Case Chart Complete (Business Law)

Law 110.
02 Contracts Biukovic
Case Canadian Dyers Ass. Ltd. v. Burton (1920) 47 O.L.R. 259 (H.L.)
Rule There can be no contract of sale unless there can be found an offer to sell and an acceptance of the offer. A mere quotation of price does not constitute an offer to sell; it is no more than an invitation to treat. The courts will look at the language used in the light of the circumstances in which it is used and into the subsequent actions of both parties to determine whether what is said by the seller is a mere quotation of price or an offer to sell. The general assumption in the case of retail self-service sales is that placing goods on shelves is an invitation to treat. An offer and acceptance take place at the cashier when a customer offers to buy and a cashier accepts the offer. An offer in a supermarket sale was held to be made by the customer at the cash desk and the contract was held to be formed when a cashier took the money. Note that the S.C.C. overruled R. v. Dawood on the criminal law issue in R. v. Milne [1992] 1 S.C.R. 697, saying that property does not pass for the purpose of the criminal law if the law of property creates a right of recovery. Under R .v. Milne, actions such as Dawoods would result in a criminal conviction. The general assumption is that advertisements published in newspapers are invitations to treat, not offers. However, the court looked at the surrounding circumstances, the actions of both parties (direct contact, consultation, examination, etc.) and the language used in the ad and held that Logans electrolysis ad was an offer to the public at large. In general, in order to be binding an offer has to be communicated to an offeree and it has to be intended as an offer. A bare resolution without advice, formal or otherwise, cannot be considered ipso facto to create or indicate an intention to create a legal obligation capable of acceptance.
Topic
[1]
Formation: Offer & Invitation to Treat
[2]
Pharmaceutical Society v. Boots [1953] 1 Q.B. 401, [1953] All E.R. 482 (C.A.)
Formation: Offer & Invitation to Treat (retail sale)
[3]
R. v. Dawood [1976] 1 W.W.R. 262 (Alta. C.A.)
Formation: Offer & Invitation to Treat (retail sale)
[4] Goldthorpe v. Logan [1943] O.W.N 215, [1943] 2 D.L.R. 519 (C.A.)
Formation: Public offer or invitation to treat Formation: Communication of Offer, Intention to create legal obligations
[5]
Blair v. Western Mutual Benefit Assn. [1972] 4 W.W.R. 284 B.C.C.A.)
[6]
Carlill v. Carbolic Smoke Ball Co. [1893] 1 Q.B. 256 (C.A.)
An ad was held to be an offer for a unilateral contract, an offer to the public at largeto everyone who does something (a guarantee in an ad was held to be an indication of the intention to create legal obligations). An ordinary rule of law is that acceptance of an offer requires the offeror to be notified in order that the two minds may come together. However, in the case of a unilateral contract, an offer is made to the public but the contract is not concluded with everybody (all the world). It is only formed with that limited portion of the public who come forward and perform the condition on the faith of the advertisement (following the indicated method of acceptance).
Formation: Communication of Offer public offer to anyone who does something; Communication of Acceptance; Unilateral Contracts
Law 110.02 Contracts Biukovic
Case
Rule The court held that in the case of rewards (or an offer to anyone who can give the information requested) the defendant is entitled to the reward regardless of her motives (fear of Gods punishment) because she knew of the reward and she performed the act in question. The case does not give offer-acceptance analysis but deals with human motives. In contrast with Williams v. Carwardine, the court held that the defendant was not entitled to the reward because he did not act in reliance on the offer but for other reasons (to clear himself from a false accusation). Reconcile with Williams v. Carwardine by noting that in a bi-lateral contract knowledge is required (to enable meeting of the minds), but motive is irrelevant. Whether an invitation from a seller to prospective buyers was to be construed as an invitation to participate in a fixed bidding sale or in an auction sale depended on the presumed intention of the seller as deduced from the express provisions of the invitation to bid (an invitation for the submission of offers was held to be an invitation for a fixed bid). The legal nature of the invitation was that of unilateral contracts; if an offer was received from both Harvela and Sir Leonard, the obligation of the bank (the vendors) was to sell the shares to the promisor whose offer was the highest and any obligation to the other tenderer under the other unilateral contract came to an end. Analyses the tender process a 2 phase process which includes formation of two contracts (A and B). This changed the traditional analysis of a call for tenders as an invitation to potential tenderers to make offers. The tender call is the offer and the bid submission is the acceptance of that offer which leads to formation of contract A; the consideration is the preparation of the bid; consequence of formation of contract A is the imposition of contractual liability on the tenderer (not to withdraw from the bid) and the owner (to treat tenderers fairly and in good faith). Contract B is the construction contract to be formed between the owner and the successful tenderer. The submission of a tender in response to an invitation to tender may give rise to contractual obligations (contract A), quite apart from the obligations associated with the construction contract to be entered into upon the acceptance of a tender (contract B). But it is always possible that contract A does not arise upon the submission of a tender (if the tender is invalid). The invitation for tenders may be characterized as an offer to consider a tender, if that tender is valid. The submission of the tender is good consideration of the owners promise, as the tender was of benefit to the owner, prepared at a not an insignificant cost and accompanied by the bid security. The privilege clause is only one term of contract A and must be read in harmony with the
Topic Formation: Communication of Offer public offer to anyone who does something Formation: Communication of Offer public offer to anyone who does something
[7]
Williams v. Carwardine (1883) 4 B. & Ad. 621, 110 E.R. 590 (K.B.)
[8]
R. v. Clarke (1927) 40 C.L.R. 227 (Aust. H.C.)
[9]
Harvela Investments Ltd. v. Royal Trust Co. of Canada [1986] A.C. 207, [1985] 2 All E.R. 966 (H.L.)
Formation: Offer & Invitation to Treat - tenders
[10]
R. v. Ron Engineering & Construction (Eastern) Ltd. [1981] 1 S.C.R. 111, 13 B.L.R. 72
[11]
M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd) [1999] 1 S.C.R. 619
Case
Rule rest of the tender documentsit does not override the obligation to only accept compliant bids. The owner does not have a duty to investigate as to whether a submitted bid is compliant or to look beyond the face of the bid to ensure compliance; it only has a duty to treat all bids fairly and equally When an owner accepts a compliant bid and enters into Contract B on the terms set out in the tender documents, Contract A is fully discharged and an owner has no any further obligations to unsuccessful bidders An offer that has been rejected is thereby ended and it cannot be afterwards accepted without the consent of the one who made it. A counter-offer is a rejection of the original offer, a mere inquiry is not. If an offeror replies to the rejection, the reply (cannot reduce price) may amount to a renewal of the offer. The answer is dependent upon considering all surrounding circumstances. In order to avoid problems with contract formation (and revocation of offer) courts should treat offers as calling for bilateral rather than unilateral action when the language can be fairly so construed Where acceptance is not expressly given the question of whether the language used amounts to acceptance will be a matter of construction of the court which may include taking into consideration conduct of the acceptor Although in theory an offer for a unilateral contract can be revoked any time before the acceptance, such as offer could be interpreted to have an implied term that an offeror who controls conditions of cooperation of an offeree would not be allowed to prevent performance/acceptance of an offeree Lord Denning restated the traditional last shot formula for the resolution of the battle of the forms, identifying several possibilities for courts: 1. Last shot: a contract is concluded upon the terms of the last document sent by one of the parties that was not objected to; 2. First shot: a contract is concluded upon the terms of the first document; 3. All shots count and the court must discover its terms on an objective basis: A) a contract is concluded upon terms drawn from all the documents that have passed between the parties when the terms can be reconciled as to give a harmonious result, or B) a contract is not concluded since the differences are irreconcilable. Follows the test in Butler Machine that in a battle of the forms the court will examine all of the documents exchanged between the parties and look into their commercial relationship, in order to find out if they considered any terms other than those found on the face of the documents. The court only considered the terms on the face of the documents. The other partys attention must be drawn to the important terms, else unconscionable. Silence does not amount to acceptance. Even though the nephew (seller) might have intended to sell, he never communicated this
Topic
[12] Double N. Earthmovers Ltd v. City of Edmonton, 2007 SCC 3 [13] Livingstone v. Evans [1925] 3 W.W.R. 453, [1925] 4 D.L.R. 769 (Alta S.C.) [14] Dawson v. Helicopter Exploration Co. [1955] S.C.R. 868
Formation: Acceptance counter-offer; rejection and counter offer
Formation: offer and acceptance; unilateral and bilateral contracts
Butler Machine Tool v. Ex-cell-o Corp. [1979] 1 W.L.R. 401, 1 All E.R. 965 (C.A.)
[15]
Formation: Acceptance counter-offer; battle of forms
[16] Tywood Industries v. St. AnnNackawic Pulp & Paper (1979) 100 D.L.R. (3d) (Ont. H. C.). Felthouse v. Bindley (1962) 11 C.B. (N.S. 869, 142 E.R. 1037 (Ex. Ch.)
Formation: Acceptance counter-offer; battle of forms Formation: Communication of Acceptance
[17]
Case
Rule intention to his uncle (buyer). In general, the offeror is in control of the mode of acceptance but the courts are reluctant to allow silence to be specified as the mode of acceptance. The conduct of an offeree, unaccompanied by any verbal or written undertaking, could under certain circumstances (for example, continuing serviced on terms previously agreed) be reasonably constructed as valid acceptance General rule re-emphasized: an offer of a bargain by A to B imposes no legal obligation upon A until it is accepted by B according to the terms in which the offer was made. If the offeror specified the mode of acceptance and the acceptance was not made in the requested manner, there is no contract (Mirror image rule). The mailbox rule (the contract is concluded where and when the acceptance is mailed) applies only if acceptance by mail is required or if that has been a regular business practice of the parties or if the offer is made by mail and no acceptance requirements are specified The receipt rule (the contract is made when and where the acceptance is received) applies to instantaneous communications such as phone or telex or facsimile. The court upheld the general mailbox rule in situations where the acceptance is lost in the post and as a consequence the offeror was bound by the offer even though acceptance was not received. The majority held the post office to be the agent of both parties. The dissent rejected this and applied the recipient rule. The postal rule should only apply if it does not lead to manifest inconvenience and absurdity". The postal rule does not apply if the express terms of the offer specify that the acceptance must reach the offeror. The requirement for notice was held to invoke the recipient rule. The method of acceptance isnt essential so long as the acceptance is received at the proper place at the proper time and with no disadvantage to the offeror. Must consider the purpose of the stipulated manner of acceptance in the offer to determine whether it is essential or not. Terms of a contract entered into on the internet can be displayed on multiple pages. Users are expected to follow the links and become familiar with all terms before accepting the terms of the contract. Clicking the I agree button results in formation of a valid contract. The mailbox rule does not apply to revocationrevocation must be received by the offeree to be effective. The general principle is that if a person who makes an offer dies, the offer cannot be accepted after they are dead. The court held that an offer could be revoked by indirect communication applying the same general rule logicthat is, once the person to whom the offer was made knows that the property has been sold to someone else, it is too late for them to accept the offer and the contract is impossible to make.
