January 31, 2023 – Agreements to Agree: Bogue v. Bogue

“The decision of the Ontario Court of Appeal in Bogue v. Bogue, 1999 CanLII 3284 (ON CA), [1999] O.J. No. 4310, is instructive on the legal issues raised in this motion. The court stated at para. 12:

It is an over-simplification to say that there cannot be an agreement to agree. The true legal position was explained by Robins J.A., in Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 CanLII 2734 (ON CA), 79 D.L.R. (4th) 97 (Ont. C.A.) at pp. 103-04:

As a matter of normal business practice, parties planning to make a formal written document the expression of their agreement, necessarily discuss and negotiate the proposed terms of the agreement before they enter into it. They frequently agree upon all of the terms to be incorporated into the intended written document before it is prepared. Their agreement may be expressed orally or by way of memorandum, by exchange of correspondence, or other informal writings. The parties may “contract to make a contract”, that is to say, they may bind themselves to execute at a future date a formal written agreement containing specific terms and conditions. When they agree on all of the essential provisions to be incorporated in a formal document with the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.

However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract. In other words, in such circumstances the “contract to make a contract” is not a contract at all. The execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself . . . [Emphasis added]

And at p. 105:

If no agreement in respect to essential terms has been reached or the terms have not been agreed to with reasonable certainty, it can only be concluded that such terms were to be agreed upon at a later date and until that time there would be no completed agreement.

More recently in Bouchard v. Poulin, 2017 ONSC 3328, Justice Shelston applied Bogue, and held at paras. 16, 17 and 33-35:

[16]      In the Bogue decision, Justice Rosenberg finds that there was evidence to determine that there was a final settlement, there was no expressed discussion about the extraordinary release sought by the husband and that the parties had agreed to bind themselves to a settlement and what remained was for the lawyers to reduce that settlement to a formal document. He did not find that that was an agreement to agree. At paragraph 15 of the decision, Justice Rosenberg states:

Generally speaking, litigation is settled on the basis that a final agreement has been reached which the parties intent to record informal documentation and “parties reach a settlement should usually be held to their bargains”.

[17]           If the court finds that at the end of negotiations where the litigants had agreed to bind themselves to a settlement and it only remained for the lawyers to draft a formal document, the parties have entered into a contract and not “an agreement to agree”. For there to be a binding contract, all the basic and essential components of the creation of the contract must be present. (Volmer v. Jones, 2007 CanLII 7999 ONSC).

. . .

[33]     I find that at the meeting of December 22, 2016, the parties agreed in principle to the applicant transferring her share of the Company to the respondent. I accept the evidence of Mr. Ranger and his client that they had an agreement on specific terms. However, I do not accept their evidence that the December 22, 2016 agreement contained all the essential terms of a binding contract. I accept the evidence of the applicant that she had to consider other essential terms that required a complete and all-encompassing agreement that covered not only the Company but the matrimonial home.

[34]           I find when one considers the multitude of issues that had to be addressed in the transfer of the applicant’s interest in the Company as well as dealing with the sale of the matrimonial home, it is not realistic to believe that such a contract would be restricted to the terms contained in one short as alleged by the respondent.

[35]           Further, if the parties had reached a contract on the single paragraph as alleged by the respondent, then why wasn’t the contract prepared by hand or typed at the meeting before anyone left the meeting. I conclude that the reason it was not so prepared was because only general terms had been agreed to and a complete contract had to be drafted. To accept the respondent’s position would ignore the other issues that he himself has raised in his redrafted agreement of January 5, 2017.”

            Hamilton v. Hamilton, 2022 ONSC 724 (CanLII) at 10-11