THE UNIVERSITY OF BRITISH COLUMBIA FACULTY OF LAW DECEMBER 2015 EXAMINATION. LAW 211 Contract Law. Section 2 Professor Biukovh TOTAL MARKS: 100

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1 r THIS EXAMINATION CONSISTS OF THREE (3) PAGES PLEASE ENSURE THAT YOU HAVE A COMPLETE PAPER THE UNIVERSITY OF BRITISH COLUMBIA FACULTY OF LAW DECEMBER 2015 EXAMINATION LAW 211 Contract Law Section 2 Professor Biukovh TOTAL MARKS: 100 TIME ALLOWED: 1 HOUR and 20 minutes including 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. Please write your exam code on the cover page of the examination paper, case chart and syllabus and do NOT leave the exam room without returning them to the invigilator. 3. If you think that additional facts are necessary to answer any question fuliy, please state those facts and explain why they are necessary. 4. Please write legibly if you are hand writing this exam. THIS EXAMINATION CONSISTS OF ONE QUESTION.

2 LAW 211, SectIon 002 Page 2/3 Marks: Billy Strong is an artist, but he makes his living running a home renovation business. His son Brendon has just started his own restaurant Hungry Heart in September Brendon needs some electrical work done in the restaurant and he also needs about $7,500 to do some promotion and marketing work. Unfortunately, Brendon has already borrowed a lot of money from the bank and spent all of his savings on cookware, special stoves, appliances, and salaries for his restaurant chef and kitchen staff preparing new menus. Billy s firm In Rainbows does not do electrical work but he promised to his son that he would find a reliable electrician to do the rewiring work for him. Billy also promised Brendon that he and In Rainbows would repaint the restaurant free of charge in support of his son s first business venture. Billy also said that he would talk to his wife Belinda, Billy s stepmother, to see if she could lend Billy $7,500. Belinda successfully runs several nail spas in Vancouver and she has a jewelry store in Burnaby. She has always liked Brendon s free and entrepreneurial spirit and, upon hearing from Billy on October list that he had promised to repaint Hungry Heart for free, she said to Billy that she would gladly lend Brendon the money he needed. On October 13th, Billy went to Jason who owns Lightning Dragon and he offered to paint the offices of Lightning Dragon after Halloween in return for Jason s rewiring work in Brendon s restaurant. Billy warned Jason that the work had to be completed before the end of November Jason reluctantly agreed. After hearing of Belinda s promise to lend him $7,500 for his restaurant Brendon hired Shout Out web promoting company on November 1st. Brendon was hoping to break into Vancouver s competitive dining market before the opening of the restaurant in February They orally agreed that Shout Out would do promotion and marketing for Hungry Heart for six months and that Brendon would pay them $7,500 and that the full amount was due on December 1, Max, the owner of Shout Out, said that he would send Brendon a written version of the agreement for his signature. Brendon felt pretty good about the deal and he accepted the terms, and also promised to sign the written document and send it back to Max. Shout Out started working on November 21 and Hungry Heart s web site quickly started attracting hundreds of visitors. Several local food bloggers offered to write about the restaurant. By November 19th, Billy had repainted both Brendon s restaurant and the offices of Lighting Dragon. Jason was very pleased with Billy s work but said

3 LAW 211, SectIon 002 Page 3/3 that he would probably not be able to get to work on Hungry Heart unless Billy paid him $200 in cash to cover gas for his truck and some accidental expenses. Billy was really angry but quickly realized that arguing further with Jason would be just a waste of time. So he paid extra $200 to Jason. Jason reassured him that he would do the work for Billy and that everybody would soon be satisfied with the deal. They shook hands and Billy left Lighting Dragon s office hoping for the best. While Billy was busy with his renovation business in Vancouver, his relationship with Belinda started deteriorating. Finally, Belinda moved out from Billy s place on November 2 3rd, saying that she needed some time on her own to figure out her future and Billy s place in it. Billy feels horrible due to a breakup of his marriage and he does not want to leave his house and work anymore. He is not responding to phone calls and s. On December 1st, Brendon comes to his father home to tell him that Lightning Dragon refuses to do the work in the restaurant and that Belinda refuses to give him any money. In fact, she told Brendon over the phone that she has sold her businesses and that she will use all her money for a fresh start on the coast of the Dominican Republic where she would move to after Christmas. Brendon is also stressed out because he is not able to find a written copy of the agreement with Shout Out in his office. He is pretty sure that he never signed it nor returned it to Max. Brendon is now asking his father for help. Billy said that he could not help himself anymore, let alone anybody else: I am just an artist with a broken heart and an empty wallet, Brendon. I have no wife anymore and nobody is paying me for the work I ve done. You should see a lawyer. Perhaps we should both go to see a lawyer. Just before the holiday closure of LSLAP, Billy and Brendon came to see you. Discuss their problems based on your study of Contract Law so far and provide your analysis of the related legal issues. THIS IS THE END OF EXAMINATION.

