The Entire Agreement Clause

The Ontario court case, Langen v. Sharma (2024 ONSC 4212), provides a caution for buyers and realtors. The entire agreement clause is the single provision that cost a family a large sum of money and the failed purchase of a $2.9 million dollar home.

The sellers entered into an agreement with the buyers to purchase the Brampton home. The deposit on the purchase was $100,000.00 and the closing scheduled for August 2022. The buyers later discovered that the property taxes were listed incorrectly in the listing and were significantly higher after an assessment due to recent renovations. Due to the increase, the buyers were unable to secure financing and failed to close.

The sellers were able to resell the property for $400,000.00 less than the original purchase price of $2.9 million. They sued the buyers for damages: the deficit plus carrying costs and the forfeiture of the deposit.

The buyers countersued for misrepresenting the amount of the property taxes.

The decision ultimately resulted in the buyers paying damages to the sellers which consisted of the deficit of $400,000.00 plus the carrying costs in the amount of $25,319.69, and forfeiture of the $100,000.00 deposit.

The decision centered on the “entire agreement” clause in the contract.

It’s been widely held in Ontario that this “clause in a contract can exclude a negligent or fully innocent misrepresentation in accordance with the terms of the clause”. Langen v. Sharma (2024 ONSC 4212), at para. 20.

The entire agreement is reflected in the contract and what is contained in the 4-corners of that page are what is considered agreed upon. The agreement at bar does not include any reference to the municipal taxes and is not represented as a part of the agreement, therefore the buyers cannot rely on the alleged misrepresentation, which the court deemed non-negligent and innocent.

As concluded in the Bob Aaron, Toronto Star, article on the subject, never forget: The entire agreement clause will always be a complete bar to any claims by a buyer for an innocent misrepresentation outside an agreement of purchase and sale.