In order for contracts to be enforceable in Canada, the agreement between parties must meet a basic set of criteria. Generally speaking, a contract will be considered legally binding if the agreement has:
- An offer
- An acceptance of that offer
- Consideration
- An intention to create legal relations, and
- Certainty/completeness
Each of these elements was recently considered by the BC Court of appeal in its decision of Vancouver Canucks Limited Partnership v. Canon Canada Inc., 2015 BCCA 144.
The parties in this case had a pre-existing contract from 2003 to 2008 under which Canon purchased sponsorship advertising, as well as seasons tickets, from the Vancouver Canucks hockey team and Rogers Arena. The dispute arose when the original contract’s termination date was approaching and the parties began negotiating terms for renewal. Throughout these negotiations, which took place over email between Canon’s Senior Manager of Corporate Relations and the Canucks’ Director of Business Development and Sales Manager, the Canucks were under the impression that a contract had been formed, whereas Canon was not. When Canon refused to perform their side of the bargain, the Canucks sued for breach of contract.
The BCCA considered whether this series of emails between the parties constituted a binding agreement. In reaching its decision, the court combed through the emails in search of the elements of a contract, and ultimately found that, despite the lack of an official signed document, a binding and enforceable legal agreement had been formed between the parties.
Offer
The court found that there had been an offer made by Canon via email. The email offered a renewal of the sponsorship agreement under new terms (namely, a new price) than the original contract from 2003, but with the same rights and benefits for each party.
Acceptance
Over two months after Canon’s offer had been emailed, the Canucks responded accepting the offer on the proposed terms. After acceptance, the Canucks displayed the Canon advertisements in Rogers Arena as agreed upon. Further, Canon began using the seasons tickets provided to them under the agreement.
Consideration
Consideration refers to the benefit that each party receives under an agreement in exchange for giving something up. Often, as in the contract between the Canucks and Canon, consideration comes in the form of a price paid for a service. The consideration in this case was the money that Canon was to pay the Canucks in exchange for advertisement.
Intention to Create Legal Relations
The court held that the well-established legal principle is that, regardless of intention, a party who appears to a reasonable person to be assenting to the terms of the agreement will be held accountable as if they intended for the contract to be legally binding. The court found that both parties acted on the agreement; the Canucks displayed the Canon advertisement, and Canon used the seasons tickets provided to them under the agreement. Because the parties acted on the sponsorship agreement, a reasonable person would believe that they intended to create legal relations, so the court found that both parties ought to be held as having this intention.
Certainty/Completeness
For an agreement to be enforceable, all essential terms of the contract must be present and clear. In this case, the court found that the essential terms were contained in the agreement because both parties agreed to renew the contract under the same rights and benefits as the previous agreement.
As illustrated in the case between the Canucks and Canon, an agreement between two parties will generally be considered legally binding as long as these basic elements of a contract are met. Canadian common law will recognize oral agreements, agreements over multiple emails, and other forms of communication as enforceable contracts even without signed legal documents indicating the intention of the parties.
