{\rtf1\ansi\ansicpg1252\deff0{\fonttbl{\f0\fnil\fcharset0 Courier New;}{\f1\fmodern\fcharset0 Courier New;}} {\colortbl ;\red0\green0\blue0;} \viewkind4\uc1\pard\qc\lang4105\b\i\f0\fs20 Important Points in Contract Law\i0\par \pard\b0\par *\b Invitation to treat \b0 = any sort of information that does not amount to an offer; the lead-up to a concrete offer\par *\b offer \b0 = a more serious, concrete offer with specific conditions; all the other party has to do is accept\par *\ul Grant v. Province of New Brunswick\ulnone\par - \i ratio\i0 : intent is based on what a reasonable person would think; objective.\par - why: judges would rather measure words & conduct than subjective intent:\par \tab 1. ease of proof\par \tab 2. provides a measure of consistency/certainty in the law\par \tab 3. the courts ought to protect the reasonable expectations of honest people\par - even though the province didn't intend for the offer to be contractual, since it appeared to be so it was enforceable.\par - offer: application form\par - acceptance: filling out the form & complying with its conditions\par *\ul Australian Woollen Mills Ltd.\par \ulnone - similar fact scenario to Grant, except that here there was an evenness & consistency in the way all the wool companies had been treated, unlike Grant's uniquely bad treatment.\par - no contract\par *\ul Gibson v. Manchester City Council\ulnone (C.A. decision)\par - invitation to treat vs. offer to sell\par - Denning breaks with the conventional contractual analysis of invitation to treat > offer > acceptance = contract)\par In House of Lords, Diplock returns to the conventional analysis\par - note the similarities between letter of Feb.10th & Grant application\par - no contract; letter of March 18th was an offer to purchase which was never accepted\par *\ul Harvey v. Facey\ulnone\par - 3 telegrams: invitation to treat (will you sell? send L.C.P.); invitation to treat (sends l.c.p.) & offer to buy ("Accept"). No contract (never replied to first question).\par *\ul Canadian Dyers Assoc v. Burton\ulnone\par - letter of reply on October 21, 1919 was an offer to sell; acceptance was the sending of the cheque; reinforced by later conduct of the parties OR offer was the sending of the cheque, acceptance was the drawing-up of the deed - contract by conduct.\par *\ul Carlill v. Carbolic Smokeball Co.\par \ulnone - the ad is an offer; plaintiff's performance of the conditions constituted acceptance. She should get the reward.\par - defendant argues:\par \tab 1. Mere puffery.\par \tab - appeared to the reasonable person to be an offer, so it is\par \tab 2. Unreasonable/extravagant.\par \tab - any promise can be contractual, no matter how extravagant\par \tab 3. Not made with anyone in particular.\par \tab - offer was made to the public; only contracted with those who accepted (used their \tab smokeball)\par \tab 4. No communication of acceptance.\par \tab - in unilateral contracts, this requirement is waived\par \tab 5. Uncertain.\par \tab - judges weren't in agreement, but they all felt that is was certain enough.\par \tab 6. No consideration.\par \tab - see later analysis of consideration in unilateral contracts.\par - there was a contract here!\par - representative of all unilateral contract cases\par *\ul Dale v. Gov't of Manitoba\ulnone\par - ACCESS program funded by gov't, run by their agent, the U of M.\par - gov't cuts funding before first set of students has passed through; students sue & win.\par - gov't made promises to its agent & they were acted upon by the plaintiff.\par - government was held to be liable\par *\b Unilateral contracts\b0 : the promise for an act (no reciprocal promises); not binding until act is performed, offeree never has to make a promise; offer can be revoked at any time until the act is done\par *\b Bilateral contracts\b0 : there is a presumption that all contracts are bilateral; offer + acceptance = contract; made-up of reciprocal promises; allows for planning future arrangements & performing them later; once the contract is created, it is binding (not only once it's been performed)\par *\ul Lefkowitz v. Great Minneapolis Surplus Store\ulnone\par - the ad was an offer & his coming down to the store was acceptance, thus there was a breach of contract\par - however, one of the ads was deemed to be too uncertain\par *\ul R. v. Dawood\ulnone\par - Dawood charged with theft; however, if the owner consents to the transfer of possession, it cannot be theft\par - court's reasoning: the sales rack is an invitation to treat; Ms. Dawood offers a price to the cashier; the cashier on behalf of the store accepts this new lower price. Contract made.\par *\ul Sanchez-Lopez v. Fedco Food Corp.\ulnone\par - no tort liability, so they turn to contract\par - cannot sue manufacturer, so they sue the retailer\par - offer: having the item on the shelf; acceptance = taking it to the cashier\par - obvious sympathy for the plaintiff here\par *\ul Bettison v. I.C.B.C.\ulnone\par - two lawyers in elevator; was there a contract made?\par - informal conversation leads plaintiff's lawyer to believe an offer of $900,000 in settlement was made, though later ICBC denies the existence of a contract.\par - judge found that there was no contract here\par *\ul R. v. Clarke\ulnone\par - government offers a reward for information in death of two police officers\par - Clarke gives the government the evidence, but can't claim the reward because he wasn't acting in reference to the offer\par \i ratio: \i0 must have knowledge of the offer in order to form a valid contract\par - did not use an objective standard; Clarke himself rebutted the objective presumption.\par - why is this wrong?