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8/2/2019 Case Chart Complete

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[1]Canadian Dyers Ass. Ltd. v.Burton(1920) 47 O.L.R. 259 (H.L.)

There can be no contract of sale unless there can be found an offer to sell and anacceptance of the offer.

A mere quotation of price does not constitute an offer to sell; it is no more than aninvitation to treat.

The courts will look at the language used in the light of the circumstances in which it isused and into the subsequent actions of both parties to determine whether what is said bythe seller is a mere quotation of price or an offer to sell.

Formation: Offer &Invitation to Treat

[2]Pharmaceutical Society v.Boots[1953] 1 Q.B. 401, [1953] All E.R.482 (C.A.)

The general assumption in the case of retail self -service sales is that placing goods onshelves is an invitation to treat.

An offer and acceptance take place at the cashier when a customer offers to buy and acashier accepts the offer.

Formation: Offer &Invitation to Treat(retail sale)

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

An offer in a supermarket sale was held to be made by the customer at the cash desk andthe contract was held to be formed when a cashier took the money.

Note that the S.C.C. overruledR. v.Dawoodon the criminal law issue inR. v.Milne[1992] 1 S.C.R. 697, saying that property does not pa ss for the purpose of the criminal lawif the law of property creates a right of recovery. UnderR .v. Milne, actions such as

Dawoods would result in a criminal conviction.

Formation: Offer &Invitation to Treat(retail sale)

[4]Goldthorpe v.Logan[1943] O.W.N 215, [1943] 2 D.L.R.519 (C.A.)

The general assumption is that advertisements published in newspapers are invitations totreat , 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 heldthat Logans electrolysis ad was an offer to the public at large.

Formation: Publicoffer or invitation

to treat

[5]Blairv. Western Mutual BenefitAssn.[1972] 4 W.W.R. 284

In general, in order to be binding an offer has to be communicated to an offeree and it hasto be intended as an offer.

A bare resolution without advice, formal or otherwise, cannot be considered ipso facto tocreate or indicate an intention to create a legal obligation capable of acceptance.

Formation:Communication of

Offer,

Intention to create

legal obligations

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

An ad was held to be a unilateral contract, an offer to the public at largeto everyone whodoes something (a guarantee in an ad was held to be an indication of the intention to createlegal obligations).

An ordinary rule of law is that acceptance of an offer requires the offeror to be notified inorder that the two minds may come together.However, in the case of a unilateral contract, an offer is made to the public but thecontract is not concluded with everybody (all the world). It is only formed with thatlimited portion of the public who come forward and perform the condition on the faith ofthe advertisement(following the indicated method of acceptance).

Formation:Communication ofOfferpublic offerto anyone who doessomething;Communication of

Acceptance;

Unilateral

Contracts


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[7]Williams v. Carwardine(1883) 4 B. & Ad. 621, 110 E.R.590 (K.B.)

The court held that in the case of rewards (or an offer to anyone who can give theinformation 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 actinquestion.

The case does not give offer-acceptance analysis but deals with human motives.


Offerpublic offer

to anyone who doessomething

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

In contrast with Williams v. Carwardine, the court held that the defendant was not entitledto the rewardbecause he did not act in reliance on the offer but for other reasons (to clearhimself from a false accusation).

Reconcile with Williams v. Carwardine by noting that in a bi-lateral contract knowledge isrequired (to enable meeting of the minds), but motive is irrelevant.


Offerpublic offer

to anyone who does

something

[9]

Harvela Investments Ltd. v.RoyalTrust Co. of Canada

[1986] A.C. 207, [1985] 2 All E.R.966 (H.L.)

Whether an invitation from a seller to prospective buyers was to be construed as aninvitation to participate in a fixed bidding sale or in an auction sale depended on thepresumed intention of the seller as deduced from the express provisions of the invitation tobid (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 receivedfrom both Harvela and Sir Leonard, the obligation of the bank (the vendors) was to sell theshares to the promisor whose offer was the highest and any obligation to the other tendererunder the other unilateral contract came to an end.


- tenders

[10]R. v.Ron Engineering &Construction(Eastern) Ltd.[1981] 1 S.C.R. 111, 13 B.L.R. 72

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 topotential tenderers to make offers.

The tender call is the offer and the bid submission is the acceptance of that offer whichleads 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 thetenderer (not to withdraw from the bid) and the owner (to treat tenderers fairly and in goodfaith).

Contract B is the construction contract to be formed between the owner and the successfultenderer.


- tenders

[11]

M.J.B. Enterprises Ltd. v. Defence

Construction (1951) Ltd)

[1999] 1 S.C.R. 619

The submission of a tender in response to an invitation to tender may give rise tocontractual obligations (contract A), quite apart from the obligations associated with theconstruction contract to be entered into upon the acceptance of a tender (contract B). But itis always possible that contract A does not ar ise upon the submission of a tender (if thetender is invalid).

The invitation for tenders may be characterized as an offer to consider a tender, if thattender is valid.

The submission of the tender is good consideration of the owners promise, as the te nderwas of benefit to the owner, prepared at a not an insignificant cost and accompanied by thebid security.


- tenders


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The privilege clause is only one term of contract A and must be read in harmony with therest of the tender documentsit does not override the obligation to only accept compliantbids.

[12]Double N. Earthmovers Ltd v. Cityof Edmonton 2007 SCC 3

The owner does not have a duty to investigate as to whether a submitted bid is compliant orto 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 furtherobligations to unsuccessful bidders


- tenders

[13]Livingstone v.Evans[1925] 3 W.W.R. 453, [1925] 4D.L.R. 769 (Alta S.C.)

An offer that has been rejected is thereby ended and it cannot be afterwards acceptedwithout 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 dependant upon considering all surroundingcircumstances.

Formation:Acceptance

counter-offer;

rejection and

counter offer

[14]Dawson v. Helicopter Exploration

Co. [1955] S.C.R. 868

In order to avoid problems with contract formation (and revocation of offer) courts shouldtreat offers as calling for bilateral rather than unilateral action when the language can befairly so construed

Where acceptance is not expressly given the question of whether the language usedamounts to acceptance will be a matter of construction of the court which may includetaking into consideration conduct of the acceptor

Formation: offerand acceptance;unilateral and

bilateral contracts

[15]

Butler Machine Tool v.Ex-cell-oCorp.[1979] 1 W.L.R. 401, 1 All E.R.965 (C.A.)

Lord Denning restated the traditional last shot formula for the resolution of the battle of theforms, identifying several possibilities for courts:

1.Last shot: a contract is concluded upon the terms of the last document sent by one of theparties that was not objected to; 2. First shot: a contract is concluded upon the terms of thefirst document; 3.All shots count and the court must discover its terms on an objectivebasis: 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.


counter-offer;

battle of forms

[16]Tywood Industries v. St. Ann-Nackawic Pulp & Paper(1979) 100 D.L.R. (3d) (Ont. H. C.).

Follows the test inButler Machine that in a battle of the forms the court will examine all ofthe 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 thedocuments.

The court only considered the terms on the face of the documents. The other partysattention must be drawn to the important terms, else unconscionable.


counter-offer;

battle of forms

[17]Felthouse v.Bindley(1962) 11 C.B. (N.S. 869, 142 E.R.1037 (Ex. Ch.)

Silence does not amount to acceptance. Even though the nephew (seller) might have intended to sell, he never communicated this

intention to his uncle (buyer).

