What is the legal test for binding a municipality to a contract or agreement?

The City relied on a number of cases as well as the Municipal Act, R.S.O. 1980, c 302 which sets out the specific obligation, restrictions and rights of municipalities. With respect to the authority to bind a municipality to a contract or agreement, the City relied on the case of Sherway Contracting v. Kingsville (2002), 24 C.L.R. (3d) 228. In that case, the court found that a contract between a municipality and a contractor to construct a water line was not valid or enforceable because there was no by-law, resolution or approval of the municipal authority.

In support of its position that an employer has the right to reorganize the workforce, the City relied on the case of Jervis v. Raytheon Canada Limited (1990), 35 C.C.E.L. 73. In that case, the court found that it is an implied term in an employment contract that an employer can reorganize from time to time to remain competitive. In that case, there was a claim for constructive dismissal by a senior engineer who left his employment after 21 years of service. He claimed he had been demoted in 1985, but accepted a new position with the employer and continued his employment until 1988.