Subject clauses: a tricky subject Licensees are expected

Subject clauses: a tricky subject Licensees are expected

Subject clauses: a tricky subject Licensees are expected to be able to draft legally enforceable contracts

Contracts that are inaccurate, confusing or unenforceable may lead to a claim Subject clauses are intended

to be a condition precedent to the parties respective obligations to complete the contract Entirely subjective subject

clauses depend entirely on the personal view of the individual who decides it Warning.this clause may not create a binding agreement

An example of a poorly worded clause: subject to purchasers review of all leases, contracts, plans and surveys and the state of title to the Lands, and any existing easement agreements, such review to be to the sole satisfaction of

the Purchaser. A clause that is clear, precise and objective is a true condition precedent

Example: subject to John Smith being elected as Mayor in the municipal election of January 20, 2018.

The most common subject clauses are partly subjective and partly objective Example: subject to the seller

obtaining third reading approval for rezoning to commercial use by May 1, 2014 When drafting subject clauses:

Provide objective criteria Use plain language If unsure, ask for advice For additional information on drafting subject clauses and

advising clients, review the Professional Standards Manual section Subject Clauses General Information Whenever possible, use the

standard subject clause wording provided in the Professional Standards Manual. Courts have ruled that there is an implied duty of

good faith in the performance of a contract. If your client does not want to remove a subject clause for reasons other than that

expressly stated in it, recommend they get legal advice. Put your advice in writing.

Good resources: - Your managing broker - Risk Report, May 2014 - Risk Report, December 2017 - Professional Standards Manual

Questions? Thank you.

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