preexisting legal duties Flashcards
3 situations of pre-existing legal duties
- Where someone has a public duty to do something in question (eg. Firefighters)
- Legal obligations under statute (human rights code, duty of care under common law)
- Contractual obligations
traditional view of pre-existing public duty
• Traditional view that if, in exchange for a promise, the promisee agrees to perform, or actually performs, a public duty, there is no consideration (if consideration someone offers is to perform a public duty they are already required to do there is no binding contract)
contemporary view of pre-existing public duty
able to find consideration if it could be shown that the promisee provided something extra, beyond the requirement of public duty
view on pre-existing obligations to third parties
performance of a duty owed to a third party has traditionally been viewed as good consideration, particularly in the family context
Scotson v Pegg facts
Scotson contracted to deliver coal to X, or to X’s order. X sold the coal to Pegg and ordered Scotson to deliver the coal to Pegg.
Scotson would deliver the coal which was on board his ship to Pegg in return for Pegg agreeing to unload the coal at the rate of forty-nine tons of coal per day.
• Scotson delivered the coal but Pegg failed to unload the coal at the agreed rate which resulted in Scotson’s ship being delayed for five days.
• Scotson sued Pegg for the losses he had incurred due to the delay.
what did pegg argue
that the promise was not binding because Scotson had
not provided consideration as Scotson was bound by his contract with X (a third party) to deliver the coal.
• P’s response is that the second agreement isn’t enforceable because S is only doing something he was already required to do under the original K with X
reasoning in Scotson v Pegg
Pegg clearly received benefit from Scotson in the delivery of the coal and therefore was bound by the contract made between them.
Scotson v Pegg ratio
Performance of an obligation to a party does not preclude that performance from serving as consideration to a different contract to a third party.
Pre-existing obligations between parties (Traditional)
New promises made on basis of existing contractual duties already owed to promisor are not binding. There must be new consideration to support the new promise
Stilk v Myrick facts
Myrick, the shipmaster, made a promise that the remaining crew that he would divvy up the wages of the crew that abandoned with the remaining crew if they took the ship home.
Stilk v Myrick facts
=Nothing new was given by the crew.
Stilk v Myrick ratio
- A promise to fulfill a duty already owed to the contracting party isn’t good consideration.
- Modifications require fresh consideration.
what did Gilbert Steel v. University Const. Ltd say about modifications? (ONCA)
If the parties do agree to rescind their old k and enter into a new one, with the only change being price, this is enforceable - court looks @ it and says they are both rescinding that offer?
is a promise to pay less binding?
In principle this is fine if both parties promise mutual consideration
Traditional common law approach to paying less
can’t discharge debt by paying a lesser amount
• Rule in Foakes v beer
Can’t discharge debt by paying less- have to pay interest
how does Pinnels case give a way around the paying less rule?
Pinnels case establishes rule that although you can’t pay off debt with lesser amount of money, you can do it by giving them something else - a hawk, a horse
accord and satisfaction?
a compromise under which someone agrees to accept something else in performance of an outstanding debt or obligation.
with accord and satisfaction, does the court look at the value of the object?
Court does not look @ the value of the object that you are giving up ex. Acorn will suffice - don’t inquire into value of consideration, unless the court believes something unconscionable in the interaction
what has happened to the rule that u can’t discharge debt by payment of a lesser amount
overturned to some degree in some (but not all) Canadian provinces
Judicature Act in alberta
In Alberta, if I owe you 100, and we reach agreement for 50, this stat will protect that agreement
Robichaud c. Caisse Populaire reasoning
• Court says that consideration for the CP was getting immediate receipt of payment - saving the time and money and effort to send out a collection agency to recover practical benefit, and that was going to constitute the consideration. This is pretty thin, they deserved immediate full payment
radical shift in Greater Fred. Airport Auth. v NAV Can (NB)
A variation to an existing contract that is not supported by new consideration can be enforceable as long as there is no economic duress.
policy reasons in Greater Fred. Airport Auth. v NAV Can for refining traditional rule
- Stilk ignores commercial realities – post-contractual modifications are common, and law should protect legitimate expectations of parties
- under and over exclusive
- context of law has changed
test for duress
- Promise made under pressure.
* Pressured party must have no option but agreeing.
Rosa v Toca ratio (BC)
When parties to a contract agree to vary its terms, the variation should be enforceable without fresh consideration (absent duress, unconscionability or other public policy concerns).
so where does variation stand?
For a variation - usually a mutual exchange of consideration
- Exceptions - BC and NB
what is promisory estoppel
Applies when it would be inequitable, unfair, unjust and unconscionable for someone to go back on their promise [to not insist on their full contractual rights] because a party to the contract has relied on that promise
leading case on waiver
Hughes v. Metropolitan Railway
Hughes v. Metropolitan Railway ratio
if parties enter into a course of negotiations which has the effect of leading one party to suppose that the strict rights under K will not be enforced, those rights will not be allowed to enforce them where it would be inequitable
Modern Doctrine for Promissory Estoppel from
Central London Property v. High Trees
John Burrows v. Subsurface Surveys ratio
In order for estoppel to apply, there must be evidence that the party intended to alter the contractual arrangement and waive their rights.
D&C Builders Ltd. v. Rees facts
“$300 or nothing”
D&C Builders Ltd. v. Rees ratio
Estoppel only exists where equitable.
• Settlement produced through intimidation not valid.
what did W.J. Alan & Co. v. El Nasr say
can’t retract a waiver if it cannot be done without injustice to the other party
test for estoppel in canada
RYAN V MOORE AND SUPERIOR OIL
in canada what do we need to see for estoppel
we want to see detrimental reliance. Looking for situation where if we let the other party go back and stand upon their strict legal rights, the person who depended on those rights being suspended is going to suffer in some way
Sword vs shield
historically, estoppel was only available to defendants, to use as a part of their defence in an action against them. (A plaintiff could not use estoppel as a part of their cause of action.)
Combe v. Combe ratio
Promissory Estoppel cannot be used as a basis for a separate cause of action (can only be used defensively).
M(N) v. A(A.T) facts
M made a promise to A to pay the of her mortgage in England if she moved to Canada to live with him with a view of marrying him. She moved to Canada, but he refused to pay her mortgage and the relationship fell apart. He loaned her 100,000 on a promissory note. She applied those funds to her mortgage. He kicked her out of his house. She refuses to repay promissory note.
M(N) v. A(A.T) girl’s argument
She alleges that due to his representation that he would pay off her mortgage, and reliance on that promise, that he was estopped from enforcing the promissory note against her
M(N) v. A(A.T) dudes argument
didn’t have a legal relationship that estoppel could have been built. Bare promise couldn’t be enforced because no mutual consideration bw parties
M(N) v. A(A.T) issue
Is estoppel a cause of action in Canada where there is no pre-existing legal relationship?
M(N) v. A(A.T) ratio
Estoppel can apply only where there is an existing legal relationship
is “shield not a sword” still ture?
More recent cases have shown inconsistency in the law on this point