Topic
Saint John Tug Boat Co. v. Irving Refinery Ltd. [1964] S.C.R. 614 Eliason v. Henshaw (1819) 4 Wheaton 225, 4 U.S. (L. Ed.) 556 Brinkinbon v. Stahag Stahl [1983] 2 A.C. 34 [1982] 1 All E.R. 293 (H.L.) [20] [21] Household Fire v. Grant (1879) 4 Ex. D, 216 (C.A.) Holwell Securities v. Hughes [1974] 1 W.L.R. 155, 1 All E.R. 161 (C.A.) Yates Building Co. v. Pulleyn & Sons Ltd. (1975) 119 SJ 370 [23] [24] Rudder v. Microsoft Corp. [1999] O.J. 3778 (Ont. S.C.J.) [25] Byrne v. Van Tienhoven (1880) C.P.D. 344 [26] Dickinson v. Dodds (1876) 2 Ch. D. 463 (C.A.)
[18]
Formation: Communication of Acceptance Formation: Communication of Acceptance Formation: Communication of Acceptance Instantaneous communication Formation: Communication of Acceptance mailed acceptance Formation: Communication of Acceptance mailed acceptance Formation: Communication of Acceptance mailed acceptance Formation: Communication of Acceptance Formation: Termination of Offer - Revocation Formation: Termination of Offer - Revocation
[19]
[22]
Case
Rule A promise to hold an offer open is not binding unless have consideration or a deed. Equity cannot be applied when a third party has acquired rights. Legal consequences of family arrangements are difficult to ascertain. Unilateral contracts are formed when all conditions of the offer are met. In general, offers for unilateral contracts can be revoked any time prior to complete fulfillment by the offeree, but the court held that in this case an offer for a unilateral contract could not be revoked by the promisor once the promesee entered on performance of the act (but it would cease to bind the offeror if performance was left incomplete and unperformed). An offer will lapse if it is not accepted within a time limit determined by the offeror, or if a time limit is not specified, then it will lapse within a reasonable time. The court will determine what is a reasonable time using the rule of construction (objective test)it will depend upon the nature and character of the item being sold, on the normal or usual course of business in negotiations as well as the circumstances of the offer, including the conduct of the parties in the course of negotiation. If an offeror has prescribed a particular method of acceptance, but not in terms insisting that it be the only mode of acceptance, an acceptance communicated to the offeror by any other mode which is no less advantageous to the offeror, will conclude the contract. Re-emphasizes the basic principle that where an offer is made in terms which fix no time limit for acceptance, the offer must be accepted within a reasonable time to make a contract. A contract for Internet service was a take it or leave it contract. The original agreement allowed for changes to the contract and given the alert message on the main page it is reasonable to expect a customer who uses the Internet to go further than the main page of the website and check for changes to the contract. There was a clear inequality of bargaining position of the parties, however notice of the amendment was not unreasonably buried in the agreement, but was set out in plain language without legalese. The arbitration clause was held not unconscionable as both parties are obliged to arbitrate and resulting contractual arrangements were not improvident. Lord Denning held that a clause which is meaningless can often be ignored, whilst still leaving the contract good; whereas a clause which has yet to be agreed may mean that there is no contract at all, because the parties have not agreed on all the essential terms. A meaningless clause is a clause so vague and uncertain as to be incapable of any precise meaning. A meaningless clause has to be clearly severable from the rest of the contract. To be a good contract there must be a concluded bargain which settles everything that is necessary to be settled and leaves nothing to be settled by later agreement between the
Topic
[27]
Errington v. Errington and Woods [1952] 1 K.B. 290, [1952] 1 All E.R. 149 (C.A.)
Formation: Termination of Offer Unilateral contracts
[28] Barrick v. Clark [1951] S.C.R. 177, [1950] 4 D.L.R. 529
Formation: Termination of Offer Lapse of Time
[29]
Manchester Diocesan Council v. Commercial and General Investments Ltd. [1970] 1 W.L.R. 241, [1969] 3 All E.R. 1593 (Ch.D.)
Formation: Termination of Offer Lapse of Time
[30]
Kanitz v. Rogers [2002] O.T.C. 143 (Ont. S.C.J.)
Formation: On-line contract reasonable notice Unconsionability: arbitration clause
[31]
Nicolene v. Simmonds [1953] 1 Q.B. 543, [1953] 1 All E.R. 822 (C.A.) May & Butcher v. R. [1934] 2 K.B. 17 (H.L.)
Formation: Certainty of Terms
[32]
Case
Rule parties. It has long been a well-recognized principle of contract law that an agreement in which some critical part of the contract matter is left undetermined is no contract at all. It is perfectly possible to contract to sign a document which will contain all the relevant terms, but it is not acceptable to agree that the parties will in the future agree upon a matter which is vital to the contract. Court of Appeal with great regret upheld May & Butchers general rule that if there are any essential terms of a contract of sale undetermined, and therefore to be determined by a subsequent contract, there is no enforceable contract. House of Lords took a more modern approach: Business men often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business that are far from complete or precise. It is the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects. Interpreted the general principles of H.L.s decision in Hillas to mean that each case should be decided on the construction of the particular document. Held that an agreement to agree on price from time to time was certain enough since the parties believed they had a contract and had acted for 3 years as if they did i.e. there was already partial performance: The land had been transferred and a portion of the sale of gas agreement had been performed. Lord Denning held that the price in a building contract is of fundamental importance. There is no contract unless the price is agreed or there is an agreed method of ascertaining it that is not dependent on the negotiations of the two parties themselves. The court will try, wherever possible, to give the proper legal effect to any clause that the parties understood and intended to have legal effect. Agreements to agree cannot be enforced. When the parties stated a formula (e.g. market rental) to ascertain a clause, but did not supply machinery (e.g. arbitration) for applying the formula, the courts will supply (be) the machinery and apply the formulae so long as the formulae is not defective. Where the formula is set out but is defective, and machinery is provided for applying the formula, the machinery may be used to cure the defect in the formula. While there is no common law obligation to negotiate in good faith (because it is unworkable), in this case there was an implied term requiring good faith negotiations for the renewal of the rental agreement. The court held that the renewal clause in the rental contract was a mere agreement to agreethe contract did not provide a formula or objective measure to determine rent (such as fair market value) or a mechanism to apply the formula. The oral agreement in contemplation of a formal written agreement not enforceable due to
Topic
[34] Hillas v. Arcos (1932) 147 L.T. 503 (H.L.) [35] Foley v. Classique Coaches Ltd. [1934] 2 K.B. 1 (C.A.)
[33]
Hillas v. Arcos (1932) 40 Lloyds Rep. (C.A.)
[36]
Courtney and Fairbairn v. Tolaini Bros. [1975] 1 All E.R. 716, [1975] 1 W.L.R. 297 (C.A.)
[37]
Empress v. Bank of Nova Scotia [1991] 1 W.W.R. 537 (B.C.C.A.)
[38]
[39]
Mannpar Enterprises Ltd. v. Canada [1999] 173 D.L.R. (4th) 243 (B.C.C.A.) Bawitko Investment Ltd. v. Kernels Popocorn Ltd (1991) 79 D.L.R. (4th)
Formation: Certainty of Terms Formation: Certainty of Terms
Case 97(Ont. C.A.) Wellington City Council v. Body Corporate 51702 [2002] 3 N.Z.L.R. 486 (C.A.) Wallace v. Allen, 2009 ONCA 36
Rule the lack of certainty; it is a contract to make a contract The process contract or the agreement to negotiate in good faith is unenforceable for the lack of certainty Letter of intent could amount to an enforceable contract if the parties clearly express their intention to be bound by the terms of LOI which were later to be incorporated into a main contract, if the terms of LOI are precise and complete, and if the parties after signing LOI conducted themselves as if the deal is completed. Shrink-wrap licenses are enforceable unless their terms are objectionable on grounds applicable to contracts in general. If the buyer does not want to be bound by the terms contained inside the box the buyer has the right to return the goods promptly (unused) for a refund, but will otherwise be bound by those terms. Atkin L.J.: the common law does not regulate agreements between spousesThe consideration that really obtains from them is that natural love and affection. There is a strong presumption that family agreements are not intended to produce legal consequences. There is a strong presumption that business agreements are intended to produce legal consequences. However, if there is a clear and definite expression of the business parties that they do not intend to be subject to legal jurisdiction, there is no reason in public policy why effect should not be given to their intention. Held that the arrangement between mother and daughter was throughout a family arrangement depending upon the good faith of the parties in keeping the promises made and not intended to be a rigid binding agreement; The family arrangement was held far too vague and uncertain to be itself enforceable as a contract. A comfort letter is a form of undertaking that is deliberately designed with the intention not to create enforceable obligations. For a promise to be binding as a contract it has to be supported by a good and sufficient consideration which moves from the promisee at the time of and in exchange for the promise which is sought to be enforced Moral obligation is nudum pactum, a voluntary promise without any consideration. Past consideration is not a good consideration for a new promise made after a benefit was conferred and when the benefit was not conferred at the request of the promisor. Past consideration may be a good consideration for a subsequent promise if the benefit was conferred at the request of the promisor.
Topic
[40]
Formation: Certainty of Terms Formation: Certainty of Terms and letters of intent
[41]
[42]
ProCD v Matthew (1996) 86 F. 3d 1447
Formation: Certainty of Terms Enforcement of Promises: Intention to Create Legal Obligation Enforcement of Promises: Intention to Create Legal Obligation Enforcement of Promises: Intention to Create Legal Obligation Enforcement of Promises: Intention to Create Legal Obligation Enforcement of Promises: Consideration Enforcement of Promises: Past Consideration Enforcement: Past Consideration
[43]
Balfour v. Balfour [1919] 2 K.B. 571
[44]
Rose and Frank v. J.R. Crompton Bros., [1923] 2 K.B. 261 (C.A.)
[45]
Jones v. Padavatton [1969] 2 All ER 616, [1969] 1 WLR 328 (C.A.) Toronto Dominion Bank v. Leigh Instruments (1999) 178 D.L.R. (4th) 634 (Ont. C. A.) The Governors of Dalhousie College at Halifax v. The Estate of Arthur Boutilier, Deceased [1934] S.C.R. 642 Eastwood v. Kenyon (1840) 11 Ad. & E. 438, 113 E.R. 482 (Q.B.) Lampleigh v. Brathwait, (1615) Hobart 105, 80 E.R. 255 (K.B.)
[46]
[47]
[48] [49]
Case
Rule
Topic
[50]
Thomas v. Thomas (1842) 2 Q.B. 851, 114 E.R. 330
