dec exam Flashcards
classical theory of contract
- Consistent with laissez faire liberalism
- Law concerned with the objective manifestations of agreement (even if the agreement looks sketchy, the court will not inquire into the circumstances)
- Freedom exists for people to contract as they choose
Contemporary model
- Rise of the welfare state (belief that individuals are sometimes unable to protect their own interests and need support not to be exploited)
- Judges more concerned about bargaining vulnerabilities and inequalities, bending the rules a little
Formalism (positivism)
Judge identifies relevant rule or principle, will always be the same. Fairness through consistency. No matter who the judge is, you will get the same outcome
- If they don’t reach the right outcome, its because they made a mistake.
Realists (legal realism)
Took position that judges are people too, identify matters, social situation matters, experience matters
- Don’t pretend that outcome of decision is neutral.
Posner: Law and Economics
judges should make decision for economic efficiency, that will facilitate commerce and discourage reckless contracting and minimize K cost
Feminism and contract law (Keren) - 2 issues
- Harm caused by contract law’s abandonment, neglect of the intimate sphere (obscure the value of homemaking and reinforce notion that a woman’s labor within the home is either less valuable)
- Issues with consent: consent is used too heavily, consequences are too severe
Racial inequalities in contracting (Zalesne)
Those who are the big players when classic law of contracts became formulated, created a baseline of “reasonableness”.
- K law’s supposedly neutral objective test may perpetuate inequality by ignoring important cultural factors
- Maybe we need to think about identity and social situation
what is the benefit of making race relevant to CL? (Zalesne)
Agreements and how courts approach agreements might more accurately represent expectations of vulnerable parties when they make agreements
what is the con of making race relevant to CL? (Zalesne)
o Could get bad marketplace consequences if the broader marketplace sees contracts with vulnerable individuals as operating under different rules
Acedo v satte department of public welfare
- 18yo signed contract to give baby up for adoption, she believed this meant she had 6 months to change her mind
- court reasoned she was a high school graduate of normal intelligence, who voluntarily signed the contract after having full opportunity to read it (used idea of what was reasonable based on someone who enters contracts daily)
Friedmann Equity Developments Inc v Final Note Ltd.
appellant asked Supreme Court to abolish an old and technical “sealed contract rule” on several grounds
- courts take a restrained approach and prefer incremental change in the common law (promote efficiency/fairness, dissuade uncertainty)
Elements required for contract
- Offer
- Acceptance
- Consideration
- Intention
- Certainty
Ideally, agreement unfold through formal categories of offer:
communication of offer, an acceptance on the terms of the offer, and communication of the acceptance
3 key elements of offer
- Person who makes offer needs to show - intention or willingness to be legally bound
- Need material terms in the offer
- Offer needs to be intentionally communicated
what does the objective theory of contracts say about how to determine if offer?
Will determine if something is a offer based on objective test.
Would the reasonable person deem this to be an offer?
diff between offer and ITT
- Offer: a complete statement of terms on which a party is willing to deal
- Invitation to treat: statement by a party of a willingness to enter into negotiations that may lead to the formation of a contract (offer-like communication to the general public)
waht kind of things are NOT offers
Price quotations, statements of inquiry, and invitations to treat
what does an ITT indicate
An invitation to treat indicates willingness to receive an offer
key distinction between offer and ITT
- Key distinction is intention
o Was it intended as an offer that can be accepted with no further negotiation, or was it intended to be part of the negotiation process?
Offer-like communication to general public (like an ad) is most likely an _____ unless ____
most likely an ITT unless it sets out conditions one must fulfill to get ‘reward’ – then it may be unilateral offer
Offer-like communication to more than one person, but to a limited or specific group also most likely an ___
an ITT, but can also be a form of offer (depends on circumstances)
Canadian dyers association ltd v Burton facts and issue
CDA wanted to purchase property via a letter with a stated price. Letter stated “this is the lowest price we are willing to accept”. Sent the money (lowest price), Burton sent draft deed
- was there an offer?
Canadian dyers association ltd v Burton outcome
Court objectively looks at actions – sent a draft deed and indicated a closing date (court finds this shows the defendant understood his letter as an offer and the plaintiff’s response, an acceptance of that offer – thus binding contract). Conduct shows intention.
Pharmaceutical society of Great Britian v boots cash chemists ltd facts and issue
New approach to self-service in buying medicine contrary to existing Poison Act that requires drugs to be bought directly from a pharmacist.
- When was the contract formed?
- Position of plaintiff and
position of defendant in Pharmaceutical society of Great Britian v boots cash chemists ltd
- Position of plaintiff: argue that contract is formed when item is placed in the basket
- Position of defendant: contract formed when purchased at cash register
Pharmaceutical society of Great Britian v boots cash chemists ltd outcome
Goods on a display are invitation, not an offer – the customer makes an offer when they take the goods to the register
Fred Christie v the york corporation facts and issue
Black man not served at a bar; claimed $200 for humiliation; business argued it was within its rights to do so as a private enterprise (unless law prohibits it or it’s against good morals/public order)
- Does the owner have the right to refuse service (aka refusing to contract)?
