Incorporation by Reference

"The method of making one document of any kind become a part of another separate document by referring to the former in the latter, and declaring that the former shall be taken and considered as a part of the latter the same as if it were fully set out therein."

[Black's Law Dictionary, Fifth Edition, p.690.]

It is not uncommon for contracts to remain short and readable by ensuring that a great deal of the meat-and-potatoes clauses are found elsewhere; it is a good way of avoiding contracts that are unnecessarily long and detailed. The ones that most Canadians will be familiar with are "Standard Charge Terms" in a mortgage. The mortgage itself will only be a page or so -- of very fine print -- but it will have a box indicating which Standard Charge Terms apply; a "Standard Charge Terms" is the often massive document detailing each and every right and obligation under a mortgage: interest calculations, prepayment rights, power of sale, and so on.


NOTE:
PDFs of what appear to be all the currently used Standard Charge Terms have been very helpfully posted by the Orillia Law firm of Lewis Downey Tornosky Lassaline & Timpano, PC, and can be found here.

C-28: How the anti-spam bill may effect your business

David Canton of Harrison Pensa is a lawyer specializing in electronic law. He recently wrote an article for the London Free Press (and also found on his blog) where he brings our attention to some potential problems that businesses large and small will face under the new laws aimed at reducing spam:

The anti-spam bill was recently passed [David Sanders: Bill C-28 is here in Bill form, and the final version is here on the federal e-law site), and here is a one-page HTML version on Canlii], and will be in force this year. It gives new tools to fight spam, but unfortunately defines spam so broadly that it will affect how most organizations conduct business.

Businesses can’t just ignore the legislation. Remedies include fines of up to $1 million for individuals, $10 million for others […]

An e-mail to just one person you met at an event who you consider a potential customer may be considered spam [and] “electronic message” is broadly defined […]

Messages will not be considered spam if the recipient has consented to receiving the message. But it is up to the sender to show the recipient has consented if there is a complaint [...]"

and what constitutes "consent" is a complicated thing. David Canton strongly recommends that all businesses and charities review the consent provisions to determine if their electronic communication policies need to change.

The Act also links consent to purpose:

since my e-mail address is published on my firm’s website and other places, you may be able to e-mail me with anything relevant to the practice of law — but you won’t be able to e-mail me trying to sell me a trip. If I hand you my business card, the same applies.

Canton correctly notes that -- as with many pieces of legislation -- the devil will be in the details of the regulations that the legislature and bureaucracy will create to implement and enforce this Act, and those regulations haven't been published yet.

To keep tabs on e-law issues, keep an eye on David Canton’s blog on the topic.

What is an “affidavit of execution”?

First of all, one must define an “affidavit”! An affidavit is a document which attests to facts under oath or affirmation before a person who has authority to administer that oath or affirmation. It is intended to be a solemn, truthful statement of the facts at issue, and is intended to become evidence before a Court, if necessary.

(Note: an “affirmation” can be called the non-religious form of taking an oath. Like an oath it is a solemn and formal declaration that the statements contained in an affidavit are true; unlike an oath one does not swear before God on a bible or other holy book. One need not be religious to use an oath, or non-religious to use an affirmation, because the test that the court will administer for both is the same: is the swearing or affirmation binding on the conscience of the person giving it. Some non-believers still use oaths, for example, because of the more familiar form and perceived greater solemnity.)

What, then, is an “affidavit of execution”? It is a document whereby a witness swears or affirm) that they saw a given person sign a given document on a given day, in front of the witness and perhaps others. The affidavit of execution therefore “proves” that the document in question is what it purports to be. This is especially important in cases such as wills (where the genuineness of the will and its contents might be a hotly contested issue) or business contracts (where it may be in one party’s financial interest to deny their signature on a document, thus freeing themselves from an now-unwanted obligation).

The basic component parts of an affidavit of execution are:

1. The document must be under oath, or affirmed. In Ontario this is usually done before a Commissioner of Oaths or a Notary Public. (Every practicing lawyer is, by virtue of their status as a lawyer, a Commissioner of Oaths; most but not all lawyers are Notaries.)

2. The witness confirms that the witness was present at the signing of the legal document in question.

3. The witness attests by their signature that the witness personally knows the signer of the legal document in question and the signer of the legal document in question is of the age of majority. (With the proliferation of different kinds of identity theft it is becoming increasingly common that the identity of the person signing the document is confirmed by the witness, and sometimes that the witnesses themselves must provide acceptable identification.)