4 LAW : Contract Law Syllabus and Outline 2015/2016 TERM 1 only COURSE SYLLABUS Note: All cases are available in Ben-Ishai & Percy (9th edition) and the on-line Supplement INTRODUCTION TO THE STUDY OF THE LAW OF CONTRACT Ben-Ishai & 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 Ball Co. 25 Goldthorpe v. Logan 30 R. v. Ron Engineering & Construction (Eastern) Ltd. 33 M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. 36 Double N Earthmovers Ltd v. City ofedmonton, 2007 SCC 3 (Supp.) Williams v. Carwardine 48 R. v. Clarke Acceptance, communication of acceptance, electronic contracts Livingstone v. Evans 52 Butler Machine Tool v. Ex-cell-o Corp. 54 Carlill v. Carbolic Smoke Ball Co. 25 Dawson v. Helicopter Exploration Co. 65 Felthouse v. Bindley 70 Saint John Tug Boat Co. v. Irving Refinery Ltd. 73 Timberwolf Log Trading Ltd v Columbia National Investments Ltd. (Supp.) 11/08/201 1BCSCO864cor1.htm Household Fire v. Grant 79 Holwell Securities v. Hughes 84 Brinkibon v. Stahag Stahl 87 Rudder v. Microsoft Corp. 91 Century 21 Canada Ltd. v Rogers Communications Inc., 2011 BCSC 1196 (Supp.) 96.html Electronic Transaction Act [SBC 2001] C.10 - ss. 11 & 15 (Supp.) new/document/jd/freeside/ Termination of Offer: revocation, rejection and counter-offer, lapse of time; problems with unilateral contracts Dickinson v. Dodds 95 3

5 LAW : Contract Law Syllabus and Outline 2015/2016 TERM 1 only Byrne v. Van Tienhoven 99 Errington v. Errington and Woods 100 Carlill v. Carbolic Smoke Ball Co. 25 Livingstone v. Evans 52 Dawson v. Helicopter Exploration Co. 65 Barrick v. Clark Certainty of Terms; vagueness, incompleteness, agreements to negotiate, anticipation of formalization R. v. CAE Industries Ltd. 112 May & Butcher v. R. 117 Hillas v. Arcos 120 Foley v. Classique Coaches Ltd. 124 Sale of Goods Act ss. 12 & 13 - Ascertainment of price (Supp.) new/documentlld/freeside/ Empress v. Bank ofnova Scotia 130 Mannpar Enterprises Ltd. v. Canada 132 Ben-Ishai & Percy: A comment on Developments in the enforcement of Agreements to Negotiate Bawitko Investments Ltd v. Kernels Popcorn Ltd. 149 Wallace v. Allen, 2009 ONCA 36 (Supp.) 5. Consideration: nature of consideration, past consideration, forbearance, pre-existing duty The Governors of Dalhousie College v. the Estate ofarthur Boutilier 160 Thomas v. Thomas 173 Ben-Ishai & Percy: Bona fide compromises of disputed claims 175 Eastwood v. Kenyon 170 Lampleigh v. Brathwait 172 Ben-Ishai & Percy: Pre-existing legal duty; public duty Pao On v. Lau Yiu Long 180 Stilk v. Myrick 182 Gilbert Steel v. University Construction Ltd. 184 Williams v. Roffey Bros. 188 Greater Fredericton Airport Authority Inc. v. NAV Canada 192 Foakes v. Beer 198 Re Select,nove 201 Foot v. Rawlings 203 Law and Equity Act (R.S.B.C. 1996, c. 253) s. 43 (Supp.) new/documentlld/freeside/ Waiver and Promissory Estoppel Hughes v. Metropolitan Railway Company 207 Central London Property v. High Trees House 209 John Burrows v. Subsuiface Surveys 211 D &C Builders v. Rees 214 4

