Earlier this Fall, the British Columbia Court of Appeal
confirmed two important legal principles in Hartslief v Terra
Nova Royalty.1 Namely:
The execution of a formal written document is not always
necessary for the formation of a binding contract; and
"Unless a solicitor clearly communicates the contrary to
those with whom he or she is negotiating, a solicitor is the agent
of his or her client and thus may bind the client to an
The facts in the Hartslief, by most accounts, are
ordinary. Mr. Hartslief had been terminated by his employer, Terra
Nova Royalty ("Terra Nova"). Mr. Hartslief sought
compensation with respect to his termination. Both Mr. Hartslief
and Terra Nova retained solicitors, and the solicitors entered into
settlement negotiations. Notably, the trial judge concluded that
neither solicitor communicated to the other that a settlement
agreement required formal documentation, or a signature, to be
binding. Nor did either solicitor communicate to the other that
acceptance of a settlement agreement would be conditional until
formally approved by their respective clients. The Court of Appeal
upheld both of these conclusions. During the settlement
negotiations, the solicitor for Mr. Hartslief proposed a settlement
offer. The solicitor for Terra Nova accepted the settlement offer
on behalf of his client without obtaining express instructions to
accept or executing a formal document. Terra Nova then attempted to
recant on the agreement.
In both the BC Supreme Court and the Court of Appeal, Terra Nova
argued that a formal document would have to be signed, and signed
by the client not the solicitor, before a binding agreement came
into existence. Both the BC Supreme Court and the Court of Appeal
rejected Terra Nova's argument.
Agreements are not necessarily formally signed documents
The Court of Appeal rejected Terra Nova's argument that a
formal document would have to be signed before a binding agreement
came into force. The trial judge had found that Terra Nova's
argument departed from the "usual rule for contract formation
that acceptance can be communicated through any conduct that a
reasonable bystander would interpret as acceptance", which
finding the Court of Appeal confirmed as a correct statement of the
Solicitors can bind clients to agreements
The Court of Appeal also rejected Terra Nova's argument that
the agreement was conditional upon approval of the respective
clients. Citing Sekhon v Khangura,4 the Court
of Appeal confirmed that it is settled law, both in British
Columbia and Ontario, that "a solicitor acting for a party in
settlement negotiations is acting as the agent of the client"
and there is "no obligation on other parties to make enquiries
regarding a solicitor's authority to settle a matter on a
The British Columbia Court of Appeal has once again reminded us
that signing a formal written document is not always necessary for
the formation of a binding contract, and that unless the contrary
intention is communicated, lawyers can bind their clients to an
agreement without the signing of a formal written document by
either client or lawyer.
1. 2013 BCCA 417
2. Ibid at para 22
3. Ibid at paras 12 and 18
4. 2009 BCSC 670
5. Ibid at para. 14.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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