The following is a dummy example of an affidavit of execution (in this case, for a Power of Attorney for Property):

I, David Matthew Sanders Barrister of the City of London, in the County of Middlesex in the Province of Ontario MAKE OATH AND SAY:
1. I am one of the subscribing witnesses to the Power of Attorney for Property of the grantor, Joseph Fictional Client.
2. The Power of Attorney for Property is dated the 31st day of June, 1999, and is marked as Exhibit “A” to this Affidavit.
3. When the grantor signed the Power of Attorney for Property, I believe the grantor
(a) was 18 years of age or more
(b) understood that the document being signed was the grantor's Power of Attorney for Property; and
(c) was competent to sign the Power of Attorney for Property.
4. The grantor, myself, and the other witness to the Power of Attorney for Property, Jane Doe, were all present together when the witnesses and the grantor signed the Power of Attorney for Property.
5. That no interlineations, alterations, erasures, or obliterations were made to the Power of Attorney for Property before the grantor and the witnesses signed the Power of Attorney for Property.

Separation Agreements: Full Disclosure and Fair Dealing

The Supreme Court of Canada in Rick v. Brandsema has recently clarified the law regarding what is and isn't fair in the negotiation and contents of a separation agreement.

The SCC headnote found at Canlii gives an excellent summary (the numbers in square brackets being the relevant paragraph of the SCC judgment; the hyperlinks are by the author of this blog):

The parties married in 1973 and separated in 2000. During their 29 years together, they had five children and acquired a dairy farm in which they were equal shareholders, as well as other real property, vehicles and RRSPs. The parties were intermittently represented by lawyers and also used the services of mediators during their negotiation of a separation agreement. Approximately a year after their divorce, the wife sought to set aside the agreement on the grounds of unconscionability or, in the alternative, a reapportionment order under s. 65 of British Columbia’s Family Relations Act.

The trial judge found that the agreement was unconscionable because the husband had exploited the wife’s mental instability during negotiations and had deliberately concealed or under‑valued assets. This resulted in the wife receiving significantly less than her entitlement under the Act, despite the fact that it was the parties’ express intention to divide their assets equally. As a result, the trial judge made an order awarding the wife an amount representing the difference between the negotiated equalization payment and the amount she was entitled to under the Act. The Court of Appeal disagreed with the trial judge’s conclusions about the extent of the wife’s vulnerabilities and concluded that, in any event, they were effectively compensated for by the availability of counsel. [The wife appealed that BCCA decision to the Supreme Court of Canada and won.]

[...]
The singularly emotional environment that follows the disintegration of a spousal relationship means that the negotiation of separation agreements takes place in a uniquely difficult and vulnerable context. Special care must therefore be taken to ensure that the assets of the former relationship are distributed through a process that is, to the extent possible, free from informational and psychological exploitation. Where exploitation results in an agreement that deviates substantially from the objectives of the governing legislation, the resulting agreement may be found to be unconscionable and, as a result, unenforceable. [1] [44] [47]

While parties are generally free to decide for themselves what bargain they are prepared to make, decisions about what constitutes an acceptable settlement can only authoritatively be made if both parties come to the negotiating table with the information they need to consider what concessions to accept or offer. This requires that there be a duty on separating spouses to provide full and honest disclosure of all relevant financial information in order to help protect the integrity of the negotiating process. This duty not only anchors the ability of separating spouses to genuinely decide for themselves what constitutes an acceptable bargain, it helps ensure the finality of agreements. An agreement negotiated with full and honest disclosure and without exploitative tactics will likely survive judicial scrutiny. [45‑49]

Whether defective disclosure will justify judicial intervention, however, will depend on the circumstances of each case, including the extent of the misinformation and the degree to which it may have been deliberately generated. [49]

There is no reason to disturb the trial judge’s conclusion that the separation agreement was unconscionable. His findings about the husband’s defective disclosure and exploitation of his wife’s known mental vulnerabilities, support the conclusion. Although in some cases professional assistance will effectively compensate for vulnerabilities, in this case the trial judge concluded that the wife’s mental instability left her unable to make use of such assistance. [2] [6] [27-28] [31] [36] [58‑60] [62]