\par \tab 1. \i Unjust enrichment\i0 : offeror benefits without having to pay\par \tab 2. \i Knowledge\i0 : offeror probably doesn't care whether or not the offeree is acting in \tab\tab reference to his offer or not\par \tab 3. \i Prompt Action\i0 : this holding might make people delay in doing the act, until they \tab\tab are sure of the offer.\par - this decision benefits the offeror; normally, the requirement of knowledge is waived on the part of the acceptor\par - not binding on Canadian courts\par - you could use the \b Rule of Public Policy \b0 (not to enforce contracts contrary to public policy) if a situation like this ever arose again\par *a \b conditional acceptance \b0 is merely another counteroffer\par *\ul St. John Tug Boat v. Irving Refinery\ulnone\par - normally, ignorance or silence cannot constitute acceptance, though acquiescent conduct can be construed as acceptance\par - Why did the court decide a contract existed?\par \tab 1. \i Knowledge\i0 : defendant knew the service was continuing\par \tab 2. \i No Notification\i0 : defendant did not notify the service provider that he wished to \tab\tab terminate the contract\par \tab 3. \i Unjust Enrichment\i0 : defendant continued to benefit from the agreement.\par *\ul Manco v. Atlantic Forest Products\ulnone\par - no arrangement as to how & when tractor might be returned & who would pay for it\par - distinguishes \ul St. John Tug Boat\ulnone , saying that it dealt with the continuance of an established contract, which was not the case here\par \tab 1. No Prior Agreement\par \tab 2. No Obligation or Responsibility\par \tab 3. Fault on Both Sides\par \tab 4. No Substantial Benefit\par \tab 5. Never Paid Any of the Invoices\par - still had to pay for the 30 hours it did use\par *\ul Felthouse v. Bindley\ulnone\par - parties confused about the price\par - Paul says: it will be unless you say otherwise.\par - John's response: silence\par - this shifts the onus onto the acceptor - unfair. No contract.\par - \b A CONTRACT CANNOT BE IMPOSED UPON YOU\b0 .\par - applicable to negative-option billing.\par - \b WHEN CONDUCT IS TO BE CONSTRUED AS ACCEPTANCE, IT MUST BE UNEQUIVOCAL\b0\par *\b the problem with prescriptions is partial compliance\b0\par - Four Options:\par \tab 1. \i Strict Compliance\i0\par \tab 2. \i Functional Approach\i0\par \tab 3. \i Not Sole Method\par \i0\tab 4. \i Waiver\i0\par *\ul Manchester Diocesan Council\b \ulnone\b0 case\par - D sent letter to surveyor's office instead of Berkeley address\par - the court decided that 'near enough is good enough' - there was a contract here\par - used #2, 3 & 4\par *\ul Jen-Den\ulnone case\par - idea of \b 'implied prescription' \b0 (here, that the acceptance would be in writing)\par - oral acceptance of counter-offer mailed to agent Feb.3\par - communication to agent means knowledge by principal\par - attempted revocation on Feb. 4 (talking to his own agent - doesn't count)\par - revocations are not operative unless they are communicated to the other party.\par - written acceptance arrives Feb.5; revocation finally communicated\par - the court held that it was implied that the only method of acceptance would be in writing\par \i ratio\i0 : \b GET IT IN WRITING!\par -NO CONTRACT!!!\b0\par *Three Theories of \b Long-Distance Contracts\b0 :\par 1. \i Information \i0 (part of communication): offeror must have knowledge of acceptance\par 2. \i Reception \i0 (part of communication): offeror must receive acceptance\par 3. \i Expedition \i0 (the postal rule - no communication): acceptance must be given-over for\par transmission\par \tab - applies to post & telegraph\par *\ul Re Modern Fashions\ulnone case\par - an illustration of the general rule of communication of acceptance\par - here, Winnipeg company is offeror; accepted by company in Montreal; communication was received by telephone in Winnipeg, so that's where the contract was made.\par - choice of law clause on invoice that was sent with the goods was 'too little, too late' - contract was already made!\par *\ul Brinkibon v. Stahag Stahl\ulnone\par - Two places where a contract may have occured:\par \tab 1. Acceptance by telex.\par \tab - decided to apply the communication rule, thus the contract was made in Vienna\par \tab 2. Conduct re: letter of credit.\par \tab - letter was opened by bank in Vienna, thus that's where the contract was made\par - here, communication probably means reception\par *\ul Henthorn v. Fraser\ulnone\par - letter of revocation read at 8pm\par - revocation are only valid when communicated (postal rule does not apply), but it is unclear whether we mean 'reception' or 'information'\par - letter of acceptance was posted at 3:50pm\par - defendant's argument: initial offer was made in person (delivered by hand); expedition rule should only apply when offer & acceptance are both made by post.\par - issue: what is the extent of the postal rule's application?\par Two Theories:\par 1. Where use of post is \i foreseeable/common practice\i0 ; (applied in this case)\par 2. Where such postal acceptance is \i expressly or impliedly authorised\i0 .\par - if acceptance is posted when it is not foreseeable or not common practice the expedition rule will not apply\par - CONTRACT!\par *note that \b prescriptions can be made to avoid or supersede these postal rule theories\b0\par *\ul Charlebois v. Baril\ulnone\par - the offeror must specify/authorise/nominate the post office as their agent in order for the expedition rule to apply (like #2 above)\par - how does this nomination occur? (speculation)\par - offeror first sends his offer via post (\i implied declaration\i0 )\par - \i specific words in the offer \i0 specify that postal acceptance is okay\par - \i circumstances \i0 (distance between the parties, etc.)