Law 410 Contracts O Byrne

Transcription

1 1 Law 410 Cntracts O Byrne

2 2 1. THE ELEMENTS OF A CONTRACT Elements f a cntract: 1. Bth parties must reach agreement Offer Acceptance 2. Bth parties must prvide cnsideratin 3. Bth parties must have an intentin t cntract Definitins: Offer - expressin f willingness t cntract n certain terms, made with the intentin that it shall becme binding as sn as accepted by the persn t whm it is addressed. Acceptance - final and unqualified expressin f assent t the terms f an ffer Cnsideratin - smething f value in the eye f the law and invlves the idea f an exchange Intentin t Cntract - the parties made the agreement in cntemplatin f it having legal cnsequences Nminal cnsideratin - cnsideratin in name nly because it really desn't benefit A and n detriment t B t pay 1 cent. Hwever, the cmmn law treats nminal cnsideratin as GOOD cnsideratin. This prevents judges meddling with freedm f parties t cntract. Als intrduces prevents cntractual uncertainty, as parties t a cntract wuldn t be sure what a fair price was if judges were allwed t assess the adequacy f cnsideratin. Duress - subjecting smene t imprper stress that makes the cntract n lnger a vluntary agreement Criteria When d agreements amunt t enfrceable cntracts? 2. THE ENFORCEMENT OF PROMISES (i) Frmality Reasns fr frmality (i.e. writing)* Evidentiary functin - prvides an bjective and permanent recrd f the parties agreement, avids reliance n fallible human memries and eliminates the need t weigh pssibly cnflicting evidence as t what was said Cautinary functin - Writing intrduces a nte f deliberatin and prvides the parties with a perid f reflectin, preventing uncnsidered actin. Channelling functin - serves as a mark f an enfrceable prmise, thugh the written prmise may still be vid r unenfrceable fr lack f cnsideratin, lack f capacity r because f fraud, duress r ther vitiating factrs. * [Nte: The CL des nt insist n frmality as a prerequisite t legal liability.] (ii) Seriusly Intended Prmises Perhaps nt all prmises shuld be legally binding, but prmises shuld create legal bligatins if they are seriusly intended and made fr a gd reasn. Cause - there must be a valid purpse, a reasn fr, an end t be pursued in the cntract. (iii) Reliance In cntrast t a thery based upn the seriusly intended nature f the prmise, legal bligatin under reliance thery results frm its effect n the prmisee. Hwever, as the prmisr has n cntrl ver the actins f the prmisee, the prmisee culd act t btstrap their way int an enfrceable cntract (iv) Exchange and Bargains Cnsideratin - smething representing value (such as an act, a frbearance, r a return prmise; n judicial assessment f adequacy f value) bargained fr and received by a prmisr frm a prmisee; that which mtivates a persn t d smething. Either sme detriment t the prmisee r a benefit t the prmisr.

3 3 Unilateral v. Bilateral Cntracts Unilateral v. Bilateral Cntracts Unilateral Cntract - ne party makes an express engagement r undertakes a perfrmance, withut receiving in return any express engagement r prmise f perfrmance frm the ther. Neither party is bund until the prmisee accepts the ffer by perfrming the prpsed act. It cnsists f (1) a prmise fr an act, (2) the acceptance (cnsisting f the perfrmance f the act requested) Acceptance is nt satisfied by a prmise t perfrm an act All ffers (even an ffer f a bilateral cntract) is essentially a unilateral cntract, in that the persn receiving the cntract has n bligatin t accept. Bilateral Cntract - A cntract that requires the cntracting parties t fulfill reciprcal bligatins. Cntract is frmed by the exchange f prmises in which the prmise f ne party is cnsideratin supprting the prmise f the ther. cf unilateral cntract which frms by the exchange f a prmise fr an act Prmise under Seal If a prmise is under seal, there is n need fr there t be cnsideratin mving frm either party twards the ther. The persn making the prmise under seal is acknwledging that that prmise is binding even absent cnsideratin frm the ther side. Examples: Seller t Buyer: I prmise t deliver 100 widgets fr $100, 6 mnths frm nw Buyer t Seller: I prmise t pay $100 fr 100 widgets in 6 mnths If the seller decides at sme pint BEFORE the 6 mnths is up and says they can't deliver, it is immediately actinable, and desn't need t wait 6 mnths until the cntract was suppsed t be perfrmed. Exchange and Bargains Dalhusie Cllege v. Butilier Estate 1934, Supreme Curt f Canada Gratuitus prmises (i.e. a prmise nt supprted by cnsideratin) are nt enfrceable Prmise must be supprted by cnsideratin Nudum Pactum (latin, means bare agreement ) - an agreement that is nt enfrceable as a cntract, because it is nt "clthed" with cnsideratin Rati Third party cnsideratin is NO cnsideratin at all Cnsideratin MUST flw frm the prmisee [Reliance n a gratuitus prmise des nt cnvert it int a binding prmise] If the universities want the gratuitus prmises t be binding, they just need the prmisr t put the prmise under seal r else d smething specific in cnsideratin f the prmise. Gift A gift is irrevcable if there is: 1. Intentin t give the gift 2. Acceptance (usually presumed) 3. A sufficient act f delivery May be additinal requirements Wd v. Lucy Lady Duff-Grdn pg. 182 [Nte: American decisin; therefre persuasive, nt binding] Rati: Nthing explicitly prmised by Wd but Curt implied prmise t expend best effrts as cnsideratin n the basis f business efficacy Want t ensure that cmmercial cntracts are enfrced

