Can a seller be excused if the buyer caused a condition to fail?

This page covers Québec’s Civil Code. Other provinces apply their own law, which is not described here. Start with whose obligation depends on the condition. The Code’s rule targets the party whose duty is conditional, so the question is whether the buyer can use a failed condition as an exit.

How the Code defines a condition

An obligation is conditional where it depends on a future and uncertain event, either by suspending it until the event occurs or is certain not to occur, or by making its extinction depend on the event. If no time is fixed, the condition may be fulfilled at any time, and it fails once it becomes certain that it will not be fulfilled.

When the buyer causes the failure

Suppose the buyer’s duty to close depends on obtaining financing, and the buyer never applies. The Code says the conditional obligation becomes absolute when the debtor prevents the condition from being fulfilled. On that reading the buyer cannot rely on the failure. Ask a lawyer whether a particular act amounts to prevention, and keep a record of requests made and replies received.

A condition the seller depends on

The reverse can arise. If the seller’s duty to hand over the business depends on something the buyer must do first, such as providing a document, and the buyer does not, the condition may simply fail. Where the contract’s obligations are exigible, the Code lets a party refuse to perform a correlative obligation to a corresponding degree when the other party fails to perform to a substantial degree or does not offer to perform, unless bound by law, the will of the parties or usage to perform first.

What a seller can do

Review the clause for a deadline, a notice requirement and a waiver mechanism. Put any demand in writing. Éducaloi, writing about home offers, notes that an inspection clause does not let a buyer withdraw for any reason. Then speak to a Québec lawyer; the Barreau du Québec says lawyers draft sales agreements and advise on decisions before they are made. The page on making financing a closing condition shows a common example.