Typos and Contracts


Written by Xiyaun Feng

This is a cautionary tale about attention to clerical detail! Can a typo in a contract prevent a deal from being reached? Apparently, yes, at least insofar as essential terms of the contract are concerned. In 1132080 B.C. Ltd. v 1055616 B.C. Ltd.,[1] one mistake in the party’s name invalidated a contract related to the land and its subsequent assignments.

Here, the Court also dealt rather summarily with an allegation about an oral representation. It was suggested that a director of the defendant had made an assurance that if the transaction did not close, the deposit paid as part of the transaction would be returned.[2] Although the Court expressed skepticism over other aspects of this director’s testimony, the Court had little difficulty in finding that the alleged assurance was never made, particularly given that the alleged assurance ran directly counter to provision in the written agreement.[3] Although the Court did not refer to it, this is consistent with older jurisprudence of the Supreme Court of Canada.[4] The purpose of a deposit is to ensure that there will be consequences if the purchaser walks away prior to closing, even without litigation.[5]

The contract dispute started with an opportunity of developing a 34-unit townhouse project in Chilliwack, B.C. (“the Land Project”).[6] In 2017, Mr. Singh, who was not a party, but played a crucial role in this case, learned about this opportunity, and entered an agreement to purchase the Land Project dated July 21, 2017 (“Land Contract”), on behalf of Kesri Enterprises Ltd. (“Kesri Enterprises”) for $3,500,000 with a deposit of $250,000.[7] In an unusual twist, the seller had not yet acquired the lands that were the subject-matter of the contract,[8] and thus, the contract for the sale of these lands was subject to the seller’s acquisition of them.[9]

Next, in this contract, the name of buyer was written as Kesri Media Ltd.,[10] though the signature at the end of the contractual document was purportedly Kesri Enterprises Ltd. In an addendum on July 31, Mr. Singh declared that Kesri Enterprises Ltd. was the correct name. [11] Nonetheless, some subsequent documents continued to refer to the buyer as Kesri Media Ltd.[12]

Mr. Singh found the Land Project was too large to undertake on his own.[13] He asked Mr. Dhillon, the defendant, to find other investors and also assigned the Land Contract to 1055616 B.C. Ltd (“616” or “defendant corporation”), a corporation controlled by Mr. Dhillon, on July 27, 2017 (“First Assignment”).[14] In exchange, 616 was required to pay an assignment amount of $297,250.[15] The amount was to be held in trust and be released to Kesri Enterprises once the transfer of land was registered. Otherwise, it would be returned to 616.[16] But the monetary transaction never occurred.[17] In 2018, Mr. Dhillon invited Mr. Jindal to become an investor in the Land Project and warranted that 616 had further assigned the Land Contract to 1151706 B.C. Ltd. (“706”), and that all contracts related to the Land Project were valid.[18] On this basis, Mr. Jindal, on behalf of his corporation (“plaintiff”), purchased 10% shares in 706 with a non-refundable $60,275 deposit.[19] Thus, Mr. Jindal purported to become an indirect investor in the Land Project.[20] Unfortunately, the purchase of the Land Project did not successfully close.[21] Mr. Jindal requested a return of the deposit[22] and claimed that 616 and Mr. Dhillon had misrepresented 706’s right to purchase.[23]

The Court found 616’s misrepresentation justified recission to the plaintif.[24] The misrepresentation derived from the findings that none of the contracts related to the Land Project were valid. The Land Contract was “killed” by the inaccurate and unclear identity of the buyer.[25] The identity of parties, together with the property and the price, are essential terms in a land sale agreement.[26] Kesri Media Ltd. (the first purchaser listed) was dissolved at the time of the contract.[27]It is determined that a lack of clarity in the buyer’s name is sufficient to invalidate the contract.[28] The continuous use of the wrong name, even after Mr. Singh declared the correct one, further demonstrated that the parties were not clear about the buyer. As such, there was no “root” for the assignments that followed.

