Is Signing On The Line Really Final?

• Published date: 17 October 2025
• Subject Matter: Corporate/Commercial Law, M&A/Private Equity, Corporate and Company Law, Contracts and Commercial Law
• Law Firm: Aird & Berlis LLP
• Author: Gary Volman, Christian Nianiaris, Taylor Clapham, Matthew Graham and Aidan Abbott

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Introduction

In M&A transactions, parties often expect the final purchase agreement to be a complete, self-contained statement of the agreed-upon terms. Yet, recent jurisprudence cautions that when drafting leaves uncertainty, courts may draw upon context outside the four corners of the definitive agreement to determine meaning.

The Ontario Superior Court's 2025 decision in Project Freeway provides valuable insight for M&A lawyers for multiple reasons. First, as discussed in our previous article, Not So Fast: Ontario Court Weighs In on Earnout Acceleration Clauses, the court provided guidance on whether certain post-closing transactions could trigger the acceleration of an earnout clause. Second, as we will discuss below, Project Freeway reminds lawyers that even a robust entire agreement clause ("EAC") in an M&A purchase agreement may not preclude a court from consulting the parties' initial letter of intent ("LOI").¹ While EACs are generally intended to create a conclusive presumption that the definitive agreement represents the final, exclusive and entire agreement between the parties, Project Freeway reminds us that Ontario courts may look to the LOI to resolve ambiguity in the definitive agreement, even when faced with an EAC that expressly excludes the terms of the LOI.

The question remains: how do contracting parties ensure that the negotiated EAC truly accomplishes its purpose? This article unpacks the Project Freeway ruling and offers some key drafting considerations to improve the likelihood that an EAC achieves its intended effect.

Why EACs Matter in M&A Transactions

EACs are "generally intended to lift and distill the parties' bargain from the muck of the negotiations."² In M&A transactions, they are particularly important given the breadth and complexity of diligence, lengthy negotiations and the sheer volume of documents involved. Including an EAC helps contracting parties provide certainty about the final terms of a deal by preventing either party from relying on prior discussions and agreements (oral or written) if a dispute arises.

Project Freeway Ruling

In Project Freeway, the court waded backinto the "muck" to interpret the definitive agreement. The dispute between the parties turned on the meaning of the word "material" in an earnout acceleration clause: the purchaser contended that the term should be interpreted in relation to the impact on the business's ability to achieve the earnout performance target, whereas the vendor maintained that the term should be understood in terms of size or value of the transaction.

To resolve this ambiguity, the court consulted the LOI, the terms of which supported a performance-based...