In general, the offeror is in control of the mode of acceptance but the courts are reluctant toFormation:Communication of

Acceptance


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allow silence to be specified as the mode of acceptance.

[18]Saint John Tug Boat Co. v. Irving

Refinery Ltd. [1964] S.C.R. 614

The conduct of an offeree, unaccompanied by any verbal or written undertaking, couldunder certain circumstances (for example, continuing serviced on terms previously agreed)be reasonably constructed as valid acceptance


Acceptance

[19]Eliason v.Henshaw(1819) 4 Wheaton 225, 4 U.S. (L.Ed.) 556

General rule re-emphasized: an offer of a bargain by A to B imposes no legal obligationupon 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 therequested manner, there is no contract (Mirror image rule).


Acceptance

[20]Brinkinbon v. Stahag Stahl[1983] 2 A.C. 34 [1982] 1 All E.R.293 (H.L.)

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 practiceof 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) appliesto instantaneous communications such as phone or telex or facsimile.


Acceptance

Instantaneous

communication

[21]Household Fire v. Grant

(1879) 4 Ex. D, 216 (C.A.)

The court upheld the general mailbox rule in situations where the acceptance is lost in thepostand 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 dissentrejected this and applied the recipient rule.


Acceptancemailed acceptance

[22]HolwellSecurities v.Hughes[1974] 1 W.L.R. 155, 1 All E.R.161 (C.A.)

The postal rule should only apply if it does not lead to " manifest inconvenience andabsurdity".

The postal rule does not apply if the express terms of the offer specify that the acceptancemust reach the offeror. The requirement for notice was held to invoke the recipient rule.


Acceptance

mailed acceptance

[23]Yates Building Co. v. Pulleyn &

Sons Ltd. (1975) 119 SJ 370

The method of acceptance isnt essential so long as the acceptance is received at the properplace 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 determinewhether it is essential or not.


Acceptance

mailed acceptance

[24] Rudder v. Microsoft Corp.[1999] O.J. 3778

Terms of a contract entered into on the internet can be displayed on multiple pages. Usersare expected to follow the links and become familiar with all terms before accepting theterms of the contract.

Clicking the I agree button results in formation of a valid contract.Formation:Communication of

Acceptance

[25]Byrne v. Van Tienhoven(1880) C.P.D. 344

The mailbox rule does not apply to revocationrevocation must be received by the offereeto be effective.

Formation:Termination of

Offer - Revocation

[26]Dickinson v.Dodds(1876) 2 Ch. D. 463 (C.A.)

The general principle is that if a person who makes an offer dies, the offer cannot beaccepted after they are dead.

The court held that an offer could be revoked by indirect communication applying the samegeneral rule logicthat is, once the person to whom the offer was made knows that theproperty has been sold to someone else, it is too late for them to accept the offer and thecontract is impossible to make.


Offer - Revocation


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A promise to hold an offer open is not binding unless have consideration or a deed. Equitycannot be applied when a third party has acquired rights.

[27]

Errington v.Errington and Woods

[1952] 1 K.B. 290, [1952] 1 AllE.R. 149 (C.A.)

Legal consequences of family arrangements are difficult to ascertain. Unilateral contracts are formed when all conditions of the offer are met. In general, unilateral contracts can be revoked anytime prior to complete fulfillment, but

the court held that in this case a unilateral contract could not be revoked by the promisoronce the promesee entered on performance of the act (but it would cease to bind the offerorif performance was left incomplete and unperformed).

Formation:

Termination ofOfferUnilateral

contracts

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

An offer will lapse if it is not accepted within a time limit determined by the offeror, or if atime 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 thenormal 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.


OfferLapse of

Time

[29]

Manchester Diocesan Council v.Commercial and General

Investments Ltd.

[1970] 1 W.L.R. 241, [1969] 3 AllE.R. 1593 (Ch.D.)

If an offeror has prescribed a particular method of acceptance, but not in terms insistingthat it be the only mode of acceptance, an acceptance communicated to the offeror by anyother 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 timelimit for acceptance, the offer must be accepted within a reasonable time to make acontract.


OfferLapse of

Time

[30]Kanitz v.Rogers [2002] O.T.C. 143Ontario Superior Court

A contract for Internet service was a take it or leave it contract. The original agreementallowed for changes to the contract and given the alert message on the main page it i sreasonable to expect a customer who uses the Internet to go further than the main page ofthe website and check for changes to the contract.

There was a clear inequality of bargaining position of the parties, however notice of theamendment was not unreasonably buried in the agreement, but was set out in plainlanguage without legalese.

The arbitration clause was held not unconscionable as both parties are obliged to arbitrateand resulting contractual arrangements were not improvident.

Formation: On-linecontract -

reasonable notice

Unconsionability:arbitration clause

[31]Nicolene v. Simmonds[1953] 1 Q.B. 543, [1953] 1 AllE.R. 822 (C.A.)

Lord Denning held that a clause which is meaningless can often be ignored, whilst stillleaving the contract good; whereas a clause which has yet to be agreed may mean that thereis 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 precisemeaning.

A meaningless clause has to be clearly severable from the rest of the contract.

Formation:Certainty of Terms

[32]May & Butcherv.R.[1934] 2 K.B. 17 (H.L.)

To be a good contract there must be a concluded bargain which settles everything that isnecessary to be settled and leaves nothing to be settled by later agreement between the



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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 relevantterms, but it is not acceptable to agree that the parties will in the future agree upon a matter

which is vital to the contract.

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

Court of Appeal with great regret upheld May & Butchersgeneral rule that if there areany essential terms of a contract of sale undetermined, and therefore to be determined by asubsequent contract, there is no enforceable contract.


[34]Hillas v.Arcos(1932) 147 L.T. 503 (H.L.)

House of Lords took a more modern approach: Business men often record the mostimportant agreements in crude and summary fashion; modes of expression sufficient andclear 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 tooastute or subtle in finding defects.


[35]Foley v. Classique Coaches Ltd.[1934] 2 K.B. 1 (C.A.)

Interpreted the general principles of H.L.s decision in Hillas to mean that each case shouldbe decided on the construction of the particular document.

Held that an agreement to agree on price from time to time was certain enough since theparties believed they had a contract and had acted for 3 years as if they did i.e. there wasalready partial performance: The land had been transferred and a portion of the sale of gasagreement had been performed.


[36]

Courtney and Fairbairn v. TolainiBros.[1975] 1 All E.R. 716, [1975] 1W.L.R. 297 (C.A.)

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.


[37]Empress v.Bank of Nova Scotia[1991] 1 W.W.R. 537

The court will try, wherever possible, to give the proper legal effect to any clause that theparties 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 notsupply machinery (e.g. arbitration) for applying the formula, the courts will supply (be) themachinery 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 theformula, 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 isunworkable), in this case there was an implied term requiring good faith negotiations forthe renewal of the rental agreement.


[38]Mannpar Enterprises Ltd. v.Canada[1997] 33 B.C.L.R. (3d) 203 (S.C.)

The court held that the renewal clause in the rental contract was a mere agreement toagreethe contract did not provide a formula or objective measure to determine rent (suchas fair market value) or a mechanism to apply the formula.



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[39]Bawitko Investment Ltd. v. KernelsPopocorn Ltd(1991) 79 D.L.R. (4

th)

97(Ont. C.A.)

The oral agreement in contemplation of a formal written agreement not enforceable due tothe lack of certainty; it is a contract to make a contract


[40]Wellington City Council v.BodyCorporate 51702

[2002] 3 N.Z.L.R. 486 (C.A.)

