Breach of Contract in Ontario: Remedies and Damages
A contract is a legally binding agreement. When one side does not do what it promised, the other can ask a court to put them, as far as money can, in the position they would have been in if the contract had been performed.
- To succeed you must show there was a contract, the other side broke it, and you suffered a loss as a result.
- The usual remedy is damages, meant to put you where you would have been had the contract been performed.
- You must take reasonable steps to limit your loss, which is called mitigation.
- Most claims up to the limit can be brought in Small Claims Court, and the first step is often a clear demand letter.
Elements of a claim
- A valid contract: an offer, acceptance, something of value exchanged and an intention to create legal relations. Many contracts are oral or by messages, not just signed documents.
- A breach: the other side failed to do what was agreed, did it badly, or did it late in a way that matters.
- Loss caused by the breach, which you can prove with documents.
Types of damages
- Expectation damages: the money needed to put you in the position of performance, such as the cost to finish a job.
- Reliance damages: expenses you spent in reliance on the contract.
- Consequential losses, such as lost profit, but only if they were foreseeable when the contract was made.
- Interest: pre-judgment and post-judgment interest under the Courts of Justice Act.
Limits on recovery
- Mitigation: you must take reasonable steps to avoid or reduce your loss, and cannot claim what you could have avoided.
- Remoteness: losses that were not reasonably foreseeable are generally not recoverable.
- A contract can limit liability or set a cap, if the clause is clear and fair.
- Penalty clauses that go beyond a genuine pre-estimate of loss may not be enforced, while a reasonable liquidated damages clause usually is.
Other remedies
In limited cases, a court can order specific performance, which means making a party do what it promised, or can cancel the contract (rescission). These remedies are usually for the Superior Court. The Small Claims Court deals mostly with money and the return of personal property.
How to proceed
- Gather the contract, messages, invoices, photos and proof of what you paid and lost.
- Write a clear demand letter explaining the breach, the amount you want and a deadline.
- If there is no response, consider filing a claim in Small Claims Court, mindful of the limitation period.
- Be ready to show how you calculated the amount, and what you did to limit the loss.
- Consider settlement. An early, written, reasonable offer can save time and costs.
Common questions
Is a verbal agreement enforceable?
Often yes, but it is harder to prove. Messages and payments can help show what was agreed. Some types of contract must be in writing.
Can I get my legal costs back?
Only part, and in Small Claims Court costs are limited. See our guide to costs.
This guide is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.
Not sure where you stand? A licensed paralegal can look at your documents and tell you your options.
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