Category: Contracts Page 4 of 12

By: Jassmine Girgis

PDF Version: Penalty Clauses: Inequitable, but Not Inherently Extravagant

Case Commented On: Super Save Disposal (Alberta) Ltd v Shenwei Enterprises Ltd, 2017 ABQB 805 (CanLII)

Overview

This is an appeal from a decision of the Provincial Court, which found that a purported liquidated damages clause was, in fact, a penalty clause. The court struck the clause down for being “extravagant and unconscionable”.

It was legitimate to find a clause comprised of gross profits to be “unfair and inequitable” in principle, but without knowing the value of the net profits and the difference between the two figures, it was problematic in this case to find its use to be “extravagant and unconscionable”, and “unreasonable and oppressive”.

Approaching the Standard of Review for Standard Form Contracts Remains Unclear

By Nicholas Konstantinov

On January 4, 2018

In Contracts, Labour/Employment

By: Nicholas Konstantinov

PDF Version: Approaching the Standard of Review for Standard Form Contracts Remains Unclear

Case Commented On: EnCana Oil & Gas Partnership v Ardco Services Ltd, 2017 ABCA 401 (CanLII)

This case involves a dispute between EnCana and its payroll supplier, Ardco, over an indemnity provision in their Master Service and Supply Agreement (“Master Agreement”). In 2006, EnCana enlisted the services of Ardco to manage its contract operators. Ardco delivered these services only to EnCana; it paid and provided benefits and insurance to the contractors but was reimbursed by the larger corporation. The hiring and firing, supervision, and onsite management, including the supply of equipment, was EnCana’s responsibility.

Confidentiality Agreements and Brokerage Opportunities in the Context of the Sale of Oil and Gas Properties

By Nigel Bankes

On January 2, 2018

In Contracts, Oil & Gas, Property

By: Nigel Bankes

PDF Version: Confidentiality Agreements and Brokerage Opportunities in the Context of the Sale of Oil and Gas Properties

Case Commented On: Beaumont Resources Ltd. v Cardinal Energy Ltd., 2017 ABCA 416 (CanLII), aff’g unreported reasons for judgment of Justice Anderson, September 26, 2016, aff’g unreported reasons for judgment of Master Farrington, January 22, 2016

In 2012 Beaumont Resources made some preliminary inquiries of Felcom Resources about a possible acquisition of some oil and gas properties. In the course of those inquiries Beaumont and Felcom entered into a confidentiality agreement (the Felcom CA) with respect to information provided by Felcom to Beaumont. The agreement included the following terms:

A Questionable Equity: Rectification and Tax Avoidance

By Drew Yewchuk

On December 18, 2017

In Contracts, Tax

By: Drew Yewchuk

PDF Version: A Questionable Equity: Rectification and Tax Avoidance

Case Commented On: Harvest Operations Corp. v Attorney General of Canada, 2017 ABCA 393 (CanLII)

Harvest Operations Corp. v Attorney General of Canada (Harvest Operations Corp. CA) is a case about an elaborate but unsuccessful tax avoidance maneuver and an attempt to get contract rectification. The details of the attempted tax avoidance are unreasonably complicated, and so I will focus on the facts necessary for the rectification issue (if you want to learn how to correctly perform the “bump transaction” method of avoiding capital gains tax, this post will not help you).

Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2017 ABCA 378: Fraud and Limitation of Liability Clauses

By Jassmine Girgis

On November 23, 2017

In Contracts, Oil & Gas

By: Jassmine Girgis

PDF Version: Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2017 ABCA 378: Fraud and Limitation of Liability Clauses

Case Commented On: Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2017 ABCA 378 (CanLII)

Introduction

This is a case about the legal test for civil fraud and whether a limitation of liability clause in a contract can and should exclude liability for fraud. The Alberta Court of Appeal allowed the appeal of the summary judgment and sent it to trial (see earlier Ablawg posts about lower court decisions here and here).

A court can only find fraud after weighing the evidence and applying the proper legal test. Assuming there is fraud, the court will then have to determine whether a proper interpretation of the exclusion of liability clause excludes fraud. If so, can a party that has engaged in fraud be allowed the benefit of the clause? In my opinion, it cannot, as doing so would be contrary to public policy and it would breach the duties of honest performance and good faith articulated by the Supreme Court in Bhasin v Hrynew, 2014 SCC 71 (CanLII).