The husband’s failure to make full and honest disclosure, his knowledge that the negotiations were based on erroneous financial information, as well as his exploitation of what he knew to be his wife’s profound mental instability, resulted in a negotiated equalization payment that was $649,680 less than the wife’s entitlement under the Family Relations Act. In these circumstances, the trial judge was entitled to award this amount to compensate the wife for the loss caused by the unconscionable bargain. [6] [27-28] [31] [53] [63] [69]

Quantum Meruit

“Quantum meruit” is Latin for “as much as he deserves”. It refers to how the court determines what a party is owed for work done for another in one of two main cases: where there is no contract (and thus an unjust enrichment case) or where there is a contract but there are no express terms governing payment, (which can be an oral contract, or a written contract which is silent or unclear as to payment). If the right to payment is established by the court then, “in such circumstances, the Courts award reasonable remuneration to the person who has rendered the services”, [Dictionary of Canadian Law, (3d ed.)].

It is important that the rendering of services by one person to another has to be to one who has requested such services “or freely accepted them with the knowledge that they are not rendered gratuitously." [Gill v. Grant (1988), 30 E.T.R. 255 at 271 (B.C.S.C.) per Rowles J.] The rationale for this two-way-street is obvious: one should not be forced by a court to pay for services which one had neither requested nor knowingly accepted.

A very neat summary of what must be present to win a claim based soley on quantum meruit are found in Summers v. Harrower, 2005 CanLII 50261 (Ont S.C.J.), ¶ 11:

1. there was a contractual relationship between the parties;
2. the parties agreed that certain work was to be done but failed to agree on all aspects of the contract, for example, the price to be paid;
3. the defendant accepted the work;
4. both parties had or should have had in the circumstances an expectation that the work was not being rendered gratuitously; and
5. the payment sought was reasonable remuneration for the work done.

Quantum meruit is a very useful principle of law, permitting recovery of funds where there is inadequate documentation but evidence of the agreement and the work done.

Watch out for the Limitations Act

Where you suffer a loss and claim against your insurance, beware of the Limitations Act, 2002. It is not unheard of (!) for an insurance company to drag things. In such cases the insured thinks that the insurance company is "handling it". Unfortunately the insurer is -- whether accidentally or deliberately -- exploiting the belief of the insured that the insurance company is acting in good faith. The insured may, down the road, face a very unpleasant situation when a demand for the long-delayed payment is met by the insurance company denying the claim by pointing to the passage of the limitation period. (Note: The relevant section is reproduced at the bottom of this post.)

There are arguments in law which might defeat the insurance company's reliance on the Act in such cases but law must often defer to practicality: a client may not be able to contest the claim because any action to challenge the insurance company's position would have cost many times the amount due under the policy. The result? An insurance company pockets a tidy little profit by saying "you're too late!" to a claimant on a claim that they themselves have delayed. An individual or small business person should consider this very deeply and never forget it if they need to make an insurance claim. Whether the insurance company does this on purpose or merely benefits from its own incompetence is beside the point: they can and might do this to you too.

What can you do to avoid being scammed this way?

1. On any insured matter please remember that the two-year clock starts running as of the date of the damage.

2. Diarize, diarize, diarize. Mark off the six, twelve and fifteen month periods since the date of the claim, and follow up on those days.

3. Do everything in writing, preferably by email or fax. It is difficult for an insurer to take the position in court that they hadn't received a document ("we couldn't process the claim without it and they didn't send it to us so they have no case") if you can prove that they received it. (And please don't kid yourself: whether by accident or design any large organization will "lose" materials or information which help you and hurt them. Anybody who has dealt with a cable or cell phone company for example knows of this: somehow their promises to you rarely seem to make it onto your file!)

4. Watch out for sneaky handoffs. Large organizations of all kinds have learned that they can delay provision of service indefinitely if they keep you uncertain and confused over who really has responsibility for your file.

5. If they have not paid out by your fifteen month point, consult and, if necessary, retain counsel. Have the lawyer put the insurer on notice that failure to pay by a given date will result in a court action.

6. Don't bluff. Sue if necessary to preserve your rights. Once that two-year period has gone by your rights have largely disappeared.

An extract from the Limitations Act showing the basic two-year period:

Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered....