Fred Christie v the york corporation ratio
Freedom of contract trumps all else (equality rights up until the 20th century) unless in contravention of public order or good morals
bilateral vs unilateral K
- Bilateral: both exchanging promises
- In unilateral, basic layout that offer is framed in such a way that you are only bound if you perform (performance of the act = acceptance of the offer)
Carlill v. Carbolic Smoke Ball co. facts and issue
CSB put out an ad for compensation if you use ball and get flu. Plaintiff got ball and caught flu and tried to recover compensation from CSB.
- Is there a valid offer? Is the ad serious or a mere puff?
Carlill v. Carbolic Smoke Ball co. ratio
Ad can constitute a unilateral offer which can be accepted by fulfilling conditions in the offer (no notice of acceptance is required)
Goldthorpe v Logan facts and issue
Wanted hair removal, the ad guaranteed result; hair still grew on face; wants damages for breach of contract
- Was there a contract? Is it an offer or ITT? Acceptance? Consideration?
Goldthorpe v Logan ratio
Generally, news ads are ITT, but can be unilateral contracts – look for “reward” specific instructions or conditions that must be met to obtain the reward
- (acceptance occurred by P’s actions - underwent treatment in accordance to the ad)
Traditional view of tendering
- Call for tenders is ITT
- Bids submitted in response to call for tenders are understood as offers
- Caller then selects the winning bid (usually the lowest bidder)
Modern analysis of tendering
- Two-contract law:
- Contract A arises on submission of a tender in accordance with the tender call (“Submitted Contract”)
- Contract B comes into existence upon communication by owner of its acceptance of the tender (“Construction Contract”)
when are tenders more than ITT?
Generally, calls for tenders are invitations to treat; however, in cases where specific language and conditions are used it becomes a unilateral offer to enter into Contract A, which is accepted by the contractor when he submitted his bid in accordance with the terms.
how do we ask if ka/kb has arisen out of tendering process?
Question: whether, in all the circumstances, it is reasonable for the parties to believe that submitting a bid creates legal obligation. (that is, from an outsider standpoint, would one conclude that there was an intention to be somehow legally bound)
- look at intention of parties
Arguments in favour of case being Traditional English model approach for tendering
o If things are left to negotiate (e.g. completion date) indicates more of an invitation to treat
Arguments in favour of KA/KB
- Is a deposit required? Is it non revocable?
- How specific are the terms? How expensive and onerous is it to create a bid?
R v. Ron Engineering & Construction facts and issue
Ron Engineering submitted bit and deposit ($150,000) in response to a call for tenders; realized they forgot to include labour costs in bid price – owner refused to let them alter bid price and refused to return deposit.
- Is the acceptance of a call for tenders for a construction job a binding contract? (should they get money back)
R v. Ron Engineering & Construction ratio
- Offer is the call for tenders, acceptance is the submission of the acceptable bid (Contract A).
- The tender itself constitutes an offer that is accepted by submission of the bid, thereby creating Contract A.
- Under Contract A, the bidder typically required to enter into Contract B if selected. If refuses, then subject to forfeit deposit.
M.J.B. Enterprises LTD v. Defence construction facts and issue
MJB was the second lowest bidder in a call for tenders. The lowest bidder altered their bid, making it non-compliant but DC accepted it anyways. In call for tender there is a privilege clause (do not have to accept lowest bid)
- Issue here was the meaning of the privilege clause, and if that permitted DC construction to accept a non-compliant bid
M.J.B. Enterprises LTD v. Defence construction reasoning and ratio
- It is an implied term in tenders that only complying bids will be accepted and that Sorochan’s bid did not comply with the terms and therefore cannot be accepted.
- In accepting the disqualified bid the owner is in breach of Contract A with the other bidders.
- Privilege clause is only valid for compliant bids and does not extend to non-compliant bids.
acceptance? unilateral? bilateral?
Acceptance: unqualified expression of assent to the terms of an offer
- Acceptance of Unilateral Offer = performance of conditions
- Acceptance of Bilateral Offer = mutual promises
Mirror Image Rule
In order to have a valid and enforceable contract, the acceptance must mirror the offer (all terms and conditions in the offer must be accepted)
- If the terms change, it’s considered a counter-offer and there is no binding contract
Livingstone v Evans facts and issue
Evans offered to sell his land, Livingstone countered with a lower price. Evans said “he could not reduce price”. L replied accepting the offer. E no longer wanted to sell to the plaintiff
- Did the reply constitute a counter-offer? Was the offer revived with “cant reduce the price”?
Livingstone v Evans reasoning and ratio
- Evans original offer was rejected by counter offer, but “Can’t reduce price” response revived original offer; Livingstone accepted which created a binding contract
- Counter-offer overrides the original offer; original offer is unable to be accepted unless it is revived by the offeror.
Battle of the Forms
contracts with standard terms sent back and forth between parties; contains terms inconsistent with those in other forms in hope to reach agreement on a contract
Traditional Approach to battle of the forms
each new form (offer) overrides previous form (offer). Last form standing wins and these terms govern the agreement (contract = upon accepted delivery)
alternative approach to battle of the forms (denning)
examine all forms exchanged and look for consensus in terms. Try to read harmoniously but imply terms where there can be no reconciliation
Butler Machine Tool Co. v. Ex-cell-o corp facts and issue
BMT offered to deliver machine to ECO with a price variation clause; ECO responded with own terms and excluded a price variation clause; BMT signed the terms and said they would deliver in accordance to original quote. Sellers tried to deliver the tool for a higher price but it was not accepted upon deliver by ECO
- On whose terms was the contract made?
