How long can work under a contract be suspended before the
contractor’s obligations will be deemed terminated? A lot
longer than you might expect.
In Avery Place, LLC v. Highways, Inc., a recent
case from the Tennessee Court of Appeals, the Court was asked to
consider whether the trial court had erred in granting a motion for
summary judgment regarding a breach of contract action where the
contractor refused to perform work at the price specified in the
contract. The contract had been suspended for eight
The work was intended to be done in two phases, with at least a
one-year gap between the completion of phase one and the start of
According to the contractor, the cost of materials necessary to
perform the work had increased by over 300 percent since the
contract had been executed, making an $8,800 job into a $38,000
There was no set time or deadline for the performance of the
second phase of work in the contract.
The contractor drafted the contract.
There was no negligence on the part of the developer in waiting
eight years to request that the phase-two work be completed.
In a win for solicitors against those pesky litigators who are
always trying to punch holes in our beautifully drafted contracts
(and by “pesky”, I of course mean
“diligent”), the Court swept aside the many
sophisticated legal arguments of the contractor and relied on the
language and interpretation of the contract in affirming the
summary judgment of the trial court, holding that the eight-year
period was “a mere
hiatus” in the contractor’s
obligation to perform the work, and that the developer was entitled
to have the work performed at the original price set out in the
contract despite the extended suspension of work and the increase
in the price of such work. Because the contractor had refused to
perform the work at the price stated in the agreement, it was in
breach of contract and had to pay $29,200 as damages for work it
had initially agreed to perform for $8,800.
While Tennessee case law is not binding in Alberta (and it
appears an equivalent case has not been before a Canadian court
to-date), don’t assume a suspended contract will
automatically become a terminated contract at some point –
unless it says so in the agreement.
A special thanks to Sandra Geddes and Odessa O’Dell
for their research assistance.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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