Consideration is something which is of some value in the eyes of the law. Consideration must move from the promise. Consideration must be sufficient but need not be adequate. If an agreement is made to compromise a disputed claim, forbearance to sue in respect of that claim is a good consideration If a person bona fide believes he has a reasonable ground for suing, his forbearance to sue will constitute a good consideration Consideration can be anything beyond a basic legal duty. A forbearance to sue is good consideration and monies paid in exchange for a promise not to sue is a valid and enforceable legal contract. The forbearance can be good consideration even if the validity of the claim is doubtful or not known to be invalid (but not if the claim is known to be invalid). Past consideration can sometimes be good consideration if: 1. The act was done at the promisors request; 2. The parties understood that the act was to be remunerated; and 3. Payment would have been legally enforceable had it been promised in advance. A promise to perform, or the performance of a pre-existing contractual obligation to a third party can be valid consideration. Duress, whatever form it takes, is a coercion of the will so as to vitiate consent; duress may render a contract voidable, but this must be claimed promptly. The commercial pressure alleged to constitute duress must be such that the victim entered the contract against their will, they had no alternative course open to them, and they were confronted with coercive acts by the party exerting the pressure. A unilateral promise to increase price is unenforceable because there is no clear agreement to rescind the existing contract the new provisions were unilaterally imported into the document and accordingly, consideration of the oral agreement was not found in a mutual agreement to abandon the earlier written contract and assume the obligations under the new oral one. In Stilk v. Myrick (1809), when two out of 11 sailors deserted the ship, the captain promised to pay the remaining sailors extra money if they sailed the ship back. However, he later refused to pay that extra money. The court held that the captain was not obliged to pay the extra money because the obligation to sail the ship back was not a valid consideration for the subsequent agreement which varied the original one. Pre-existing legal duty owed to the promisor may be a valid consideration for a subsequent promise if the promisor derives practical benefit from the agreement and if the subsequent promise is not given under economic duress (note Glidewells 6 point test).
Enforcement of Promises: Nature of Consideration Enforcement of Promises: Compromise and Consideration Enforcement of Promises: Nature of Consideration Enforcement of Promises: Forbearance
[51]
Callisher v. Bischoffsheim (1870) l L.R. 5 Ward v. Byham, [1956] 1 WLR 496 (C.A.) B. v. Arkin [1996] 8 W.W.R. 100 (Man.Q.B.); affirmed [1996] 10 W.W.R. 689 (Man. C.A.)
[52]
[53]
[54] Pao On v. Lau Yiu Long [1980] A.C. 614 (P.C.)
Enforcement of Promises: Preexisting Legal DutyDuty Owed to a Third Party; Economic Duress; Past Consideration
[55]
Gilbert Steel v. University Construction Ltd. (1976) 12 O.R. (2nd.) 19, 67 D.L.R. (3d) 606 (C.A.)
Enforcement of Promises: Preexisting Legal DutyDuty Owed to the Promisor; Reference to Stilk v. Myrick (1809) 170 E.R. 1168 Enforcement of Promises: Preexisting Legal DutyDuty Owed to the Promisor
[56]
Williams v. Roffey Bros. [1990] 1 All E.R. 512 (C.A.)
Case Greater Fredericton Airport Authority Inc. v. NAV Canada [2008] N.B.J. No. 108 (N.B.C.A.)
Rule Robertson J.A. held that it is time to build upon UK decision in Williams v. Roffey and accepted that post-contractual modification, unsupported by consideration, may be enforceable so long as it is established that the variation of contracts was not procured under economic duress. Commercial reality needs to be recognized and consideredthat is, that the parties frequently varied and modified their contractual obligations and that the law has to protect their legitimate expectations that the modifications or variations will be regarded as enforceable. The promise to pay a sum which the debtor was already bound to pay was not good consideration (confirms Foakes v. Beer) Williams v. Roffey principle not applicable where the existing obligation is to pay money but rather only where the existing obligation is to supply goods or services The traditional common law position is that an agreement to accept a smaller sum in satisfaction of a debt of a larger sum is not a good consideration. This case has been overruled in B.C. by s.43 of the Law and Equity Act. In the case of the debtor who owed the creditor a large sum under a series of promissory notes as full payment of the debt, as long as the debtor continued to perform his obligation and kept paying by post-dated cheques as subsequently agreed between the two, the creditors right to sue on the notes was suspended. [I]t is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal resultscertain penalties or legal forfeitureafterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties A promise intended to be binding, intended to be acted on and in fact acted on, is binding even if there is no consideration (Lord Denning relied on the doctrine of promissory estoppel). Estoppel was used as a shield by tenants against the landlord who wanted to enforce a higher rent. The passive conduct of the appellant was not taken by the court as a waiver of his rights to seek enforcement of the contract, but only as friendly indulgences. When there is no consideration or deed, any relaxation of terms must be clear and unequivocal. A creditor is barred from enforcing their legal rights only when it would be inequitable for
Topic
[57]
Enforcement of Promises: Preexisting Legal DutyDuty Owed to the Promisor Enforcement of Promises: Duty Owed to the Promisor Enforcement of Promises: Preexisting Legal DutyDuty Owed to the Promisor Enforcement of Promises: Part payment of debt
[58] Re Selectmove Ltd. [1995] 2 All E.R. 531 (C.A.)
[59]
Foakes v. Beer (1884) 9 App. Cas. 605 (H.L.)
[60]
Foot v. Rawlings [1963] S.C.R. 197
Hughes v. Metropolitan Railway Co. (1877) 2 A.C. 439 (H.L.)
[61]
Enforcement of Promises: Waiver and Promissory Estoppel
[62]
Central London Property v. High Trees House [1947] 1 K.B. 130, [1956] 1 All E.R. 256 John Burrows v. Subsurface Surveys [1968] S.C.R. 607, 68 D.L.R. (2nd) 354 D.C. Builders v. Rees
Enforcement of Promises: Waiver and Promissory Estoppel Enforcement of Promises: Waiver and Promissory Estoppel Enforcement of
[63] [64]
Case [1966] 2 Q.B. 617
Rule the creditor to insist on them. Where there has been a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts on that accord by paying the lesser sum and the creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance, but they are not bound if there was no true accord. A promise made under duress should not be estopped. Lord Denning explained his own principle set out in High Trees: a) promissory estoppel cannot be used as a sword, to create new causes of action where none existed before, b) promissory estoppel can only be used as a shield, as a part of a cause of action, to prevent a party from insisting upon his strict legal rights when it would be unjust to allow him to enforce them. Australian court made an exception to the general rule that promissory estoppel cannot be used in the absence of a pre-existing legal relationship. The court held that the doctrine can be used in the absence of a pre-existing legal relation if there was a reliance on the promise that was a reasonable expectation and if a departure from the promise is unconscionable behavior. B.C.C.A found little evidence in Canadian authorities to indicate a move toward a more generous approach to promissory estoppel and distinguished the case from Walton , in which there was a reasonable expectation of a legal obligation. Denning on waiver: if one party by its conduct leads another to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that belief and he does act on it, then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for him to do so On some occasions it is possible to revert to the strict rights if the reasonable notice is given; but not if that would be inequitable Waiver would operate even if there is no detriment for the parties as long as there is some alteration of the parties positions and one party acts in reliance on waiver Estoppel and waiver require reliance on representation but detriment is not needed It must be inequitable to allow the party who waives his or her rights to revert
Topic Promises: Waiver and Promissory Estoppel
[65] Combe v. Combe [1951] 2 K.B. 215, 1 All E.R. 767 (C.A.) [66] Walton Stores (Interstate) Ltd. v. Maher (1988) 62 A.L.J.R. (H.C.)
Enforcement of Promises: Waiver and Promissory Estoppel Enforcement of Promises: Waiver and Promissory Estoppel Enforcement of Promises: Waiver and Promissory Estoppel Enforcement of Promises: Promissory Estoppel and Waiver
[67]
N.M. v. A.T.A. (2003), 13 B.C.L.R. (4th) 73 (B.C.C.A.)
[68]
W.J. Alan & Co. v. El Nasr Export & Import Co. [1972] 2 Q.B. 189
[69]
Socit Italo-Belge Pour Le Commerce v. Palm and Vegetable Oils (The Post Chaser) [1982] 1 All E.R. 19 (Q.B.)
[70] Saskatchewan River Bungalows v. Maritime Life Assurance [1994] 2 S.C.R.490 [71] International Knitwear Architects Inc. v. Kabob Investments (1995) 17
Waiver will be found where the evidence demonstrates that the party waiving had (1) a full knowledge of his/her rights; (2) an unequivocal and conscious intention to abandon them Waiver can be retracted if a reasonable notice is given to the party in whose favour it operates The notice to revive waived obligations could be reasonable in length even if it is not a dated notice
Enforcement of Promises: Promissory Estoppel and Waiver Enforcement of Promises: Promissory Estoppel and Waiver Enforcement of Promises: Promissory
10
Case B.C.L.R. (3d) 125 (B.C.C.A) Petridis v. Shabinsky (1982) 132 D.L.R. (3d) 430 (Ont. H.C.)
Rule
Topic Estoppel and Waiver Enforcement of Promises: Promissory Estoppel Enforcement of Promises: Promissory estoppel Privity of Contract: Third Party Beneficiaries Privity of Contract: Third Party Beneficiaries
Promissory estoppel could only apply when there was a legal relation between the parties
[72]
[73]
Robichaud c. Casse Populaire (1990) 69 D.L.R. (4th) 589 (N.B.C.A.)
Promissory estoppel used both as a shield and as a sword
[74]
Tweddle v. Atkinson (1861) 1 B & S. 393
A person who is not engaged in a contract (a third party) can generally neither sue nor be sued on that contract. Love and affection are not sufficient consideration. Only a person who is a party to a contract can sue on it. Even if a contract provides a third party with an enforceable right, there still must be consideration. A principal not named in the contract, however, may sue upon it if the promisee really contracted as his agent. C.A: Lord Denning MR finds an equitable exception to general rule of privity where the third party is in a trustee relationship - in this case the widow sued in her capacity as executrix of the estate, and also in her personal capacity (Denning held that joint claim was good). H.L.: Lord Reid found that although the widow in her personal capacity had no right to sue, she had a right as administratrix of her husbands estate Iacobucci J held employees were protected from clause limiting their liability even though they were not parties to the contract. The employee could rely on the limitation of liability clause if such clause expressly or implicitly extends its benefits to the employees and if the employees have been acting in the course of their employment and performing the very services provided for in the contract between their employer and the customer when the loss occurred Limited Exception to privity, employees may use as shields. McLachlin J held that Engineers were not protected from clause limiting their liability in a tender as they were not parties to the contract. Distinguished the exception in London Drugs as specific to powerless employees who were the only ones who could do the work. Here the engineering firm could have taken measures to protect themselves (ie disclaimer) unlike the employees in London Drugs. No exception to privity rule found in this case. Followed London Drugs analysis re: application of limitation of liability clause on
[75]
Dunlop PneumaticTyre Co. v. Selfridge & Co. Ltd. [1915] A.C. 847(H.L.)
[76]
Besweck v. Beswick [1966] 1 Ch. 538; [1966] 3 All E.R. 1 (C.A.) [1968] A.C. 58;[1967] 2 All E.R. 119 (H.L.)
Privity of Contract: Ways for Third Parties to Acquire Benefits
[77]
London Drugs Ltd. v. Kuehne & Nagel International Ltd. [1992] 3 S.C.R. 299
Privity of Contract: Exceptions Employees
[78]
Edgeworth Construction Ltd. v. N.D. Lea & Associates Ltd. (1993)

