Performance, Non-Performance & Excuses
Guidance on breach classification, substantial performance, and lawful excuses such as frustration, impossibility, or force majeure. Jump to section
Grigoras Law acts for businesses and individuals across Ontario in breach of contract disputes, from non-payment and delivery failures to wrongful termination, repudiation, and broken earn-out or supply commitments. We advise on contract interpretation, notice and termination rights, and negotiation strategy, and move quickly where urgency is needed, seeking interlocutory relief for restrictive covenants or unique goods, and pursuing summary judgment on clear breaches. We act for plaintiffs and defendants, build the evidentiary record early, and target practical outcomes: expectation and reliance damages (including lost profits where proven), specific performance where appropriate, interest and costs, and sensible settlements that protect commercial relationships and cash flow.
Guidance on breach classification, substantial performance, and lawful excuses such as frustration, impossibility, or force majeure. Jump to section
Analysis of early refusal to perform, acceptance or affirmation of breach, and resulting litigation strategies. Jump to section
Comprehensive advice on expectation, reliance, and restitutionary damages, including equitable relief and punitive awards. Jump to section
Quantification of loss, duty to mitigate, causation, and foreseeability in accordance with common-law and statutory principles. Jump to section
Equitable enforcement of unique subject-matter contracts, negative covenants, and ongoing obligations. Jump to section
Pursuing or defending against disgorgement, account of profits, and unjust enrichment claims in breach contexts. Jump to section
Defences based on formation, frustration, waiver, limitation, or the plaintiff’s own non-performance. Jump to section
Strategic insight on remedies, liability limits, and best practices for managing contract performance and disputes. Jump to section
A breach of contract arises when one party fails to perform, or expresses an intention not to perform, a binding contractual obligation without lawful excuse. The non-breaching party is entitled to pursue remedies designed to place them, so far as money can do it, in the same position they would have occupied had the agreement been fulfilled. This foundational “expectation interest” principle, articulated in Hadley v. Baxendale and consistently applied in Canadian courts, underpins modern contract remedies.
Under Ontario law, breach claims may be brought in the Superior Court of Justice for contractual relationships governed by the Courts of Justice Act, R.S.O. 1990, c. C.43, or in Small Claims Court for disputes under $50,000. The governing principles of formation, performance, and remedy are rooted in the common law and reflected in legislation such as the Sale of Goods Act, R.S.O. 1990, c. S.1, and the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A.
A party is in breach when they fail to perform as promised and cannot justify their non-performance under the contract’s terms or recognized legal doctrines. Canadian courts distinguish between complete performance, where all contractual obligations are fulfilled; substantial performance, where minor defects exist but the core benefit is delivered; and non-performance, where essential terms are left unfulfilled.
Not every failure justifies termination. Courts assess whether the breached term is a condition, entitling the other party to treat the contract as ended, or a warranty, limiting remedies to damages. This distinction ensures proportionality between the seriousness of the breach and the remedy awarded.
Defences or excuses for non-performance may arise under doctrines such as frustration, impossibility, or force majeure, where external events render performance radically different or impossible. The Ontario Court of Appeal’s decision in Capital Quality Homes Ltd. v. Colwyn Construction Ltd., 1975 CanLII 726 (ON CA), remains a leading authority for the proposition that when performance becomes impossible through no fault of either party, the law may discharge the contract entirely.
An anticipatory breach, or repudiation, occurs when a party, through words or conduct, demonstrates an intention not to be bound before performance is due. The test is whether a reasonable person would conclude that the breaching party no longer intends to perform its obligations under the agreement. When this happens, the innocent party faces a choice. They may accept the repudiation, treat the contract as terminated, and sue for damages; or they may affirm the contract, refuse to accept the repudiation, and insist on performance.
If repudiation is not accepted, complex issues arise about the duty to mitigate and the right to continue performing. Courts have long balanced the principle of mitigation against the autonomy of a party to maintain the contract. The doctrine prevents opportunism while protecting the legitimate expectations of parties who choose to stand by their agreement despite a declared refusal to perform.
Canadian law provides several remedies, both at common law and in equity, for breach of contract.
The primary remedy is monetary damages—an award intended to place the injured party in the position they would have been in had the contract been properly performed. This compensation principle does not seek to punish the breaching party but to restore the injured party to the financial position that performance would have produced. Courts calculate damages by reference to the loss of the contractual bargain, and the plaintiff bears the burden of proving that loss with reasonable certainty. As the Supreme Court of Canada explained in Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), the goal is restoration, not enrichment.
