Simon's Legal Resources

Contract - Interpretation - Absurdity

. Centre de Services à l’emploi Prescott-Russell Inc. v. Forage M3 Drilling Services Inc.

In Centre de Services à l’emploi Prescott-Russell Inc. v. Forage M3 Drilling Services Inc. (Ont CA, 2026) the Ontario Court of Appeal allowed an appeal, here brought against a summary "judgment dismissing their third-party claim against the respondents", this grounded in indemnity agreements intended to secure (now invoked) loan guarantees.

Here the court considered the contractual inpretation principle of 'absurdity':

[51] Finally, the interpretation and approach adopted by the motion judge would lead to an absurd result and great unfairness to the appellants. Where a given construction of a contract leads to an absurd result, courts can assume that this could not have been intended by rational commercial actors in making their bargain: Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, [2019] 4 S.C.R. 394, at para. 144, per Côté and Brown JJ. (dissenting, but not on this point), citing Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423, at para. 61. ....