Ms. Black wished to purchase Mr. Green's farm. After lengthy negotiation, the two parties drew up and signed an agreement of purchase and sale for the farm with the assistance of and in the presence of Green's real-estate agent, Simms. The agreement that the parties signed was a standard, preprinted form used by all local real-estate agents that contained a clause which was an irrevocable direction by the vendor of the land, Green, to the purchaser, Black, to deduct from the sale price and pay the real-estate agent's commission directly to Simmson the closing day of the transaction. The preprinted form had printed on it a black circle with the word "Seal" written under it. Also, above the line for Green's signature were printed the words "In witness whereof I have hereunto set my hand and seal." Beside Green's signature line was a place for a witness to sign the agreement. Immediately above this place appeared the preprinted words "Signed, sealed and delivered in the presence of." Green and Black each had lawyers looking after the details of the transaction and each gave a copy of the agreement to their respective lawyers.

Shortly before the closing of the sale, Green's lawyer prepared some final paperwork and had Green sign several important documents. Among them was a direction to Black and Black's lawyer to make the cheque for the full amount of the purchase price payable to Green. On closing, Black's lawyer presented to Green's lawyer a cheque made payable to Green for the full purchase price of the farm. Green's lawyer later turned over the cheque to Green.

After the closing, Simms contacted Green to request delivery of his commission cheque. Green replied that neither he nor his lawyer had received a cheque for Simms from Black's lawyer on closing and suggested that Simms contact Black himself since that was the arrangement. When Simms called Black, Black stated that as far as she was concerned, she had paid for the farm and did not owe anyone any more money.

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