4 4 Wd needed t expend best effrts Past Cnsideratin Eastwd v. Kenyn (1840) The mral bligatin t fulfil a prmise cannt be cnstrued as cnsideratin fr that prmise The law requires the prmisee t give smething f value in exchange fr the prmise. Infant s cntracts are vidable, in that they are nt bund by them Exceptin: Infants can cntract fr necessaries HOWEVER: Upn attaining the age f majrity an infant renews the prmise t pay, that makes the cntract binding Thugh this is still a past-cnsideratin prblem, as past cnsideratin is n cnsideratin at all Lampleigh v. Brathwait (1615)..185 Implicit in a request t d smething is the agreement t pay if: The act was dne at the request f the prmisr Payment, if prmised in advance, must be legally recverable When nt legally recverable? Fr an illegal cntract, i.e. fr a hitman Quantum meruit as much as he deserves. It means he will be paid a reasnable amunt Thmas v. Thmas (1842) Jhn Thmas makes the prvisin his wife shuld be able t live in his huse fr her life r until she remarries. Cnsideratin is smething f value in the eyes f the law that mves frm the prmisee t the prmisr. Taking the burdens with the gift (eg. I give yu my car; yu say yu'll get yur wn insurance. This isn't cnsideratin. It isn't smething dne at my request and desn't flw t me) Widw s payment f ne pund and keeps the huse in gd repair is cnsideratin The curt finds this isn't a burden f the gift. The pund is extra and that keeping the huse in gd repair wasn't an bligatin either; will therefre cunt as cnsideratin. Firm ffer: I prmise t sell yu 100 widgets fr $100 and t keep this ffer pen until Friday This ffer f a bilateral cntract is a gratuitus prmise t keep the ffer pen and can nly be accepted by the exchange f a prmise t pay This prmise may therefre be revked withut legal cnsequences Optin cntract: Offeree pays mney (depsit) t keep the ffer pen until a certain date Fr example, pay $1000 t keep the ffer pen If yu dn't g ahead with the ffer, yu dn't get yur mney back, because it was mney paid t purchase keeping that ptin pen. Frbearance Questin Glria Greer purchases a C.G.E. Hairdryer frm a lcal department stre, and upn pening the bx finds a card headed Manufacturer's "guarantee", instructing the purchaser t cmplete, sign and return the card in rder t be cvered by the 12- mnth guarantee. Ten mnths later the hair dryer breaks due t a manufacturers defect. Can Glria sue n the guarantee? What is she prviding as cnsideratin in exchange fr the warranty? Culd argue that entering int the cntract with the retailer (she pays, they give her the hairdryer), prvides supprt fr cnsideratin fr the side cntract with the manufacturer (cllateral cntract) Is filling in the card cnsideratin? It culd be, but it culd als be a cnditin f getting the warranty Culd be cnsideratin if yu are prviding valuable cnsumer infrmatin.

5 5 Frbearance t sue This may be cnstrued as cnsideratin. Example: Plaintiff injured; defendant and plaintiff discuss settling ut f curt. The cntract is that the defendant will pay the plaintiff, wh in return prmises t frbear t sue (r t discntinue actin if a suit has already been started). B. (D C ) v. Arkin Actin 1 Agreement: Mm pays Zellers, in exchange, Zellers frbears t sue (settled ut f curt) Actin 2 Mm sues Zellers t get her mney back, because their lawsuit was knwn t be invalid Frbearance When is frbearance gd cnsideratin? 1. Give up a gd claim. 2. Give up a dubtful claim (might win, might nt) 3. Give up a claims nt knwn t be invalid a. Needs t shw that it is a reasnable claim, made in gd faith n reasnable grunds b. N deliberate cncealment f invalidity f the claim c. Shw that yu seriusly intended t pursue the claim Frbearance When is frbearance NOT gd cnsideratin? 1. When what is sacrificed is a claim that is knwn t be invalid a. In this case, the plaintiff needs t demnstrate claim was invalid b. The nus is n Zellers t prve (n the balance f prbabilities) that the claim was nt knwn t be invalid and they can fill the 3 requirements listed abve Pre-Existing Legal Duty Prmisr - Prmisee (pre-existing legal duty) Example: Harvey's father prmises t pay him $5000 if he prmises t stp selling drugs. Nt selling drugs is nt gd cnsideratin because he has a pre-existing legal duty t nt sell drugs. (1) Public Duty Ward v. Byham Prmising t fulfill a public duty is NOT gd cnsideratin Father agreed t pay mther his illegitimate child a pund a week The mther already has a pre-existing legal duty t take care f the child (ii) Duty Owed t a Third Party Prmisee must purchase prmise frm the prmisr Cnsideratin must flw frm the prmisee Cnsideratin need nt flw t the prmisr frm the prmisee Example: A student agrees t tutr anther student. "I will tutr yu if yu teach my child pian lessns" Here cnsideratin flws t a third party. The perfrmance f a duty wed t a third party duty can be GOOD CONSIDERATION if perfrmance ccurs at the request f the prmisr Shadwell v. Shadwell (1860) Nephew gt engaged, and subsequently his uncle prmised t pay nephew 150 punds per year Then the uncle desn't want t pay The argument is that because the nephew had a pre-existing legal duty t marry, ging thrugh with the marriage shuldn't be cnsidered gd cnsideratin. BUT: Prmising t fulfill a pre-existing legal duty t a third party IS GOOD CONSIDERATION. (2) Duty Owed t the Prmisr Can fulfillment f pre-existing legal duty t the prmisr be gd cnsideratin? N.

