LAW 110 Contracts. Section 2 Professor Biukoviá TOTAL MARKS: 100

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1 THIS EXAMINATION CONSISTS OF 5 PAGES PLEASE ENSURE THAT YOU HAVE A COMPLETE PAPER THE UNIVERSITY OF BRITISH COLUMBIA FACULTY OF LAW FINAL EXAMINATION LAW APRIL 2012 Section 2 Professor Biukoviá TOTAL MARKS: 100 TIME ALLOWED: 2 HOURS and 20 minutes reading time ******************** NOTE: 1. This is a LIMITED OPEN BOOK examination. You may use only a CLEAN copy of the syllabus and case chart provided to you in the exam. 2. If you think that additional facts are necessary to answer any question fully, please state those facts and explain why they are necessary. 3. Please write legibly. THIS EXAMINATION CONSISTS OF 2 QUESTIONS. PLEASE ANSWER BOTH QUESTIONS.

2 Page 2 of 5 110, Section 2 MARKS 60 Question 1 60 points Samuel purchased a commercial property on Water Street, Vancouver, hoping to open a model agency and photo studio in the new premises. He saw a lot of potential in the location and really liked some old furniture and fixtures that came with the premises, especially an old 1906 Berry Wood Coin Operated Nickelodeon Player Piano. However, the property needed a complete renovation, including a new heating system. He decided to put all furniture and equipment into a nearby self-storage Clever City Storage while the contractors finished their renovation job. The storage owner is Peter Bread, his wife Maya, and their sons Gordon and Thomas being the only employees. Samuel phoned Clever City Storage and learned from Maya Bread that the storage has been open for 3 years, that it consists of prefabricated metal units that look like a line of garages which share common walls, that units are very basic, with no water pipes, no climate control but are well secured with a modern surveillance system and well lit. Clever City s rental price is also lower than the price of other rental places in the neighborhood. When Samuel visited Clever City Storage he saw that it was a clean place and that the surveillance was appropriate. Thomas Bread explained that their price is lower than other rental prices in the neighbourhood because they only rent units for a minimum one-year term. Samuel asked Thomas if they had any problems with storage and Thomas said: Never. In the three years since we have been running this place we have been completely problem free. It has always been a safe and dry place. On April 20, 2010, while Gordon and Thomas were moving Samuel s furniture and equipment into the unit #88, Samuel was signing a standard Clever City Storage agreement on terms of storage withpeter Bread in the offices of the storage. Samuel just glanced over the agreement without reading it carefully. All contracts looked the same to him anyway. Each page of the agreement needed to be initialized by both parties and signed by them at the last page. The following clauses were on page 1: OCCUPIERS DUTY 3.1. In accordance with the Occupiers Liability Act, [RSBC 1996] CHAPTER 337, Clever City Storage (an occupier of premises) owes a duty to persons entering on the premises and to any person, whether on or off the premises, whose property is on the premises, to take such care as, in all circumstances of the case, is reasonable to see that the person or property, as the case may be, will be reasonably safe while on the premises. LOSS OR DAMAGES TO GOODS 5.1 Renter acknowledges that Clever City Storage is only providing space to the Renter for the storage of goods at Renter s own risk and that Clever City Storage is not a bailee or warehouseman, and does not have custody of and has no obligation to care for or preserve Renter s goods.

3 Page 3 of 5 110, Section 2 Question 1, continued MARKS 60 The liability clause was on page 2 and it specified that: 7.1. Renter agrees that under no circumstances shall Clever City Storage, its directors, representatives, or employees be subject to any liability whatsoever for loss, theft, or destruction of, or damage to, any goods stored by the Renter in the unit, whatever the cause of such loss, theft, destruction or damage. At the last page of the agreement there was the following provision: FAILURE TO PERFORM In the event the Renter terminates this agreement prior to the expiration of this one year term, the Renter agrees to pay as liquidated damages an amount equal of the sum of the Renter s monthly billing for the most recent six months. The Renter acknowledges that the foregoing liquidated damages are reasonable in light of the anticipated loss caused by the termination and are not imposed as a penalty. When Samuel came to collect his items from the storage on November 19, 2010, he found that his stored goods, including the antique piano, were damaged by water that had probably leaked into the unit and flooded it. Thomas and Gordon, who were moving the items out of the unit, could not deny the damage but they could not figure out where the water came from since not a single unit in the storage had any water pipes. Samuel was upset and said that he would like them to follow up on the water leak with the engineers who had installed the units. He subsequently made a claim on his insurance policy but the insurance rejected it. That was all bad news for Samuel who ended up paying extra money for renovation of his business premises since he could not use any of the stored items. Moreover, finding new furniture and fixtures delayed opening of his modeling business and ultimately caused further loss of income. The insurance agent told him to sue Clever City Storage and its employees for damage especially since it made no sense that people would store their goods in self-storage unless it would be implied that storages were dry and safe places. The insurance agent also mentioned that the storage, or rather its employees Gordon and Thomas, probably acted carelessly since they had put Samuel s goods in that particular unit and failed to check on them regularly. The agent persuaded Samuel that Peter Beard should not be allowed to get away with such practice.

4 Page 4 of 5 110, Section 2 Question 1, continued MARKS 60 In the meantime, Samuel received a notice from Clever City Storage to pay liquidated damages stipulated in the contract. However, he does not have any intention of paying that amount but instead is now considering possibilities to recover loss from Clever City Storage. Advise him as to his contractual rights considering principles of common law that you studied so hard in your Contract class. Your professor of Contract will take care of any statutory interpretation and application if necessary. 40 Question 2 40 points Cherie Dee has a Ph.D. in creative writing but no job. She just lost her position in a video rental store Celluloid Dreams that recently went bankrupt. Inspired by numerous movies she saw, Cherie decided to write a book that would be easily turned into a movie or TV mini-series. If J.K. Rowing could rise to glory from a desperate jobless reality, Cherie thought she should be able to bounce back too. She has also been applying to university jobs whenever a position in an English department becomes available. Prodigal Publishing Company (PPC) has favorably reviewed one of Cherie s manuscripts, a novel called The Girl Without Tattoo. The editors suggested that Cherie could make the book shorter by reducing the number of main characters in the novel. Cherie understood that changes would require lot of additional work but was willing to do so after PPC suggested that the revisions would make the book attractive to a huge market of e-readers. Six months later, after she submitted her revised draft electronically, a publishing manager for PPC, Susanne Sew, and Cherie exchanged several s in which Ms. Sew explained PPC s publishing policy, such as royalty, complementary copies, wholesale price and publicity, and suggested that Cherie might need some further work on the manuscript. In her final , Ms. Sew emphasized that she could not make a final commitment to publish the book but that only the Editorial Committee would do it. However, she did attach to her Author s Publicity Form and Publishing Proposal Form, which specified the format of the book (paperback), number of copies (2,500) and a price per copy ($23.45). When Cherie finished her third draft she signed the Publishing Proposal Form and sent it as an attachment to PPC with the novel. She started dreaming big again and anticipated some advance payment from PPC after submission of the novel and the form. She bought a new ipad and Bang & Olufsen headphones. She also bought some new clothes and

5 Page 5 of 5 110, Section 2 Question 2, continued MARKS 40 shoes, and went to a spa for a full treatment for the first time in her life. She wanted to feel good about herself and to prepare for a job interview at a newly established College of Creative Writing in Vancouver, for which she was recently shortlisted. The advertisement asked for a person with a graduate degree in English literature, creative writing or an equivalent degree to work as a lecturer without review. The ad also specified that the starting day would be July 1, 2012 and that the appointment was subject to final budgetary approval. When Cherie came back from the job interview she received a letter from PPC explaining that due to a change of climate in publishing and a need for further improvement of the manuscript they had decided not to proceed with the publication of her book. Cherie was devastated and immediately sent an to Ms. Sew demanding an explanation why they had decided to break the contract with her. The following day, Ms. Sew replied by e mail suggesting that Cherie should take her draft to other publishers. At the end of the week, Cherie received a letter from the College of Creative Writing saying that she would not be offered a position. All her effort to get transcripts, references, a new wardrobe for an interview, was just a waste. The following week Cherie heard that the position was offered to a person without a Ph.D. Then she went to the law library at Allard Hall and did some research on her own. She concluded that on the basis of the rules of Contract she could sue PPC for a breach of contract, demand something called a specific performance of the contract, or in alternative damages for expenses she incurred during the period of writing and awaiting publication, coupled with damages for mental distress she suffered when they crashed her dreams. She further concluded that her job application situation is similar to creation of unilateral contracts and that she might be able to sue the college as well for breach of contract, although she is not sure if she would still want to work at the College. Cherie asked the librarians for an explanation and they suggested that she send her case to the class list. You are on that list and you know that Cherie is better off reading fiction than case law. Advise Cherie and explain what legal arguments Cherie could make and what counter arguments PPC and the College of Creative Writing could make? How would a court view them and why? END OF EXAMINATION

6 LAW : Contract Syllabus 2011/2012 Course description and objectives: The aim of this course is to introduce the basic concepts that underlie contractual obligations and to examine contract law in Canada in its social and political context. While the focus is primarily on common law, different ideas on which contract law is founded in civil law in Quebec are also discussed. The main objective of the course is to enable students to acquire basic legal skills to competently identify, analyze, synthesize and apply the law of contract. Students will learn to analyze and evaluate judicial opinions, statutory provisions and contractual clauses. In the first term (September-December 2011), the objectives are to help students understand the relationship between contract law and other categories of obligations recognized by the common law (tort and restitution), to familiarize them with different functions of contract law, and to introduce them to the key concepts of contract formation, such as an agreement between the parties, certainty, intention to create legal obligation, consideration, and privity. In the second term (January-April 2012), the focus is on interpretation of contractual obligations and on remedies for breach of contract. The objectives are to enable students to distinguish terms of the contracts from representations and puffs, to understand the importance and consequences of classification of terms of the contract, to learn when and why terms will be implied into a contract, and to understand consequences of non-performance of contractual obligations. Course materials (required): Stephanie Ben-Ishai and David Percy, : Cases and Commentaries, 8th ed. (Toronto: Carswell, 2009), Supplementary Materials (available online at the course web page) lractsindex.htm Other sources ( Library): Waddams, McCamus, Waidron, Neyers and Girgis, Cases and Materials on, 4thi ed. (Toronto: Edmond Montgomery Publications, 2010) Swan, Canadian Contract, 2d ed. (Lexis/Nexis Canada, 2010) Swan, Reiter and Baja,, Cases, Notes and Materials, 8th ed. (Lexis/Nexis Canada, Butterworths, 2010) B. MacDougall, Introduction to (Lexis/Nexis Canada, 2007) McCamus, The of (Toronto: Irwin, 2005) The Library collection related to common law of contracts includes many valuable casebooks and textbooks which could be used for further readings (Anson ofcontract, Cheshire, Fjfoot and Furmston s ofcontract, Chitty on Contract, or Treitel on of Contract). NOTE: The US materials available in the Library are based on primarily US case law, the Restatement of and Unjform Commercial Code (UCC). The Restatements (Second) of were drafted by the American Institute and they summarize in statute-like form the major common law rules on contracts. The UCC is statutory law that covers contracts for the sale of goods and is applicable only in the US. 1

7 COURSE SYLLABUS Note: All cases are available in Ben-Ishai & Percy (8th edition) and the on-line Supplement INTRODUCTION TO THE STUDY OF THE LAW OF CONTRACT Boyle& Percy 1-15 II. FORMATION OF THE CONTRACT 1. Offer, invitation to treat, tenders, communication of offer Canadian Dyers Ass. Ltd. v. Burton 18 Pharmaceutical Society v. Boots 20 Carlill v. Carbolic Smoke Bail Co. 25 Goldthorpe v. Logan 30 Harvela Investments Ltd. v. Royal Trust Co of Canada 33 R. v. Ron Engineering & Construction (Eastern) Ltd. 35 MJB. Enterprises Ltd. v. Defence Construction (1951) Ltd. 38 Double NEarthmovers Ltd v. City ofedmonton, 2007 SCC 3 (Supp.) Williams v. ar.vardine 50 R. v. Clarke Acceptance, communication of acceptance, electronic contracts Livingstone v. Evans 54 Butler Machine Tool v. Ex-cell-o Corp. 56 Carlill v. Carbolic Smoke Ball Co. 25 Dawson v. Helicopter Exploration Co. 66 Feltho use V. Bindley 72 Saint John Tug Boat Co. v. Irving Refinemy Ltd. 75 ProCD v. Matthew Zeindenberg and Silken Mountain Web Services Inc. 61 Household Fire v. Grant 81 Holwell Securities v. Hughes 85 Brinkibon v. Stahag Stahl 88 Rudder v. Microsoft Corp. 93 Kanitz v. Rogers Cable Inc. (Supp.) Electronic Transaction Act [SBC 2001] C.10 -ss. 11 & 15 (Supp.) International Convention on Sale of Goods, Art. 1 8(2)(3) and 24 (Supp.) 3. Termination of Offer: revocation, rejection and counter-offer, lapse of time; problems with unilateral contracts Dickinson v. Dodds 97 Byrne V. Van Tienhoven 100 2

