Late last year, the Ontario Superior Court of Justice handed
down a decision that most likely has the defendant employer wishing
that it could recall its email to a successful job candidate.
In Buaron v Acuity Ads Inc, 2015 ONSC
5774, the plaintiff, Mr. Buaron, interviewed with Acuity
Ads for the position of Senior System Administrator. During
this interview, the parties negotiated and reached a verbal
agreement on certain terms of Mr. Buaron's employment,
including his salary, a three month probationary period and details
on benefits and vacation entitlement. Mr. Buaron left the interview
on the basis that he would sign a letter confirming the terms that
had been discussed.
Following the interview, Acuity Ads sent Mr. Buaron an e-mail
with an offer letter attached, which set out the terms of
employment as discussed. The e-mail specified that the parties
would schedule a time for him to "come in and go through the
contracts". Subsequently, Mr. Buaron executed a more
comprehensive employment agreement, which stipulated that if he was
terminated without cause, he would be provided a severely limited
payment in lieu of notice.
Mr. Buaron worked for 9 months before he was dismissed without
cause and was provided with severance in accordance with the
employment agreement. He argued that the subsequent agreement
he had signed was not binding, as a contract between him and Acuity
Ads had already been formed when he received its offer letter. As
the offer letter was silent on notice upon termination, Mr. Buaron
argued he was entitled to receive reasonable notice at common law
The Court agreed with Mr. Buaron, finding that Acuity Ads had
already made the offer of employment during the interview. He
had accepted its offer during the interview, conditional on
receiving written confirmation of the agreed essential terms of his
employment – salary, title, vacation, probation period, and
benefits. While Acuity Ads could have easily included the
employment agreement as an attachment along with the offer letter
in its e-mail, or mentioned that a comprehensive employment
agreement would have to be signed before Mr. Buaron started work,
it chose not to do so. Given the discussions at the interview, the
Court found that Acuity Ads' action of sending an offer letter
setting out these essential terms was sufficient to establish a
To form a legally binding contract, both parties must agree on
the essential terms and exchange something of value –
referred to as "consideration" – upon executing the
contract. Variations or new terms and conditions of existing
contracts may not be binding without new or additional
consideration for the variation or new term. In this case,
Acuity Ads had a binding contract and did not provide fresh
consideration when it presented Mr. Buaron with the more
comprehensive employment agreement with termination provisions.
Accordingly, the termination provisions in the subsequent
agreement were not enforceable. The Court awarded Mr. Buaron
reasonable notice, which it determined to be four months –
almost half of the time he worked for Acuity Ads.
Buaron serves as a reminder to all employers to avoid
communicating agreement (either verbally or in writing) on the
fundamental terms of employment with prospective employees before
all of the terms and conditions of the employment relationship have
been properly set out in a contract.
Another similar, common issue which raises the
"consideration" issue is when employers allow an employee
to begin work prior to signing an employment contract. In
such circumstances, an employee may have an argument that
consideration was exchanged when the employee started work.
Thus, any contract signed subsequent to the commencement of work is
void and unenforceable, leaving any prior verbal discussions or
communications to govern the employment relationship.
As noted by the Court in Buaron, an employer can vary
an existing agreement by providing fresh consideration (for
example, a lump sum payment as a signing or retention bonus).
However, it is best practice to simply avoid this altogether by
communicating an offer of employment along with the key terms,
including termination provisions, in the letter or contract of
employment. Alternatively, the employer can make an offer
with an express stipulation that the terms and conditions of
employment will be set out in subsequent documentation. In
any case, the agreement ought to be in place before the employee
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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