August 26, 2025
Agreement as to essential terms is central to the existence of a contract. Without this there is no contract.
It is trite law that an “agreement to agree” is not an agreement and cannot create a contract.
This is illustrated by a couple of recent Ontario Court of Appeal cases, on different subjects. Neither case is noteworthy for uniqueness. Both involve variations on common agreements, or agreements to agree.
In Metske v. Metske the plan was that a son and daughter-in-law would take over the parent’s dairy farm. For complex reasons, this was set up as a series of transactions by which the purchasers first bought the herd and the milk quota, with plans to later by the rest of the farm. As the trial judge put it “[i]n terms of the transfer of land, precisely what succession would entail was hazy”. No price was ever set.
When the parties had a falling out, the younger Metskes were forced to sell the herd at a discounted price, as well as disposing of equipment at low prices. They brought a claim against the parents for unjust enrichment and proprietary estoppel. The Court of Appeal found for the parents – an “agreement to agree” is not enough to establish proprietary estoppel and any benefit obtained by the parents was justified in the circumstances(except claims to two small improvements to the land).
This creative attempt to avoid the rules of contract law was unsuccessful.
The other example is a commercial lease case, Gallant v. Johnson. The lease included a provision that the tenant had an option to a five-year renewal of the lease, on the same terms as the first lease, “except for the rental rate for the renewed term, which shall be agreed upon by the Tenant and Landlord.” The lease contained no mechanism to settle the renewal rent (such as “at market value”) The courts were not prepared to fix the rental rate, and the option was described as simply an agreement to agree.
TAKEAWAYS
- Care should be taken in drafting contracts.
- To create a contract, there must be agreement on essential terms.
- Courts will not create an agreement where there is simply an “agreement to agree”.
HOW WEILERS LLP CAN HELP YOU
Our team of commercial lawyers are skilled in drafting binding contracts, and reviewing both existing agreements and drafts of proposed new contracts.
If your deal is important enough not to be just “an agreement to agree” give us a call. We might be the right lawyers for you.