th
107 D.L.R. (4 ) 169 (S.C.C.) [79]
Privity of Contract: Exceptions
Privity of Contract:
11
Case Fraser River Pile & Dredge Lt. v. Can-Dive Services. [1997] 39 B.C.L.R. (3d) 187 (B.C.C.A.)
Rule employees in order to enforce the insurers waiver of its rights of subrogation against the charterer Does not modify the test of London Drugs but extends its application on contracts other than employment contracts as long as the contract explicitly or implicitly extends its benefits to the third party and if the third party has been performing the activities contemplated in the contract Statutory requirement that a contract be in writing has been satisfied with a memorandum evidencing the agreement (that is, description of land) with a sufficient certainty of description that enables the property to be identified A contract can be rescinded (set aside) due to a material false representation: a man is not to be allowed to get a benefit from a statement which he now admits to be false. Failure to exercise due diligence is not relevant if a person is induced to enter into a contract by a false representation. In the case where the facts are equally well known to both parties, what one of them says to the other is frequently nothing but an expression of opinion. However, if the facts are not equally known to both sides, then a statement of opinion by the one who knows the facts best very often involves a statement of a material fact. Fraudulent misrepresentation requires proof of a misrepresentation and that it was known to be incorrect at the time it was made; that is, a proof that a false statement is made: (a) knowingly; or (b) without belief in its truth; or (c) recklessly, careless as to whether it be true or false. In 1889 type (c) was classified as fraudulent misrepresentation, but today (c) would likely be considered to be negligent misrepresentation. General rule: there is no rescission for misrepresentation if a 3 rd party has acquired rights, or when restitutio in integrum is impossible, or if the action to rescind is not taken within a reasonable time, or the contract is executed (except in the case of fraud), or if the injured party affirms the contract. The court dealt with the possibility of rescission for fraudulent misrepresentation using the 2 step test: a) is rescission practical and restitution possible? b) was the claim to rescind submitted in timely fashion? When rescission is impossible then the injured party may get monetary compensation (in this case fair market value for the property plus interest). The Supreme Court of Canada held that there was no contract between the bank and the plaintiff but that the bank was liable for negligent misrepresentation the bank had a special relationship with the plaintiff and the banks false statement induced the plaintiff to sign a contract with another party in reliance on the banks false statement regarding financing. The court awarded expectation damages (anticipated profits) in addition to wasted expenses. In the case of innocent misrepresentation the court relying on Lord Denning (Leaf v.
Topic Exceptions other than Employees
[80]
Dynamic Transportation Ltd. v. O.K. Detailing Ltd. [1978] 2 S.C.R. 1072
Requirement of Writing Misrepresentation and Rescission: material representation, fraudulent misrepresentation Misrepresentation and Rescission: statement of opinion or misrepresentation Fraudulent misrepresentation
[81] Redgrave v. Hurd (1881) 20 Ch.D. 1 (C.A.)
[82]
Smith v. Land & House Property Corporation (1884) 28 Ch. D. 7 (C.A.)
[83]
Derry v. Peek (1889), 58 L.J. Ch. 864, [1889] All E.R. Rep. 1
[84]
Kupchak v. Dayson Holdings (1965) 53 W.W.R. 65, 53 D.L.R. (2d) 482 (B.C.C.A.)
Misrepresentation and Rescission: fraudulent misrepresentation
[85]
V.K. Mason Construction Ltd. v. The Bank of Nova Scotia (1985) 58 N.R. 196 (S.C.C.) S-244 Holdings Ltd. Seymour
Misrepresentation: Negligent
[86]
Misrepresentation
12
Case Building Systems Ltd. (B.C.C.A.)
Rule International Galleries) and Canadian case law held that rescission may be available despite the execution of the contractexecution or performance is a relevant but not decisive factor to be considered when deciding whether rescission should be denied because of the plaintiffs undue delay in seeking a remedy or because rescission might affect 3 rd parties, or would otherwise be inequitable. Denial of rescission could, in certain circumstances, be inequitable because rescission is an all or nothing remedy. A person is not liable in damages for an innocent misrepresentation no matter in what way or under what form the attack is made, therefore if rescission is not possible there is no remedy. An affirmation at the time of sale is a warranty, provided it appears on evidence to be so intended, else it is only an innocent misrepresentation. A collateral warranty must be proved strictly, not only the existence of such terms but the existence of animus contrahendi must be clearly shown. Lord Denning: if a representation is made in the course of dealings for a contract for the very purpose of inducing the other party to act on it, and it actually induces him to act on it by entering into the contract, that is prima facie ground for inferring that the representation was intended as a warranty. The maker of the representation can rebut this inference if they can show that it really was an innocent misrepresentation, in that they were in fact innocent of fault in making it, and that it would not be reasonable in the circumstances for them to be bound by it. Interpretation of a contract is an exercise in determining the intention of the parties in an objective sense. The court does not question what the parties subjectively intended, but instead ascertains what their intentions were from the circumstances. Evidence of the subjective intention of the parties is not admissible. Extrinsic evidence is admissible to show that words in an agreement have by custom or usage a peculiar meaning; or when the words are susceptible to more than one meaning, or if an ambiguity emerges. Lord Denning held: rescission may be available in cases of innocent misrepresentation if no other option is available and the innocent party behaved reasonably. But, no rescission is available for innocent misrepresentation when the contract is executed and a reasonable time for a claim lapses. Distinction drawn between the quality of the painting (who painted it) and the substance of the painting (picture of Salisbury Cathedral). Only allow rescission if differs in substance. The court found that the banks failure to disclose material facts to the defendant (i.e. that there had been a change to collateral securities held by the bank) constituted misrepresentation by words, acts and conduct which induced the defendant to sign the guarantee which he otherwise would not have signed (unilateral mistake induced by negligent misrepresentation)
Topic and Rescission: rescission when the contract is executed
Heilbut, Symons & Co. v. Buckleton [1913] A.C. 30 (H.L.) Dick Bentley v. Smith Motors [1965] 1 W.L.R. 623 (C.A.)
[87]
Misrepresentation and Rescission: innocent misrepresentation; breach of warranty
[88]
Misrepresentation and Rescission: innocent misrepresentation; breach of warranty Misrepresentation and Rescission: breach of warranty; Parol evidence rule: admissibility of extrinsic evidence; Interpretation of contract Misrepresentation and Rescission: innocent misrepresentation; rescission and lapse of time Misrepresentation and Rescission: omissions
Charbonneau v. Brawn (2002) 113 A.C.W.S. (3d) 620 B.C.S.C.
[89]
[90] Leaf v. International Galleries [1950] 2 K.B. 86, 1 All E.R. 693 (C.A.) [91] Bank of B.C. v. Wren Developments (1973), 38 D.L.R. (3rd) 759 (B.C.C.A.)
13
Case
Rule Omissions can be misrepresentation where the omissions are related to the material aspects of the contract If a partys skill and judgment is foreseeably being relied upon, a duty is owed to take care in making statements. If care is not taken, and injury results, the party that was relied upon will be liable. Special relationship must be shown. Denning held: a negligent misrepresentation inducing a contract gives rise to actions in tort (negligence) and contract (breach of collateral warranty). If a party, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another (advice, information or opinion) with the intention of inducing the other to enter into a contract, they are under a duty to use reasonable care to see that the representation is correct. If they negligently give unsound advice or misleading information and thereby induce the other side into a contract, they are liable in damages. Breach of a collateral warranty gives the right to damages. Liability for negligent misrepresentation may be found both in contract and tort where there is a special relationship creating a duty of care the defendant as a professional accountant and trustee in bankruptcy and the party submitting an accepted tender were in such a relationship SCC held that the limitation clauses in the contract did not negate Hydros duty of care. Held that actions in contract and tort may be concurrently pursued unless the parties by a valid contract explicitly indicate that they intended otherwise. Iacobucci in dissent said that a contract precluded the concurrent liability, but the majority of SCC held that the mere fact that the parties have dealt with a matter expressly in their contract does not mean that they intended to exclude all the rights to sue in relation to that matter (in this case, tort). [38] The SCC made it clearthat breach of precontractual representations may be actionable as both a breach of contract and negligent misrepresentation, with clear exceptions arising from the express terms of the contract. The entire agreement clause in the contract between the parties did not explicitly refer to negligence but BCCA held that where the parties were both sophisticated, commercial entities and the contract was not a standard adhesion contract and was clearly intended to govern the relationship between the parties, it would not accord with commercial reality to gove no effect to the entire agreement clause in determining whether Taurus can claim a tort remedy[59] Rescission not allowed for innocent misrepresentation if the contract is executed unless the benefit provided differs in substance from that promised. For fraudulent misrepresentation rescission may be granted even if the contract is executed Impossibility of restitution will prevent rescission unless that impossibility has been
Topic
[92]
Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd, [1964] A.C. 465
Misrepresentation and Rescission: negligent misrepresentation Misrepresentation and Rescission: concurrent liability in contract and tort; negligent misrepresentation Misrepresentation and Rescission: concurrent Liability in Torts and Contracts Misrepresentation and Rescission: concurrent Liability in Torts and Contracts
[93]
Esso Petroleum v. Mardon [1976] Q.B. 801, 1 All E.R. 5 (C.A.) Sodd Corp. v. N. Tessis (1977), 17 O.R. (2d) 158 (Ont. C.A.)
[94]
[95]
B.G. Checo Intl Ltd. v. B.C. Hydro, [1993] 1 S.C.R. 12
[96]
No. 2002 Taurus Ventures Ltd. v. Intrawest Corp. 2007 BCCA 228
Misrepresentation and Rescission: concurrent liability in torts and contracts and the entire agreement clause Misrepresentation and Rescission: Availability of remedies
[97] Redican v Nesbitt [1924] S.C.R. 135
14
Case caused by the guilty party.
Rule
Topic
[98]
Bank of BC v. Wren (1973) 38 D.L.R. (3d) 759 (B.C.S.C.)
An obligation to disclose material facts arises when a party asks a direct question. Failure to disclose a material fact which would have prevented a party from making a guarantee, may render that party not liable for the terms of the guarantee Limitation clauses may be valid even in the case of illegal rescission. For the purpose of triggering a limitation period, knowledge of the right to make a claim is deemed to arise when there are sufficient facts available to cause a reasonable person to assume that a loss of a type covered under the contract has occurred. Rescission is a remedy available for misrepresentation, and is independent of whether or not the guilty party accepts the rescission. The effect of repudiation depends on the attitude of the non-repudiating party. If the nonrepudiating party agrees that the contract should be dissolved, then the contract is at an end and there are no further obligations, but if the non-repudiating party wants to continue the contract, they can reject the repudiation and sue for damages. The court upheld the traditional principle that any agreement collateral or supplementary to the written agreement may be established by parol evidence, provided it is one which could be made as an independent agreement without writing and that it is not in any way inconsistent with or contrary to the written agreement. Confirmation of the general principle that oral evidence which contradicts the main written contract is inadmissible under the parol evidence rule. There are many cases where evidence of an oral statement is relevant and may be admitted: the written agreement is not the whole contract, in support of interpretation of the contract, to correct a mistake or an error in written contracts, to show misrepresentation, etc. It is only a presumption that a collateral agreement cannot be admitted if it is inconsistent with, or contradicts, the written terms. In addition to traditional common law categorization of terms of contract into two groups (conditions-the breach of which give rise to repudiation; warranties-the breach of which give rise to damages only) there are intermediate terms-those which are neither conditions nor warranties. The test the court used to determine if the term was a condition or intermediate term is the nature of event and its practical effectdoes it deprive the party to perform of substantially the whole benefit of contract. The court applied Hong Kong Fir test and held that the gravity of the consequences of the breach did not deprive the party to perform of substantially the whole benefit of the contract; accordingly the court found only a breach of warranty and ordered damages (not repudiation). The contract should be interpreted as a whole and word condition should, on the facts of this case, be given an ordinary meaning not as a term which will entitle the innocent party to repudiate the contract in the event of a breach.
Misrepresentation and Rescission: Enforcement of terms
[99]
Guarantee Co. of North America v. Gordon Capital Corp. (1999) 178 D.L.R. (4th) 1 (S.C.C.)
Misrepresentation and Rescission: applicability of exclusion clauses and options for the innocent party
[100] Harwish v. Bank of Montreal [1969] S.C.R. 515 Bauer v. Bank of Montreal [1980] S.C.R. 102 Gallen v. Butterley (1984) 53 B.C.L.R. 38, 25 B.L.R. 314 (B.C.C.A.) [102] Hong Kong Fir v. Kawasaki Kisen Kaisha Ltd. [1962] 1 All E.R. 474 (C.A.)
Parol Evidence Rule
[101]
Parol Evidence Rule
Parol Evidence Rule
[103]
Classification of Terms
[104]
Krawchuk v. Ulrychova (1996) 40 Alta. L.R. (3d) 196 (Alta. Prov. Ct.) Wickman v. Schuler [1974] A.C. 235, 2 All E.R. 39 (H.L.)
Classification of Terms Classification of Terms
[105]
15
Case Fairbanks v. Sheppard [1953] 1 S.C.R. 314, 2 D.L.R. 193