8 Erringlon v. Errington and Woods 102 Cariill v. Carbolic Smoke Ball Co. 25 Livingstone v. Evans 54 Dawson v. Helicopter Exploration Co. 66 Barrick v. Clark Certainty of Terms; vagueness, incompleteness, agreements to negotiate, anticipation of formalization R. v. CAE Industries Ltd. 114 May & Butcher v. R. 119 Hiiiasv.Arcos 122 Foley v. Classique Coaches Ltd. 126 Sale of Goods Act ss. 12 & 13 - Ascertainment of price (Supp.) E,npress v. Bank ofnova Scotia 131 Mannpar Enterprises Ltd. v. Canada 134 Bawitko Investments Ltd v. Kernels Popcorn Ltd. 145 Wallace v. Allen, 2009 ONCA 36 (Supp.) 5. Consideration: nature of consideration, past consideration, forbearance, pre-existing duty The Governors ofdalhousie College v. the Estate ofarthur Boutilier 156 Thonas v. Thomas 169 Eastwoodv. Kenyon 166 Lampleigh v. Brathwait 168 Pao On v. Lau Yiu Long 173 Stilk v. Myrick 177 Gilbert Steel v. University Construction Ltd. 178 Williams v. Roffey Bros. 182 Greater Fredericton Airport Authority Inc. v. NA V Canada 186 Foakes v. Beer 192 Re Selectmnove 195 Foot v. Rawlings 197 and Equity Act (R.S.B.C. 1996, c. 253) s. 43 (Supp.) 6. Waiver and Promissory Estoppel Hughes v. Metropolitan Railway Company 201 Central London Property v. High Trees House 203 John Burrows v. Subsurface Surveys 205 D &CBuilders v. Rees 208 Combe v. Combe 224 Walton Stores v. Maher 230 M(N) v.a.(ta.) Intention to Create Legal Obligation Balfour v. Balfour 243 Rose and Frank v. JR. Crompton Bros. 246 TD Bank v. Leigh Instruments Ltd

9 8. Formality: The Requirement of Writing Dynamic Transport Ltd. v. O.K Detailing Ltd. 258 Deglinan v. Guaranty Trust Co. 262 III. PRIVITY OF CONTRACT Tweddle v. Atkinson 276 Dunlop PneumaticTyre Co. v. Seifridge & Co. Ltd. 277 Besweck v. Beswick 283 London Drugs Ltd. v. Kuehne & Nage! International Ltd. 298 Fraser River Pile & Dredge Ltd. v. Can-Dive Services 310 IV. CONTENT OF THE CONTRACT 1. Misrepresentation and Rescission: Representations and Terms, Parol Evidence Rule Redgravev.Hurd 355 Sinith v. Land & House Property Corporation 359 Kupchak v. Dayson Holdings 363 Hielbut, Symons & Co. v. Buckleton 371 Leafv. International Galleries 378 Sodd Corp. v. N Tessis 392 B, G. Checo Int l Ltd. v. B.C. Hydro 395 (Supp.) No Taurus Ventures Ltd. V. Intrawest Corp. Hawrish v. Bank ofmontreal 412 Bauer v. Bank ofmontreal 415 Gallen v. Butterley 422 Hong Kong Fir v. Kawasaki Kisen Kaisha Ltd 436 Wickman v. Schuler 443 Business Practice and Consumer Protection Act (Supp.) 2. Discharge by Performance or Breach Jedfro Investments (USA) Ltd. V. Jacyk (Supp.) Fairbanks v. Sheppard 450 Sumpter v. Hedges 454 Howe v. Smith 455 Stevenson v. Colonial Homes Ltd Standard Form and Exclusion Clauses Machtinger v. Hoj Industries Ltd. 463 Thornton v. Shoe Lane Parking Ltd. 478 McCutcheon v. David MacBrayene Ltd. 488 Tilden Rent-A-Car CO. v. Clendenning 492 Karroll v. Silver Star Mountain Resorts Ltd

10 Zhu v. Merrill Lynch (Supp.) Tercon Contractors Ltd. v. BC (Transportation and Highways) (Supp.) V. EXCUSES FOR NON-PERFORMANCE: MISTAKE AND FRUSTRATION (TBA) VI. THE PROTECTION OF WEAKER PARTIES: DURESS, UNDUE INFLUENCE, UNCONSIONABILITY Pao On v. Lau Yiu Long 173 Greater Fredericton Airport Authority Inc. v. NA V Canada 666 Geffen v. Goodman Estate 680 Royal Bank ofscotland Plc. v. Etridge (no. 2) 688 Morrison v. Coast Finance Ltd. 697 Marshall v. Can. Permanent Trust Co. 701 Harry v. Kreutziger 709 Business Practices and Consumer Protection Act (S.B.C.2004, c.2) ss (Supp.) VII. ILLEGALITY AND PUBLIC POLICY Still v. Minister ofnational Revenue 762 Shafron v. KRG Insurance Brokers (Western) Inc. 730 Vifi. REMEDIES Damages: interest protected, quantification, certainty, causation and remoteness, mitigation, time of measurement McRae v. Commonwealth Disposals Commission 793 Sunshine Vacation Villas Ltd. v. Hudson Bay Co. 801 Attorney General v. Blake 805 Chaplin v. Hinks 814 Groves v. John Wunder Co. 816 New West Homes Ltd. v. Thunderbird Petroleums Ltd. 821 Jarvis v. Swans Tours 825 Hadley v. Baxendale 858 Victoria Laundry v. Newman 861 Koufos v. Czarnikow (The Heron II) 868 Asamera Oil Orp. v. Sea Oil 871 Semelhago v. Paramadevan Aggravated and Punitive Damages Whiten v. Pilot Insurance Co. 846 Fidler v. Sun Lfe Assurance (Supp.) Honda v. Keays (Supp.) 5

11 3. Liquidated Damages, Deposits and Forfeitures Shall/la v. Feinstein 885 H.F. Clarke Ltd. v. Thermadaire Corporation Ltd G. Collins Insurance Agencies Ltd. v. Esley 896 Stockloser v. Johnson Equitable Remedies (Specific Performance,Injunctions, Rectifiction) John E. Dodge Holdings Ltd. v Ontario Ltd. 904 Warner Bros. v. Nelson 910 Zipper Transportation v. Korstrom 916 Zipper Transportation v. Korstroin 917 Shafron v. KRG Insurance Brokers (Western) Inc. 730 NOTE: Cases and readings are subject to additions, deletions and reordering which will be announced in class 6

12 . There can be no contract of sale unless there can be found an offer to sell and an acceptance of the offer. Canadian Dyers Ass. Ltd. v. Burton Formation: Offer & invitation to treat. (1920)47 O.L.R. 259 (H.L.) Invitation to Treat. A mere quotation of price does not constitute an offer to sell; it is no more than [I]. The courts will look at the language used in the light of the circumstances in which it is used and into the subsequent actions of both parties to determine whether what is said by the seller is a mere_quotation_of price_or an offer to sell. Pharmaceutical Society v. Boots Formation: Offer & shelves is an invitation to treat. [2] [1953] 1 Q.B. 401, [1953] All E.R. Invitation to Treat 482 (C.A.) (retail sale) cashier accepts the offer.. The general assumption in the case of retail self-service sales is that placing goods on. An offer and acceptance take place at the cashier when a customer offers to buy and a. An offer in a supermarket sale was held to be made by the customer at the cash desk and the contract was held to be formed when a cashier took the money. Formation: Offer & R. v. Dawood Note that the S.C.C. overruled R. v. Dawood on the criminal law issue in R. v. Mime [3] Invitation to Treat [1976] 1 W.W.R. 262 (Alta. C.A.) [1992] 1 S.C.R. 697, saying that property does not pass for the purpose of the criminal law (retail sale) if the law of property creates a right of recovery. Under R.v. Mime, actions such as Dawood s would result in a criminal conviction.. The general assumption is that advertisements published in newspapers are invitations to Goldihorpe v. Logan treat, not offers. Formation: Public [4] [1943] O.W.N 215, [1943] 2 D.L.R. However, the court looked at the surrounding- circumstances, the actions ofboth parties offer or invitation 519 (C.A.) (direct contact, consultation, examination, etc.) and the language used in the ad and held to treat that Logan s electrolysis ad was an offer to the public at large. Formation: In general, in order to be binding an offer has to be communicated to an offeree and it has Blair v. Western Mutual Benefit Communication of to be intended as an offer. [5] Assn. Offer, A bare resolution without advice, formal or otherwise, cannot be considered ipsofacto to [1972] 4 W.W.R. 284 B.C.C.A.) Intention to create create or indicate an intention to create a legal obligation capable of acceptance. lal obligations [6] Carlill v. Carbolic Smoke Ball Co. [1893] 1 Q.B. 256 (c.a.) An ad was held to be an offer for a unilateral contract, an offer to the public at large to Formation: everyone who does something (a guarantee in an ad was held to be an indication of the Communication of intention to create legal obligations). Offer public offer An ordinary rule of law is that acceptance of an offer requires the offeror to be notified in to anyone who does order that the two minds may come together. something; However, in the case of a unilateral contract, an offer is made to the public but the Communication of contract is not concluded with everybody (all the world. It is only formed with that Acceptance; limited portion of the public who come forward andperform the condition on the faith of Unilateral the advertisement (following the indicated method of acceptance). 1

13 2 The court held that in the case of rewards (or an offer to anyone who can give the Formation: Williams v. Carwardine information requested) the defendant is entitled to the reward regardless ofher motives Communication of [7] (1883) 4 B. & Ad. 621, 1 10 E.R. (fear of God s punishment) because she knew ofthe reward and act Offer she performed the in public offer 590 (K.B.) question. anyone to who does The case does not give offer-acceptance analysis but deals with human motives, something. In contrast with Williams v. Carwardine, the court held that the defendant was not entitled Formation: to the reward because he did not act in reliance Communication of R. v. Clarke on the offer but for other reasons (to clear [8] himself from a false accusation). Offer offer (1927) 40 C.L.R. 227 (Aust. H.C.) public. Reconcile with Williams v. Carwardine by noting that in a bi-lateral contract knowledge is to anyone who does required (to enable meeting of the minds), but motive is irrelevant, something. Whether an invitation from a seller to prospective buyers was to be construed as an [9] Harvela Investments Ltd. v. Royal Trust Co. ofcanada [1986] A.C. 207, [1985] 2 All E.R. 966 (H.L.) invitation to participate in a fixed bidding sale or in an auction sale depended on the presumed intention of the seller as deduced from the express provisions of the invitation to bid (an invitation for the submission of Offer offers was held to be an invitation for a fixed Formation: & bid). Invitation Treat to The legal nature ofthe invitation was that of unilateral contracts; if tenders an offer was received - from both Harvela and Sir Leonard, the obligation of the baiik (the vendors) was to sell the shares to the promisor whose offer was the highest and any obligation to the other tenderer under the other unilateral contract came to an end.. 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 to potential tenderers to make offers. Formation: Offer &. The tender call is the offer and the bid submission is the acceptance of that offer which Invitation to Treat R. v. Ron Engineering & [10] Construction (Eastern) Ltd. [1981] 1 S.C.R. 11, 13 B.L.R. 72 leads 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 the tenderer (not to withdraw from the bid) and the owner (to treat tenderers fairly and in good faith). - tenders. Contract B is the construction contract to be formed between the owner and the successful tenderer.. The submission of a tender in response to an invitation to tender may give rise to contractual obligations (contract A), quite apart from the obligations associated with the construction contract to be entered into upon the acceptance of a tender (contract B). But it is always possible that contract A does not arise upon the submission of (if a tender the M.J.B. Enterprises Ltd. v. Defence tender is invalid). Offer Formation: & [11] Construction (1951) Ltd) The invitation for tenders may be characterized if as an offer to consider a tender, that Invitation Treat to [1999] 1 S.C.R. 619 tender is valid. tenders - The submission of the tender is good consideration of the owner s promise, as the tender was of benefit to the owner, prepared at a not an insignificant cost and accompanied by the bid security. The privilege clause is only one term of contract A and must be read in harmony with the