6 6 Gilbert Steel Ltd. v. University Cnst. Ltd Facts Defendant rally agreed t increase the price he was paying fr steel purchased frm the Plaintiff Plaintiff billed ut at the higher price, defendant nly paid riginal price Plaintiff suing fr the deficiency Issue Was cnsideratin present t supprt the variatin t the cntract? N evidence that the ld cntract was rescinded, s this was a variatin Applicatin The nly term that is changing is price This sunds mre like a variatin in the existing cntract and variatin must have cnsideratin Decisin The prmise t give a gd price n steel in the future was nt gd cnsideratin Initially, the buyer had 60 days t pay at price x, nw they pay at x+1 The effect f this is t gives the university increased credit Hwever, this is really just an incident f the increased price, it isn't bargained fr and therefre isn't cnsideratin Cnsideratin must be present t supprt variatin in a cntract Stilk and Myrick 1809 The Captain desn't pay his sailrs, arguing they had a pre-existing duty t d the wrk Curt says that this is an emergency situatin and desertin is a risk fr the sailrs, and sailrs were bligated withut the need fr extra pay Curt has t chse between explitatin (f the sailrs) and extrtin (f the captain) Slutin - let the curt decide n a case-by-case basis. Williams v. Rffey Brs. & Nichlls (Cntractrs) Ltd Williams can t finish based n riginal cntract New cntract - Rffey agrees t make the extra payments THEN, Rffey stps paying, Williams stps wrk, and they end up in curt. Accrding t the Gilbert Steel case, prmise t pay mre was gratuitus. What des Rffey gain frm the new cntract with Williams? Rffey wn't breach his cntract with the flats' wner Wn't need t lcate replacement sub-trade Imprved payment scheme Greater efficiency in delivery (finishing ne flat at a time instead f a bunch) HOWEVER: These are practical benefits, but nt cnsideratin Duress Test fr duress: (p. 716) Duress is cercin f the will s as t vitiate cnsent In determining whether there was a cercin f will (such that there was n true cnsent), cnsider whether the persn alleged t have been cerced: Did r did nt prtest Did r did nt have an alternative curse pen t him such as an adequate legal remedy Had independent legal advice After entering the cntract, tk steps t avid it. Rati (frmula fr pre-existing legal duty) Assume A has entered int a cntract with B t d wrk fr, r t supply gds r services t B, in return fr payment by B At sme stage befre A has cmpletely perfrmed the bligatins under the cntract, B has reasn t dubt whether A will r will be able t, cmplete his side f the bargain

7 7 Thereupn, B prmises A an additinal payment in return fr A's prmise t perfrm his cntractual bligatins n time As a result f giving his prmise B btains in practice a benefit, r bviates a disadvantage Prvided B's prmise is nt given as a result f ecnmic duress r fraud n the part f A THEN the benefit t B is capable f being cnsideratin t B's prmise s that the prmise will be legally binding. Rbichaud v. Caisse Ppular Rbichaud brrws mney frm Ryal Bank and Caisse Ppular (CP) CP gets a $4000 judgment CP is a judgement creditr and Rbichaud is a judgement debtr Rbichaud ges t Atv fr debt cnslidatin CP agrees t take a $1000 in full satisfactin f the debt What is the benefit t CP? Practical benefits: Defendant gets smething (may get nthing if defendant ges bankrupt) Dn't have t "chase him arund", seize his assets, etc Saves time and truble The curt (bttm p. 211) fund that the cnsideratin was the immediate receipt f payment and saving time effrt and expense and that CP entered int the agreement f its wn accrd and knwing all the cnsequences f its actins Frmatin f the Agreement: Offer and Acceptance Offer and Invitatin t Treat Offer: an expressin f the willingness t cntract n specified terms, made with the intentin that it is t becme binding upn acceptance by the persn t whm it is addressed. Invitatin t treat: an expressin f willingness t d business that is designed t elicit an ffer frm the ther side. [Nte: Merely quting yur lwest price is NOT an ffer t sell at that price.] Canadian Dyers Assciatin Ltd. v. Burtn Oct 21, 1919 Defendant respnds In reply, I wuld say that the last price I gave yu is the lwest I am prepared t accept. If it were anyne else, I wuld ask mre The curt n page 19, " surely unless language is used t cnceal thught, this is an ffer." Frm a legal perspective, cnduct subsequent t the ffer is irrelevant (thugh it wuld be difficult fr a judge t really ignre) Test: Hw t determine whether smething is a legal ffer: Objectively determine intentin by asking: What did the persn purprted t have made the ffer intend? Cnsider language used Cnsider methd f crrespndence Nte: When an ffer is rejected, the ffer is ff the table ; ffer is dead. Harvey v. Facey. (page 18) Ptential purchaser sent a telegram asking 2 questins: Will yu sell? Name price? Reply: Lwest cash price accepted = 900 punds Assuming this t be an ffer, the purchaser wired acceptance Hwever, the curt decided that answering the secnd questin did nt imply an affirmative answer t the first questin This precedent wasn't fllwed in the Canadian Dyers case Pharmaceutical Sciety f Great Britain v. Bts Cash Chemists Display f gds is an invitatin t treat. Otherwise yu culd never put an item yu've taken f the shelf back withut being in breach f cntract. Offer = custmer taking an item t the till t pay fr it.

8 8 Acceptance = cashier accepting payment fr the item. Carlill v. Carblic Smke Ball C Ad was ffer f unilateral cntract Gldthrpe v. Lgan Facts Plaintiff submitted t electrlysis advertised by defendant, and it didn't wrk Trial Trial judge fund the plaintiff had nt established a claim in trt r cntract Step 1: Was there a Cntract? The cntract analysis hwever, (O'byrne believes judge was reading Carlill and delivered a Carlill-like judgement.) Lk at the ad: Offer r invitatin t treat? Test is: intentin as determined by cnsidering all the circumstances. Yu have an ffer if yu can walk up and say "yes, I accept" Curt says the ad IS an ffer, nt an invitatin t treat (page 31) O'Byrne desn't see the intent t be bund in the ad "yu culdn't just walk up t the defendant and say 'yes'" Yu wuld still need t determine the price, infrmatin abut the treatment, risks This implies defendant wuld t sme kind f pre-prcedure cnsultatin, and therefre the ad is merely an invitatin t treat Where is the acceptance? Submitting t and/r paying fr the treatment What was the cnsideratin? Paid and/r detriment f submitting t treatment Step 2: Was there a breach f term? Yes, hair grew back Step 3: Damages? O'Byrne says curt gets this wrng t In the end the judge gives her, her mney back, because she gt nthing fr her mney Ttal failure f cnsideratin Als awards $100 - value f a smth face Measure f damages - shuld be put int the psitin yu shuld have been in had the cntract been fulfilled Prblem in awarding $13 and $100? She is being dubly cmpensated Had the prcedure wrked, she wuld have had a smth face (valued at $100), but wuld have had t pay $13 fr the treatment S, had the treatment wrked she wuld have been "up" $87. Step 4: Alternative analysis (per O'Byrne's) Ad: invitatin t treat Offer: Custmer agrees t treatment, guarantee f results Acceptance: perfrming treatment Cnsideratin: mutual exchange f prmises, $ Chaplin v. Hicks Facts: Beauty cntest annunced: send in yur picture, prizes awarded t tp peple entered, Chaplin was ne f the final 50 cntestants She didn't get the letter ntifying her and wasn't able t participate Analysis: Ad = ffer f a unilateral cntract Acceptance, by sending in her entry Breach? Yes What is the implied term that is being breached?

