Actions Can Sometimes Speak Louder Than Words

As parties work out the terms of a deal, many letters of intent and other commercial documents come with warning labels as to the non-binding nature of the terms set out in that document. "This letter is not to serve as a legal agreement but as a summary of the understanding of A and B," is one such warning and seems clear enough. However, a recent decision of the Ontario Court of Appeal demonstrates that in some situations, the statement of the parties' intentions as expressed in such a warning label will not prevail. Contracting parties need to take care  to ensure that their actions do not speak louder than the words in the warning. 

In Nordlund Retreat¹, the Court addressed a dispute between two neighbours of real property in Northern Ontario. One neighbour (Plominski) was landlocked, and the other (Nordlund) had water access only. They struck a deal in principle to provide Nordlund with a road access easement, and to sever a portion of the waterfront property to