FACULTY OF LAW LAW 211. Contract Law. Section 2. Professor Biukovié TOTAL MARKS: 100. minutes reading time

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1 NOTE: PLEASE ENSURE THAT YOU HAVE A COMPLETE PAPER LAW 211 DECEMBER 2014 EXAMINATION 1. This is a LIMITED OPEN BOOK examination. You may use 3. Please write legibly. Professor Biukovié minutes reading time they are necessary. to you in the exam. TOTAL MARKS: 100 Section 2 Contract Law any question fully, please state those facts and explain why only a CLEAN copy of the syllabus and case chart provided FACULTY OF LAW THIS EXAMINATION CONSISTS OF THREE (3) PAGES THE UNIVERSITY OF BRITISH COLUMBIA TIME ALLOWED: 1 HOUR and If you think that additional facts are necessary to answer THIS EXAMINATION CONSISTS OF ONE QUESTION.

2 LAW 211, Section 002 Page 2/3 Marks: Marcia is a 76 year old widow and a retired UBC librarian. She has a big house in East Vancouver, in Mount Pleasant. She is quite lonely since her husband died and her children moved to interior BC to live with their own families. Most of the days she thinks about selling her house and moving to a smaller place. Marcia relies on other people to maintain the house and to keep up with her daily routine. One of Marcia s neighbours, Tony, a 1L at UBC Law, cleans her house monthly and runs small errands twice a month, for which she pays him $ every month. Even though Marcia and Tony never signed a contract, Marcia gave him a pair of keys to her house and let him use her car to go shopping for her. On April 1, 2014, Marcia mentions to Tony that she is worried about her wonderful garden because her hands are not strong enough to maintain it: Sadly, that s my only hobby, Tony, and I am now too old for it. Marcia, don t worry, replies Tony. I ll work on your garden when I have a bit more time. I am very busy now because I have several final exams and I really want to do well. The following day, Marcia went to Kamloops, BC, to visit her son and to celebrate her grandson s third birthday. When she returns home to Vancouver on May 8, 2014, she finds that Tony not only cleaned her house, but also did a lot of gardening. She notices several new plants in the front yard. Even her boxwood looks completely new, although Tony just gave it a little boost with a new layer of fertilizer. Marcia is both stunned by Tony s skilled gardening and happy with the results of his work and promises to pay him $ for the work on the garden in addition to her usual monthly payment to him for cleaning and shopping for her. On May 15, 2014, Marcia receives in the mail an invoice from Green Wonder Nursery asking her to pay almost $ for all the supplies Tony took for her garden. She immediately phones Tony to ask about an invoice but only manages to reach his voice mail and to leave a message. Without returning Marcia s call at all, Tony mails her back her home and car keys. Marcia decides not to pay Tony for any work he did in May while she was in Kamloops.

3 will be happy to continue cleaning her home for $ per to return her keys as soon as possible. Apparently, she has hired a THE END OF EXAMINATION pay Tony for any work done in May while she was away. Explain nursery? Wonder Nursery. Do you think that she needs to pay Tony and the Wonder Nursery with his own money and phones Marcia asking to Tony his position vis-à-vis Marcia and Green Wonder Nursery. reimburse him. However, he only manages to leave her a voic Considering only the common law rules that you have studied in your Contract Law class: explaining that she owes him almost $ He also says that he month. Marcia calls back only to leave him a voice mail asking him company that provides services to senior citizens and will not need to bother Tony with her problems anymore. She refuses to LAW 211, Section 002 Page 3/3 A) advise Marcia regarding her relations with Tony and Green B) Imagine the following scenario: Tony buys supplies from Green

4 LAW : Contract Law Syllabus and Outline 2014/2015 Professor: Ljiljana Biukovié Class schedule: Tuesdays & Thursdays 11:00 13:30 Classroom: #122 AlIard Hall Office: #454 Allard Hall Office hours: Mondays & Wednesdays 1-2 pm (other times by appointment) Telephone: Secretary: Iris Lee 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 2014), 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 2015), 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 nonperformance of contractual obligations. Course materials (required): Stephanie Ben-Ishai and David Percy, Contracts: Cases and Commentaries, 8th ed. (Toronto: Carswell, 2009) Biukovic, Supplementary Materials (Connect course web page TBA) NOTE: CASES AND READINGS ARE SUBJECT TO ADDITIONS, DELETIONS AND REORDERING WHICH WILL BE ANNOUNCED IN CLASS

