Humber/Ontario Real Estate Course 1 Exam Practice

In contract law, what can invalidate an agreement if not disclosed to a buyer?

1. A known, material latent defect

2. Unintentional mistake

3. Non est factum

4. Mutual consensus changes

5. Price changes

6. A change in buyer's circumstances

The correct answer is: A known, material latent defect

A known, material latent defect can invalidate an agreement if it is not disclosed to a buyer because such defects are significant issues that could affect the buyer's decision to enter into the contract. In contract law, sellers have a duty to disclose any material defects that they are aware of, especially those that are not readily observable. If a seller fails to inform the buyer about a known latent defect—such as structural problems or issues with the property's systems that are not visible—the buyer may argue that they would not have agreed to the purchase had they been aware of the defect. This can lead to the contract being considered void or subject to rescission. Other factors, such as unintentional mistakes or changes in circumstances, might impact a contract's enforceability but don’t carry the same weight as undisclosed material defects when it comes to validity. Non est factum relates to a party being misled about the nature of the document they are signing, which is a different legal concern. Mutual consensus changes deal with modifications made through agreement between parties and do not invalidate the original contract unless specific conditions are unmet. Price changes and circumstances affecting the buyer do not directly relate to the validity of the agreement in the same way as an undisclosed defect would.