Category Archives: Contracts

Beyond the Four Corners of the Contract: The Parol Evidence Rule, Implied Terms and the Duty of Good Faith

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Case commented on: Bhasin v Hrynew, 2013 ABCA 98, leave to appeal granted, 2013 CanLII 53400 (SCC)

This appeal is ultimately about contractual interpretation. It is about the types of obligations, over and above the express terms, that can be brought into the contract and the difficulties created as a result of the assertion that the contract goes beyond its express terms. Importantly, it considers the duty of good faith in the context of commercial relations and, as stated by the Supreme Court of Canada, which has granted leave to appeal, whether such duty could be excluded by an entire agreement clause.

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Contractual Interpretation and Context

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Case commented on: Ziegler v Green Acres (Pine Lake) Ltd, 2013 ABQB 349.

Ziegler v Green Acres (Pine Lake) Ltd is a case that revolves around one provision in a unanimous shareholder agreement (USA). Due to tragic circumstances, the Applicants/Defendants (referred to as Defendants) ended up in court, in disagreement over the interpretation of the USA, and specifically, over whether the shares of a deceased shareholder had to be sold to the remaining shareholders, or could remain with the deceased’s wife.

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Species at risk and an adjustment clause

PDF version: Species at risk and an adjustment clause

Case considered: Matichuk v Quattro Holdings Ltd, 2013 ABQB 164.

The case of Matichuk v Quattro Holdings Ltd involves a contractual dispute over the sale of a parcel of agricultural land in St. Albert. The parties entered into a purchase and sale agreement in June 2012. The facts set out by Mr. Justice G.A. Verville suggest the Vendor was keen to sell and the Purchaser was keen to purchase in order to develop the land (I presume residential). Time was of the essence. The closing date was set for early October 2012. But the deal began to go sideways just a couple weeks before closing. The Purchaser sought an adjustment (reduction) on the purchase price to account for the facts that there are five wetlands on the property, some which may be Crown owned under section 3 of the Public Lands Act, RSA 2000, c P-30, and that a bird species listed as “special concern” under the Species at Risk Act, SC 2002, c 29 – was known to nest on the lands. The Vendor was not agreeable, and insisted on closing for the full purchase price. The parties filed counter claims and Mr. Justice G.A. Verville heard arguments in late February at the Court of Queen’s Bench. Justice Verville decided in favour of the Vendor, ruling the environment adjustments provision in the contract being relied upon by the Purchaser was so vague as to be meaningless and thus the Purchaser could not rely on it. Accordingly, Justice Verville found that the Purchaser had repudiated the contract by refusing to close the deal.

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When Does the Purchaser of an Interest in a Natural Gas Processing Plant also Purchase an Interest in the Sulphur Block Associated with the Plant? Answer: Only when the Agreement (or perhaps ‘the Elephant in the Room’) says so!

PDF version: When does the purchaser of an interest in a natural gas processing plant also purchase an interest in the sulphur block associated with the plant? Answer: only when the agreement (or perhaps ‘the elephant in the room’) says so!

Case commented on: Talisman Energy Inc v Esprit Exploration Ltd, 2013 ABQB 132

Talisman purchased Canadian 88’s interest in the East Crossfield Conditioning Plant in 2000. Did it also purchase the sulphur block and the liabilities associated with ownership of the block? In this case, and after undertaking an extensive and detailed contractual paper trail, Justice Sal LoVecchio concluded that the answer was no. The ‘elephant in the room’ was C88’s draft purchase and sale agreement (PSA) (which Talisman elected not to use) which, had it been executed, would have dictated the opposite result.

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