The process contract or the agreement to negotiate in good faith is unenforceable for thelack of certainty

Formation:

Certainty of Terms

[41]Wallace v. Allen (2009) ONCA 36 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 maincontract, if the terms of LOI are precise and complete, and if the parties after signing LOIconducted themselves as if the deal is completed.


and letters of intent

[42]ProCD v Matthew

(1996) 86 F. 3d 1447

Shrinkwrap licenses are enforceable unless their terms are objectionable on groundsapplicable to contracts in general.

If the buyer does not want to be bound by the terms contained inside the box the buyer hasthe right to return the goods promptly (unused) for a refund, but will otherwise be bound bythose terms.


[43]Balfourv.Balfour[1919] 2 K.B. 571

Atkin L.J.: the common law does not regulate agreements between spousesTheconsideration that really obtains from them is that natural love and affection.

There is a strong presumption that family agreements are not intended to produce legalconsequences.

Enforcement ofPromises: Intentionto Create Legal

Obligation

[44]Rose and Frank v. J .R. Crompton

Bros., [1923] 2 K.B. 261 (C.A.)

There is a strong presumption that business agreements are intended to produce legalconsequences.

However, if there is a clear and definite expression of the business parties that they do notintend to be subject to legal jurisdiction, there is no reason in public policy why effectshould not be given to their intention.


Obligation

[45]Jones v. Padavatton[1969]2 All ER 616, [1969] 1 WLR

328 (C.A.)

Held that the arrangement between mother and daughter was throughout a familyarrangement depending upon the good faith of the parties in keeping the promises madeand not intended to be a rigid binding agreement;

The family arrangement was held far too vague and uncertain to be itself enforceable as acontract.


Obligation

[46]Toronto Dominion Bankv.LeighInstruments (1999) 178 D.L.R. (4

th)

634 (Ont. C. A.) A comfort letter is a form of undertaking that is deliberately designed with the intention not

to create enforceable obligations.


Obligation

[47]The Governors of Dalhousie

College at Halifax v. The Estate of

Arthur Boutilier, Deceased[1934]S.C.R. 642

For a promise to be binding as a contract it has to be supported by a good and sufficientconsideration which moves from the promisee at the time of and in exchange for thepromise which is sought to be enforced

Enforcement ofPromises:Consideration

[48]Eastwoodv. Kenyon(1840) 11 Ad. & E. 438, 113 E.R.

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 Enforcement ofPromises: Past


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482 (Q.B.) conferred and when the benefit was not conferred at the request of the promisor. Consideration

[49]Lampleigh v.Brathwait, (1615)Hobart 105, 80 E.R. 255 (K.B.)

Past consideration may be a good consideration for a subsequent promise if the benefit wasconferred at the request of the promisor.

Enforcement: PastConsideration

[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.

Enforcement of

Promises: Nature ofConsideration

[51]Callisher v. Bischoffsheim

(1870) l L.R. 5

If an agreement is made to compromise a disputed claim, forbearance to sue in respect ofthat claim is a good consideration

If a person bona fide believes he has a reasonable ground for suing, his forbearance to suewill constitute a good consideration

Enforcement ofPromises:Compromise and

Consideration

[52] Ward v. Byham, [1956] 1 WLR 496 Consideration can be anything beyond a basic legal duty. Enforcement ofPromises: Nature ofConsideration

[53]

B. v.Arkin[1996] 8 W.W.R. 100 (Man.Q.B.);

affirmed [1996] 10 W.W.R. 689(Man. C.A.)

A forbearance to sue is good consideration and monies paid in exchange for a promise notto 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 claimis known to be invalid).

Enforcement of

Promises:Forbearance

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

Past consideration can sometimes be good consideration if: 1. The act was done at thepromisors 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 thirdparty can be valid consideration.

Duress, whatever form it takes, is a coercion of the will so as to vitiate consent; duress mayrender a contract voidable, but this must be claimed promptly.

The commercial pressure alleged to constitute duress must be such that the victim enteredthe contract against their will, they had no alternative course open to them, and they wereconfronted with coercive acts by the party exerting the pressure.

Enforcement ofPromises: Pre-existing Legal

DutyDuty Owed

to a Third Party;

Economic Duress;

Past Consideration

[55]

Gilbert Steel v. UniversityConstruction Ltd.

(1976) 12 O.R. (2nd

.) 19, 67 D.L.R.(3d) 606 (C.A.)

A unilateral promise to increase price is unenforceable because there is no clear agreementto rescind the existing contractthe new provisions were unilaterally imported into thedocument and accordingly, consideration of the oral agreement was not found in a mutualagreement to abandon the earlier written contract and assume the obligations under the neworal one.

In Stilk v.Myrick (1809), when two out of 11 sailors deserted the ship, the captainpromised 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 topay the extra money because the obligation to sail the ship back was not a validconsideration for the subsequent agreement which varied the original one.


DutyDuty Owed

to the Promisor;

Reference to Stilkv.Myrick (1809)170 E.R. 1168

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

Pre-existing legal duty owed to the promisor may be a valid consideration for a subsequentpromise if the promisor derives practical benefit from the agreement and if the subsequent

Enforcement ofPromises: Pre-


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promise is not given under economic duress (note Glidewells 6 point test). existing LegalDutyDuty Owed

to the Promisor

[57]Greater Fredericton Airport

Authority Inc. v. NAV Canada

(2008) N.B.J. No. 108 (C.A.)

Robertson J.A. held that it is time to build upon UK decision in Williams v. Roffey andaccepted that post-contractual modification, unsupported by consideration, may be

enforceable so long as it is established that the variation of contracts was not procuredunder economic duress.

Commercial reality needs to be recognized and consideredthat is, that the partiesfrequently varied and modified their contractual obligations and that the law has to protecttheir legitimate expectations that the modifications or variations will be regarded asenforceable.


DutyDuty Owed

to the Promisor

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

The promise to pay a sum which the debtor was already bound to pay was not goodconsideration (confirmsFoakes v. Beer)

Williams v. Roffey principle not applicable where the existing obligation is to pay moneybut rather only where the existing obligation is to supply goods or services

Enforcement ofPromises: DutyOwed to the

Promisor

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

The traditional common law position is that an agreement to accept a smaller sum insatisfaction 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.


DutyDuty Owed

to the Promisor

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

In the case of the debtor who owed the creditor a large sum under a series of promissorynotes as full payment of the debt, as long as the debtor continued to perform his obligationand kept paying by post-dated cheques as subsequently agreed between the two, thecreditors right to sue on the notes was suspended.

Enforcement ofPromises:Part payment of

debt

[61]

Hughes v. Metropolitan Railway

Co. (1877) 2 A.C. 439 (H.L.)

[I]t is the first principle upon which all Courts of Equity proceed, that if parties who haveentered into definite and distinct terms involving certain legal resultscertain penalties orlegal forfeitureafterwards by their own act or with their own consent enter upon a courseof negotiation which has the effect of leading one of the parties to suppose that the strictrights arising under the contract will not be enforced, or will be kept in suspense, or held inabeyance, the person who otherwise might have enforced those rights will not be allowedto enforce them where it would be inequitable having regard to the dealings which havethus taken place between the parties

Enforcement ofPromises: Waiverand Promissory

Estoppel

[62]

Central London Property v.HighTrees House

[1947] 1 K.B. 130, [1956] 1 AllE.R. 256

Lord Denning relied on the doctrine of promissory estoppel and held that a promiseintended to be binding, intended to be acted on and in fact acted on, is binding even if thereis no consideration. Estoppel was used as a shield by tenants against the landlord whowanted to enforce a higher rent.


