Is an executory agreement for the purchase and sale of an asset surviving the completion of the transaction?
British Columbia, Canada
The following excerpt is from Close v. Weigh West Marine Resort Incorporated, 2009 BCCA 216 (CanLII):
Although it is referred to as a doctrine, the question of whether all or part of an executory agreement for the purchase and sale of an asset survives the completion of the transaction is really a matter of the intention of the parties. This was explained by Mr. Justice Dickson in Fraser-Reid v. Droumtsekas, 1979 CanLII 55 (SCC), [1980] 1 S.C.R. 720 at 734, 103 D.L.R. (3d) 385: Although it is a general rule that the acceptance of a deed is prima facie full execution of the agreement to convey, and preliminary agreements and understandings relating to the sale of land become merged in the conveyance, such a rule is not applicable to independent covenants or collateral stipulations in an agreement of sale not intended by the parties to be incorporated in the conveyance. and at 738: There is no presumption of merger. The proper inquiry should be to determine whether the facts disclose a common intention to merge the warranty in the deed; absent proof of such intention, there is no merger.
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