Court of Appeal of Ontario Enforces Oral Agreement for Purchase of $4.1 Million Property

In 2730453 Ontario Inc. v. 2380673 Ontario Inc. (2025 ONCA 112), the Court of Appeal of Ontario (“Court of Appeal”) dismissed an appeal and upheld the trial judge’s decision finding that 2380673 Ontario Inc. (the “Appellant”) orally agreed to purchase a CAD $4.1 million parcel of land from 2730453 Ontario Inc. (the “Respondent”).

Typically, contracts pertaining to the sale of land must be in writing to be enforceable pursuant to the Statute of Frauds (Ontario). However, an exception to this rule is the equitable doctrine of part performance, which allows a court to enforce an oral contract if certain conditions are met.

This decision underscores the importance of remaining cautious when providing verbal commitments that are supported by part performance, even if nothing is agreed to in writing.

The Facts

A summary of the facts of the case is as follows:

• The Respondent sought to purchase a 32-acre parcel of land in Milton, Ontario, owned by the Appellant. In September 2019, the Appellant orally agreed to sell the property to the Respondent for CAD $4.1 million.
• Over the course of two years, the parties negotiated the essential terms of the deal, including the purchase price, terms of sale and the closing date. Once those key terms were settled, both parties retained legal counsel to move the deal forward. At the Appellant’s request, the parties agreed to finalize a written agreement closer to the closing date.
• The Respondent’s lawyer indicated that they would draft the agreement of purchase and sale. The Appellant’s lawyer engaged in the transaction process by providing requested documents and confirming that they would be executed upon closing. Evidence also showed ongoing correspondence between the parties’ lawyers regarding revisions to the agreement of purchase and sale and the acceptance of any registered easements on title, which was a known point of contention between the parties.
• Despite there being no signed written agreement, the Respondent’s lawyer attempted to tender the necessary closing documents and payment but received no response from the Appellant. Despite multiple attempts, the Appellant refused to close the transaction.
• The Respondent subsequently brought an action against the Appellant for breaching their agreement and sought the remedy of specific performance.

Judicial History

In the lower court decision, the trial judge determined there was a binding oral agreement between the parties and that the Respondent’s conduct leading up to and until closing was sufficient to meet the equitable doctrine of part performance. As there was no legal justification to refuse to close the transaction, the trial judge ordered the discretionary legal remedy in contract law of specific performance, requiring the Appellant to complete the transaction. The remedy of specific performance acknowledges that, in certain circumstances, such as contractual disputes involving unique or irreplaceable items like a parcel of land, an award of monetary damages is not sufficient to remedy the harm suffered by an innocent party. Rather than awarding monetary damages, a court compels the party who breached the agreement to fulfill their contractual obligations.

The Court of Appeal upheld the trial judge’s decision that there was a binding oral agreement between the parties and found that the trial judge did not err in concluding that the doctrine of part performance applied and granting the remedy of specific performance.

The Appeal 

The equitable doctrine of part performance is an exception to the statutory rule that an oral agreement to sell land is unenforceable. The doctrine will apply if (i) there is detrimental reliance on the oral agreement by one of the parties; and (ii) acts of part performance of the oral agreement have been undertaken.

On appeal, the Appellant argued that the detrimental reliance aspect had not been satisfied, contending that since payment was never accepted by the Appellant, the Respondent’s attempts to tender the funds were not detrimental to the Respondent and, thus, did not constitute detrimental reliance. The Appellant further argued that while the conduct related to the preparation of closing documents may have indicated the existence of an oral agreement, it did not constitute the Respondent’s performance of its sole obligation under the oral agreement to pay CAD $4.1 million on closing and was, therefore, irrelevant.

The Court of Appeal disagreed with the Appellant’s arguments and concluded that both aspects of the doctrine of part performance had, in fact, been satisfied. In reviewing the doctrine, the Court of Appeal emphasized that “if one party to an otherwise unenforceable agreement stands by while the other party acts to its detriment by performing its contractual obligations, the first party will be precluded from relying on the requirements of the Statute of Frauds to avoid its own performance.”

The Court of Appeal upheld the trial judge’s decision that the Respondent’s efforts to complete the transaction constituted acts of part performance. Actions like resolving title concerns related to an easement, preparing closing documents, and making arrangements for payment and title transfer were considered integral to the agreement and the obligations arising from it. Additionally, the Court of Appeal noted that jurisprudence supports the view that obtaining legal representation and attempting to make payment under an oral agreement of purchase and sale are acts of part performance, as these involve significant time and effort, even if they are “universal customs” in such transactions.

Conclusion and Key Takeaway

In assessing whether the doctrine of part performance applies and whether an oral agreement should be enforced, an Ontario court will consider whether, in all the circumstances, equitable intervention to prevent reliance on the Statute of Frauds to avoid an oral agreement is justified. Where one party remains passive in the face of the other party acting to its detriment in performing its obligations under an oral agreement, the passive party may lose the ability to rely on the Statute of Frauds as a defence to failing to complete the transaction.

In other words, passive acceptance of the other party’s performance may amount to a waiver of the protections of the Statute of Frauds. 2730453 Ontario Inc. v. 2380673 Ontario Inc. serves as a reminder that an oral agreement may be enforceable where there is clear detrimental reliance and part performance.

If you have any questions about this content, please contact the authors Paul De Francesca at [email protected] or Ana Savic at [email protected]. The authors gratefully acknowledge the assistance of Articling Student Pavanpreet Ranu in the preparation of this update.

This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.

If you would like further information regarding the issues discussed in this update or if you wish to discuss any aspect of this commentary, please feel free to contact us.