Estoppel

[63]John Burrows v. SubsurfaceSurveys

The passive conduct of the appellant was not taken by the court as a waiver of his rights toseek enforcement of the contract, but only as friendly indulgences.

Enforcement ofPromises: Waiver


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10

[1968] S.C.R. 607, 68 D.L.R. (2nd)354

When there is no consideration or deed, any relaxation of terms must be clear andunequivocal.

and Promissory

Estoppel

[64] D.C. Builders v.Rees[1966] 2 Q.B. 617

A creditor is barred from enforcing their legal rights only when it would be inequitable forthe creditor to insist on them.

Where there has been a true accord, under which the creditor voluntarily agrees to accept alesser sum in satisfaction, and the debtor acts on that accord by paying the lesser sum andthe creditor accepts it, then it is inequitable for the creditor afterwards to insist on thebalance, but they are not bound if there was no true accord.

A promise made under duress should not be estopped.

Enforcement of

Promises: Waiverand PromissoryEstoppel

[65]Combe v. Combe[1951] 2 K.B. 215, 1 All E.R. 767(C.A.)

Lord Denning explained his own principle set out in High Trees: a) promissory estoppelcannot 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 aparty from insisting upon his strict legal rights when it would be unjust to allow him toenforce them.


Estoppel

[66]Walton Stores (Interstate) Ltd. v.Maher(1988) 62 A.L.J.R. (H.C.)

Australian court made an exception to the general rule that promissory estoppel cannot beused 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 ifthere was a reliance on the promise that was a reasonable expectation and if a departurefrom the promise is unconscionable behavior.

Enforcement of

Promises: Waiverand Promissory

Estoppel

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

There is little evidence in Canadian authorities to indicate a move toward a moregenerous approach to promissory estoppel and in Walton there was a reasonable

expectation of a legal obligation.


Estoppel

[68] W.J. Alan & Co. v.El Nasr Export& Import Co. [1972] 2 Q.B. 189

Denning on waiver: if one party by its conduct leads another to believe that the strict rightsarising under the contract will not be insisted on, intending that the other should act on thatbelief and he does act on it, then the first party will not afterwards be allowed to insist onthe 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 isgiven; but not if that would be inequitable

Waiver would operate even if there is no detriment for the parties as long as there is somealteration of the parties positions and one party acts in reliance on waiver

Enforcement ofPromises:Promissory

Estoppel and

Waiver

[69]

Socit Italo-Belge Pour Le

Commerce v. Palm and VegetableOils (The Post Chaser) [1982] 1 AllE.R. 19 (Q.B.)

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 Enforcement ofPromises:

Promissory

Estoppel and

Waiver

[70] Saskatchewan River Bungalows v.Maritime Life Assurance

Waiver will be found where the evidence demonstrates that the party waiving had (1) a fullknowledge 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 itoperates


Estoppel and


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Waiver

[71]International Knitwear Architects

Inc. v. Kabob Investments

The notice to revive waived obligations could be reasonable in length even if it is not adated notice


Estoppel and

Waiver

[72]Petridis v. Shabinsky (1982) 132D.L.R. (3d) 430 (Ont. H.C.)

Promissory estoppel could only apply when there was a legal relation between the parties Enforcement ofPromises:Promissory

Estoppel

[73]Robichaudc. Casse Populaire(1990) 69 D.L.R. (4

th) 589

(N.B.C.A.)

Promissory estoppel used both as a shield and as a sword Enforcement ofPromises:Promissory

estoppel

[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 besued on that contract.

Love and affection are not sufficient consideration.Privity of Contract:Third Party

Beneficiaries

[75]Dunlop PneumaticTyre Co. v. Selfridge& Co. Ltd. [1915] A.C. 847(H.L.)

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 reallycontracted as his agent.

Privity of Contract:Third Party

Beneficiaries

[76]

Besweckv.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.)

Lord Denning MR finds an equitable exception to general rule of privity where the thirdparty is in a trustee relationship - in this case the widow sued in her capacity as executrix ofthe estate, and also in her personal capacity (Denning held that hoint claim was good).

Accordingly, the original contracting parties were not able to change the contract withoutthe consent of the third party.

The Court of Appeal ordered specific performance, upheld by HL. Lord Reid for the House of Lords finds that although the widow in her personal capacity

had no right to sue, she had a right as administratrix of her husbands estate

Privity of Contract:Ways for ThirdParties to Acquire

Benefits

[77]

London Drugs Ltd. v. Kuehne &Nagel International Ltd. [1992] 3

S.C.R. 299, 97 D.L.R. (4th

) 261

Iacobucci J held employees were protected from clause limiting their liability even thoughthey were not parties to the contract.

The employee could rely on the limitation of liability clause if such clause expressly orimplicitly extends its benefits to the employees and if the employees have been acting inthe course of their employment and performing the very services provided for in thecontract between their employer and the customer when the loss occurred

Limited Exception to privity, employees may use as shields.

Privity of Contract:ExceptionsEmployees

[78]

Edgeworth Construction Ltd. v.N.D. Lea & Associates Ltd. (1993)

107 D.L.R. (4th

) 169 (S.C.C.)

McLachlin J held that Engineers were not protected from clause limiting their liability in atender as they were not parties to the contract.

Distinguished the exception inLondon Drugs as specific to powerless employees who werethe only ones who could do the work. Here the engineering firm could have taken measures

Privity of Contract:Exceptions


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to protect themselves (ie disclaimer) unlike the employees in London Drugs. No exceptionto privity rule found in this case.

[79]Fraser River Pile & Dredge Lt. v.

Can-Dive Services. [1997] 39

B.C.L.R. (3d) 187 (B.C.C.A.)

FollowedLondon Drugs analysis re: application of limitation of liability clause onemployees 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 otherthan employment contracts as long as the contract explicitly or implicitly extends itsbenefits to the third party and if the third party has been performing the activitiescontemplated in the contract

Privity of Contract:Exceptions otherthan Employees

[80]Redgrave v.Hurd(1881) 20 Ch.D. 1 (C.A.)

A contract can be rescinded (set aside) due to a material false representation: a man is notto 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 acontract by a false representation.

Misrepresentationand Rescission:material

representation,

fraudulent

misrepresentation

[81]Smith v.Land & House PropertyCorporation

(1884) 28 Ch. D. 7 (C.A.)

In the case where the facts are equally well known to both parties, what one of them says tothe 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 bythe one who knows the facts best very often involves a statement of a material fact.

Misrepresentation

and Rescission:statement of

opinion or

misrepresentation

[82]Derry v. Peek(1889), 58 L.J. Ch.864, [1889] All E.R. Rep. 1

Fraudulent misrepresentation requires proof of a misrepresentation and that it was knownto 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 betrue or false. In 1889 type (c) was classified as fraudulent misrepresentation, but today (c)would likely be considered to be negligent misrepresentation.

Fraudulent

misrepresentation

[83]Kupchakv.Dayson Holdings(1965) 53 W.W.R. 65, 53 D.L.R.(2d) 482 (B.C.C.A.)

General rule: there is no rescission for misrepresentation if a 3rd party has acquired rights,or when restitutio in integrum is impossible, or if the action to rescind is not taken within areasonable 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 rescindsubmitted in timely fashion?

