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
