Contracts Final Ratio

Question 1

Hart v O’Connor

Answer 1

A contract which is negotiated in good faith, with no knowledge (or reasonable) knowledge of incapacity on the part of the other party, is not voidable for unconscionability (for incapacity)

Question 2

Smith v Land and House Property Corp

Answer 2

• A statement of opinion, from a knowledgeable party to one who is not, is a representation
• Innocent misrepresentation allows rescission

Question 3

Redgrave v Hurd

Answer 3

Any statement made in an attempt to induce another party to enter a contract is relied upon as a condition if the contract is eventually formed. Rescind for misrepresentation

To rebutt:

• prove knowledge to the contrary of the statement, or
• express proof that the party did not rely on the statement.

Question 4

Bank of British Columbia v Wren Developments

Answer 4

• Failures or omissions can qualify as misrepresentation

- Negligent misrepresentation permits rescission.

Question 5

Kupchak v Dayson

Answer 5

• Monetary compensation may be granted under rescission where it is impossible or inequitable to restore the original property.
• Barriers to equitable remedies of compensation or rescission
1) Affirmation (innocent party affirmed the deal after discovering fraud)
2) Laches (innocent party waited too long to come to court)
3) Restitution in integrum (restoration of the original condition not possible)
4) Effect on third parties (rescission would adversely affect 3rd parties)

Question 6

Hellibut Symons & Co v Buckleton

Answer 6

• Damages only awarded for fraudulent/reckless misrepresentations, or misrepresentations that refer to a material issue that fundamentally changes the contract
• Innocent representations only warranties if clearly intended to be by the parties

Question 7

Dick Bently Productions Ltd v Harold Smith (Motors)

Answer 7

• Representation to induce a party to enter a contract is a warranty, therefore a breach of it would mean damages even if it was innocent
• Objective test for warranty: intended to be acted upon + was acted on= warranty

Question 8

BG Checho International Ltd v British Columbia Hydro & Power Authority

Answer 8

• Plaintiff always allowed to sue in both tort and contract so long as relevant duty for tort is not expressly negated in the contract
• Goal of damages in contracts= put them in position they would be in if contract completed

Question 9

Harwish v Bank of Montreal

Answer 9

A collateral agreement cannot be established where it is inconsistent with or contradicts the written agreement. There must be clear intent that the parties are creating a separate agreement (collateral agreement)

Question 10

Bauer v Bank of Montreal

Answer 10

Where a written agreement appears on its face to be a complete agreement, extrinsic evidence could not be admitted that contradicts, varies, adds to, or subtracts from the terms of the written agreement. (Parole evidence rule)

Question 11

J Evans & Son (Portsmouth) Ltd v Merzario (Andrea) Ltd

Answer 11

The promise to carry goods below deck was an enforceable collateral contract and the oral assurance was an express term which was partly oral, written and by conduct . The promise overrides any exemption clause.

Question 12

Gallen v Allstate Grain Co

Answer 12

Parole Ev Rule does not extend to cases where documents may not embody all the terms of the agreement. Even where it seems to embody all terms there is exceptions to the rule:

• Defective formation of contract (ex: fraud/mistake in forming)
• Collateral contract (promise in collateral that is oral)
• Ambiguous language

Question 13

Greater Fredericton Airport Authority Inc v Nav Canada

Answer 13

♣ To establish economic duress, two conditions must be met:
1) the promise but be made under pressure (demand/threat);
2) the pressured party must have no option but agreeing.
♣ If these conditions are met, three factors must be analyzed:
1) was the promise supported by consideration?
2) was the promise made “under protest”?
3) were reasonable steps taken to disaffirm the promise?

Question 14

Geffen v Goodman Estate

Answer 14

For there to be a finding of undue influence:
-Nature of the relationship (must be dominance, manipulation, and coercive abuse of power)
-Nature of transaction
>Commercial (must be undue disadvantage or benefit)
>Gift (requires only evidence of a dominant relationship)

Question 15

Morrison v Coast Finance

Answer 15

Unfair deal + unequal power between the parties= presumption of unconscionability

once raised the stronger party must rebut the presumption

Question 16

Lloyds Bank v Bundy

Answer 16

A contract is void for unconscionability if:

1) Unfair terms or inadequate consideration
2) Bargaining power impaired by necessity, ignorance, or infirmity
3) Undue pressure/ influence used (not necessarily consciously); and
4) Absence of independent advice

Question 17

KRG Insurance Brokers (Western) Inc v Shafron

Answer 17

• Restrictive covenant unenforceable unless reasonable with respect to the parties + reasonable with respect to interests of the public
• Ambiguous RC can only be enforced if the ambiguity can be resolved

Question 18

Still v Minister of National Revenue

Answer 18

• Modern approach to doctrine of statutory illegality
• Where a contract is prohibited by statute, a court may refuse to grant relief to a party when, it would be contrary to public policy to do so.

Question 19

Paradine v Jane

Answer 19

When a party, by his own contract, creates a duty upon himself he is bound to make it good notwithstanding any accident that he could have provided against in the contract

Question 20

Taylor v Caldwell

Answer 20

When a situation arises, through no fault of either party to a contract, both parties are excused from performing their respective duties under the agreement

Question 21

Atlantic Paper Stock Ltd v St Anne- Nackawic Pulp & Paper Co

Answer 21

• Cannot be a condition in an exemption clause frees a party from contractual obligations
• Force major claims generally operate to discharge contracting party when supernatural event, beyond parties control that makes performance impossible. Look for external, supervening, supernatural event, in order to frustrate a contract.

Question 22

R v Ron Engineering

Answer 22

-A mistake by the tenderer renders the tender revocable so long as notice of mistake is given prior to selection

Question 23

Great Peace Shipping v Tsavliris Salvage

Answer 23

Test to establish a common mistake at common law (to avoid contract):

1) Common assumption of existence of a state of affairs
2) No warranty by either party that the state of affairs exists
3) Non-existence of the state of affair not the fault of either party
4) Non-existence of state of affairs renders performance impossible
5) The state of affairs may be the existence, or vital attribute, of the consideration to be provided or circumstances which make performance possible

Question 24

Miller Paving Ltd v B Gottardo Construction Ltd

Answer 24

• Common law and equitable doctrines of common mistake are in the fabric of Canadian law
• Before determining if contract vitiated by common mistake look to see if the parties have provided for who bears the risk of relevant mistake

Question 25

Shotgun Finance Ltd v Hudson

Answer 25

Person who is mistaken about identity must show on a balance of probabilities:

1) They intended to contract with a specific person
2) The other party knew or ought to have known that the first party was mistaken as to identity
3) That, at the time of the contract, they regarded the identity of the other party as being crucial importance
4) that they took reasonable steps to verify the identity of the other party

Question 26

Marvco Color Research Ltd v Harris

Answer 26

• Carelessness will disentitle a party to the right to disown the document
• Test: Non est factum is only allowed to be used where:
  1) there is no carelessness or negligence, and
  2) The original contract was fundamentally or radically different

Question 27

Sylvan Lake Gold and Tennis Club v Performance Industries Ltd

Answer 27

Test: 4 hurdles a plaintiff must overcome to prove rectification is justified:

1) P must show existence and content of the inconsistent prior oral agreement
2) It was different than the written agreement, and D either knew or ought to have known of the mistake in reducing the oral terms to writing
3) P must show the precise form in which the written instrument can be made to express the prior intention
4) All the foregoing must be established beyond a reasonable doubt

Question 28

McLean v McLean

Answer 28

Standard of proof for rectification is the ordinary civil standard (balance of probabilities) and is not the elevated one the TJ was trying to impose.