6 LAW : Contract Law Syllabus and Ouffine 2015/2016 TERM 1 only Combe v. Combe 231 Walton Stores v. Maher 237 M.(N.) v. A.(T.A.) Intention to Create Legal Obligation Balfour v. Balfour 250 Rose and Frank v. JR. Crompton Bros. 253 TD Bank v. Leigh Instruments Ltd Formality: The Requirement of Writing and Part Performance Ben-Ishai & Percy: The Requirement of Writing Dynamic Transport Ltd. v. O.K Detailing Ltd. 268 Degiman v. Guaranty Trust Co. 273 Ben-Ishai & Percy: Electronic III. PRIVITY OF CONTRACT Tweddle v. Atkinson 288 Dunlop PneumaticTyre Co. v. Selfridge & Co. Ltd. 289 Besweck v. Beswick London Drugs Ltd. v. Kuehne & Nagel International Ltd. 310 Fraser River Pile & Dredge Ltd. v. Can-Dive Services 322 IV. CONTENT OF THE CONTRACT 1. Representations and Terms: Misrepresentation and Rescission: Parol Evidence Rule and Rectification; Classification of Terms Redgravev.Hurd 361 Smith v. Land & House Property Corporation 365 Kupchak v. Dayson Holdings 369 Hielbut, Symons & Co. v. Buck!eton 377 Leaf v. International Galleries 384 Sodd Corp. v. N. Tessis 398 B.G. Checo Int l Ltd. v. B.C. Hydro 401 No Taurus Ventures Ltd. V. Intrawest Corp. (Supp.) Hawrish v. Bank ofmontreal 418 Bauer v. Bank ofmontreal 421 5

7 Law. There can be no contract of sale unless there can be found an offer to sell and an acceptance of the offer.. A mere quotation of price does not constitute an offer to sell; it is no more than invitation to treat. [1] 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. An offer and acceptance take place at the cashier when a customer offers to buy and a (retail sale) 482 (C.A.) cashier accepts the offer.. The general assumption is that advertisements published in newspapers are invitations to that Logan s electrolysis ad was an offer to the public at large. intention to create legal obligations). Offer [5] (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 [6] 1 Canadian Dyers Ass. Ltd. v. Burton Formation: Offer & Formation: Offer & [2] [1953] 1 Q.B.401, [1953] AUE.R. Invitation to Treat Goldthorpe v. Logan treat, not offers. Formation: Public [3] [1943] O.W.N 215, [1943] 2 D.L.R. However, the court looked at the surrounding circumstances, the actions of both parties offer or invitation 519 (C.A.) (direct contact, consultation, examination, etc.) and the language used in the ad and held to treat. An ad was held to be an offer fora 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 Communicationof offer public 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). 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 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: to the reward because he did not act in reliance on the offer but for other reasons (to clear Communicationof himself from a false accusation). Offer public offer. Reconcile with Williams v. Carwardine. NOTE that in a bilateral contract setting, to anyone who does knowledge is required to enable meetings ofminds, but motive is irrelevant, something (1920) 47 O.L.R. 259 (H.L.) Invitation to Treat The courts will look at the language used in the light of the circumstances in which it is Carlill v. Carbolic Smoke Ball Co. [41 [1893] 1 Q.B. 256 (C.A.) R. v. Clarke (1927)40 C.L.R. 227 (Aust. H.C.)

8 Law. 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 Harvela Investments Ltd. v. Royal Trust Co. of Canada [7] [1986] A.C. 207, [1985] 2 AU E.R. 966 (HI.) 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 R. v. Ron Engineering & 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 [198 1] 1 S.C.R. 111, 13 B.L.R. 72 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 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 a tender (if the tender is invalid). 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 to look beyond the face of the bid to ensure compliance; it only has a duty to treat all bids Double N. Earrhmovers Ltd v. City fairly and equally [10] ofedmonton, 2007 SCC 3. 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 Livingstone v. Evans An offer that has been rejected is thereby ended and it cannot be afterwards accepted Formation: [11] [1925] 3 W.W.R. 453, [1925] 4 without the consent of the one who made it. Acceptance 2 bid (an invitation for the submission of offers was held to be an invitation for a fixed Formation: Offer & Formation: Offer & 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 & Formation: Offer & Invitation to Treat bid). Invitation to Treat The legal nature ofthe invitation was that ofunilateral contracts; if an offer was received - tenders [8] Construction (Eastern) Ltd. Invitation to Treat - tenders [9] 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 - tenders - 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 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

