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ARTICLE · 06 AUGUST 2015

Incorporation By Reference

Alexander Holburn Beaudin + Lang LLP
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Most trade contracts incorporate "by reference" the terms and conditions of the prime contract.

CanadaReal Estate and Construction
Christopher Hirst
Christopher Hirst
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Most trade contracts incorporate "by reference" the terms and conditions of the prime contract.

Are these clauses effective? Short answer: not really.

The general rule of interpretation is that a trade contractor is only bound by the terms of the principal contract to the extent that the term incorporating the prime contract is explicitly set out in the trade contract.  Where the term purporting to incorporate the prime contract is ambiguous, the court will look at the trade contract to determine "on its face" whether incorporation by reference was intended. The court will also consider the intentions of each party to be bound by the term as demonstrated by their actions and correspondence.

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