GOD AND CANADIAN LAW
The Canadian Charter of Rights and Freedoms opens with the following line: “Whereas Canada is founded upon principles that recognize the supremacy of God and the rule of law:”
God is supreme and Canada’s Constitution explicitly recognizes His supremacy as a foundational building block of the country. This fact is so important that it is the first thing mentioned in the Charter, above and ahead of all else. It is also mentioned in conjunction with the rule of law.
Therefore, Christian principles should guide and inform the practice, development, interpretation, and application of Canadian law in all spheres, including municipal law.
Written Agreements Help Build Trust
Clients sometimes cite “trust” as a sound basis to forego a formal written agreement with a counterparty. Reasons may be given along the lines of “We’ve known them for a long time and they’ve done good work before, so need to waste time doing a written contract…” or “They won’t want to damage their business reputation” (iffy justification in light of the Supreme Court of Canada’s endorsement of the doctrine of “efficient breach” – Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 (CanLII) at para. 31), or “If that issue happens to come up, we’ll just sort it out with them at that point.”
These are flimsy arguments, pretexts for lazy business and reduced accountability, and conducive to disputes between two supposedly trusting and trustworthy counterparties. Reasonable people regularly disagree over what is reasonable and established relationships regularly breakdown. Especially when business interests and livelihoods are at stake. And in the Alberta municipal setting, where the indoor management rule does not apply (Pacific National Investments Ltd. v. Victoria (City), 2000 SCC 64 (CanLII) at para. 68 and Mikisew Cree First Nation v. Rath, 2023 ABKB 321 (CanLII) at para. 30), the absence of a duly authorized and executed written agreement can jeopardize the legal validity of the arrangements.
Trust is crucial to a functional contractual relationship, whether the agreement is based on an oral or written understanding. Insisting on a formal written agreement does not indicate a lack of trust in the counterparty. It actually signals and strengthens trust. This salutary effect applies both within the party-counterparty relationship as well as within a party’s internal personnel relationships.
When a party signs a formal written agreement, it demonstrates to the other party that it takes their business and its own business seriously (this solemnity has been recognized as a product of signing formalities) – to the degree that the party is prepared to make and be held accountable to clear and certain written commitments and expectations. It also lets the counterparty know that the party expects no less from them.
It sends the same message to the party’s own internal personnel, making it easier for them to perform their roles and manage, identify, and rectify contract administration issues.
Just as the Lord has given us clear commandments and instructions for living our lives (for example, Exodus 20:12 – 17), which makes us accountable to Him, clear expectations in a contractual relationship enhance accountability under the contract. A party cannot be held accountable to an unknown obligation or standard and it is unfair to try to do so.
Although the negotiation and drafting process add time at the outset, the extra time is often well worth the advantages gained through this process.
Every now and then, a party does not like what it sees or hears from the counterparty during the negotiation or drafting stage, even a counterparty the party has dealt with before, and realizes it would be better to terminate the relationship before entering into a new legally binding contract with a possibly problematic counterparty. And because the parties have to take the time to negotiate, think things through, write the agreement out, and figure stuff out together to get to a mutually satisfactory finished product, it is often more comprehensive than other forms of agreement. As it covers more waterfront, the potential range of disputes is narrowed and disputes are less likely to occur. And if disputes do occur, the relationship-building the parties went through to finalize the agreement may make them more agreeable to an expeditious and amiable resolution.
Altogether, a formal written agreement may help to fulfill our Lord’s admonition to settle disputes before getting to court (Matthew 5: 25).
So, if a party trusts its counterparty, it may be worthwhile to show it through a formal written agreement.