9 Law D.L.R. 769 (Alta S.C.) A counter-offer is a rejection ofthe oririnal offer, a mere intjuiry is not. counter-offer,. If an offeror replies to the rejection, the reply ( cannot reduce price ) may amount to a rejection and. treat 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 [121. Although in theory an offer for a unilateral contract can be revoked any time before the bilateral contracts. acceptance, performance/acceptance of an offeree. Lord Denning restated the traditional last shot formula for the resolution of the battle of the forms, identifying several possibffities 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: [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 obiedive counter-offer; [13] 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: 1037 (Ex. Ch.) In general, the offeror is in control of the mode of acceptance but the courts are reluctant to Acceptance allow silence to be specified as the mode of acceptance... [15] communications between them to see if they made an oral agreement, as well as to consider 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 finds a contract to have been formed._[para._1161 Brinkinbon v. Stahag Stahl The mailbox rule (the contract is concluded where and when the acceptance is mailed) A ce [17] [ A.C. 34 [1982] 1 All ER. applies only if acceptance by mail is requiredor ifthathas been aregularbusiness practice 293 (H.L.) of the parties or if the offer is made by mail and no acceptance requirements are specified 3 [161 Colunthia National Investments Ltd (BC logging industry) Communicationof imtionof Corp. parties that was not objected to; 2. First shot. a contract is concluded upon the terms of the Acceptance [14] (1962) 11 C.B. (N.S. 869, 142 E.R. intention to his uncle (buyer). Communicationof TimberwolfLog Trading Ltd V. their conducts over the relevant period of time and in the context of a particular industry Formation: 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 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 such as offer could be inteipreted to have an implied term that an offeror who controls conditions of cooperation of an offeree would not be allowed to prevent under certain circumstances (for example, continmng serviced on terms previously agreed) Commumcataonof. The conduct of an offeree, unaccompanied by any verbal or written undertaking, could Formation: Saint John Tug Boat Co. v. Irving.. Refinery Lt [1964] S.C.R. 614 be reasonably constructed as valid acceptance Acceptance When there was no written contract between the parties the court had to review all

10 Law 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 general mailbox rule in situations where the acceptance is lost in the Formation: Household Fire v. Grant pand as a consequence the offeror was bound by the offer even though acceptance was Communicationof [18] (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 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: Hoiwell Securities v. Hughes absurdity. Comniunicationof The postal rule does not apply if the express terms of the offer specify that the acceptance Acceptance [19] [1974] 1 W.L.R. 155, 1 AU E.R. 161 (C.A.) 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 Formation: Rudder v. Microsoft Corp. are expected to follow the links and become familiar with all terms before accepting the Co nunication of [20] [1999] (Ont. S.CJ.) terms of the contract. Acceptance. Clicking the I agree button results in formation of a valid contract. 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. AU that is required Formation: is that they use the product after being made aware of the product s Terms of Use. [92] Acceptance by Century 21 Canada v. Rogers The act of browsing could constitute the acceptance of terms (of use) of the web agreement Browsing; CommunicationsInc. 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 ExciusionClauses in [21] 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 Formation: Byrne v. Van Tienhoven The mailbox rule does not apply to revocation revocation must be received by the offeree Termination of [22] (1880) C.P.D. 344 to be effective. Offer - Revocation 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 Formation: Termination of [231 (1876) 2 Ch. D. 463 (C.A.) property has been sold to someone else, it is too late for them to accept the offer and the Offer - Revocation 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. Formation: Errington v. Errington and Woods Unilateral contracts are formed when all conditions of the offer are met. Termination of Offer Unilateral [24] [ 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 contracts contract could not be revoked by the promisor once the promesee entered on performance 4

11 Law 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 determine what is a reasonable rime using the rule of construction Termination of (obiective test) it will depend upon the nature and character of the item being sold, on the Offer Lapse of 529 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.. 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: contract which has also been partly performed Vagueness of [261. Preliminaiy 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 eveiything 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: [1934] 2 K.B. 17 (ILL.) some critical part of the contract matter is left undetermined is no contract at all. Certainty of Terms [27] 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 Fontion: any essential terms of a contract of sale undetermined, and therefore to be determined by a Hillas v. Arcos CCthdJfty of Terms [28] 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 Fotion: clear to them in the course of their business that are far from complete or precise. Certainty ofterms [29] 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. Foley v. Classique Coaches Ltd. Held that an agreement to agree on price from time to time was certain enough since the Formation: [30] 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. Formation: Agreements to agree cannot be enforced. When the parties stated a formula (e.g. market rental) to ascertain a clause, but did not [31] supply machinery (e.g. arbitration) for applying the formula, the courts will supply (be) the 5 [1934] 2 K.B. 1 (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 Certainty of Terms Barrickv. Clark [25] [1951] S.C.R. 177, [1950] 4D.L.R. R. v. CAE Industries Lti [1986] 1 F.C. 129 (F.C.A.) (1932)40 Lloyd s Rep. (c.a.) Hillas v. Arcos (1932) 147 L.T. 503 (H.L.) [1991] 1 W.W.R. 537 (B.C.C.A.) Empress v. Bank ofnova Scotia

