The other side walked away after agreeing to sell you something, and a cheque will not be adequate compensation for you. Specific performance of a commercial contract is the order that makes them do what they promised, and Ontario courts grant it more readily than the old textbooks suggest. It remains discretionary, and you still have to earn it. This guide covers when a business can realistically ask for it, what the court weighs, and why getting it before trial is the hardest part.
When a Commercial Contract Earns Specific Performance
Start with the default. A court usually compensates in money for the damages suffered by the innocent party, and specific performance of a commercial contract follows only where money leaves you short.
The modern framing is less grudging than the reputation suggests. In Bellwoods Brewery Inc. v. 1896841 Ontario Limited, 2023 ONSC 2845, the Superior Court said it is inaccurate to describe specific performance as an extraordinary remedy. The court took the same view in The Decorators Choice Paint Store Ltd. v. Innes Crossing Inc., 2024 ONSC 4418, an undefended commercial lease case decided on a motion for default judgment, calling it an exaggeration to treat the remedy as extraordinary.
Three things decide whether specific performance of a commercial contract is available. They are whether damages are adequate, the nature of the subject matter and in particular whether it is unique, and how the parties have behaved, since this is equitable relief.
Uniqueness is the word that misleads people in a specific performance commercial contract case. It does not mean one of a kind. In Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, the Court of Appeal treated it as a quality that cannot be readily duplicated elsewhere and that is particularly suited to the proposed use.
Most of the reported authority on that test concerns land, because that is where the argument usually arises. The principles apply more broadly, though, and the sections below cover where they land in a purely commercial deal.
Goods: the Section the Sale of Goods Act Hides
Most business owners never learn this provision exists.
Section 50 of the Sale of Goods Act is the clearest statutory grant of specific performance of a commercial contract Ontario has. It reads as follows.
In an action for breach of contract to deliver specific or ascertained goods, the court may, if it thinks fit, direct that the contract be performed specifically, without giving the defendant the option of retaining the goods on payment of damages, and may impose such terms and conditions as to damages, payment of the price, and otherwise, as to the court seems just.
Read the two limits in that sentence. The goods must be specific or ascertained, so a commodity you could buy from anyone falls outside it, and the court “may, if it thinks fit”, which keeps the remedy discretionary however the agreement is drafted.
Compare the section before it. Where an available market exists, section 49 presumes the buyer’s damages to be the difference between the contract price and the market or current price, in the absence of evidence to the contrary. That measure assumes a substitute can be bought. Section 50 is the escape hatch for when it cannot, and it gives a claim for specific performance of a commercial contract for goods the firmest footing available.
Shares and Whole Businesses
This is where specific performance of a commercial contract has the most traction, because there is no market to buy a replacement in.
Shares in a closely held company are the clearest case for specific performance of a commercial contract. No exchange lists them, no comparable block is for sale, and a damages award asks a court to value something nobody trades.
Ontario has now ordered a major transaction to close. In Fairstone Financial Holdings Inc. v. Duo Bank of Canada, 2020 ONSC 7397, the buyer told the seller it would not complete an agreed acquisition, citing the effects of the pandemic. The Commercial List rejected its grounds for refusing and ordered it to perform the share purchase agreement, and the transaction closed weeks later.
Note what that case does and does not establish. It is a first-instance decision that turned mainly on the material adverse effect clause, so treat it as proof that specific performance of a commercial contract is genuinely available in Ontario rather than as a detailed ruling on when damages are inadequate.
Long-Term Supply and Distribution
Ontario courts also hold parties to continuing commercial relationships, though usually through a differently shaped order.
Where a long-term agreement contains a negative covenant, such as an exclusive supply term, a restrictive covenant or a licensing restriction, the practical remedy is an injunction restraining the breach rather than an order compelling supply.
Watch that distinction when you plead a claim for specific performance of a commercial contract. Restraining a counterparty from doing something is materially easier than compelling it to keep performing.
Getting It Before Trial Is the Hard Part
Here is the point that decides most real disputes, and almost nobody sees it coming.
A business that wants performance now is asking a court to make the other side act. That is a mandatory injunction, and it carries a higher threshold than the familiar serious-issue test. In R. v. Canadian Broadcasting Corp., 2018 SCC 5, the Supreme Court allowed the broadcaster’s appeal and held at paragraph 17 that an applicant must demonstrate
a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice
Ontario courts apply that threshold to commercial disputes. In 2659953 Ontario Inc. v. Druxy’s Franchising Inc., 2022 ONSC 6356, a franchisee whose franchise had been terminated sought relief from forfeiture and an interlocutory injunction reinstating it.
The court dismissed the motion. Because an order of that kind compels a party to remain in a commercial agreement until trial, it was mandatory in substance, and the higher threshold applied.
Therefore plan the interim stage separately from the final one. A claim for specific performance of a commercial contract can be perfectly sound at trial and still fail on a motion eighteen months earlier.
What to Do Next: When to Call a Lawyer
Move quickly, because delay is itself a reason to refuse equitable relief, and a counterparty who has reorganised around the breach becomes harder to unwind.
Keep performing your own side, or make clear you are ready and able to. A party asking a court to enforce a bargain is expected to be good for its own half of it.
Build the record on substitutability now. Evidence that you canvassed the market and found nothing comparable is what turns an assertion of uniqueness into a finding.
Put a remedies clause in the agreement. An acknowledgement that damages would be inadequate will not bind a court, yet it is evidence of what the parties expected, so a specific performance commercial contract claim is worth the two lines at signing.
Plead damages in the alternative. Ordinary contract damages remain available if the court declines specific performance, and section 99 of the Courts of Justice Act lets a court with jurisdiction to order specific performance award damages in addition to it or in substitution for it.
Specific performance of a commercial contract rewards whoever moved early and documented why no substitute was available. If a counterparty has walked away from a deal you cannot simply replace, contact Cowan before the market makes the decision for you.
