Contracts_BenIshai_F07_4 by fanzhongqing


									    Case Name                             Facts                                      Reasons; Ratio & Policy                                                Issue
                                                            Offer and Acceptance
    Harvey v. Facey         Buyer asks seller to send lowest price The mere statement of the lowest price at which one would sell is NOT an          Offer and Acceptance
                            and then treats it as an offer and tries offer - it is only an invitation to treat (Quotation of price not offer)
                            to accept.

Canadian Dyers v. Burton    When purchasing property, the offer        1) A price followed by an indicatoin that the supplier has a willingness to   Offer and Acceptance
                            said "I would ask anyone else for          sell constitutues and offer
                            more". She then accepted the chq and       2) An agreement is not precluded by the anticipation of futhur steps of
                            started to draft the deed. Tried to rely   fomalization of agreement.
                            on Harvey that there was no K              The courts can look at the actions of the parties before and after the
                                                                       contract to determine if there was intent to sell.

Pharmaceutical Society v.   Question of where the sale occured in Goods on shelves merly an invitation to treat. Offer is when the customer          Offer and Acceptance
                            a general store.                      presents the goods to the cashier which then accepts the offer.

 Carbolic Smoke Ball Co.    General advertisment to the public,        Although gerneral rule = must be notice of acceptance of offer                Offer and Acceptance
                            that whoever uses product and gets         Unilateral contract - performance of a condition is a sufficient acceptance
                            sick will reveive $1000                    without notice. Person who makes the offer may dispense with notice to

  R. v. Ron Engineering     Attempt to withdraw a sucessful bid,       The Tender Call (offer) + Submission of bid (acceptance) = Contract A         Offer and Acceptance
                            and they refuse to return deposit.         Terms of Bid (offer) + Selection of wining bid (acceptance) = Contract B      Tendering Process
                                                                       Contract A is bilateral because it includes promises on both parties, if
                                                                       selected to perform K-B and if not to give back deposit.

  MJB Enterprises v.        Tender process where the owner             Contract A includes an implied term to refrain from accepting non-          Offer and Acceptance
                            accepts a non-compliant bid and tires      compliant bids. A privledge clause does not do away with this implied term. Tendering Process
 Defence Construction       to justify it because there was a          To determine which bid would have had K, balance of prob. Contract A
                            privledge clause.                          binds both parties to follow the terms and conditions (rules)

 Williams v. Carwardine     Plaintiff believing that she was near      You can accept an offer if you know about it, as long as you perform the      Communication of Offer
                            death provided information which           necessary condition - motive is irrelevant.
                            lead to a conviction.

       R. v. Clarke         Accused gave up information leading Ignorance of the offer creates a situatoin where acceptance will not be          Communication of Offer
                            tto a conviction, but he had forgotten recognized. Can't accept the offer if you are not aware of it, because there
                            about the offer when he gave the info. is not meeting f the minds. If you knew about it but forgot and didnt have it
                                                                   on mind = ignorance.
 FeltHouse v. Bindley      Uncle agrees to buy the horse and tells Silence cannot be equated with acceptance, acceptance of an offer must be Acceptance
                           nephew he shall consider it a deal if he communicated. Offer is accepted when the offeror receives notice of the
                           doesnt hear anything. Auctioneer sells acceptance
                           horse by mistake.

Brinkibon ltd. V. Stahag   Acceptance of the offer was by Telex      Postal Acceptance Rule - Accpetance effective when reach post office and Communication of
                           between countries and it must be          jurisdiction is the senders.                                                Acceptance
                           established where the contract took       Telephone rule - Acceptance is effective upon receiving the phone call, and
                           place.                                    jurisdiction is in the receiver’s locality
                                                                     Telex Machine = telephone rule. If we agree by our actions that the
                                                                     method of acceptance is by mail, then it is upon putting the letter in the
                                                                     mail that acceptance takes place- if agree acceptance should take place by
                                                                     fax or telex then there is acceptance upon receipt

 Rudder v. Microsoft       P's want to sue MSN in Ontario, but       Electronic agreement is similar to a multi-page agreement in which you          Communication of
                           there was a forum slection clause in      have to flip the pages.                                                         Acceptance
                           the Member Agreement which stated         Signifigance - as long as you include in contract jurisdiction, you dont have
                           they had to sue in Washington. They       to deal with the problems of where the contract took place
                           argue that the agreement should be
                           treated as fine print which need to be
                           brought specifically to attention.

 Holwell Securities v.     Defendant put the acceptance in the       The contract said “by notice” such that this took us out of the postal          Communication of
                           mail but it was never received.           acceptance rule and didn’t allow for acceptance merely by putting in the        Acceptance
      Hughes                                                         mail- notice is not helpful to anyone if it does not reach their mind – this
                                                                     term explicitly took the contract out of the postal rule – acceptance would
                                                                     take place when they received the notice in writing (not when it was
                                                                     dropped in the mail). IF you dont like it contract around it.

   Dickson v. Dodds        The defendant offers to sell the          If you make offer and promise to keep it open; offer is gratuitous and not Termination of Offer
                           plaintiff his property. He promises       binding to keep offer open. If someone makes an offer and it is accepted
                           that the offer will be held open for a    and another knows of this, that person cannot accept the offer.
                           certain time, but he sells the property   An offer to sell may be withdrawn before acceptance without any formal
                           to someone else before the deadline.      notice to the person to whom the offer is made, sale of the property to a
                                                                     third person would itself amount to witdrawl of the offer. If offeror dies it is
                                                                     impossible for it to be accepted. Can always provide consideratoin to keep
                                                                     the offer open.

