Proration of single option to buy two properties based on the properties’ relative values
Example 3 – Option to purchase real property in different provinces
A builder in Ontario is advertising a new home for sale in Ontario for $1,000,000. The same builder owns 20 acres of land in Manitoba worth $10,000. The builder makes a single supply of granting an option to the purchaser for $101,000 (10% of the total purchase price) to purchase both the Ontario home and the Manitoba land for $1,010,000. The purchaser may exercise the option to purchase the two properties anytime within five years of the date the option is granted. Of the $101,000 paid for the purchase of the option, $100,000 can reasonably be attributed to the purchase of the new home in Ontario (10% of $1,000,000) and $1,000 can reasonably be attributed to the purchase of the land in Manitoba (10% of $10,000).
Requirement (for s. 3 to apply) for the supplier to retain the common carrier
14. In order for the deemed delivery rule to apply, the supplier must be sufficiently involved in securing the transportation of the good. The supplier must retain a common carrier or consignee on behalf of the recipient (rather than on the supplier’s behalf or on behalf of a person other than the recipient) to have the good shipped to a province pursuant to terms negotiated, and instructions provided, by the supplier.
15. The fact that a supplier may be reimbursed for shipping costs does not affect whether a supplier is considered to have retained a common carrier or consignee on behalf of the recipient.
16. A supplier that merely contacts a common carrier or consignee to indicate that the good is ready to be transported pursuant to an arrangement that has already been established by the recipient with the carrier or consignee, or that is merely made aware of such an arrangement, is not considered to have retained the carrier or consignee on behalf of the recipient.
