Category Archives: Contract

Supreme Court Confirms Duty to Perform Contracts Honestly

The Supreme Court’s recent decision in Bhasin v. Hrynew[1] enshrined into Canada’s common law the concept of a “duty to perform contracts honestly”.  Take note that this case is not about a duty to negotiate an agreement in good faith, but rather concerns performance obligations.

Primer on Oral Agreements

In contract law generally, there is no requirement that an agreement be in writing or be signed by the parties in order to be valid or enforceable. Like any other contract, at the core, there must be offer, acceptance and consideration. The problem is not whether a court can enforce an oral agreement, but rather in proving an oral agreement existed in the first place.  As one can imagine, the first move by the infringing party to an oral agreement will simply be to assert that it doesn’t exist!

Enforceability of letters of intent and memorandums of understanding

Parties from time to time will enter into a letter of intent, memorandum of understanding or similar such preliminary agreements.  Often they precede the execution of a more fulsome and detailed ultimate agreement.  They range in content from vague agreements setting out conditions governing subsequent negotiations to more detailed documents setting out the terms the parties agree on to date and leaving open those parts left to be negotiated.

Anticipatory Breach of Contract

As we all know, contracts are not written in stone.  For any number of reasons one party to a contract may no longer be willing or able to carry out its contractual obligations.   If the other innocent party to the contract is made aware that the non-compliance is forthcoming then the law provides certain rights and options to the innocent party.

Interpreting Contracts

Many, if not most, commercial legal disputes revolve around one or several contracts.  The parties will often differ on their interpretation of the contracts, the number of contracts, or whether other related or collateral agreements added to or changed the terms of the contract(s).