A CLEARLY WORDED TERMINATION CLAUSE IS LIKELY TO BE ENFORCEABLE

Crowe v. Saskatchewan Indian Gaming Authority Inc. 2006 SKQB 27 (CanLII)

If a termination clause is clearly worded and its meaning is clear and enforceable, the courts will likely apply the parol evidence rule with the result that a party whose contract is terminated will be unlikely to be able to establish that the termination clause was modified by a collateral contract.

Drafters should ensure that termination clauses are clear and unambiguous.

In Crowe v. Saskatchewan Indian Gaming Authority Inc. 2006 SKQB 27 (CanLII), the defendant entered into consecutive written consulting agreements with the plaintiffs in early 2000. In November, 2000 the plaintiff terminated the agreement with 30 days notice, in accordance with the termination clause. The defendants claimed damages arising from that termination, based on notice requirements for termination of an employment contract. The court rejected this claim based on the finding that they were consultants rather than employees. The termination clauses in their contracts were clearly worded and could be interpreted without consideration of the context in which the agreements had been executed.

To read the full case on CanLII, click here.