Ontario has passed several major pieces of legislation between 2023 and 2026 that affect how businesses draft, renew, and enforce commercial contracts. The recent updates to Ontario commercial contract regulations include: the Consumer Protection Act, 2023 overhauls business-to-consumer contracts; the Construction Act amendments (in force January 1, 2026) rewrite holdback and invoicing rules; the Working for Workers framework continues to shape restrictive covenants; and the Ontario Business Corporations Act has been updated to remove director-residency requirements and add transparency registers.
At Hadri Law, we regularly help corporate and commercial clients update their contract templates and corporate records to keep pace with these changes. This article walks through the most significant recent updates, what is already in force, what is coming, and what business owners should do now to stay compliant.
Why Ontario Commercial Contract Law Is in Flux
Between 2020 and 2026, the Legislative Assembly of Ontario has moved through four distinct waves of commercial-contract-relevant legislation. Each wave targets a different slice of the contracting landscape:
- Consumer-facing contracts (Bill 142, Consumer Protection Act, 2023)
- Construction contracts (Bill 216 and Bill 60 amendments to the Construction Act)
- Restrictive covenants in employment and commercial sale contracts (Working for Workers Acts)
- Corporate governance affecting signing authority and diligence (OBCA amendments dating back to Bill 213)
If your Ontario business is using the same commercial contract templates it relied on in 2020, there is a strong chance those templates are out of step with at least one of these changes. The sections below explain what changed, who is affected, and what to do about it.
Consumer Protection Act, 2023: New Rules for B2C Contracts
Bill 142, the Better for Consumers, Better for Businesses Act, 2023, received Royal Assent on December 6, 2023. It enacts the Consumer Protection Act, 2023, S.O. 2023, c. 23, Sched. 1, which will replace the Consumer Protection Act, 2002 once it is proclaimed into force.
What changed
The new CPA consolidates contract disclosure, content, and delivery requirements that were previously scattered across different contract categories into a single set of "core" obligations that apply to most consumer contracts. Categories that warrant additional protection -- such as loan brokering contracts, credit repair contracts, timeshare contracts, personal development services contracts, and direct contracts -- will have extra requirements layered on top of the core rules.
Two changes stand out for any business with a subscription or fixed-term consumer offering:
- Amendments require express consent. A change to a fixed-term consumer contract generally cannot take effect unless the consumer expressly agrees to it. Narrow exceptions apply for changes required by law, changes that reduce supplier obligations or increase consumer obligations, and certain amendments to indefinite-term contracts that follow prescribed notice and termination procedures.
- Continuations (renewals) require express consent. The default position is that a renewal or extension of a fixed-term contract is only effective when the consumer actively opts in.
When it takes effect
The CPA, 2023 is not yet in force. The Ministry of Public and Business Service Delivery posted Phase 1 Regulatory Proposals in December 2024 and accepted input until February 10, 2025. A second phase of regulations is expected. Businesses should prepare template updates now so they are ready to deploy when the regulations are proclaimed.
Who should pay attention
Any Ontario business that sells goods or services to consumers -- especially businesses that use auto-renewing subscriptions, fixed-term service contracts, or layered amendment clauses.
Construction Act Amendments: Effective January 1, 2026
Ontario's Construction Act, R.S.O. 1990, c. C.30 received its most significant overhaul in years through two bills:
- Bill 216, Building Ontario For You Act (Budget Measures), 2024, which received Royal Assent on November 6, 2024.
- Bill 60, Fighting Delays, Building Faster Act, 2025, which received Royal Assent on November 27, 2025.
The Construction Act amendments introduced through both bills came into force on January 1, 2026.
Mandatory annual holdback release
Under the amended Act, holdback must be released on each anniversary of the owner-contractor contract. This replaces the prior framework, which made annual or phased release optional and generally only available for contracts over $10 million. Owners must publish a notice of annual release of holdback in the prescribed form within 14 days after the contract anniversary. Payment to the contractor must then follow at least 60 days but no later than 74 days after publication of the notice, subject to any lien that is preserved, perfected, and undischarged. Contractors and each tier of subcontractor must then release accrued holdback within 14 days of receiving their own annual payment.
