Simon's Legal Resources

Contracts - Interpretation - Conflict

. 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 the possibility of contractual term conflicts, holding that the more specific term applies:

[36] Articles 6 and 17 address different risks. Article 17 specifically allocates the risk that Stateview itself will default and thereby prevent completion of the assignment. Article 6, read in the context of the vendor consent as a whole, allocates responsibility between assignor and assignee for breaches of the purchaser’s obligations under the underlying agreement of purchase and sale. Nothing in Article 6 expressly addresses Stateview’s own default or the repayment obligation created by Article 17.

[37] The two provisions can, therefore, operate together. The assignee indemnifies the assignor against liabilities arising from the assignee’s breach of the purchaser’s obligations, while the assignor must return the assignee’s payments if Stateview’s default prevents completion of the assignment. The specific allocation of Stateview-default risk in Article 17 is not displaced by the general indemnity in Article 6: BG Checo International Ltd. v. British Columbia Hydro and Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12, at pp. 23-24. Nor does Article 6’s broad “all claims” language ordinarily extend to the indemnitor’s own contractual claims against the indemnitee: Weyerhaeuser Company Limited v. Ontario (Attorney General), 2017 ONCA 1007, 77 B.L.R. (5th) 175, at paras. 208-9, per Laskin J.A., dissenting, approved in 2019 SCC 60, [2019] 4 S.C.R. 394.

[38] For the same reason, the precedence clause in Ms. Osarugue’s vendor consent does not assist her. It operates only where the vendor consent conflicts with the assignment agreement. There is no such conflict. The provisions are capable of simultaneous performance and address different sources of default: Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 245, 480 D.L.R. (4th) 426, at paras. 45-47.