Abstract:
The Canadian case law concerning variation agreements has been confused in the decade after the New Brunswick Court of Appeal’s decision in Nav Canada v Greater Fredericton Airport Authority Inc. There have been four different answers given to the question of whether variation agreements require consideration to be binding. Two of the answers (the practical benefit test for consideration and the reliance-focussed approach) are unsuitable and should not be followed. There are only two coherent and attractive answers: to embrace Nav Canada fully; or to return to the pre-existing duty rule. Of the two, the pre-existing duty rule is the least problematic and should be returned to by the Canadian courts in the future. But whichever approach is taken, the courts need to decide on an approach to clarify an uncertain area in Canadian contract law.