Breach of contract disputes represent the foundation of business and commercial litigation in Canada. Claimants with clear, enforceable, written contracts can avoid costly legal disputes that arise commonly with informal ‘handshake deals’. At DOBRMAN, we draft, review, negotiate, and litigate contracts for businesses in Alberta and across Canada — helping clients build commercial relationships on solid legal foundations and obtain timely dispute resolutions.
Formation of a contract. Under Canadian contract law, a binding contract requires an offer, acceptance, and consideration — something of value exchanged between the parties. A contract can be formed in writing, verbally, or through conduct, though written contracts are significantly easier to interpret and enforce. Understanding the elements required for a valid and enforceable contract is the starting point of any contract law analysis in Canada.
Contract interpretation. When a contract dispute arises, Canadian courts interpret contracts by looking at the plain meaning of the written words in the context of the surrounding circumstances at the time the contract was made. Clear, precise contract drafting reduces the scope for interpretive disputes.
Representations, warranties, and indemnities. Contracts frequently include representations — statements of fact made by one party to induce the other to enter the contract — as well as warranties, which are contractual promises about the state of affairs. Indemnity provisions allocate risk between the parties by requiring one party to compensate the other for defined losses. These provisions are among the most negotiated and most consequential elements of any commercial contract.
Limitation of liability clauses. Most commercial contracts include provisions that limit the liability of one or both parties in the event of a breach or other loss. In Canada, limitation of liability clauses are generally enforceable, subject to certain conditions, and their scope and application are frequently disputed in commercial contract litigation. Understanding how limitation clauses work — and how to draft them effectively — is an important part of contract law practice.
Breach vs. material breach. Under Canadian common law, the distinction between a breach and a material breach lies in the severity of the impact: a “breach” is any failure to perform, while a “material breach” (or fundamental breach) is one so substantial that it defeats the very purpose of the contract, granting the innocent party additional remedies.
Contract termination. A contract can be terminated in a number of ways under Canadian contract law — including by performance, agreement, frustration, or breach. The right to terminate a contract, and the consequences of doing so, depend on the specific terms of the contract and the nature of the breach.
Sale of Goods Act, RSA 2000, c S-2 — Governs the formation, performance, and litigation of contracts for the sale of goods in Alberta.
Limitations Act, RSA 2000, c L-12 — Governs the time limits for commencing contract claims in Alberta, including the general two-year limitation period from the date the claim was discovered.
Consumer Protection Act, RSA 2000, c C-26.3 — Governs consumer contracts in Alberta, including provisions that affect the enforceability of certain contractual terms in consumer transactions.
Electronic Transactions Act, SA 2001, c E-5.5 — Governs the formation and enforceability of electronic contracts in Alberta, including the legal recognition of electronic signatures and electronic records.
Employment Standards Code, RSA 2000, c E-9 — Establishes minimum employment standards in Alberta that apply to employment contracts regardless of what the parties have agreed in writing.
Electronic contracts. Contract disputes often arise regarding whether a binding agreement was formed through informal email exchanges or “click-wrap” terms. This is particularly important for online businesses that sign contracts digitally. The Electronic Transactions Act validates digital signatures, but parties must still prove a clear “meeting of the minds” occurred in the digital thread.
Ambiguous or incomplete contract terms. Contracts that are poorly drafted — including those with ambiguous language, missing terms, or internal inconsistencies — are a persistent source of contract disputes in Canada. When a contract fails to clearly address a particular situation, the parties may disagree about what was intended, leaving the resolution of the contract dispute to negotiation or the courts.
Non-payment and unpaid invoices. Failure to pay amounts owing under a contract is one of the most common forms of breach of contract in Canadian commercial law. Whether the dispute involves an unpaid invoice, a failed milestone payment, or a withheld royalty, the terms of the underlying contract govern the rights of the non-breaching party to recover the amount owed.
Non-compete clauses. Non-compete clauses, especially in employment contracts, are frequently disputed in Canadian courts. Under Canadian contract law, restrictive covenants are enforceable only to the extent they are reasonable in scope, geographic reach, and duration — and courts scrutinize them carefully, particularly in the employment context.
Breach of the duty of good faith. Canadian contracts include an inherent duty of honest performance that cannot be excluded. Parties face significant liability if they act dishonestly or capriciously in a manner that undermines the legitimate interests of the other party.
Improper contract termination. Terminating a contract without a “material breach” or failing to provide the contractually required notice can lead to claims for wrongful termination. An innocent party who mistakenly treats a minor breach as a fundamental one may themselves be liable for damages for repudiating the agreement.
What does a contract lawyer do? A contract lawyer assists businesses and individuals with the drafting, review, negotiation, and interpretation of legally binding agreements. A contract lawyer identifies risks and ambiguities in proposed agreements, negotiates favorable terms on behalf of clients, and advises on the legal consequences of contract provisions before they are signed. At DOBRMAN, our contracts practice covers a wide range of commercial agreements for business in Alberta and across Canada.
Are verbal contracts enforceable? Most contracts in Canada do not need to be in writing to be legally binding — a verbal agreement or conduct that demonstrates mutual assent can form an enforceable contract. However, certain types of contracts — including contracts for the sale of land and some consumer contracts — are required by statute to be in writing. Written contracts are strongly advisable in all commercial contexts because they provide clear evidence of the parties’ intentions and significantly reduce the scope for disputes.
What happens if the other party breaches our contract? Under Canadian contract law, a breach of contract entitles the non-breaching party to a remedy — which may include damages, specific performance, or the right to treat the contract as terminated, depending on the nature and severity of the breach and the terms of the contract. The specific remedies available depend on the contract terms, the nature of the breach, and the applicable law.
What’s the first step when our contract has been breached? The first step in a contract dispute is to consult a lawyer to review the facts, the contract, and the applicable law. Oftentimes, contract disputes start with a demand letter or a cease and desist letter.
Can I get out of a contract I already signed? The termination rights of a party in a contract are usually governed by a termination clause in the contract. A contract may be easy or difficult to get out of depending on what the parties agreed to. Once a contract is signed, it is binding on the parties, and often cannot be escaped against the letter of the contract, without a penalty.
This information is for education and entertainment purposes only. It is not intended to be legal, business, or other professional advice to be relied on. Do not make or refrain from any decisions on the basis of this information. Please contact us to receive advice from a qualified lawyer. View our Terms of Service for more information.