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Distinct actions or representations are required in order to waive the strict language of a contract

Discussion: A party can waive the strict language of a contract where, by its actions or representations, it leads the other to believe that those contractual rights will not be enforced. In Tas-Mari Inc v DiBattista* GambiDevelopments Ltd (2011 Ont CA), a developer tried to argue that the builders of a residential project had waived a notice provision. The notice provision required the developer to notify the builders of any damage caused by them, and to give the builders time to repair such damage before utilizing the security deposit. The court found that the developer did not alter its position as a result of any action or representation on the part of the Builders. Although the builders initially paid some invoices that helped cover the cost of repairs, the court nonetheless found that nothing the builders said, or did not say, induced the developer to act in a certain way.

Background:

The appellant (developer) appeals from the judgment of the trial judge, who held that the appellant was not entitled to bill the respondent builders for certain repairs in a residential building project because the appellant had not complied with a notice provision in the agreements between the appellant and various builders.

The provision required the developer to notify the builders before repairing any damage caused by the Builders and to give the Builders time to repair such damage, before drawing on the security deposit.

Notice: In no event shall the Vendor, at the Purchaser’s expense, repair any damage or draw upon the Security Deposit, prior to providing to the Purchaser written notice specifying the Damage or default complained of and allowing seven (7) days for the Purchaser to remedy such default or repair the Damage or commence and diligently undertake repair of the Damage or cure of such default within a reasonable time as determined by the Vendor but not exceeding 15 days from delivery of the written notice thereof by the Vendor[.]
Instead of providing notice and opportunity to cure damages caused by the builders outside of the lots they purchased, the developer issued invoices to the Builders to cover the cost of repairs. The Builders initially paid many of the invoices despite the fact that the developer failed to provide the required notice. Eventually, the Builders stopped paying and the developer exhausted the security deposits.
The developer argued that the notice provision was subject to an implied term that made it inapplicable to damages located outside the lot lines of the lots purchased by the Builders.
The developer also argued that the Builders had waived the notice provision by paying invoices for a period of time, without raising the lack of notice as an issue (ie.

promissory estoppel defence)
The appellant appeals on the notice issue. The respondents’ cross-appeal on the posting of security issue.

Issues:

Did the trial judge err in his interpretation of Article 11.05 of the contract by not properly considering (i) the agreement as a whole; (ii) the factual matrix within which the agreement was made; and (iii) repairs “within the lot lines” as an implied term of the contract?
Has a case of promissory estoppel been made by the appellant?
Rule:
Provisions in an agreement must be clear and unambiguous
A party can waive the strict language of a contract where, by its actions or representations, it leads the other to believe that those contractual rights will not be enforced.

Analysis:

Issue 1 – Interpretation of Notice Provision
The trial judge did not err in his interpretation that Article 11.05 was not ambiguous, and, on its clear language, covered services within and outside the lot lines.
Issue 2 – Promissory Estoppel
The appellant contends that by paying several invoices though no notice had been given, the builders represented that notice was not required and the appellant relied on those representations.

A party can waive the strict language of a contract where, by its actions or representations, it leads the other to believe that those contractual rights will not be enforced. In this case, the developer did not alter its position as a result of any action or representation on the part of the Builders. The developer was clear in his evidence that he simply did not believe he was required to give notice under Article 11.05, and he did not do so based on that belief. Nothing the builders said, or did not say, induced him to act in a certain way.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Gramma Might Need a Prenup Too

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This article considers the not uncommon situation where a senior falls in love with another senior and decides to marry. Both spouses have accumulated assets and have children. One or both may have divorced a spouse and have children and stepchildren. Both have families with financial expectations in relation to the property accumulated during the lifetime of their parents, and one or both prospective spouses may have interests in a family business. To complicate matters, both prospective spouses know that they will be responsible for the expenses of caring for the other spouse as their physical needs increase: assisted living, nursing homes, medications and assistive devices and therapies. Both spouses know that these expenses will come sooner than later. How can the prospective spouses ensure that their financial affairs will be predictable and not disrupt the family?

A prenuptial agreement (marriage contract) can help alleviate many family concerns by having each of the parties waive all rights to inherit a spouse’s property. In addition, the parties can waive any obligation to split assets in the event of divorce, and they can waive the right to spousal support. The agreement can also detail who will be responsible for paying what costs — such as assisted living or nursing home fees.

The spouses would be prudent to review their wills and estate planning instruments to ensure that everything has been properly disclosed to the other spouse, and to ensure that the marriage contract, wills, estate planning instruments etc. are consistent with the parties’ wishes.

Read the article here.

Take away:

  • Planning is necessary at any age when entering into a cohabitation or marriage agreement. It is even more important for older couples who have accumulated more assets, have more children with expectations, may have interests in family businesses, and who are facing significant increases in (health) care costs in the not so distant future.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Is a Waiver a Good Strategy to Protect a Family Business from Marital Breakup?

