In Ontario, many contracts are entered into each day between individuals or businesses, but sadly, many fail due to a breach of some kind. If you have been affected, you may want to know about your legal rights and whether you can sue for breach of contract in Ontario. Generally, the answer is yes—but subject to certain conditions. So, what do you need to know about a breach when it refers to a valid contract and the various ways such a contract can be breached? Do people have the right to break a contract, and what are the consequences of such an action?
Table of Contents
Toronto civil litigation lawyer Allan Rouben has 35+ years of experience representing individuals and businesses in contract disputes. This guide explains when you can sue, how long you have, and what you can recover.
Understanding Contracts and Breaches
In Ontario, a contract can be a legally binding agreement if it involves an offer, acceptance, consideration, legal capacity, and lawful purpose. An offer represents a promise to do something (or not to do something) in exchange for something of value, which is known as consideration. A breach may occur if one party fails to fulfill its obligations under the contract, which could be a failure to perform as promised, do something on time, or perform at all. The breach could be considered material or minor, depending on its impact on the contract.
Breaching a Contract
When one party clearly communicates or acts in such a way that it shows it will not fulfill contractual obligations, this is known as an “anticipatory” breach. For example, they could refuse to perform, be unable to perform, or issue a statement that indicates non-performance. In this case, the non-breaching party can treat the anticipatory breach as immediate and sue for damages. Alternatively, they can wait and see if the breaching party performs as expected. If the non-breaching party chooses to treat the breach as immediate, they have the option to terminate the contract and pursue legal remedies.
The Right to Break a Contract
In Ontario, parties have the right to break a contract under certain legal conditions or in line with specific clauses within the contract. Legal grounds for breaking a contract could include frustration of purpose, impossibility of performance, or a force majeure event, such as a natural disaster, that renders performance impractical or impossible. In addition, a specific contract clause could allow for termination under certain conditions, like a breach of warranty or failure to meet specific deadlines. The parties must review the contract carefully so they fully understand their rights and obligations in the event of a potential termination.
The Consequences of a Breach
Any consequences associated with breaching the contract will vary depending on the nature and severity of the breach. For example, the non-breaching party could be compensated for losses suffered as a result of the breach. Alternatively, a court may order the breaching party to fulfill their contractual obligations. If a contract is terminated, restitution could be ordered, where any benefits received are returned. All these consequences are meant to put the non-breaching party in the position they would be in had the breach not occurred.
Evidence and Documentation
Evidence and documentation have a crucial role in proving that a breach of contract may have occurred. Relevant documentation will include not only the contract itself but also communications between the parties, receipts, invoices, or any other evidence to support a claim. The documentation should always be clear, complete, and well-organized to present a compelling case in court. When suing for breach of contract, it’s important for parties to keep thorough records from the outset of the contract to strengthen their position in the event of a dispute. Business owners can learn more about what to do before a commercial dispute.
Legal Remedies and Resolution
In Ontario, several legal remedies are available during a breach of contract lawsuit.
These could include damages representing monetary compensation that will be awarded to the non-breaching party to cover losses suffered as a result of a breach. These damages could be general, to cover foreseeable losses, or special, to cover specific losses that were communicated or foreseeable at the time the contract was made.
Other remedies include specific performance (where a court orders the breaching party to fulfill any contractual obligations) and cancellation and restitution. With cancellation and restitution, the contract is terminated, and any benefits received must be returned. Liquidated damages could be specified in the contract as a predetermined compensation for breach.
How Long Do You Have to Sue for Breach of Contract in Ontario?
Under Ontario’s Limitations Act, 2002, you generally have two years from the day you discovered, or reasonably ought to have discovered, the breach to start a lawsuit. If you miss this deadline, your claim may be barred, so it’s important to get legal advice early.
Which Court Hears a Breach of Contract Claim?
Claims of up to $50,000 can be brought in Small Claims Court. Larger claims are brought in the Ontario Superior Court of Justice, where the Rules of Civil Procedure apply.
How to Sue for Breach of Contract
Several steps are involved in suing for breach of contract in Ontario. For a broader overview, see our guide on how to sue someone in Ontario.
- Plaintiff gathers evidence and documentation to support a claim.
- Plaintiff drafts a statement of claim outlining the details of the breach and the relief sought.
- Plaintiff has the statement of claim issued by the appropriate court.
- Plaintiff serves the claim on the defendant.
- Defendant serves and files a statement of defence.
- Parties exchange documents, attend examinations for discovery and, in Toronto, mandatory mediation.
- Court schedules a hearing to adjudicate the matter.
Parties must adhere to the procedural requirements and deadlines throughout any litigation process to ensure that the case is heard and resolved effectively.
Have you been served with a claim, or do you need to start one? Book a free consultation with Allan Rouben to discuss your contract dispute.
The Role of an Experienced Lawyer
An experienced lawyer will play a critical role in assisting individuals or businesses to face contractual disputes in Ontario. They have extensive knowledge, expertise, and familiarity with contract law, enabling them to navigate such a complex legal terrain efficiently.
An experienced lawyer will bring a wealth of insights that have been gained from handling various cases like this. This will allow them to anticipate challenges and develop a strategic approach, which will always be tailored to the specific client’s needs.
In addition to their legal capability, an experienced lawyer will offer invaluable guidance throughout the litigation process. They’ll gather the evidence, analyze contractual terms, and always advocate strongly for the client’s interests in court. Such a depth of experience will equip them to negotiate favourable settlements and pursue optimal outcomes for their clients, even when the case is extremely contentious.
As a civil litigation lawyer in Toronto, Allan Rouben has represented clients in contract disputes at trial and on appeal for 35+ years. Contact him to book a free consultation and get a clear assessment of your claim.
FAQs
Can a verbal agreement be considered an enforceable contract?
A verbal agreement could be considered an enforceable contract in Ontario if it meets certain criteria. Typically, a written contract will present clearer terms and evidence, but a verbal agreement can still be legally binding if it has an offer, acceptance, consideration, and the intent to create a legal relationship. Nevertheless, it can sometimes be more difficult to prove the terms of a verbal agreement in court.
How does the court determine damages in a breach of contract case?
In this situation, the court will assess the losses suffered by the non-breaching party. The aim is to compensate the injured party for the harm caused by the breach and to restore them to the position they would have been in had the contract been fulfilled. Damages may cover direct losses, consequential damages, and potentially punitive damages for egregious breaches.
Can I sue for any type of breach of contract?
Yes, so long as you have a legally enforceable contract and the other party has failed to fulfill their obligations. It’s essential to assess the nature of the breach (minor or substantial) and to review the terms of the contract carefully.
Do I need a lawyer to sue for breach of contract?
You are not legally required to have a lawyer to sue for breach of contract, but it is highly advisable. They can help to explain the complexities of contract law, determine the strengths or weaknesses of the case, and navigate the legal process effectively.
How long do I have to sue for breach of contract in Ontario?
Generally two years from when you discovered the breach, under Ontario’s Limitations Act, 2002. Some contracts and claims have different deadlines, so get advice as soon as possible.