5 B. MacDougall, Introduction to Contracts (LexisfNexis Canada, 2012) McCamus, The Law of Contracts, 2m1 ed. (Toronto: Irwin Law, 2012) Waddams, McCamus, Waidron, Neyers and Girgis, Cases and Materials on Swan, Canadian Contract Law, 2d ed. (Lexis/Nexis Canada, 2010) The Law Library collection related to common law of contracts includes many valuable casebooks and textbooks which could be used for further readings (Anson s Law of based on primarily US case law, the Restatement of Contracts and Uniform Commercial Treitel on Law of Contract). NOTE: The US materials available in the Law Library are Institute and they summarize in statute-like form the major common law rules on applicable only in the US. Key dates: September 2, 2014 contracts. The UCC is statutory law that covers contracts for the sale of goods and is January 6, 2015 April 9, 2015 April 22, 2015 Code (UCC). The Restatements (Second) of Contracts were drafted by the American Law Contract, Cheshire, Ffoot and Furmston s Law of Contract, Chitly on Contract, or November 27, 2014 December 17, 2014 February 16-20, 2015 Last Contracts class I term Final examination (1:30 pm) NOTE: CASES AND READINGS ARE SUBJECT TO ADDITIONS, 2 DELETIONS AND REORDERING WHICH WILL BE ANNOUNCED IN CLASS First Contracts class I term December examination (1:30 pm) First Contracts class II term Midterm break Last Contracts class II term Contracts, 5 ed. (Toronto: Edmond Montgomery Publications, 2014) Other sources (Law Library):

6 Note: All cases are available in Ben-Ishal & Percy (8th edition) and the on-line Goldthorpe v. Logan 30 Double N Earthmovers Ltd v. City of Edmonton, 2007 SCC 3 Livingstone v. Evans Acceptance, communication of acceptance, electronic contracts R. v. Clarke 51 M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. 38 Williams v. Carwardine 50 R. v. Ron Engineering & Construction (Eastern) Ltd. 35 Canadian Dyers Ass. Ltd. v. Burton 18 Carlill v. Carbolic Smoke Ball Co Offer, invitation to treat, tenders, communication of offer Supplement Boyle&Percy 1-15 INTRODUCTION TO THE STUDY OF THE LAW OF CONTRACT II. FORMATION OF THE CONTRACT COURSE SYLLABUS Pharmaceutical Society v. Boots 20 Harvela Investments Ltd. v. Royal Trust Co of Canada 33 Carlill v. Carbolic Smoke Ball Co. 25 NOTE: CASES AND READINGS ARE SUBJECT TO ADDITIONS, 3 DELETIONS AND REORDERING WHICH WILL BE ANNOUNCED IN CLASS httn://wwwhc1wsc)ept ihrries/hc1aws newk1nciimenrjtfl/freeside/ Dawson v. Helicopter Exploration Co. 66 Timberwolf Log Trading Ltd v Columbia National Investments Ltd. 11/08/2011 BCSCO864corI.htm Hoiwell Securities v. Hughes 85 Brinkibon v. Stahag Stahl 88 Century 21 Canada Ltd. v Rogers Communications Inc., 2011 BCSC 1196 httjx// ii.org/en/bc/bcsc/doc/20 11/201 I bcsc 1196/2011 bcsc html Butler Machine Tool v. Ex-cell-o Corp. 56 Felthouse v. Bindley 72 Household Fire v. Grant 81 Saint John Tug Boat Co. v. Irving Refinery Ltd. 75 Rudder v. Microsoft Corp. 93 Electronic Transaction Act [SBC 2001] C & 15 ss.