Butler Machine Tool Co. v. Ex-cell-o corp outcome
ECO’s counteroffer was accepted by BMT = binding contract (no price variation clause included)
Tywood industries ltd v. St. Anne-Nackawic Pulp facts and issue
Anne sent a request for a quote to Tywood with T&C on back (no arbitration clause); Tywood responded with quote (no arbitration clause); Anne sent revised order with arbitration clause; Tywood did not sign or return the order; Tywood delivered goods but there was a dispute over price.
- Was the arbitration clause part of the contract? On whose terms was the contract made?
Tywood industries ltd v. St. Anne-Nackawic Pulp reasoning
- Under the classical model, St. Anne’s contract would hold (last shot)
- Courts cautious about if there are fine print terms on the agreement, that they think should have been brought to attention
- Can’t sneak in new terms (not reasonable)
Tywood industries ltd v. St. Anne-Nackawic Pulp ratio
When there is a battle of forms between the parties to a contract, new terms can’t be snuck into a contract, particularly if they are important
what can the offeror stipulate?
Offeror is the “master of the offer” and can stipulate mode of acceptance
what can the mode of acceptance include
- Method of acceptance
- Time by which acceptance is to be given
- Place where acceptance to be given
what can the offeree argue about mode of acceptance?
oferee may argue that Offeror did not intend that the dictated mode was the only way to accept
Eliason v Henshaw facts and issue
Eliason wanted to buy flour, asked Henshaw to write back by a specific time, place, and manner. Henshaw did not respond in the specified way
Eliason v Henshaw reasoning and ratio
No acceptance within proper time, place or manner
- It is reasonable for offeror to set terms of acceptance; offeree must follow those terms for an acceptance to be valid and binding
Felthouse v. Bindley facts and issue
Felthouse negotiated to purchase a horse from his nephew. There was a price mix up, Felthouse gave offer to nephew “if I hear no more about him I consider the horse mine” - but there was no response. Nephew then sold all his stock in an auction – told auctioneer not to sell horse that was reserved for Felthouse but the horse was sold by accident.
- Was the offer (from Felthouse) accepted (by nephew)?
Felthouse v. Bindley reasoning
If the nephew wanted to enter into the contract he must have given clear indication of his acceptance, which he had failed to do.
Felthouse v. Bindley ratio
- Acceptance cannot be assumed if there is no notification of acceptance, or implied acceptance through action present.
- You cannot impose obligations on an unwilling party.
- Silence does not amount to acceptance.
Exceptions where silence will bind you
Where parties have previous relationship
- Has to do with nature of dealings
- Insurance policies (have house, write to company saying “I want to continue having insurance” when policy runs out, court will say offer is accepted if insurance says nothing
- Homeowner expects insurance company to contact home owner if insurance is going to end)
what are pro and con of applying CL to intimate sphere? (Keren)
pro: economic value of activities conducted in the intimate sphere should not be deemed monetarily worthless
con: applying contract law to intimate sphere runs risk of commodification
what are the shortcomings of consent talked about by Keren
- Idea of consent is used too heavily, consequences are too severe
- Asks whether consent should be as determinative as it is now
- Something more than consent should be legally relevant
ProCD v Zeidenberg facts and issue
Zeidenberg bought database with the license restriction, ignored the license and resold the information at a lower price than ProCD. Argued one cannot agree to hidden terms
- Do the terms of shrink-wrap licenses - which are not visible at time of purchase - bind the buyer?
ProCD v Zeidenberg reasoning
- When purchasing the software Zeidenberg agreed to terms of an additional license (software splashed the license on the screen and would not let him proceed without accepting right to return)
- Common for transactions to exchange money prior to communication of detailed terms (insurance, plane tickets, warranties, etc)
ProCD v Zeidenberg ratio
Seller can dictate terms of sale, which includes locating terms of sale inside consumer packages. These terms are binding unless they violate some general contract rule or principle.
Saint John Tug boat co v. Irving refinery facts and issue
Tugboats were continued to stay on-call for Irving past the end date stated in the agreement. Irving was billed for the months they used the tugs. They refused to pay but accepted the tug on-call service.
- Can a party accept a contract through their actions?
