A buyer includes a condition in their offer stating 'subject to buyer's approval of a satisfactory home inspection.' The inspection reveals minor cosmetic issues but no structural problems. The buyer attempts to use this condition to withdraw from the purchase. Which legal principle would likely apply?
Correct Answer
C) The condition must be exercised honestly and in good faith
Courts have established that subjective conditions like inspection approval must be exercised honestly and in good faith, not arbitrarily or for reasons unrelated to the stated purpose. While buyers have considerable discretion, they cannot use subjective conditions as an escape clause when their real concerns are unrelated to the inspection results.
Why This Is the Correct Answer
Option C correctly identifies the good faith principle established by Canadian courts. Under contract law, subjective conditions must be exercised honestly and in good faith, not arbitrarily. While 'satisfactory inspection' gives buyers considerable discretion, they cannot use this condition to escape for reasons unrelated to the inspection's purpose. The buyer's decision must genuinely relate to the property's condition as revealed by the inspection, not serve as a general escape mechanism for buyer's remorse or changed circumstances.
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A buyer includes a home inspection condition in their offer that states 'subject to buyer's approval of a home inspection.' What type of condition is this considered to be?