One Year Fixed Term Contract Means What it Says :

n Elder v. Max Wright Real Estate 2023 ONSC 5661 , Justice Koehnen had a situation where a real estate agent had a one year fixed term contract will an automatic renewal clause .

It also had the following clauses :

1. In the event the Contractor violates this Agreement or otherwise fails to conduct his/her business in accordance with the terms of this Agreement, the Company may terminate this Agreement immediately and without notice.

2. Either party may terminate this Agreement, without cause, at any time with written notice to the other party.

The Defendant argued that , in reliance on section 2 above, that they could terminate the contract without cause without any notice, reasonable or otherwise, notwithstanding the one year fixed term .

This is what the judge said :

I nevertheless conclude that the concept of notice even in clause Q 2 must refer to the period of advance warning. If it were otherwise, it would render the inclusion of a one-year renewable term in clauses A 1 and A 3 superfluous and would in fact negate the concept of a renewing one-year term. The concept of a one-year renewing term would be meaningless if either party could terminate the contract at will, at any time, without any advance warning. It is a well accepted canon of contractual interpretation that contracts should be read as a whole and should be read harmoniously so as to avoid conflict between terms and so as to avoid rendering any terms superfluous. The easy way of doing that here is to interpret the concept of “notice” in accordance with the well-established concept of common-law notice of termination in the sense of advance warning.

[22] In clause Q 2 the actual amount of notice is not referred to because it is not necessary to do so. The amount of notice required is the period of time remaining in the one-year term.

My Comment :

This decision is so obviously correct.

According to the Defendants’ interpretation, the whole contract was at will . Why then have a fixed term? Why then have a with cause clause?

It is great to see that sometimes common sense prevails, even in law.

The judge found that because the plaintiff was not an employee but a contractor , the plaintiff  had a duty to mitigate and and such his damages were reduced by the income he earned from new employment during the balance of the 11 months in the fixed term contract.

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