Dangerous Assumptions: Estoppel By Convention In Construction Projects

A recent case on estoppel by convention in the context of an owner's termination of a construction contract provides a valuable reminder to both legal practitioners and project personnel on the dangers associated with ignoring the contract, even when it may seem safe to do so.

In the recent case from the Ontario Court of Appeal of Grasshopper Solar Corporation v Independent Electricity System Operator, 2020 ONCA 499 [Grasshopper], the court rejected the contractor's argument that a fairly express past communication from the owner that the contract would not be terminated for delay "estopped" the owner from later terminating the agreement for delay.

The contractor had argued that "estoppel by convention" applied, which is briefly defined as a shared assumption of fact or law between two contracting parties that may operate to prevent one of the parties from asserting contractual rights in a manner contrary to the shared assumption. The court held that there was