Invoice deeming rules
A new s. 6.1(2) deems an invoice to be a "proper invoice" -- and triggers the prompt payment clock -- unless the owner provides written notice of any deficiency within seven days of receiving the invoice. In practical terms, owners who want to dispute an invoice now have a very short window to do so, and contractors have a much clearer path to enforcing payment timelines.
Adjudication improvements
The amended Act allows parties to commence an adjudication within 90 days of the date the contract was completed, abandoned, or terminated, unless the parties agree otherwise. Parties may also retain a private adjudicator outside the Authorized Nominating Authority's registry. Adjudication determinations will be published on ODACC's website going forward, which is expected to build a more visible body of adjudication precedent over time.
Who should pay attention
Owners, contractors, subcontractors, and anyone who finances or administers construction contracts in Ontario should review their contract templates, invoice review processes, and holdback tracking systems before the next contract anniversary.
Non-Compete Clauses in Ontario Commercial Contracts: Employment vs. Commercial
Since the Working for Workers Act, 2021, the Employment Standards Act, 2000 has prohibited non-compete agreements in employment contracts. The ban took effect on October 25, 2021 and has a narrow exception for certain senior executives.
The Ontario government's official guidance on non-compete agreements confirms that employers are prohibited from entering into an employment contract or other agreement with an employee that is, or that includes, a non-compete agreement. Subsequent Working for Workers bills have refined definitions and clarified the enforcement path through the Ministry of Labour, Immigration, Training and Skills Development.
The commercial contract carve-out
The ESA non-compete ban does not apply to bona fide commercial contracts -- for example, restrictive covenants in share purchase agreements, asset purchase agreements, franchise agreements, and certain shareholder agreements. Courts continue to analyze these covenants under the common-law reasonableness test, weighing the scope of prohibited activity, the geography, and the duration.
Recent Ontario Court of Appeal decisions have reinforced that restrictive covenants in M&A contexts can still be enforceable where the parties had relatively equal bargaining power and the covenant is reasonable. That said, enforceability remains fact-specific -- no non-compete is guaranteed to hold up.
Why this matters for commercial contracts
Businesses often reuse non-compete language from employment templates in M&A and franchise documents, or vice versa. Since 2021, that practice has become risky: a restrictive covenant drafted for an employment context may be void, while the same covenant drafted for a commercial transaction may be enforceable. The two contexts now demand distinct drafting.
OBCA Amendments: Changes That Affect How Ontario Corporations Sign Commercial Contracts
Several amendments to the Business Corporations Act (Ontario), R.S.O. 1990, c. B.16 -- many introduced through Bill 213 (Royal Assent December 8, 2020, effective July 5, 2021) -- affect how Ontario corporations enter into and administer commercial contracts.
Director residency requirements removed
Under former s. 118(3) of the OBCA, at least 25 percent of a corporation's directors had to be resident Canadians (or, if there were fewer than four directors, at least one). Effective July 5, 2021, s. 118(3) was repealed, eliminating the residency requirement entirely. Non-resident investors and foreign parent companies now have more flexibility in structuring Ontario subsidiaries, and signing authority for commercial contracts is simpler to administer.
Ordinary resolutions by majority written signatures
The OBCA was amended to allow private companies to pass ordinary shareholder resolutions by written resolution signed by a majority of voting shareholders, rather than requiring unanimous signatures. This speeds up corporate approvals that often sit on the critical path of commercial deals, such as authorizing a financing, approving a share sale, or ratifying a material contract.
Transparency register (individuals with significant control)
Private Ontario corporations must maintain a register of individuals with significant control (ISC register). Counterparties in commercial transactions increasingly ask to see the ISC register during due diligence, so it should be treated as a standard piece of the modern corporate record book, not an afterthought.
What Business Owners Should Do About These Ontario Commercial Contract Updates
The easiest way to stay ahead of these changes is to build a short annual contract review into your compliance calendar. A practical checklist:
- Review your consumer contract templates (subscription terms, service agreements, fixed-term contracts) for CPA, 2023 readiness, with particular attention to amendment and renewal clauses.
- Update construction contracts to reference the new holdback timing, invoice deeming rules, and 90-day adjudication window.
- Separate restrictive covenants in employment agreements from those in share or asset purchase agreements. Draft each for its own legal context.
- Confirm that your OBCA corporate records -- directors register, shareholder resolutions, and ISC register -- reflect the current requirements.
