The Second Opinion: To Agree Or Not To Agree; When Do Discontinued Negotiations Lead To A Binding Contract?

When negotiations between two parties terminate before a formal, written agreement is signed, a common question is whether or not a binding contract has nevertheless come into existence. An interesting variant on this question was recently considered in Hartslief v. Terra Nova Royalty Corp., 2013 BCCA 417. The added variable was the fact that the negotiations took place exclusively between the parties' solicitors, thereby raising additional uncertainty as to the authority of the solicitors to bind their clients.

The case arose from the termination of the plaintiff's employment with the defendant corporation. The solicitors for the two parties had discussed a settlement of the plaintiff's claim, and appeared to have reached a binding agreement. The employer disputed this, however, and argued that (i) it was the...