Contracts are an essential part of business and personal transactions. When one party fails to fulfill their contractual obligations, it results in a breach of contract. If the amount in dispute is $35,000 or less, you can file a lawsuit in Ontario Small Claims Court to seek compensation.

Filing a breach of contract claim in Ontario Small Claims Court can be an effective way to recover money owed to you. By gathering strong evidence, following court procedures, and considering settlement options, you improve your chances of success.

This article explains what constitutes a breach of contract, how to file a claim, possible legal remedies, and key considerations before going to court.

Contract

A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act, which resulting contract is enforceable in a court of law. A contract is a promise or set of promises, the breach of which gives a remedy or the performance of which creates a legally recognized obligation. The remedy at law for breach of contract is “damages” or monetary compensation. The remedies award the damaged party the “benefit of the bargain” or expectation damages.

Any oral or written agreement between two or more parties can constitute a binding legal contract. However, only a written contract can be material evidence. If the contract is only oral in nature, it might be difficult to prove the existence of the contract in Small Claims Court.

Types of Contracts That Must Be in Writing to Be Enforceable

There are some types of contracts that must be in writing to be enforceable, such as:

• Sales of real property
• Promises to pay someone else’s debt
• A contract that takes longer than one year to complete
• Property leases for more than one year
• A contract that will go beyond the lifetime of the one performing the contract
• The transfer of property upon the death of the party performing the contract

If you don’t have such a contract in writing, the breach of contract will not be enforceable.

Situations for Filing a Claim for Breach of Contract in Ontario Small Claims Court

All of us are, have been or will be bind with different types of contracts: we have to sign a contract to get our credit card; to lease a car; to rent an apartment; to advertise our product or service; to go to gym; to get a job; to buy a computer; to hire a construction team; to … Everywhere. Every time. Often, we don’t even realize that fact.

There are an endless number of situations when things go wrong: a fridge we bought yesterday doesn’t work; a printing company issued only 5,000 copies of our corporate brochure instead of 10,000 and insists on the number of 10,000; a web designer of our e-store is 5 months behind the schedule. We are frustrated and tired of it and looking for legal help.

Laws exist for the protection of the consumer regardless of whether they are buying goods in a store, obtaining services from a company, or applying for a credit card. All agreements are strictly regulated and there are consequences should these regulations be broken.

Unfortunately, sometimes dishonest people will slip out. For instance, a large retailer that advertises goods on the Internet is inviting the consumer to enter into an agreement to make a purchase. However, the products on websites have been incorrectly priced and the purchase has taken place before the mistake has been noticed. If this happens then there is nothing could be done.

What is a Breach of Contract?

Breach of contract is a failure of a party to a contract to perform their obligations as agreed to within the contract. Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honoured by one or more of the parties to the contract by non-performance or interference with the other party’s performance. If the party does not fulfill their contractual promise, or has given information to the other party that they will not perform their duty as mentioned in the contract, there is the “breach of contract” case.

Types of Breaches:

• Minor Breach: One party does not fulfill part of the contract, but the overall agreement remains in effect.
• Material Breach: A major violation that substantially affects the contract, giving the other party the right to sue.
• Anticipatory Breach: One party indicates they will not fulfill their obligations before the deadline.
• Fundamental Breach: A serious violation that undermines the entire contract, allowing the non-breaching party to terminate the agreement.

Minor (also, partial or immaterial) Breach of Contract

In a “minor” breach, the non-breaching party cannot sue for specific performance, and can only sue for actual damages. Minor breaches can be, for example, a builder who substitutes his own type of materials for specified materials. The substituted materials may work just as well as the specified but it can still be seen as a minor breach of contract. Suppose a homeowner hires a contractor to install new plumbing and insists that the pipes, which will ultimately be hidden behind the walls, must be red. The contractor instead uses blue pipes that function just as well. Although the contractor breached the literal terms of the contract, the homeowner cannot ask a court to order the contractor to replace the blue pipes with red pipes. The homeowner can only recover the amount of their actual damages. In this instance, this is the difference in value between red pipe and blue pipe. Since the colour of a pipe does not affect its function, the difference in value is zero.

Major Breach of Contract

If something particular had been specified in the contract as a condition, a breach of that condition would constitute a “major” breach. For example, when a contract specifies time is of the essence and one party to the contract fails to meet a contractual obligation in a timely fashion, the other party could sue for damages for a major breach.

Material Breach of Contract

A material breach is a breach of contract that has serious consequences on the outcome of the contract. A material breach of contract is any failure to perform that permits the other party to the contract to either compel performance, or collect damages because of the breach. If the contractor in the above example had been instructed to use copper pipes, and instead used iron pipes that would not last as long as the copper pipes would have lasted, the homeowner can recover the cost of actually correcting the breach – taking out the iron pipes and replacing them with copper pipes.