7 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 Errington v. Errington and Woods 102 Carlill 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 &Butcherv.R. 119 Hillas v. Arcos 122 Foley v. Classique Coaches Ltd. 126 Sale of GoodsAct ss. 12 & 13 - Ascertainment of price new/document/id/freeside/ Empress v. Bank ofnova Scotia 131 Mannpar Enterprises Ltd. v. Canada 134 Bawitko Investments Ltd v. Kernels Popcorn Ltd. 145 Wallace v. Allen, 2009 ONCA Consideration: nature of consideration, past consideration, forbearance, pre-existing duty The Governors of Daihousie College v. the Estate ofarthur Boutilier 156 Thomas v. Thomas 169 Eastwood v. 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. NAV Canada 186 Foakes v. Beer 192 Re Selectmove 195 Foot v. Rawlings 197 Law and EquityAct (R.S.B.C. 1996, c. 253)s new/documentlld/freeside/ 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 NOTE: CASES AND READINGS ARE SUBJECT TO ADDITIONS, 4 DELETIONS AND REORDERING WHICH WILL BE ANNOUNCED IN CLASS

8 Combe v. Combe 224 Walton Stores v. Maher 230 M.(N.) v.a.(t.a.) Intention to Create Legal Obligation Balfour v. Balfour 243 Rose and Frank v. JR. Crompton Bros. 246 TD Bank v. Leigh Instruments Ltd Formality: The Requirement of Writing Dynamic Transport Ltd. v. O.K Detailing Ltd. 258 Deglman v. Guaranty Trust Co. 262 III. PRIVITY OF CONTRACT Tweddle v. Atkinson 276 Dunlop PneumaticTyre Co. v. Selfridge & Co. Ltd. 277 Besweck v. Beswick 283 London Drugs Ltd. v. Kuehne & Nagel International Ltd. 298 Fraser River Pile & Dredge Ltd. v. Can-Dive Services 310 IV. CONTENT OF THE CONTRACT 1. Representations and Terms: 1 lisrepresentation and Rescission: Parol Evidence Rule and Rectification; Classification of Terms Redgrave v. Hurd 355 Smith v. Land & House Property Corporation 359 Kupchak v. Dayson Holdings 363 Hielbut, Symons & Co. v. Buck!eton 371 Leaf v. International Galleries 378 Sodd Corp. v. N. Tessis 392 B.G. Checo Int l Ltd. v. B.C. Hydro 395 No Taurus Ventures Ltd. V. Intrawest Corp. gov.bc.caljdb-txt/cajo7/02/2007bcca0228.htm 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 2. Discharge by Performance or Breach Jedfro Investments (USA) Ltd. V. Jacyk NOTE: CASES AND READINGS ARE SUBJECT TO ADDITIONS, 5 DELETIONS AND REORDERING WHICH WILL BE ANNOUNCED IN CLASS

9 Fairbanks v. Sheppard 450 Sumpter v. Hedges 454 Howe v. Smith 455 Stevenson v. Colonial Homes Ltd Standard Form Contracts; Interpretation; Incorporation of Terms; Exclusion and Limitation of Liability 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. Star Mountain Resorts Ltd. 496 Kanitz v. Rogers Cable Inc. ii.or/en/on/onsc/doc/2002/2002can1ii /2002can11i htmlSilver Tercon Contractors Ltd. v. BC (Transportation and Highways) Loychuk v. Cougar Mountain Adventures [2012] BCCA ii.calen/bc/bccaldoc/20 12/201 2bcca 122/201 2bcca I 22.html V. EXCUSES FOR NON-PERFORMANCE 1. Mistake (TBC) Smith v. Hughes 546 Bell v. Lever Brothers Ltd. 560 McRae v. Commonwealth Disposals Commission 565 Solle v. Butcher 571 Great Peace Shipping v. Tsavliris Salvage Ltd. 574 Miller Paving v. Gottardo 579 Sylvan Lake Golf & Tennis Club v. Performance Industries Ltd Frustration (TBC) Paradine v. Jane 620 Taylor v. Caldwell 621 KBKNo. 138 Ventures Ltd. v. Canada Safeway Ltd. 636 VI. THE PROTECTION OF WEAKER PARTIES: DURESS, UNDUE INFLUENCE, UNCONSIONABILITY Pao On v. Lau Yiu Long 173 Greater Fredericton Airport Authority Inc. v. NAV Canada 666 Geffen v. Goodman Estate 680 Royal Bank of Scotland 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 new/document/id/freeside/ NOTE: CASES AND READINGS ARE SUBJECT TO ADDITIONS, 6 DELETIONS AND REORDERING WHICH WILL BE ANNOUNCED IN CLASS