The injured party has a duty to take reasonable steps to mitigate their loss once a breach occurs. They cannot recover damages for losses that could have been avoided through reasonable efforts or alternative arrangements. This principle, sometimes referred to as the “duty to minimize loss,” ensures fairness and discourages plaintiffs from allowing damages to accumulate unnecessarily. The court will examine what steps were reasonably available to the plaintiff in the circumstances and will adjust any award accordingly. Ontario’s Sale of Goods Act, R.S.O. 1990, c. S.1, reflects this approach, particularly in transactions involving goods and delivery failures.
While damages are the usual remedy, equity will sometimes intervene where monetary compensation is inadequate. Specific performance compels the breaching party to perform exactly as promised, most often in real estate transactions, unique goods, or share-purchase agreements where the subject matter has no true substitute. Following Semelhago, courts have emphasized that specific performance is discretionary and will only be granted where damages are inadequate to do justice between the parties.
Courts may also grant injunctions to restrain a party from breaching a negative covenant, such as a non-competition or confidentiality clause. These remedies protect the integrity of contractual promises where ongoing obligations or proprietary interests are at stake.
In limited cases, Canadian courts may award restitutionary or gain-based relief, focusing on the defendant’s unjust gain rather than the plaintiff’s loss. These awards are exceptional but serve an important function in deterring opportunistic breaches and preventing enrichment through wrongdoing. Gain-based recovery is typically available where the breach involves wrongful use of property, confidential information, or other assets of particular value to the defendant. In such cases, the plaintiff may claim an account of profits or, in appropriate circumstances, a constructive trust over the benefit obtained.
Punitive damages are rare in contract law, but courts may award them where the breach involves conduct that is malicious, oppressive, or high-handed. Their purpose is to punish and deter behaviour that departs markedly from ordinary standards of decency. In Whiten v. Pilot Insurance Co., 2002 SCC 18, the Supreme Court confirmed that punitive damages may be appropriate where a breach is accompanied by bad faith or deceitful conduct, particularly in contracts of utmost good faith such as insurance agreements.
Breach of contract disputes arise across many industries and contexts. Construction and service contracts frequently give rise to claims of non-performance, defective work, or delay, where the adequacy of performance and the right to withhold payment are disputed. Sales and supply agreements may involve failures to deliver goods conforming to contractual specifications or within agreed timelines, engaging remedies under the Sale of Goods Act.
Real estate transactions often produce litigation when a purchaser or vendor fails to close. In such cases, the court may award damages for lost bargain or, where appropriate, specific performance. Similarly, in consumer transactions, contractual breaches often intersect with statutory protections under the Consumer Protection Act, 2002, which implies terms of fairness, disclosure, and the right to cancel in certain circumstances. Employment and independent contractor relationships also frequently generate breach claims, particularly where one party repudiates the agreement prematurely or fails to honour payment obligations.
Defending a breach of contract action requires a clear understanding of both the formation of the contract and the conduct alleged to constitute breach. A party may deny liability on the basis that no enforceable contract was formed due to lack of offer, acceptance, consideration, or certainty of terms. They may assert that performance was completed or substantially completed in accordance with the contract, or that the alleged breach was minor and does not justify termination or damages.
In some cases, performance may have been prevented by external circumstances amounting to frustration, which discharges the contract and releases both parties from further obligations. Defendants may also rely on the doctrines of mistake, illegality, or impossibility, depending on the facts. Procedural defences under the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, are also significant; most breach claims must be brought within two years of the date on which the breach was or ought to have been discovered.
Even where liability is established, mitigation, contributory conduct, and waiver may limit or reduce damages. Courts will examine whether the plaintiff took reasonable steps to minimize loss, whether the parties’ conduct modified the agreement, a
Breach of contract law in Canada reflects a balance between compensation, fairness, and the allocation of risk. Plaintiffs must prove the existence of a valid contract, a breach of its terms, and a resulting loss. Defendants may invoke doctrines that excuse or limit liability, including frustration, mistake, or statutory limitation. Remedies are designed to restore the injured party to their original position, not to provide a windfall, and equitable relief such as specific performance or injunctions will only be granted where damages are inadequate.
Disclaimer: The answers provided in this FAQ section are general in nature and should not be relied upon as formal legal advice. Each individual case is unique, and a separate analysis is required to address specific context and fact situations. For comprehensive guidance tailored to your situation, we welcome you to contact our expert team.