 Errington v. Errington    Flagpole problem. Promised to give        There is the express promise where there is an offer and an acceptance by Termination of Offer
                           house to daughter if she kept making      full completion- you might infer an implicit promise to keep an offer open
                           monthly mortgage payments, then he        while one is doing that act towards completion (“while someone is going up
                           dies.                                     the flagpole”). Implicit
                                 The Enforcement of Promises - Consideration
    Consideration                                                      Something of value (such as an act, a forbearance, or return promise) received by a
                                                                       promisor from a promisee

 Dalhousie College v.     Respondent had promised to give the          For a negotiation to amount to a legal contract, there must be mutual                   Consideration
                          college $5000 for improving efficiency and   consideration. Both parties must receive something and give something of value.
      Boutlier            for new buildings, but then died. College    A subscription (promise) is not binding unless there is cons., otherwise it is just a
                          spent money on upgrades expecting to get     gift and courts dont enforce gifts. Action of the promisee alone cannot convert a
                          money.                                       gratuitous promise into a binding legal contract (ie reliance). not the place of the
                                                                       courts to enforce moral considerations, unless they can place nominal value on

Wood v. Lucy, Lady Duff   D is fashion designer who made a 1 year Even though no explicit cons, a resonable attempt to turn a profit is consideration. Consideration
                          agreement with P to have exclusive rights Both explicit and implied promises amount to consideration. Caution: implied
       Gordon             to her designs and endorsements for 1/2 mostly for commercial deals, this is how it differs from Dalhousie.
                          of all profits. P then endorsed other
                          materials without D's knowledge and
                          withheld profit.

 Eastwood v. Kenyon       P spent money on Sarah as her guardian       Past consideration is not good consideration . Money was not spent as a request by Past Consideration
                          for education and borrowed money from        D. Consideration must be given at the time of the transaction not some time in the
                          a 3rd party to do so. Sarah promised to      past or future. Promise give at current period for benefits received in past = no
                          pay the money back and when she              cons.
                          married her husband D, promised to pay it
                          back too. There was no agreement at the
                          time when P agreed to raise Sarah.
                          Guardian argues consideration fowing to
                          Husband is money spent on her in the

Lampleigh v. Brathwait    P laboured to get a pardon from king for A promise made for past consideration is enforceable when                               1) Past Consideration
                          D, who committed murder and was about done at the request of person                                                               2) (exception)
                          to be executed. D promised to pay P 100 resonable expectation for compensation
                          pounds after he already got pardon but
                          never pays.
 Thomas v. Thomas        On deathbed P's husband promised to            1p is good cons. Peppercorn theory - anything of value can be given as                 Past Consideration
                         give his house to wife or 100pounds.           consideration even if it is disproportionate. Not the job of the court to go in to
                         Executor (D) of will have her pay 1p a         asses the value of what flows back and forth
                         month as rent. D then dispossess P and
                         she sues for enforcement of K.

   B. (D.C.) v. Arkin    P is mother of kids who stole from Zellers.    Forbearance to bring legal action is good consideration, except when: 1) when          Forbearance
                         P receives a letter thretening civil action    claim is known to be invalid by party forbearing. 2) when the forbearing party
                         unless she pays an amount. After she pays      believed the legal action would be unsuccessful. Must seriously intend to pursue
                         she argues she should get her money back       the claim with a reasonable change of success.
                         because payment was not legally
                         enforceable, she was not negligent.

   Ward v. Byham         In england obligation of the mother to     General Rule - no consideration if promise to do an existing public duty There was Public Duty
                         take care of illegitimate child. Father    consideration because she promised to do something extra, beyond the
                         wrote and said would $1 per week if the requirements of the public duty.
                         child was well looked after. Father argued
                         no cons because she was only doing what
                         her public duty required.

Shadwell v. Shadwell     Nephew became engaged and had legal            General Rule - duty to third party is good cons.Promise was binding despite the  Duty to third party
                         obligation to marry. Uncle promised to         fact that nephew already owed a legal obligaiton (through engagement) to fiancee
                         pay $150 per year upon marriage.               (third party).

Pao On v. Lau Yiu Long   Original agreement - Shing On (P) agreed       Agreement to guarantee shares is enforceable. Past consideration is good               Duty to third party
                         to sell building to Fu Chip corp. For 4.2      consideration here, as per Lampleigh. Even though past because of the main
                         million Fu Chip shares. P agrees not to sell   agreement. A pre-existing legal duty is good consideration if there is no duress.
                         2.5 mil (60%) of shares for one year.          Third party consideration is good cons in business scenario as well.for past
                         Subsidary agreement - Fu Chip will by 2.5      consideration to be good consideration there must be an express/implied request
                         mil shares on April 23rd at $2.50, to          or reasonable expectation of later compensation. There was clearly an express
                         protect P from price drop. Subsidary           request as plaintiff clearly tried to protect against a big decrease in share value.
                         agreement canclled and general                 There was also a reasonable expectation of compensation for retaining the shares
                         guarantee put in place - protect P if a drop   Third party consideration is good consideration in business situations as well
                         in shares. Shares do drop and P seeks to
                         enforce guarantee and D refuses, arguing
                         consideration came from first agreemet
                         (to Fu Chip comany and not the
     Stilck v. Myrick         Captain makes a promise to pay a crew         No Conisderation for the captains promise because it was based on a pre-existing       Duty owed to Promisor (2
                              more money to fullfull their duties after     duty owed to the promisor. All agreements involving one-sided variations of            parties)
                              they threaten mutiny.                         existing contracts fail on the basis of pre-existing duty rule.