10 VII. ILLEGALITY AND PUBLIC POLICY Still v. Minister of National Revenue 762 Shafron v. KRG Insurance Brokers (Western) Inc. 730 VIII. 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 Lzundiy v. Newman 861 Koufos v. Czarnikow (The Heron II) 868 Semeihago v. Paramadevan 879 Southcott Estates Inc. v. Toronto Catholic District School Board lexurn.org/decisia-scc-csc/scc-csc/scc-csc/enhi 2612/1 /document.do 2. Aggravated and Punitive Damages Whiten v. Pilot Insurance Co. 846 Fidler v. Sun Life Assurance Honda v. Keays RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. pdf 3. Liquidated Damages, Deposits and Forfeitures Shatilla v. Feinstein 885 H.F. Clarke Ltd. v. Thermadaire Corporation Ltd. 889 J. G. Collins Insurance Agencies Ltd. v. Esley 896 Stockloser v. Johnson 898 Super Save Disposal Inc. v. Blazin Auto Ltd. 1/17/2011 BCSC I 784.htm 4. Equitable Remedies (Specific Performance, Injunctions, Rectification) John E. Dodge Holdings Ltd. v Ontario Ltd. 904 Warner Bros. v. Nelson 910 NOTE: CASES AND READINGS ARE SUBJECT TO ADDITIONS, 7 DELETIONS AND REORDERING WHICH WILL BE ANNOUNCED IN CLASS

11 NOTE: CASES ANTI READINGS ARE SUBJECT TO ADDITIONS, 8 DELETIONS AND REORDERING WHICH WILL BE ANNOUNCED IN CLASS Shafron v. KRG Insurance Brokers (Western) Inc. 730 Zipper Transportation v. Korstrom 916 Zipper Transportation v. Korstrom 917

12 1 Lai Contracts Case Rule Topic Biukovic. There can be no contract of sale unless there can be found an offer to sell and an [1] acceptance of the offer.. A mere quotation of price does not constitute an offer to sell; it is no more than an. Canadian Dyers Ass. Ltd. v. Burton. invitation to treat. (1920) 47 O.L.R. 259 (H.L.). The courts will look at the lan uae used in the light of the circumstances in which it is Formation: Offer & Invitation to Treat [2] 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.. The general assumption in the case of retail self-service sales is that placing goods on Pharmaceutical Society v. Boots shelves is an invitation to treat. [1953] 1 Q.B. 401, [1953] All E.R. An offer and acceptance take place at the cashier when a customer offers to buy and a 482 (C.A.) cashier_accepts_the_offer. Formation: Offer & Invitation to Treat (retail sale). The general assumption is that advertisements published in newspapers are invitations to Goldthorpe 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. [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 and perform the condition on the faith of Unilateral the advertisement (following the indicated method of acceptance). Contracts 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 of her motives Communication of [7] (1883) 4 B. & Ad. 621, 110 E.R. (fear of God s punishment) because she knew ofthe reward and she performed the act in Offer public offer 590 (K.B.) question. to anyone 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: R. v. Clarke to the reward because he did not act in reliance on the offer but for other reasons (to clear Communication of [8] (1927) 40 C.L.R. 227 (Aust. H.C.) himself from a false accusation). Offer public offer 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

13 2 Law 2 11,02 Contracts Biukovic [9] Case Rule Topic Harvela Investments Ltd. v. Royal Trust Co. of Canada [1986] A.C. 207, [1985] 2 All E.R. 966 (H.L.) R. v. Ron Engineering & [10] Construction (Eastern) Ltd. [1981] 1 S.C.R. 111, 13 B.L.R. 72. Whether an invitation from a seller to prospective buyers was to be construed as an 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 offers was held to be an invitation for a fixed Formation: Offer & bid). Invitation to Treat The leral nature of the invitation was that of unilateral contracts; if an offer was received - tenders from both Harvela and Sir Leonard, the obligation of the bank (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. The tender call is the offer and the bid submission is the acceptance of that offer which 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).. 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 oblinations (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 a tender (if the tender is invalid). Formation: Offer & Invitation to Treat M.J.B. Enterprises Ltd. v. Defence The invitation for tenders may be characterized as an offer to consider a tender, if that Formation: Offer & [11] Construction (1951) Ltd) tender is valid. Invitation to Treat [1999] 1 S.C.R. 619 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 privile e clause is only one term of contract A and must be read in harmony with the rest of the tender documents it does not override the obligation to only accept compliwit - - tenders tenders Double N. Earthmovers Ltd. City [12] of Edmonton, 2007 SCC 3 [13] The owner does not have a duty to investigate as to whether a submitted bid is compliant or to look beyond the face of the bid to ensure compliance; it only has a duty to treat all bids fairly and equally. When an owner accepts a compliant bid and enters into Contract B on the terms set out in the tender documents, Contract A is fully discharged and an owner has no any further obligations_to_unsuccessful_bidders Fotion: Offer & Invitation to Treat - tenders Livingstone v. Evans An offer that has been rejected is thereby ended and it cannot be afterwards accepted Formation: [1925] 3 W.W.R. 453, [1925] 4 without the consent of the one who made it. Acceptance