Discovery

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a)...

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved....

Demand obligations

(3) For the purposes of subclause (1) (a) (i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made. ...

Same

(4) Subsection (3) applies in respect of every demand obligation created on or after January 1, 2004. ...

Quebec's insurers will have to be more specific and do so earlier.

The Quebec Court of Appeal has come down with an interesting decision in Lombard Canada Ltd. v. Ezeflow Inc., (decision in French only).

Ezeflow is a manufacturer of pipes for oil-drilling platforms and Lombard was its general commercial liability insurance provider. Flaws showed up in some installed Ezeflow pipes and that company made a claim on its insurance. Lombard refused on four grounds and later relied on another clause in the insurance agreement. The matter went to trial, Ezeflow won at trial and Lombard took the matter to the Court of Appeal, where the appeal was upheld. However it noted that Lombard could not use an exclusion which was not used as a reason for denial at the outset of the action. As Kelly Harris notes [infra], "Quebec courts do not recognize the doctrine of estoppel [fn1], which prevents new defences from being introduced once a case has begun." Jean-Charles René of Ogilvy, Renault notes,

In Quebec, the courts have refused to apply the doctrine of estoppel, but have recognized a similar concept in civil law, the "fin de non-recevoir" which bars an insurer from adding to its reasons for denial of coverage on the basis that it is deemed to have waived the right to do so. According to the case law, such a waiver does not need to have been expressly stated in writing, but may be tacit, provided it is unequivocal, i.e., there is no doubt as to the insurer's intention to waive a clause in the policy. Some writers have observed that it is harder to prove a "fin de non-recevoir" than to prove estoppel because the civil law concept requires proof that, by its representations, the insurer indicated its intention to modify its rights.

Ezeflow has now ended the insurers' practice of reserving a right to bring up any clause later on; they must now commit at the outset of the action. M. René:

[I]nsureds would be well advised to require their insurer to state its position precisely as soon as it is apprised of a situation that could trigger a claim, thereby forcing the insurer, so to speak, "to make its bed and lie in it".

Footnotes:

fn1 - Quebec is the only province which does not use a "common law" system (like that of England or America) for the resolution of non-criminal disputes; it uses a "civil law" system more akin to European models.]

Further Reading

The entry above is only a cursory examination of the case. I strongly recommend that any interested reader read these articles:

“Quebec Court Of Appeal Weighs In On Scope Of Coverage Under Cgl Policy For Costs Of Removing Insured’s Defective Products”. Nicholl Paskell-Mede, Lawyers.

“Quebec Court of Appeal Warns Insurers To Specify All the Reasons for Denial of Coverage.”
Jean-Charles René, Ogilvie Renault.

“Court tells insurers to lie in the bed they made.” Kelly Harris, Canadian Lawyer Magazine, February, 2009. [Note: Canadian Lawyer uses an unusual digital version of its magazine. You will have to go to the link and then flip the pages as if you were reading the magazine in its treeware format.]

What is "Rectification" in Contract Law? 4: Evidence Required

Previous posts: Definition of Rectification; unilateral mistake; mutual mistake.

We conclude our four-day examination of the law of rectification with an analysis of how a party actually goes about proving its case, and how the court will determine whether or not they succeed.

The court will consider:

• all the relevant documents [Clarke v. Thermidaire, (fn1), ¶26 and Royal Bank v. El-Bris, (fn2), ¶ 20-22];
• the oral evidence of the parties and/or witnesses, including the key issue of whether the oposing sides are in agreement or have differing versions of the facts [Clarke v. Thermidaire, (fn1), ¶ 26]
• the later conduct of the parties, [Royal Bank v. El-Bris, (fn2), ¶ 32].

Please note that:

1. When the court considers oral evidence it is doing something that it rarely does in contract cases: outside (also called "extrinsic") evidence to contradict or add to the terms of a contract is normally not allowed. (This is called the "parol evidence rule".) However, parol evidence is permitted in rectification cases. [Royal Bank v. El-Bris, (fn2), ¶ 24].
2. A court may order rectification even if the testimony of the party seeking rectification is not corroborated by the documentary evidence. [Royal Bank v. El-Bris, (fn2), ¶ 24; Sylvan, (fn2), ¶ 43.]
3. The judge need not specifically use the word "rectification" to apply the doctrine of rectification. [Royal Bank v. El-Bris, (fn2), ¶ 6.]

