Drafting agreements without legal advice is an unwise proposition. In Vandal v Cousineau the Alberta Court of Appeal upheld a decision to void a purported contract for uncertainty and refused to rely on contextual factors to resolve the deficiencies in the written document.
Facts
An experienced businessman owned an Edmonton bar named Smokin' Joe's Roadhouse. He tried to sell Smokin' Joe's to the bartender who worked for him. Rather than seeking legal advice, the businessman sat down and wrote out a one-page "purchase agreement" on a kitchen table and the parties both signed off on same. The problem was that the "purchase agreement" was unclear as to whether the sale was a share purchase or an asset sale. It was also unclear as to the date of when the change of control would occur.
The fact that both parties believed that the purported agreement was a binding contract was irrelevant. Further irrelevant was the parties' evidence as to what they thought the words of the contract meant. The purported agreement was doomed by the fact that the written text was silent as to several key issues which should have been addressed had the parties indeed come to an agreement.
Although recent cases that have expanded the scope of admissible evidence used to interpret contracts, the scope of such evidence is still quite limited. While courts may consider context when interpreting contracts, contextual considerations should not supplant the written text such that the courts create a new agreements.
Conclusion
This decision highlights the importance of obtaining proper legal advice prior to entering into a contract and illustrates the down side of "kitchen table deals".
From a legal standpoint, litigants ought to be wary of attempting to adduce subjective testimony of written contractual agreements. Only objective evidence of the knowledge of the parties at the time of the contracts formation is generally admissible.
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This article is intended to be an overview and is for informational purposes only.