Assuming the buyer’s name had been successfully clarified in the Land Contract, it was still not validly assigned to 616 because, at the time of this assignment, Kesri Enterprises Ltd. had no right to purchase.[29] The clarifying addendum was dated July 31, but the Assignment completed four days before the addendum. Thus, Kesri Enterprises Ltd. could not assign the right to which it had not been entitled. Additionally, the payment terms in the Assignment were inconsistent.[30] The amount promised in the Assignment was never been paid by or returned to 616.[31] Instead, the parties entered into an Authorization to mutually release each other, which was not given weight in the Court’s analysis.[32]

Finally, the agreement by which rights to the property were transferred to the party in which Mr. Jindal was said to have an interest was unclear.[33] Mr. Dhillon never produced a copy of the Assignment.[34] Alongside the less than forthright performance of the contract following the acceptance of the deposit, the Court held that it is possible that the document does not exist.[35] In this sense, 706 did not have a valid right to purchase the Land Project, which is contrary to the 616’s representation to Mr. Jindal.[36]

Assignment brings a third party into a contact by transferring rights or burdens in the contract,[37] but a party can only assign the rights that one is entitled to in the contract, and sometimes, the contract may prohibit certain rights to be assigned.[38] Therefore, both assignor and assignee must ensure the rights related to the Assignment are valid and are available to assign before proceeding. One may check the validity of the contract to be assigned. Specifically, the parties’ name, payment terms and price must be correct, since an error in these essential terms can render a contract invalid!

[1] 2022 BCSC 1452 [113].

[2] Ibid, at para 3.

[3] Ibid.

[4] See Hawrish v. Bank of Montreal, [1969] SCR 515, which, though it dealt with guarantees, and not deposits, made it clear that oral representations that contradict express terms of a written agreement should rarely prevail.

[5] See Darcy L. MacPherson, “A Deposit in a Pre-Incorporation Transaction Is Still a Deposit:  A Comment on Benedetto v 2453912 Ontario Inc.”, (2021), 44(3) Manitoba Law Journal 225, at 230-231

[6] Ibid at para 8. 

[7] Ibid at paras 8-9.

[8] Ibid at paras 9.

[9] Ibid.

[10] Ibid at para 10.

[11] Ibid at paras 10-11.

[12] Ibid at para 11.

[13] Ibid at para 14.

[14] Ibid at paras 15.

[15] Ibid at para 17.

[16] Ibid at paras 18.

[17] Ibid at paras 1 and 18.

[18] Ibid at para 23.

[19] Ibid at para 50.

[20] Ibid at paras 20-21.

[21] Ibid at para 35.

[22] Ibid at para 36.

[23] Ibid at para 37(a) and (b).

[24] Ibid at para 58.

[25] Ibid at para 40.

[26] Ibid, citing First City Investments Ltd. v. Fraser Arms Hotel Ltd., (1979), 13 BCLR 107, [1979] 6 WWR 125, 104 DLR (3d) 617, 1970 CanLII 606 (BCCA), at paras 19-20.

[27] 113, supra note 1 at para 39.

[28] Ibid at para 40.

[29] Ibid at para 41.

[30] Ibid at para 42.

[31] Ibid at para 43.

[32] Ibid at para 43.

[33] Ibid at para 44.

[34] Ibid.

[35] Ibid.

[36] Ibid.

[37] Canadian Encyclopedic Digest, 4th ed.(online) [CED 4th], “Contracts – Assignment and Novation: Assignment: General” (XV.1.(a)) at §961.

[38] CED 4th ibid,Contracts –Assignment and Novation: Assignment: Limitation on Assignability: When Consent to Assignment Required” (XV.1.(d).(iv)) at §979.

The views and opinions expressed in the blogs and case reporter are the views of their authors, and do not represent the views of the Desautels Centre for Private Enterprise and the Law, the Faculty of Law, or the University of Manitoba. Academic Members of the University of Manitoba are entitled to academic freedom in the context of a respectful working and learning environment.