A caution!
The doctrine of rectification is not an everyday thing. "[P]arties, especially experienced and sophisticated parties, cannot routinely look to this remedy to correct mistakes in signed contracts." The courts have been consistent in their cautions against "opening the floodgates". [Royal Bank v. El-Bris, (fn2), ¶ 35.]

Footnotes:

fn1 - H.F. Clarke Ltd. v. Thermidaire Corp. Ltd., [1973] 2 O.R. 57 at 64 - 65 (C.A.), [reversed on other grounds 1974 CanLII 30 (S.C.C.), [1976] 1 S.C.R. 319].

fn2 - Royal Bank of Canada v. El-Bris Limited, [2008] 92 O.R. (3d) 779 (C.A.).

fn3 - Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club, 2002 SCC 19 (CanLII), [2002] 1 S.C.R. 678 (S.C.C.)

What is "Rectification" in Contract Law? 3: Mutual Mistake

Two days ago I did a post on the law of "rectification", a legal concept used "to correct a contract which has been mistakenly drawn so as to carry out the common intention of the parties and have the contract reflect their true agreement"; yesterday I addressed rectification in cases where the mistake lay only on one side.

Today's blog post will address what happens when both parties make a mistake.

The case

We continue our examination of the Ontario Court of Appeal's decision in Royal Bank of Canada v. El-Bris Limited, [2008] 92 O.R. (3d) 779 (C.A.). In that case the bank sought to collect on a guarantee: a businessman had given a personal guarantee for $700,000 in additional credit, and, as a part of that guarantee, had pledged a collateral mortgage. He repaid the debt, and sought a discharge of the mortgage (which was granted), but the bank pursued him for $700,000 under the guarantee. The businessman took the position that the guarantee had been for only $700,000, not $1,400,000, that the mortgage had been security for the guarantee, and with the repayment of the $700,000 the discharge of the mortgage his personal obligation was now terminated. The paperwork supported the bank's side that his guarantee was not limited to the $700,000; the businessman asserted that such a limitation was what was intended all along and sought rectification.

The trial judge agreed with the businessman, finding that the "parties intended the collateral mortgage to be security for Ellis's guarantee" and that paying off the collateral mortgage entitled him to a discharge of his obligation under the personal guarantee. The Court of Appeal dismissed the bank's appeal, agreed with the trial judge -- and thus also with this Mr. Ellis and not the rather more notorious one(s) -- agreed with the businessman.

The law

First and most importantly, the four-part test for unilateral mistake detailed yesterday does not apply to cases of mutual mistake. In such cases the test is less stringent, and has been laid down by the Court of Appeal in a previous case: Downtown King West Development Corp. v. Massey Ferguson Industries Ltd. 1996 CanLII 1232 (ON C.A.), (1996), 28 O.R. (3d) 327 at 336 (C.A.):

"the remedy of rectification is available only in certain defined circumstances and cannot be invoked to correct every mistake. In principle, rectification is permitted, not for the purpose of altering the terms of an agreement, but to correct a contract which has been mistakenly drawn so as to carry out the common intention of the parties and have the contract reflect their true agreement. The remedy is normally granted only where the mistake is mutual or common to the contracting parties."

In short, rectification exists to make the mistaken written contract reflect the real agreement of the parties; thus, to obtain rectification in a case of alleged mutual mistake becomes a question of fact and thus one for the presentation and examination of clear evidence. Does the evidence make it clear what the alleged real contract was?

When may the Court exercise its jurisdiction to grant rectification? In order for a party to succeed on a plea of rectification, he must satisfy the Court that the parties, all of them, were in complete agreement as to the terms of their contract but wrote them down incorrectly. It is not a question of the Court being asked to speculate about the parties’ intention, but rather to make an inquiry to determine whether the written agreement properly records the intention of the parties as clearly revealed in their prior agreement. The Court will not write a contract for businessmen or others but rather through the exercise of its jurisdiction to grant rectification in appropriate circumstances, it will reproduce their contract in harmony with the intention clearly manifested by them, and so defeat claims or defences which would otherwise unfairly succeed to the end that business may be fairly and ethically done... (fn1)

Tomorrow: the evidence required to obtain rectification.