14 rest of the tender documents it does not override the obligation to only accept compliant. The owner does not have a duty to investigate as to whether a submitted bid is compliant or Double N. Earthmovers Ltd. Ci [12] ofedmonton, 2007 SCC 3 to look beyond the face of the bid to ensure compliance; it only has a duty to treat all bids fairly and equally Fonnation: Offer & Invitation to Treat. 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 further obligations to unsuccessful bidders - tenders Formation: without the consent of the one who made it. Acceptance Livingstone v. Evans A counter-offer is a rejection ofthe original offer, a mere inquiry is not. [13] [1925] 3 W.W.R. 453, [1925] 4 If an offeror replies to the rejection, the reply ( cannot reduce price ) may amount to a D.L.R. 769 (Alta S.C.) renewal of the offer. The answer is dependent upon considering all surrounding. An offer that has been rejected is thereby ended and it cannot be afterwards accepted [14] circumstances. In order to avoid problems with contract formation (and revocation of offer) courts should treat offers as calling for bilateral rather than unilateral action when the language can be fairly so construed counter-offer; rejection and counter offer Where acceptance is not expressly given the question of whether the language used Formation: offer Dawson v. Helicopter Exploration amounts to acceptance will be a matter of construction of the court which may include and acceptance; Co. [1955] S.C.R. 868 taking into consideration conduct of the acceptor unilateral and Although in theory an offer for a unilateral contract can be revoked any time before the bilateral contracts acceptance, such as offer could be interpreted to have an implied term that an offeror who controls conditions of cooperation of an offeree would not be allowed to prevent performance/acceptance of an offeree. Lord Denning restated the traditional last shot formula for the resolution of the battle of the [15] forms, identif ing several possibilities for courts: Butler Machine Tool v. Ex-cell-o 1. Last shot: a contract is concluded upon the terms of the last document sent by one of the Formation: Corp. parties that was not objected to; 2. First shot: a contract is concluded upon the terms of the Acceptance [1979] 1 W.L.R. 401, 1 All E.R. first document; 3. All shots count and the court must discover its terms on an objective counter-offer; 965 (C.A.) basis: A) a contract is concluded upon terms drawn from all the documents that have battle of forms 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. Follows the test in Butler Machine that in a battle of the forms the court will examine all of Tj wood Industries v. St. Ann- [16] Nackawic Pulp & Paper (1979) 100 D.L.R. (3d)(Ont. H. C.). the documents exchanged between the parties and look into their commercial relationship, Formation: in order to find out if they considered any terms other than those found on the face of the Acceptance documents. counter-offer; The court only considered the terms on the face of the documents. The other party s battle of forms attention must be drawn to_the_important terms,_else unconscionable. Feithouse v. Bindley Formation: Silence does not amount to acceptance. [17] (1962) 11 C.B. (N.S. 869, 142 E.R (Ex. Ch.) Even though the nephew (seller) might have intended to sell, he never communicated this Communication of Acceptance 3

15 J intention to his uncle (buyer).. In general, the offeror is in control ofthe mode of acceptance but the courts are reluctant to allow silence to be specified as the mode of acceptance.. The conduct of an offeree, unaccompanied by any verbal or written undertaking, could Formation: [18] Saint John Tug Boat Co. v. Irving Refinery Ltd. [1964] S.C.R. 614 under certain circumstances (for example, continuing serviced on terms previously agreed) Communication of be reasonably constructed as valid acceptance Acceptance Formation:. General rule re-emphasized: an offer of a bargain by A to B imposes no legal obligation Eliason v. Henshaw [19] (1819)4 Wheaton 225,4 U.S. (L. upon A until it is accepted by B according to the terms in which the offer was made. Communication of Acceptance. If the offeror specified the mode of acceptance and the acceptance was not made in the Ed.) 556 requested manner, there is no contract (Mirror image rule).. The mailbox rule (the contract is concluded where and when the acceptance is mailed) Formation: Brinkinbon v. Stahag Stahl applies only if acceptance by mail is required or if Communication of that has been a regular business practice [20] [ A.C. 34 [1982] 1 All E.R. of the parties or if the offer is made by mail and no acceptance requirements are specified Acceptance 293 (H.L.) Instantaneous The receipt rule (the contract is made when and where the acceptance is received) applies communication to instantaneous communications such as phone or telex or facsimile, [21] The court upheld the general mailbox rule in situations where the acceptance is lost in the Formation: Household Fire v. Grant p Communication and as a consequence the offeror was bound by the offer even though acceptance was of not received. The majority held the post office to be the agent of both parties. The dissent Acceptance rejected this and applied the recipient rule. acceptance mailed The postal rule should only apply if it does not lead to manifest inconvenience and Formation: Communication of Hoiwell Securities v. Hughes [221 [1974] 1 W.L.R. 155, 1 All E.R. 161 (C.A.) The postal rule does not apply if the express terms of the offer specify that the acceptance Acceptance must reach the offeror. The requirement for notice was held to invoke the recipient rule. acceptance mailed. The method of acceptance isn t essential so long as the acceptance is received at the proper Formation: [23] [24] Yates Building Co. V. Pulleyn & place at the proper time and with no disadvantage to the offeror. Communication of Sons Ltd. (1975) 119 SJ 370 Must consider the purpose of the stipulated manner of acceptance Acceptance in the offer to determine whether it is essential or not. acceptance mailed Terms of a contract entered into on the internet can be displayed on multiple pages. Users Rudder v. Microsoft Corp. are expected to follow the links and become familiar with all terms before accepting the [1999] O.J (Ont. S.C.J.) terms of the contract. Clicking the 1 agree button results in formation of a valid contract. Formation: Communication of [25] Byrne v. Van Tienhoven The mailbox rule does not apply to revocation revocation must be received by the otteree (1880) C.P.D. 344 to be effective. Acceptance Formation: Termination of Revocation Offer - The general principle is that if a person who makes an offer dies, the offer cannot be accepted after they are dead. v. Dodds The court held that an offer could be revoked by indirect communication applying the same (1876) 2 Ch. D. 463 (C.A.) general rule logic that is, once the person to whom the offer was made knows that the Formation: Dickinson 4 Termination of Offer - [26] property has been sold to someone else, it is too late for them to accept the offer and the contract is_impossible to_make. Revocation

16 . A promise to hold an offer open is not binding unless have consideration or a deed. Equity cannot be applied when a third party has acquired rights.. Legal consequences of family arrangements are difficult to ascertain.. Unilateral contracts are formed when all conditions of the offer are met. Errington v. Errington and Woods In general, offers for unilateral contracts can be revoked any time prior to complete [27] [1952] 1 K.B. 290, [1952] 1 All fulfillment by the offeree, but the court held that in this case an offer for a unilateral E.R. 149 (C.A.) contract could not be revoked by the promisor once the promesee entered on performance Barrick v. Clark [28] [1951] S.C.R. 177, [1950] 4 D.L.R. 529 Formation: Termination of Offer Unilateral contracts of the act (but it would cease to bind the offeror if performance was left incomplete and unperformed). An offer will lapse if it is not accepted within a time limit determined by the offeror, or if a time limit is not specified, then it will lapse within a reasonable time. Formation: The court will detennine what is a reasonable time using the rule of construction Termination of (objective test) it will depend upon the nature and character of the item being sold, on the Offer Lapse of normal or usual course of business in negotiations as well as the circumstances of the offer, Time including the conduct of the parties in the course of negotiation. Manchester Diocesan Council v. Commercial and General [29] Investments Ltd. [1970] 1 W.L.R. 241, [1969] 3 All E.R (ch.d.) If an offeror has prescribed a particular method of acceptance, but not in terms insisting that it be the only mode of acceptance, an acceptance communicated to the offeror by any Formation: other mode which is no less advantageous to the offeror, will conclude the contract. Termination of Re-emphasizes the basic principle that where an offer is made in terms which fix no time Offer Lapse of limit for acceptance, the offer must be accepted within a reasonable time to make a Time contract. [30] A contract for Internet service was a take it or leave it contract. The original agreement allowed for changes to the contract and given the alert message on the main page it is reasonable to expect a customer who uses the Internet to go further than the main page of the website and check for changes to the contract. Formation: On-line contract - Kanitz v. Rogers [2002] O.T.C. 143 reasonable notice There was a clear inequality of bargaining position of the parties, however notice of the (Ont. S.C.J.) amendment was not unreasonably buried in the agreement, but was set out in plain Nicolene v. Simmonds [31] [1953] 1 Q.B. 543, [1953] 1 All E.R.822(C.A.) [32] Unconsionability: language without legalese. arbitration clause The arbitration clause was held not unconscionable as both parties are obliged to arbitrate and resulting contractual arrangements were not improvident. Lord Denning held that a clause which is meaningless can often be ignored, whilst still leaving the contract good; whereas a clause which has yet to be agreed may mean that there is no contract at all, because the parties have not agreed on all the essential terms. Formation: A meaningless clause is a clause so vague and uncertain as to be incapable of any precise Certainty of Terms meanmg. A meaningless clause has to be clearly severable from the rest of the contract. May & Butcher v. R. To be a good contract there must be a concluded bargain which settles everything that is Formation: [1934] 2 K.B. 17 (H.L.) necessary to be settled and leaves nothing to be settled by later agreement between the Certainty of Terms 5

17 [33] Hillas v. Arcos (1932) 40 Lloyd s Rep. (c.a.) 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 relevant terms, but it is not acceptable to agree that the parties will in the future agree upon a matter which is vital to the contract.. Court of Appeal with great regret upheld May & Butcher s general rule that if there are any essential terms of a contract of sale undetermined, and therefore to be determined by a subsequent contract, there is no enforceable contract.. House of Lords took a more modern approach: Business men often record the most important agreements in crude and summary fashion; modes of expression sufficient and [34] Hillas v. Arcos clear to them in the course of their business that are far from complete or precise. Formation: Certainty of Terms Formation: (1932) 147 L.T. 503 (HL.) Certainty of Terms. It is the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects.. Interpreted the general principles of H.L. s decision in Hillas to mean that each case should be decided on the construction of the particular document. [35] Foley v. Classique Coaches Ltd. Held that an agreement to agree on price from time to time was certain enough since the Formation: [1934] 2 K.B. I (C.A.) parties believed they had a contract and had acted for 3 years as if they did i.e. there was Certainty of Terms already partial performance: The land had been transferred and a portion of the sale of gas agreement had been performed. [36] [37] Courtney and Fairbairn v. Tolaini. Lord Denning held that the price in a building contract is of fundamental importance. Bros. Formation: There is no contract unless the [1975] 1 All price is agreed or there is an agreed method of ascertaining E.R. 716, [1975] 1 it that is not dependent on the negotiations of the two parties themselves. W.L.R. 297 (C.A.) Empress v. Bank ofnova Scotia [1991] 1 W.W.R. 537 (B.C.C.A.) The court will try, wherever possible, to give the proper legal effect to any clause that the parties understood and intended to have legal effect. Agreements to agree cannot be enforced. When the parties stated a formula (e.g. market rental) to ascertain a clause, but did not supply machinery (e.g. arbitration) for applying the formula, the courts will supply (be) the machinery 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 the formula, 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 is unworkable), in this case there was an implied term requiring good faith negotiations for the renewal of the rental agreement. Certainty of Terms Formation: Certainty of Terms Mannpar Enterprises Ltd. v. The court held that the renewal clause in the rental contract was a mere agreement to Canada Formation: [38] agree the contract did not provide a formula or objective measure to determine rent (such [1999] 173 D.L.R. (4) 243 Certainty of Terms as fair market value) or a mechanism to apply the formula. (B.C.C.A.) Bawitko Investment Ltd. v. Kernels Formation: [39] Popocorn Ltd (1991) 79 D.L.R. (4th) The oral agreement in contemplation of a formal written agreement not enforceable due to Certainty of Terms 6

