A Full and Final Release is a contract by which one party, the releasor, agrees to relinquish, permanently, all legal claims held or potentially held against another party, the releasee, frequently a corporation, typically in exchange for a payment or other consideration. Once validly executed, a release is intended to conclude the matter entirely, preventing the releasor from later asserting the released claims.

What are the essential elements of a Full and Final Release?

• Identification of the parties released, which, in the case of a corporation, frequently extends expressly to its directors, officers, employees, and affiliates.
• A clear description of the claims released, whether broad or narrow, as negotiated by the parties.
• Under Ontario contract law, a release executed without genuine consideration risks being held unenforceable, such that the identification of the consideration provided in exchange for the release is essential to its validity.
• A governing law and jurisdiction clause, together, typically, with a severability clause.

How do the courts treat Full and Final Releases?

Ontario courts interpret releases as ordinary contracts. The Court of Appeal for Ontario has confirmed that broad, clearly drafted releases will generally be enforced as written.

When is a Full and Final Release used?

• The settlement of litigation or a threatened claim against the corporation.
• The termination of an employee, officer, or director, in consideration of severance or other compensation.
• The conclusion of a shareholder buy-out, share transfer, or the winding up of a business relationship.

Limitation periods

In Ontario, most claims must be commenced within two years of discovery.

Illustration

Where a former director resigns following a dispute with the board, and the corporation pays a negotiated settlement, the director, in exchange, executes a Full and Final Release relinquishing any claim for wrongful removal, unpaid fees, or indemnification beyond the amount provided in the settlement.

Getting the legal help you need

Protect yourself and your business from future claims or lawsuits. Create a Full and Final Release of Corporation quickly and affordably with Legal Line Documents. Get your document in just a few minutes and move forward with confidence. Start now.

								
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