Saint John Tug boat co v. Irving reasoning
- St. Johns was serving a new contract every time they sent an invoice and kept tug boards on-call for Irving
- Irving continued to imply acceptance by continuing to use the service
- Continuing Acceptance Test
what is the Continuing Acceptance Test (Saint John Tug boat)
Continuing Acceptance Test:
- Taking a benefit (ongoing benefit)
- Implied promise to pay for the benefit
Saint John Tug boat ratio
Acceptance can be implied by conduct despite intentional silence if the test is met (ongoing benefit, implied payment)
Dawson v. Helicopter Exploration facts
- Dawson had located some sort of valuable site
- HE says that if we do this, you get 10% of the cut, but then explore on their own, and stake it
- HE argues that letter was unilateral offer that would be accepted by performance (they would only have a contract if Dawson showed them the site. but Dawson never did this, so no contract)
Dawson v. Helicopter Exploration reasoning
- This was a bilateral contract, conditional on finding a pilot
- Parties were bound when pilot was available
- Once they had a contract, they were required to take him out and they didn’t
Dawson v. Helicopter Exploration ratio
To avoid unfairness of the traditional rule of offer, courts will favour bilateral contracts, and treat an offer as bilateral instead of unilateral where language can fairly so be construed
what is the unfairness in unilateral contracts
Person who makes offer can withdraw up until moment that performance is completed
- o’ee doesn’t have protection
- Eg. If you grow me peonies, will give you $500. this will take you ~2 years. You put in all this effort, and then the offeror can put the rug out
Household Fire facts
Grant purchased shares in HF but letter of acceptance never reached him, so he never paid for shares, but earnings were credited to his account. HF liquidated and asked for outstanding money from Grant. He refused to pay as he was never notified of becoming a shareholder
Household Fire ratio
Postal Acceptance Rule = A contract becomes binding (acceptance is communicated) the instant that the acceptance is put in the mail
Holwell Securities v. Hughes facts
Option to purchase property must be exercised by notice in writing. Hughes wrote to exercise option, deposit cheque was included. Letter was never delivered, and Holwell refused to sell the property.
Holwell Securities v. Hughes reasoning
- “notice in writing” means that Hu required actual notice of acceptance
- Postal rule does not apply when the terms of a contract point to the necessity of actual communication, even if the post is the desired medium of communication
Holwell Securities v. Hughes ratio
The PAR does not apply in situations where a notification of acceptance has been specified in the terms of the contract
what is the assumption about PAR?
- Assume postal rule applies until something expressly excludes it
- And then see if it would result in something absurd
Brinkibon Ltd. v. Stahag Stahl facts and issue
Brink (London) telexed their acceptance of an offer to Stahag (Vienna). There was a breach and Brink wanted to bring damages in London but Stahag was not under British jurisdiction.
- Where is a contract created when it is between parties in two jurisdictions?
Brinkibon Ltd. v. Stahag Stahl ratio
When communication is not instance, postal rule applies. If communication is instant, GENERAL RULE IS the contract is formed when and where acceptance is received
Electronic Commerce Act
you can create a contract electronically but in order to determine whether there is a contract, you need to apply the common law principles of contract law
Rudder v. Microsoft facts and issue
Rudder didn’t read the EULA before accepting it to use MSN. Argued the forum selection clause (dispute resolution) was not valid because he didn’t read it; it is important and should require special notice.
- Should a clause be upheld even if it’s not seen by the acceptor?
Rudder v. Microsoft reasoning
- There is no fine print in an online EULA; terms are in plain language
- Scrolling through a EULA is not materially different than a multi-page contract - acceptor has the option to disagree to the terms if they want
Rudder v. Microsoft ratio
EULA via scrolling on a screen is a valid way to communicate an offer. EULAs are as valid as written contracts, and not reading them is not an excuse.
what does Rudder v. Microsoft show about Canada’s stance on online agreements
- “You should have read several pages of fine print before you agreed”
- Didn’t consider the culture of online agreements
- Didn’t consider public policy arguments
- This case and the further ones, set Canada one of the worst jurisdictions to offer protection for online agreements
Douez v Facebook facts and issue
Plaintiff brought action against defendant for relief for violations of Privacy Act. When signing up for FB, must agree to terms of use, terms include a forum selection clause requiring all disputes be resolved in California according to California law
- Does BC law apply or California law?
Douez v Facebook reasoning
3 rely on quasi-constitutional rights of privacy, only on judge said that in these circumstances the consumer is at a disadvantage, no bargaining, no choice, inadequate notice
Douez v Facebook implications in canada
Doesn’t get us any further on issue of consumer protection online because 3 of the judges relied on quasi-constitutional rights, Canada is moving along but its not holistic
Dickson v Dodds facts and issue
Dodds was going to sell a house to Dickson (had until Friday morning to accept the offer); was informed by a third party that Dodds had sold the property to someone else on Thursday evening; Dickson tried to reach Dobbs to accept offer. Friday morning Dobbs told Dickson he sold property already.
- Can the offeree be made aware of the revocation indirectly?
Dickson v Dodds ratio
An oferree must have knowledge of a revocation, but explicit communication is not required
Dickson v Dodds, can he sell without revoking the offer? is he bound to keep the offer open till friday morning?
- He needs to revoke the offer before making an offer to someone else
- He’s not bound to hold the offer until 9am on Friday, but he is bound to the offer until he revokes it
Byrne v. Van Tienhoven facts and issue
Van T mailed a proposal to sell tins to Byrne; short time later Van T mailed a revocation of offer letter but it was received after Byrne accepted + resold the merchandise
- Must revocation be communicated?
- Is revocation effective immediately on posting (PAR)?
Byrne v. Van Tienhoven reasoning
With acceptance, it is something you are expecting to receive, however a revocation isn’t something you are expecting, and it therefore must actually be communicated
Byrne v. Van Tienhoven ratio
Revocation of offer is only effective upon acceptance, while acceptance of offer is effective when sent
in dawson helicopter, why do they prefer bilateral contracts?
o Don’t like fact that unilateral contract can be withdrawn when other party has already started their side –> don’t think that’s fair
what is the general rule for revocation of unilateral contracts?