12 Fotion: Obation Coderafion Law 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 [32] unworkable), in this case there was an implied term requiring good faith negotiations for the renewal of the rental agreement. 243 agree the contract did not provide a formula or objective measure to determine rent (such Certainty ofterms MannparEnterprises LtS v. Canada The court held that the renewal clause in the rental contract was a mere agreement to Formation: [1999] 173 D.L.R. (4th) (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 [33] Popocorn Ltd (1991) 79 D.L.R. (4th) the lack of certainty; it is a contract to make a contract 97(Ont. C.A.) Certainty of Terms Formation: intention to be bound by the terms of LOT which were later to be incorporated into a main Certainty Wallace v. Allen, 2009 ONCA 36 ofterms [34] contract, if the terms of LOl are precise and complete, and if the parties after signing LOT and letters of intent conducted themselves as if the deal is completed.. Letter of intent could amount to an enforceable contract if the parties clearly express their. Atkin L.J.: the common law does not regulate agreements between spouses...the [35] Balfour v. Balfour consideration that really obtains from them is that natural love and affection. [1919] 2 K.B. 571 There is a strong presumption that family agreements are not intended to produce to Create Legal legal consequences. Obligation consequences. Rose and Frank v. J.R. Crompton Promises: Intention [36] However, if there is a clear and definite expression of the business parties that they do not Create Legal Bros., [1923] 2 K.B. 261 (C.A.) intend to be subject to legal jurisdiction, there is no reason in public policy why effect should not be given to their intention. Toronto Dominion Bank v. Leigh Promises: Intention. There is a strong presumption that business agreements are intended to produce legal [37] Instruments (1999) 178 D.L.R. (4th) A comfort letter is a form of undertaking that is deliberately designed with the intention not Create Legal to create enforceable obligations. 634 (Ont. C. A.) Obligation The Governors ofdaihousie For a promise to be binding as a contract it has to be supported by a good and sufficient [38] College athalfax v. The Estate of consideration which moves from the promisee at the time of and in exchange for the ArthurBoutilier, Deceased promise which is sought to be enforced [1934] S.C.R. 642 Eastwood v. Kenyon Moral obligation is nudum pactum, a voluntary promise without any consideration. [39] (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 [401 Limpleigh 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 (LB.) conferred at the request of the promisor. Consideration 6

13 Lal Law Thomas v. Thomas [41] Consideration must move from the promise. Promises: Nature of (1842)2 Q.B. 851, 114E.R Consideration is something which is of some value in the eyes of the law.. Consideration must be sufficient but need not be adequate. Consideration 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. Promises: Pre. A promise to perform, or the performance of a pre-existing contractual obligation to a third [42] Pao On v. Lau Yiu Long party can be valid consideration. Duty Duty Owed [1980] AC. 614 (P.C.) Duress, whatever form it takes, is a coercion of the will so as to vitiate consent; duress may to a Third Party; render a contract voidable, but this must be claimed promptly. EconomicDuress; The commercial pressure alleged to constitute duress must be such that the victim entered Past Consideration the contract against their wifi, 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 [431 to rescind the existing contract the new provisions were unilaterally imported into the 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 ConstructionLtd. oral one. Duty Duty Owed (1976) 12 O.R. (2.) 19,67 D.L.R. In Stilk v. Myrick (1809), when two out of 11 sailors deserted the ship, the captain to thepromisor (3d) 606 (C.A.) promised to pay the remaining sailors extra money if they sailed the ship back. However, Reference to Silk 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. [44] Williams v. Roffey Bros. [ E.R. 512 (CA.) 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. 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 enforceable so long as it is established that the variation of contracts was not procured GreaterFredericton Airport Promises: under economic duress. Pre [45] Authority Inc. v. NAV Canada existing Legal [2008] N.B.J. No. 108 (N.B.C.A.) Commercial reality needs to be recognized and considered that is, that the parties frequently varied and modified their contractual obligations and that the law has to protect Duty Duty Owed 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 [46] 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 7