14 3 [Law [fijtkovic [141 [15] Case I Rule Topic D.L.R. 769 (Alta S.C.) A counter-offer is a rejection of the ori inal offer. a mere inquiry is not, counter-offer; If an offeror replies to the rejection, the reply ( cannot reduce price ) may amount to a rejection and renewal of the offer. The answer is dependent upon considering all surrounding counter offer 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. 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 forms, identifying 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.. Silence does not amount to acceptance. Feithouse v. Bindley Even though the nephew (seller) might have intended to sell, he never communicated this Formation: [17] (1962) 11 C.B. (N.S. 869, 142 E.R. intention to his uncle (buyer). Communication of [18] 1037 (Ex. Cli.) In general, the offeror is in control of the mode of acceptance but the courts are reluctant to Acceptance Saint John Tug Boat Co... V. Irving Refinery Ltd. [1964] S.C.R. 614 allow silence to be specified as the mode of acceptance. The conduct of an offeree, unaccompanied by any verbal or written undertaking, could Formation:..... under certam circumstances (for example, contmumg serviced on terms previously agreed) Communication of be reasonably constructed as valid acceptance Acceptance. When there was no written contract between the parties the court had to review all communications between them to see if they made an oral agreement, as well as to consider Timberwolf Log Trading Ltd V. their conducts over the relevant period of time and in the context of a particular industry Formation: [19] Columbia National Investments Ltd. (BC logging industry) Communication of 2011 BCSC 864 Held that where one party represents through conduct and silence that a contract has been Acceptance.. formed so as to lead the other party to reasonably conclude that such is the case, that the law_fmds a contract_to_have_been formed._[para._116] Brinkinbon v. Stahag Stahl The mailbox rule (the contract is concluded where and when the acceptance is mailed) [21] [1983] 2 A.C. 34 [1982] 1. All E.R. applies only if acceptance by mail is required or if that has been a regular business practice 293 (H.L.) of the parties or if the offer is made by mail and no acceptance requirements are specified... Formation: Of

15 4 Law Contracts Bi,ektjvic [22] [23] [1974] [25] [26] [27] [28] Household Fire Case Rule Topic 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. The court upheld the Reneral mailbox rule in situations where the acceptance is lost in the Formation: v. Grant p and as a consequence the offeror was bound by the offer even though acceptance was Communication of (1879) 4 Ex. D, 216 (C.A.) not received. The majority held the post office to be the agent of both parties. The dissent Acceptance Hoiwell Securities v. Hughes 161 Rudder [29] [1952] 1 W.L.R. 155, 1 (C.A.) All E.R rejected this and applied the recipient rule. mailed acceptance The postal rule should only apply if it does not lead to manifest inconvenience and Formation: absurdity. Communication of 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. mailed acceptance. Terms of a contract entered into on the internet can be displayed on multiple pages. Users 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. v.. Clicking the I agree button results in formation of a valid contract. The court defmes the browse wrap agreement the one that does not require that the Formation: COnuUUniC1tiOn of Acceptance purchaser indicate their agreement by clicking on an I Agree button. All that is required Formation: is that they use the product after being made aware of the product s Terms of Use. [92] Acceptance by Rogers The act of browsing could constitute the acceptance of terms (of use) of the web agreement Browsing; Century 21 Canada Communications Inc. and the formation of contract as long as a user of the web site continues to browse after Terms of Contract 2011 BCSC 1196 reading the terms posted Exclusion Clauses in. The court found that there was an enforceable browse wrap agreement on the Century 21 web posted contracts web site and that terms of use were properly incorporated because the terms of use were (browse wrap clear and a person who browsed the web site had enough time to read them prior to agreements) accepting them Byrne v. Van Tienhoven The mailbox rule does not apply to revocation revocation must be received by the offeree (1880) C.P.D. 344 to be effective. The general principle is that if a person who makes an offer dies, the offer cannot be accepted after they are dead. The court held that an offer could be revoked by indirect communication applying the same Dickinson v. Dodds general rule logic that is, once the person to whom the offer was made knows that the (1876) 2 Ch. D. 463 (CA.) property has been sold to someone else, it is too late for them to accept the offer and the contract is impossible to make. 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. Errington v. Errington and Woods Unilateral contracts are formed when all conditions of the offer are met. 1 K.B. 290, [1952] 1 All In general, offers for unilateral contracts can be revoked any time prior to complete E.R. 149 (C.A.) fulfillment by the offeree, but the court held that in this case an offer for a unilateral contract could_not be_revoked_by_the_promisor_once_the_promesee_entered_on performance Formation: Termination of Offer Formation: - Revocation TelilIlmation of Offer Formation: - Revocation Termination of Offer contracts Unilateral