9 9 That yu wuld have ample time t present yurself fr the interview. Damages? Tricky, we dn't knw if she wuld have been ne f the tp 12 r nt. What has she lst? She lst ut n the pprtunity t win. Curt says 12 winners, 50 cntestants, awarded her 1/4 the value f ne f the prizes. Tenders Call the persn calling fr tenders the "wner" Type 1 Tenders: Call fr tenders, wner cmmits t sell t the best bidder Offer: Call fr tender Acceptance: Submissin f the best COMPLIANT tender Harvela Investments Ltd. v. Ryal Trust C. Of Canada (C.I.) Ltd When there is a call fr ffers with a cmmitment t sell t the best ffer, that cnstitutes an ffer and the wner is bund t sell t the best bidder Sir Lenard did nt accept in accrdance with the terms Didn't submit a FIXED bid His referential bid was nn-cmpliant There is a prmise by the wner t sell t the best bid The bidder prvides cnsideratin by submitting a bid. Type 2 Tenders: Call fr tenders with n cmmitment t sell t the best bid Old law: Pre-Rn Engineering A call fr tenders with n cmmitment t sell t the best bid = an invitatin t treat The tenderer submits a bid = the ffer The wner can then chse the ffer he wants N cntract between the parties until the wner accepts that ffer Therefre the tender (ffer) is a gratuitus prmise that may be revked at any time befre acceptance Dickensn v. Ddds R. v. Rn Engineering & Cnstructin (Eastern) Ltd Cntract A Cntract B analysis Call fr tenders: Offer f unilateral cntract (cntract A) Submissin f a tender: = Acceptance f cntract A = Offer (in this case, irrevcable fr 60 days) t enter int cntract B An wner will have nly ne cntract B, but many cntract A s O'Byrne disagrees and says cntract A is really bilateral cntract Bth parties have nging bligatins (See p. 41, SCC admits this) What is the cnsideratin fr tenderer's prmise nt t revke? The curt says it is in the qualified bligatin t take the best bid O'Byrne (and Percy) say that the cnsideratin REALLY is the bligatin t abide by the rules they've set in selecting bid i.e. Can't accept a nn-cmpliant bid Law f Mistake. (p.598) A tender may be s lacking that it desn't even cnstitute a tender in law Therefre n acceptance f cntract A eg. Instead f submitting a tender, whps, I submit a pem Snapping up - Yu cannt accept an ffer yu knw hasn't been made eg. Tender is missing a page Rn Engineering claims that there is n cntract A because their tender was meaningless based n mistake

10 10 Hwever, the curt says Rn submitted what it intended t submit, the errr was separate. Didn't just write dwn wrng number, wrte the number they intended t submit, their errr was in calculatin nt submissin. The errr must be s bvius that the wner must have been taken t knw abut the mistake at time f submissin. M.J.B. Enterprises Ltd. v. Defence Cnstructin (1951) Ltd Privilege clause - states lwest OR ANY tender will nt necessarily be accepted Allws the wners t accept whichever tender they prefer Cntract A impses bligatins n the tenderer What are the wners bligatins? T accept cmpliant bid. Rules required an unqualified tender Srchan didn't submit an unqualified tender Therefre, his bid wasn t cmpliant Implied term in Cntract A that wner can nly chse a cmpliant bid. (Terms may be implied in a cntract) This implied term is based n custm r usage As the legal incidents f a particular class r kind f cntract Implied term is based n: Presumed intentin f the parties, where the implied term must be necessary t give business efficacy t a cntract, OR As therwise meets the 'fficius bystander' test as a term which the parties wuld say if questin that they had bviusly assumed Owners claim they thught bid was cmpliant - desn't matter, still in breach f cntract. Cmmunicatin f Offer / Acceptance c. Cmmunicatin f Offer An ffer has t be cmmunicated in rder t be accepted d. Acceptance Acceptance is a final and unqualified assent t the terms f the cntract Livingstne v. Evans A cunter ffer kills the ffer. But if yu are just making an inquiry as ppsed t a rejectin, it will nt kill the ffer. In this case, it was an inquiry, but rejectin f ffer is implied and a cunter-ffer was made Hwever, then rejects the cunter ffer and renews the ffer in statement 1 Therefre there is a cntract and the defendant is bund by cntract Nte: When yu make a cunter ffer, yu run the risk that the riginal ffer will nt be renewed Butler Machine Tl C. v. Ex-Cell-O Crp Overview: Battle f the frms Buyer sends t vendr an rder t buy widgets Subject t buyer s terms and cnditins Vendr sends cnfirmatin Subject t the seller's terms and cnditins There is n acceptance here because it isn't an unqualified assent (the vendr isn t agreeing t the buyer s ffer) s n cmpleted cntract This is cnsidered a cunter-ffer Hwever, nce there has been perfrmance, the curts are likely ging t find there is a cntract based n cnduct. T the extent that the seller ges n t deliver and the purchaser accepts the delivery, the acceptance f the prduct is unqualified assent t the cntract Facts: (N date) May 23 Inquiry by buyers Respnse by sellers qutes the price fr a tl at 75 thusand punds, delivery in 10 mnths Qute cntains trumping clause