\par *note that \b courier & messenger services \b0 have been grouped with the postal rule/expedition cases\par - whereas faxes are thought of as instantaneous; general rule applies\par *\ul The Queen v. Weymouth Sea Products Ltd.\par \ulnone - courier case where postal rule was applied\par *\ul Holwell Securities Ltd. v. Hughes\ulnone\par - this offer is subject to a specific prescription: a certain mode of acceptance is required (notice in writing to owner & deposit to solicitors)\par - however, both notice & deposit were sent to solicitors; notice to owner was posted but not received\par - court decides that strict compliance was necessary in this case, so NO CONTRACT\par - postal rule does not apply since a prescription was issued\par *\ul Joan Balcomb Sales Inc. v. Poirier\ulnone\par - fax case; Brinkibon applied\par *\ul Easter Power Ltd. v. Azienda Communale Energia\ulnone\par - fax case, Brinkibon applied (instantaneous\par - no SCC authority on this point, yet\par *\ul Dickinson v. Dodds\ulnone\par - a firm offer, not an option (revocable at will)\par \i ratio\i0 : revocation requires communication, but that \b communication need not be direct\b0\par *\ul Petterson v. Pattberg\ulnone\par - Petterson goes to Pattberg's house to pay, money in hand, but before he can hand-over the money, Pattberg revokes.\par - court takes a very harsh, strict view; decides against Petterson. Won't enforce the contract.\par \i ratio\i0 : \b revocation can occur anytime before the act is completed\b0\par - on its face, this is a strict application of the rule of revocation to unilateral contracts\par *\ul Errington v. Errington\ulnone\par - taking back the offer at this time would cause unjust enrichment, since it required performance (payment) over a long period of time.\par - Denning decides that the offer must be kept open once performance has begun\par Explanation: Look at a unilateral contract as two separate agreements\par \tab 1. \i Implied Contract \i0 (in essence, an option): a promise not to revoke; consideration = \tab\tab beginning & continuing in a timely fashion the performance of the act.\par \tab 2. \i Express (Main) Contract\i0 : only completed once the act is fully performed.\par *\ul Barrick v. Clark\ulnone\par - Nov. 20: offer is effectively communicated to Mr. Clark\par - Dec. 10: accepted, expedited (use postal rule)\par - However, on Dec. 3 the property was sold to a third party\par - offer had lapsed...a reasonable time had passed (Mr. Clark is out of luck!)\par - factors taken into account: \cf1 type of commodity, wording of the offer, conduct of the parties, no possibility of possession until March, used for farming (not useful until springtime), ready buyers, hurried language\par \cf0 *\ul Manchester Diocesan Council v. Commercial & General Inv.\ulnone\par - offer/tender to purchase: August 26th\par - acceptance, but no compliance with prescribed mode of acceptance: Sept.15\par - full compliance with prescribed mode: January (134 days later)\par - court says: 'near enough is good enough'; partial compliance is all right.\par - and anyway, offer had not lapsed\par - Two Analyses:\par \tab 1. \i Withdrawal Theory\i0 : if not accepted in reasonable time, offer is withdrawn by \tab\tab offeror; OR\par \tab 2. \i Refusal Theory\i0 : if not accepted in reasonable time, the offer is refused by offeree\par - seems to contradict Barrick v. Clark, where Supreme Court opts for #1 (here they go with refusal theory)\par *once an offer is rejected, it is terminated; cannot be accepted later.\par *a counter offer is viewed by the courts as:\par 1. a rejection of the previous offer &\par 2. a new proposal.\par - be sure not to confuse counteroffers with information-seeking/clarification/inquiries. In these cases, the offer remains open & valid.\par *\ul Livingston v. Evans\ulnone\par - says "Cannot reduce price." Court accepts that this is a renewal of the initial offer, not a flat-out rejection.\par *\ul In re Cohen v. Boyd\ulnone\par - Landlord says "I will call on you for further discussion." Seen by the court as a renewal of the first offer, not merely an invitation to treat. Used to support finding in \ul Livingston v. Evans\ulnone .\par *\ul Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corporation (England) Ltd.\par \ulnone - a "battle of the forms"\par Options:\par 1. Contract on seller's form\par \tab - supported by trial judge\par 2. Contract on buyer's form.\par \tab - Denning's analysis: contract concluded on buyer's form, since acknowledgement (tear- slip) is returned & signed.\par 3. No contract.\par \tab - parties have not agreed on terms & conditions; no agreement = no contract\par 4. Implied contract on no forms.\par \tab - parties had agreed on everything but the price. Here the court can step-in & import a \tab reasonable price.\par 5. Contract from end conduct of the parties.\par \tab - contract only concluded by conduct. Problem: what is the price?\par *\ul Financings Ltd. v. Stimson\ulnone\par - revolves around hire-purchase agreement\par - Financings Ltd. now argues that there was a contract, so Stimson should be responsible for the damage\par - Stanmore is an agent of Financings Ltd.; Stimson's return of the car is the revocation of his offer to purchase.\par - communication requirement is met, since Stanmore is the ostensible agent of Financings Ltd.\par OR this could be categorised as a \b 'conditional offer'\b0 , where the offer is made under certain circumstances; if they change, the offer automatically terminates.\par - since the condition of the car changed drastically, it resulted in the termination of the offer\par *\ul Dawson v. Helicopter Exploration Co.