18 97(Ont. C.A.) the lack of certainty; it is a contract to make a contract Wellington City Council v. Body [40] Corporate The process contract or the agreement to negotiate in good faith is unenforceable for the Formation: [2002] 3 N.Z.L.R. lack of 486 (C.A.) certainty Certainty of Terms Letter of intent could amount to an enforceable contract if the parties clearly express their Formation: Wallace v. Allen, intention 2009 ONCA to be 36 bound by the terms of LOT which were later to be incorporated into a main Certainty of Terms [411 contract, if the terms of LOl are precise and complete, and if the parties after signing LOl conducted themselves as if the deal is completed. Shrink-wrap licenses are enforceable unless their terms are objectionable on grounds applicable ProCD v Matthew to contracts in general. [42] (1996) 86 F. 3d 1447 If the buyer does not want to be bound by the terms contained inside the box the buyer has [43] [44] and letters of intent Formation: Certainty of Terms the right to return the goods promptly (unused) for a refund, but will otherwise be bound by those terms.. Atkin L.J.: the common law does not regulate agreements between spouses...the Enforcement of Balfour v. Balfour consideration that really obtains from them is that natural love and affection. Promises: Intention [1919] 2 K.B. 571 There is a strong presumption that family agreements are not intended to produce legal to Create Legal consequences. Obligation Rose and Frank v. JR. Crompton Bros., [1923] 2 K.B. 261 (C.A.). There is a strong presumption that business agreements are intended to produce legal consequences. However, if there is a clear and definite expression of the business parties that they do not intend to be subject to legal jurisdiction, there is no reason in public policy why effect should not be given to their intention.. Held that the arrangement between mother and daughter was throughout a family Jones v. Padavatton arrangement depending upon the good faith of the parties in keeping the promises made [45] [1969] 2 All ER 616, [1969] 1 WLR and not intended to be a rigid binding agreement; 328 (C.A.) The family arrangement was held far too vague and uncertain to be itself enforceable as a contract. [461 Enforcement of Promises: Intention to Create Legal Obligation Enforcement of Promises: Intention to Create Legal Obligation Toronto Dominion Bank Enforcement v. Leigh of (4th) Instruments A comfort (1999) 178 D.L.R. letter is a form of undertaking that is deliberately designed with the intention not Promises: Intention 634 (Ont. to create C. A.) enforceable obligations, to Create Legal Obligation The Governors ofdalhousie Enforcement of [47] College For at Haflfax a promise to be binding v. The Estate as a contract it has of to be supported by a good and sufficient Promises: Arthur Boutilier, Deceased [1934] S.C.R. 642 consideration which moves from the promisee at the time of and in exchange for the promise which is sought to be enforced Consideration Eastwood v. Kenyon Moral obligation is nudum pactum, a voluntary promise without any consideration. Enforcement of [48] (1840) 11 Ad. & E. 438, 113 E.R. Past consideration is not a good consideration for a new promise made after a benefit was Promises: Past 482 (Q.B.) conferred and when the benefit was not conferred at the request of the promisor. Consideration [49] Lampleigh v. Brathwait, (1615) Past consideration may be a good consideration for a subsequent promise if the benefit was Enforcement: Past Hobart 105, 80 E.R. 255 (K.B.) conferred at the request of the promisor. Consideration 7

19 . Consideration is something which is of some value in the eyes of the law. Enforcement of Thomas v. Thomas [50] Consideration must move from the promise. Promises: Nature of (1842)2 Q.B. 851, 114 E.R. 330 Consideration must be sufficient but need not be adequate. Consideration [511 [521 [53] [54] If an agreement is made to compromise a disputed claim, forbearance to sue in respect of Enforcement of Callisher v. Bischoffsheim that claim is a good consideration Promises: (1870) 1 L.R. 5 If a person bona fide believes he has a reasonable ground for suing, his forbearance to sue Compromise and will constitute a good consideration Consideration Enforcement of Wardv. Byham, [1956] 1 WLR 496 Consideration can be anything beyond a basic legal duty. Promises: Nature of (C.A.) Consideration B. v. Arkin A forbearance to sue is good consideration and monies paid in exchange for a promise not [1996] 8 W.W.R. 100 (Man.Q.B.); to sue is a valid and enforceable legal contract. The forbearance can be good consideration affirmed [1996] 10 W.W.R. 689 even if the validity of the claim is doubtful or not known to be invalid (but not if the claim (Man. C.A.) is known to be invalid). Past consideration can sometimes be good consideration if: 1. The act was done at the promisor s 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 third Pao On v. Lau Yiu Long party can be valid consideration. [1980] A.C. 614 (P.C.) Duress, whatever form it takes, is a coercion of the will so as to vitiate consent; duress may render a contract voidable, but this must be claimed promptly. The commercial pressure alleged to constitute duress must be such that the victim entered the contract against their will, they had no alternative course open to them, and they were confronted with coercive acts by the party exerting the pressure. Enforcement of Promises: Forbearance Enforcement of Promises: Pre existing Legal Dut Duty Owed to a Third Party; Economic Duress; Past Consideration A unilateral promise to increase price is unenforceable because there is no clear agreement to rescind the existing contract the new provisions were unilaterally imported into the Enforcement of document and accordingly, consideration of the oral agreement was not found in a mutual Promises: Pre Gilbert Steel v. University agreement to abandon the earlier written contract and assume the obligations under the new existing Legal [551 Construction Ltd. oral one. Duty Duty Owed (1976) 12 O.R. (2d) 19, 67 D.L.R. In Silk v. Myrick (1809, when two out of 11 sailors deserted the ship, the captain to the Promisor; (3d) 606 (C.A.) promised to pay the remaining sailors extra money if they sailed the ship back. However, Reference to Silk [56] Williams v. Roffey Bros. [1990] 1 All ER. 512 (C.A.) he later refused to pay that extra money. The court held that the captain was not obliged to v. Myrick (1809) pay the extra money because the obligation to sail the ship back was not a valid 170 E.R consideration for the subsequent agreement which varied the original one. Enforcement of Pre-existing legal duty owed to the promisor may be a valid consideration for a subsequent Promises: Pre promise if the promisor derives practical benefit from the agreement and if the subsequent existing Legal promise is not given under economic duress (note Glidewell s 6 point test). Duty Duty Owed to the Promisor 8

20 . Robertson J.A. held that it is time to build upon UK decision in Williams v. Roffey and accepted that post-contractual modification, unsupported by consideration, may be Enforcement of enforceable so long as it is established that the variation of contracts was not procured Promises: Pre Greater Fredericton Airport under economic duress. [57] Authority Inc. v. NA V Canada existing Legal. Commercial reality needs to be recognized and considered that is, that the parties Duty Duty Owed [2008] N.B.J. No. 108 (NB.C.A.) frequently varied and modified their contractual obligations and that the law has to protect to the Promisor their legitimate expectations that the modifications or variations will be regarded as enforceable.. The promise to pay a sum which the debtor was already bound to pay was not good Enforcement of [58] Re Selectmove Ltd [1995] 2 All consideration (confirms Foakes v. Beer) Promises: Duty E.R. 531 (C.A.) Williams v. Roffey principle not applicable where the existing obligation is to pay money Owed to the but rather only where the existing obligation is to supply goods or services Promisor Enforcement of The traditional common law position is that an agreement to accept a smaller sum in Promises: Pre [59] satisfaction of a debt of a larger sum is not a good consideration. existing Legal Foakes v. Beer (1884)9 App. Cas. 605 (H.L.) This case has been overruled in B.C. by s.43 of the and Equity Act. Duty Duty Owed to the Promisor Enforcement of 1n the case ofthe debtor who owed the creditor a large sum under a series of promissory Promises: Foot v. Rawlings [1963] S.C.R. 197 Part payment of [60] notes as full payment of the debt, as long as the debtor continued to perform his obligation and kept paying by post-dated cheques as subsequently agreed between the two, the debt creditor s right to sue on the notes was suspended.. [I]t is the first principle upon which all Courts of Equity proceed, that if parties who have Hughes v. Metropolitan Railway entered into definite and distinct terms involving certain legal results certain penalties or legal forfeiture afterwards by their own act or with their own consent enter upon a course Enforcement of of negotiation which has the effect of leading one of the parties to suppose that the strict Promises: Waiver rights arising under the contract will not be enforced, or will be kept in suspense, or held in and Promissory abeyance, the person who otherwise might have enforced those rights will not be allowed Estoppel [61] Co. (1877) 2 A.C. 439 (H.L.) to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties Enforcement of Central London Property v. High A promise intended to be binding, intended to be acted on and in fact acted on, is binding even if there is no consideration (Lord Denrnng relied on the doctrine of promissory Promises: Waiver Trees House estoppel). and Promissory [62] [1947] 1 K.B. 130, [1956] 1 All Estoppel Estoppel was used as a shield by tenants against the landlord who wanted to enforce a E.R. 256 higher rent. John Burrows v. Subsurface The passive conduct of the appellant was not taken by the court as a waiver of his rights to Enforcement of Surveys seek enforcement of the contract, but only as friendly indulgences. Promises: Waiver [1968] S.C.R. 607, 68 D.L.R. (2) When there is no consideration or deed, any relaxation of terms must be clear and and Promissory [63] 354 unequivocal. Estoppel [64] D. C. Builders v. Rees A creditor is barred from enforcing their legal rights only when it would be inequitable for Enforcement of 9

21 10 [1966] 2 Q.B. 617 the creditor to insist on them. Promises: Waiver. Where there has been a true accord, under which the creditor voluntarily agrees to accept a and Promissory lesser sum in satisfaction, and the debtor acts on that accord by paying the lesser sum and Estoppel the creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance, but they are not bound if there was no true accord.. A promise made under duress should not be estopped.. Lord Denning explained his own principle set out in High Trees: a) promissory estoppel Enforcement of Combe v. Combe cannot be used as a sword, to create new causes of action where none existed before, b) Promises: Waiver [65] [ K.B. 215, 1 All E.R. 767 promissory estoppel can only be used as a shield, as a part of a cause of action, to prevent a and Promissory (C.A.) party from insisting upon his strict legal rights when it would be unjust to allow him to Estoppel enforce them.. Australian court made an exception to the general rule that promissory estoppel cannot be Enforcement of Promises: Waiver Walton Stores (Interstate) Ltd. v. used in the absence of a pre-existing legal relationship. [66] Maher The court held that the doctrine can be used in the absence of a pre-existing legal relation if and Promissory Estoppel (1988) 62 A.L.J.R. (H.C.) there was a reliance on the promise that was a reasonable expectation and if a departure from the promise is unconscionable behavior. Enforcement of Promises: Waiver B.C.C.A found little evidence in Canadian authorities to indicate a move toward a more [67] (4th) 73 (B.C.C.A.) generous approach to promissory estoppel and distinguished the case from Walton, in N.M. v. A.TA. (2003), 13 B.C.L.R. and Promissory which there was a reasonable expectation of a legal obligation. Estoppel. Denning on waiver: if one party by its conduct leads another to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that Enforcement of belief and he does act on it, then the first party will not afterwards be allowed to insist on Promises: [68] W.J. Alan & Co. V. El Nasr Export the strict rights when it would be inequitable for him to do so Promissory & Import Co. [1972] 2 Q.B. 189 On some occasions it is possible to revert to the strict rights if the reasonable notice is Estoppel and given; but not if that would be inequitable Waiver Waiver would operate even if there is no detriment for the parties as long as there is some alteration of the parties positions and one party acts in reliance on waiver Société Italo-Belge Pour Le Estoppel and waiver require reliance on representation but detriment is not needed Enforcement of Commerce v. Palm and Vegetable It must be inequitable to allow the party who waives his or her rights to revert Promises: [69] Oils (The Post Chaser) [1982] 1 All Promissory E.R. 19 (Q.B.) Estoppel and Waiver Waiver will be found where the evidence demonstrates that the party waiving had (1) a full Enforcement of [70] Saskatchewan River Bungalows v. knowledge of his/her rights; (2) an unequivocal and conscious intention to abandon them Promises: Maritime Lfe Assurance Waiver can be retracted if a reasonable notice is given to the party in whose favour it Promissory [1994] 2 S.C.R.490 operates Estoppel and Waiver The notice to revive waived obligations could be reasonable in length even if it is not a Enforcement of [71] International Knitwear Architects dated notice Promises: Inc. v. Kabob Investments (1995) 17 Promissory

22 Contraar B.C.LR. (3d) 125 (B.C.C.A) Estoppel and Waiver Petridis v. Shabinsky (1982) 132 Promissory estoppel could only apply when there was a legal relation between the parties Enforcement of [72] D.L.R. (3d) 430 (Ont. H.C.) Promises: Promissory Estoppel Robichaud c. Casse Populaire Promissory estoppel used both as a shield and as a sword Enforcement of [73] (1990) 69 D.LR. (4th) 589 Promises: (N.B.C.A.) 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 be Privity of Contract: sued on that contract. Third Party Love and affection are not sufficient consideration. Beneficiaries 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 Privity of Contract: consideration. Tiairu Party.. Dunlop PneumancTyre Co. v. Selfrzdge..1. L - i & Co. Ltd. [1915] A.C. 847(H.L.) A principal not named in the contract, however, may sue upon it if the promisee really Beneficiaries contracted as his agent. C.A: Lord Denning MR fmds an equitable exception to general rule of privily where the Besweck v. Beswick [1966] 1 Ch. third party is in a trustee relationship - in this case the widow sued in her capacity as Privity of Contract: 538; [1966] 3 All E.R. I (C.A.) executrix of the estate, and also in her personal capacity (Denning held that joint claim was Ways for Third [76] [1968] A.C. 58;[l967] 2 All E.R. good). Parties to Acquire 119 (H.L.) H.L.: Lord Reid found that although the widow in her personal capacity had no right to sue, Benefits she had a right as administratrix of her husband s estate. lacobucci J held employees were protected from clause limiting their liability even though they were not parties to the contract. London Drugs Ltd. v. Kuehne & The employee could rely on the limitation of liability clause if such clause expressly or Privity of Contract: Nagel International Ltd. implicitly extends its benefits to the employees and if the employees have been acting in Exceptions [77] [1992] 3 S.C.R. 299 the course of their employment and performing the very services provided for in the Employees contract between their employer and the customer when the loss occurred Edgeworth Construction Ltd. v. Limited Exception to privily, employees may use as shields. McLachlin J held that Engineers were not protected from clause limiting their liability in a tender as they were not parties to the contract. [78] ND. Lea & Associates Ltd. (1993) Distinguished the exception in London Drugs as specific to powerless employees who were Privily of Contract: tb the only ones who could do the work. Here the engineering firm could have taken measures Exceptions 107 D.L.R. (4 ) 169 (S.C.C.) to protect themselves (ie disclaimer) unlike the employees in London Drugs. No exception to_privily rule_found_in this_case. [79] Followed London Drugs analysis re: application of limitation of liability clause on Privily of Contract: ii.

