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Contracts – Mixed Fact and Law, and What This Means

September 15, 2016

Thursday September 15, 2016 - Interpretation of a Standard Form Contract not subject to appellate deference

The Case

The Supreme Court ruled in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC, that contracts are a combination of fact and law and must be approached using a “factual matrix.” This is significant because it undoes the previous assertion that contracts are solely a legal instrument and also suggests that an arbitrator’s decision cannot be questioned on the law at a higher court level. 

The case itself hinged on an agreement between Sattva Capital and Creston Moly – that the latter owed the former US$1.5 million, and that this fee would be paid out in shares. The case mainly focused on the date from which the price of the Creston shares would be determined; according to Creston, Sattva would receive approximately nine million fewer shares than Sattva believed to be the correct amount. 

An arbitrator ruled in favour of Sattva, but this decision was then appealed in the British Columbia Court of Appeal, where the decision was reversed. It was then appealed to the Supreme Court of Canada, who once more returned to the initial decision. 

Do All Contracts Require Both Fact and Law? 

Though a great deal of contracts do require an understanding of the factual matrix, this is less relevant in the case of contracts where terms are not negotiated, such as standard form contracts. These contracts are often presented as a straightforward yes-or-no – though there are items to consider, such as the reason for the contract, the relationship it creates between parties, and the industry it is created out of, these factors are generally before anybody who may find themselves a party to such a contract, and are not hinged on fact. 

Trust Our Civil Lawyer for Contract Disputes

Contract disputes can be stressful and not always straightforward. If you find yourself in a breach of contract or have had someone else break your contract, talk to the civil litigation lawyers Karrass Law. As contract law experts, we understand the nuances that surround contracts and can provide you with tailored legal advice

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