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Rajah Lehal

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

October 26, 2016

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.

No Waiver
Waivers and Releases
Case Law

Written by Rajah. Rajah Lehal is Founder and CEO of Clausehound.com. Rajah is a legal technologist and technology lawyer who is, together with the Clausehound team, capturing and sharing lawyer expertise, building deal negotiation libraries, teaching negotiation in classrooms, and automating negotiation with software.