Always start with general rule that unilateral offer can be revoked, even if partially performed
Errington v. Errington and Woods facts and issue?
Errington father bought house for Wood (down payment = gift, Woods pays mortgage and once it is paid the house is hers). Errington dies leaving estate to wife – wife wants possession of house.
- Can you revoke a unilateral offer on partial performance?
what is the court reasoning in Errington v. Errington
- In an agreement of this sort (paying for 20 years) which has long time stamp for completion of performance, there is an implied term = if the other party commences performance (the DIL), father cannot withdraw offer
- Also said that even if ^^ argument had not been made out, by virtue of fact that she had been paying instalments for 20 years, she had equitable right (right based on fairness)
ratio in Errington v. Errington
Always start with general rule that unilateral offer can be revoked, even if partially performed UNLESS there is an implied promise that the offer won’t be withdrawn once performance commences (something in circumstances)
- Unilateral offer can’t be revoked if the offeree has acted on the offer, and the revocation would be unjust
Barrick v. Clark facts and issue
Clark wanted to buy Barrick’s land. Barrick made an offer but Clark was out of town; in the time that he was gone Barrick sold the property to someone else
- how long is a party expected to keep offer open?
Barrick v. Clark reasoning
- Leaving the offer open for 13 days was a reasonable amount of time as Clark had indicated he wanted to get the sale done as soon as possible –> “as soon as possible”
- There was also a market for his land and therefore a sense of speediness
Barrick v. Clark ratio
An offer without a specific expiry date will be deemed to have lapsed after a reasonable time. Reasonable time = language, nature of business, conduct, circumstances of offer
what are the 3 ways that k’s can be uncertain
- Ambiguity = can be read in multiple ways, judge can’t decide what they meant
- vagueness = carbolic smoke ball case, company said ad was too vague to constitute an offer
- Missing terms
May and Butcher facts? issue?
May & Butcher wanted to buy surplus of tents from gov; who defined terms of agreement except price, date of payment and delivery terms were left open (Price and dates on which payment will be made shall be agreed upon by the parties as the tents become available). Deposit of 1000 pounds was made. Gov changed management control and negotiations with M&B break down.
- Were the terms sufficiently defined to constitute a legally binding contract?
May and Butcher reasoning
- An agreement to agree is not a contract
- Price was undetermined (essential term for a contract to be valid)
- The court will not “read in” key terms to save a contract (Classic Approach)
May and Butcher ratio
There is no contract if an essential term is missing. It is simply an agreement to agree, and this is not a binding contract
- If any material term is left undetermined, we do not have a contract
Hillas v. Arcos Court of Appeal facts and issue
Hillas was purchasing timber from Arcos, reaches agreement under conditions that there should be an option to enter into contract to purchase more the following year with 5% reduction in price. Arcos refuses to sell timber to Hillas the following year.
- Was the option clause (Clause 9) sufficiently defined as to constitute a binding contract?
Hillas v. Arcos Court of Appeal reasoning
Clause is missing essential terms (about the quality/quantity of timber) - Bound by May & Butcher decision (Classical Approach - Lassaiz faire here - court cannot intervene)
Hillas v. Arcos Court of Appeal ratio
If essential terms are undetermined, the contract is an agreement to agree and is not enforceable
Hillas v. Arcos house of lords reasoning
- Just because it’s hard to assess intention, doesn’t mean court shouldn’t do best efforts to do so
- Say there was always a price list, argument about not being a price list is irrelevant
- Timing = when these goods going to be delivered, HL says that if delivery date not specified, it will be a reasonable time
Hillas v. Arcos house of lords ratio
Courts should be flexible; where intentions are clear, they can and should intervene to determine terms (Modern Approach)
- Contract to negotiate could be valid
Foley v. Classique Coaches facts and issue
Foley owned gas station, sold land to Classique on condition that they would buy all their gas from Foley. No indication of price in contract but there was an arbitration clause. After 3 years Classique claimed that since there was no price they are not bound by a valid contract.
- Does the fact that no price is quoted mean that the contract was void for uncertainty?
Foley v. Classique Coaches reasoning
- They did it for three years!! Obviously thought they were in an agreement and intended to be in an agreement
- During the 3-year period, they always determined a price (evidence that there was an implied term that the price would be a reasonable price)
- court read arbitration clause as demonstrating that they parties intended a reasonable price - because if they went to a third party to determine the price, the third party would have come back with what they concluded was reasonable to pay.
what did court say about may and butcher in Foley v. Classique Coaches
- May & Butcher is still good law – price is required but there is a mechanism that fixes the price issue (arbitration clause)
Foley v. Classique Coaches ratio
Contract is valid where there is a mechanism to fix an indefinite or undetermined price.
- Past performance may indicate that a contract is binding
how do courts generally view agreements to negotiate
- Cts have generally rejected them as enforceable.
