Written by Connor Heuver
JD Candidate 2023 | UCalgary Law
Contract law is important for entrepreneurs in Canada because it provides a framework for creating legally binding agreements and protecting their interests. Understanding and following contract law can help entrepreneurs avoid disputes and ensure that their agreements are enforceable in court.
In Canada, contract law is governed by both common law and statutory law. Common law is the body of law developed by the courts, while statutory law is the law created by the legislature.
One key principle of contract law in Canada is the requirement for a "meeting of the minds," or mutual assent, between the parties. This means that both parties must understand and agree to the terms of the contract. Additionally, contracts must typically be supported by consideration, or something of value exchanged by the parties.
Another important principle of contract law in Canada is the concept of "good faith" which is implied in all contracts. This means that both parties must act in a fair and honest manner and not use the contract to take advantage of the other party.
Canadian law also recognizes the principle of "frustration of contract" which allows parties to be released from their obligations under a contract if an unforeseen event renders the contract impossible to perform.
Entrepreneurs should also be aware of the various types of contracts and their legal implications. For example, express contracts are agreements in which the terms are explicitly stated, while implied contracts are agreements in which the terms are inferred from the parties' actions.
In case of disputes arising from contracts, it is generally resolved through the court system, although mediation and arbitration are also used as alternative dispute resolution methods.
In summary, contract law is essential for entrepreneurs in Canada because it provides a framework for creating legally binding agreements, protecting their interests and ensuring that agreements with customers, suppliers, employees, and other parties are enforceable in court. Entrepreneurs should be familiar with the principles of contract law in Canada and seek legal advice when drafting and entering into contracts.
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Blog posts are by students at the Business Venture Clinic. Student bios appear under each post.