When rescission is impossible then the injured party may get monetary compensation (inthis case fair market value for the property plus interest).

Misrepresentationand Rescission:fraudulent

misrepresentation

[84]V.K. Mason Construction Ltd. v.The Bank of Nova Scotia (1985) 58N.R. 196 (S.C.C.)

The Supreme Court of Canada held that there was no contract between the bank and theplaintiff but that the bank was liable for negligent misrepresentationthe bank had aspecial 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 towasted expenses.

Misrepresentation:Negligent


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[85]S-244 Holdings Ltd. SeymourBuilding Systems Ltd. (B.C.C.A.)

In the case of innocent misrepresentation the court relying on Lord Denning (Leaf v.International Galleries) and Canadian case law held that rescission may be available despitethe execution of the contractexecution or performance is a relevant but not decisivefactor to be considered when deciding whether rescission should be denied because of theplaintiffs 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

allor nothing remedy.

Misrepresentationand Rescission:rescission when the

contract is

executed

[86]Heilbut, Symons & Co. v.Buckleton[1913] A.C. 30 (H.L.)

A person is not liable in damages for an innocent misrepresentation no matter in what wayor under what form the attack is made, therefore if rescission is not possible there is noremedy.

An affirmation at the time of sale is a warranty, provided it appears on evidence to be sointended, else it is only an innocent misrepresentation.

A collateral warranty must be proved strictly, not only the existence of such terms but theexistence ofanimus contrahendi must be clearly shown.

Misrepresentationand Rescission:innocent

misrepresentation;

breach of warranty

[87]

Dick Bentley v. Smith Motors

[1965] 1 W.L.R.

Lord Denning: if a representation is made in the course of dealings for a contract for thevery 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 isprima facie ground for inferring that the representationwas intended as a warranty.

The maker of the representation can rebut this inference if they can show that it really wasan innocent misrepresentation, in that they were in fact innocent of fault in making it, andthat it would not be reasonable in the circumstances for them to be bound by it.

Misrepresentation

and Rescission:innocent

misrepresentation;

breach of warranty

[88]Charbonneau v.Brawn(2002) 113 A.C.W.S. (3d) 620BCSC

Interpretation of a contract is an exercise in determining the intention of the parties in anobjective sense.

The court does not question what the parties subjectively intended, but instead ascertainswhat 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, orif an ambiguity emerges.

Misrepresentationand Rescission:breach of

warranty;Parol evidence rule:admissibility of

extrinsic evidence;

Interpretation ofcontract

[89]Leafv.International Galleries[1950] 2 K.B. 86, 1 All E.R. 693(C.A.)

Lord Denning held: rescission may be available in cases of innocent misrepresentation ifno other option is available and the innocent party behaved reasonably.

But, no rescission is available for innocent misrepresentation when the contract is executedand a reasonable time for a c laim lapses.

Distinction drawn between the quality of the painting (who painted it) and the substance ofthe painting (picture of Salisbury Cathedral). Only allow rescission if differs in substance.

Misrepresentationand Rescission:innocent

misrepresentation;

rescission and

lapse of time

[90]

Bank of B.C. v. Wren Developments(1973), 38 D.L.R. (3rd) 759(B.C.C.A.)

The court found that the banks failure to disclose material facts to the defendant (i.e. thatthere 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

Misrepresentationand Rescission:

omissions


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guarantee which he otherwise would not have signed (unilateral mistake induced bynegligent misrepresentation)

Omissions can be misrepresentation where the omissions are related to the material aspectsof the contract

[91] Hedley Byrne & Co. Ltd. v. Heller& Partners Ltd, [1964] A.C. 465

If a partys skill and judgment is foreseeably being relied upon, a duty is owed to take c arein making statements. If care is not taken, and injury results, the party that was relied uponwill be liable.

Special relationship must be shown.

Misrepresentation

and Rescission:negligent

misrepresentation

[92]Esso Petroleum v.Mardon[1976] Q.B. 801, 1 All E.R. 5 (C.A.)

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 representationby virtue thereof to another (advice, information or opinion) with the intention of inducingthe other to enter into a contract, they are under a duty to use reasonable care to see that therepresentation is correct. If they negligently give unsound advice or misleading informationand thereby induce the other side into a contract, they are liable in damages.

Breach of a collateral warranty gives the right to damages.

Misrepresentationand Rescission:concurrent liability

in contract and

tort; negligent

misrepresentation

[93]

Sodd Corp. v.N. Tessis (1977), 17O.R. (2d) 158

Liability for negligent misrepresentation may be found both in contract and tort wherethere is a special relationship creating a duty of care the defendant as a professionalaccountant and trustee in bankruptcy and the party submitting an accepted tender were insuch a relationship

Misrepresentationand Rescission:concurrent

Liability in Torts

and Contracts

[94]

B.G. Checo Intl Ltd. v.B.C. Hydro,[1993] 1 S.C.R. 12

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 majorityof SCC held that the mere fact that the parties have dealt with a matter expressly in theircontract does not mean that they intended to exclude all the rights to sue in relation to thatmatter (in this case, tort).

Misrepresentationand Rescission:concurrent

Liability in Torts

and Contracts

[95]Redican v Nesbitt[1924] S.C.R. 135

Rescission not allowed for innocent misrepresentation if the contract is executed unlessthe benefit provided differs in substance from that promised.

For fraudulent misrepresentation rescission may be granted even if the contract isexecuted

Impossibility of restitution will prevent rescission unless that impossibility has beencaused by the guilty party.

Misrepresentationand Rescission:Availability of

remedies

[96]Bank of BC v. Wren

(1973) 38 D.L.R. (3d) 759

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

Misrepresentationand Rescission:Enforcement of

terms

[97] Guarantee Co. of North America v. Limitation clauses may be valid even in the case of illegal rescission. Misrepresentation


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Gordon Capital Corp.

178 D.L.R. (4th

). 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 toassume that a loss of a type covered under the contract has occurred.

Rescission is a remedy available for misrepresentation, and is independent of whether ornot the guilty party accepts the rescission.

The effect of repudiation depends on the attitude of the non-repudiating party. If the non-repudiating party agrees that the contract should be dissolved, then the contract is at an endand there are no further obligations, but if the non-repudiating party wants to continue thecontract, they can reject the repudiation and sue for damages.

and Rescission:applicability of

exclusion clauses

and options for the

innocent party

[98]Harwish v.Bank of Montreal[1969] S.C.R. 515

The court upheld the traditional principle that any agreement collateral or supplementary tothe written agreement may be established by parol evidence, provided it is one which couldbe made as an independent agreement without writing and that it is not in any wayinconsistent with or contrary to the written agreement.

Parol Evidence Rule

[99]Bauerv.Bank of Montreal[1980] S.C.R. 102

Confirmation of the general principle that oral evidence which contradicts the main writtencontract is inadmissible under the parol evidence rule.

Parol Evidence Rule

[100]Gallen v.Butterley(1984) 53 B.C.L.R. 38, 25 B.L.R.314

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 inconsistentwith, or contradicts, the written terms.

Parol Evidence Rule

[101]Hong Kong Firv. Kawasaki KisenKaisha Ltd.

[1962] 1 All E.R. 474 (C.A.)

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 whichgive rise to damages only) there are intermediate terms-those which are neither conditionsnor warranties.

The test the court used to determine if the term was a condition or intermediate term is thenature of event and its practical effectdoes it deprive the party to perform of substantiallythe whole benefit of contract.