\ulnone\par - this is a classic case of unjust enrichment\par - majority deems this arrangement is bilateral; reinforces the notion that the court's presumption is always in favour of a bilateral agreement.\par - court realises that the parties don't normally spell-out each term: cite 'fair implications' and 'instict [imbued] with an obligation' doctrines of Cardozo & Williston.\par - the conditions in this case are precedent to the performance of a contract.\par *\b Characteristics of a Unilateral Contract\b0\par 1. Acceptance of the offer is the full completion of the act.\par 2. Normally the communication of acceptance requirement is waived.\par 3. The consideration is the complete performance of the act required.\par 4. After act is performed, nothing more is required of the offeree.\par 5. An offeree never makes any promises or further commitments.\par 6. Offeror remains totally passive until the act is done.\par 7. Offeree can never be in breach of contract, because he is under no obligation\par 8. The offer may be revoked\par 9. The court's presumption is always toward a bilateral contract\par - language & conduct of the parties must strongly indicate their preference for a unilateral contract for the court to enforce it that way\par *\b Two Categories of Uncertainty:\b0\par 1. \i Indefiniteness \i0 (where the terms of the contract are in doubt/dispute)\par 2. \i Incompleteness \i0 (where some terms are left in dispute or an agreement is silent on some important point or 'agreements to agree' are made).\par \tab - these are referred to as \b 'open term agreements'\b0\par *note the difference between transactional & relational agreements\par *\ul Scammell v. Ouston\ulnone\par - court holds that the agreement is indefinite; especially when it comes to the term 'hire-purchase agreement'.\par *\b Two Categories:\b0\par 1. \i Express stipulation \i0 that the parties will agree in the future\par \tab - ex. Scammell v. Ouston, May & Butcher v. King\par 2. \i No express stipulation \i0 for future agreement; silence\par \tab - Hillas v. Arcos, Montana Mustard Seed\par *\ul R. v. C.A.E. Industries\ulnone\par - this is a commercial, not a political arrangement\par - so, the government tried to argue indefiniteness\par - 'best efforts' held to mean 'leave no stone unturned'\par - complicated by part performance, unjust enrichment & the fact that it's relational\par *\ul Nicolene v. Simmonds\ulnone\par - "the usual conditions of acceptance will apply" was the only indefinite phrase in the whole agreement\par - Denning held that this indefinite clause did not affect the important parts of the contract, so he severed those indefinite words & let the contract stand.\par *\ul Montana Mustard Seed Co. v. Gates\ulnone\par - judge distinguishes May & Butcher, where there was an agreement to agree; when there is silence, as in this case, the court can import a reasonable price\par *\ul May & Butcher v. the King\ulnone\par - this was not a case of silence, but of express agreement to agree\par - contract void for incompleteness\par *\ul Foley v. Classique Coaches Ltd.\ulnone\par - here, there was an agreement to agree (as in \ul May & Butcher\ulnone ) yet a contract was found to be enforceable\par - complicated by issue of unjust enrichment\par - construes the arbitration clause more broadly than in \ul May & Butcher\ulnone\par - believed Classique was acting as a bad faith purchaser\par *\ul Friesen v. Braun\ulnone\par - court held that the agreement was void for incompleteness, as in SCC decision of \ul McSorley v. Murphy\ulnone (which mirrored \ul May & Butcher\ulnone )\par - didn't fit with \ul Foley\ulnone because there was no arbitration clause & it was transactional, not relational\par - the court takes a hard line on 'agreements to agree' in real estate transactions\par *\ul A.G. v. Barker Bros. Ltd.\ulnone\par - court discusses agreements that contain \b 'machinery'\b0 (as in an arbitration clause) and a \b 'formula'\b0 (a set or standard criteria, ex. reasonable price). Different types:\par \tab 1. Agreement with a formula but no machinery.\par \tab 2. Agreement with a formula and machinery.\par \tab 3. No formula, no machinery (as in \ul Friesen v. Braun\ulnone )\par \tab - simply an 'agreement to agree'\par \tab 4. No formula, but machinery (as in \ul Barker Bros.\ulnone )\par \tab - would it be impossible for the arbitrator to deal with? If not, then the contract \tab should stand.\par *Indicators when dealing with agreements to agree:\par T R P M S L G\par - \b t\b0 ransactional/\b r\b0 elational\par - \b p\b0 erformance/reliance\par - \b m\b0 achinery\par - \b s\b0 tandard/formula\par - \b l\b0 and or \b g\b0 oods?\par Clearly, \ul May & Butcher\ulnone was wrongly decided\par *\ul Sudbrook Trading Estate v. Eggleton\ulnone\par - deals with buying out a lease\par - there is machinery & a standard\par - court held that the defendant vendors waived their rights to machinery; since the intent, machinery & standard are so clear, the court will bend over backward to enforce it.\par *\ul Re Empress Towers v. Bank of Nova Scotia\ulnone\par - both an objective & a subjective standard ("market value as mutually agreed by the parties")\par - judge imports an \b implied obligation to negotiate in good faith\b0 towards a renewal of the lease\par - \b Explanation of Good Faith Bargaining\b0 :\par \tab 1. Do not withhold agreement unreasonably;\par \tab 2. Do not lease to a third party for what the current lessee is willing to pay.\par *\ul Manpar Enterprises Ltd. v. Canada\ulnone\par - similar renewal arrangement, but with no standard\par - \ul Empress Towers\ulnone was distinguished on its facts (will probably be given a very narrow reading)\par *\ul Courtney Ltd. v. Tolaini Bros. Ltd.