23 Lt,w Fraser River Pile & Dredge Lt. v. employees in order to enforce the insurer s waiver of its rights of subrogation against the Exceptions other Can-Dive Services. [1997] 39 charterer than Employees B.C.L.R. (3d) 187 (B.C.C.A.) Does not modifs the test of London Drugs but extends its application on contracts other than employment contracts as long as the contract explicitly or implicitly extends its benefits to the third party and if the third party has been performing the activities contemplated in the contract [80] Dynamic Transportation Ltd. v. Statutory requirement that a contract be in writing has been satisfied with a memorandum Requirement of O.K Detailing Ltd [1978] 2 S.C.R. evidencing the agreement (that is, description of land) with a sufficient certainty of Writing 1072 description that enables the property to be identified Misrepresentation. A contract can be rescinded (set aside) due to a material false representation: a man is not and Rescission: [811 Redgrave v. Hurd to be allowed to get a benefit from a statement which he now admits to be false, material (1881) 20 Ch.D. 1 (C.A.) Failure to exercise due diligence is not relevant if a person is induced to enter into a representation, contract by a false representation. fraudulent misrepresentation Misrepresentation Smith v. Land & House Property. In the case where the facts are equally well known to both parties, what one of them says to and Rescission: the other is frequently nothing but an expression of opinion. [82] Corporation statement of [83] (1884)28 Ch. D. 7 (C.A.) Derry v. Peek (1889), 58 L.J. Ch. 864, [1889] All E.R. Rep. I However, if the facts are not equally known to both sides, then a statement of opinion by the one who knows the facts best very often involves a statement of a material fact. Fraudulent misrepresentation requires proof of a misrepresentation and that it was known to 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 be true or false. In 1889 type (c) was classified as fraudulent misrepresentation, but today (c) would likely be considered to be negligent misrepresentation. General rule: there is no rescission for misrepresentation if a 3 party has acquired rights, or when restitutio in integrum is impossible, or if the action to rescind is not taken within a reasonable time, or the contract is executed (except in the case of fraud), or if the injured Kupchak v. Dayson Holdings party affirms the contract. [84] (1965) 53 W.W.R. 65, 53 D.L.R. The court dealt with the possibility of rescission for fraudulent misrepresentation using the (2d) 482 (B.C.C.A.) 2 step test: a) is rescission practical and restitution possible? b) was the claim to rescind V.K Mason Construction Ltd v. [85] The Bank ofnova Scotia (1985) 58 N.R. 196 (s.c.c.) submitted in timely fashion? When rescission is impossible then the injured party may get monetary compensation (in this case fair market value for the property plus interest). The Supreme Court of Canada held that there was no contract between the bank and the opinion or misrepresentation Fraudulent misrepresentation Misrepresentation and Rescission: fraudulent misrepresentation plaintiff but that the bank was liable for negligent misrepresentation the bank had a special relationship with the plaintiff and the bank s false statement induced the plaintiff to Misrepresentation: sign a contract with another party in reliance on the bank s false statement regarding Negligent financing. The court awarded expectation damages (anticipated profits) in addition to wasted expenses. [86] S-244 Holdings Ltd. Seymour In the case of innocent misrepresentation the court relying on Lord Denning (Leaf v. Misrepresentation 12

24 [87] [88] Building Systems Ltd. (B.C.C.A.) International Galleries) and Canadian case law held that rescission may be available despite and Rescission: the execution of the contract execution or performance is a relevant but not decisive rescission when the factor to be considered when deciding whether rescission should be denied because of the contract is plaintiff s undue delay in seeking a remedy or because rescission might affect 311 parties, or executed would otherwise be inequitable.. Denial of rescission could, in certain circumstances, be inequitable because rescission is an all or nothing remedy.. A person is not liable in damages for an innocent misrepresentation no matter in what way or under what form the attack is made, therefore if rescission is not possible there is no Misrepresentation Heilbut, Symons & Co. v. Buckleton [1913] A.C. 30 (H.L.) Dick Bentley v. Smith Motors [1965] 1 W.L.R. 623 (C.A.) remedy. and Rescission:. An affirmation at the time of sale is a warranty, provided it appears on evidence to be so innocent intended, else it is only an innocent misrepresentation. misrepresentation;. A collateral warranty must be proved strictly, not only the existence of such terms but the breach of warranty existence of animus contrahendi must be clearly shown.. Lord Denning: if a representation is made in the course of dealings for a contract for the very purpose of inducing the other party to act on it, and it actually induces him to act on it Misrepresentation by entering into the contract, that is primafade ground for inferring that the representation and Rescission: was intended as a warranty. innocent. The maker of the representation can rebut this inference if they can show that it really was misrepresentation; an innocent misrepresentation, in that they were in fact innocent of fault in making it, and breach of warranty that it would not be reasonable in the circumstances for them to be bound by it. Misrepresentation and Rescission:. Interpretation of a contract is an exercise in determining the intention of the parties in an objective sense. breach of. The court does not question what the parties subjectively intended, but instead ascertains Charbonneau v. Brawn warranty; what their intentions were from the circumstances, [89] (2002) 113 A.C.W.S. (3d) 620 Parol evidence rule:. B.C.S.C. Evidence of the subjective intention of the parties is not admissible. admissibility of. Extrinsic evidence is admissible to show that words in an agreement have by custom or extrinsic evidence; usage a peculiar meaning; or when the words are susceptible to more than one meaning, or Interpretation of Leafv. International Galleries [90] [1950] 2 K.B. 86, 1 All E.R. 693 (C A) if an ambiguity emerges. contract. Lord Denning held: rescission may be available in cases of innocent misrepresentation if Misrepresentation no other option is available and the innocent party behaved reasonably. and Rescission: But, no rescission is available for innocent misrepresentation when the contract is executed innocent and a reasonable time for a claim lapses. misrepresentation; Distinction drawn between the quality of the painting (who painted it) and the substance of rescission and the painting (picture of Salisbury Cathedral). Only allow rescission if differs in substance. lapse of time The court found that the bank s failure to disclose material facts to the defendant (i.e. that Misrepresentation there had been a change to collateral securities held by the bank) constituted and Rescission: [91] Bank ofb.c. v. Wren Developments misrepresentation by words, acts and conduct which induced the defendant to sign the omissions (1973), 38 D.L.R. (3rd) 759 guarantee which he otherwise would not have signed (unilateral mistake induced by (B.C.C.A.) negligent misrepresentation) 13

25 [921. Omissions can be misrepresentation where the omissions are related to the material aspects of the contract. If a party s skill and judgment is foreseeably being relied upon, a duty is owed to take care Misrepresentation Hedley Byrne & Co. Ltd. v. Heller in making statements. If care is not taken, and injury results, the party that was relied upon and Rescission: 1 j & Partners Ltd, [1964] A.C. 465 will be liable, negligent Special relationship must be shown, misrepresentation. Denning held: a negligent misrepresentation inducing a contract gives rise to actions in tort (negligence) and contract (breach of collateral warranty). Misrepresentation If a party, who has or professes to have special knowledge or skill, makes a representation and Rescission: [93] [941 [95] Esso Petroleum v. Mardon by virtue thereof to another (advice, information or opinion) with the intention of inducing concurrent liability [1976] Q.B. 801, 1 All E.R. 5 (C.A.) the other to enter into a contract, they are under a duty to use reasonable care to see that the in contract and representation is correct. If they negligently give unsound advice or misleading information tort; negligent and thereby induce the other side into a contract, they are liable in damages. misrepresentation. Breach of a collateral warranty gives the right to damages.. Liability for negligent misrepresentation may be found both in contract and tort where Sodd Corp. v. N. Tessis (1977), 17 there is a special relationship creating a duty of care the defendant as a professional O.R. (2d) 158 (Ont. C.A.) accountant and trustee in bankruptcy and the party submitting an accepted tender were in such a relationship Misrepresentation Liabilifuin Torts and. SCC held that the limitation clauses in the contract did not negate Hydro s duty of care. Misrepresentation. Held that actions in contract and tort may be concurrently pursued unless the parties by a and Rescission:, valid contract explicitly indicate that they intended otherwise. concurrent B. G. Checo mt 1 Ltd. v. B. C Hydro,, [ c R 12 lacobucci in dissent said that a contract precluded the concurrent liability, but the majority Liability in Torts 1 3 of SCC held that the mere fact that the parties have dealt with a matter expressly in their and contract does not mean that they intended to exclude all the rights to sue in relation to that matter (in this case, tort). [38] The SCC made it clear...that breach of precontractual representations may be actionable as both a breach of contract and negligent misrepresentation, with clear Misrepresentation exceptions arising from the express terms of the contract. and Rescission: No Taurus Ventures Ltd. v. The entire agreement clause in the contract between the parties did not explicitly refer to concurrent liability [96] Intrawest Corp. negligence but BCCA held that where the parties were both sophisticated, commercial in torts and 2007 BCCA 228 entities and the contract was not a standard adhesion contract and was clearly intended to contracts and the govern the relationship between the parties, it would not accord with commercial reality entire agreement to gove no effect to the entire agreement clause in determining whether Taurus can claim clause a tort remedy [59] Rescission not allowed for innocent misrepresentation if the contract is executed unless.. Misrepresentation [97].. the benefit provided differs m substance from that promised. For fraudulent misrepresentation rescission may be granted even if the contract is executed Impossibility_of restitution_will_prevent rescission_unless_that_impossibility_has_been Redican v Nesbitt.,.... and [1924] S.C.R. 135 Rescission: Availability of remedies 14

26 caused by the guilty party. Bank ofbc v. Wren An obligation to disclose material facts arises when a party asks a direct question. [98] (1973) 38 D.L.R. (3d) 759 Failure to disclose a material fact which would have prevented a party from making a (B.C.S.C.) guarantee, may render that party not liable for the terms of the guarantee Guarantee Co. ofnorth America v. [99] Gordon Capital Corp. (1999) [100] [101] Misrepresentation and Rescission: Enforcement of terms Limitation clauses may be valid even in the case of illegal rescission.. 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 to Misrepresentation assume that a loss of a type covered under the contract has occurred. and Rescission:. Rescission is a remedy available for misrepresentation, and is independent of whether or applicability of 178 D.L.R. (4th) (s.c.c.) not the guilty party accepts the rescission. exclusion clauses The effect of repudiation depends on the attitude of the non-repudiating party. If the non- and options for the repudiating party agrees that the contract should be dissolved, then the contract is at an end innocent party and there are no further obligations, but if the non-repudiating party wants to continue the contract, they can reject the repudiation and sue for damages. The court upheld the traditional principle that any agreement collateral or supplementary to Harwish v. Bank ofmontreal the written agreement may be established by parol evidence, provided it is one which could [1969] S.C.R. 515 be made as an independent agreement without writing and that it is not in any way inconsistent with or contrary to the written agreement. Bauer v. Bank ofmontreal Confirmation of the general principle that oral evidence which contradicts the main wntten [1980] S.C.R. 102 contract is inadmissible under the parol evidence rule.. There are many cases where evidence of an oral statement is relevant and may be admitted: Gallen v. Bullerley the written agreement is not the whole contract, in support of interpretation of the contract, Parol Evidence Rule Parol Evidence Rule [102] (1984) 53 B.C.L.R. 38, 25 B.L.R. to correct a mistake or an error iii written contracts, to show misrepresentation, etc. Parol Evidence Rule 314 (B.C.C.A.) It is only a presumption that a collateral agreement cannot be admitted if it is inconsistent with, or contradicts, the written terms. 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 which Hong Kong Fir v. Kawasaki Kisen give rise to damages only) there are intermediate terms-those which are neither conditions [103] Kaisha Ltd. nor warranties. [1962] 1 All E.R. 474 (C.A.) The test the court used to determine if the term was a condition or intermediate term is the nature of event and its practical effect does it deprive the party to perform of substantially the whole benefit of contract. The court applied Hong Kong Fir test and held that the gravity of the consequences of the Krawchuk v. Ulrvchova breach did not deprive the party to perform of substantially the whole benefit of the [104] (1996)40 Alta. L.R. (3d) 196 (Alta. Prov. Ct.) contract; accordingly the court found only a breach of warranty and ordered damages (not repudiation). Wickman v. Schuler The contract should be interpreted as a whole and word condition should, on the facts of [105] [1974] A.C. 235, 2 All E.R. 39 this case, be given an ordinary meaning not as a term which will entitle the innocent party (H.L.) to repudiate the contract in the event of a breach. Classification of Terms Classification of Te Classification of Terms 15

