After an agreement for the sale of a residential home was signed and the late provision of Form 4 (Occupancy Permit) by the seller, the purchasers failed to timely pay the balance of the consideration. Shortly thereafter, the seller sent an immediate notice of termination based on a material breach of contract.
The Supreme Court held that the contract was terminated by the seller unlawfully and in bad faith. In exercising a right arising from a contract, one must act in a customary manner and in good faith, even in the event of a fundamental breach that grants an immediate right of termination. A party to an agreement cannot remain idle; rather, by virtue of the principle of good faith, they are duty-bound to cooperate with the counterparty in order to address difficulties involved in the performance of the contract. In this instance, the seller himself fundamentally breached the contract by delaying the provision of 'Form 4' (Occupancy Permit). This delay created uncertainty for the purchasers regarding the exact timing they would require the mortgage funds. Consequently, due to the seller’s lack of good faith, he was obligated to grant the purchasers an extension, notwithstanding the fundamental breach. Accordingly, the contract is to be consummated and the purchasers are to pay the balance of the contractual consideration plus linkage and interest.
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