Savanna Well Servicing v Cleo Energy – 2022 ABKB 769
Written by Ty Schmidt
A recent summary judgment from the Alberta Court of King’s Bench, Savanna Well Servicing v Cleo Energy, has added to the body of jurisprudence stating that, when a contract’s terms clearly supersede any previous negotiations, unfulfilled verbal pre-contractual representations will not be found to constitute negligent misrepresentations.
Savanna Well Servicing Inc. (“Savanna”) provided well services to the defendant, Cleo Energy Inc. (“Cleo”), until invoices totaling $605,867 were rendered.[1] Cleo alleged that Savanna’s invoices exceeded what was agreed upon, and so rather than paying what it considered a reasonable amount, it paid nothing.[2] Cleo’s primary defense hinged on the allegation that Savanna made representations prior to forming the contract regarding the speed at which the work would be completed.[3] The Applications Judge found that even if such misrepresentations were made, their existence would not raise a triable issue due to the fact that both parties entered into an industry-standard contract that precluded either party from relying on unwritten statements.[4] Accordingly, judgment was granted in favour of Savanna, and Cleo’s defence and counterclaim were dismissed.
While the issue of pre-contract negotiations being superseded by subsequently written contract terms is one that has been relatively settled in commercial law, this case does provide confirmation that always pays off to carefully read the terms of contracts, and raise issues when they are first spotted. If a party is relying on an unwritten representation, then that party must ensure that the contract is amended to accurate reflect the deal being made before being entered into. Doing so will help mitigate future disputes, and save oneself from being directly criticized by the Court. As written by the judge, “[w]hat is the point of having a written contract between two commercial entities if its provisions are ineffective if one party did not read or comprehend its clear provisions?”[5]
[1] 2022 ABKB 79 at para 16.
[2] Ibid at para 2.
[3] Ibid at para 6.
[4] Ibid at paras 7-10.
[5] Ibid at para 12.
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