- But: have left the door open where nature of negotiations can be objectively evaluated for compliance
R. v. CAE Industries facts
- CAE negotiated with Gov to take over and run an aircraft maintenance base
- Gov agreed to give base a certain amount of business – could guarantee no more than 40-50,000 labor hours as set-aside repair and overhaul work, but will employ “best efforts” to secure additional work to meet target 700,000 labor hours
- Contract was formed – but hours fell below 40,000
what were the two arguments made by the gov in R. v. CAE Industries
- no contract intended (mere puffery - didn’t intend for the letter to be a binding contract)
- lack of certainty
R. v. CAE Industries reasoning
- It is clear from the evidence that the parties treated the document as a binding contract to the extent that it was partly performed
- lack of certainty? - In a commercial context, every effort should be made by the court to find a meaning, looking at substance, not just form
R. v. CAE Industries ratio
In business relationships, the courts will make every effort to apply definite meaning to vague terms in a contract so as not to render it unenforceable; this is especially true if it is obvious that the parties intended to enter into a binding relationship, or if there was part performance
Empress Towers Ltd. v. Bank of Nova Scotia facts
Bank leased property from Empress – could renew for 2 successive periods of 5 years; price to be determined by market rate as mutually agreed between parties. Bank wanted to exercise option to review and proposed fair rate. Empress ignored all correspondence until the date before option expired – said Bank could stay if they paid prevailing rate + $15,000
Empress Towers Ltd. v. Bank of Nova Scotia issue
Whether the renewal clause was void either for uncertainty, or what is fundamental the same, as an agreement to agree
Empress Towers Ltd. v. Bank of Nova Scotia reasoning
Judge argues that “mutually agreed upon” implies that Empress Towers will negotiate in good faith to try and reach an agreement and not unreasonably withhold the attempts to negotiate.
Empress Towers Ltd. v. Bank of Nova Scotia ratio
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.
(Ratio has to do with business efficacy)
what would happen in Empress Towers Ltd. v. Bank of Nova Scotia if their contract said “rent to be agreed”
this would not be enforceable, just like May and Butcher
what happens if there is a stated formula like rent will be market value” and no machinery to determine market value
court can supply this machinery and hire someone to say what market value is
“to be agreed”, enforceable or not?
This cannot be enforced.
- Rent is established by formula, but machinery is not provided
Courts will generally supply machinery.
Formula set out is defective, but machinery is provided. ex?
Courts will cure the defect
- if B and C agreed that they would appoint a third party valuer, who would then determine the price. A ‘defect’ could arise if B refuses to participate in deciding who the valuer is going to be. A court could look at this situation, and decide that the intention of the parties was to have the price determined by an impartial third party. If they reached that conclusion, the court could then appoint the third party valuer.
Mannpar Enterprises facts
Mannpar under a 5-year contract with Crown (authorized by Band) to remove sand/gravel from Ban’s reserve. Clause 7 allowed Mannpar to renew contract for 5-years subject to satisfactory performance and renegotiation of royalty rate. Mannpar notified intention to renew, Crown and Band refused to negotiate royalty rate. Mannpar argues Crown had repudiated obligation to renew, breach of contract
Mannpar Enterprises reasoning
- No enforceable agreement arose out of the language of the renewal clause.
- Distinguished from Empress Towers case on the basis of facts.
- There was no general market rate (NO OBJECTIVE LANDMARK IN MANNPAR!! EXTREMELY IMPORTANT)
Mannpar Enterprises ratio
Any implied duty to negotiate in good faith should be based on language/intentions, objective standard to assess, and broader context of contract. Gov obligations to third parties may mean courts less likely to imply a duty to negotiate in good faith
Bawitko Investments v. Kernels Popcorn facts
- B wanted to buy K
- Kernels provided Bawitko with an info package including a “draft” franchise agreement
- parties negotiated certain terms that Bawitko had an issue with – they formed an interim agreement (handshake, Kernels said “you’ve got a deal”) they agreed to write it up
- Parties started performing as it they had a contract
- Kernels presented Bawitko with original draft agreement (no modifications)
– Bawitko refused to sign it
Bawitko Investments v. Kernels Popcorn issue
Was the oral agreement (+ handshake) complete and binding? Did they both understand that they were bound at “you’ve got a deal”, or not legally bound until something was signed?
Bawitko Investments v. Kernels Popcorn reasoning
- Oral contract was enforceable on the terms decided – but b/c there were essential terms missing, the contract as a whole is not enforceable (would’ve been otherwise though)
- no meeting of the minds on essential terms of this complex contract arrangement
what was the major problem in Bawitko Investments v. Kernels Popcorn
500 clause agreement, and they only discussed 4 - THIS WAS THE PROBLEM
- Things remained undiscussed in standard form agreement, were complex and not routine
Bawitko Investments v. Kernels Popcorn ratio
Handshake/oral agreement in contemplation of a formal written agreement is enforceable unless there are missing essential terms from the contract
Balfour v. Balfour facts and issue
Mr. B agreed to pay wife 30$ a month; their relationship broke down; they separated and he stopped paying
- Was there a binding contract for the allowance? Was there intention to create legal relations?