Classification ofTerms

[102]Krawchukv. Ulrychova(1996) 40 Alta. L.R. (3d) 196

The court appliedHong Kong Firtest and held that the gravity of the consequences of thebreach did not deprive the party to perform of substantially the whole benefit of thecontract; accordingly the court found only a breach of warranty and ordered damages (notrepudiation).

Classification ofTerms

[103]Wickman v. Schuler[1974] A.C. 235, 2 All E.R. 39(H.L.)

The contract should be interpreted as a whole and word condition should, on the facts ofthis case, be given an ordinary meaning not as a term which will entitle the innocent partyto repudiate the contract in the event of a breach.

If the parties intend to give a condition such an effect they must make that intention clear.Classification ofTerms

[104]Fairbanks v. Sheppard[1953] 1 S.C.R. 314, 2 D.L.R. 193

In certain circumstances the general rule (that there is no recovery for a contract to do workfor a lump sum until the work is fully completed) could be interpreted to mean that the

Discharge byPerformance or

Breach: Remedy


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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 whowants to recover must provide evidence from which any new contract to accept and pay forthe work done could be inferred.

for a party in

default

[105]Sumpterv.Hedges[1898] 1 Q.B. 673 (C.A.)

The general rule is that where there is a contract to do work for a lump sum, until the workis 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 aquantum meruitbasis from the defendants having taken the benefit of that work. But inorder that that may be done, the circumstances must be such as to give an option to thedefendant 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 uponwhich an inference of a new contract can be founded.

Discharge byPerformance orBreach: Remedyfor a party in

default

[106]

Stevenson v. Colonial Homes Ltd.,

[1961] O.R. 407 (C.A.)

To determine if the payment is a deposit or a part payment the court will look at theintention of the parties in the circumstances of each case as indicated by the actual words ofthe 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 as ide. However if the money is paid as apart payment on account of the purchase price then it is recoverable

Discharge byPerformance orBreach: cases of

uncompleted workwhen some money

was given before

the performance

started

[107]

Markland Associates Ltd. v.Lohnes(1973), 22 D.L.R. (3d) 493

Where the work was done, but badly, and the defects have been or can be remedied, thecourts tend to find that there has been substantial performance and that the builder shouldhave the agreed price less the cost of correcting the defects and omissions

Discharge byPerformance orBreach: cases oflump sum

contracts and

uncompleted work

[108]Machtingerv.Hoj Industries Ltd.[1992] 1 S.C.R. 986

A reasonable notice period is an implied term of an employment contract and the intentionof the contracting parties is not relevant to terms implied as a matter of law (but only toterms implied as a matter of fact).

The test for implication of a term as a matter of law is necessity or whether the term soughtto be implied is a necessary incident of the contract.

Standard FormContracts:Exclusion Clauses

[109]

Parkerv. South Eastern R.y. Co.(1877) 2 C.P.D. 416 (C.A.)

In ordinary cases where an action is brought on a written agreement which is signed by theparties the agreement is proved by proving the signature and, in the absence of fraud, it iswholly 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.


and unsigned

documentsticket


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The test to determine what constitutes reasonable steps is an objective testnot whetherthe party knew of the condition but whether the party imposing the condition did what wasreasonably sufficient to give the other party notice of the condition.

case

[110]Thornton v. Shoe Lane Parking Ltd.[1971] 2 Q.B. 163, 1 All E.R. 686(C.A.)

Lord Denning on the formation of contracts in a parking lot: the ticket is no more than avoucher 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 tothe entrance and by the movement of his car, turned the light from red to green, and theticket was thrust at him. The contract was then concluded and it could not be altered by anywords printed on the ticket itself.

The court should not bind a party by unusually wide and destructive exclusion clausesunless they are drawn to their attention in the most explicit way.

Standard Form

Contracts:Exclusion Clauses

and unsigned

documentsticket

case

[111]

McCutcheon v.David MacBrayene Ltd.[1964] 1 W.L.R. 125, 1 All E.R.430 (H.L.)

Previous dealings between the parties are relevant only if they prove (1)knowledge of theterms (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, itcan be imported into the 100th contract without an express statement, but without provingknowledge there is nothing.


and unsigned

documentsticket

case

[112]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 theagreement, regardless of the length of the ensuing relationship between the parties.


and unsigned

documents

[113]Tilden Rent-A-Car Co. v.Clendenning(1978) 18 O.R. (2d) 601 (C.A.)

In modern commercial practice, many standard form printed documents are signed withoutbeing read or understood and in many cases the parties seeking to rely on the terms of thecontract know or ought to know that the signature a party to the contract does not representthe true intention of the signer and that the party signing is unaware of the stringent andonerous provisions which the standard form contains.

The party seeking to rely on such stringent and onerous terms should not be able to do so inthe absence of first having taken reasonable measures to draw such terms to the attention

of the other party, and, in the absence of such reasonable measures, it is not necessary forthe party denying knowledge of such terms to prove either fraud, misrepresentation or nonest factum; what is reasonable is the question of facts in each instance.


and signed

documents

[114]Delaney v. Cascade River HolidaysLtd.(1983) 44 B.C.L.R. 24

In a split decision of the BCCA (Nemetz dissenting, Taggart concurring) McFarlane J. heldthat the language of the standard liability release must be interpreted and understoodhaving regard to the whole purpose of the relationship between the parties or the nature ofthe venture involved.

The purpose was to engage in what must have been intended to be an exciting and thrillingchallenge and such an intent was involved in the language of the release.


and signed

documents

[115]Schusterv.Blackcomb SkiingEnterprises Ltd. Partnership

Delaneys decision is followed and it is held that the 2 step test of requiring (1) reasonablesteps must be considered in examining whether the party relying on the unusual exclusion

Standard FormContracts:


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[1995] 3 W.W.R. 443 (B.C.S.C.) clause did what was necessary to bring it to the other partys attention and (2) that thepurpose of the relationship and the nature of the venture involvedmust be considered.

In examining the reasonable steps test the court referred to Karroll v. Silver StarMountain 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 toengage in such an activity and where and how the exclusion clause was represented werealso considered in the reasonable steps test The waiver was found to exclude liability.

Exclusion Clauses

and signed

documents

[116]Interfoto Picture Library v. Stiletto

[1989] Q.B. 433 The more onerous the condition of the contract, the more stringent is the duty to draw it to

the attention of the other party.


[117]Zhu v. Merrill Lynch HSBC

[2002] B.C.J. No. 2883 A disclaimer which is extremely broad and excludes almost a ll liability for any poor

performance may be unenforceable.


and signed

documents

[118]

Dell Computer Corp. v . Union des

consommateurs and Olivier

Dumoulin

[2007] SCC 34

The arbitration agreement is not null on the ground that it is found in an external clause thatwas 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 thebottom of the Configurator Page, this is consistent with industry standards. It can thereforebe concluded that the hyperlink was evident to defentand.

Furthermore, the Configurator Page contained a notice that the sale was subject to theTerms and Conditions of Sale, available by hyperlink, thus bringing the Terms andConditions expressly to defendants attention.

Standard FormContracts:Incorporation of

Terms

[119]Solway v Davis Moving and

Storage, [2002] O.J. 4760

A defendant will not be permitted to rely on a liability limitation clause if it would beunconscionable in the circumstances.


and signeddocuments

[120]Karsales v. Wallis[1956] 1 W.L.R. 936, 2 All E.R.866 (C.A.)