27 [106] [107] [108] Fairbanks v. Sheppard [1953] 1 S.C.R. 314,2 D.L.R. 193 Sumpter v. Hedges [1898] 1 Q.B. 673 (C.A.) Howe v. Smith (1884)27 Ch.D. 89 (C.A.). If the parties intend to give a condition such an effect they must make that intention clear.. In certain circumstances the general rule (that there is no recovery for a contract to do work for a lump sum until the work is fully completed) could be interpreted to mean that the Discharge by recovery for a contract to do work for a lump sum is possible ifthe work is substantially Performance or completed. Breach: Remedy. In order to recover for the work that is substantially completed, the party in default who for a party in wants to recover must provide evidence from which any new contract to accept and pay for default the work done could be inferred.. The general rule is that where there is a contract to do work for a lump sum, until the work is completed the price of it cannot be recovered.. There are cases in which, though the plaintiff has abandoned the performance of a contract, Discharge by it is possible for him to raise the inference of a new contract to pay for the work done on a Performance or quantum meruit basis from the defendant s having taken the benefit of that work. But in Breach: Remedy order that that may be done, the circumstances must be such as to give an option to the for a party in defendant to take or not to take the benefit of the work done. default. The mere fact of the appellant remained in possession oftheir land is not evidence upon which an inference of a new contract can be founded. Discharge by. Whether, in absence of an express stipulation, a party in default who paid money as a Performance or deposit on the signing of a contract, could recover that deposit or he has lost all right to Breach: Deposit performance by the other party, would depend on what terms are to be implied paid by a party in default [109] Discharge by. To determine if the payment is a deposit or a part payment the court will look at the Performance or intention of the parties in the circumstances of each case as indicated by the actual words of Breach: cases of Stevenson v. Colonial Homes Ltd., the contract and evidence of what was said uncompleted work [1961] O.R. 407 (Ont. C.A.) If the payment is a deposit (money paid in advance to guarantee the performance of the K) when some money there would be no return when the contract is set aside. However ifthe money is paid as a was given before part payment on account of the purchase price then it is recoverable the performance started Abandonment discharges a contract only if it amounts to a new contract in which the parties agree to abandon the old one. [17 A new contract could be made explicitly or Discharge by Jedfro Investments (USA) Ltd. v. implicitly but it must be clear that the parties have made a new contract Performance or [110] Jacyk More than a simple ignorance of a contractual obligation is needed to establish repudiation. Breach: 2007 SCC 55 A contract may be said to be repudiated when one party acts in a way that evinces intent to abandonment/repu no longer be bound by the contract. The other party then may, at its option, elect to diation terminate the contract. [20] Discharge by Maridand Associates Ltd v. Lohnes Where the work was done, but badly, and the defects have been or can be remedied, the Performance or [1111 (1973), 22 D.L.R. (3d) 493 (N.S. courts tend to find that there has been substantial performance and that the builder should Breach: cases of T.D.) have the agreed price less the cost of correcting the defects and omissions lump sum 16

28 contracts and uncompleted work. A reasonable notice period is an implied term of an employment contract and the intention [112] Machtinger v. Ho/ Industries Ltd. [1992] 1 S.C.R. 986 of the contracting parties is not relevant to terms implied as a matter of law (but only to Standard Form terms implied as a matter of fact). :. The test for implication of a term as a matter of law is necessity or whether the term sought Exclusion Clauses [113] to be implied is a necessary incident of the contract. In ordinary cases where an action is brought on a written agreement which is signed by the parties the agreement is proved by proving the signature and, in the absence of fraud, it is Standard Form wholly immaterial that the party has not read the agreement and does not know its contents : Parker v. South Eastern R.y. Co. In the case of unsigned documents the party imposing a condition (or an exclusion clause) Exclusion Clauses (1877)2 C.P.D. 416 (C.A.) has to take reasonable steps to give the other party notice of the condition. and unsigned The test to determine what constitutes reasonable steps is an objective test not whether documents the party knew of the condition but whether the party imposing the condition did what was case reasonably sufficient to give the other party notice of the condition. ticket. Lord Denning on the formation of contracts in a parking lot: the ticket is no more than a Thornton v. Shoe Lane Parking Ltd. [114] [1971] 2 Q.B. 163, 1 All E.R. 686 (C.A.) voucher or receipt for the money that has been paid on terms which have been offered and Standard Form accepted before the ticket is issued... The offer was accepted when the plaintiff dove up to : the entrance and by the movement of his car, turned the light from red to green, and the Exclusion Clauses ticket was thrust at him. The contract was then concluded and it could not be altered by any and unsigned words printed on the ticket itself. documents ticket. The court should not bind a party by unusually wide and destructive exclusion clauses case [115] unless they are drawn to their attention in the most explicit way. Standard Form Previous dealings between the parties are relevant McCutcheon only if they prove (1) v. David knowledge of MacBrayene the COncts: terms (actual and not constructive), and (2) assent Ltd. to the terms in the previous dealings. Exclusion Clauses If previous [1964] dealings 1 W.L.R. show 125, that a person knew of and 1 All agreed E.R. to a term on 99 occasions, it and unsigned can be imported into the (H.L.) documents ticket knowledge there is nothing. case Standard Form Olley v. Marlborough Court, : [1949] All terms must be disclosed prior to formation of the contract if they are to form part of the 1 K.B. 532 Exclusion Clauses agreement, regardless of the length of the ensuing relationship between the parties. and unsigned documents th contract without an express statement, but without proving [116]. In modem commercial practice, many standard form printed documents are signed without being read or understood and in many cases the parties seeking to rely on the terms ofthe Standard Form Tilden Rent-A-Car Co. v. contract know or ought to know that the signature a party to the contract does not represent : [117] Clendenning the true intention of the signer and that the party signing is unaware of the stringent and Exclusion Clauses (1978) 18 O.R. (2d) 601 (Ont. C.A.) onerous provisions which the standard form contains, and signed The party seeking to rely on such stringent and onerous terms should not be able to do so in documents the_absence_of first_having taken_reasonable_measures_to_draw_such_terms_to the attention 17

29 Delaney v. Cascade River Holidays [118] Ltd. of the other party, and, in the absence of such reasonable measures, it is not necessary for the party denying knowledge of such terms to prove either fraud, misrepresentation or non estfactum;_what is reasonable_is the question_offacts_in_each_instance.. In a split decision of the BCCA (Nemetz dissenting, Taggart concurring) McFarlane J. held that the language of the standard liability release must be interpreted and understood having regard to the whole purpose ofthe relationship between the parties or the nature of SIÜUd Form : Exclusion Clauses the venture involvecl (1983)44 B.C.L.R. 24 (B.C.C.A.) and signed. The purpose was to engage in what must have been intended to be an exciting and thrilling challenge and such intent was involved in the language of the release.. The court held that whether the duty to take reasonable steps to advise of an exclusion documents clause arises depends on many factors, such as the nature of the contract, the length and Standard Form Karroll v. Silve Star Mountain format of the contract and the time available for reading and understanding it : [119] Resort Ltd.(1988) 33 B.C.L.R (2d) The purpose of the contract was to engage in a hazardous activity upon which Karroll Exclusion Clauses 160 (B.C.S.C.) voluntary embarked, the exclusion clause was consistent with the purpose of the contract, and signed there was no fine print, no unusual terms, and she was an experience racer who had signed documents such clauses before Delaney s decision is followed and it is held that the 2 step test ofrequiring (1) reasonable must be considered in examining whether the party relying on the unusual exclusion clause did what was necessary to bring it to the other party s attention and (2) that the Sd&d Form purpose ofthe relationship and the nature ofthe venture involved must be considered. Schuster v. Blackcomb Skiing :. In examining the reasonable steps test the court referred to Karroll v. Silver Star [120] Enterprises Ltd. Partnersh4, Exclusion Clauses Mountain where the circumstances of the signing were such that a reasonable person [1995] 3 W.W.R. 443 (B.C.S.C.) and signed (competition organizer witnessing the signing) would have known that the signor did documents not intend to agree to what she signed. The purpose of permitting the signor and others to engage in such an activity and where and how the exclusion clause was represented were also considered in the reasonable steps test - The waiver was found to exclude liability. Standard Form Interfoto Picture Library v. Stiletto The more onerous the condition of the contract, the more stringent is the duty to draw it to [121] Concts: [1989] Q.B. 433 the attention of the other party. [122] Zhu v. Merrill Lynch HSBC A disclaimer which is extremely broad and excludes almost all liability for any poor [2002] B.C.J. No (B.C.P.C) performance may be unenforceable. The court defines the browse wrap agreement the one that does not require that the purchaser indicate their agreement by clicking on an I Agree button. All that is Century 21 Canada v. Rogers required is that they use the product after being made aware of the product s Terms of [123] Communications Inc. Use. [92] 2011 BCSC 1196 The court found that there was an enforceable browse wrap agreement on the Century 21 web site and that terms of use were properly incorporated because the terms of use were_clear and_a person who_browsed the_web_site_had_enough_time_to_read_them_prior Exclusion Clauses Standard Form : Exclusion Clauses and signed documents Exclusion Clauses in web posted contracts (browse wrap agreements) 18

30 to accepting them. The act of browsing could constitute the acceptance of terms (of use) of the web agreement and the formation of contract as long as a user of the web site continues to browse after reading the terms posted [124] 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 that was not expressly brought to the attention of defendant as required under art C.C.Q. While the hyperlink to the Terms and Conditions of Sale was in smaller print, located at the bottom of the Configurator Page, this is consistent with industr standards. It can therefore be concluded that the hyperlink was evident to defentand.. Furthermore, the Configurator Page contained a notice that the sale was subject to the Terms and Conditions of Sale, available by hyperlink, thus bringing the Terms and Conditions expressly to defendant s attention. Standard Form : Incorporation of Terms Standard Form Soiway v Davis Moving and : [125] Storage, [2002] O.J. A defendant 4760 (Ont. will not be permitted to rely on a liability limitation clause if it would be unconscionable Exclusion Clauses C.A.) in the circumstances. and signed documents [126] [127] [128]. Lord Denning formulates his doctrine of fundamental breach: A party cannot rely on an exemption clause when they deliver something different in kind from that contracted for, Fundamental Karsales v. Wallis or when they have broken a fundamental term or a fundamental contractual obligation. Breach: Lord [1956] 1 W.L.R. 936, 2 All E.R. Doctrine of fundamental breach says that a breach which goes to the root of the contract Denning s doctrine 866 (C.A.) disentitles the party from relying on the exemption clause, of fundamental This doctrine has been overruled by the House of Lords in Photo Production v. Securicor breach Transport Ltd. Confirms the Suisse Allantique case ruling that the question whether, and to what extent, an exclusion clause is to be applied to a fundamental breach, or a fundamental term, or indeed Photo Production v. Securicor to any breach of contract, is a matter of construction of the whole contract. Fundamental Transport Ltd. Lord Diplock s analysis of primary and secondary obligations is based on the fundamental Breach: Lord [1980] A.C. 827, 1 All E.R. 556 principle of the common law of contract that parties to a contract are free to determine for Denning s doctrine (H.L.) themselves what primary obligations they will accept. overruled. If the exclusion clause is clear and unambiguous it will protect the party relying on it from liability. Dicbon J. (relying on Photo Production and inclined to lay the doctrine of fundamental Hunter Engineering v. Syncrude breach to rest) held that if on its true construction the contract excludes liability for the kind Fundamental Canada Ltd of breach that occurred, the party in breach will generally be saved from liability, unless Breach: Canadian [1989] 1 S.C.R. 426, 57 D.L.R. (4th) the contract or the clause is unconscionable, as might arise from situations of unequal courts follow Photo 321 bargaining power between the parties. Production Wilson J. held that the test for whether an exclusion clause or a contract will be enforced is 19

