Contract

How BC law treats it

BC contract law is mainly common law. There is no general contracts statute. A contract forms when one party accepts the other's offer, the parties intend to create legal relations, the essential terms are certain, and each gives something of value (consideration). In BC, a later variation can be enforceable without fresh consideration if freely agreed (Rosas v Toca, 2018 BCCA 191). Most contracts, including employment contracts, can be oral. Under s. 59 of the Law and Equity Act, RSBC 1996, c 253, a contract respecting land is not enforceable unless there is writing signed by the party to be charged, conduct by that party indicating the contract was made, or reliance by the other party that makes enforcement necessary to avoid an inequitable result (s. 59(3)), and a guarantee or indemnity is enforceable only if evidenced in writing signed by the guarantor or if the guarantor's conduct shows the guarantee was made (s. 59(6)). The Electronic Transactions Act, SBC 2001, c 10 allows electronic documents and signatures to satisfy writing and signature requirements, subject to exceptions. The Sale of Goods Act, RSBC 1996, c 410 implies terms into sales of goods. Courts interpret a contract by reading its words in light of the surrounding circumstances known to both parties when it was made (Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53). Every contract carries a duty of honest performance: a party must not lie to or knowingly mislead the other about matters directly linked to performance (Bhasin v Hrynew, 2014 SCC 71; CM Callow Inc v Zollinger, 2020 SCC 45). A claim for breach must generally be started within two years after discovery under the Limitation Act, SBC 2012, c 13. The usual remedy is damages that put the innocent party where it would have been had the contract been performed; specific performance or an injunction is available in limited cases.

What it means for your business

Contracts allocate risk, price and responsibility in every business relationship. Clear written terms on scope, payment, liability limits, termination and dispute resolution prevent most disputes and make the rest cheaper to resolve. Relying on handshake deals or unreviewed templates creates uncertainty a court must later resolve. Businesses should also remember the duty of honest performance: misleading a counterparty about a contract can create liability even where the contract allows the underlying decision. Example: A Burnaby supplier agrees by email to deliver equipment at a fixed price. The emails show offer, acceptance and agreed terms, so the contract is binding even though no formal document was signed.

Risks and common mistakes

Assuming a contract must be a signed formal document to be binding. Agreeing to a land deal or guarantee orally and expecting it to be enforceable. Leaving key terms such as price or scope to be agreed later, making the contract uncertain. Misleading the other party about performance or termination plans, breaching the duty of honest performance. Waiting more than two years after a breach is discovered to start a claim.