A fundamental breach strikes at the contract’s core, undermining the very essence of what was agreed. For instance, if a seller promises exclusive rights to a product but simultaneously sells the same product to your competitor, that goes to the heart of your bargain. In such scenarios, the non-breaching party often has the right to terminate (repudiate) the contract entirely and claim damages for lost opportunities or disrupted plans. Courts will assess whether this breach effectively deprives you of the main benefit of the agreement.
By contrast, a minor (or non-fundamental) breach involves a less serious shortfall—maybe a slight delay in delivery or a small deviation from product specifications—that doesn’t completely ruin the contract’s purpose. You can usually claim compensation for any resulting loss, but you might not be allowed to walk away from the deal altogether. Instead, you continue performing and seek damages or an injunction to force proper compliance.
Determining whether a breach is fundamental requires an analysis of the contract’s essential terms, the circumstances of performance, and the severity of the impact on the innocent party’s expectations. If you misjudge a minor breach as fundamental and terminate, you could risk committing wrongful repudiation—exposing yourself to liability. Therefore, it’s crucial to review the contract carefully and, if needed, consult legal counsel to gauge which remedy best matches the nature of the breach.
You generally cannot simply walk away from an agreement if the other party breaches—unless their breach is so serious that it constitutes a fundamental or repudiatory breach. Under Ontario law, a relatively minor violation typically does not justify unilateral termination; you may only be entitled to damages or another remedy while the contract remains in force. Walking away prematurely could lead to a countersuit for wrongful termination, in which the other party argues you became the breaching side.
In most contracts, parties adopt termination clauses outlining the steps to end the agreement. These can include a requirement to issue a notice of breach or allow a cure period so the breaching side can fix the problem. If your contract lacks explicit termination rules, courts will look to common law principles. If the breach undermines the entire deal’s purpose—like failing to deliver the main asset or destroying trust essential to performance—a court may consider it fundamental, letting you rescind or terminate outright.
When deciding to end a contract, it’s prudent to formally communicate your decision in writing, specifying the breach and referencing the relevant contractual clauses or legal grounds. Doing so safeguards your position if disputes escalate. Failure to follow a methodical approach, including giving the other party a chance to rectify minor infractions, may expose you to liability, even if they initially violated the terms.
A contract might be invalid (void or voidable) for various reasons distinct from mere non-performance. To prove invalidity, you must demonstrate that fundamental flaws existed from the outset or that circumstances arose that nullify its enforceability.
Common grounds include:
1. Missing Elements of Formation: If key ingredients—offer, acceptance, consideration, or intention—never coalesced, no valid contract formed. For instance, an illusory promise (“I might buy your goods if I feel like it”) reveals no firm commitment.
2. Misrepresentation: If a party was lured into the agreement by false statements (innocent, negligent, or fraudulent), they may seek rescission, effectively wiping out the contract from the start.
3. Illegality: Deals contravening statutory provisions (like unlicensed gambling) or significant public policy are typically void ab initio.
4. Incapacity or Duress: Individuals lacking mental capacity or forced by threats (duress) cannot provide genuine consent. Similarly, undue influence might compromise free will, especially in relationships of trust (e.g., caregiver–patient).
5. Unconscionability: If one party exploited a stark power imbalance to secure an oppressive bargain, a court might declare the contract void or voidable.
Gathering evidence—such as emails, medical evaluations (for capacity), or references to statutory prohibitions—supports your claim that no true, lawful agreement was forged. If successful, the result usually is rescission or a declaration the contract never existed, sparing you from obligations that a valid, albeit unperformed, contract would have imposed.
Arbitration clauses typically reflect the parties’ prior agreement to resolve disputes outside regular court. Under Ontario law—particularly the Arbitration Act—courts usually enforce these clauses unless there is a strong reason to deem them invalid or inapplicable. For instance, if the arbitration clause was procured by fraud, or deals with matters that are legally non-arbitrable (like certain statutory consumer rights), courts might override it.
If you prefer litigation but your contract compels arbitration, you can challenge the clause on grounds such as unconscionability (if it imposes prohibitive fees or an unfair forum) or lack of clarity (if the arbitration process is so vaguely described that no real mechanism exists). But courts generally respect freedom of contract, aiming to uphold your prior decision to arbitrate. This means that if you file a lawsuit in the Superior Court of Justice, the defendant might seek a stay of proceedings, forcing compliance with the arbitration clause.
