Doctrine of Part Performance: What You Need to Know

The doctrine of part performance is a legal principle that prevents someone from using the Statute of Frauds as a shield when the other party has already partially performed their obligations under an oral contract.

It’s an exception to the general rule that certain contracts, especially those involving land, must be in writing to be enforceable.

In simple terms: if you made an oral agreement about property and the other person has already acted on it in significant ways, you can’t suddenly claim “there’s no written contract, so I don’t have to honor our deal.”

Ontario’s Statute of Frauds requires certain types of contracts to be in writing. The most important for our purposes are contracts for the sale or transfer of land or any interest in land. This includes buying property, granting easements, or creating leases over three years.

The purpose is preventing fraud and misunderstandings. Real estate transactions are significant, and written agreements provide clear evidence of the parties’ intentions.

However, strict application of this rule can cause injustice. What if you relied on an oral agreement, spent money, made improvements, or changed your position based on the promise – and now the other party wants to walk away claiming there’s no written contract?

The doctrine of part performance allows courts to enforce oral contracts that would otherwise fail under the Statute of Frauds. If you’ve partially performed your obligations in ways that clearly point to the existence of a contract, courts won’t let the other party hide behind the writing requirement.

The key is that your actions must be so clearly connected to the alleged contract that they provide strong evidence the agreement actually existed. Your performance essentially substitutes for the missing written evidence.

Courts apply a strict test. Not every action taken under an oral agreement qualifies as part performance.

Acts Must Be Referable To The Contract: Your actions must point unmistakably to the existence of the specific contract you’re claiming. They can’t be explained by any other reasonable interpretation. The connection between what you did and the alleged agreement must be clear and obvious.

Acts Must Be Substantial: Minor or trivial actions don’t count. You must have done something significant that changed your position in reliance on the contract. The greater your investment of time, money, or effort, the stronger your claim.

Must Be Done In Reliance On The Contract: Your actions must have been taken because of the oral agreement. You wouldn’t have done these things but for the promised contract.

This is the most important requirement. Courts ask: do the actions taken, standing alone, point clearly and unmistakably to the existence of the specific contract claimed?

For example, if you move onto property and make improvements, this strongly suggests an agreement giving you rights to the property. These actions are referable to a contract about the land.

The doctrine of part performance balances competing interests. The Statute of Frauds protects people from false claims about oral agreements. But it would be unjust to let someone benefit from your performance and then deny the agreement’s existence.

Courts developed part performance to prevent fraud while maintaining the writing requirement’s protective purpose. The high threshold for proving part performance ensures the doctrine isn’t abused.

If someone is denying an oral land contract you’ve already acted upon, consult a real estate litigation lawyer immediately. They can assess whether your situation meets the part performance requirements and advise on your options. Contact us at 416.901.9984 or info@pintoshekib.ca.