{"id":47332,"date":"2026-03-11T11:29:51","date_gmt":"2026-03-11T15:29:51","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=47332"},"modified":"2026-03-11T11:29:54","modified_gmt":"2026-03-11T15:29:54","slug":"when-does-an-email-settlement-become-a-binding-contract-lessons-from-jh-drilling-in-alberta","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/commercial-litigation\/when-does-an-email-settlement-become-a-binding-contract-lessons-from-jh-drilling-in-alberta\/","title":{"rendered":"When does an email settlement become a binding contract? Lessons from JH Drilling<\/i> in Alberta"},"content":{"rendered":"\n

Throughout the litigation process, parties and their legal counsel may engage in settlement discussions through email correspondence, where the terms of a settlement agreement are negotiated and agreed upon. As demonstrated in JH Drilling Inc v Barsi Enterprises Ltd<\/a><\/em>,[1]<\/a> courts recognize that a settlement reached through email correspondence may constitute a contract binding upon the parties. As a binding contract, the parties\u2019 settlement agreement may preclude further litigation.<\/p>\n\n\n\n

Commercial parties should be aware of the potential consequences to entering into settlement discussions via email correspondence and the legal principles applied by courts when determining if such discussions bind a party to the terms contained therein. A plaintiff resiling from the terms of a binding settlement agreement may have its claim summarily dismissed. <\/p>\n\n\n\n

Background<\/h2>\n\n\n\n

In JH Drilling<\/em>, JH Drilling Inc (the \u201cPlaintiff<\/strong>\u201d) assigned a surface material lease to Barsi Enterprises Ltd (\u201cBarsi<\/strong>\u201d), permitting Barsi to excavate sand and gravel on a parcel of land.[2]<\/a> Barsi abandoned the lease after it failed to perform to Barsi\u2019s expectations and the Plaintiff subsequently commenced an action against Barsi, as well as two individuals carrying on business as Misty Valley Trucking (collectively, the \u201cDefendants<\/strong>\u201d), for breach of contract. The Defendants counterclaimed as against the Plaintiff and the Plaintiff\u2019s principal, for, among other things, misrepresentation.[3]<\/a><\/p>\n\n\n\n

The Alberta Court of King\u2019s Bench (the \u201cCourt<\/strong>\u201d) dismissed of the Plaintiff\u2019s application for summary judgment, and the parties settled the matter through email correspondence only, by way of the following partial exchange:[4]<\/a><\/p>\n\n\n

[15] On July 30, 2025, Mr. Harms responded,<\/p>\n

\u201c[The Plaintiff] accepts your offer [for the] sale of the gravel pile with proceeds to be split 50-50 as has been proposed by you in the past. This would be a full settlement of the main claim and the counter claim without costs\u201d.<\/p>\n

[16]\u00a0 On August 7, 2025, counsel for the Defendants then responded:<\/p>\n

\u201cI confirm we are in agreement and we have a deal as follows:<\/p>\n

    \n
  1. \n
      \n
    1. The parties will use their reasonable efforts to sell the gravel pile. The net proceeds will be split 50-50.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n
        \n
      1. \n
          \n
        1. The main claim and counterclaim will be discontinued on a without costs basis.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n
            \n
          1. \n
              \n
            1. There will be a full mutual release between the parties.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

              I will send you a draft settlement agreement that we can sign \u2026\u201d.<\/p>\n\n\n

              However, after the Defendants\u2019 legal counsel provided a proposed settlement agreement containing the above-noted terms (the \u201cOriginal Settlement Agreement<\/strong>\u201d), the Plaintiff\u2019s legal counsel provided a revised settlement agreement, including a provision that the Defendants shall pay the Plaintiff an amount of $40,000.00, representing the amount of royalties owed to the Government of Alberta under the surface material lease (the \u201cRevised Settlement Agreement<\/strong>\u201d).[5]<\/a> The Defendants refused to sign the Revised Settlement Agreement and, instead, brought an application for an Order for summary dismissal, arguing that the Original Settlement Agreement constituted a binding contract that resolved the parties\u2019 dispute.<\/p>\n\n\n\n

              The issues before the Court were whether the Original Settlement Agreement was binding upon the parties and, if so, whether the Plaintiff\u2019s claim should be summarily dismissed on the basis that the Original Settlement Agreement entirely resolved the parties\u2019 dispute.[6]<\/a><\/p>\n\n\n\n

              Key legal principles applicable to the formation of settlement agreements and applications for summary dismissal<\/h2>\n\n\n\n

              The Court\u2019s decision was guided by the legal principles applying to the formation of contracts:<\/p>\n\n\n\n