14 Estoppel Estoppel Estoppel Law but rather only where the existing obligation is to supply goods or services Promisor. The traditional common law position is that an agreement to accept a smaller sum in Promises: Pre. This case has been overruled in B.C. by s.43 of the Law and Equity Act Duty Duty Owed Foakes v. Beer [47] satisfaction of a debt of a larger sum is not a good consideration, existing (1884) 9 App. Cas. 605 (H.L.) Legal tothepromisor [48] In the case of the debtor who owed the creditor a large sum under a series promissory of Enforcementof 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 [lit is the first principle upon which all Courts of Equity proceed, that parties who have if 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 Hughes v. Metropolitan Railway of negotiation which has the effect of leading one of the parties to suppose that the strict Promises: Waiver [49] Co. (1877) 2 A.C. 439 (HI.) 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 to Estoppel 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 Enforcement of Trees House even if there is no consideration (Lord Denning relied on the doctrine of promissory Promises: Waiver [1947] 1 K.B. 130, [1956] 1 All estoppel). [50] E.R. 256 Estoppel was used as a shield by tenants against the landlord who wanted to enforce a andpromissory 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 [51] Surveys seek enforcement of the contract, but only as friendly indulgences. Promises: Waiver [19681 S.C.R. 607,68 D.L.R. (2m1). When there is no consideration or deed, any relaxation of terms must be clear and and Promissory 354 unequivocal. Estoppel. 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 D. C. Builders v. Rees [52] lesser sum in satisfaction, and the debtor acts on that accord by paying the lesser sum and [ Q.B.617 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. Promises: Waiver A promise made under duress should not be estopped. and Promissory Promises: Waiver. Lord Derming explained his own principle set out in High Trees: a) promissory estoppel and Promissory Combe v. Combe cannot be used as a sword, to create new causes of action where none existed before, b) [53] [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. [54] Walton Stores (Interstate) Ltd. v. Australian court made an exception to the general rule that promissory estoppel cannot be 8

15 Law (1988) 62 A.LJ.R. (H.C.) The court held that the doctrine can be used in the absence of a pre existing legal relation if and Promissory 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 and Promissory which there was a reasonable expectation of a legal obligation. Estoppel [561 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 S.393 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 Privity of Contract [57] Seifridge & Co. Ltd. [19151 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 contracted as his agent.. C.A: Lord Denning MR finds an equitable exception to general rule of privity where the third party is in a trustee relationship - this case the widow sued in her capacity as in Besweck v. Beswick [1966] 1 Ch. 538; [1966] 3 All ER. 1 (C.A.) [58] [1968] A.C. 58;[1967] 2 All E.R. 119 (H.L.) she had a right as adininistratrix 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 J held employees were protected from clause limiting their liability even though they were not parties to the contract. [59] Nagel International Ltd. implicitly extends its benefits to the employees and if the employees have been acting in Exceptions [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 Limited Exception to privity, employees may use as shields.. Followed London Drugs analysis re: application of limitation of liabffity clause on employees in order to enforce the insurer s waiver of its rights of subrogation against the FraserRiverPile &DredgeLt. v. [60] Does not modify the test of London Drugs but extends its application on contracts other Exceptions other Can-Dive Services. [1997] 39 B.C.L.R. (3d) 187 (B.C.C.A.) 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 [61] Dynamic Transportation Ltd. v. Statutory requirement that a contract be in writing has been satisfied with a memorandum Requirement of 9 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 London Drugs Ltd. v. Kuehne & The employee could rely on the limitation of liability clause if such clause expressly or Privity of Contract charterer Privity of Contract 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 IlL disagreed with Ways for Third Maher used in the absence of a pre-existing legal relationship. Promises: Waiver N.M. v. A.T.A. (2003), 13 B.C.L.R. Promises: Waiver 73 c.c.a.) generous approach to promissory estoppel and distinguished the case from Walton, in [55] (4th) Tweddle v. Atkinson (1861) 1 B &

16 Law O.K. Detailing Lti [ S.C.R. evidencing the agreement (that is, description of laud) with a sufficient certainty of Writing 1072 description that enables the property to be identified. Equitable doctrine of part performance could be used to enforce an (oral) agreement for transfer of laud which is non-compliant with a statutory requirement of form if an oral Degiman v. Brunet Estate 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 [621 [1954] S.C.R 725 (S.C.C.). If the doctrine of part performance is not applicable, the plaintiff could still have a claim in non-compliance meruit based on the reasonable value of services rendered, if those services would - quantum otherwise unjustly enriched the defendant 10