The Challenges of a Dispute Over Breach of a Business Contract in Ontario

Disputes over the breach of a business contract in Ontario are rarely straightforward. Agreements such as share purchase or asset purchase contracts often involve complex terms, and when one side fails to live up to them, proving the case in court can be difficult. Beyond showing that a breach occurred, the bigger challenge is usually proving the damage. Courts often require detailed evidence and sometimes expert reports to figure out what, if anything, the plaintiff actually lost.

Because of this, businesses that bring lawsuits over contracts need to be strategic. Claims must be set out clearly, and the evidence must back them up. If not, defendants often gain the advantage. The lawyers at Gionet Fairley Wood LLP weigh in on what weakens these kinds of lawsuits.

Not Properly Raising Bad Faith When Disputing the Breach of a Business Contract

In Ontario, every business contract is expected to be carried out honestly and fairly. This means neither side is allowed to mislead the other, and any discretion given in the contract must be used reasonably. Businesses cannot agree to “opt out” of this duty because it is built into every contract by law.

However, many plaintiffs make the mistake of not properly raising bad faith in their claim. Bad faith is not a separate legal claim on its own but must be included as part of a breach of contract lawsuit. If it is not pleaded correctly, it can seriously damage the case.

Misusing Economic Torts

Sometimes plaintiffs try to go beyond the breach of a business contract and make additional claims for economic harm, such as interference with business relationships or misrepresentation. These claims, often called “economic torts,” can provide extra avenues for recovery.

But the courts apply them carefully and in very limited circumstances. They are not a catch-all for every loss a business suffers. Plaintiffs who overreach with these claims often find that the court strikes them down, which can add to their costs.

Relying on the Wrong Kind of Evidence When Suing for Breach of a Business Contract

When a contract ends up in court, judges focus on what the parties meant at the time they signed the agreement. This means evidence of negotiations, discussions, or communications leading up to the contract may be considered.

What the parties did after signing, however, usually does not matter. Courts are cautious about relying on behaviour after the fact, because businesses could act in ways designed to support their preferred interpretation. Many plaintiffs waste time and money presenting evidence that a judge will not accept.

Forgetting the Importance of Commercial Common Sense

Courts do not just look at the words in a contract; they also ask what makes sense in the business world. If one side’s interpretation of the contract leads to a commercially unreasonable or absurd result, the court is unlikely to accept it. Parties need to be prepared to explain why their position makes sense from a practical business standpoint, not just a legal one.

Failing to Prove Actual Losses in the Breach of a Business Contract

Perhaps the most damaging mistake is failing to prove real financial loss. Courts will not automatically award damages just because a contract was breached. Plaintiffs must show clear, tangible evidence of what they lost, whether it is missed profits, lost opportunities, or other measurable harm. Asking a judge to “fill in the blanks” with assumptions will almost always lead to failure.

Working with Experienced Business Litigators is Essential in Business Contract Disputes

All of this makes suing for breach of a business contract in Ontario a serious challenge. Courts expect careful pleadings, strong evidence, and arguments that make sense both legally and commercially. Any gaps in a claim can quickly sink it.

The experienced business litigators at Gionet Fairly Wood LLP know how to avoid these pitfalls. They understand how to frame a case properly, what evidence will actually be accepted, and how to prove damages in a way that stands up in court. Just as importantly, they know how to anticipate the strategies the other side will use to defend themselves.

Whether you are considering suing for breach of contract or you are defending against a claim, our skilled litigators give you the best chance at a successful outcome. We have represented businesses in Barrie, Simcoe, Grey-Bruce, Muskoka and throughout Ontario, through alternative dispute resolution and in court. Contact us today at (705) 468 1088 or visit our website to schedule a consultation to discuss your situation.

***The information provided in this blog is for general informational purposes only and should not be construed as legal advice. If you have legal questions, we strongly advise you to contact us.