- Schedule an annual contract review. Ontario's contract law framework is changing faster than it has in years, and templates that were compliant twelve months ago may not be compliant today.
Frequently Asked Questions
When did the new Ontario Consumer Protection Act come into force?
Bill 142 received Royal Assent on December 6, 2023, enacting the Consumer Protection Act, 2023. The statute is not yet fully in force; it will be proclaimed once the necessary regulations are finalized. Phase 1 Regulatory Proposals were posted by the Ontario government in December 2024 for public consultation.
What are the Construction Act changes in Ontario for 2026?
The Ontario Construction Act amendments that took effect on January 1, 2026 introduced mandatory annual holdback release on contract anniversaries, a 14-day notice requirement and 60-to-74-day payment window after that notice, new invoice deeming rules with a seven-day owner objection period, and a 90-day adjudication window after completion, abandonment, or termination of the contract.
Are non-compete clauses enforceable in Ontario commercial contracts?
Yes, in most commercial contexts. The Ontario Employment Standards Act ban on non-compete agreements applies to employment contracts, not to restrictive covenants in bona fide commercial contracts such as share or asset purchase agreements and franchise agreements. Enforceability still depends on the common-law reasonableness test looking at scope, geography, and duration.
What is a "proper invoice" under the amended Ontario Construction Act?
Under the new s. 6.1(2) of the Ontario Construction Act, an invoice is deemed to be a "proper invoice" for prompt-payment purposes unless the owner gives the contractor written notice of a deficiency within seven days of receiving it. Owners that want to dispute an invoice must act quickly or forfeit that objection.
Do I need express consumer consent to renew a consumer contract in Ontario?
Under the Ontario Consumer Protection Act, 2023, the default position is that continuations or renewals of fixed-term consumer contracts require express consumer consent. Certain indefinite-term amendments with prescribed notice and termination procedures may be exempt, but businesses should review their renewal mechanics once the regulations are finalized.
What is the ISC register under the OBCA?
The ISC register is a record that private Ontario corporations must maintain of their individuals with significant control. It captures information about persons who directly or indirectly control a significant portion of the corporation's shares or voting rights and is increasingly requested as part of commercial contract due diligence.
Does the Ontario director-residency requirement still apply?
No. The OBCA requirement that at least 25 percent of a corporation's directors be resident Canadians (former s. 118(3)) was repealed effective July 5, 2021. Non-resident-owned Ontario corporations now have more flexibility in board composition, which in turn simplifies signing authority for commercial contracts.
How often must holdback be released under the amended Ontario Construction Act?
Holdback must be released on each anniversary of the owner-contractor contract. The owner must publish the prescribed notice of annual release within 14 days of the anniversary, with payment to the contractor following at least 60 but no later than 74 days after that notice under the amended Act.
This article provides general information and is not legal advice. Every situation is different. Contact a lawyer to discuss your specific circumstances.
Sources & Official Resources
Ontario Statutes Cited
- Consumer Protection Act, 2023, S.O. 2023, c. 23, Sched. 1
- Business Corporations Act (Ontario), R.S.O. 1990, c. B.16
- Construction Act, R.S.O. 1990, c. C.30
- Employment Standards Act, 2000, S.O. 2000, c. 41
Legislative Records
- Bill 142, Better for Consumers, Better for Businesses Act, 2023
- Bill 216, Building Ontario For You Act (Budget Measures), 2024
- Bill 60, Fighting Delays, Building Faster Act, 2025
Official Guidance
- Ontario Guide to the Employment Standards Act -- Non-Compete Agreements
- Consumer Protection Act, 2023 -- Consultation on Phase 1 Regulatory Proposals (Ontario Regulatory Registry)
Contact Hadri Law
If your Ontario business needs its commercial contract templates updated to reflect recent regulatory changes -- whether that means aligning consumer contracts with the new CPA, revising construction holdback and invoicing provisions, separating employment and commercial restrictive covenants, or refreshing your OBCA corporate records -- getting the right legal advice early can prevent costly disputes later. Hadri Law has helped businesses across Toronto and the GTA navigate complex corporate and commercial matters.
Call (437) 974-2374 for a free consultation. We serve clients in English, French, Spanish, and Catalan.
