There are many rules and principles that govern the interpretation of the contract. These rules may become more or less relevant depending on the circumstances. For example, if there is an ambiguity that cannot be resolved by looking at the factual matrix, the contra proferent rule states that the ambiguity must be interpreted against the author. This is a concept that is often at stake when it comes to an employment contract or insurance policy. Due to the wide variety of relationships and scenarios governed by treaties, there is a plethora of rules of interpretation and therefore many reasons to discuss. One party does not intend for the other party to rely on its dishonest conduct. The party`s reasons are not relevant to determining whether the duty of honesty is breached, unless those grounds indicate dishonesty. However, whenever an innocent party chooses to accept a refusal, it must immediately, clearly and unambiguously communicate that decision to the injured party (the general Canadian practice in such cases is that the innocent party clearly reserves the right to claim damages). If, on the other hand, an innocent party does not wish to terminate the contract, he may waive his right to do so. However, two precautions must be observed for commercial parties with regard to these derogations. First, they often cannot be effectively revoked because Canadian courts, if the offending party acts on the basis of a clear and unambiguous waiver, generally protect that trust. Second, if a party has the right to invoke a contractual termination provision but chooses not to do so, that party is often responsible for the consequences of its inaction.
In recent years, good faith has played an increasingly important role in Quebec jurisprudence. In other provinces, a recent decision of the Supreme Court of Canada also established a new requirement of good faith in contractual matters, but in certain circumstances. Breaches of good faith may occur when the contract allows a party to exercise its discretion. In such a case, the party exercising its discretion must do so in good faith and, in some cases, give reasonable reasons for its decision (a remedy less known under the principles of natural justice that are often at stake in the management of voluntary associations). While the implied duty of good faith is an effective remedy, there may be other situations where the courts find implied clauses that complement a written agreement. During the first year of the winter contract, in March or April 2013, Baycrest decided to terminate the contract prematurely, but did not inform Callow. Subsequently, a Baycrest representative had a communication with Callow, which gave the false impression that the winter contract would not be terminated prematurely and would likely be extended for a longer period. Callow overstepped its obligations under the summer contract by providing free work to Baycrest to encourage Baycrest to renew the winter contract. Baycrest was aware of Callow`s false impression, but took no action to correct it. In September 2013, when it was too late for Callow to get another winter job, Baycrest told Callow that it was exercising its right to terminate under the contract. Most contractual disputes concern the interpretation of the agreement, i.e. the objective meaning of the words chosen by the parties to govern their relationship.
Words have different meanings in different contexts and in the minds of different people (this simple principle is what keeps contract lawyers like business supply law). When the meaning of the words is disputed, it is common for the courts to take into account the clear wording of the agreement and, if necessary and appropriate, the circumstances of the agreement at the time of the conclusion of the contract (or the so-called “matrix of facts” among contract lawyers). In examining the agreement and the matrix of facts, the objective of the courts is to determine the true intentions of the parties. Ultimately, Canadian courts apply the above rules in a practical manner to protect the reasonable trust of the parties. For example, in a recent decision, the Ontario Court of Appeal upheld the decision of a Toronto Commercial List judge who found that a contractual provision to exclude liability for “loss of profits” does not in fact apply to profits lost as a direct result of infringement, but only to indirect losses of profits (i.B other business opportunities, due to the breach, sometimes referred to as “consequential damages”). In reaching this conclusion, the subsequent court did not consider the enforceability of the exclusion clause (and the corresponding unscrupulous requirement discussed above), but instead focused on its interpretation and ultimately concluded that the clause simply did not apply to profits lost as a direct result of the infringement. On the first question, the majority found that Baycrest had knowingly misled Callow. The majority argued that a flat lie or a half-truth knowingly false would violate the duty of honesty. On the other hand, failure to disclose an important fact without further ado would not infringe that obligation. The majority stated: The courts may also award financial compensation in the form of damages to the extent of the damage suffered and the loss of profits resulting from the breach of contract; however, this loss and profit must be directly related to the non-fulfillment of the promise (Article 1611 QCC). In addition, the courts will only award damages that are proportionate to the benefits that the parties would reasonably have expected at the time of entering into the contract.
The parties may seek to limit the evidence that the courts consider in the event of a contractual dispute by inserting a “full agreement clause” into the contract. Entire contractual clauses usually look like this, legal limitation periods affect applicability, depending on when the breach occurred. Enforceability can also be compromised by waiver or forfeiture, although most commercially written contracts contain explicit provisions dealing with these issues. The claim of collateral contracts relating to the main contract may also affect performance. Conditions are essential conditions that go to the root of the contract. For example, in the case of the sale of a new car, one condition would be that the car is actually new. In this scenario, when the condition is violated (for example. B by the seller providing a used car), the buyer may assume that the seller violates a material condition and will be exempted from continuing the transaction. In this case, however, the buyer also has the option to accept the car and sue for damages. In Callow, a corporation, Baycrest, and its designated property manager managed the joint and joint assets of ten housing corporations.
In 2012, Baycrest renewed a winter service contract with C.M. Callow Inc. and also signed a new summer contract. The winter contract had a two-year term, but allowed Baycrest to terminate the contract unilaterally with ten days` notice without giving reasons. In some contracts, the parties may choose to set a lump sum of damages in the event of a breach. The caveat here is that the indication of lump sum damages cannot be a penalty. If the contractual penalty is enforceable, it will prevent the injured party from having to prove their actual damage. In the absence of a lump-sum damages clause, the injured party is entitled to damages that result directly from the damage and indirect damages in the mind (or that should have been in the minds of the parties at the time of the contract).
The purpose of damages in the event of a breach of contract claim is to put the innocent party in the situation in which he would have found himself if the contract had been performed as agreed. These claims for damages may take the form of loss of profits, interest and/or additional costs necessary for the performance of the contract, but this is ultimately a complex and factual analysis. .