Rule If the parties intend to give a condition such an effect they must make that intention clear. In certain circumstances the general rule (that there is no recovery for a contract to do work for a lump sum until the work is fully completed) could be interpreted to mean that the recovery for a contract to do work for a lump sum is possible if the work is substantially completed. In order to recover for the work that is substantially completed, the party in default who wants to recover must provide evidence from which any new contract to accept and pay for the work done could be inferred. The general rule is that where there is a contract to do work for a lump sum, until the work is completed the price of it cannot be recovered. There are cases in which, though the plaintiff has abandoned the performance of a contract, it is possible for him to raise the inference of a new contract to pay for the work done on a quantum meruit basis from the defendants having taken the benefit of that work. But in order that that may be done, the circumstances must be such as to give an option to the defendant to take or not to take the benefit of the work done. The mere fact of the appellant remained in possession of their land is not evidence upon which an inference of a new contract can be founded. Whether, in absence of an express stipulation, a party in default who paid money as a deposit on the signing of a contract, could recover that deposit or he has lost all right to performance by the other party, would depend on what terms are to be implied
Topic
[106]
Discharge by Performance or Breach: Remedy for a party in default
[107]
Sumpter v. Hedges [1898] 1 Q.B. 673 (C.A.)
Discharge by Performance or Breach: Remedy for a party in default
[108]
Howe v. Smith (1884) 27 Ch.D. 89 (C.A.)
[109] Stevenson v. Colonial Homes Ltd., [1961] O.R. 407 (Ont. C.A.)
To determine if the payment is a deposit or a part payment the court will look at the intention of the parties in the circumstances of each case as indicated by the actual words of the contract and evidence of what was said If the payment is a deposit (money paid in advance to guarantee the performance of the K) there would be no return when the contract is set aside. However if the money is paid as a part payment on account of the purchase price then it is recoverable Abandonment discharges a contract only if it amounts to a new contract in which the parties agree to abandon the old one.[17 A new contract could be made explicitly or implicitly but it must be clear that the parties have made a new contract More than a simple ignorance of a contractual obligation is needed to establish repudiation. A contract may be said to be repudiated when one party acts in a way that evinces intent to no longer be bound by the contract. The other party then may, at its option, elect to terminate the contract. [20] Where the work was done, but badly, and the defects have been or can be remedied, the courts tend to find that there has been substantial performance and that the builder should have the agreed price less the cost of correcting the defects and omissions
Discharge by Performance or Breach: Deposit paid by a party in default Discharge by Performance or Breach: cases of uncompleted work when some money was given before the performance started Discharge by Performance or Breach: abandonment/repu diation Discharge by Performance or Breach: cases of lump sum
Jedfro Investments (USA) Ltd. v. Jacyk 2007 SCC 55
[110]
[111]
Markland Associates Ltd. v. Lohnes (1973), 22 D.L.R. (3d) 493 (N.S. T.D.)
16
Case
Rule
Topic contracts and uncompleted work
[112] Machtinger v. Hoj Industries Ltd. [1992] 1 S.C.R. 986 Thornton v. Shoe Lane Parking Ltd. [1971] 2 Q.B. 163, 1 All E.R. 686 (C.A.)
[113]
Parker v. South Eastern R.y. Co. (1877) 2 C.P.D. 416 (C.A.)
[114]
A reasonable notice period is an implied term of an employment contract and the intention of the contracting parties is not relevant to terms implied as a matter of law (but only to terms implied as a matter of fact). The test for implication of a term as a matter of law is necessity or whether the term sought to be implied is a necessary incident of the contract. In ordinary cases where an action is brought on a written agreement which is signed by the parties the agreement is proved by proving the signature and, in the absence of fraud, it is wholly immaterial that the party has not read the agreement and does not know its contents In the case of unsigned documents the party imposing a condition (or an exclusion clause) has to take reasonable steps to give the other party notice of the condition. The test to determine what constitutes reasonable steps is an objective testnot whether the party knew of the condition but whether the party imposing the condition did what was reasonably sufficient to give the other party notice of the condition. Lord Denning on the formation of contracts in a parking lot: the ticket is no more than a voucher or receipt for the money that has been paid on terms which have been offered and accepted before the ticket is issued The offer was accepted when the plaintiff dove up to the entrance and by the movement of his car, turned the light from red to green, and the ticket was thrust at him. The contract was then concluded and it could not be altered by any words printed on the ticket itself. The court should not bind a party by unusually wide and destructive exclusion clauses unless they are drawn to their attention in the most explicit way. Previous dealings between the parties are relevant only if they prove (1) knowledge of the terms (actual and not constructive), and (2) assent to the terms in the previous dealings. If previous dealings show that a person knew of and agreed to a term on 99 occasions, it can be imported into the 100th contract without an express statement, but without proving knowledge there is nothing.
Standard Form Contracts: Exclusion Clauses
Standard Form Contracts: Exclusion Clauses and unsigned documents ticket case
Standard Form Contracts: Exclusion Clauses and unsigned documents ticket case Standard Form Contracts: Exclusion Clauses and unsigned documents ticket case Standard Form Contracts: Exclusion Clauses and unsigned documents Standard Form Contracts: Exclusion Clauses and signed documents
[115]
McCutcheon v. David MacBrayene Ltd. [1964] 1 W.L.R. 125, 1 All E.R. 430 (H.L.)
[116]
Olley v. Marlborough Court, [1949] 1 K.B. 532
All terms must be disclosed prior to formation of the contract if they are to form part of the agreement, regardless of the length of the ensuing relationship between the parties. In modern commercial practice, many standard form printed documents are signed without being read or understood and in many cases the parties seeking to rely on the terms of the contract know or ought to know that the signature a party to the contract does not represent the true intention of the signer and that the party signing is unaware of the stringent and onerous provisions which the standard form contains. The party seeking to rely on such stringent and onerous terms should not be able to do so in the absence of first having taken reasonable measures to draw such terms to the attention
Tilden Rent-A-Car Co. v. Clendenning (1978) 18 O.R. (2d) 601 (Ont. C.A.)
[117]
17
Case
Rule of the other party, and, in the absence of such reasonable measures, it is not necessary for the party denying knowledge of such terms to prove either fraud, misrepresentation or non est factum; what is reasonable is the question of facts in each instance. In a split decision of the BCCA (Nemetz dissenting, Taggart concurring) McFarlane J. held that the language of the standard liability release must be interpreted and understood having regard to the whole purpose of the relationship between the parties or the nature of the venture involved. The purpose was to engage in what must have been intended to be an exciting and thrilling challenge and such intent was involved in the language of the release. The court held that whether the duty to take reasonable steps to advise of an exclusion clause arises depends on many factors, such as the nature of the contract, the length and format of the contract and the time available for reading and understanding it The purpose of the contract was to engage in a hazardous activity upon which Karroll voluntary embarked, the exclusion clause was consistent with the purpose of the contract, there was no fine print, no unusual terms, and she was an experience racer who had signed such clauses before Delaneys decision is followed and it is held that the 2 step test of requiring (1) reasonable steps must be considered in examining whether the party relying on the unusual exclusion clause did what was necessary to bring it to the other partys attention and (2) that the purpose of the relationship and the nature of the venture involved must be considered. In examining the reasonable steps test the court referred to Karroll v. Silver Star Mountain where the circumstances of the signing were such that a reasonable person (competition organizer witnessing the signing) would not have known that the signor did not intend to agree to what she signed. The purpose of permitting the signor and others to engage in such an activity and where and how the exclusion clause was represented were also considered in the reasonable steps test The waiver was found to exclude liability. The more onerous the condition of the contract, the more stringent is the duty to draw it to the attention of the other party.
Topic
[118] Delaney v. Cascade River Holidays Ltd. (1983) 44 B.C.L.R. 24 (B.C.C.A.)
Standard Form Contracts: Exclusion Clauses and signed documents Standard Form Contracts: Exclusion Clauses and signed documents
[119]
Karroll v. Silve Star Mountain Resort Ltd.(1988) 33 B.C.L.R (2d) 160 (B.C.S.C.)
[120]
Schuster v. Blackcomb Skiing Enterprises Ltd. Partnership [1995] 3 W.W.R. 443 (B.C.S.C.)
Standard Form Contracts: Exclusion Clauses and signed documents
[121]
Interfoto Picture Library v. Stiletto [1989] Q.B. 433
[122]
Zhu v. Merrill Lynch HSBC [2002] B.C.J. No. 2883 (B.C.P.C)
A disclaimer which is extremely broad and excludes almost all liability for any poor performance may be unenforceable. The court defines the browse wrap agreement the one that does not require that the purchaser indicate their agreement by clicking on an I Agree button. All that is required is that they use the product after being made aware of the products Terms of Use. [92] The court found that there was an enforceable browse wrap agreement on the Century 21 web site and that terms of use were properly incorporated because the terms of use were clear and a person who browsed the web site had enough time to read them prior
Standard Form Contracts: Exclusion Clauses Standard Form Contracts: Exclusion Clauses and signed documents Exclusion Clauses in web posted contracts (browse wrap agreements)
[123]
Century 21 Canada v. Rogers Communications Inc. 2011 BCSC 1196
18
Case
Rule to accepting them The act of browsing could constitute the acceptance of terms (of use) of the web agreement and the formation of contract as long as a user of the web site continues to browse after reading the terms posted
Topic
Dell Computer Corp. v . Union des consommateurs and Olivier Dumoulin, 2007 SCC 34
[124]
The arbitration agreement is not null on the ground that it is found in an external clause that was not expressly brought to the attention of defendant as required under art. 1435 C.C.Q. While the hyperlink to the Terms and Conditions of Sale was in smaller print, located at the bottom of the Configurator Page, this is consistent with industry standards. It can therefore be concluded that the hyperlink was evident to defentand. Furthermore, the Configurator Page contained a notice that the sale was subject to the Terms and Conditions of Sale, available by hyperlink, thus bringing the Terms and Conditions expressly to defendants attention. A defendant will not be permitted to rely on a liability limitation clause if it would be unconscionable in the circumstances. Lord Denning formulates his doctrine of fundamental breach: A party cannot rely on an exemption clause when they deliver something different in kind from that contracted for, or when they have broken a fundamental term or a fundamental contractual obligation. Doctrine of fundamental breach says that a breach which goes to the root of the contract disentitles the party from relying on the exemption clause. This doctrine has been overruled by the House of Lords in Photo Production v. Securicor Transport Ltd. Confirms the Suisse Atlantique case ruling that the question whether, and to what extent, an exclusion clause is to be applied to a fundamental breach, or a fundamental term, or indeed to any breach of contract, is a matter of construction of the whole contract. Lord Diplocks analysis of primary and secondary obligations is based on the fundamental principle of the common law of contract that parties to a contract are free to determine for themselves what primary obligations they will accept. If the exclusion clause is clear and unambiguous it will protect the party relying on it from liability. Dickson J. (relying on Photo Production and inclined to lay the doctrine of fundamental breach to rest) held that if on its true construction the contract excludes liability for the kind of breach that occurred, the party in breach will generally be saved from liability, unless the contract or the clause is unconscionable, as might arise from situations of unequal bargaining power between the parties. Wilson J. held that the test for whether an exclusion clause or a contract will be enforced is
Standard Form Contracts: Incorporation of Terms
[125]
Solway v Davis Moving and Storage, [2002] O.J. 4760 (Ont. C.A.)
Standard Form Contracts: Exclusion Clauses and signed documents Fundamental Breach: Lord Dennings doctrine of fundamental breach
Karsales v. Wallis [1956] 1 W.L.R. 936, 2 All E.R. 866 (C.A.) Photo Production v. Securicor Transport Ltd. [1980] A.C. 827, 1 All E.R. 556 (H.L.) [128] Hunter Engineering v. Syncrude Canada Ltd. [1989] 1 S.C.R. 426, 57 D.L.R. (4 th) 321
[126]
[127]
Fundamental Breach: Lord Dennings doctrine overruled
Fundamental Breach: Canadian courts follow Photo Production
19
Case