11 Qute cntains a price variatin clause May 27 Buyers reply by placing an rder Stipulates that the rder subject t terms and cnditins (which are DIFFERENT frm the sellers) N price variatin clause Tear-ff rder frm inviting sellers t accept this ffer as per these terms and cnditins by tearing ff and returning a slip frm the rder frm June 5 Sellers return the cmpleted slip with a letter stating that the buyers rder was being entered in accrdance with seller's qutatin f May 23. Alternative appraches t this prblem: Traditinal Methd (Lrd Denning) May 23 qute is the ffer t sell May 27 rder represents a cunter ffer Nt an unqualified assent based n the intrductin f new terms June 5th - letter is an acceptance f the May 27 cunter-ffer Purchaser shuld win Price variatin clause desn t apply 11 Last sht apprach (Perfrmance rule) The persn wh puts frward the last terms and cnditins that the ther side des nt bject t. First sht apprach Offers t sell with terms and cnditins accepted by buyer, but with different terms and cnditins Initial cntract stands unless the purchaser draws the variant clause t the vender s attentin Shts fired n bth sides If 2 cntracts with different terms, try t put bth dcuments tgether in harmnius dcument If it can't be dne, then reslve t the mst reasnable slutin pssible (in the eyes f the judge) Here the trial curt ges with the first sht apprach: seller wins The price variatin clause was s emphatic that it survived everything that came after. [O'Byrne agrees with this decisin] Lrd Denning reverses this decisin He finds the dcument n June 5th is the decisive dcument Als: the letter sent back t the buyer frm the seller says we agree t the sale based n the qutatin f May 23 Hwever Denning says that a "qutatin" nly refers t price, nt dcument as whle Curt will lk at which party is being the mst reasnable. Tywd Industries Ltd. v. St Anne-Nackawic Pulp & Paper C Ltd [Nte: O'Byrne likes this decisin better (wh is acting mre reasnably wins).] Issue: Facts: Plaintiff (Tywd) sues fr cntract price Defendant (St. Anne) insists n arbitratin clause Sept, : defendant sends ut invitatins t tender N mentin f arbitratin clause Sept 26, 1977: Plaintiff respnse with a qute N mentin f arbitratin Has a trumping clause Nv. 7: Plaintiff sends a revised prpsal N mentin f arbitratin Has a trumping clause Jan 3. and July 3, 1978: defendant sends in purchase rders Defendant inserts an arbitratin clause Defendant asks plaintiff t sign frm and return it

12 12 This des nt happen Decisin: Plaintiff wins because defendant didn't bring new term t plaintiff's attentin and didn't cmplain with the frm was nt signed and returned OLR Cmmissin Reprt On Sale Of Gds: The Battle Of The Frms PrCD v. Matthew Zeidenberg and Silken Muntain Web Services Inc (Nte: This is the judgment f a U.S. curt) Structure f analysis: Cntract #1 - between Z and retailer Cntract #2 - between Z and manufacturer Facts PrCD is ffering a cntract that the user accepts by using prduct (click "I agree") The details f this license are nt knwn t the purchaser until he buys the prduct and pens it If Z desn't like licence, he can return prduct Cnclusin Licence is in effect and Z is in breach. Dn't need t knw all the specific terms f an ffer in rder t be bund t the cntract The licence binds the purchaser because: It stated n the bx there was a licence inside The license cmes up befre yu can use the prduct Yu can return prduct if yu disagree with agreement Dawsn v. Helicpter Explratin C Issue: Is the March 5th agreement a bilateral cntract r a unilateral cntract? Springer says is a unilateral cntract BUT curt says nt unilateral because Dawsn's requested act is dependent upn Springer t get the chpper. A unilateral cntract is ne where the fferee is nt cntingent upn the fferr. Primary bligatin (here t pay the 10%) t perfrm is cntingent n fulfillment f cnditins (find chpper, bring in Dawsn, stake claim). Curt classifies this as a cntract subject t a cnditin subsequent. Means that we have a cntract between the parties and the parties have subsidiary bligatins. In a cntract subject t a cnditin subsequent, if thse cnditins aren't met, n ne is in breach f cntract, but the cntract cmes t an end. Hwever, d we require reasnable (gd faith) effrts? Yes, reasnable/gd faith effrt t perfrm is an implied term, based n business efficacy. An fficius bystander wuld say that the parties mean t participate in the agreement and wuld put in gd faith effrts t fulfill the cnditins. Curt finds Springer is in breach f cntract because he didn't act in gd faith t fulfill the cnditin subsequent What happens when yu're n the receiving end f the breach? The June 7th letter is an anticipatry breach f the cntract. This is because it prevents Dawsn's perfrmance and it brings the cntract t an end. This issue is then put t an electin f the inncent party. That party may: Insist n perfrmance, Or Sue fr breach f cntract Springer's alternative psitin is that even if there was a cntract, Dawsn has abandned it because he didn't reply t Springer. Hwever, yu can't take silence as abandnment, especially when the inncent party didn't knw all the facts. Felthuse v. Bindley Acceptance must be cmmunicated. Yu cannt accept a cntract by silence. Ratinale fr requiring cmmunicatin f acceptance: Prtect the fferr S that they knw they are in a cntract Prtect the fferee