(fn1) - H.F. Clarke Ltd. v. Thermidaire Corp. Ltd., [1973] 2 O.R. 57 at 64 - 65 (C.A.), reversed on other grounds 1974 CanLII 30 (S.C.C.), [1976] 1 S.C.R. 319.

What is "Rectification" in Contract Law? 2: Unilateral Mistake

Yesterday I did a post on the law of "rectification", a legal concept used "to correct a contract which has been mistakenly drawn so as to carry out the common intention of the parties and have the contract reflect their true agreement" (but not for the purpose of altering the terms of an agreement). Rectification can be applied in cases where the mistake lies solely on one side (unilateral rectification) or multiple sides (mutual rectification). Today's post deals with unilateral mistake.

The law in this area has been set by the Supreme Court of Canada in Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club, 2002 SCC 19 (CanLII), [2002] 1 S.C.R. 678, (often just called "Sylvan"), a case where a party sought rectification of an inaccurately drafted contract, mistakenly and negligently signed by the party seeking the correction. The Supreme Court said that such a party must meet a four-part test:

1. There must be a "previous oral agreement inconsistent with the written document".
2. "[T]he other party knew or ought to have known of the mistake and permitting that party to take advantage of the mistake would amount to unfair dealing", (conduct the Supreme Court called "fraud or conduct equivalent to fraud"
3. "[T]he document can be precisely rewritten to express the parties’ intention".
4. "[E]ach of the first three prerequisites must be demonstrated by convincing proof". (fn1)

Each and every one of these prerequisites must be met for the court to grant rectification on the grounds of unilateral mistake. They are not required for cases of common or mutual mistake; there the “traditional rule,” still applies. (fn2)

Note that the Supreme Court permitted rectification even in the face of applicant party's negligence:

[C]ourts ought to hold commercial entities to a reasonable level of due diligence in documenting their transactions. Otherwise, written agreements will lose their utility and commercial life will suffer. Rectification should not become a belated substitute for due diligence. [...] On the other hand, most cases of unilateral mistake involve a degree of carelessness on the part of the plaintiff. [...] [It is legally significant that the doctrine of rectification] applies "only where there has been an agreement that preceded the writing. In such a case, a party’s negligence in failing to read the writing does not preclude reformation if the writing does not correctly express the prior agreement". [Emphasis added.] [T]he plaintiff seeks no more than enforcement of the prior oral agreement to which the defendant has already bound itself."

Tomorrow: Mutual or Common Mistake.

David Sanders,
Camberwell House

fn1 - The quotations are from Royal Bank of Canada v. El-Bris Limited, [2008] 92 O.R. (3d) 779 (C.A.), where Laskin J.A gave an excellent summary. ["J.A." is a title used by judges of appellate courts.]

fn2 - Royal Bank of Canada v. El-Bris Limited, [2008] 92 O.R. (3d) 779 (C.A.), ¶ 17.

What is "Rectification" in Contract Law? 1: Definition

The Ontario Court of Appeal put it very neatly in Royal Bank of Canada v. El-Bris Limited, [2008] 92 O.R. (3d) 779 (C.A.) :

Rectification is an equitable remedy designed to ensure that one party is not unjustly enriched at the expense of another. A court will rectify an inaccurately drawn written agreement so that it conforms to the agreement the parties intended to make. In Downtown King West Development Corp. v. Massey Ferguson Industries Ltd. 1996 CanLII 1232 (ON C.A.), (1996), 28 O.R. (3d) 327 at 336 (C.A.), Robins J.A. explained the remedy’s underlying rationale, while acknowledging that rectification cannot be used to correct every mistake.

"The remedy of rectification is available only in certain defined circumstances and cannot be invoked to correct every mistake. In principle, rectification is permitted, not for the purpose of altering the terms of an agreement, but to correct a contract which has been mistakenly drawn so as to carry out the common intention of the parties and have the contract reflect their true agreement. The remedy is normally granted only where the mistake is mutual or common to the contracting parties."

Rectification can address either a unilateral mistake or mutual mistake. Posts on these will follow after this one. Please come back and review them, or subscribe to this site's RSS feed.

It is important to note that a court may admit parol evidence to determine wither to rectify the terms of a written agreement to confirm to the real intention of the parties. Please see my subsequent post for information on the "parol evidence rule"!