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If a spouse operates or owns a family business, one strategy to protect that business would be to enter into a marriage contract that contains a waiver by the non-owner spouse of the owner spouse’s interest in the business, whether the business was owned prior to marriage, or whether it is anticipated that one spouse will take over the family business in the future. The contract can also include a waiver of any claim for the future increase in value of the business over the course of the marriage.

Two important considerations involved in drafting a waiver include: (a) the business owner must provide full financial disclosure to the non-owner spouse regarding the business’ present value and its future value if known, and (b) each party must receive independent legal advice. The financial disclosure needs to include the current value of the business, and any future value (if known). It may be necessary to consult a business valuator, depending on the size of the business.

Read the article here.

Take away:

  • To ensure that there has been a full disclosure of the value of a business interest at the time of the signing of a waiver in a marriage contract, it may be prudent to consult a business valuator.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Marriage Contracts and Child Support

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Parties to a marriage contract cannot waive their obligations to provide support for their own children. However, if your spouse has brought children from a previous relationship into the marriage, you may wish to consider a provision in your marriage contract (assuming you have one – and this may provide an incentive to enter into one) that specifies that “under no circumstances will you stand in place of a parent to these children and will not be required to pay child support to them in the event of the breakdown of your marriage. ” The reason for this is that you don’t have to be a biological parent in order to be required to pay child support. As long as you have treated the children as your own (or stood in place of a parent), you may end up being required to support them.

As with all marriage contracts, the parties must receive independent legal advice. It is very important that each spouse receive this advice in a language which they can understand and which permits them to both receive a full explanation of the effects of the terms of the agreement, and to ask questions about the agreement.

This is especially important if any rights or obligations are waived in the agreement.

Read the article here.

 

Take away:

  • While parties cannot contract out of the responsibility to support their own children, they can agree on support obligations for children brought into the marriage from a previous relationship.
  • Both parties should receive independent legal advice, in a language that allows them to appreciate the meaning of the terms of the contract.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Was the Marriage Contract Signed under Duress?

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The article discusses the high profile case of McCain v. McCain (currently on appeal to the ONCA). After 15 years of marriage, the spouses entered into a marriage contract under which the wife waived her equalization and support rights. The husband’s father was prepared to disinherit him if the agreement was not signed. After 30 years of marriage and 5 children the couple separated. The wife was left with a $7 million settlement, and all property in her name – a house and 2 cottages which were all heavily mortgaged (by the husband). The husband was worth $500 million at the time of separation.

Waivers of any rights in a marriage contract may be considered unenforceable by a court under the Ontario Family Law Act if (1) one spouse did not provide full and proper financial disclosure to the other regarding assets, income and debts (including their values); (2) one spouse did not understand the nature or consequences of the contract (e.g., each spouse should have proper independent legal advice prior to signing); or (3) the contract or the making of it somehow offends contract law rules (such as the presence of fraud, duress, undue influence or unconscionability) .

In an interim order, the Court found that the contract was entered into under duress, and posed the question: “How could [she] have possibly refused to sign under those circumstances?” The wife was awarded $175,000 per month in spousal support – the highest amount ever awarded by a Canadian court. The decision will be appealed to the Ontario Court of Appeal.

This case is a reminder that the process of entering into a marriage contract is extremely important.

If the circumstances are such that one spouse, to their detriment, had no real choice but to enter into the agreement, a later challenge by that spouse of the enforceability of a waiver of equalization rights and/or spousal support clause may be successful.

Read the article here.

 

Take away:

  • If one of the parties to the marriage contract “had no real choice but to sign”, that party might succeed (often years later) in challenging the enforceability of a waiver of spousal support and equalization rights. This will be especially likely if the wealthier spouse was too ‘greedy’ and the contract is so one sided that it does not even come close to what the other spouse would have received under the statutory regime.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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How to Increase the Likelihood that Releases and Waivers in Marriage Contracts will be Enforceable

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Marriage contracts and prenuptial agreements may have full release and waiver clauses embedded but they may not be enforceable. Section 33(4) of the Family Law Act in Ontario provides that a court may set aside a provision for support or a waiver of the right to support in a domestic contract although the contract contains an express provision excluding its application, if the provision for support or the waiver to support results in “unconscionable” circumstances at the time of separation.

The article suggests including language indicating that both parties agree that they have discussed (with their own lawyer) the notions of fairness and the circumstances under which they have entered into the agreement; that they both agree that the terms of the agreement are fair in the present and will be considered to be fair in the future regardless of any change in their circumstances; that both parties intend to be bound by the agreement; and that any challenges to the enforceability of the agreement may be resolved by summary judgement without a case conference.

Careful drafting of the agreement may increase the chances that a full release/waiver clause will be enforceable.

Read the article here.

Take away:

  • Ensure that the marriage contract contains acknowledgements by both parties that the agreement is fair and reasonable both now and for the future, and that they both fully intend to be bound by a release and/or waiver of support obligations or equalization rights.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

What you don't know can hurt you! Subscribe to stay informed.

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