Gilbert Steel v. University   Contract to supply steel bars for             Promise to perform a pre-existing legal duty, or forebearance to not breack the K is Duty owed to Promisor (2
                              construction. The price of steel increases    not good consideration in a new K. P must do something more than what he is          parties)
          Const               and they agree orally to pay the higher       originally boud to do, or must provide new consideration for the variation. But if
                              price, and accept the invoices but only pay   they mutually agree to tear up the old agreemnt and make a new one - the new
                              the original amount.                          one is good.

Williams v. Roffey Bros.      D is contracter who was hired to renovate     Promise to perform a pre-existing contractual duty provided there are practical   Duty owed to Promisor (2
                              27 flats. P is sub contractor to do           benefits to the other party can amount to good consideration subject to avoidance parties)
                              carpentry work. P had financial difficulty    for economic duress. No duress because D initiated the agreement. Consideration
                              because price was too low and D offered       would be a practical benefit or avoids a detriment.
                              more money to complete the same job. D
                              then did not pay all the extra money.

     Foakes v. Beer           F offer to pay B 150 insallments to not       Partial payment of debt to discharge the remainder of the debt is not good             Accord & Satisfaction
                              enforce the order for him to pay the full     consideration. Payment of a lesser sum in satisfaction of a whole is not sufficient,
                              amount.                                       unless there is consideration for the new promise and that consideration cannot
                                                                            flow from an obligation that is already owed as a result of a previous contract

   Re Selectmove Ltd          Reconsider Foakes and conclude that it is     Partial payment is not good consideration. Consistent with Foakes. Promise to          Accord & Satisfaction
                              still good law                                accept less money is not good cons. Do not apply williams in a creditor situation

    Foot v. Rawlings          P agrees to accept partial payment from       Change in the mode of payment constituted good consideration. Cheques are good Accord & Satisfaction
                              D. D switches payment metod from              consideration if they are partial payment, since they are more formal then a
                              promissory note to chqus to pay off the       promise and can be traded on the market.
                              partial amount.

     Judicature Act           Statute                                       Legislation in most provinces which overturns Beer. Part performance of an             Accord & Satisfaction
                                                                            obligation either before or after a breach thereof shall be held to extinguish the
                                                                            obligation when…
                                                                            (1) expressly accepted by the creditor in satisfaction or (hand the creditor $1000
                                                                            instead of $1500 and they accept it)
                                                                            (2) when rendered pursuant to an agreement for that purpose without any new
                                                                            consideration. (e.g. creditor agrees they will accept $1000 instead of $1500).
                                                              Promissory Estoppel
Hughes v. Metropolitan   Landlord had the right to demand that a       Landlord waived his right of strict performance when, by his conduct                  Waiver - party commits a
                         tennant make repairs within a certain         (negotiations), he led the D to believe they would not be enforced: there was an      breach of a contract on the
       Rwy Co.           timeframe. But they entered into              implied promise. Leading one of the parties to suppose that the strict legal rights   faith that it would not be
                         negotiations under the impression that        arising under the K will not be enforced, or will be kept in suspense, or held in     considered such. Waiver
                         that the reparis would not take place.        abeyance, the person who otherwise might have enforced those rights will not be       does not apply to a promise
                         When negotiatons ended the landlord           allowed to enforce them where it would be inequitable                                 to accpet partial payment as
                         wanted to kick the tennant out for not                                                                                              full discharge
                         making the repairs.

Central London v. High   Landlord reduced rent during war time         Denning - Where one had given a promise that was intended to be binding and           Promissory Estoppel
                         because the flats were not fully let. Then    intended to be acted upon and which was in fact acted on the promise should be
         Trees           he demanded full payment of previous          considered to be binding                                       Basic requirements
                         rents.                                        for Estoppel:
                                                                       1. A legal relationship
                                                                       2. The making of a representation intended to affect the relationship; and
                                                                       3. An action by the representee on the basis of the representation
                                                                       The estoppel lasts as long as the conditions under which it was made under
                                                                       continue, when circumstance ends so does indulgence.

   John Burrows v.       Defendant was paying in installments and      There must be evidence from which it can be inferred that the first party intended Nature of Representation
                         the P had the option to sue for full amount   that the legal relations created by the contract would be altered as a result of the
     Subsurface          it the installments were late. The            negotiations…it is not enough to show that one party has taken advantage of
                         installments were late and accepted until     indulgences granted. This case = friendly indulgences. there must be serious steps
                         one point where the P decided to sue for      (negotiation) to imply the promise
                         the entire amount.