13 13 If cmmn law required fferee t reject ffers (silence means acceptance) yu wuld spend all day rejecting ffers. What if hrse had been reserved frm the sale but the uncle had then changed his mind? Here fferer has waived prtectin "if I hear n mre.." etc The fferee desn't require prtectin if he wants the deal t g thrugh and des because he has reserved the hrse. Exceptin t rule that acceptance must be cmmunicated. 1. Curse f dealings Retailer sends requests and supplier always accepts just by sending gds In this case if the supplier wishes t reject, it wuldn't be unreasnable t have the supplier cmmunicate rejectin. 2. Acceptance may be inferred where the fferee takes the benefit f an ffered perfrmance which he has had a reasnable pprtunity t reject The circumstances must shw that the fferr expects t be paid. Cnsider - The Jam Case Whetherby, 1832 Defendant received unslicited jar f jam frm seller and ate it. Seller nw wants t be paid fr the jam The curt said he had t pay. Seller had expectatin f payment The fferee tk the benefit and there was a reasnable pprtunity t reject the ffer, but didn't P. 77 (nte 2) - The prblem with unslicited gds has been dealt with by legislatin in a number f jurisdictins, which prvide that payment fr unslicited gds is nt required, even if the recipient uses them. Dawsn - has there been acceptance here? Parties are bund in the interim if it is a bilateral cntrat. Curts find cntracts t be bilateral whenever they can t enhance business efficacy. Fr cnditinal cntracts yu must Accceptance must be cmmunicated t fferer t be effective. This prtects the fferer and the fferee. But there are exceptins t this rule, fr example The "curse f dealings" example If the fferr waives the prtectin f cmmunicatin f acceptance, Saint Jhn Tug Bat C. v. Irving Refinery Ltd Silence is nt acceptance, UNLESS the silence is reasnably understd t be acceptance. Offer: Tugs available. Invices cnfirm the terms and cnditins f the ffer. Acceptance: Acquiescence in receipt f thse services The test f whether cnduct, unaccmpanied by any verbal r written undertaking, can cnstitute an acceptance f an ffer s as t bind the acceptr t the fulfilment f the cntract is bjective and nt subjective. We cnsider cntact when reasnably cnstrued, and nt as it was perceived by the parties t the cntract. (p. 82) In this case the respndents tk the benefit f the service and their silence was misleading It was their duty t bring their rejectin t the ntice f the tugbat cmpany. Eliasn v. Henshaw When the fferr specified that the ffer can nly be accepted in a specific way, the cntract must be accepted that way, r there is n cntract. Hwever, the fferr can waive that nn-cmpliance and allw acceptance. T the extent that the fferee prvides a superir frm f acceptance (hrse instead f wagn, faster) it MIGHT be accepted (p 85, nte 1.) Prblem, if yu are changing the frm f acceptance, yu risk being wrng in yur assumptin, therefre negating yur acceptance. e. Cmmunicatin f Acceptance (i) Instantaneus Methds f Cmmunicatin The pstal rule - a mailed acceptance takes effect when it is psted. Even if the fferr never receives the acceptance, the pstal rule says the acceptance is effective. Brinkibn Ltd. v. Stahag Stahl Und Stahlwarenhandelsgesellschaft mbh What rule shuld apply in the cntext f a telex (a telex is similar t a fax)? Tw legal theries available: 1. Pstal Rule - acceptance effective when letter is put in mailbx

14 14 2. Instantaneus rule - this is the general rule. Says that acceptance is effective when cmmunicated r heard by the fferr Facts: Acceptance by telex frm buyers (Lndn) t sellers (Vienna) Alternative applicatins: Pstal rule - cntract made in Lndn when the telex was sent Instantaneus Rule - acceptance when heard in Vienna. Decisin: The curt finds telex is mst similar t an instantaneus frm f cmmunicatin Acceptance (cntract frmatin) ccurred in Vienna Page 91 - nce the message has been received n the fferr's telex machine, it is nt unreasnable t treat it as delivered t the principal fferr, because it is his respnsibility t arrange fr prmpt handling f messages within his wn ffice. But agrees that the general rule will nt cver all the many variatins that may ccur with telex messages Electrnic Cntracting In Canada, many jurisdictins (including Alberta) have legislatin regulating e-cntract (Electrnic Transactins Act) Offer may be expressed electrnically An ffer expressed via is valid Similarly, it is pssible t accept an ffer electrnically. Hwever, legislatin desn't tell us WHEN the acceptance takes effect Rudder v. Micrsft Crp Click wrap (Web wrap) agreement: Licence appears n users screen when attempting t dwnlad prduct, can't dwnlad unless yu click agreement This methd f cntracting is upheld Plaintiff argues: He didn't read the clause Curt said he had every pprtunity t read it. Only a prtin f agreement presented n screen at any ne time Curt says, that is just like flipping pages in a bk, agreement still gd Plaintiff clicked "I agree"; curt finds plaintiff wants t avid sme parts f agreement while using thers. Fund that the cntract was valid. (ii) Mailed Acceptances Husehld Fire and Carriage Accident Insurance C. v. Grant Facts Letter f alltment was never received Issue: Is there a cntract given this letter was never received? Applicatin Curt says, think f pst ffice as the agent f the parties. Therefre cmmunicatin t the pst ffice by the acceptr = cmmunicatin with the fferr The fferr can always prtect themselves by the terms f the ffer. Include smething like "pstal rule" desn't apply, r acceptance must be received. Therefre curts say if we must apprtin risk, lets apprtin it t the fferr wh can cntrl terms f the fferr. Here cnduct f fferr implied that the fferee culd reply by pst and therefre acceptance speaks as sn as psted Hlwell Securities v. Hughes If terms f ffer specify acceptance must be received, the pstal rule will nt apply. Here acceptr had t give "ntice in writing". Ntice is derived frm the Latin wrd "knwing", s can nly have "ntice" if yu knw abut it. Curts say ptin was therefre nt prperly exercised Argument that there had been ntice in writing t ptin hlder was ineffective: Letter given t defendant's lawyers and the lawyer read it ver the phne t the defendant This is NOT ntice in writing, because it is being read alud, nt received in writing.