\ulnone\par - facts remind us of \ul Dawson v. Helicopter\ulnone (unjust enrichment at the expense of the plaintiff)\par - Denning figures that if you can't agree to agree, you can't agree to negotiate either\par - too indefinite!\par *\ul Walford v. Miles\ulnone\par - remember that in England, 'subject to contract' means no contract.\par - vendor promised not to negotiate with 3rd parties while the purchasers secured a letter of comfort from their bank\par - what is this collateral agreement? Is it enforceable? Two arguments:\par \tab 1. Contract to negotiate (positive) - \b lock-in\b0\par \tab 2. Contract not to negotiate with others (negative) - \b lock-out\b0\par - this particular lock-in agreement was flawed, as it didn't specify a time period\par - basing a lock-out agreement on 'reasonable time' is basically like enforcing a lock-in agreement, forcing the parties to negotiate, which the courts will not do.\par *\ul Commertec v. Stabler\ulnone\par - narrow reading of \ul Empress Towers\ulnone yet again\par 1. there was an existing contract\par 2. a standard was provided (market rent)\par - will enforce an agreement with one or more elements to be decided, but not whole agreements that need to be negotiated.\par *\b Conditional Contracts\b0 (aka \b contingent contracts\b0 )\par - easy to recognise: will say 'subject to...' or something like that\par \i Two Loose Categories:\i0\par 1. \b Subject to Contract\b0 : usually involve only the two contracting parties\par 2. \b Conditional Contracts\b0 : usually depend on 3rd parties\par *Subject to Contract: anticipate a formal contract at a later date\par Problem: when one party withdraws between initial agreement & formal contract\par - in England, 'subject to contract' means no contract (see \ul Walford v. Miles\ulnone ). In Canada & Australia, we have a number of interpretations:\par \tab 1. Condition precedent to the formation of a contract.\par \tab 2. Condition precedent to the performance of some/all obligations of contract\par \tab 3. Nothing depends on the written document. Contract is binding as of their initial \tab agreement. Writing it down is just a formality.\par *\ul Masters v. Cameron\ulnone\par - example of an arrangement defined by #1 - no contract\par - very clear, written arrangement\par *\ul Megill v. Woo\ulnone\par - one party reneges between initial agreement & drawing-up of final documents\par - Judge finds 2 conditions precedent:\par \tab 1. approval of Woo's lawyer; and \par \tab 2. a written document.\par - there was no obligation until these conditions were met.\par *\ul Wiebe v. Bobsien\ulnone\par Was it...\par 1. Condition precedent to formation of a contract?\par 2. Condition precedent to performance?\par - judge finds that contracts of type #1 usually have conditions dependent on 'whim & fancy' of the parties, where either party can elect not to perform them. These are conditions precedent to formation because no real/firm agreement/commitment has been made.\par - says type #2 usually involve conditions dependent on 3rd parties (conditions precedent to performance). Here, if they are not performed, the contract terminates.\par - CPP\par *\ul Pietrobon v. McIntyre\ulnone\par - buyer is trying to get out of the arrangement, since the basement leaks...pretends he can't secure financing so as not to meet the condition...court finds that the condition & thus the contract were void for uncertainty.\par - CPF\par *\ul Griffin v. Martens\ulnone\par - court finds that the term is certain; imports their own definition of 'satisfactory financing'\par - compare this to \ul Wiebe v. Bobsien\ulnone !\par - CPF\par *\ul Barnett v. Harrison\ulnone\par - both sides doing their best to meet their obligations\par - vendor is waiting for contract to terminate so he can sell for a higher price; doesn't accept waiver principle\par - issue: who gets the increase in price of the land?\par - Dickson & majority side with vendor & ownership rights\par \tab - \b no unilateral waiver in conditional contracts, unless such a right is expressly \tab written-into an agreement\b0\par - Laskin, in dissent, sides with purchaser, saying risk is part of this agreement.\par \tab - holds that there are \b two types of conditions precedent to performance\b0 : those for the \tab mutual benefit of the parties and those for the sole benefit of one of the parties. The \tab first type are subject to waiver, the second type are not.\par \tab - here, waiver should be allowed\par - here, some conditions are subject to waiver and some are not. Odd.\par \b *NOTE that a condition precedent to the formation of a contract cannot be waived, as that would lead to one party forming a binding contract.\par \b0 *\ul Balfour v. Balfour\ulnone\par - seems to be a presumption that family members generally do not intend to contract\par - indefiniteness & consideration problems often arise\par *\ul Merritt v. Merritt\ulnone\par - points of distinction from \ul Balfour\ulnone case:\par \tab 1. couple no longer living together\par \tab 2. some of the agreement is put down in writing\par \tab 3. not as flexible as the \ul Balfour\ulnone agreement; much more strict.\par \tab 4. much more definite.\par - wife wins; there was a contract.\par *\ul Jones v. Padavatton\ulnone\par - majority finds that the mother should not be bound to pay daughter for attending law school\par *\ul Fobasco Ltd. v. Cogan\ulnone\par - arrangement between friends re: Blue Jays season tickets\par - held that there was no contract; defendant keeps the tickets.