Rule one of unreasonableness as between the parties and in light of the nature of the breach. Refers to both Hunter and Photo Production cases in holding that an exclusion clause should be enforced according to its true meaning provided that it is not unconscionable (Dickson J. in Hunter) or unfair or unreasonable (Wilson J. in Hunter). If an exclusion clause is not obscure, if it is visible, clear and unambiguous, and not the result of abuse of bargaining power, there is no basis for the court to disturb the agreement made between the parties. The question of the applicability of exclusion of liability clause properly incorporated was an important issue SCC referred to Dickson J. in Hunter Engineering in stating that the doctrine of fundamental breach should be lay to rest and that an analytical approach of Binnie J. to exclusion of liability clauses applicability should be applied Binnie J. held (dissenting) that because categorizing breach as fundamental is not helpful, especially when the parties are big, sophisticated, commercial entities, the courts should focus on: whether as a matter of interpretation the clause applies to the circumstances of the case; and if so, whether the exclusion clause was unconscionable at the time the contract was made, and if the clause is valid and applicable, whether the court should nevertheless refuse to enforce it because of an overriding public policy [122-123] Court held that the military occupation did not frustrate the lease contract (strict pacta sunt servanda): "When the party by his own contract creates a duty or charge upon himself, he is bound to make it good, if he may, notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract. Court further held that frustration is a part of the risk a party has to bear (As the lessee is to have the advantage of casual profits, so he must run the hazard of casual losses....). The court confirmed the general principle of contract law that a party to a contract had to either perform or pay damages (if the performance of a contract has become unexpectedly burdensome or even impossible in consequence of unforeseen accidents) but held that the parties should be excused from their obligations because there was an implied condition to excuse the parties in the case that performance becomes impossible without default of the contractor... [T]he parties contracted on the basis of the continued existence of the particular person or chattel. Frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract.... The event must be unforeseeable and must occur after the formation of the contract. It is not hardship, inconvenience or material loss which calls the principle of frustration into play, but a change in the significance of the obligation such that the thing undertaken would, if performed, be a different thing from that contracted for. "There can be no frustration if the supervening event results from the voluntary act of one of the parties or if the possibility of such an event arising during the term of the agreement
Topic
[129] Fraser Jewellers Ltd. v. Dominion Electric Protection Co. (1997) 148 D.L.R. (4th) 496 (Ont. C.A.) Tercon Contractors Ltd. v. BC (Transportation), 2010 SCC 4
Fundamental Breach: Canadian courts follow Photo Production
[130]
Fundamental Breach: analytical framework for application of exclusion clauses
[131] Paradine v. Jane (1647) Aleyn 26, 82 All E.R. 897 Taylor v. Caldwell (1863) 3 B&S 826, 122 E.R. 309 (Q.B.) Davis Contractors Ltd. v. Fareham UDC [1956] A.C. 696, [1956] 2 All E.R. 145 (H.L.)
Before Doctrine of Frustration
[132]
Doctrine of Frustration: Excuse for nonperformance contract voidable
[133]
Frustration: Excuse for nonperformance
[134]
Capital Quality Homes Ltd. v. Colwyn Construction Ltd.
Frustration: intervening
20
Case (1975) 9 O.R. (2d) 617, 61 D.L.R. (3d) 385 (C.A.)
Rule was contemplated by the parties and provided for in the agreement." Intervening legislation which was not within the contemplation of the parties and which destroys the very foundation of the agreement does discharge both parties from performance. The court interpreted strictly and narrowly the terms of the contract and held that "the very foundation of the agreement" had not been destroyed.... The agreement was in no sense made conditional upon the ability of the purchaser to carry out its intention. The court also emphasized the nature of the businessthat is, that a developer in purchasing land should always contemplate the effects of intervening zoning legislation. The House of Lords overruled the old common law rule that rights which had accrued before frustration remained unenforceable (as held in the coronation case Chandler v. Webster) deciding that in this case the Polish company could recover back the money paid before frustration because of the total failure of consideration (the machine had not been delivered). The Privy Council held that duress, whatever form it takes, is a coercion of the will so as to vitiate consent. In a contractual situation commercial pressure is not enough. Test: did the person protest; did he have a practical and reasonable alternative course open to him; was he independently advised; did he try to avoid the contract. The court held that the pressure exerted was justified and that the appellant had the onus of proving that Roebuck was not entitled to the amounts required in the agreement.
Topic legislation
[135]
Victoria Wood Development Corporation v. Ondrey (1977) 14 O.R. (2d) 723, 1 R.P.R. 141, 74 D.L.R. (3) 528 (H.C.)
Frustration: Intervening legislation Frustration: Consequences of supervening illegality
[136]
Fibrosa Spolka v. Fairburn [1943] A.C. 32
[137]
Pao On v. Lau Yiu Long [1980] A.C. 614 (P.C.)
Duress: Economic Duress
[138]
Gordon v. Roebuck (1992) 9 O.R. (3d) 1, 92 D.L.R. (4 th) 670 (Ont. C.A.) Gotaverken Energy Systems Ltd. v. Cariboo Pulp & Paper Co, [1993] B.C.J. No. 149 (B.C.S.C.), affd [1994] B.C.J. No. 1545 (B.C.C.A.)
Duress: Justifiable Economic Duress
[139]
Affirmed the requirements for duress set out in Pao On and Gordon. Robertson J. said his analysis applies to the plea of economic duress regarding the enforceability of variations to an existing contract and not in regard to the formation of the contract; (whether a demand or a threat) and that pressure must have been such that the coerced party had no practical alternative but to agree to the demand to vary the contract; in this context, he found that a criterion of illegitimate pressure is unnecessary The contractual variation must be extracted as a result of the exercise of pressure Once it was established that the variation was under the press ion and that no practical alternative was available, the focus of analysis should be whether the coerced party contested to the variation (was there consideration, was the promise made under protest and if not whether the coerced party took reasonable steps to disaffirm the promise as soon as practicable Wilson J. said that the plaintiff must establish the presence of a dominant relationship in
Duress: Economic Duress
[140]
Greater Fredericton Airport Authority Inc. v. NAV Canada, (2008) N.B.J. No. 108 (N.B.C.A.)
Economic duress: modification of contract
[141]
Geffen v. Goodman Estate
Undue Influence:
21
Case [1991] 2 S.C.R. 353, 81 D.L.R (4th) 211
Rule order to give rise to a presumption of undue influence. Then the onus moves to the defendant to rebut it (to show that the plaintiff acted full, free and informed and that he had independent advice. The magnitude of the disadvantage or benefit is cogent evidence going to the issue of whether undue influence was exercised). The creditor must always take reasonable steps to bring home to the individual guarantor the risks that he is running by standing as surety. A transaction that is not reasonably expected to occur between the parties is necessary to give rise to a rebuttable evidential presumption of undue influence. The term 'manifest disadvantage' causes confusion and should be discarded. A presumption of unconscionability requires: a) proof of inequality in the position of the parties arising out of the ignorance, need or distress of the weaker, which left them in the power of the stronger, and b) proof of substantial unfairness of the bargain in favour of the stronger. The stronger party must rebut the presumption by proving that the bargain was fair, just and reasonable.
Topic Potentially dominant relationships
[142]
Royal Bank of Scotland v Etridge (No. 2), [2001] 3 W.L.R. 1021
Undue Influence: Potentially dominant relationships
[143]
Morrison v. Coast Finance Ltd. (1965) 54 W.W.R. 257, 55 D.L.R. (2d) 710 (B.C.C.A)
Unconscionability: presumption of unconsionability
[144]
Marshall v. Canada Permanent Trust Co. (1968) 69 D.L.R. 2d) 260 (Alta. S.C.)
The court held that the defendant was entitled to rescission of the contact for sale of land because he was incapable of protecting his interests and because the transaction was improvident for him The court held that it was not material whether the plaintiff was aware of defendants incapacityit was enough that the plaintiff was aware that the price agreed upon by the defendant was considerably less than the actual value of that land and of any comparable land in the same general area. The onus was on the plaintiff to show that the price given for the land was the fair price and he failed to establish that. Lord Denning said that there are different categories of cases where there has been inequality of bargaining power (duress, unconscionable transactions, undue influence, undue pressure and salvage agreements) and that the English law gives relief to one who, without independent advice, enters into a contract upon terms which are very unfair or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his ignorance or infirmity, coupled with undue influences or pressures, brought to bear on him by or for the benefit of other. McIntire J referred to the test in Morrison for unconscionability: Inequality of position of the parties due to the ignorance, need or distress of the weaker, coupled with proof of substantial unfairness in the bargain. Lambert J. A. introduced a new test: whether the transaction seen as a whole is sufficiently divergent from community standards of commercial morality that it should be rescinded.
Unconscionability
[145]
Lloyds Bank v. Bundy [1975] Q.B. 326, [1974] 3 All E.R. 757
Unconscionability: relief
[146] Harry v. Kreutziger (1978) 9 B.C.L.R. 166, 95 D.L.R. (3d) 231 (B.C.C.A.)
Unconscionability: relief
22
Case
Rule A covenant in restraint of trade is enforceable only if it is reasonable between the parties and with reference to the public interest. In assessing the reasonableness of the restraint of trade clause several questions must be asked: whether the party seeking to enforce the clause has a proprietary interest entitled to protection, were the temporal or spatial features of the clause too broad, whether the clause is unenforceable as being against competition generally The modern approach to the law of illegality rejects the understanding that simply because a contract is prohibited by statute it is illegal and therefore void ab initio. Where a contract is expressly or impliedly prohibited by statute, a court may refuse to grant relief to a party, when it would be contrary to public policy, reflected in the relief claimed, to do so. Severance is applied to allow courts to alter terms of the original agreement in accordance with the intention of the parties when they entered into the contract; Both blue pencil and notional severance should not be invoked when the doctrine of severance is to be applied in cases of ambiguous or unreasonable restrictive covenants in employment contracts; such restrictive covenants should be void and unenforceable SCC held that the rule of Bain v. Fothergill did not apply when the vendors had voluntarily disabled themselves from conveying good title by engaging in concurrent dealings with other purchasers. It awarded the plaintiffs not only loss of bargain damages ($37 000 for lost appreciation in property price) but also 6,628.50 in reliance (wasted land title investigation fees etc) Double compensation? The court held that where the non-breaching party cannot meet the burden of proof with respect to net profits he may be entitled to recover damages measured by reference to expenditure incurred and wasted in reliance on the promise given by the Commission. The burden was then thrown on the Commission of establishing that the expense incurred would equally have been wasted (in order to reduce the amount of the reliance damages). C.A. upheld the trial decision which held that the law of contract compensates a plaintiff for damages resulting from the defendants breach, but not for damages resulting from the plaintiff making a bad bargain. The onus is on defendant to prove that none of the plaintiffs costs would have been recovered and that the plaintiff is thus entitled to nominal damages only. The Court of Appeal held that the defendant could not recover for loss of capital and loss of gross profit because they were alternatives and it was wrong to make awards based on mixture of two approaches. The court also held that the plaintiff could elect to claim its expenses but that, if the owner could show that the plaintiff would have incurred a loss had it completed the contract, only nominal damages should be awarded. The common law rule was established that the right to restitution could be lost if the plaintiff enjoyed any benefit under the contract (the plaintiffs occupation after knowledge was a waiver of the right to terminate).
Topic
[147]
J.G. Collins Inc. Agencies Ltd v. Elsley, [1978] 2 S.C.R. 916
Illegality: Restraint of Trade
[148] Still v. Minister of National Revenue [1998] 1 F.C. 549 (C.A.) [149] Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6
Illegality: The modern approach Illegality: restraint of trade; application of severance Damages: Expectation Interest
[150]
A.V.G. MGMT. Science Ltd. v. Barwell Dev. Ltd. [1979] 2 S.C.R. 43, [1979] 1 W.W.R. 330
[151] McRae v. Commonwealth Disposals Commission (1951) 84 C.L.R. 377 (Aust. H.C.) [152] Bowlay Logging Ltd. v. Domtar Ltd. [1982] 6 W.W.R. 528 (B.C.C.A.) [153] Sunshine Vacation Villas Ltd. v. Hudson Bay Co. (1984) 58 B.C.L.R. 33, 13 D.L.R. (4th) 93 (B.C.C.A.) Hunt v. Silk (1804) 5 East 449, 102 E.R. 1142 (K.B.)
Damages: Reliance Interest
Damages: Reliance Interest and Nominal Damages
Damages: Reliance Interest
[154]
Damages: Restitution Interest
23
Case Chaplin v. Hinks [1911] 2 K.B. 786 (C.A.)
Rule "The fact that damages cannot be assessed with certainty does not relieve the wrong-doer of the necessity of paying damages for his breach of contract." The plaintiff was awarded damages for the loss of the chance of selection. In a construction contract, the law attempts to give the injured party what he was promised and the cost of remedying the defect is the amount awarded as compensation for failure to render the promised performance--the owner is entitled to compensation for what he has lost, that is, the work which he has been promised (cost of performance test). Not followed in Peevyhouse v. Garland Coal Mining Co., 382 P. 2d 109 (Okla. S.C., 1962) Where a builder is in breach of his obligation under a building contract, the owner is entitled to damages measured by the cost of making good the defects and omissions (general rule) unless that cost is unreasonably high in relation to the value to be gained by its expenditure. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to them has acted reasonably in the adoption of remedial measures, and they will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to them might have been taken. If the contract is terminated, abandoned or discontinued after substantial completion, then the service provider is entitled to payment less damages for non-completion. Lord Denning held that there are cases where one can recover damages for the mental distress, disappointment and discomfort caused as a result of breach of a contract for a package holiday. The court held that the right measure of damages is to compensate the plaintiff for the loss of entertainment and enjoyment which the plaintiff was promised and which he did not get. Damages for breach of a contract to do work on the land of another may be assessed either on the basis of the cost of completing the work or on the decrease in the value of the land by reason of the work not having been done. Specific performance may be refused if the cost of performance is wholly out of proportion to the benefit which performance will confer. A failure to achieve the precise contractual objective does not necessarily result in the loss which is occasioned by a total failure. Damages are designed to compensate for an established loss and not to provide a gratuitous benefit to the aggrieved party. House of Lords only awarded damages for the loss of a pleasurable amenity for the breach of failing to build a pool as specified by the owner. In exceptional cases where the normal remedies of damages, specific performance and injunction are inadequate compensation for a breach of contract, the court can, if justice demands it, grant the discretionary remedy of requiring the defendant to account to the plaintiff for the benefits received from the breach of contract. Undue influence focuses on the sufficiency of consent and unconscionability on the