15 15 f. Terminatin f Offer General rule is that an ffer can be withdrawn at any time befre the ffer is accepted Can yu terminate an ffer by acting incnsistent with the ffer? (i) Revcatin Byrne v. Van Tienhven Ntice f withdrawal must be received befre an ffer is revked The pstal rule des nt apply. Odd because there is a cntract withut cnsensus ad idem Exceptins t idea that revcatin MUST be cmmunicated and pstal rule desn't apply: Disentitling cnduct by the fferee - eg. Mail revcatin, but fferee has mved withut telling fferr Terms f the ffer - eg. Carblic smke ball cmpany, what if they wanted t revke their ffer. Prbably wuldn't need t g dr t dr telling everyne they revke. It is enugh t take reasnable steps t infrm public. They culd publish similar sized ad in same newspaper revking ffer. Dickinsn v. Ddds Cmmunicatin f revcatin need nt cme frm the fferr Dickinsn knew thrugh his agent that Ddds was dealing with smene else Rati: Curt says that even thugh plaintiff heard f revcatin frm third party, it was gd enugh BUT cmmunicatin must cme frm a reliable third party surce. Erringtn v. Erringtn and Wds Widw argues fr unilateral cntract, there is n cntract until perfrmance is cmplete Huse nt paid ff, s perfrmance nt cmplete; therefre she shuld be able t revke. HOWEVER: cannt revke ffer f unilateral cntract nce perfrmance has begun. Father's ffer f a unilateral cntract cntained anther ffer. Once perfrmance has begun, revcatin wn t ccur Cmmencing perfrmance is acceptance, and the cnsideratin is ding the thing requested. (ii) Lapse If nt explicitly stated, the ffer will lapse after a reasnable time (reasnable depends n the circumstances, such as what is the subject matter f the cntract) Is it perishable? Is it a fluctuating cmmdity? Prbably a shrter ffer What was the methd f ffer? Offers by fax, phne etc. likely t be pen fr a shrter perid f time than if delivered by mail What are the dealings between the parties? Hw they cnduct themselves generally Barrick v. Clark (SCC decisin) N clause stating when ffer expires, s will expire after a "reasnable time" What will cnstitute a reasnable time depends upn the nature and character and the nrmal r usual curse f business in negtiatins leading t a sale, as well as the circumstances f the ffer including the cnduct f the parties in the curse f negtiatins (Kellck J.) Based n this test: lk fr factrs that wuld lengthen/shrten the ffer. First determine when the ffer takes effect r speaks. It speaks when the ffer is cmmunicated. That culd be either when the wife receives it r when Clark actually gets it. Accrding t the judge it speaks as sn as the wife pens it and that is when "reasnable time" starts t run. Mrs. Clark has asked fr mre time, des that lengthen it? NO, the fferee can't make the ffer lnger just by asking fr it. It isn't fr the fferee t dictate t the fferr. What abut Barrick accepting the third party ffer? Des this end his ffer t Clark? N, because fr this t be revcatin, it wuld have t be cmmunicated t Clark, either by Barrick r by a reliable third party. Clark: Lengthen time ffer is pen based n the fllwing factrs:

16 16 Land Slw r few sharp price fluctuatins. Nt perishable Methd f cmmunicatin - used letters Accepting n Dec 10th wuld nly leave tw weeks fr clsing Definitely nt rejecting the ffer, based n his cnduct Barrick: Shrten time ffer is pen based n the fllwing factrs: Sme interest in prperty Letter indicated sme urgency, "immediate clsing" Manchester Dicesan Cuncil f Educatin v. Cmmercial and General Investments Ltd Tender case frm England in 1970 (desn t use the Canadian, Cntract A, Cntract B methd) Plaintiff called fr tenders n building they want t sell Old law here, call fr tenders is an invitatin t treat. Offer cmmunicated arund Aug. 27. Offer is t be accepted by a letter sent by pst t the address specified in the tender Plaintiff sends acceptance letter n Sept 15th. Hwever: The acceptance is still subject t cnditins (nt unqualified acceptance) The acceptance didn't g t the address specified in the tender On Nv. 18th sale apprved by secretary f state, defendants aren't infrmed until Dec. On Jan 7th, have final and frmal acceptance 1. Is Sept 15th letter gd acceptance? 2. Setting aside cnditin 4 this is gd acceptance? Even thugh it desn't specifically meet the terms f cnditin 4, it is still gd acceptance. Because cnditin 4 is made by the fferee t prtect the fferee, the fferee can waive that prvisin prvided the fferr is nt adversely affected and they aren't in this case. Als nt written inflexibly that this wuld be the ONLY mde f acceptance that wuld be valid Defendant says n final and unqualified acceptance until cnfirmed by secretary f state (sale cnditinal n ministerial apprval) Curt says pwer f sale is cnditinal, but the pwer t cntract is nt. Bund by cntract, subsidiary bligatin wuld be t attempt t get the apprval f minister. The primary bligatin (t sell the building) is cntingent upn apprval f the minister. As they are immediately bund, the acceptance is gd. The primary bligatin is just cntingent. Curt says there is a cntract as f Sept 15. Curt als says, in the alternative (if they are wrng and there is n acceptance until Jan Offer lapses after a reasnable time Withdrawn implicitly by the fferr OR, because it has been implicitly rejected by the fferee Under the first thery, wuld just lk at the cnduct f the fferr t determine when the ffer is withdrawn Curt likes the secnd thery: Lk at the cnduct f the fferee t determine whether they are rejecting r nt. Then subsequent cnduct f fferee is relevant Here the fferee is clearly nt rejecting. S even if there is n cntract n Sept 15, there is n rejectin because f the subsequent cmmunicatin by the fferee. Therefre the ffer is still pen when accepted in Jan. In the Barrick and Clark case, appear t be taking the first thery. If secnd thery had been applied, clearly n rejectin f ffer (letter by wife) s Clark may have wn. Certainty f Terms MIDTERM EXAM Intrductin An agreement isn't binding if it lacks certainty: (1) A term is vaguely expressed (wrding unclear) (2) Term is missing (wrding isn't there at all) (3) Term t be agreed in the future (wrding is pstpned)