\par \b *In commerical relationship, the presumption is that the parties intended to contract. Opposite of the presumption in social relationship.\par \b0 - you can, however, delay contracting by:\par \tab 1. Condition precedent to formation of contract (ex 'subject to contract')\par \tab 2. Cases where the parties make it clear that they do not want to contract (ex \ul Rose & \ulnone\tab\ul Frank Co. v. J.R. Crompton\ulnone )\par \tab - include an \b 'honour clause'\b0 which specifically states that a contract is not being \tab formed;\par *\ul Edwards v. Skyways Ltd.\ulnone\par - the airline argued that the words 'ex gratia' should be regarded as an honour clause\par - the court did not agree; this was a binding contract\par - this case shows that an explicit honour clause would be preferable if you truly do not wish to make a contract\par *\ul British Steel Corp. v. Cleveland Bridge & Engineering\ulnone\par - involved a letter of intent: where parties are almost ready to contract, but need some more time for the final details\par - an indication of a future contract & the parties' intentions.\par - presumption that there is no contract, but this can be rebutted.\par - sometimes creates problems of reliance, unjust enrichment & partial performance.\par - the trouble is that the parties are still battling it out; neither has conceded.\par - this is a restitutionary claim; BSC wins\par *\b Consideration:\b0\par - the role of contract law is to decide which agreements the court will enforce and which ones it won't. Offer & acceptance perform part of this function, but so does consideration.\par \i - How do we identify consideration?\par \i0\tab 1. Identify the promisor.\par \tab - identify which promise you are trying to enforce & the person who made it\par \tab 2. What did this person request as the price/payment for the promise?\par \b\tab - Two part: (a) request\tab (b) price\par \b0 - in bilateral contracts, the consideration is the promise to pay, not the payment itself\par - in unilateral contracts, the act is acceptance, performance & consideration\par \b *remember that consideration must be requested & bargained for. Cannot be decided by just one side.\par \b0 - \i general rule\i0 : the courts will not investigate the adequacy of consideration, provided it is of sufficient economic value. \b Consideration must be sufficient but not adequate.\b0\par - \b past consideration is no consideration; it is insufficient\b0\par *\ul Pau On v. Lau Yui Long\ulnone\par - laid out a test for \b when past consideration was o.k.:\b0\par \cf1\tab 1. Act was done on request of promisor;\par \tab 2. Parties must have understood that it was to be paid for (not a gift); AND\par \tab 3. Payment or benefit must be legally enforceable if the promise had been made in \tab\tab\tab advance (i.e. past consideration is the only hold-up or snag in enforcement of the \tab\tab contract)\par \cf0 *\ul Re Boutilier Estates\ulnone\par - here, the Court was not prepared to accept the American approach. Didn't believe that that type of reliance existed here, anyway. This was a gratuitous promise, not a binding contract.\par - courts generally \b do not want to enforce gift promises\b0 . Not due to doctrine of consideration, but driven by policy concerns, such as:\par \tab 1. \i Donor/Promisor\i0 : don't want to bind people to charitable promises; don't want to \tab\tab discourage charity;\par \tab 2. \i Donee\i0 : gifts are given based on worthiness of donee; what if his character changes? \tab\tab Should the donor still be bound?;\par \tab 3. \i Cautionary Concern\i0 : promises of gifts can be made quite rashly, can lack \tab\tab\tab seriousness;\par \tab 4. \i Evidentiary Concerns\i0 : easier for donee to show a positive action, could become a \tab\tab vehicle for fraud.\par - besides, the common law has \b other vehicles for their enforcement\b0 :\par \tab (a) deeds\tab (b) nominal consideration\tab (c) executed gifts\tab (4) wills\par *\ul Combe v. Combe\ulnone\par - no contract because consideration must be at the request of the promisor.\par \i Two Extraneous Factors:\i0\par \tab 1. Wife makes more money than husband ~ no reliance.\par \tab 2. Denning thinks this case should have be tried in Divorce Ct.\par *\ul Royal Bank v. Kiska\ulnone\par - deals with a \b document of guarantee\b0 , which has two requirements:\par \tab 1. Must be written;\par \tab 2. Must have consideration.\par - if the guarantee is sought after the loan is made, there is no consideration (as past consideration is no consideration)\par - however, the fresh consideration could be forbearance to sue\par - most oftentimes, however, these guarantees are drawn-up as deeds, to avoid the consideration problem\par - in this case, the bank forgot to put the little seal on the deed, so they argue it as a contract instead\par *\b Compromise Agreements:\b0\par \cf1 \i Definition\i0 : \b an improvident agreement made between unequal parties without independent advice.\par \cf0\b0 - all premised on a common situation, where the D is negligent and the Plaintiff has suffered some loss. They were involved in a tort action.\par - settlements in tort cases are a type of contract\par - D can later argue lack of consideration, if he feels that the Plaintiff's action would never have succeeded (thus the consideration is worthless).\par - \i rule: \b\i0 if the plaintiff has an honest belief that the claim was a valid one, there would be consideration.\par \b0 - however, \b we will not enforce dishonest or fraudulent claims\b0\par *\ul Scivoletto v. De Dona\ulnone\par - not your typical compromise agreement\par - judge thinks that since Scivoletto had an honest belief in his right to send Mrs. De Dona back to Italy, the agreement should stand\par - couldn't we just dismiss this as a social arrangement?