Home construction and renovation are one of the most common types of the contract the average homeowner will be involved in after the purchase of their home and at the same time, one of the least understood and most litigated relationships that appear before the Small Claims Court in Ontario.

The key to successful home construction is “to get it in writing”.  In other words know what you want in terms of design, materials, and timing and have it reduced to writing if there are changes or extras have them added in writing with all costs specified and agreed to.  This will not only ensure that you and your contractor are clear as to the nature and costs of your desired construction but the envisioned completion date.  If you take the time to clarify your agreement you hopefully avoid future disagreements, after all, it is easier and cheaper to avoid a mess than it is to clean one up as suggested by the Court in the recent decision of Greca v Ndreka Construction Ltd, 2018 CanLII 44844 (ON SCSM) which stated;

The Plaintiff’s and Defendants’ evidence on the terms of the contract were both equally credible and therefore, in my opinion, the Plaintiff has not been able to establish on the balance of probabilities his position as to the terms of the oral agreement. If the contract would have been in writing and signed by the parties then the terms of the contract would likely have been more clearly established.

Without establishing that the terms of the contract are as asserted by the Plaintiff the Plaintiff cannot establish on the balance of probabilities that any money is owed by the Defendants.  

However, if it is too late for the above advice, hope is not lost, contrary to the old saying of “a verbal contract is not worth the paper it is written on”, the Courts have and will enforce an oral agreement both for initial construction and in respect to extra’s or unforeseen changes and additions to a construction agreement.

The Court’s position in respect to oral agreements is well outlined in the case of Schrempf v. Willchuk, 2013 ONSC 2863 (CanLII) which states;

[5]                     On the first issue of whether an oral agreement existed, in Picavet v. Clute, 2012 CarswellOnt 4575 (ON S.C.), Healey J. at para. 9 summarized that where there is no written contract documenting the alleged agreement “the court must examine everything occurring between the two parties that is relevant to the alleged agreement in order to decide whether a contract exists.”

[6]                     Paragraph 15 of the decision of Cavarzan J. in Summers v. Sawyer, 2005 CarswellOnt 4001 (ON S.C.), provides as follows with respect to binding oral agreements:

Whether or not a binding oral agreement was formed in the circumstances here is a question which engages what has been called the objective principle of contract formation.  As stated in S.M. Waddams, The Law of Contracts (5th Edition) at p. 103:

The principle function of the law of contracts is to protect reasonable expectations engendered by promises.

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