Some contractual arbitration clauses contain “step” provisions, requiring initial negotiation or mediation before arbitration or litigation. Disregarding those steps can harm your credibility in both court and arbitration settings. Ultimately, arbitration clauses, once found valid, often remove the conventional lawsuit route, meaning you cannot unilaterally circumvent them unless extraordinary circumstances apply.
Not all misrepresentations carry the same consequences. Ontario law recognizes three basic categories:
1. Innocent Misrepresentation
The party makes a false statement about a material fact but does so without knowing it’s false and without failing any duty of care (they honestly believed it to be true). The primary remedy is often rescission, allowing the deceived party to undo the contract. Damages may be limited unless another cause of action (like breach of contract) also arises.
2. Negligent Misrepresentation
Here, the representor ought to have been more careful in verifying facts. They breach a duty of care by relaying inaccurate information that the other side reasonably relies on. Plaintiffs can claim damages for losses directly caused by the false statement, sometimes measured by reliance losses. Rescission may also be possible if the misrepresented term was pivotal.
3. Fraudulent Misrepresentation
The defendant knows the statement is false or is recklessly indifferent to its truth. This is the most severe category, potentially enabling the plaintiff to pursue rescission, compensatory damages, and in certain rare cases, punitive damages if the wrongdoing was egregiously deceptive. Fraud also allows for claims of deceit in tort, broadening the scope of possible remedies (like the possibility to recover intangible or reputational harm).
Courts decide which category applies by examining how the misrepresentation arose, the parties’ knowledge or expertise, and their diligence. Proving fraud demands strong evidence of intention or reckless disregard, whereas negligence focuses on failing to check facts responsibly. Innocent misrepresentations typically reflect honest misunderstandings, limiting the remedy to unwinding the deal rather than paying compensation for wrongdoing.
Not every delay constitutes breach; the nature of the delay and the contract terms determine if a breach has occurred. If the contract specifies a firm deadline or states “time is of the essence,” failure to meet the date typically breaches that clause—entitling the other party to remedies. Even without an explicit time-of-essence provision, courts look at the significance of punctual performance. If tardiness severely undermines the deal’s purpose, the plaintiff can claim breach.
However, if an unforeseen and truly disruptive event occurs—like a government ban on a product essential for performance—this might trigger the doctrine of frustration. Frustration discharges both parties if the contract becomes radically different from what they originally agreed, not merely more costly or inconvenient. For instance, a manufacturer losing its sole raw material source due to an unforeseeable embargo could invoke frustration, arguing it’s fundamentally impossible to proceed under the original arrangement.
Yet frustration is narrow: it only applies when the event is outside the normal risk allocation, was not foreseeable, and has drastically changed the contract’s foundation. If the contract or general commercial risk contemplates potential delays (like shipping holdups), it’s less likely frustration will succeed. So if you’re grappling with a delayed performance, verifying the contract’s timelines, potential built-in extensions, and the severity of the unforeseen event will clarify whether an actual breach or a possible frustration claim emerges.
Yes. Ontario law generally allows a party who partially fulfilled their end of the bargain to claim damages or other remedies if the counterparty’s breach prevented full completion or further performance. Even incomplete performance does not forfeit your right to compensation for losses sustained from the other side’s failure to uphold the deal. Courts look at how much of the contract you performed, whether the partial performance provided any benefit to the breaching party, and the reason your obligations remained unfinished.
In many scenarios, the innocent party stops performing upon discovering the other’s breach or receiving unequivocal repudiation. You do not have to continue incurring expenses if it’s clear the other side won’t fulfil their obligations or has rendered performance meaningless. Damages can then reflect your wasted labour, materials, or expected profits had the entire project progressed. That said, you must show you acted reasonably in mitigating further losses—like seeking alternate customers or suppliers if feasible.
Sometimes partial performance intersects with quantum meruit principles, where you claim payment for the value of the services or materials supplied up to the breach date. Alternatively, you may claim standard compensatory damages equalling the net benefit you would have received if the contract had fully executed. In either route, partial performance does not bar you from upholding your contractual rights—provided you can demonstrate the breach genuinely blocked complete fulfilment and caused tangible harm.
If a deal has gone sideways or performance is at risk, Grigoras Law can help. We assess your rights fast, map out practical options, and move decisively—whether that means negotiating terms, enforcing performance, or pursuing targeted court relief to protect your position.
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