\par *\ul Keewatincappo v. Clearsky\ulnone\par - will not enforce \b unconscionable agreements\b0\par \i \i0 This Requires:\par \tab 1. \i Disparate Capacity\i0 of the parties AND\par \tab 2. \i Gross Inadequacy\i0 of consideration.\par *\ul B.(D.C.) v. Zellers\ulnone\par - judge feels that this is an invalid claim ~ cannot rely on 'honest belief' doctrine\par *compromise agreements are generally enforced, so long as the claim advanced is honestly believed to be a valid one.\par - \b will not enforce unconscionable agreements\b0\par - \b will not enforce where claim is an invalid one\b0\par - \b difficult to overturn where they have been executed \b0 (as in Zellers case)\par *\b Promise to Pay More than is Due\b0\par - if a promise is made to perform an act that is an act that already arises from an existing duty (as a result of some prior arrangement), the promise to do the act cannot be construed as valid consideration.\par - \b consideration cannot be something which the promisee is already obliged to do (something that arises from some pre-existing duty)\par \b0 - \b the rationale behind this is that since the person was going to do it anyway, the other party isn't truly benefitting\par \b0 *\ul Stilk v. Myrick\ulnone\par - case of a contract of employment between captains & crewmen who were on a voyage\par - concern was that duress would become a factor, with crewmen threatening their captains while out on the sea for higher wages, etc. Court didn't want to enforce these types of agreements.\par - however, instead of directly addressing the duress issue, the court pointed to a lack of consideration\par *\ul Gilbert Steel Ltd. v. University Construction Ltd.\ulnone\par - here, the cost of steel had risen dramatically since the initial agreement was forged. Construction company understands this dilemma, so they agree to pay the higher price in order to get the work done. Later, they renege, pointing to a lack of consideration, as steel company had a pre-existing duty to do the work anyway.\par - Wilson J. holds that this was merely a variation to the existing contract, not some mutual agreement to the termination of the first agreement; there was no fresh consideration (dismissed 'line of credit' argument. Also dismissed the 'I promise to pay more if you promise to give me a good price on future contracts' point, saying it was too vague & uncertain.\par \i (note the main arguments, though struck-down, were (1) fresh consideration, (2) good price & (3) mutual agreement re termination)\par \i0 - it has been suggested that Wilson J suspected an element of duress here\par *\ul Williams v. Roffey\ulnone\par - court crafts a narrow exception to the rule in \ul Stilk v. Myrick\ulnone . \par \i Six Requirements:\par \i0\tab 1. Where A enters into a contract with B to do work or supply goods or services, in \tab\tab return for payment by B (an employment contract); AND\par \tab 2. at some point it appears that A will not be able to complete the work or B has \tab\tab\tab reason to doubt that it will be completed AND\par \tab 3. B them promises to pay more to ensure that A completes the job AND\par \tab 4. as a result of his promise B gets some practical benefit,\par \tab 5. so long as B gives the promise freely (not under duress or fraud)\par \tab 6. Then, the practical benefit gained by B is sufficient consideration. There is a \tab\tab legally binding contract.\par *Review of the \b ways to get around \ul Stilk v. Myrick\ulnone :\par \b0 1. Fresh consideration\par 2. Termination of existing contract & creation of a new one (mutual agreement)\par 3. Make this variation by way of deed.\par 4. \ul Roffey\ulnone exception (six requirements)\par \tab - note, however, that this has not yet been expressly adopted by Canadian courts\par *\ul Ward v. Byham\ulnone\par - promise by father to pay \f1\fs24\'a3\f0\fs20 1 per week, so long as the child is well-looked after & happy\par - court enforces the agreement: realise they need to find something more than performance of the pre-existing statutory duty.\par - mother has to promise her duty +\par - Denning turns to a more unconventional analysis, holding that a promise to perform a pre-existing duty is good consideration (so long as it provides some benefit).\par - you can see this echoed in \ul Roffey\ulnone .\par *\ul Shadwell v. Shadwell\ulnone\par - case where uncle promises to pay nephew a yearly sum until his wages reach a certain amount\par - majority of the court enforces the agreement; how to distinguish from \ul Stilk v. Myrick\ulnone - existing duty is owed to a third party (the wife?)\par - couldn't they have applied this argument in \ul Ward v. Byham\ulnone ??\par *\b Promise to Accept Less than is Due\b0\par - Ways to Evade \ul Foakes v. Beer\ulnone :\par \tab 1. Make a deed.\par \tab 2. If there exists a composition of creditors, it is enforceable.\par \tab 3. Where a third party agrees to pay the creditor some money on behalf of the debtor, such an agreement is enforceable (see \ul Hirachand Punanchand v. Temple\ulnone )\par \tab 4. Fresh consideration (aka 'accord & satisfaction')\par \tab ex. Upon request of the creditor - paying sooner, paying at a different place, paying by some different method (cannot settle for less than the initial amount, though - then you have the 'existing duty' problem all over again)\par \tab 5. \ul Roffey\ulnone exception may apply\par \tab 6. Other exceptions may be made (see \ul Robichaud v. Caisse-Populaire\ulnone )\par \tab - also revolve around 'practical benefit' concept\par \tab 7. \ul The Mercantile Law Amendment Act\ulnone\par \tab - statutory rules governing debt settlement agreements\par \tab 8. Equitable/Promissory Estoppel\par *\ul Hughes v. Metropolitan Railway Co.