Topic Damages: Quantification Damages: Quantification-cost of performance or diminution of value
[155]
[156]
Groves v. John Wunder Co. (1939) 286 N.W. 235 (Minn.C.A.) Nu-West Homes v. Thunderbird Petroleums | (1975) 59 D.L.R. (3d) 292 (Alta. C.A.)
[157]
Damages: Quantification
[158]
Markland Associates v Lohnes (1973), 33 D.L.R. (3d) 493 (N.S.T.D.) Jarvis v. Swans Tours [1973] 1 Q.B. 233 (C.A.)
[159]
Damages: Quantification Damages: Quantification Specific performance
[160]
Tito v. Waddell [1977] 2 W.L.R. 496 (Ch.D.)
[161]
Ruxley Electronics v. Forsyth [196] 1 A.C. 344 (H.L.)
[162] [163]
AG v Blake, [2001] 1 A.C. 268 Hodgkinson v Simms,
Damages: Quantification Damages:
24
Case [1994] 3 S.C.R. 377
Rule reasonableness of a given transaction The existence of a contract does not necessarily preclude the existence of fiduciary obligations between parties The proper approach to damages for breach of a fiduciary duty is restitutionary. The innocent party is entitled to be put in as good a position as he would have been in had the breach not occurred. A court exercising equitable jurisdiction may consider the principles of remoteness, causation, and intervening act where necessary to reach a just and fair result. Where a party can show that but for the relevant breach it would not have entered into a given contract, that party is freed from the burden or benefit of the rest of the bargain. The wronged party is entitled to be restored to the pre-transaction status quo. Damages must be foreseeable as to kind, but not extent The special circumstances of this case were brought home to the defendant at the time it entered into the contract with the plaintiffs. Damage to the plaintiffs' health, anguish, unhappiness and inconvenience were a reasonably foreseeable consequence of the defendant's breach of contract, for which the plaintiffs were entitled to recover damages. The failure of a sound system in a luxury vehicle is only one aspect of the operation of the vehicle and it is not a fundamental breach but is a breach of an implied warranty. The plaintiff was entitled to special damages ($2,257) and non-pecuniary damages for loss of enjoyment of the luxury vehicle and for inconvenience in the amount of $5,000. General rule is that if the loss flowing from breach is too remote then it cannot be recovered. Recoverable losses are those arising naturally from the breach which should have been within the reasonable (objective test) contemplation of the parties (1st Hadley rule). If the contract was made under special circumstances which were communicated to the defendant, and thus known to both parties, the damages will be the amount of injury which would ordinarily result from such a breach of the contract under the given special circumstances (2nd Hadley rule). Only damages which are reasonably foreseeable as arising from the breach are recoverable (objective test). What is reasonable depends on the knowledge of the parties (particularly the breaching party). Everyone has imputed knowledge of ordinary circumstances, but there may have to be actual knowledge of special circumstances for recovery to be granted on these special grounds. It is not necessary to prove that the wrongdoer contemplated the loss. It is enough if they could foresee the loss was likely to result.
Topic Quantification
[164]
Newell v. Canadian Pacific Airlines, Ltd. (1976), 14 O.R. (2d) 752 (Ont. Co.Ct.)
Damages: mental distress Conditions & warranties Damages: mental distress
[165]
Wharton v. Tom Harris Chevrolet (1999), B.C.D. Civ. J. 3186 (B.C.S.C.)
[166]
Hadley v. Baxendale (1854) 9 Exch. 341, 156 E.R. 145
Damages: Remoteness
[167] Victoria Laundry v. Newman [1949] 2 K.B. 528
Damages: Remoteness
25
Case
Rule
Topic
[168]
Koufos v. Czarnikow (The Heron II) [1969] 1 A.C. 350
The Court of Appeal criticized Victoria Laundry and held that the crucial question is whether, on the information available to the defendant when the contract was made, they should, or the reasonable person in their position would have, realized that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within their contemplation. In contracts, if one party wishes to protect themselves against a risk which to the other party would appear unusual, they can direct the other partys attention to it before the contract is made and the court need not stop to consider in what circumstances the other party will then be held to have accepted responsibility in that event. McIntyre: o Aggravated damages may be awarded in a case of wrongful dismissal particularly where the acts complained of were also independently actionable. o Punitive damages may only be awarded in respect of conduct which is of such nature as to be deserving of punishment because of its harsh, vindictive, reprehensible and malicious nature (must be an actionable wrong). Wilson J. relied on the remoteness test in Hadley: The issue in assessing damages should be whether the plaintiff should be compensated for damage the defendant should reasonably have anticipated. Wilson J. did not agree that a separate actionable wrong is needed for either of aggravated damages or punitive damages. Iacobucci J.(majority): Damages for mental distress were not recoverable for wrongful dismissal unless there was a separately actionable course of conduct, but did account for mental distress by lengthening the notice period Wallace damages. McLachlin J. (dissenting): the action for wrongful dismissal is an action for breach of implied term in the contract of employment to give reasonable notice of termination. Would have awarded $15000 aggravated damages as well. SCC awarded 1 million in punitive damages for a breach of the contractual duty of good faith (separate actionable wrong) in the case of a breach of an insurance contract (breach of a duty to pay the loss). Punitive damages are awarded in exceptional cases for malicious, oppressive and highhanded misconduct that offends the courts sense of decency. Where a purpose of a commercial contract is to provide a peace of mind (either if it is an essence of a contract or just a part of the bargain) it is within reasonable contemplation of the parties that its breach would cause mental distress (the right to compensatory damages arises out of the contractual breach not from aggravating circumstances) True aggravated damages arise out of aggravating circumstances and are not awarded under the principles of Hadley v. Baxendale Punitive damages are awarded to punish for a misconduct that departs from ordinary standards of decency (malicious, oppressive conduct) and claim for punitive damages must
Damages: Remoteness
[169]
Vorvis v. ICBC [1989] 1 S.C.R. 1085, 36 B.C.L.R (2d) 273
Damages: Aggravated and Punitive Damages
[170] Wallace v. United Grain Growers [1997] 3 S.C.R. 701 [171] Whiten v. Pilot Insurance Co., 2002 SCC 18
[172]
Fidler v. Sun Life Assurance , 2006 SCC 30
26
Case
Rule be independently actionable (as a claim in tort or independent contractual obligation to act in good faith) SCC rejected the Wallace type of aggravated damages (extension of the period of reasonable notice) for wrongful dismissal cases and stated that the principles of compensation stated in Hadley v. Baxendale should apply SCC confirmed the Whiten analysis of the standard of punitive damages (separate actionable wrong of a high-handed manner of employer breaching a duty of good faith) General rule: When a party to a contract repudiates, the innocent party has an option: to accept that repudiation and sue for damages or to disregard or refuse to accept it and then the contract remains in full effect. Finelli v. Dee (1968), 67 D.L.R. (2d) 393 Ont. C.A. distinguished this case. The general common law rule to affix damages as at the date of the breach does not seem to be inflexible. The court has jurisdiction to award damages in substitution for specific performance as will put the plaintiffs into as good a position as if the contract had been performed, even if to do so means awarding damages assessed by reference to a period subsequent to the date of the breach (in this case at the time of judgment). Sopinka, J: Specific performance should not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available, but specific performance was given in this case. The provision will be liquidated damage if it contains nothing unreasonable, unconscionable or extravagant. When the damages which may arise out of the breach of a contract are in their nature uncertain, the law permits the parties to agree beforehand as to the amount to be paid in case of breach. Whether the sum agreed upon is a penalty, must depend upon the circumstances of each case. An agreement for payment of a fixed sum on any one of a number of breaches, some trivial and some serious, is presumed to be void as a penalty since the strength of a chain is its weakest link. It is always open to the parties to make the predetermination, but it must yield to judicial appraisal of its reasonableness in the circumstances. The sum will be held to be a penalty if it is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach (Snells principles). The formula of gross trading profit was not defined and it departs markedly from any reasonable approach to recoverable loss or actual loss. Held that the power to strike down a penalty clause is a blatant interference with freedom
Topic
[173] Honda v. Keays, 2008 SCC 39
Damages: Aggravated and Punitive Damages Damages: Repudiation and Mitigation
[174]
White and Carter (Councils) v. MacGregor, [1962] A.C. 413, [1961] 3 All E.R. 1178 (H.L)
[175] Wroth v. Tyler [1976] Ch. 30
Damages: Time of Measurement
[176]
Semelhago v. Paramadevan [1996] 2S.C.R. 415 Dunlop Pneumatic Tyre ltd. v. New Garage and Motor Co. [1915] A.C. 79 (H.L.)
Damages: Time of Measurement Damages: Liquidated Damages and Penalties
[177]
[178]
Shatilla v. Feinstein [1923] 1 W.W.R. 1474, 16 Sask. L.R. 454 (Sask.C.A.)
Damages: Liquidated Damages and Penalties
[179]
H.F. Clarke Ltd. v. Thermidaire Corp. [1976] 1 S.C.R. 319
Damages: Liquidated Damages and Penalties Damages:
[180]
27
Case
Rule of contract and is designed for the sole purpose of providing relief against oppression for the party having to pay the stipulated sum. It has no place where there is no oppression A penalty clause should function as a limitation on the damages recoverableif the actual loss turns out to exceed the penalty, the party should be allowed to recover only the agreed sum. A deposit is a sum of money paid as a guarantee that the contract shall be performed and at common law it is generally irrecoverable unless the contract provides otherwise (the court held that the purchaser has lost all rights to recover by his delay) A part-payment is simply a payment of a part of the contract price. Where there is no forfeiture clause, if money is handed over in part payment of the purchase price and then the buyer makes default as to the balanceonce the seller rescinds the contract or treats is as at an end the buyer is entitled to recover their money in law, but the seller can claim damages. Where there is a forfeiture clause or the money is expressly paid as a deposit a party may have a remedy in equity but two things are necessary: 1. the forfeiture clause must be of a penal nature and 2. it must be unconscionable for the seller to retain the money. The court held that the plaintiff was not entitled to specific performance because it was clear that damages would afford an adequate remedy. In order to establish that a property is unique the person seeking the remedy of specific performance must show that the property in question has a quality that cannot be readily duplicated elsewhere. This quality should relate to the proposed use of the property and be a quality that makes it particularly suitable for the purpose for which it was intended followed The time when a determination of the uniqueness of the property is to be made is the date when an actionable act takes place Specific performance is not available in the context of agreements for the purchase of publicly traded shares and the plaintiff was obliged, within a reasonable time to acquire substitute shares (the buyer has to mitigate loss by securing substitute shares in the market) The court granted an injunction, and found an award of damages not an appropriate remedy since they could not reasonably and adequately compensate the defendants special, unique, extraordinary and intellectual services and no adequate damages were available. Applying the test as set out in Elsley v. J. G. Collins the court held that the agreement was reasonable and that it would not be contrary to public interest to enforce the injunction.
Topic Liquidated Damages and Penalties
J.G. Collins Insurance Agencies Ltd. v. Elsley [1978] 2 S.C.R. 916
[181] Howe v. Smith (1884) 27 Ch. D. 89 (C.A.) Stockloser v. Johnson [1954] 1 Q.B. 476, [1954] All E.R. 630 (C.A.)
Damages: Forfeiture as Liquidated Damages or Penalties Damages: Forfeiture as Liquidated Damages or Penalties
[182]
[183]
Mennonite Land Sales v. Freisen [1921] 3 W.W.R. 431 (Sask. K.B.)
Equitable Remedies: Specific Performance
John E. Dogde Holdings Ltd. V. 805062 Ontario Ltd. [2003] O.J. No. 350, 63 O.R. (3d) 304 (On. C.A.)
[184]
Equitable Remedies: Specific Performance
[185]
Asamera Oil Corp. v. Sea oil and General Corp. [1979] 1 S.C.R. 633 Warner Bros. v. Nelson [1937] 1 K.B. 209, [1936] 3 All E.R. 160 Zipper Transportation v. Korstrom (1997) 122 Man. R. (2d) 139 (Q.B.) Zipper Transportation v. Korstrom (1998) 126 Man. R. (2d) 126 (Man.
Equitable Remedies: Specific Performance Equitable Remedies: Injunction Equitable Remedies: Injunction (Interlocutory) Equitable Remedies: Injunction
[186]
[187] [188]
The Court of Appeal applied a different test considering irreparable harm and balance of convenience and denied the injunction; holding that if the injunction is upheld, no benefit
28
Case C.A.)
Rule would accrue to Zipper by regaining the Piston Ring runs and that no irreparable harm would result to Zipper if the relief is denied since it was possible to quantify damages So let Korstrom keep the stolen client (Piston ring) until the result of the trial is known. SCC confirmed that rectification is an equitable remedy correcting mistaken written records (which differs from a prior oral agreement of the parties) but not dealing with the intention of the parties and lack of clarity of the terms of contract
Topic (Interlocutory)
[189]
Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6
Equitable Remedies: Rectification
29