16 5 Law Contracts Biukovic Barrick v. Clark [30] [1951] S.C.R. 177, [ D.L.R. Case Rule Topic 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 tune 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 determine what is a reasonable time using the rule of construction Termination of 529 (objective test) it will depend upon the nature and character of the item being sold, on the Offer Lapse 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. R. v. CAE industries Ltd.. The court dealt with vagueness of a best efforts term by constructing its reasonable meaning in the context of the language used by the parties and the overall purpose of the Formation: [33] contract which has also been partly performed Vagueness of [35] [36] [1986] 1 F.C. 129 (F.C.A.) Preliminary issue was if the contract was intended and the court held that it could be Terms answered by analyzing the surrounding circumstances as well as the letter itself To be a good contract there must be a concluded bargain which settles everything that is necessary to be settled and leaves nothing to be settled by later agreement between the parties. May & Butcher v. R. It has long been a well-recognized principle of contract law that an agreement in which Formation: of [1934] 2 K.B. 17 (H.L.) some critical part of the contract matter is left undetermined is no contract at all. Certainty of Terms Hi/las v. Arcos (1932) 40 Lloyd s Rep. (C.A.) Hi/las v. Arcos 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 [37] clear to them in the course of their business that are far from complete or precise. [38] [40] Formation: Certainty of Terms Formation: (1932) 147 L.T. 503 (H.L.) 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 Hi/las to mean that each case should be decided on the construction of the particular document. 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. 1 Empress v. Bank ofnova Scotia [1991] (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 1 W.W.R. 537 (B.C.C.A.) already partial performance: The land had been transferred and a portion of the sale of gas agreement had been performed. 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 Formation: Certainty of Terms

17 6 Lall Contracts Bizikovic [41] Mannpar Enterprises Ltd. v. Case Rule Topic 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. Canada The court held that the renewal clause in the rental contract was a mere agreement to Formation: [1999] 173 D.L.R. (4th) 243 agree the contract did not provide a formula or objective measure to determine rent (such Certainty of Terms (B.C.C.A.) as fair market value) or a mechanism to apply the formula. Bawitko Investment Ltd. v. Kernels The oral agreement in contemplation of a formal written agreement not enforceable due to [42] Popocorn Ltd (1991) 79 D.L.R. (4th) the lack of certainty; it is a contract to make a contract 97(Ont. C.A.) Wallace v. Allen, 2009 ONCA 36. Letter of intent could amount to an enforceable contract if the parties clearly express their intention to be bound by the terms of LOl which were later to be incorporated into a main [44] contract, if the terms of LOT are precise and complete, and if the parties after signing LOl [46] conducted themselves as if the deal is completed. Fontion: Certainty of Terms Formation: Certainty of Terms and letters of intent. 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 Rose and Frank v. J.R. Crompton [471 Bros., [ K.B. 261 (C.A.) consequences. Obligation. 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. Enforcement of Promises: Intention to Cte Legal Obligation Enforcement of [491 Toronto Dominion Bank v. Leigh Promises: Intention Instruments (1999) 178 D.L.R. (4th) A comfort letter is a form of undertaking that is deliberately designed with the intention not to Create Legal to create enforceable obligations. 634 (Ont. C. A.) Obligation The Governors ofdaihousie Enforcement of [50] College at Halifax v. The Estate of Arthur Boutilier, Deceased [1934] S.C.R For a promise to be binding as a contract it has to be supported by a good and sufficient consideration which moves from the promisee at the time of and in exchange for the promise which is sought to be enforced Promises: Consideration Eastwood v. Kenyon Moral obligation is nudum pactum, a voluntary promise without any consideration. Enforcement of [51] (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 [ (Q.B.) conferred and when the benefit was not conferred at the request of the promisor. Consideration Lainpleigh 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

