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Interpretation - Commercial Principles

. 2484234 Ontario Inc. v. Hanley Park Developments Inc.

In 2484234 Ontario Inc. v. Hanley Park Developments Inc. (Ont CA, 2020) the Court of Appeal commented on commercial factors in contractual interpretation:
[64] The court should also seek to avoid an interpretation of a commercial contract that “would result in commercial absurdity”: Toronto (City) v. W. H. Hotel Ltd., 1966 CanLII 8 (SCC), [1966] S.C.R. 434, at p. 440; Ventas, at para. 24(d). Rather, commercial contracts are to be construed in accordance with sound commercial principles and good business sense, objectively rather than from the perspective of one contracting party: Kentucky Fried Chicken Canada v. Scott’s Food Services Inc., 1998 CanLII 4427 (Ont. C.A.), at para. 27. ...

[65] ... An interpretation that allows the contract to function in furtherance of its commercial purpose is preferred over one that does not: Humphries v. Lufkin Industries Canada Ltd., 2011 ABCA 366, 68 Alta. L.R. (5th) 175, at para. 15.
. 2099082 Ontario Limited v. Varcon

In 2099082 Ontario Limited v. Varcon (Ont CA, 2020) the Court of Appeal commented as follows on the role of commercial principles in contract interpretation:
[24] .... Varcon’s interpretation of the warranty would effectively make AWD — one of the many subcontractors on the project — a guarantor of any or all defects in the project, whether its own work has been defective or not. A plain reading of the warranty provisions does not support this position and does not accord with sound commercial principles and good business sense: All-Terrain Track Sales and Services Ltd. v. 798839, 2020 ONCA 129, at para. 27.
. Himidan v Farquarson

In Himidan v. Farquharson (Ont CA, 2019) the Court of Appeal articulated basics of contract interpretation:
[20] A contract must be interpreted in accordance with sound commercial principles and good business sense: Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205 (CanLII), 85 O.R. (3d) 254, at paras. 24, 50. On the appellant’s argument, she was agreeing to sell only a seven-foot strip of the driveway. If the appellant’s contentions against the neighbours are correct, namely that the appellant owned the other two-foot strip by adverse possession, then the APS was reserving that two-foot strip to her (because she was not including it in the sale). If the neighbours’ assertion is right, then the appellant was selling a seven-foot strip of a nine-foot-wide driveway under circumstances in which the neighbours could block the other two feet, interfering with the functioning of the driveway as it appeared at the time of the APS. In either event, the appellant’s proposed interpretation does not make commercial sense.


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