    D&C Builders         Defendant refused to pay contractors full     Must come to court with CELAN HANDS. Estoppel can be used in a Foakes v. Beer         The Equities - Duress
                         price and offered them half. P accepted       situatoin. When creditor accpets partial payment for the total he will not later be
                         because desperate and then sued for the       able to enfore full amount if relied upon by debtor and it would be inequitable to
                         entire amount.D said there was accord         do so. THIS CASE - DURESS - can not use the doctrine when it. An exception to
                         and satisfactoin for accepting the lower      estoppel is when there is duress

 Saskatchewan River      Failed to pay Insurance Policy, sent late     2nd letter was intention to waive its rights for timely payment BUT resonable         The Notice
                         payment offer, then immediate payment         notice was given to retract the waiver                        Waiver will be found
     Bungalows           or termination offer (extending coverage      only where the evidence demonstrates that the party waiving had:
                         for this time) and then notice of policy      (1) Full knowledge of rights; and
                         lapse. P argued letters waived strict legal   (2) an unequivocal and conscious intention to abandon them
                         rights by saying they would accept late       Distinction between waiver and PE not useful                         **Resonable
                         payment                                       notice can retract the waived legal rights.
International Knitwear v.   Landlord agreed to reduce rent, but then       One cannot make one’s right retroactive, but moving forward, one can enforce        The Notice
                            the tennant didnt pay and the landlord         strict compliance to the original terms of the contract provided that enough notice
         Kebob              sued for every backdated month at the full     is given after a promissory estoppel has been invoked. Adequate notice depends
                            amount. Tennant had to pay the full            on situation – up to judge. No formula for resonable notice, done on case by case
                            amount after notice that the waived rights     basis.
                            were being revoked.

   WJ Alan v. El Nasr       K to be paid in Kenyan Shillings, but the      Denning - All that is required is that one has "acted" on the belief induced by the The Reliance
                            seller accepts payment in Sterling and         other party and not that it be detrimental. Representation via conduct is enough to
                            then sues for payment in Kenyan                invoke PE. However divided on whether it has to be detrimental or not. EX - by
                                                                           accepting late payments you are representing that you are waiving your strict legal
                                                                           rights to timely payments.

    The Post Chaser         Delay of declaration of ship give the          Although there was a waiver, there must also be a reliance by sellers on this      The Reliance
                            buyers the right to reject sellers             representation, in order for estopple to apply. So little time from when the
                            documents.Buyers still accpeted but when       representation was made and where it was revoked that it was not relied on. Dont
                            sub-buyers rejected they changed their         need to focus on detriment, just need to look at whether it would be inequitale to
                            mind. Sellers were forced to sell oil          revert back to legal rights.
                            elsewhere at a loss- seller is now suing the
                            buyer- promise at issue is whether the
                            buyer waived the right to enforce the
                            contract (therefore promissory estoppel)

    Combe v. Combe          Husband agrees to pay the wife. In             PE does not create causes of action when there was none before, it only prevents a Sword or Shield -
                            reliance the wife does not take him to         party from insisting on strict legal rights where it would be unjust to allow him to Sword Attempt
                            court (forbearance).                           enfore them. The promise was being used as a cause of action in itself. This would
                                                                           render consideration null and void- and make every gratuitous promise
                                                                           enforceable. MUST BE A LEGAL RELATIONSHIP thereofre imits the use of PE

  Petridis v. Shabinsky     Tennent was supposed to renew K before         Use semantic differance between waiver and PE to get around the legal                    Sword or Shield -SWORD
                            the deadline but instead enterd into           relationship requirement. Say its a waiver situation and therefore the tennatn can
                            negotiation with landlord. Landlord makes      use PE. Recognition **The issue must relate to the legal relationship – simply a
                            rep by negotiating that he will not enfore     legal rel is not enough if the issue in question does not relate to this relationship.
                            his strict legal right, and tennant acts on    **
                            this BUT there is no longer a legal
                            relationship because the option to renew
                            had expired

  Robichaud v. Caisse       Bank promises to accept a lower amount Accordint to case law PE couldnt be used as a sword BUT now PE can be used as a Sword or Shield - SWORD
                            in return for not enforcing court order for sword in this situation.
      Populaire             full amount. It later refuses chq and tries
                            to recover full amount - action brought by
                            person not bank
Waltons Stores v. Maher   P negotiated with D for the lease of their   Proprietary estoppel = estoppel by acquiescence or encouragement:                     Sword or Shield
                          land, and on the instruction of a lawyer     1. Plaintiff assumed or expected that a particular legal relationship exists between
                          who said client would accpet they started    the plaintiff and the defendant or that a particular legal relationship will exist
                          to demolish the building on the premesis.    between them, and in the case of this assumed future relationship, that the
                          Then the lawyer returns the unsigned         defendant would not be able to withdraw. Future expectation of legal relationship
                          lease saying there is no agreement.          is good for PE.
                                                                       American Doctrine – if there is a reasonable expectation that it will be relied on,
                                                                       and there is some acting on. NO requirement for a pre existing legal relationship. It
                                                                       has a language of injustice – looking at how the parties have come to court. Looks
                                                                       like it says this doctrine is interchangeable with consideration.
                                                                        - looks like this does away with bargin theory

        M v. A            Defendant promises to pay p's mortgage if PE can not be used. Reluctant to pursue Waltons in a non-commercial context.           Sword or Shield
                          she comes to live with him in Canada      Estoppel must be considered within the terms of the relationship and the level of
                                                                    mutuality - the applicability of this implied relationship depends on
                                                                    mutuality/understood realistic future of the relationship

                                                              Promises Under Seal
  Royal Bank v. Kiska     Majority found that the contract was         A Seal is a way to get aroud consideration. BUT you must have an actual seal, the Seal
                          enforceable beacuse of consideration, but    words "given under seal" or "seal" are no substitute. Purpose - for common people
                          Laskin in obiter gives us what is required   who do not understand consideration, serves as a caution for them (makes them
                          for a seal.                                  think twice, because they see its formal), and serves as evidence.

