When it comes to contracts, communication is key to managing liability

Litigation associate Winston Gee has told Canadian Underwriter that organizations need to tread carefully on how a status of a contract is communicated.

The decision C.M. Callow Inc. v. Tammy Zollinger, et al, released in late December 2020, ruled in favour of property management firm Callow Inc., who received 10 days’ notice that their winter maintenance contract was being terminated early. Read our full analysis on the ruling in Callow here.

Although the contract allowed for early termination with 10 days’ notice, Callow sued for breach of contract. Callow was award $80,000 in damages. 

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Winston and a team of Torys lawyers represented the Canadian Chamber of Commerce as an intervenor in the case.

“One of the practical takeaways of this decision is organizations need to be careful on how they communicate the status of a contract,” Winston said.

Winston said one of the outcomes of the ruling is that a party to a contract could now be under a duty to correct any potential misapprehensions if they become aware that their counter-party is under a mistaken belief about how certain contractual rights or obligations will be exercised.

“Selective disclosure of the kind that went on in Callow can lead to liability.”

You can read more litigation insights on the practice page.