Canada: When Part Performance Can Make An Unexecuted Agreement Binding

Last Updated: February 2 2010
Article by Brennan M. Carroll

Most Read Contributor in Canada, September 2016

A variation of this article will appear in the February 26, 2010, issue of The Lawyers Weekly published by LexisNexis Canada Inc.

Typically, agreements dealing with real property are only binding if made in writing and executed by the parties. However, there are exceptions that BLG's clients should be aware of. The Ontario Court of Appeal's recent decision in Erie Sand and Gravel Limited v. Seres' Farms Limited et al upheld the binding nature of an unexecuted agreement due to the partial performance of the contract by the parties. This case offers an example of what constitutes part performance and how it can cause an oral agreement to be enforceable. It also highlights the importance of clear communication when negotiating agreements, particularly when a right of first refusal or offer is part of the deal.

The Facts

Erie approached the vendor (Seres' Farms) about purchasing land for the purposes of a mining business. Erie did so with the knowledge that a third party, Tri-B, had a right of first refusal on the property. Because of this right, Erie refused to provide a written offer until the terms of the agreement were finalized verbally. After a series of meetings, Erie submitted a written offer and a deposit for the full purchase price of $1,193,082. Seres said it would accept this offer if Tri-B did not match the offer with the "same deposit, terms and conditions" within five banking days. However, Seres did not sign the offer.

After receiving notice of Erie's offer, Tri-B opted to match it, with the notable exception that the closing date would be three weeks later, and that the deposit provided would be for $25,000, with the remainder of the purchase price to be paid on closing (in part by way of a vendor take-back mortgage). Nevertheless, Seres accepted this offer despite the difference in the terms and conditions with Erie's offer and the property was transferred to Tri-B.

The Outcome

Erie claimed that there was a binding agreement between Erie and Seres, conditional upon Tri-B refusing to match the offer. Erie's position was that since Tri-B failed to meet all the conditions of the offer, Seres was obligated to transfer the land to Erie. Tri-B argued that no legal contract existed between Erie and Seres, merely that they had an "agreement to agree". Two levels of Courts in Ontario agreed with Erie. Although there was not a signed contract, all of the essential terms were established and both parties intended for the agreement to be binding and, most importantly, Seres had shown "partial performance" of the agreement, taking Erie's offer to Tri-B.

Part Performance

To protect against fraud, the Statute of Frauds requires that any agreement to transfer land must be written and executed. An exception to this requirement is the doctrine of part performance, which applies because the risk of fraud in such circumstances is minimal.

In Erie, the Court stated that in assessing part performance it is not just a plaintiff's actions that are relevant, but also a defendant's actions. In this case, in addition to Erie preparing the offer and providing a deposit which Seres accepted, the steps taken by Seres in delivering the offer to Tri-B also contributed to the finding that there was part performance. The Court conceded that, generally, an offer to purchase land accompanied by a deposit would not constitute part performance. However, because of the intention by Seres to trigger the right of first refusal and the acceptance of a deposit for the full purchase price, a reasonable person could conclude that there was part performance in relation to some dealing with the land.

Six Practical Tips

Here are six practical tips for BLG's clients in light of the Erie decision:

  1. Although we can see from Erie that oral or unexecuted agreements may be found binding by a Court, parties who want agreements to be binding should ensure that agreements are in writing and executed. Before completing an agreement, review it carefully to ensure that there are no blanks that need to be filled in, notes to draft that remain in the document, or schedules that have not been properly completed. Typically, you do not need to review legal agreements unless a problem arises, so make sure that the document is in final form and executed before it is put into the filing cabinet. Also, given the ease of today's technology, pdf the document and send by email to your lawyer and anyone else with a vested interest in the agreement or lands.
  2. Usually, you do not want verbal communications to be binding until they are properly documented and executed by both parties. Decisions such as Erie suggest that verbal agreements can be binding in certain situations. Do not rely on the fact that nothing has been executed. Rather, verbal and written communications, such as emails, letters or correspondence between your lawyers or real estate agents, should specify that the communications are not binding on the parties until an agreement is finalized and executed by both parties. Court's will consider important clear communications which expressly stated that the agreement was non-binding in nature.
  3. This case serves as a reminder that partial performance of an oral agreement can render it a binding contract. Care must be taken to ensure that any actions performed during negotiations cannot be construed as partial performance of a binding agreement. Ideally, no obligations under an agreement should be performed until the contract is finalized and executed.
  4. Rights of first refusal or rights of first offer are some of the most technically detailed and difficult clauses to draft. Whether you are the party granting the right of first refusal or offer or the recipient of such a right, you need to carefully consider all of the potential issues, which might include determining a fair market price at the time of the future transaction, changes in value to the property based on improvements or deterioration over time; future Planning Act problems; the degree to which the matching offer must be precisely the same as the one being provided; and dealing with potential encumbrances against the property between the date that the option is granted and potentially exercised.
  5. You can see the difficult position that Seres' Farms was in when Tri-B stated that it could match the purchase price but made some further changes to the process for closing (namely, extending the closing date for a few weeks and providing a smaller deposit). At this point, Seres' Farms likely saw that it was in a tough position in dealing with two very motivated potential purchasers. Getting a lawyer involved to manage the process surrounding the right of first refusal including ensuring that appropriate notices and timing is dealt with is important so that future liability is minimized.
  6. Almost all real estate transactions involve timelines for certain obligations or conditions to be satisfied. In Erie, Tri-B had only five days to match the offer that was provided. Given the offer included a deposit equal to the entire purchase price, you can see how Tri-B's position was severely compromised. You need to negotiate time frames that will allow you time to deal with these types of unexpected scenarios, provided that you are not unreasonable in terms of timeline expectations. A significant portion of real estate litigation is based on timelines that ultimately could not be satisfied for a number of reasons!

Cases such as Erie give all of us pause for thought. Whenever you are negotiating an agreement dealing with real property, particularly where future rights or rights involving third parties are involved, it is definitely recommended to obtain legal advice in order to avoid liability in the future.

About BLG

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

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

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.