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Law 110.

Formation: Offer & Invitation to Treat

Formation: Offer & Invitation to Treat (retail sale)

R. v. Dawood [1976] 1 W.W.R. 262 (Alta. C.A.)

Formation: Offer & Invitation to Treat (retail sale)

Blair v. Western Mutual Benefit Assn. [1972] 4 W.W.R. 284 B.C.C.A.)

Carlill v. Carbolic Smoke Ball Co. [1893] 1 Q.B. 256 (C.A.)

Law 110.02 Contracts Biukovic

R. v. Clarke (1927) 40 C.L.R. 227 (Aust. H.C.)

Formation: Offer & Invitation to Treat - tenders

Formation: Offer & Invitation to Treat - tenders

Formation: Offer & Invitation to Treat - tenders

Law 110.02 Contracts Biukovic

Formation: Offer & Invitation to Treat - tenders

Formation: Acceptance counter-offer; rejection and counter offer

Formation: offer and acceptance; unilateral and bilateral contracts

Formation: Acceptance counter-offer; battle of forms

Formation: Acceptance counter-offer; battle of forms Formation: Communication of Acceptance

Law 110.02 Contracts Biukovic

Law 110.02 Contracts Biukovic

Formation: Termination of Offer Unilateral contracts

[28] Barrick v. Clark [1951] S.C.R. 177, [1950] 4 D.L.R. 529

Formation: Termination of Offer Lapse of Time

Formation: Termination of Offer Lapse of Time

Kanitz v. Rogers [2002] O.T.C. 143 (Ont. S.C.J.)

Formation: On-line contract reasonable notice Unconsionability: arbitration clause

Formation: Certainty of Terms

Formation: Certainty of Terms

Law 110.02 Contracts Biukovic

Hillas v. Arcos (1932) 40 Lloyds Rep. (C.A.)

Formation: Certainty of Terms

Formation: Certainty of Terms

Formation: Certainty of Terms

Formation: Certainty of Terms

Empress v. Bank of Nova Scotia [1991] 1 W.W.R. 537 (B.C.C.A.)

Formation: Certainty of Terms

Formation: Certainty of Terms Formation: Certainty of Terms

Law 110.02 Contracts Biukovic

Formation: Certainty of Terms Formation: Certainty of Terms and letters of intent

ProCD v Matthew (1996) 86 F. 3d 1447

Balfour v. Balfour [1919] 2 K.B. 571

Law 110.02 Contracts Biukovic

Thomas v. Thomas (1842) 2 Q.B. 851, 114 E.R. 330

[54] Pao On v. Lau Yiu Long [1980] A.C. 614 (P.C.)

Williams v. Roffey Bros. [1990] 1 All E.R. 512 (C.A.)

Law 110.02 Contracts Biukovic

[58] Re Selectmove Ltd. [1995] 2 All E.R. 531 (C.A.)

Foakes v. Beer (1884) 9 App. Cas. 605 (H.L.)

Foot v. Rawlings [1963] S.C.R. 197

Hughes v. Metropolitan Railway Co. (1877) 2 A.C. 439 (H.L.)

Enforcement of Promises: Waiver and Promissory Estoppel

Law 110.02 Contracts Biukovic

Case [1966] 2 Q.B. 617

Topic Promises: Waiver and Promissory Estoppel

N.M. v. A.T.A. (2003), 13 B.C.L.R. (4th) 73 (B.C.C.A.)

Law 110.02 Contracts Biukovic

Robichaud c. Casse Populaire (1990) 69 D.L.R. (4th) 589 (N.B.C.A.)

Promissory estoppel used both as a shield and as a sword

Tweddle v. Atkinson (1861) 1 B & S. 393

Privity of Contract: Ways for Third Parties to Acquire Benefits