                                                                 Privity of Contract
  Provender v. Wood       Son in law brings action against father in   Shows us the old Common Law - Any party who would benefit from a promise may Privity of Contract
                          law for the K which was made betweeen        bring an action.
                          father and father-in-law to give Son

  Twiddle v. Atkinson     Same type of situation as above. P brings 3rd parties are strangers of consideration and therefore can not enforce the           Privity of Contract
                          action against father-in-laws estate for the promise. Regardless of what was stated in the contract if there is no consideration
                          money.                                       then you can not sue.

     Dunlop Tyre          Dunlop (manufactuer) sues Selfridge          Dunlp was a mere third party beneficiary.                                 1) Only Privity of Contract
                          (retailer). Dew (wholesaler) had             a person who is a party to a contract can sue on it.                 2)
                          agreement with Selfridge not to sell tires   Consideration must flow to the promisor                                 Way to get
                          below manufactuer price, but they did,       around rule = agency, turns a 3 party scenario into a 2 party scenario.
                          and now Dunlop wants compensation.
Beswick v. Beswick   Husband agrees to sell company to            CA - Denning changes 3rd party rule to one of "legitimate interest", if you have that Privity of Contract
                     newphew on the condition that he payed       you can sue. BUT - this would abolish consideration, and hard to define what
                     him and his wife a sum from the business     "legitimate interest is"                                        HL - Dont adopt
                     every week. Old man dies and the nephew      Denning's view. In her personal capacity she has no right to sue, but she can sue as
                     refuses to keep paying old lady.             administratrix of the estate (ie acting as her husband). They award specific

Trust Relationship   Settler and the trustee are treated as one Someone who wants to set up a trust is known as a settler. (person who has money Way around 3rd party
                     and the same                               they want to preserve)                                                            beneficiary
                                                                They chose someone to take for this and arrange for it to happen = trustee
                                                                The person who ultimately gets this benefit = beneficiary
                                                                If the beneficiary doesnt get the money can the person sue to get the agreement =

  London Drugs       London payed a warehose to take care of      New exception to privity of contract is recognised by the courts for employees who Privity of Contract
                     their item. There was a clause saying        are third party beneficiarys to a contract. 2 conditions:     1) It can be express or
                     without extra insurance only liable for      implied that the employees are covered                 2) The employees must be
                     $40. Employees broke item and London         engaged in an act of their employment.                Different from agency and trust
                     cant sue company but they try and sue        where it is brought down to 2 parties, here there is an express exception to 3 party
                     employees arguing they were not party to     scenarios.
                     the contrat betwene London and
                     Company which included the limited
                     liability clause.

                                              Protection of Weaker Parties
     Duress          Historically was availabel only for threats Do not need to show manifest disadvantage/unfair contract. • duress is a threat to Duress
                     of violence. Now can use economic duress you, it is a narrow doctrine- even if you are rich and powerful, you can still use
                                                                 doctrine of duress whereas other two doctrines are equitable doctrines

     Pao On          Facts above. Defendant tries to argue that   Duress = a coercios of the will so as to vitiate consent. It must be show that the K   Duress
                     the guarantee which they gave was            entered into was not a voluntary act. To determie if there was duress: 1) Was
                     procured by economic duress (the P's         there protest? 2) Was there an alternate course open, such as a legal remedy?
                     would have backed out of the already         3) Was there independant advice?                               4) After entering the
                     established deal)                            contract did he take steps to avoid it?

Gordon v. Roebuck    Two lawyers - D refuses to sign documents This is an application of the 4 criteria layed out in Pao On. They add on an extra  Duress
                     for sale of property until P promises to pay factor 5) was the duress legitimate? Here use of economic duress was legitimate,
                     D. D thinks of it as money which was         because of commercial context.
                     loaned. P says it was a joint business
                     venture and they only get profits. P agrees
                     to D's demands then claims duress
  Undue Influence       Relationships: trustee + beneficiary,            There are two types:                                                                  Undue Influence
                        solicitor + client, doctor + patient, parent +   (1) Actual: less coercive threats than those recognized at common law- threats of
                        child, guardian + ward, future husband +         dire consequence other than physical violence- Even threats to 3rd parties such as;
                        fiancee, teacher + student, brother + sister     family, spouses withholding of affection- in terms of general relationships
                        -- But not confinded to fixed categories.        (2) Presumed - arising out of special relationships: • if one can establish a special
                                                                         relationship, undue influence is presumed and the burden is shifted to the stronger
                                                                         party to rebut

 Geffen v. Goodman      Mother leaves estate with mentally ill           The brother sister relationship did raise a presumption of undue influence, but it     Undue Influence
                        daughter (P). P then enters trust deed           was sucessfully rebutted by brothers because she had independant advice. OBITER -
                        with brothers (D) to leave the property to       Wilson states that for a commercial situatoin plaintiff must show that there was a
                        all grandchildern after P's death. Question      manifest disadvantage (not just a bad deal) before the presumption arises. Laforest
                        is whether the trust deed was under              disagrees saying simply focus on consent and the relationship between the parties. -
                        undue influence                                  - therefore he states could still interfere if there was no manifest disadvantage. For
                                                                         a new relationship to arise there must be an element of domination.

 Unconscionability      Even where no confidential relationship     Must show : 1) An imporvident bargain                                                    Unconscionability
                        exists, where parites not on equal terms .              2) inequality in positions of parties
                        the party who gets a benefit can not keep
                        it without proving that everything is right
                        and fair.