\par \ulnone Important Facts:\par \tab 1. Parties have an \i existing contractual relationship\i0 .\par \tab 2. Negotiations begin; one party is led to believe that the prior rights will not be\par \tab\tab strictly enforced during this time; these \i strict contractual rights are to be held\par \tab\tab in abeyance/suspension \i0 during this time.\par \tab 3. Lessor is not permitted to enforce their strict rights under the contract where it\par \tab\tab would be \i inequiable \i0 to do so.\par \tab 4. Tenant has acted to his detriment. \i Detrimental reliance \i0 on above-stated belief.\par \tab 5. This case is about lease & \i forfeiture\i0 . Courts are always protective of tenant in\par \tab\tab these scenarios.\par - how is this related to consideration?\par - lessor's actions add-up to a promise that they will not enforce their strict contractual rights, but there is \i no consideration for this promise\i0 . Would not be enforceable unless aided by the doctrine of equitable estoppel.\par *\ul Foakes v. Beer\ulnone : illustrates that \ul Hughes\ulnone was initially read very narrowly\par Here, \par Y\tab 1. There was a legal relationship between the parties (creditor/debtor)\par Y\tab 2. Express promise from creditor, that she would not enforce her strict legal rights. \tab\tab No consideration.\par Y\tab 3. Inequitable? Probably.\par N\tab 4. Detrimental reliance? No. It actually helps the debtor out.\par N\tab 5. Not about leases & forfeiture.\par - one other distinction: this involved a promise to abrogate rights, as opposed to merely suspending them\par - Hughes isn't even referred to in the judgment\par *\ul Central London Property Trust v. High Trees House\ulnone : illustrates a broad reading of \ul Hughes\ulnone\par Y\tab 1. Parties have an existing contractual relationship.\par Y\tab 2. Express promise that strict legal rights to full rent will not be enforced during the war.\par Y\tab 3. Inequitable? Yes.\par N\tab 4. Detrimental reliance? No. It relieved them of a difficulty, in fact.\par N\tab 5. Not about forfeiture.\par - \b Denning feels that Hughes only requires Steps 1, 2 & 3.\par \b0 - what would this mean for \ul Foakes v. Beer\ulnone ? Denning feels it would have been decided differently were the courts faced with it today.\par \b - note that promissory estoppel will only be applied when there is an existing relationship between the parties. Only allows for the modification of that existing relationship. Nota cause of action in & of itself (see \ul Combe v. Combe\ulnone ). Estoppel can be used only as a shield, not a sword.\par \b0 - so we know that you need #1 & 2, but what else?\par \tab - reliance\tab - detrimental reliance\tab - inequity/unconscionability?\par - so, the \ul Hughes\ulnone test are \i not requirements, only factors...\par \i0 *\ul Combe v. Combe\ulnone\par - Denning in \ul High Trees\ulnone didn't mean to do away with the doctrine of consideration all together; he did not want to create a new cause of action or head of contractual liability.\par *\ul John Burrows Ltd. v. Subsurface Systems Ltd\ulnone\par - a change in the social relationship between creditor & debtor caused the creditor to suddenly exercise his strict legal rights\par - Supreme Court decides not to apply the doctrine of equitable estoppel\par - they don't like the practical ramifications for indulgent creditors\par *\b Common Law Estoppel or Estoppel by Representation\par - a representation of fact which is relied on by the other party cannot later be repudiated\par - whereas promissory estoppel deals with future conduct\par \b0 *\i Waltons v. Maher\i0\par - one important fact: all negotiations, it was made clear, were subject to contract. Not binding until the contract was signed.\par Other Important Factors:\par \tab 1. Owner/builder sends tenant an executed draft for his comment; silence.\par \tab 2. Tenant is constantly pressuring the owner/builder to get the work done.\par \tab 3. After work is 40% complete, the tenant backs out.\par \b - shouldn't be able to use promissory estoppel as a sword instead of a shield, right?\par WRONG! Court moves beyond this limitation; to do otherwise would be absolutely unconscionable in the circumstances.\par \b0 - are we on the slippery slope?\par \b - court tries to restrict its applications to the facts; emphasises the importance of unconscionability, hurriedness, draft deed & silence of tenant.\par \b0 *Issues in the Area of Consideration:\par 1. \i Gift promises\i0 : should they be enforced?\par 2. \i Past consideration\i0 : overcome by restitutionary claims as in \ul Pau On\ulnone case\par 3. \i Promise to Pay More\i0 : \ul Stilk v. Myrick\ulnone & \ul Gilbert Steel\ulnone cases; note, however, the many exceptions (ex. fresh consideration, \ul Williams v. Roffey\ulnone )\par 4. \i Acceptance of a Lesser Sum\i0 : \ul Pinnel\ulnone case, debt settlements\par 5. \i The gratuitous option\i0 : should firm offers be enforced? See \ul Dickinson v. Dodds\ulnone for the current position. Exception (to be studied later): \ul Ron Engineering\ulnone .\par Where do we go from here?\par \tab 1. \i Promise\i0 : practical benefits; failure to enforce may cause unjust enrichment. See \ul Ward v. Byham\ulnone & \ul Williams v. Roffey\ulnone .\par \tab 2. \i Reliance\i0 : another category enabling enforcement (as opposed to consideration). See \ul Waltons v. Maher\ulnone . Or more conventionally, \ul Grant\ulnone , \ul Gibson\ulnone , \ul Lefkowitz\ulnone .\par \tab 3. \i Deeds\i0 : should we dispense with the formalities? See \ul Royal Bank v. Kiska\ulnone\par }