Anticipatory Breach of Contract

An anticipatory breach of contract is one where one of the parties makes it known that they will not be carrying out agreed work, and the consequences can be termination of the contract and damages being sought in court. An anticipatory breach gives the non-breaching party the option to treat such a breach as immediate and terminate the contract and sue for damages (without waiting for the breach to actually take place).

Fundamental Breach of Contract

A fundamental breach of contract is a breach so serious that the contract has to be terminated. In addition that party is entitled to sue for damages.

Common Examples of Breach of Contract Cases in Small Claims Court:

• Failure to pay for goods or services
• Not delivering goods as promised
• Poor-quality work or incomplete services
• Breaking a rental or lease agreement
• Failing to honour a warranty or guarantee

Tip: A verbal contract can be legally binding, but written agreements are easier to prove in court.

Breach of Contract Claims in Ontario Small Claims Court: A Step-by-Step Guide

Step 1: Determine If You Have a Strong Case

Before filing a lawsuit, consider:

• Was there a valid contract (written, verbal, or implied)?
• Did the other party fail to meet their contractual obligations?
• Have you suffered financial loss due to the breach?
• Do you have evidence (emails, contracts, invoices, receipts, or witness statements)?
• Is the amount you are claiming $35,000 or less?

Step 2: Attempt to Settle the Dispute

Courts prefer that parties try to resolve disputes before filing a claim.

Send a demand letter outlining:

• The breach of contract details.
• The compensation you are seeking.
• A deadline (usually 10-14 days) for the other party to respond.

If they refuse to pay or ignore your request, proceed with a Small Claims Court lawsuit.

Step 3: File a Plaintiff’s Claim (Form 7A)

If no settlement is reached, you must file a claim in Small Claims Court.

How to Complete Form 7A:

• Plaintiff Information – Your name, address, and contact details.
• Defendant Information – The party you are suing (individual or business).
• Claim Details: 1) What was agreed upon in the contract? 2) How was the contract breached? 3) What damages did you suffer?
• Amount Claimed – Specify the monetary loss due to the breach.
• Supporting Documents – Attach contracts, invoices, emails, receipts, or photos.

Where to File?

File your claim at the court closest to where the contract was signed or where the defendant lives or does business.

Filing Fees:

• $102 (in-person filing)
• $108 (online filing)

Step 4: Serve the Defendant

Once the court processes your claim, you must serve (officially deliver) a copy to the defendant within six months.

How to Serve the Defendant?

• In-person delivery (handing documents directly).
• Registered mail or courier (proof of delivery required).
• Process server (hiring a professional).

File an Affidavit of Service (Form 8A) to prove the defendant received the documents.

Step 5: 20 Days for Defendant’s Response

The defendant has 20 days to respond by:

• Filing a Defence (Form 9A) if they dispute your claim.
• Making a Counterclaim (Form 10A) if they believe you owe them money.
• Ignoring the claim, in which case you can request a default judgment.

Step 6: Settlement Conference & Trial

• If the defendant files a Defence, the court schedules a Settlement Conference where both parties discuss resolution options.
• If no agreement is reached, the case proceeds to trial before a judge.

Tip: Many cases settle at this stage, avoiding the need for trial.

What Remedies Can You Seek?

The law provides remedies against those who breach their contracts. The most common and usual remedy for breach of contract will be an award of damages. The general rule for recoverable loss in breach of contract cases is that the courts will award damages to place the aggrieved parties in the same position they would have been in had the contract been performed. In some contracts, the parties may choose to specify a liquidated sum of damages in the event of breach. The caveat here is that the specification of liquidated damages cannot be a penalty. If the liquidated damage clause is enforceable, it will avoid the need for the aggrieved party to prove their actual damages.

In Small Claims Court, a judge can award:

• Compensatory Damages – Money to cover financial losses due to the breach.
• Consequential Damages – Compensation for indirect losses caused by the breach.
• Restitution – Returning money or property obtained unfairly.
• Specific Performance – A rare order requiring the defendant to perform their contractual duty (only if money won’t fix the problem)

Defending Against a Breach of Contract Claim

If you are the defendant, possible defences include:

• No valid contract existed – There was no agreement or consideration (exchange of value).
• Plaintiff breached first – The other party didn’t fulfill their obligations.
• Impossibility of performance – You were unable to perform due to unforeseen circumstances.
• Contract was modified or canceled – You can prove both parties agreed to change or void the contract.

Tip: Keep records of payments, emails, and conversations to support your defence.

Key Considerations before Suing

Before filing a lawsuit, ask yourself:

• Do I have strong evidence?
• Is the defendant able to pay if I win?
• Have I attempted to resolve the dispute out of court?
• Are the legal costs worth the potential award?

If the case is complex, consider consulting a lawyer or paralegal.

Guides for Small Claims Court Matters

The Ministry of the Attorney General has a series of guides to Small Claims Court procedures which are available at court offices and online.

For more details, visit the Ontario Small Claims Court website