Lord Denning formulates his doctrine of fundamental breach: A party cannot rely on anexemption 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 contractdisentitles the party from relying on the exemption clause.

This doctrine has been overruled by the House of Lords in Photo Production v. SecuricorTransport Ltd.

FundamentalBreach: LordDennings doctrine

of fundamentalbreach

[121]Photo Production v. SecuricorTransport Ltd.

Confirms the Suisse Atlantique case ruling that the question whether, and to what extent, anexclusion clause is to be applied to a fundamental breach, or a fundamental term, or indeed

FundamentalBreach: Lord
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[1980] A.C. 827, 1 All E.R. 556(H.L.)

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 fundamentalprinciple of the common law of contract that parties to a contract are free to determine forthemselves what primary obligations they will accept.

If the exclusion clause is clear and unambiguous it will protect the party relying on it fromliability.

Dennings doctrine

overruled

[122]

Hunter Engineering v. SyncrudeCanada Ltd.

[1989] 1 S.C.R. 426, 57 D.L.R. (4th)

321

Dickson J. (relying on Photo Production and inclined to lay the doctrine of fundamentalbreach to rest) held that if on its true construction the contract excludes liability for the kindof breach that occurred, the party in breach will generally be saved from liability, unlessthe contract or the clause is unconscionable, as might arise from situations of unequalbargaining power between the parties.

Wilson J. held that the test for whether an exclusion clause or a contract will be enforced isone of unreasonableness as between the parties and in light of the nature of the breach.

FundamentalBreach: Canadiancourts followPhoto

Production

[123]

Fraser Jewellers Ltd. v.DominionElectric Protection Co.

(1997) 148 D.L.R. (4

th

) 496 (Ont.C.A.)

Refers to bothHunterand Photo Production cases in holding that an exclusion clauseshould be enforced according to its true meaning provided that it is not unconscionable(Dickson J. inHunter) or unfair or unreasonable (Wilson J. in Hunter).

If an exclusion clause is not obscure, if it i s visible, clear and unambiguous, and not theresult of abuse of bargaining power, there is no basis for the court to disturb the agreementmade between the parties.

FundamentalBreach: Canadian

courts follow PhotoProduction

[124]Paradine v.Jane(1647) Aleyn 26, 82 All E.R. 897

Court held that the military occupation did not frustrate the lease contract (strict pacta suntservanda): "When the party by his own contract creates a duty or charge upon himself, heis 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 isto have the advantage of casual profits, so he must run the hazard of casual losses....).

Before Doctrine ofFrustration

[125]Taylorv. Caldwell(1863) 3 B&S 826, 122 E.R. 309(Q.B.)

The court confirmed the general principle of contract law that a party to a contract had toeither 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 conditionto excuse the parties in the case that performance becomes impossible without default ofthe contractor... [T]he parties contracted on the basis of the continuedexistence of theparticular person or chattel.

Doctrine of

Frustration: Excusefor non-

performance

contract voidable

[126]

Davis Contractors Ltd. v. FarehamUDC[1956] A.C. 696, [1956] 2 All E.R.145 (H.L.)

Frustration occurs whenever the law recognizes that without default of either party acontractual obligation has become incapable of being performedbecause thecircumstances in which performance is called for would render it a thingradicallydifferent from that which was undertaken by the contract....

The event must be unforeseeable and must occur after the formation of the contract. It isnot hardship, inconvenience or material loss which calls the principle of frustration

into play,buta change in the significance of the obligation such that the thing undertaken

Frustration: Excusefor non-

performance


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would, if performed, be a different thing from that contracted for.

[127]

Capital Quality Homes Ltd. v.Colwyn Construction Ltd.

(1975) 9 O.R. (2d) 617, 61 D.L.R.(3d) 385 (C.A.)

"There can be no frustration if the supervening event results from the voluntary act of oneof the parties or if the possibility of such an event arising during the term of the agreementwas contemplated by the parties and provided for in the agreement."

Intervening legislation which was not within the contemplation of the parties and whichdestroys the very foundation of the agreement does discharge both parties fromperformance.

Frustration:intervening

legislation

[128]

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.)

The court interpreted strictly and narrowly the terms of the contract and held that "the veryfoundation of the agreement" had not been destroyed.... The agreement was in no sensemade 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 inpurchasing land should always contemplate the effects of intervening zoning legislation.

Frustration:Intervening

legislation

[129]Fibrosa Spolka v. Fairburn[1943] A.C. 32

The House of Lords overruled the old common law rule that rights which had accruedbefore frustration remained unenforceable (as held in the coronation case Chandlerv.Webster) deciding that in this case the Polish company could recover back the money paid

before frustration because ofthe total failure of consideration(the machine had not beendelivered).

Frustration:Consequences of

supervening

illegality

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

The Privy Council held that duress, whatever form it takes, is a coercion of the will so asto 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.

Duress: Economic

Duress

[131]Gordon v.Roebuck(1992) 9 O.R. (3d) 1, 92 D.L.R. (4 th)670 (C.A.)

The court held that the pressure exerted wasjustifiedand that the appellant had the onus ofproving that Roebuck was not entitled to the amounts required in the agreement.

Duress: JustifiableEconomic Duress

[132]

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.)

Affirmed the requirements for duress set out in Pao On and Gordon. Duress: EconomicDuress

[133]Geffen v. Goodman Estate[1991] 2 S.C.R. 353, 81 D.L.R (4 th)211

Wilson J. said thatthe plaintiff must establish the presence of a dominant relationship inorder to give rise to a presumption of undue influence. Then the onus moves to thedefendant to rebut it (to show that the plaintiff acted full, free and informed and that hehad independent advice. The magnitude of the disadvantage or benefit is cogent evidencegoing to the issue of whether undue influence was exercised).

Undue Influence:Potentially

dominant

relationships


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[134]Royal Bank of Scotland v Etridge

(No. 2), [2001] 3 W.L.R. 1021

The creditor must always take reasonable steps to bring home to the individual guarantorthe risks that he is running by standing as surety.

A transaction that is not reasonably expected to occur between the parties i s necessary togive rise to a rebuttable evidential presumption of undue influence.

The term 'manifest disadvantage' causes confusion and should be discarded.

Undue Influence:Potentially

dominant

relationships

[135]Morrison v. Coast Finance Ltd.(1965) 54 W.W.R. 257, 55 D.L.R.(2d) 710 (B.C.C.A)

A presumption of unconscionability requires: a)proof of inequality in the position of theparties arising out of the ignorance, need or distress of the weaker , which left them in thepower of the stronger, and b) proof of substantial unfairness of the bargain in favour ofthe stronger.

The stronger party must rebut the presumption by proving that the bargain wasfair, justand reasonable.

Unconscionability:presumption of

unconsionability

[136]Marshall v. Canada Permanent

Trust Co. (1968) 69 D.L.R. 2d) 260

The court held that the defendant was entitled to rescission of the contact for sale of landbecause 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 plaintiffwas aware of defendants

incapacityit was enough that the plaintiff was aware that the price agreed upon by thedefendant was considerably less than the actual value of that land and of any comparableland in the same general area. The onus was on the plaintiff to show that the price given forthe land was the fair price and he failed to establish that

Unconscionability

[137] Lloyds Bankv.Bundy[1975] Q.B. 326, [1974] 3 All E.R.757

Lord Denning said that there are different categories of cases where there has beeninequality 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 uponterms which are very unfair ortransfers property for aconsideration which is grossly inadequate, whenhis bargainingpower is grievously impairedby reason of his own needs or desires, or by his ignorance orinfirmity, coupled with undue influences or pressures, brought to bear on him by or forthe benefit of other.

