CASUAL LEGAL: New Approach to Interpreting Releases
New Approach to Interpreting Releases
By Jessica Fleming
Reynolds Mirth Richards Farmer LLP
AMSC Casual Legal Service Provider
The Supreme Court of Canada (SCC) recently confirmed that the rules of contractual interpretation that apply to all contracts now also apply to releases. A release is an agreement in which one party agrees to not sue or proceed with legal action against another.
In the SCC case, the release being considered was concluded between the City of Corner Brook, Newfoundland, and a driver who promised not to sue the city for damages arising from a car accident. Until now, for historical reasons, courts would give meaning to these types of agreements by calling on a different rule.
The SSC confirmed that releases, like all contracts, are to be interpreted by having regard to the words used in the agreement, in their ordinary sense, and in accordance to the surrounding circumstances known to both parties at the time when the agreement was concluded. The inclusion of surrounding circumstances recognizes that written words do not exist in a vacuum. The meaning of the words used by parties when drafting an agreement will necessarily be informed by the purpose of the agreement, the factual context that lead to its conclusion and the relationship between the parties.
The SSC noted that although the same rules of interpretation now apply to releases, releases are, by their very nature, particular types of contracts which can complicate the task of interpretation, even when the same rules are applied.
Therefore, to alleviate any potential uncertainty around the interpretation of releases, the SCC offered two useful tips that should be borne in mind when setting out the terms of a release. First, it is useful to indicate whether a release is intended to include unknown claims or claims of a particular subject matter. Second, it is advisable to narrow the scope of a release to a particular timeframe or subject.
To access AMSC’s Casual Legal Helpline, AUMA members can call toll-free to 1-800-661-7673 or email casuallegal [at] amsc.ca (casuallegal[at]amsc[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] auma.ca (riskcontrol[at]auma[dot]ca), or call 310-AUMA (2862) to speak to AUMA’s Risk Management staff. Any Regular or Associate member of the AUMA can access the Casual Legal Service.
DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.