31 one of unreasonableness as between the parties and in light of the nature of the breach.. Refers to both Hunter and Photo Production cases in holding that an exclusion clause Fraser Jewellers Ltd. v. Dominion should be enforced according to its true meaning provided that it is not unconscionable Fundamental r129 Electric Protection Co. (Dickson J. in Hunter) or unfair or unreasonable (Wilson J. in Hunter). Breach: Canadian [130] (1997) 148 D.L.R. (4th) (Ont. If an exclusion clause is not obscure, if it is visible, clear and unambiguous, and not the courts follow Photo C.A.) result of abuse of bargaining power, there is no basis for the court to disturb the agreement Production made between the parties. The question of the applicability of exclusion of liability clause properly incorporated was an important issue. SCC referred to Dickson 3. in Hunter Engineering in stating that the doctrine of fundamental breach should be lay to rest and that an analytical approach of Binnie 3. to Fundamental exclusion of liability clauses applicability should be applied Breach: analytical Tercon Contractors Ltd v. BC.... (Transportation) 2010 SCC 4 Paradine v Jane [131] (1647) Ale Y All E R 897 Bmme J. held (dissentmg) that because categorizing breach as fundamental is not framework for helpful, especially when the parties are big, sophisticated, commercial entities, the courts application of should focus on: whether as a matter of interpretation the clause applies to the exclusion clauses circumstances of the case; and if so, whether the exclusion clause was unconscionable at the time the contract was made, and if the clause is valid and applicable, whether the court should nevertheless_refuse_to_enforce_it because_of an_overriding public_policy_[ ] Court held that the military occupation did not frustrate the lease contract (strict pacta sunt servanda): When the party by his own contract creates a duty or charge upon himself, he is bound to make it good, if he may, notwithstanding any accident by inevitable necessity, Before Doctrine of because he might have provided against it by his contract. Frustration Court further held that frustration is a part of the risk a party has to bear ( As the lessee is to have the advantage of casual profits, so he must run the hazard of casual losses... ). The court confirmed the general principle of contract law that a party to a contract had to either perform or pay damages ( if the performance of a contract has become unexpectedly Doctrine of Taylor v. Caidwell burdensome or even impossible in consequence of unforeseen accidents ) but held that the Frustration: Excuse [132] (1863) 3 B&S 826, 122 E.R. 309 parties should be excused from their obligations because there was an implied condition for non (Q.B.) to excuse the parties in the case that performance becomes impossible without default of performance the contractor... [T]he parties contracted on the basis of the continued existence of the contract voidable particular person or chattel L j Frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable ofbeing performed because the Davis Contractors Ltd v. Fareham circumstances in which performance is called for would render it a thing radically,, Frustration: Excuse UDC.. different from that which was undertaken by the contract... [1956] A.C. 696, [1956] 2 All E.R. The event must be unforeseeable and must occur after the formation of the contract. 145 (H.L.) It is nut hardship, inconvenience or material loss which calls the principle of frustration into play, but a change in the signflcance ofthe obligation such that the thing undertaken would, jfperformed, be a different thingfrom that contractedfor. f - nance Capital Quality Homes Ltd. v. There can be no frustration if the supervening event results from the voluntary act of one Frustration: Colwyn Construction Ltd of the parties or if the possibility of such an event arising during the term of the agreement intervening 20

32 [135] [136] (1975) 9 O.R. (2d) 617, 61 D.L.R. was contemplated by the parties and provided for in the agreement. legislation (3d) 385 (C.A.) Intervening legislation which was not within the contemplation of the parties and which destroys the very foundation of the agreement does discharge both parties from performance. 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.) Fibrosa Spolka v. Fairburn [1943] A.C. 32 The court interpreted strictly and narrowly the terms of the contract and held that the very foundation of the agreement had not been destroyed... The agreement was in no sense Frustration: made conditional upon the ability of the purchaser to carry out its intention. Intervening The court also emphasized the nature of the business that is, that a developer in legislation purchasing land should always contemplate the effects of intervening zoning legislation.. The House of Lords overruled the old common law rule that rights which had accrued before frustration remained unenforceable (as held in the coronation case Chandler v. Webster) deciding that in this case the Polish company could recover back the money paid beforefrustration because ofthe totalfailure of consideration (the machine had not been delivered). Fition: Consequences of supervening illegality The Privy Council held that duress, whatever form it takes, is a coercion of the will so as to vitiate consent. Pao On v. Lau Yiu Long Duress: Economic [137] In a contractual situation commercial pressure is not enough. [1980] A.C. 614 (P.C.) Duress. 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. Gordon v. Roebuck [138] (1992) 9 O.R. (3d) 1, 92 D.L.R. (4th) The court held that the pressure exerted was justified and that the appellant had the onus of Duress: Justifiable proving that Roebuck was not entitled to the amounts required in the agreement. Economic Duress 670 (Ont. C.A.) [139] Gotaverken Energy Systems Ltd. v. Cariboo Pulp & Paper Co, [1993] Duress: Economic Affirmed the requirements for duress set out in Pao B.C.J. On and Gordon. No. 149 (B.C.S.C.), ajj d Dur [1994] B.C.J. No (B.C.C.A.) Robertson J. said his analysis applies to the plea of economic duress regarding the enforceability of variations to an existing contract and not in regard to the formation of the contract; (whether a demand or a threat ) and that pressure must have been such that the coerced party had no practical alternative but to agree to the demand to vary the contract; in this Greater Fredericton Airport Economic duress: context, he found that a criterion of illegitimate pressure is unnecessary [140] Authority Inc. v. NA V Canada, modification of The contractual variation must be extracted as a result of (2008) N.B.J. No. 108 the exercise of pressure (N.B.C.A.) contract Once it was established that the variation was under the press ion and that no practical alternative was available, the focus of analysis should be whether the coerced party contested to the variation (was there consideration, was the promise made under protest and if not whether the coerced party took reasonable steps to disaffirm the promise as soon as practicable [141] Geffen v. Goodman Estate Wilson J. said that the plaint1ffmust establish the presence ofa dominant relationship in Undue Influence: 21

33 [1991] 2 S.C.R. 353, 81 D.L.R (4th) order to give rise to a presumption of undue influence. Then the onus moves to the Potentially 211 defendant to rebut it (to show that the plaintiff acted full, free and informed and that he dominant had independent advice. The magnitude of the disadvantage or benefit is cogent evidence relationships going to the issue of whether undue influence was exercised). [142] Royal Bank ofscotland v Etridge (No. 2), [2001] 3 W.L.R The creditor must always take reasonable steps to bring home to the individual guarantor the risks that he is running by standing as surety. A transaction that is not reasonably expected to occur between the parties is necessary to Undue Influence: Potentially. dominant give nse to a rebuttable evidential presumption of undue influence. relationships The term manifest disadvantage causes confusion and should be discarded. Morrison v. Coast Finance Ltd. [143] (1965) 54 W.W.R. 257, 55 D.L.R. A presumption of unconscionability requires: a) proof ofinequality in the position of the parties arising out of the ignorance, need or distress ofthe weaker, which left them in the power of the stronger, and b) proofof substantial unfairness of the bargain in favour of Unconscionability: presumption of (2d) 710 (B.C.C.A) the stronger. The stronger party must rebut the presumption by proving that the bargain was fair, just unconsionability and reasonable. Marshall v. Canada Permanent [144] Trust Co. (1968) 69 D.L.R. 2d) 260 (Alta. S.C.). The court held that the defendant was entitled to rescission of the contact for sale of land because 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 plaintiff was aware of defendant s incapacity it was enough that the plaintiff was aware that the price agreed upon by the defendant was considerably less than the actual value of that land and of any comparable land in the same general area. The onus was on the plaintiffto show that the price given for the land was the fair price and he failed to establish that. Unconscionability Lloyd s Bank v. Bundy [145] [1975] Q.B. 326, [1974] 3 All E.R. 757 Lord Denning said that there are different categories of cases where there has been inequality 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 upon terms which are very unfair or Unconscionability: transfers property for a consideration which is grossly inadequate, when his bargaining relief power is grievously impaired by reason of his own needs or desires, or by his ignorance or infirmity, coupled with undue influences or pressures, brought to bear on him by or for the benefit of other.. Mclntire J referred to the test in Morrison for unconscionability: Inequality of position of Harry v. Kreu:ziger the parties due to the ignorance, need or distress of the weaker, coupled with proof of Unconscionability: [146] (1978) 9 B.C.L.R. 166, 95 D.L.R. substantial unfairness in the bargain, relief (3d) 231 (B.C.C.A.) Lambert J. A. introduced a new test: whether the transaction seen as a whole is sufficiently divergentfrom community standards of commercial morality that it should be rescinded. 22

34 [147] [148] [149] [150]. A covenant in restraint of trade is enforceable oniy if it is reasonable between the parties and with reference to the public interest. J G. Collins Inc. Agencies Ltd v.. In assessing the reasonableness of the restraint of trade clause several questions must be Illegality: Restraint ElsIey, [1978] 2 S.C.R. 916 asked: whether the party seeking to enforce the clause has a proprietary interest entitled to of Trade protection, were the temporal or spatial features of the clause too broad, whether the clause is unenforceable as being against competition generally. The modem approach to the law of illegality rejects the understanding that simply because Still v. Minister ofnational Revenue a contract is prohibited by statute it is illegal and therefore void ab initio. Where a contract [1998] 1 F.C. 549 (C.A.) is expressly or impliedly prohibited by statute, a court may refuse to grant relief to a when. -. it would be contraxy to public policy, reflected in the relief claimed, to do so. Severance is applied to allow courts to alter terms of the original agreement in accordance with the intention of the parties when they entered into the contract; Illegality. The modern approach Shafron v. KRG Insurance Brokers of trade; (Western) Inc., 2009 SCC 6 Both blue pencil and notional severance should not be invoked when the doctrine of A. V.G. MGMT. Science Ltd. v. Barwell Dev. Ltd [1979] 2 S.C.R. 43, [1979] 1 W.W.R. 330 severance is to be applied in cases of ambiguous or unreasonable restrictive covenants in employment contracts; such restrictive covenants should be void and unenforceable SCC held that the rule of Bain v. Forhergill did not apply when the vendors had voluntarily Illegality: restraint application of severance disabled themselves from conveying good title by engaging in concurrent dealings with Damages: other purchasers. ft awarded the plaintiffs not only loss of bargain damages ($ for Expectation lost appreciation in property price) but also 6, in reliance (wasted land title Interest investigation fees etc) - Double compensation?. The court held that where the non-breaching party cannot meet the burden of proof with McRae v. Commonwealth Disposals respect to net profits he may be entitled to recover damages measured by reference to [151] Commission expenditure incurred and wasted in reliance on the promise given by the Commission. (1951) 84 C.L.R. 377 (Aust. H.C.) The burden was then thrown on the Commission of establishing that the expense incurred would equally have been wasted (in order to reduce the amount of the reliance damages). Damages: Reliance Interest [152] [153] 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 plaintiff for damages resulting from the defendant s breach, but not for damages resulting from the Damages: Reliance plaintiff making a bad bargain. Interest and. The onus is on defendant to prove that none of the plaintiffs costs would have been Nominal Damages recovered and that the plaintiff is thus entitled to nominal damages only. The Court of Appeal held that the defendant could not recover for loss of capital and loss Sunshine Vacation Villas Ltd v. of gross profit because they were alternatives and it was wrong to make awards based on Hudson Bay Co. mixture of two approaches. Damages: Reliance (1984) 58 B.C.L.R. 33, 13 D.L.R. The court also held that the plaintiff could elect to claim its expenses but that, if the owner Interest (4th) 93 (B.C.C.A.) could show that the plaintiff would have incurred a loss had it completed the contract, only nominal damages should be awarded. Hunt v. Silk The conimon law rule was established that the right to restitution could be lost if the [154] (1804) 5 East 449, 102 E.R plaintiff enjoyed any benefit under the contract (the plaintiff s occupation after knowledge (K.B.) was a waiver of the right to terminate). Damages: Restitution Interest 23

35 [155] Chaplin v. [ K.B. 786(C.A.). The fact that damages cannot be assessed with certainty does not relieve the wrong-doer of the necessity of paying damages for his breach of contract.. The plaintiff was awarded damages for the loss of the chance of selection.. In a construction contract, the law attempts to give the injured party what he was promised and the cost of remedying the defect is the amount awarded as compensation for failure to Damages: Quantification Damages: v. Quantification-cost [156] Groves John Wunder Co. (1939) 286 N.W. 235 (Minn.C.A.) render the promised performance-- the owner is entitled to compensation for what he has of performance or lost, 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 (OkIa. S.C., 1962). Where a builder is in breach of his obligation under a building contract, the owner is entitled to damages measured by the cost of making good the defects and omissions diminution of value Nu-West Homes v. Thunderbird (general rule) unless that cost is unreasonably high in relation to the value to be gained [157] Petroleums by its expenditure. Damages: (1975) 59 D.L.R. (3d) 292 (Alta. The law is satisfied if the party placed in a difficult situation by reason of the breach of a Quantification C.A.) duty owed to them has acted reasonably in the adoption of remedial measures, and they will 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. Markiand Associates v Lohnes [158] (1973), 33 D.L.R. (3d) 493 (N.S.T.D.) [159] If the contract is terminated, abandoned or discontinued after substantial completion, then Damages: the service provider is entitled to payment less damages for non-completion. Quantification Lord Denning held that there are cases where one can recover damages for the mental distress, disappointment and discomfort caused as a result of breach of a contract for a Jarvis v. Swans Tours Damages: package holiday. [1973] 1 Q.B. 233 (C.A.) Quantification The court held that the right measure of damages is to compensate the plaintiff for the loss of entertainment and enjoyment which the plaintiff was promised and which he did not get. Damages for breach of a contract to do work on the land of another may be assessed either Damages: Tito v. Waddell on the basis of the cost of completing the work or on the decrease in the value of the land Quantification [160] [1977] 2 W.L.R. 496 (Ch.D.) by reason of the work not having been done. Specific performance may be refused if the cost of performance is wholly out of proportion Specific [161] to the benefit which performance will confer. performance A failure to achieve the precise contractual objective does not necessarily result in the loss which is occasioned by a total failure. Ruxley Electronics v. Forsyth Damages are designed to compensate for an established loss and not to provide a gratuitous Damages: [196] 1 A.C. 344 (H.L.) benefit to the aggrieved party. Quantification. House of Lords only awarded damages for the loss of a pleasurable amenity for the [162] AG v Blake, [ A.C. 268 breach of failing to build a pooi as specified by the owner.. In exceptional cases where the normal remedies of damages, specific performance and injunction are inadequate compensation for a breach of contract, the court can, ifjustice Damages: demands it, grant the discretionary remedy of requiring the defendant to account to the Quantification plaintiff for the_benefits_received_from the breach_of contract. [163] Hodgkinson v Simms, Undue influence focuses on the sufficiency of consent and unconscionability on the Damages: 24