Balfour v. Balfour reasoning
- No intention to create legal relations within the confines of a relationship
- Personal family relations are a private matter (presume no intent)
- If everything agreed in a partnership was a contract, floodgates for frivolous lawsuits would open
Balfour v. Balfour ratio
- Law of contracts should not interfere with private or domestic domain
- Presumption that promises/agreements in domestic context are not legally enforceable
Rose and Frank Co. v. J.R. facts
Rose frank Frank had agreement with JR’s; had clause stating arrangement was not intended to be a formal legal agreement and would not be subject to legal jurisdiction
- JR cancelled agreement and Rose & Frank sued for breach.
Rose and Frank Co. v. J.R. issue and decision
Can a contract be voided by a clause stating it’s not legally binding?
- Yes, there is no legally binding contract here
Rose and Frank Co. v. J.R. ratio
There is a presumption in commercial contexts that there is an intention to create legal relations; but express terms of intention (to not form legal
relations) can rebut this assumption.
Rose and Frank Co. v. J.R. dissent
Dissent says that the document did not form a legally binding contract but held that the orders and responses between the parties in the process of business constituted enforceable contracts of sale.
- court could enforce that specific promise to fulfill order, while majority said even if during order something went wrong not enforceable (hands off)
Wood v. Lucy, Lady Duff Gordon facts
celeb employed Wood to help her do her business, and gave him exclusive right to license out her name in exchange for 50% of the profits he earned
- After the contract was signed, she did her own dealings and did not pay Wood
Wood v. Lucy, Lady Duff Gordon issue
Question is whether Mr. wood had actually promised to do anything, if he had given any consideration
lady duff’s argument
Duff-Gordon claimed that there was no corresponding request to her promise and since she did not request anything from Wood, there was no consideration.
- Wood did not bind himself to anything, and therefore there was no contract.
Wood v. Lucy, Lady Duff Gordon reasoning
- Wood’s promise to render accounts and to give Duff-Gordon 50% of the profits inherently implied that he would use reasonable effort to implement the agreement.
- In commercial context court looks at contract as a whole (Modern Approach)
Wood v. Lucy, Lady Duff Gordon ratio
Where intention to create legal relations is clear but consideration isn’t explicit, courts may imply terms (ie. best efforts) to give effect to those intentions (commercial context)
Bruker v. Markoviz facts
- Bruker and Marcovitz negotiated a contract to obtain a Get
- despite Bruker’s requests, Marcovitz refused to provide a Get for 15 years
- Bruker sues for breach of contract
what did Markoviz argue
Marcovitz argues enforcing the contract would violate his freedom of religion (charter right)
Bruker v. Markoviz issue
Whether an obligation to obtain a Get can be a valid contractual provision that can bind.
- If so, if right to freedom of religion should allow the husband to avoid the legal consequences for having breached the agreement?
what does the majority in Bruker v. Markoviz say about limits on moral duties being changed into legally binding ones?
If moral obligation is to do something that is illegal, or contrary to public policy crts won’t enforce
what does the dissent in Bruker v. Markoviz say about limits on moral duties being changed into legally binding ones?
agrees with majority (If moral obligation is to do something that is illegal, or contrary to public policy crts won’t enforce) but also won’t enforce if consideration only has religious meaning and doesn’t have meaning in civil law context
what does the majority in Bruker v. Markoviz say about if it would offend public order to enforce an agreement with religious aspects?
might be agreements w religious aspects where it would be against public order to enforce them, depends.
- in this case, Would be contrary to public policy not to enforce this agreement, enforcing it is in harmony with Canada’s laws of divorce.
what does the dissent in Bruker v. Markoviz say about if it would offend public order to enforce an agreement with religious aspects?
mortified of giving damages remedy for the failure of individual to perform religious ritual. To give damages is to recognize validity of religious law as having place in law of state - it doesn’t, and it shouldn’t. Concerned about public policy consequences here
- State neutrality on religious matters (separation of church and State)
majority thoughts on if it would offend Mr. Markoviz’s freedom of religion rights to award damages for failing to perform a religious act?
On evidence and his own testimony was that he didn’t want to give get based on motivations not grounded in faith, but anger and betrayal (nothing religious). Public interest in equality rights of women (women not allowed to give get, has to wait and be granted a get) outweigh his religious freedoms because he freely entered into this agreement and he benefited from the other provisions
dissent thoughts on if it would offend Mr. Markoviz’s freedom of religion rights to award damages for failing to perform a religious act?
Argument that forcing him to come before rabbi and make statement is forcing him to make religious act - coercive and violation of religious freedom
Bruker v. Markoviz ratio
Moral obligations can become legally binding obligations (susceptible to compulsory performance) if formalized in a contract
Dalhousie College at Halifax v. Boutilier Estates facts
- Boutilier wrote a letter committing to give $5000 to “improve Dal’s efficiency of its teachings”
- Dal writes a reminder to B
- B writes “I have kept my promise to you in mind, but rn recession”
- B dies
- Dal makes a claim against his estate
Dalhousie College at Halifax v. Boutilier Estates issue
where is the consideration from Dal
what did dal argue was consideration in Dalhousie College at Halifax v. Boutilier Estates
- Implied request to use $ for certain purposes (improving efficiency of teaching), was a promise to use money for those purposes
- Dal says our consideration was spending more money
Dalhousie College at Halifax v. Boutilier Estates reasoning
- Document too vague to suggest Dal was bound to use money in a particular way, dal was not required to spend this money in a certain way - still had discretion
- Court says dal would spend money anyways, no evidence that dal did anything different because of receiving this pledge from B
Dalhousie College at Halifax v. Boutilier Estates ratio
A voluntary promise does not have sufficient consideration to be considered a binding contract unless the money was given for a specific purpose which can be seen as of some benefit to the promisor
Eastwood v. Kenyon facts
- Eastwood (guardian) borrowed money for Sarah’s (orphan) education and she promised to pay him back when she’s of age (plus interest).
