What Is: Release Agreement in Ontario, Canada

NOTICE: The information in this video is intended only to be merely informative and is NOT intended to be legal advice to any person, company or entity. Never rely solely on the information contained in this video. Information may not apply or be appropriate to your situation and/or may be out of date. Any person with a specific legal question or legal problem should always consult with and seek the advice of a qualified lawyer. Peter Cusimano is a licenced member (lawyer) of the Law Society of Ontario. All legal services will be provided by a licenced lawyer. Not intended to solicit anyone who is represented by a lawyer or paralegal. E.&O.E. (c) 2018-2024 Peter Cusimano, www.PeterCusimano.com


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Video Transcript

What Is: Release Agreement in Ontario, Canada
by: Peter A. Cusimano, B.Sc., LL.B.; Toronto Business Lawyer

In this video, I am going to share some general information about a release agreement or release provision as it applies in the Province of Ontario.

This is based on my twenty plus years experience as a business lawyer in Ontario advising small and medium sized businesses.

A release is essentially an agreement between parties whereby one party will let go or release the other party from a certain obligation.

Often a release is used when parties settle a dispute or lawsuit. In such a situation, a party will release the other party from any obligations regarding the issue.

In some cases, a business may be able to include in their contract, such as a sales contract, a release provision to preemptively prevent some disputes from even starting.

Let us look at an example of a release where a dispute has occurred and the parties are proceeding to resolve the issue.

Let us say that a business provides website design services to a customer and the customer is not pleased with part of the services provided and refuses to pay the full invoice.

As part of their discussions to resolve the matter, let us say that the parties settle their differences by agreeing to accept the services as-is in exchange for a reduced price.

This type of resolution of the dispute is very common. In the particular circumstances, the business may be able to resolve the matter with just verbal discussions.

Or perhaps something in writing is desired especially if there is a significant amount of money involved or if there is a concern that the customer may change their mind and then sue the business.

In order to prevent the customer from later coming back and suing the business for incomplete or defective services, the business will at the time of settlement request the customer to sign a document that says the customer will not sue regarding the matter.

In other words, the customer will release the business from any further obligation to the customer regarding the matter.

Technically, the business is released from further obligations to the customer.

If the customer then subsequently changes their mind and sues the business, the business can generally use the release document as a defense to stop the lawsuit from proceeding.

So there you have it. That's just an overview of a release.

Every release will need to be carefully written to deal with the specifics of the business and the specifics of the matter.