    Morrison v.         Old woman was persuaded by two men to            There was an unfair advantage gained by an unconscientious use of power by a        Unconscionability
                        take out a mortgage on her house to give         stronger party against a weaker and this raises a presumption of fraud which the
    Cost Finance        them as loans. Cost finance provided the         stronger party must repel. • in undue influence, there was more of a focus on the
                        loan, and the money went straigt to their        relationship…in unconscionability, just stronger asserting power on weaker
                        auto company. The woman would gain
                        nothing on the loans

   Marshall v. Can.     Elderly patient in rest home agreed o sell       Stronger party does not have to know about the inequality. the party gaining        Unconscionability
                        farm for less than its value to an intelligent   advantage need not know nor behave improperly in obtaining ill-gotten bargain
 Permanent Trust Co     business man
Lloyd's Bank v. Bundy   Herbert Bundy mortgaged farm that had            Denning concludes that all of these doctrines (duress, undue influence,              Unconscionability
                        been in the family for 300 years for the         unconscionability) have a common thread which is enunciated under inequality of
                        benefit of his son who was in financial          bargaining power doctrine -Denning wants to address equity without worrying
                        trouble- father believes everything that         about the various requirements of the three other doctrine – his main concern is
                        the bank tells him- bank forecloses, sues        that equity is maintained says if he's getting it wrong undue influence would apply,
                        to throw him off of the property                 because they developed a relationship of trust and confidence.
   Harry v. Kreutziger       Indian agrees to sell fishing boat for much     McIntyre - applies unconscionability, there was an inequality in bargaining          Unconscionability
                             less than what it was worth, buyer will not     positions, and proof of unfairness in the bargain. Plaintiff was ignorant and the
                             take no for an answer. He was also              defendant was too agressive.                                         Lambert -
                             assured that he could get another fishing       (concuring minority) Single question is whether the transaction seen as a whole is
                             liscence, but he cant. He sues to get back      sufficiently divergent from community standards of commercial morality that it
                             boat.                                           shuld be recinded. Same type of overall theme that was seen in Loyd Banks

 Tiplady: Judicial Control   Justice and fairness are not themselves         • fairness and certainty are often assumed to be opposed values in contract law- it Unconscionability
                             principles of k law, they are discriptions of   is often claimed that there is an underlying conflict between the judicial instinct for
of Contractual Unfairness    the way in which lawyers handle the             justice and the judge’s function in adjudicating cases
                             instrument of law. Danger that judges will      • traditional methods already aim to achieve justice and they are not conflicting
                             try to make decisions which they are not        with this end and the rejection of these methods is essentially misguided and is
                             equipped to make.                               itself a source of potential injustice
                                                                             • doctrine of inequality is an appeal to instinct and it is a poor substitute for clear
                                                                             articulation of rational standards
                                                                             • danger that judges will start making decisions that they are not equipped to

       Expectancy                                                            When there is a breach of contract, expectation interest is the normal entitlement Expectancy
                                                                             for the Plaintiff. The Ruling Principle is that remedies should place plaintiff in the
                                                                             position they would have occupied had the contract been performed

Holmes - The Path of Law                                                     Duty to keep a contract at common law means a prediction that you must pay           Theory
                                                                             damages if you do not keep it (a compensatory sum). Forget morality.

   Posner - Economic                                                         LAW AND ECONOMICS - In many cases it is uneconomical to induce completion of Theory
                                                                             performance of a contract after it has been broken. Expectancy measure gives the
    Analysis of Law                                                          promisor an incentive to fulfill his promise unless the breach would be more
                                                                             efficient. Efficient breaches are Pareto superior. Breaches are value maximizing
                                                                             since the innocent party made whole, they receive lost profit, and therefore does
                                                                             NOT deter from entering contracts. You need to have formal categories in order to
                                                                             be able to understand the world and law. Economically efficient to have a set of
                                                                             default rules which people can rely on. Doctrine of mitigation of damages - suplier
                                                                             has duty to mitigate and wouldnt get damages for excesses.
 Fuller & Perdue - The                                               As long as the parties compensate for their breach, they should break the contract. Theory
                                                                     That way it creates a win-win situation, the innocent company will get the
  Reliance Interest in                                               compensation they would receive if a breach hadn’t occurred (under expectation
   Contrat Damages                                                   measure) and the other company would be free to contract into deals that would
                                                                     be better for them financially - overall economy benefits. reliance interest is what
                                                                     your relying on expecting. Expectation measure protects the reliance interest.
                                                                     expectancy easy to calculate, encourages market activity. Compensation for loss of
                                                                     expectancy is the law taking a more active role, distributive justice rather then
                                                                     corrective justice. Expectancy already takes into accout the reliance loss. o The
                                                                     goal of contract remedies is to promote market activity
                                                                     o To further this goal, contract law should protect reliance interest of non-
                                                                     breaching parties
                                                                     o To protect reliance interest, contract law should award expectation measure of

    AVG v. Barwell       Vendor sold the land two times, in good     Struck down limitation on Expectancy Measure from the old Bain v. Fothergill rule Expectancy v. Reliance
                         faith, thinking that the first offer fell   (stated that when no fault of vender or honest mistake only reliance would be
                         through. Barwell mistakenly makes a k       rewarded), because social circumstances have changed so much that it is no longer
                         with AVG thinking that Jordan had not       needed. Thus, expectancy is awarded.
                         met a condition. Jordan had and they get
                         property. AVG is suing.

