|
Contracts - Assignment
COMMENT
'Assignment' refers to the 'stepping into the shoes' of another in the course of a contract, lease - or a CLPA s.53 "debt or other legal chose in action" [see Assignment - Legal (CLPA s.53)] which are mostly loans and thus mostly contract-based. An assignment is the complete transfer of interest between the assignor and the assignee, with the status of the other party to the contract remaining the same. See Assignment generally.
By express clause, a contract can anticipate the event of an assignment and condition it's effect contractually. Typical conditions (with respect to leases at least) are that the other party to the contract has the right to consent to the assignment (between the assignor and the assignee), and that such other party cannot refuse consent unreasonably.
. Ayuba v. Erhunmwun
In Ayuba v. Erhunmwun (Ont CA, 2026) the Ontario Court of Appeal considered three related appeals, here arising "from two failed transactions involving the assignment of agreements to purchase pre-construction homes".
The court considers an assignment agreement, here drafted by a real estate brokerage after the APS was entered into:[35] The assignment agreements and vendor consents form part of the same overall transaction and should, so far as possible, be read harmoniously: SS&C Technologies Canada Corp. v. The Bank of New York Mellon Corporation, 2024 ONCA 675, 174 O.R. (3d) 410, at para. 29, aff’d in relevant part, 2026 SCC 29, 516 D.L.R. (4th) 199. The vendor consents preserve rather than extinguish the separate financial bargain between assignor and assignee. Their provisions expressly recognize the parties’ financial arrangements under the assignment agreements. In Ms. Osarugue’s transaction, the amendment executed with the vendor consent also provided that the remaining terms of the assignment agreement would “remain the same”. . Quickie Convenience Stores Corp. v. Parkland Fuel Corporation
In Quickie Convenience Stores Corp. v. Parkland Fuel Corporation (Ont CA, 2020) the Court of Appeal considered whether a commercial contract which contained a consent for assignment provision, also carried with it the condition that the consent shall not be unreasonably withheld (as is the case by statute in commercial landlord and tenant situations):[40] The question then is whether an agreement that requires consent to be assigned carries with it an implicit understanding that consent to an assignment will not be withheld unreasonably. I agree with the appellant on this point. I conclude that a provision in a contract that requires one party to consent to the assignment of the contract by the other party, has implicit in it the requirement that the party, whose consent is necessary, will not withhold that consent for an improper or ulterior purpose. In my view, the imposition of a good faith obligation, on the decision whether or not to consent, is consistent with the approach to be taken to contracts generally, as enunciated in Bhasin.
[41] In Bhasin, Cromwell J. outlined the organizing principle of good faith that applies to all contracts. It requires that parties to a contract act honestly in the performance of their obligations. In that decision, Cromwell J. established certain duties that rest on parties to a contract. These include:(i) parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily; and
(ii) a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner: Bhasin, at paras. 63 and 65.
|