18 Topic of 7 Law Contracts Biukovic Case Rule J Thomas v. Thomas [531 (1842) 2 Q.B. 851, 114 E.R. 330 Consideration is something which is of some value in the eyes of the law. Enforcement of Consideration must move from the promise. Promises: Nature.. Consideration must be sufficient but need not be adequate. Consideration [57] [581 [591 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. Enforcement of Promises: Pre to Stilk Enforcement of Payment would have been legally enforceable had it been promised in advance. A promise to perform, or the performance a pre-existing contractual obligation to a third On v. Lou Yiu Long party can be valid consideration. isting Duty Duty Owed [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. to Economic Duress; 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. 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 Construction Ltd. oral one. Duty Duty Owed (1976) 12 O.R. 19, 67 D.L.R. In Sulk v. Myrick (1809), when two out of 11 sailors deserted the ship, the captain to (3d) 606 (C.A.) promised to pay the remaining sailors extra money they sailed the ship back. However, 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. Pre-existing legal duty owed to the promisor may be a valid consideration for a subsequent Promises: Williams v. Roffey Bros. Pre promise if the promisor derives practical benefit from the agreement and if the subsequent existing Legal [ All E.R. 512 (C.A.) promise is not given under economic duress (note Glidewell s 6 point test). Duty Duty Owed Pao (2.).... of if iegai a Third Party; Past Consideration the Promisor Reference to the Promisor 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 enforceable so long as it is established that the variation of contracts was not procured of Promises: under economic duress. Pre [60] Authority Inc. v. NAY Canada existing Commercial reality needs to be recognized and considered that is, that the parties Legal [2008] N.B.J. No. 108 (N.B.C.A.) frequently varied and modified their contractual obligations and that the law has to protect to their legitimate expectations that the modifications or variations will be regarded as enforceable. The to pay a sum which the to pay was good Enforcement of [61] Re Selectmove Ltd. [1995] 2 All (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 Greater Fredericton Airport promise consideration debtor was already bound not Duty Duty Owed the Promisor

19 8 Law Contracts Biukovic Case Rule Topic but rather only where the existing obligation is to supply goods or services Promisor Enforcement of Foakes V. Beer The traditional common law position is that an agreement to accept a smaller sum in Promises: Pre [62] satisfaction of a debt of a larger sum is not a good consideration, existing Legal (1884) 9 App. Cas. 605 (H.L.). This case has been overruled in B.C. by s.43 of the Law and Equity Act. Duty Duty Owed to the Promisor [631. In the case of the debtor who owed the creditor a large sum under a series of promissory Enforcement of Foot v. Rawlings [1963] S.C.R. 197 notes as full payment of the debt, as long as the debtor continued to perform his obligation Promises: and kept paying by post-dated cheques as subsequently agreed between the two, the Part payment of creditor s right to sue on the notes was suspended. debt Hughes v. Metropolitan Railway [64] Co. (1877) 2 A.C. 439 (HI.) [65] [661 [67] [lit is the first principle upon which all Courts of Equity proceed, that if parties who have entered into defmite 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 to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties Central London Property v. High A promise intended to be binding, intended to be acted on and in fact acted on, is binding Trees House even if there is no consideration (Lord Denning relied on the doctrine of promissory [1947] 1 K.B. 130, [1956] 1 All estoppel). E.R. 256 Estoppel was used as a shield by tenants against the landlord who wanted to enforce a higher rent. Enforcement of Promises: Waiver and Promissory Estoppel 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 354 unequivocal. Estoppel D.C. Builders v. Rees [1966] 2 Q.B. 617 A creditor is barred from enforcing their legal rights only when it would be inequitable for the creditor to insist on them. Where there has been a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts on that accord by paying the lesser sum and 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 Combe v. Coinbe cannot be used as a sword, to create new causes of action where none existed before, b) [681 [1951] 2 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 (C.A.) party from insisting upon his strict legal rights when it would be unjust to allow him to enforce them. Enforcement of Promises: Waiver and Promissory Estoppel Enforcement of Promises: Waiver and Promissory Estoppel [69] Walton Stores (Interstate) Ltd. v.. Australian court made an exception to the general rule that promissory estoppel cannot be Enforcement of

