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Contract - Interpretation - Implied Terms (2). James Bay Resources Limited v. Mak Mera Nigeria Limited
In James Bay Resources Limited v. Mak Mera Nigeria Limited (Ont CA, 2025) the Ontario Court of Appeal allowed an appeal - here from orders that "Mak Mera to pay James Bay the amount of US$405,000, which she characterized as “advances”" and "damages for defamation in the amount of $200,000".
Here the court considers 'implied term' contractual interpretation doctrine:[61] There is a high threshold for implying terms into agreements. Contractual terms may be inferred “based on the presumed intention of the parties where the implied term must be necessary ‘to give business efficacy to a contract or as otherwise meeting the ‘officious bystander’ test as a term which the parties would say, if questioned, that they had obviously assumed’”: M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 CanLII 677 (SCC), [1999] 1 S.C.R. 619, at para. 27, quoting Canadian Pacific Hotels Ltd. v. Bank of Montreal, 1987 CanLII 55 (SCC), [1987] 1 S.C.R. 711, at p. 775. Implied terms must have a “certain degree of obviousness” and cannot be found “if there is evidence of a contrary intention”, such as that expressed in the clear terms of the contract: M.J.B. Enterprises Ltd., at para. 29. Implied terms cannot contradict express provisions of an agreement, be unreasonable or add terms that the parties could have provided for: First National Financial GP Corporation v. Golden Dragon Ho 10 Inc. and Golden Dragon Ho 11 Inc., 2022 ONCA 621, 474 D.L.R. (4th) 650, at paras. 70-71, leave to appeal refused, [2022] S.C.C.A. No. 40456. . Rankin Construction Inc. v. Ontario
In Rankin Construction Inc. v. Ontario (Ont CA, 2014) the Court of Appeal made the following comments on the interpretive principles that the courts will applied to commercial contracts:[29] Terms may be implied in a contract based on: (1) custom or usage; (2) legal incidents of a class or type of contract; or (3) the presumed intention of the parties, where the term is necessary “to give business efficacy to a contract or as otherwise meeting the ‘officious bystander’ test as a term which the parties would say, if questioned, that they had obviously assumed”: Canadian Pacific Hotels Ltd. v. Bank of Montreal, 1987 CanLII 55 (SCC), [1987] 1 S.C.R. 711, at p. 775; see also M.J.B. Enterprises, at para. 27; Double N Earthmovers, at para. 30; Martel, at para. 81. Any implied terms must fit and be the necessary implication of the express terms; if there is any evidence against the proposed term, it cannot be implied: M.J.B. Enterprises, at para. 29. In my view, none of the criteria for an implied term prohibiting investigation of allegedly non-compliant bids is made out in this case.
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