Earl Altman

Following earlier reasons finding a binding agreement and liability for breach, the court addressed the remaining issue of damages concerning the valuation of shares under a draft partnership agreement.

The dispute centred on the meaning of “fair market value” and whether “earnings” in the contractual formula referred to gross commissions or net earnings after expenses.

The court held that, absent an express contractual definition, the traditional meaning of fair market value—an arm’s length price in the open market—should apply.

Applying principles of implied terms and contractual interpretation, the court concluded that earnings should be interpreted as net earnings rather than gross commissions to give business efficacy to the agreement.

Damages were therefore calculated based on net earnings.

Commercial dispute arising from an insurance brokerage joining a broker network.

The plaintiff alleged that an enforceable agreement existed under which it would receive a 25% ownership interest in the brokerage and 7.5% of commissions in exchange for services and access to insurance markets and systems.

The defendants argued that no binding agreement was formed because formal documents were never signed.

The court held that the parties reached agreement on essential terms and manifested an intention to be bound through conduct, including issuance of shares, regulatory arrangements, and operational participation in the network.

The defendants repudiated the agreement, and the plaintiff was entitled to damages for breach of contract and additional recovery on a quantum meruit basis for a post-repudiation period.