17 17 (4) Parties cntemplate a further, frmal dcument (d they mean t have a cntract nw?) Principles f Uncertainty (tw cmpeting) (i) Curts will nt make an agreement fr the parties. i. In that sense, an agreement t agree is unenfrceable. (ii) Curts will render certain which is capable f being rendered certain Cntinuum Ttally Uncertain < Perfectly Clear The litigatin usually ccurs fr cntracts smewhere in the middle Vagueness R v. CAE Industries Ltd CAE industries and Gvernment f Canada negtiate abut CAE taking ver and running an aircraft maintenance base n lnger required by Air Canada Is the cntract (page 128) sufficiently certain t cnstitute a cntract? Was there an intent t cntract? When tw parties are in negtiatins, the presumptin is that there is an intentin t create legal relatins Up t gvernment t rebut this assumptin We judge whether there was an intent t cntract based n an bjective test (p. 129) Here, the gv't was unable t rebut the presumptin that there was an intentin t cntract Assuming the parties intended t enter int a cntract, have they succeeded in ding s? Was the cntract t vague, uncertain r incmplete? Parties have begun perfrmance f cntract, mmentum in favur f a cntract being frmed P If the real intentins f the parties can be determined frm the language within the fur crners f the instrument, the curt must give effect t such intentins by supplying anything necessarily t be inferred and rejecting whatever is repugnant t such real intentins s ascertained Gv't refers t "assurances" as t wrk t be given t CAE, later referred t as a cmmitment. Als reference t "guaranteeing" - this language is cntractual Curt says "it is my view that by the language used the parties intended that at least direct labur man-hurs f setaside wrk wuld be prvided. Gvernment cntracted t give a certain amunt f wrk t CAE and t use its best effrts t give mre. The curt clarifies the vagueness and enfrces it as a cntract Incmplete Terms f..b.- free n bard. The seller brings the gds t the pint f transprtatin, then the buyer takes ver. The seller has n bligatin t pay fr freight and insurance c.i.f. - the buyer is given a price which includes cst, insurance and freight Agreements lacking an essential term; was that term needed t give the cntract effect? In all three cases the parties left a term f their agreement unspecified May & Butcher Ltd. v. R Parties have an agreement fr plaintiff t buy tentage frm April 21 - Dec 21 Dispute arises abut price n Dec 23 In the cntract, everything is "t be agreed", but there is an arbitratin clause if they cannt agree Gvernment says there are s many missing terms that the cntract is unenfrceable If we have cntract here, hw d we determine: Price - left the price t be determined in the future, intended that a reasnable price wuld be paid (plaintiff's view) P "It has been argued that as the fixing f the price has brken dwn, a reasnable price must be assumed" - parties are suppsed t agree n price, but here they cannt agree. Hwever, the nly way yu can default t reasnableness n price when the cntract is silent n price This cntract was nt silent n price and the mechanism fr determining price has failed. If yu chse a third party valuatin and the third party cannt r des nt make such valuatin, the agreement is avided. Curt says third party valuatin is like the parties agreeing t valuate themselves, they can't valuate - cntract is avided What abut the arbitratin clause? Usually wuld have a cntract, then when a dispute arises abut that cntract, yu use arbitratin t reslve the dispute

18 18 HOWEVER, here, yu DO NOT have a cntract and yu CANNOT use the arbitratin clause t CREATE the cntract. In summary, the dispute was abut price, price was a vital part f the cntract, mechanism fr determining price failed, n cntract. Example: O'Byrne agrees t sell car t Klar at market value, price t be determined by the Dean Frmula fr price - "market value" Mechanism fr setting price Dean If mechanism fails, that is the Dean refuses t set the price, then culd resrt t the frmula and anther persn culd set price. Run int prblems in cntracts where the mechanism fails and there is n frmula Then have n cntract Imprtant: have a frmula and mechanism fr determining price if it is nt set by the cntract. Example (p. 148): The rent is simply "t be agreed". Usually such a clause cannt be enfrced Where the rent is t be established by a stated frmula but n machinery is prvided fr applying the frmula t prduce the rental rate, the curts may supply the machinery (mechanism) The frmula is set ut but is defective and the machinery is prvided fr applying the frmula t prduce the rental rate In thse cases the machinery may be used t cure the defect in the frmula Agreements t agree are nt enfrceable. The mechanism here has brken dwn [ price shall be agreed upn frm time t time; disputes arising ut f this agreement will be submitted t arbitratin ]. Pursuant t the S.G.A., a reasnableness standard has been usted, and the cntract fails fr uncertainty. Hillas & C v. Arcs Ltd This is the "highwater mark" fr fixing agreements. Shws hw far curts will g t supply missing terms if agreement is capable f being rendered certain. If this isn't pssible then there is simply an agreement t agree. Facts: Des the ptin cntract fail fr lack f certainty? (ptin clause page 136) Curt f Appeal fllwed May v. Butcher and said cntract was uncertain. Huse f Lrds says they can make sense f the ptin clause The mtivatin fr this may be that the ptin clause was given as cnsideratin fr the riginal purchase cntract. At the time f cntract, bth parties believed they had entered int a binding ptin cntract Prblems with the ptin clause: Delivery dates were nt fixed. But the curt says the delivery dates wuld be decided by negtiatin between the parties As a last resrt, the dates culd be decided by the curts Price was nt set. But curts say refer t a price list and this becmes a frmula t determine price. "Whatever the cnditins are" (p. 138) Des this statement mdify the wrd cntract (means we're just saying "whatever the cntract says", OR Des it mean the cnditins in the marketplace, that is what the Russians and English are experiencing If it mdifies "cntract" then it is nly an agreement t agree. Curt says cnditins refers t whatever the cnditins are in the trade Quality f the gds - just says standard, desn't say what quality. Curt says in ther parts f the cntract it says "fair quality", and then the curt applies that quality here. If the parties fail t agree n acceptable quality, the curts will decide fr them. Shipping dates and prts f delivery Curts say this isn't a prblem, they g t the larger agreement t determine and if that desn't wrk then the Sale f Gds Act implies a reasnable standard and the curt will enfrce reasnable shipping dates and reasnable prts. Huse f Lrds says cntent f ptin clause is determined with reference t ther sectins f the agreement r is derived frm a reasnableness standard. It is the duty f the curt t cnstrue dcuments fairly and bradly. This agreement is cmplete and is nt dependent n any future agreement fr its validity. Curt says that May v. Butcher des nt apply here. Fley v. Classique Caches Ltd