       Reliance          Put the person in the position they were    In cases where plaintiffs are not able to definitively prove a loss according to    Reliance
                         before the contract - backward looking      expectation interest or have not suffered a loss measurable by expectation
                                                                     measurement, or in some cases where the potential reward is greater if the
                                                                     reliance measure is used. Undo the harm which the reliance on the promise has

McRae v. Commonwealth    Commonwealth Disposal made K with           Courtt ends up using reliance b/c expectancy in this case was too difficult to assess. Reliance Measure
                         McRae to sell a wrecked oil tanker; McRae   Creates guidelines for application of Reliance Measure              Only in three
   Disposals Comm        incurred expenses based on reliance that    circumstances can reliance apply:
                         oil tanker would be somewhere, and the      1. Expectancy is impossible to prove
                         oil tanker was non-existent. Issue over     2. Burden shifts to the defendant to show that these expenses would have been
                         what remedy to apply.                       lost in any case and the defendant is unable to do so.
                                                                     3. The impossibility of proof results from the nature of the defendant’s breach.
Bowlay Logging v. Domtar    Respondent was to haul logs, but in             Fails McRae Test b/c expectancy of K could be calculated, and when calculated, the Reliance Measure NOT
                            breach of K failed to provide enough            losses at full performance exceeded those in part performance. This means had       Allowed
                            trucks. Appellant was seeking reliance          there been no breach P would have lost more. Cts not willing to assign Reliance b/c
                            measure rather than expectancy for the          to do so would be to compensate P for entering into a bad bargain. Respondant
                            breach.                                         Says the breach was not the reason for the loss of money, but rather inefficient
                                                                            business operations on behalf of Bowlay and them entering into a bad K. You can’t
                                                                            go choose reliance measures unless you are in a position where you cannot assess
                                                                            market value. Cant put the P in a better position then they would have been in had
                                                                            the K been performed.

  Sunshine Vacation v.      The Bay had K with Sunshine villages to         Reliance (loss of capital) is an alternative to expectant (loss of profit) and they    Reliance AND Expectancy
                            put 7 outlets in its stores. The Bay did not    cannot both be held. Cannot use award both reliance and expectancy measure .           both not allowed
       Governor             follow K with 4 outlets; so Sunshine            Distinguished from Bowlay b/c the Bay could not show that Sunshine would have
                            cancelled entire K                              lost money had K been fulfilled.

       Restitution          Defendant has been enriched at the        aka - unjust enrichment. Court will force the defendant to disgorge the value he             Restitution
                            expense of plaintiff, who has been        received from the plaintiff.
                            impoverished, and justice demands a state
                            of equilibrium

Attorney General v. Blake   Blake, a spy who defected from UK to            Both expectancy and reliance would amount to 0.                                         Restitution
                            Soviets and published book about it Crown       Situations when Restitution can be employed (Lord Woolf):
                            sues on the grounds that their contract         1. Case of Skimped Performance – where D fails to provide full extent of services he
                            with Blake requires him to remain silent        has contracted to provide; liable to pay back amount of expenditure saved by
                            with regards to confidential information        breach.
                            and should not benefit financially from         2. Where the defendant obtained his profit by doing exactly what he contracted
                            breach of that contract                         not to do – but more than this is required if full account of profits is to be imposed.
                                                                            While the remedy of restitution is available, it is unlikely to ever by made available
                                                                            beyond a major breach in conflict with social values (like national security). The
                                                                            crown is awarded restitution

    Chaplin v. Hicks        Plaintiff was part of a select group of         D does not get away w/out paying simply b/c there is no certainty as to the loss.      Loss of Chance
                            women who were chosen for a modeling            However, P has the burden of showing some degree of certainty. She meets this
                            competition. This select group had a 1/4        burden by showing there was a 1/4 chance. Therefore, D deprived her of a 25%
                            chance of winning. The P was away and           chance at winning a 2 yr modelling contract. If P can show a more than
                            did not get the msg in time and as a result     speculative loss of opp./chance then expectancy can be awarded (b/c can show a
                            was omitted from the chance to win              probability of outcome if K was performed). Important aspect to the decision in
                            modeling contract. Plaintiff sues for loss of   this case is that P had no downside risk, if there was a change at loss - then loss of
                            chance. Issue is whether damages can be         chance would not apply.
                            awarded if the loss from breach cannot be
                            determined with certainty.
Groves v. John Wunder    D failed to perform K properly. Was             Majority-- awarded cost of performance (60K) b/c that is what was promised.        Cost of Completion v.
                         negotiated that D would level off land, but     What if owner did not want to sell off the property, then he would not be able to Difference in Value
                         instead took all the good soil and left bad     cover the cost of doing the work he wanted done-- b/c land is worth much less
                         soil. Issue over whether to award damages       than the work (15K). Dissent-- should award dimunition of value b/c to do
                         in the form of cost of performance (what        otherwise would be to overcompensate P, far beyond what the parties had in
                         it would cost to perform the work he            mind.      Posner: It is not economically efficient to award 60K for smthg that is
                         agreed to do) or to award dimunition of         worth 12 K in market. If P wanted this arrangement, should have created specific
                         value (what the land would be worth had         rules in the beginning of K. HELD - awarded cost of remedying the defect. •
                         the work been done properly).                   appropriate measure of damages is the cost of performance- it makes D pay for his
                                                                         bad faith breach and gives the P what is promised

