Humber/Ontario Real Estate Course 1 Exam Practice

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If a buyer fails to close a deal unconditionally agreed upon and the seller’s lawyer believes this goes to the root of the contract, the seller:

  1. Has no legal recourse for damages

  2. Cannot sue for damages but can withdraw from the contract

  3. Has the right to sue for damages and withdraw from the contract

  4. Must provide additional time for the buyer to close the deal

  5. Can sue for specific performance only

  6. Must renegotiate the contract terms

The correct answer is: Has the right to sue for damages and withdraw from the contract

The correct response highlights that in the event a buyer fails to fulfill an unconditionally agreed contract, the seller not only has the right to withdraw from the contract but also can pursue damages. This stems from the principle that the buyer's failure to close goes against the fundamental terms of the contract, known as "the root of the contract." When a buyer defaults in this way, the seller is afforded legal avenues to seek compensation for any losses incurred due to the breach. Furthermore, the ability to withdraw from the contract is a critical right for the seller, as it allows them to mitigate further risks associated with a non-compliant buyer and potentially move forward with other interested parties. The other options don't capture the full extent of the seller's rights in this scenario. For example, some suggest limitations like being unable to sue for damages or needing to renegotiate, which do not apply when the breach is significant and foundational to the contract's validity.

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