- Sarah married Kenyon who also promised to pay back her debt, but failed so Eastwood sued Kenyon for breach of contract for failing to pay that money
Eastwood v. Kenyon issue
Is the promise to pay legally binding? Is there valid consideration?
what is the court concerned about in Eastwood v. Kenyon
Courts concerned that if we don’t require mutual exchange of consideration, all kinds of people will be suing when people making promises and not fulfilling
- Wants threshold for judicial interference
what did Eastwood say was Kenyons consideration? problem with this? when would crt have enforced this?
Exchange of consideration: educating Sarah, and Kenyon got benefit for having educated wife which he should pay for
- Kenyon didn’t make the request, didn’t ask “will you pay to educate her”
- If promises at the same time, crt would have enforced it
why would eastwood have been successful if he sued sarah?
Exception of circumstances where someone receives benefit when they are not capable of contracting (eg. below age of majority, not mentally stable, drunk…. Not legally capable) if someone gives you a benefit at this time, and she comes to age of majority and can now contract, and she made promise to pay, we will bring those promises together
Eastwood v. Kenyon ratio
- Past consideration is not good consideration.
- Promises are not sufficient to form a contract.
- Moral obligation does not constitute consideration
Thomas v. Thomas facts
- Thomas died and wanted his wife to have his house and its contents.
- Not written into his will, so instead the executors and wife enter an agreement after husband dies
- Executors (Sam and Ben) let her live there for 1$ a year and upkeep of the house. When Sam died, Ben tried to eject her from the house (no consideration)
Thomas v. Thomas issues
Was there sufficient consideration (1$ a year) to form a valid contract?
what did wife in Thomas v. Thomas argue
That motive (that everyone was just trying to do what dead husband wanted, out of respect) was their consideration
what did court say about motive in Thomas v. Thomas
Motive is not the same thing as giving consideration. Just because you have good motivation is not enough
what did courts reason in Thomas v. Thomas
- Courts don’t ask whether the consideration is adequate, they ask whether it is sufficient (if it is sufficient it is not for the court to intervene further and assess whether it is adequate/fair) – leaves to parties to decide if adequate
Thomas v. Thomas ratio
- Consideration must have some value in the eyes of the law (even if it’s just a peppercorn).
- Having motive or moral objective is not consideration to make agreement binding.
general rule about forebearance
- The promise to forbear from suing will constitute good consideration so long as party that is giving up right to sue is doing so in good faith
B. (D.C.) v. Arkin facts
BDC’s son shoplifted from Zellers. Zeller’s legal counsel demanded restitution of $225 – if not provided store would take civil action. BDC paid $225 but is seeking its return after obtaining legal advice – argues Zellers is not entitled to the money, but Zellers says she voluntarily paid and there was consideration (payment and forbearance)
B. (D.C.) v. Arkin ratio
Forbearance to sue is valid consideration BUT not if the money was paid in mistake
with forebearance, when is it not good consideration?
If claim is invalid, and the person knows its invalid, or if you don’t believe its valid (trying to intimidate you)
with forebearance, can a doubtful claim be valid?
If claim is doubtful it’s okay, good consideration
with forebearance, can an invalid claim be valid?
Invalid claim will sometimes also be good consideration if believed in good faith that you had a fair chance of success and actually intended to pursue the claim
Lampleigh v. Brathwait facts
- Brathwait commits murder, in tower of London and waiting his death
- Somehow talks to Lampleigh and requests that Lampleigh get pardon from King
- Rides all across the country, doesn’t actually get pardon, but somehow B isn’t killed anyway
- Brathwait is not going to be executed anymore and is so happy he promises to pay Lampleigh 100 pounds.
Lampleigh v. Brathwait issue
Can a promise to pay after a request has been fulfilled be binding?
Lampleigh v. Brathwait reasoning
If you just do something for someone else voluntarily, that’s not sufficient consideration. But if act because asked to do it, past consideration (riding around that horse) can be good consideration for a subsequent promise if that past consideration was done at the request of the promisor
- A lot of weight placed on fact that he only rode around because he was asked to do it
Lampleigh v. Brathwait ratio
If the past act was performed at the request of the promisor, then the subsequent promise is enforceable
what did court say in carbolic
just because an offer is reckless/careless, doesn’t result in the offer not being binding especially if reasonable for other party to believe that it was seriously intended
case for basic elements of offer
canadian dyers
basic elements of offer from canadian dyers
- intention to be bound
- communication
- material terms
with instantaneous communication, what else do you need to consider about when an offer is received?
depends on whats reasonable in circumstances
- eg not reasonable to believe someone read your email before the office was even open
HE case other ratio
If some aspect of performance is controlled by the other party, good faith obligation to not prevent them from fulfilling their obligation