Unconscionability:relief

[138]Harry v. Kreutziger

(1978) 9 B.C.L.R. 166, 95 D.L.R.(3d) 231 (C.A.)

McIntire J referred to the test in Morrison for unconscionability: Inequality of position ofthe parties due to the ignorance, need or distress of the weaker, coupled with proof ofsubstantial unfairness in the bargain.

Lambert J. A. introduced a new test: whether the transaction seen as a whole is sufficientlydivergent from community standards of commercial morality that it should be rescinded.

Unconscionability:relief

[139]J.G. Collins Inc. Agencies Ltdv.Elsley, [1978] 2 S.C.R. 916

A covenant in restraint of trade is enforceable only if it is reasonable between the partiesand withreference to the public interest.

Illegality: Restraintof Trade


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[140]Still v.Minister of National Revenue [1998] 1 F.C. 549 (C.A.)

The modern approach to the law of illegality rejects the understanding that simply becausea contract is prohibited by statute it is illegal and therefore void ab initio. Where a contractis 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.

Illegality: Themodern

approach

[141]

A.V.G. MGMT. Science Ltd. v.Barwell Dev. Ltd.

[1979] 2 S.C.R. 43, [1979] 1W.W.R. 330

SCC held that the rule ofBain v. Fothergill did not apply when the vendors had voluntarilydisabled themselves from conveying good title by engaging in concurrent dealings withother purchasers. It awarded the plaintiffs not only loss of bargain damages ($37 000 forlost appreciation in property price) but a lso 6,628.50 in reliance (wasted land titleinvestigation fees etc) Double compensation?

Damages:Expectation

Interest

[142]McRae v. Commonwealth DisposalsCommission

(1951) 84 C.L.R. 377 (Aust H.C.)

The court held that where the non-breaching party cannot meet the burden of proof withrespect to net profits he may be entitled to recover damages measured by reference toexpenditure 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 incurredwould equally have been wasted (in order to reduce the amount of the reliance damages).

Damages: RelianceInterest

[143]Bowlay Logging Ltd. v. Domtar Ltd.[1982] 6 W.W.R. 528 (B.C.C.A.)

C.A. upheld the trial decision which held that the law of contract compensates a plaintifffor damages resulting from the defendants breach, but not for damages resulting from theplaintiff making a bad bargain.

The onus is on defendant to prove that none of the plaintiffs costs would have beenrecovered and that the plaintiff is thus entitled to nominal damages only.

Damages: RelianceInterest and

Nominal Damages

[144]

Sunshine Vacation Villas Ltd. v.Hudson Bay Co.

(1984) 58 B.C.L.R. 33, 13 D.L.R.(4

th) 93 (C.A.)

The Court of Appeal held that the defendant could not recover for loss of capital and lossof gross profit because they were alternatives and it was wrong to make awards based onmixture of two approaches.

The court also held that the plaintiff could elect to claim its expenses but that, if the ownercould show that the plaintiff would have incurred a loss had it completed the contract, onlynominal damages should be awarded.

Damages: RelianceInterest

[145]Huntv. Silk(1804) 5 East 449, 102 E.R. 1142(K.B.)

The common law rule was established that the right to restitution could be lost if theplaintiff enjoyed any benefit under the contract (the plaintiffs occupation after knowledgewas a waiver of the right to terminate).

Damages:

Restitution Interest

[146]Chaplin v.Hinks[1911] 2 K.B. 786 (C.A.)

"The fact that damages cannot be assessed with certainty does not relieve the wrong-doerof the necessity of paying damages for his breach of contract."

The plaintiff was awarded damages for the loss of the chance of selection.Damages:Quantification

[147]Groves v.John Wunder Co .(1939) 286 N.W. 235 (Minn.C.A.)

In a construction contract, the law attempts to give the injured party what he was promisedand the cost of remedying the defect is the amount awarded as compensation for failure torender the promised performance--the owner is entitled to compensation for what he haslost, 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)

Damages:Quantification-cost

of performance or

diminution of value

[148]Nu-West Homes v. ThunderbirdPetroleums |

Where a builder is in breach of his obligation under a building contract, the owner isentitled to damages measured by the cost of making good the defects and omissions

Damages:Quantification


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(1975) 59 D.L.R. (3d) 292 (Alta.C.A.)

(general rule) unless that cost is unreasonably high in relation to the value to be gainedby its expenditure.

The law is satisfied if the party placed in a difficult situation by reason of the breach of aduty owed to them has acted reasonably in the adoption of remedial measures, and theywill 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.

[149]Markland Associates v Lohnes(1973), 33 D.L.R. (3d) 493

If the contract is terminated, abandoned or discontinued after substantial completion, thenthe service provider is entitled to payment less damages for non-completion.


[150]Jarvis v. Swans Tours[1973] 1 Q.B. 233 (C.A.)

Lord Denning held that there are cases where one can recover damages for the mentaldistress, disappointment and discomfort caused as a result of breach of a contract for apackage holiday.

The court held that the right measure of damages is to compensate the plaintiff for the lossof entertainment and enjoyment which the plaintiff was promised and which he did not get.

Damages:

Quantification

[151]Tito v. Waddell[1977] Ch 106

Damages for breach of a contract to do work on the land of another may be assessed eitheron the basis of the cost of completing the work or on the decrease in the value of the landby reason of the work not having been done.

Specific performance may be refused if the cost of performance is wholly out of proportionto the benefit which performance will confer.


Specific

performance

[152]Ruxley Electronics v. Forsyth[196] 1 A.C. 344 (H.L.)

A failure to achieve the precise contractual objective does not necessarily result in the losswhich is occasioned by a total failure.

Damages are designed to compensate for an established loss and not to provide a gratuitousbenefit to the aggrieved party.

House of Lords only awarded damages for the loss of a pleasurable amenity for thebreach of failing to build a pool as specified by the owner.


[153] AG v Blake, [2001] 1 AC 268

In exceptional cases where the normal remedies of damages, specific performance andinjunction are inadequate compensation for a breach of contract, the court can, if justicedemands it, grant the discretionary remedy of requiring the defendant to account to theplaintiff for the benefits received from the breach of contract.


[154]Hodgkinson v Simms ,[1994] 3 SCR 377

Undue influence focuses on the sufficiency of consent and unconscionability on thereasonableness of a given transaction

The existence of a contract does not necessarily preclude the existence of fiduciaryobligations between parties

The proper approach to damages for breach of a fiduciary duty is restitutionary. Theinnocent party is entitled to be put in as good a position as he would have been in had thebreach 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 agiven contract, that party is freed from the burden or benefit of the rest of the bargain. Thewronged party is entitled to be restored to the pre-transaction status quo.



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Damages must be foreseeable as to kind, but not extent

[155]Newell v. Canadian PacificAirlines,Ltd. (1976), 14 O.R. (2d)752

The special circumstances of this case were brought home to the defendant at the time itentered into the contract with the plaintiffs.

Damage to the plaintiffs' health, anguish, unhappiness and inconvenience were areasonably foreseeable consequence of the defendant's breach of contract, for which the

plaintiffs were entitled to recover damages.

Damages: mentaldistress

[156]Wharton v. Tom Harris Chevrolet(1999), B.C.D. Civ. J. 3186 BCSC

The failure of a sound system in a luxury vehicle is only one

case chart complete

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