ABSTRACT
Are entire agreement (EA) clauses among sophisticated commercial parties enforceable under Canadian common law to exclude reliance on preliminary deal documents in a contractual interpretation dispute? Recent decisions, such as that of the Ontario Court of Appeal in Project Freeway, suggest that the answer is ‘no’. We posit that a principal source of confusion in the case law is how courts apply the doctrinal requirement to consider contracts ‘in light of the factual matrix’ or ‘surrounding circumstances’. Our main contribution is to demonstrate that the factual matrix of commercial transactions, fulsomely appreciated, requires honouring EA clauses by not relying on preliminary deal documents such as a letter of intent (LOI) in an interpretation dispute under the parties’ subsequent definitive agreement. To do otherwise overlooks the particular factual matrix of commercial transactions that is characterized by dynamically evolving bargaining, informational, and market environments. For courts to override an EA clause risks imposing an outdated (at best) or non-existent (at worst) commercial reality on the contracting parties. We argue that respecting the parties’ express objective intent by upholding EA clauses is the clearest and most consistent way to apply the foundational principles of Canadian contractual interpretation and respect the factual matrix of commercial transactions.
Blyschak, Paul and Chan, Jonathan, Non-Binding No More? Entire Agreement Clauses and the Factual Matrix in Commercial Transactions (October 29, 2026). Forthcoming in the University of British Columbia Law Review.
Leave a Reply