     Peevyhouse          Owners of farm leased it for mining.            Opposite decision from Groves. Farm owner awareded only $300 or dimunition of Cost of Completion v.
                         Mining company failed to restore the land       value (what the land would be worth had the work been done properly) Cost of     Difference in Value
                         and owner sues. Cost of performance             performance is the norm except for where the cost of performance grossly exceeds
                         would be 29K, dimunition in value only          diminution of value
  Nu-West Homes v.       Nuwest entered K to build a house for           TJ - didnt think that demolishing the basement was necessary so only awared                Protectd Interest
                         Thunderbird. Nuwest breached k with             partial sum. CA - Ratio: If the P who is victim to a breach acts reasonably in the
    Thunderbird          serious deviation from specs. Thunderbird       adoption of alternative measures, the P will be able to recover full cost of
                         got another company to finish the project.      performance. The aggrieved party is expected to act reasonably not perfectly;
                         Appelants sue for diff between the cost of      therefore, aggrieved party will not be disentitled from the damages because
                         completeing construction and original K         breaching party can suggest less costly measures of completing the contract. --
                                                                         Economic Wast arguement (restriction on cost of performance) -->If the omission
                                                                         or defect is trivial or affects the value of the building only slightly, but the cost of
                                                                         rectifying the defect or omission is large, the courts will not slavishly force the
                                                                         completion of the contract

Certainty, Causation &                                                   P must show 1) Certainty - must prove with a sufficient degree of certainty that
                                                                         they would have made profits in the amount claimed if the defendant had
     Remoteness                                                          performed. 2) Causation - That the loss was caused by the defendant’s breach. 3)
                                                                         Remoteness - it was sufficiently within the range of the defendant’s contemplation
                                                                         at the time of entry into the contract

 Hadley v. Baxendale     P sent in a mill shaft to be fixed but it was   Two part rule:                                                                     Remoteness
                         delayed and they did not get it back for        1. D is only liable for those damages that naturally or reasonably flowed from the
                         several days longer then expected. They         breach (probable result)OR were reasonably supposed to be in the contemplation
                         suffered lost profits.                          of both parties at the time of the breach
                                                                         2. If special circumstances were communicated at the time of the breach, the P is
                                                                         entitled to those damages that naturally flowed from those special circumstances
                                                                         (communication of exceptional results gives damages)- special circumstances need
                                                                         to be known and communicated and should be a probable result of the breach. If
                                                                         these special circumstances are not communicated, only obvious natural, probable
                                                                         results will be considered. ASSUMPTION OF RISK!
Victoria Laundry v.   Boiler breaks down and repair takes           Reasonable foreseeability depends on the knowledge of the D at the time of the       Remoteness
                      longer than expected. Defendant was           contract
     Newman           aware the plaintiff was in the laundry        o Rule 1 from H v. B relates to imputed knowledge (naturally foreseeable) – the
                      business and that the boiler was vital to     contract breaker is assumed to posses a certain degree of knowledge whether he
                      the plaintiff’s business                      does or not. (esp if knowledgeable about the field)
                                                                    o Rule 2 from H v. B relates to actual knowledge (special circumstances)
                                                                    Lower threashold than Hadley what is reasonably foreseeable, that it is a “serious
                                                                    possibility”, “liable to result” or “in the cards”.

Scyrup v. Economy     The equipment sold for a dozer was a      D had imputed knowledge as well as actual knowledge because the special                  Remoteness -
                      breach of contract. The P had specificallycircumstances were communicated.                                                         Proportionality
     Tractor          told the D about special circumstances,   Dissent - concerned with proportionality. Thinks more should have been
                                                                communicated about the specific circumstances so that the D would havethe
                      including that the dozer was for another K.
                      P wants expectancy profits from second K  opportunity to think about the consequences beforehand and have a chance to
                                                                contract around them
     Munroe           P tried to claim expectancy damages after Opposite of Scyrup. Proportionality concern – Cant make the leasing company the          Remoteness -
                      his leased tractor broke down and he      guarantee that the plaintiff would be able to get all the work done and turn the         Proportionality
                      could not complete another contract.      expected profit.

Koufos v. Czamikow    Respondents chartered ship to deliver       Loss of profits here were too remote. - What is probable is what would happen in Remoteness
                      sugar. But the ship breached K by being     the majority of cases; what is not probable is what would happen in the minority of
    (Heron II)        late, and when the sugar was delived the cases. Probable means “not unlikely” (slightly less than an even chance)
                      price on the market had fallen. D did not
                      know it was the intention to sell the sugar
                      right away, but he did know there was a
                      market for sugar there.

Damage Standards      Hadley requires a higher standard of      1) Probable (51%)– from Hadley                                                       Remoteness
                      proof, less likely the defendant would    2) Not unlikely - Heron II – somewhere in between -- could go either way.
                      have to pay the money.----Victoria lowest 3) Liable to result (means something less that 50%), (or “serious possibility”) –
                                                                from Victoria -- anything which you could foresee happening.
                                                                1) probable should be applied where the defendant has absolutely no knowledge
                                                                of the plaintiff's business as in Hadley                        2) Liable: Should be
                                                                applied where the defendant has quite a strong understanding of the plaintiff's
                                                                business (although no "special circumstances" are described) as in Victoria
                                                                3) "not unlikely" should be applied where there are a number of outcomes which
                                                                even one with limited knowledge of the plaintiff's business should be able to
                                                                recognize as not very unusual and easily foreseeable to happen, although less than
                                                                an even chance

To top