The Ontario Court of Appeal's recent decision in 2730453 Ontario Inc. v. 2380673 Ontario Inc., 2025 ONCA 112, provides important guidance on the doctrine of part performance as an equitable exception to the Statute of Frauds, RSO 1990, c S.19.
The Statute of Frauds requires that an agreement for the sale of land must be in writing and signed by the parties to be enforceable. However, the Court's decision demonstrates that the technical requirement of a signed agreement will not defeat what is, in substance, a completed deal – particularly where one party stands by while the other incurs effort and expense in carrying out its side of the bargain.
A Binding Deal Without a Signature
This case involved an oral agreement to sell a 32-acre parcel of land in Milton, Ontario, for $4.1 million. The buyer and seller, both commercial parties represented by counsel, agreed on all essential terms in September 2019. Over the ensuing months, both sides took numerous steps toward closing, including conducting title searches, preparing closing documents, corresponding between lawyers and tendering of closing funds. However, on the designated closing date, the seller refused to close – and relied on the Statute of Frauds to argue that the undocumented and unsigned agreement was unenforceable.
The trial judge disagreed, finding that the buyer had acted in reliance on the agreement and had partly performed its obligations. The trial judge granted the buyer's request for specific performance, thus, requiring the seller to close the transaction. On appeal, the seller argued that the doctrine of part performance did not apply in the circumstances of the case because the buyer did not, in fact, detrimentally rely on the anticipated closing of the real estate transaction.
The Court of Appeal upheld the lower court's decision. It confirmed that the buyer's conduct, including retaining counsel, preparing closing documents, delivering a revised purchase agreement, exchanging requisitions, and tendering closing funds, was not merely preparatory work ahead of a potential agreement, but formed part of a coherent course of performance of an already binding agreement. The Court found that these acts were undertaken solely in anticipation of closing the deal and, crucially, with the seller's participation and acquiescence.
Legal Significance: The Statute of Frauds Faces Modern Commercial Realities
This decision affirms that the doctrine of part performance in Ontario remains a valid exception to the strict application of the Statute of Frauds. Courts will focus not just on whether a signed agreement exists, but on whether a party seeking to avoid a deal has allowed the other to undertake performance in reliance on it. Importantly, the Court rejected the notion that "detriment" must be financial or substantial. For example, the seller argued that the buyer's tendering of funds which were not accepted was not, itself, detrimental. The question, however, is whether the performance was undertaken with the expectation of reciprocity – and whether it would be inequitable to allow the other party to resile from the deal.
Implications for Commercial Actors
For parties seeking to enforce oral agreements involving land, this case provides a clear and encouraging precedent. Where the conduct of the parties reflects a mutual understanding that a binding agreement exists, and where one party performs in furtherance of that agreement, courts may be willing to enforce the deal notwithstanding the lack of a signed document. This is especially so where the steps taken go beyond mere negotiation and reflect a genuine commitment to close.
On the other hand, the decision should serve as a caution to those hoping to use the Statute of Frauds as a procedural shield. The mere absence of a written agreement may not be enough to escape a deal where there has been active participation in the closing process or tacit approval of the other side's efforts. Courts will be particularly wary of parties who, having benefited from a committed counterparty, later attempt to invoke a statutory defence to walk away from their obligations.
In either scenario, the case underscores the need to manage transactional risk thoughtfully. Where formal documentation has not yet been signed, parties should consider being vigilant in clarifying their intentions – and, where appropriate, expressly reserving their rights.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