36 [1994] 3 S.C.R. 377 reasonableness of a given transaction Quantification. The existence of a contract does not necessarily preclude the existence of fiduciary obligations between parties. The proper approach to damages for breach of a fiduciary duty is restitutionary. The innocent party is entitled to be put in as good a position as he would have been in had the breach not occurred.. A court exercising equitable jurisdiction may consider the principles of remoteness, causation, and intervening act where necessary to reach ajust and fair result.. Where a party can show that but for the relevant breach it would not have entered into a given contract, that party is freed from the burden or benefit ofthe rest of the bargain. The wronged party is entitled to be restored to the pre-transaction status quo.. Damages must be foreseeable as to kind, but not extent. The special circumstances of this case were brought home to the defendant at the time it Newell v. Canadian Pac/lc entered into the contract with the plaintiffs. Damages: mental [164] Airlines, Ltd. (1976), 14 O.R. (2d) Damage to the plaintiffs health, anguish, unhappiness and inconvenience were a 752 (Ont. Co.Ct.) reasonablyforeseeable consequence of the defendant s breach of contract, for which the plaintiffs were entitled to recover damages. Wharton v. Tom Harris Chevrolet [165] (1999), B.C.D. Civ. J (B.C.S.C.) [166] The failure of a sound system in a luxury vehicle is only one aspect of the operation of the vehicle and it is not a fundamental breach but is a breach of an implied warranty. The plaintiff was entitled to special damages ($2,257) and non-pecuniary damages for loss of enjoyment of the luxury vehicle and for inconvenience in the amount of $5,000.. General rule is that if the loss flowing from breach is too remote then it cannot be recovered. Recoverable losses are those arising naturally from the breach which should have been distress Conditions & warranties Damages: mental distress Hadley v. Baxendale within the reasonable (objective test) contemplation of the parties (1 Hadley rule). Damages: (1854) 9 Exch. 341, 156 E.R. 145 If the contract was made under special circumstances which were communicated to the Remoteness defendant, and thus known to both parties, the damages will be the amount of injury which would ordinarily result from such a breach of the contract under the given special circumstances (2fld Hadley rule). Only damages which are reasonablyforeseeable as arising from the breach are recoverable (objective test). What is reasonable depends on the knowledge of the parties (particularly the breaching party). Victoria Laundry v. Newman [167] Everyone has imputed knowledge of ordinary circumstances, but there may have to be [1949] 2 K.B. 528 actual knowledge of special circumstances for recovery to be granted on these special grounds. It is not necessary to prove that the wrongdoer contemplated the loss. It is enough if they could foresee the loss was likely to result. Damages: Remoteness 25

37 . The Court of Appeal criticized Victoria Laundry and held that the crucial question is [168] whether, on the information available to the defendant when the contract was made, they should, or the reasonable person in their position would have, realized that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the Koufos v. Czarnikow (The Heron II) loss flowed naturally from the breach or that loss of that kind should have been within their Damages: [1969] 1 A.C. 350 contemplation. Remoteness In contracts, if one party wishes to protect themselves against a risk which to the other party would appear unusual, they can direct the other party s attention to it before the contract is made and the court need not stop to consider in what circumstances the other party will then be held to have accepted responsibility in that event.. Mcintyre: o Aggravated damages may be awarded in a case of wrongful dismissal particularly where the acts complained ofwere also independently actionable Vorvis v. ICBC o Punitive damages may oniy be awarded in respect of conduct which is of such nature Damages: [169] [1989] 1 as to be deserving of punishment S.C.R. 1085, 36 B.C.L.R because of its harsh, vindictive, reprehensible and malicious nature (must be Aggravated an actionable wrong). and (2d) 273 Punitive Damages Wilson J. relied on the remoteness test in Hadley: The issue in assessing damages should be whether the plaintiff should be compensated for damage the defendant should reasonably have anticipated. Wilson J. did not agree that a separate actionable wrong is needed for either of aggravated damages or punitive damages. lacobucci J.(majority): Damages for mental distress were not recoverable for wrongful dismissal unless there was a separately actionable course of conduct, but did account for Wallace v. United Grain Growers mental distress by lengthening - the notice period damages. [1997] 3 S.C.R. 701 McLachlin J. (dissenting): the action for wrongful dismissal is an action for breach of Damages: Aggravated and Punitive Damages Wallace [170] implied term in the contract of employment to give reasonable notice of termination. Would have awarded $15000 aggravated damages as well.. SCC awarded 1 million in punitive damages for a breach of the contractual duty of good [171] [172] Whiten v. Pilot Insurance Co., 2002 SCC 18 faith (separate actionable wrong) in the case of a breach of an insurance contract (breach of Damages: a duty to pay the loss). Aggravated and Punitive damages are awarded in exceptional cases for malicious, oppressive and high- Punitive Damages handed misconduct that offends the court s sense of decency.. Where a purpose of a commercial contract is to provide a peace of mind (either if it is an essence of a contract or just a part of the bargain) it is within reasonable contemplation of the parties that its breach would cause mental distress (the right to compensatory damages Fidler v. Sun Life Assurance, arises out of the contractual breach not from aggravating circumstances) 2006 SCC 30 True aggravated damages arise out of aggravating circumstances and are not awarded under the principles of Hadley v. Baxendale Punitive damages are awarded to punish for a misconduct that departs from ordinary standards of decency (malicious, oppressive conduct) and claim for punitive damages must Damages: Aggravated and Punitive Damages 26

38 be independently actionable (as a claim in tort or independent contractual obligation to act in_good faith). Sec rejected the Wallace type of aggravated damages (extension of the period of Honda v. Keays, reasonable notice) for wrongful dismissal cases and stated that the principles of Damages: [173] 2008 SCC 39 compensation stated in Had1ey v. Baxendale should apply Aggravated and. sec confirmed the Whiten analysis of the standard of punitive damages (separate Punitive Damages actionable wrong of a high-handed manner of employer breaching a duty of good faith). General rule: When a party to a contract repudiates, the innocent party has an option: to White and Carter (Councils) v. Damages: accept that repudiation and sue for damages or to disregard or refuse to accept it and then [174] MacGregor, [1962] A.C. 413, [175] [176] [1961] 3 All E.R (H.L) the contract remains in full effect. Finelli v. Dee (1968), 67 D.L.R. (2d) 393 Ont. C.A. distinguished this case.. The general common law rule to affix damages as at the date ofthe breach does not seem to be inflexible. Repudiation and Mitigation Wroth v. Tyler The court has jurisdiction to award damages in substitution for specwc performance as Damages: Time of [1976] Ch. 30 will put the plaintiffs into as good a position as if the contract had been performed, even if Measurement Semelhago v. Paramadevan [1996] 2S.C.R. 415 Dunlop Pneumatic Tyre ltd. v. New [177] Garage and Motor Co. to do so means awarding damages assessed by reference to a period subsequent to the date ofthe breach_(in this_case_at the_time_ofjudgment). Sopinka, J: Specific performance should not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available, but specific performance was given in this case. Damages: Time of Measurement Damages:. The provision will be liquidated damage if it contains nothing unreasonable, Liquidated unconscionable or extravagant Damages and [1915] A.. 79 (H.L.) Penalties Shatilla v. Feinstein [178] [1923] 1 W.W.R. 1474, 16 Sask. L.R. 454 (Sask.C.A.) When the damages which may arise out of the breach of a contract are in their nature uncertain, the law permits the parties to agree beforehand as to the amount to be paid in case of breach. Damages:. Whether the sum agreed upon is a penalty, must depend upon the circumstances of each Liquidated case. Damages and An agreement for payment of a fixed sum on any one of a number of breaches, some trivial Penalties and some serious, is presumed to be void as a penalty since the strength of a chain is its weakest link. It is always open to the parties to make the predetermination, but it must yield to judicial appraisal of its reasonableness in the circumstances. H.F. Clarke Ltd. v. Thermidafre The sum will be held to be a penalty if it is extravagant and unconscionable in amount in [179] Corp. comparison with the greatest loss that could conceivably be proved to have followed from [1976] 1 S.C.R. 319 the breach (Snell s principles). Damages: Liquidated Damages and Penalties The formula of gross trading profit was not defined and it departs markedly from any reasonable_approach_to_recoverable_loss_or actual_loss. [180] Held that the power to strike down a penalty clause is a blatant interference with freedom Damages: 27

39 28 Contraas of contract and is designed for the sole purpose of providing relief against oppression for Liquidated J. G. Collins Insurance Agencies the party having to pay the stipulated sum. It has no place there and where is no oppression Damages Ltd. v. Elsley A penalty clause shouldfunction Penalties as a limitation on the damages recoverable if the [1978] 2 S.C.R. 916 actual loss turns out to exceed the penalty, the party should be allowed to recover only the agreed sum. Damages:. A deposit is a sum of money paid as a guarantee that the contract shall be performed and at Forfeiture as Liquidated [18 1] Howe v. Smith common law it is generally irrecoverable unless the contract provides otherwise (the court (1884) 27 Ch. D. 89 (C.A.) held that the purchaser has lost all rights to recover by his delay) A part-payment is simply a payment of a part of the contract price. or Damages Penalties Where there is no forfeiture clause, if money is handed of over in part payment the purchase price and then the buyer makes default as to the balance... once the seller rescinds Damages: Stockloser v. Johnson the contract or treats is as at an end the buyer is entitled recover Forfeiture to their money in law, but as [182] [1954] 1 Q.B. 476, [1954] All E.R. the seller can claim damages. Liquidated 630 (C.A.) Where there is a forfeiture or clause or the money is expressly paid as a deposit a party may Damages have a remedy in equity but two things are necessary: of Penalties 1. the forfeiture clause must be a penal nature and 2. it must be unconscionable for the seller to retain the money. Mennonite Land [183] Sales v. Freisen The court held that the plaintiff was not entitled to specific performance because it was [1921] 3 W.W.R. 431 (Sask. K.B.) clear that damages would afford an adequate remedy. Equitable Remedies: Specific Performance In order to establish that a property is unique the of person seeking the remedy specific John E. Dogde Holdings Ltd V. performance must show that the property in question has a quality that cannot be readily Ontario Ltd. [2003] O.J. duplicated elsewhere. This quality should relate to the of proposed use the property and be Equitable Remedies: [184] No. 350, 63 O.R. (3d) 304 (On. a quality that makes it particularly suitable for the purpose for which it was intended Specific C.A.) followed Performance The time when a determination ofthe uniqueness of the property is to be made is the date when an actionable act takes place [185] [186] [187] Asamera Oil Corp. v. Sea oil and General Corp. [1979] 1 S.C.R. 633 Warner Bros. v. Nelson [1937] 1 K.B. 209, [1936] 3 All E.R. 160 Specific performance is not available in the context of agreements for the purchase of Equitable Remedies: publicly traded shares and the plaintiff was obliged, within a reasonable time to acquire Specific substitute shares (the buyer has to mitigate loss by securing substitute shares in the market) Performance The court granted an injunction, and found an award of damages not an appropriate remedy since they could Equitable not reasonably Remedies: and adequately compensate the defendant s special, unique, extraordinary injunction and intellectual services and no adequate damages were available. Zipper Transportation v. Korstrom Applying the test as set out in Elsley v. J G. Collins the court held that the agreement was (1997) 122 Man. R. (2d) 139 (Q.B.) reasonable and that it would not be contrary to public interest to enforce the injunction. Equitable Remedies: Injunction [188] (Interlocutory) Zipper Transportation v. Korstrom The Court of Appeal applied a different test considering irreparable harm balance of and Equitable Remedies: (1998) 126 Man. R. (2d) 126 (Man. convenience Injunction and denied the injunction; holding that if the injunction is upheld, no benefit