The rules of contractual interpretation have evolved significantly in the last several years in Canada. At one time, the circumstances surrounding the preparation of a contract were rarely considered by the courts; the courts preferred to look within the “four walls” of the contract to interpret ambiguous phrases or to resolve uncertainties. More recently, however, the courts have begun to consider all of the circumstances involved in the drafting of the contract in order to give meaning to it and to ensure that the intention of the parties is carried out.
Getting your contracts in writing is half the battle. You must also ensure that your contract says what you want it to say, and says it clearly. The main issue in the following case was the interpretation of an employment agreement.
This is not to suggest that written contracts provide perfect inoculation against lawsuits—litigants often misunderstand the obvious; written information may be open to multiple interpretations; and people sue even when they have no case. Two important considerations when making an agreement that you wish to be legally binding and enforceable in a court of law, are:
Established in 1995, First Reference Inc. (known as La Référence in Quebec) provides Canadian organizations of any size with practical and authoritative resources to help ensure compliance.