If someone owes me money under a contract and does not pay, can I charge interest in Ontario?

Whether you can charge interest on unpaid contract amounts in Ontario depends on whether your contract provides for it. If the contract specifies an interest rate on late payments, you are entitled to charge that rate, subject to the limits of Ontario's Interest Act. Courts will enforce contractual interest provisions between commercial parties.

If your contract does not specify an interest rate, you are not entitled to interest simply because a debt is unpaid. However, once you commence litigation, you become entitled to pre-judgment interest under Ontario's Courts of Justice Act. The rate is set by regulation and is updated quarterly; it is intended to compensate you for the time value of money while the case proceeds.

After a judgment is issued, post-judgment interest accrues at the rate specified in the Courts of Justice Act (or your contract rate, if higher and the judge exercises discretion) until the judgment is paid.

For most commercial contracts where timely payment is important, including a clear contractual interest clause — specifying a rate and the date from which interest starts to run — is advisable. This creates a clear entitlement without depending on the courts' statutory rate.