20 9 Law Contracts Biukovic Case Rule Topic Maher used in the absence of a pre-existing legal relationship. Promises: Waiver (1988) 62 A.L.J.R. (H.C.) The court held that the doctrine can be used in the absence of a pre-existing legal relation if and Promissory N.M. v. A.TA. (2003), 13 B.C.L.R. [70] (4th) 73 (B.C.C.A.) Tweddle v. Atkinson (1861) 1 B & there was a reliance on the promise that was a reasonable expectation and if a departure Estoppel from the promise is unconscionable behavior. B.C.C.A found little evidence in Canadian authorities to indicate a move toward a more generous approach to promissory estoppel and distinguished the case from Walton iii which there was a reasonable expectation of a legal obligation. Enforcement of Promises: Waiver and Promissory Estoppel A person who is not engaged in a coniract (a third party) can generally neither sue nor be Privity of Contract: [77] 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. Dunlop PneumaticTyre Co. V. Even if a contract provides a third party with an enforceable right, there still must be Privily of Contract: [78] Seifridge & Co. Ltd. [1915] A.C. consideration. Third Party 847(H.L.) A principal not named in the contract, however, may sue upon it if the promisee really Beneficiaries Besweck v. Beswick [1966] 1 Ch. 538; [ A11E.R. 1 (C.A.) [79] [1968] A.C. 58;[1967] 2 All ER. 119 (H.L.) contracted as his agent.. C.A: Lord Denning MR fmds an equitable exception to general rule of privity where the third party is in a trustee relationship - in this case the widow sued in her capacity as executrix of the estate, and also in her personal capacity (Denning for C.A. held that she Privity of Contract: could make a joint claim and that a personal claim was good as well but I{L disagreed with Ways for Third him on the point of a personal claim see below). Parties to Acquire. H.L.: Lord Reid found that although the widow in her personal capacity had no right to sue, Benefits (choice of she had a right as adminisiratrix of her husband s estate to sue and seek for specific remedy) performance of a contract (rather than damages); the widow is in that way enforcing the contract in her benefit. lacobucci I 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: [80] Nagel International Ltd. implicitly extends its benefits to the employees and if the employees have been acting in Exceptions [82] [1992] 3 S.C.R. 299 the course of their employment and performing the very services provided for in the Employees Fraser River Pile & Dredge Lt. v. Can-Dive Services. [ B.C.L.R. (3d) 187 (B.C.C.A.) contract between their employer and the customer when the loss occurred Limited Exception to privity, employees may use as shields.. Followed London Drugs analysis re: application of limitation of liability clause on employees in order to enforce the insurer s waiver of its tights of subrogation against the charterer Privity of Contract: Does not modify the test of London Drugs but extends its application on contracts other Exceptions other than employment contracts as long as the contract explicitly or implicitly extends its than Employees benefits to the third party and if the third party has been performing the activities contemplated_in the contract [83] Dynamic Transportation Ltd. v. Statutory requirement that a contract be in writing has been satisfied with a memorandum Requirement of

21 10 Law 2c.cts Birikovic I [84] Case Rule Topic O.K Detailing Ltd. [ 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 Degiman v. Brunet Estate,, [1954] S.C.R 725 (s.c.c.). Equitable doctrine of part performance could be used to enforce an (oral) agreement for transfer of land which is non-compliant with a statutory requirement of form if an oral agreement is partially performed (part performance relevant to an oral agreement, not Requirement of wholly neutral and it would be unjust to refuse enforcement of an agreement writing: effects of. If the doctrine of part performance is not applicable, the plamtiff could still have a claim in non-compliance quantum meruit based on the reasonable value of services rendered, if those services would otherwise unjustly enriched the defendant