Casual legal: The fine print that isn't there
DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.
By Mitchell R. Hayward
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider
Municipalities often focus on the express wording of their contracts, tenders, and service agreements. However, courts may also recognize obligations that are not expressly written into the contract. These "implied terms" can create obligations and risks for municipalities, particularly in procurement and long-term commercial relationships. Courts across Canada will recognize an implied term based on three circumstances: (1) there is an established custom in implying certain terms, (2) specific classes of contracts, such as insurance contracts or employment agreements, and (3) “the presumed intentions of the parties where the term is necessary to give business efficacy to the agreement.”
For municipalities, the third category often presents the greatest risk. Courts will imply a term only where it is sufficiently obvious and necessary to make the contract work. The focus will remain on the intentions of the actual parties – not necessarily what reasonable parties might have intended.
Recent Alberta case law also reinforces the continuing importance of implied terms. In Remington Development Corporation v. Canadian Pacific Railway Company, 2025 ABCA 244, the Alberta Court of Appeal reaffirmed the traditional "officious bystander" test by explaining that an implied term should have a certain degree of obviousness to it. For example, “if, while the parties were making their bargain, a bystander were to suggest some express provision relating to a matter in their agreement, both parties would answer sharply with a common “Oh, of course!”, then such provision is likely to be considered an implied term.
Municipalities should therefore consider whether critical expectations (whether thought to be obvious or not) are expressly addressed in their agreements. Assumptions regarding cooperation, information sharing, inspection rights, change management, cost escalation, performance reporting, or dispute resolution may appear obvious to municipal administrators but can become contentious if left unstated.
The practical lesson for municipalities is straightforward: do not rely on assumptions. Contract review should extend beyond what is written to include an assessment of what a court might imply. Procurement templates, construction contracts, development agreements, and service contracts should be periodically reviewed to identify areas where a court could find an implied duty based on custom, legal incident, or business efficacy. By addressing these matters expressly, municipalities can reduce uncertainty, improve risk allocation, and minimize costly disputes over contractual obligations that were never written down but may nevertheless be legally enforceable.
To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1.800.661.7673 or email casuallegal [at] abmunis.ca (casuallegal[at]abmunis[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] abmunis.ca (riskcontrol[at]abmunis[dot]ca), or call 310.MUNI (6864) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.
