Legal Blog

Contract Frustration

Perkins v. Sheikhtavi 2019 Ont CA

In the height of the 2018 real estate boom, vendor and purchaser agreed to a sale. The federal government then changed its lending guidelines and property values declined significantly. The purchaser was unable to obtain financing to close the transaction. The vendor re-sold the property at a $620,000 loss. The purchaser claimed that the contract had been frustrated. The court held that frustration applies only when a supervening event alters the nature of the parties’ obligations to such an extent that performance would be radically different from what was originally agreed to be done. The court noted that the purchaser could have made the agreement conditional on financing and did not; the new government policy did not force the purchaser to do something radically different and the contract was not frustrated.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.