Canada: Business Disputes - Contracts With Suppliers Or Other Third Parties

Virtually all businesses deal with contracts of one form or another.

These can include contracts with suppliers or vendors, or contracts with other third-party service providers. Most businesses will have contracts or agreements with their own clients or customers which govern the relationship between the parties.

While standard-form printed contracts are increasingly common, a business contract or agreement does not have to be in writing to be legally enforceable. A verbal or 'handshake' agreement is just as binding as a written contract for most commercial contracts, although in cases where agreements are not put in writing, disputes can arise over the specific terms of what was agreed to. There is also an exception to this general rule as contracts respecting land or a disposition of land must be in writing. As a general rule, it is good business practice to put key agreements in writing.

If a dispute arises, the very first thing to do is review the contract carefully. The terms of the contract govern the relationship between the parties and will set out each party's obligation. If the terms of the contract have not been complied with, the contract will often set out the rights and remedies available to the party that is not in default.

In addition, the Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71, found that in regards to the performance of all contracts, the contracting parties owe a duty of honest performance flowing from a common principle of good faith. This means that parties to a contract must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract.

It is important to carefully review the section of the contract dealing with rights and remedies on non-compliance. Often the non-defaulting party must give some notice of the default to the other party and give them an opportunity to cure the default before other steps can be taken. If the defaulting party fails to cure the default, then the contract may specify whether the non-defaulting party can then terminate the contract (and how notice of that termination is to be given). In some cases, the contract may provide for liquidated damages for breach – a set sum of money payable to the non-defaulting party. In other cases, the non-defaulting party may have to make a formal claim for damages for breach of contract. In some situations, the contract may contain limitations of liability which restrict the ability to claim for damages or place limits on the amount of damages that could be recovered and these limitations need to be considered when settling the dispute as they may affect your best approach.

In many cases, the breach of contract arises because one party has not paid for goods or services rendered pursuant to the contract. In that case, provided the non-defaulting party has discharged their obligations under the contract, they can advance a claim in debt against the non-paying party. More information on Debt Claims can be found in that section of this website.

Formal Dispute Resolution Mechanisms

Many contracts will have specific provisions governing how disputes are to be resolved. It is not unusual for the contract to specify where claims for breach of contract are to be brought or what law will apply. Many contracts will have formal dispute resolution mechanisms built in – for example, mediation or arbitration. Depending how the contract is worded, these dispute resolution mechanisms may be mandatory – meaning that the parties cannot sue in the courts to enforce their rights under the contract but rather must follow the procedures set out in the contract. More information on Arbitration can be found in that section of this website.

If the contract has no termination date, ending the contract requires some care. For example, if you have been regularly supplying goods or services, you will need to give sufficient notice before terminating. It is important not to cause harm by ending a contract without sufficient notice as a damages claim may be brought against you for failing to give adequate notice. You may wish to obtain legal advice prior to terminating for this reason.

Some written contracts can be quite complex and are often written in complicated legal language. Standard-form contracts, while convenient, may not be appropriate for use in every situation. In addition, standard-form contracts may be quite one-sided in favour of the party who drafted them and this should be evaluated before an agreement is made. Also, a standard form contract may be read against the party that drafted it, where it is ambiguous, which is another reason to avoid them.

Where standard-form contracts are frequently used, it is prudent to have a lawyer review standard forms in order to determine whether changes need to be made to properly protect the interests of the respective parties. In some cases, for example involving particularly large or significant transactions, it is advisable to have a lawyer prepare a more customized agreement in order to ensure that the terms of the agreement between the parties are properly documented, and hopefully minimize any disputes.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Pallett Valo LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Pallett Valo LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions