Question 2 Assume that Katharine is successful in retaining her cottage. With the assistance of Brad...

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Question 2 Assume that Katharine is successful in retaining her cottage. With the assistance of Brad (her new agent), she negotiates directly with Erica for the sale of the cottage. The cottage was listed and advertised for sale for $650,000.00 by Brad who suggested that this price might elicit multiple offers. Erica's initial offer was for $650,000.00 with a closing date of August 1. The standard form offer that she submitted included in paragraph 12, on the reverse side, the standard provision that on completion the Purchaser would receive vacant possession of the cottage. Erica intended to use the cottage starting August 1. Katharine wished to make a counteroffer and discussed with Brad whether it should be for $675,000.00 or more. They decided that the counteroffer would be for $685,000.00 since a number of people had expressed interest in seeing the property and Brad suggested that there may be other offers forthcoming. As well, Katharine had agreed to rent the cottage for the months of August and September to Andrew for $3,000.00 per month and suggested that the completion date be changed to October 1. Her agent, Brad, suggested that they leave the completion date as August 1, but that he would change the offer so that Katharine could keep Andrew as a Tenant for August and September. Brad prepared the counteroffer, deleting the words "on completion" in paragraph 12 and substituting "on October 1". The paragraph setting out the purchase price was amended to read "Six Hundred and Seventy-Five Thousand Dollars ($685,000.00)". As well, a paragraph was added to stipulate that a deposit of $100,000.00 was due within 24 hours of acceptance. There were no other changes. Katharine signed the counteroffer as instructed by Brad without reading it. Brad gave Erica the counteroffer but did not discuss the amendments. Erica signed to accept the offer but said that she would need a couple of days to cash in her investments to pay the deposit. She paid the deposit 5 days after acceptance. When Erica was signing the closing documents at her lawyer's office, her lawyer asked her to confirm that the purchase price was $685,000.00 and that Katharine would retain possession until October 1. Erica disagreed, saying that the purchase price was $675,000.00 and vacant possession was to be provided on completion. Erica said that she was unaware that paragraph 12 on the reverse side had been amended and pointed out that the wording of the purchase price was written as "Six Hundred and Seventy-Five Thousand Dollars" although the written number did say $685,000.00. Katharine has received another offer for the property with a purchase price of $750,000.00 and would like to get out of the contract in any event. Required: (i) (ii) Discuss whether there is a binding contract and, if so, the terms of the agreement. Be certain to explain the applicable legal principles as part of your answer. Assume that there is a binding agreement. On July 31, there is a fire and the cottage burns to the ground. How does this affect the rights of the parties?

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