OFFER AND ACCEPTANCE

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					                            CONTRACT FORMATION
OFFER AND ACCEPTANCE

TRADITIONAL
RULES OF
OFFER AND
ACCEPTANCE
               OFFER           SMITH V. HUGHES      Old oats vs. new     An objective
                                                    oats – consensus     standard is an
                                                    ad idem              attempt to
                                                                         ascertain the
                                                - conducting             intention of the
                                                yourself so others       parties (if
                                                think you are            subjective, would
                                                assenting makes          need to know what
                                                you liable               was in their minds)
                               PHARMACEUTICAL Picking item off of        Invitation to offer,
                               SOCIETY OF       shelf                    not an offer
                               GREAT BRITAIN V.
                               BOOTS
                               LEFKOWITZ V.     Fur coat sale; “first    Unilateral offer
                               GREAT            come, first served”      accepted by
                               MINNEAPOLIS                               performance
                               SURPLUS STORE                             (since there is
                                                                         detrimental
                                                                         reliance)
               ACCEPTANCE      TINN V. HOFFMAN                           If both parties
                               & CO.                                     make the same
                                                                         offer at the same
                                                                         time there is no
                                                                         contract until one
                                                                         accepts
                               DICKINSON V.         Said offer was       At common law,
                               DODDS                held open for 48     an offer stated to
                                                    hours; sold before   be open for a
                                                    this time            specified period of
                                                                         time can be
                                                                         revoked before
                                                                         acceptance (no
                                                                         consideration)
                               FELTHOUSE V.                              A person cannot in
                               BRINDLEY                                  effect force
                                                                         another to
                                                         respond or to be in
                                                         a binding
                                                         contractual
                                                         relationship by
                                                         saying “If I do not
                                                         hear from you, we
                                                         have a binding
                                                         contract on my
                                                         terms”
                ADAMS V.                                 Postal acceptance
                LINDSELL                                 rule (once in mail,
                                                         acceptance is
                                                         made – post office
                                                         is agent)
                HOUSEHOLD FIRE     Postal rule           Contract is made
                & CARRIAGE                               when offeree puts
                ACCIDENT INS. V.                         notice of
                GRANT                                    acceptance in the
                                                         mail
                SCHILLER V.        Changes to a          Mail had
                FISHER             contract initialed,   previously been
                                   not sent out for a    used, therefore an
                                   few days              acceptable mode;
                                                         acceptance was
                                                         made
                ROLLING V.      Contract formed
                WILLANN         via fax
                INVESTMENT
                CONSUMER
                PROTECTION ACT,
                2002
REVOCATION OF
AN OFFER
                HENTHORN V.                              If the postal
                FRASER                                   acceptance rules
                                                         apply, then to be
                                                         effective, a
                                                         revocation must
                                                         reach the offeree
                                                         before the
                                                         acceptance is put
                                                         in the mail
                BRYNE & CO. V.                           If the mail rule
                VAN TIENHOVEN                            does not apply,
                                                         revocation is
                                                         possible before
                                                  the acceptance
                                                  reaches the
                                                  offeror
              DICKINSON V.                        Firm offers: At
              DODDS                               common law the
                                                  offeror has a right
                                                  to revoke this offer
                                                  at any time before
                                                  acceptance, as
                                                  the promise to
                                                  keep it open was
                                                  made without
                                                  consideration
              GREAT          Witham‟s offer to    Unilateral contract
              NORTHERN       GNR to supply        for orders is
              RAILWAY V.     goods at             voidable, unless
              WITHAM         stipulated prices    the order comes in
                             for a whole year     (is consideration)
                             could be revoked
                             at any time since
                             GNR had not paid
                             for the promise to
                             stand ready to
                             supply. Witham
                             was, however,
                             bound to supply
                             the goods that
                             were already
                             ordered before the
                             offer was revoked.
FIRM OFFERS
AND
UNILATERAL
CONTRACTS
              DAWSON V.      Goes with            Portrayed as
              HELICOPTER     someone other        bilateral contract:
                             than Dawson to       instinct with
                             get the minerals     obligation (his
                                                  promise to take
                                                  the guy to the
                                                  minerals)
              ERRINGTON V.   “Pay the mortgage    Unilateral offer,
              ERRINGTON      and it is yours in   but once
                             the end”             performance
                                                  begins, offer
                                                  cannot be revoked
                                                                       while action is
                                                                       ongoing
                TENDER
                CONTRACTS
                               RON                 Bid is acceptance   Contract A:
                               ENGINEERING &       to tender offer     owner‟s tender
                               CONSTRUCTION        (unilateral) and    documents – offer
                               (EASTERN) LTD. V.   can‟t be revoked    to prospective
                               ONTARIO                                 bidder; submitting
                                                                       tender is
                                                                       acceptance
                                                                       Contract B: enter
                                                                       into the work
                               NORTHERN            Contractor and      Same as above;
                               CONSTRUCTION        subcontractor       subcontractors
                               V. GLOGE                                can‟t back out of
                               HEATING AND                             work
                               PLUMBING
                               NAYLOR GROUP        Submitted bid      Can‟t frustrate
                               V. ELLIS-DON        knowing            your own contract
                               CONSTRUCTION        subcontractor was  (pick a wrong
                                                   in wrong union     person to get the
                                                                      lowest bid, then
                                                                      replace them)
                               M.J.B.              Non-conforming     Second bidder
                               ENTERPRISES V.      bidder award the   succeeded despite
                               DEFENCE             contract; next     „privilege clause‟
                               CONSTRUCTION        lowest bidder sued (choosing the bid);
                               (1951) LTD.                            must bid on what
                                                                      is tendered
                               MARTEL BUILDING     Government         This is fine;
                               V. CANADA           added to bids for  government
                                                   alterations of     treated all bids
                                                   buildings; lowest  equally in
                                                   „raw‟ bidder now   adjusting price
                                                   not lowest
LIMITS OF THE
TRADITIONAL
RULES
                CONSENSUS AD
                IDEM
                               RAFFLES V.          Mistake in fact:    No contract; no
                               WICHELHAUS          two ships named     consensus ad
                                                   Peerless            idem
                               HOBBS V.            Did railway         Specific
                               ESQUIMALT AND       company reserve     performance; man
                 NANAIMO           mineral rights to    had ostensible
                 RAILWAY CO.       the land?            authority to sell
                 STAIMAN STEEL     Auction – steel      Consensus ad
                 LTD. V.           divided into lots;   idem is found; did
                 COMMERCIAL &      valuable steel not   not believe the
                 HOME BUILDERS     meant to be sold     buyer (trickery)
                 LTD.
INDEFINITENESS
AND CONTRACT
NEGOTIATIONS –
AGREEMENTS
TO AGREE
                 MAY & BUTCHER     Provide tents for a An agreement to
                 V. THE KING       price „agreed upon agree is not an
                                   from time to time‟ agreement: but
                                                       don‟t follow this,
                                                       follow Hillas
                 HILLAS V. ARCOS   Russian lumber – Viable agreement
                                   exclusive contract in this instance;
                                   for two years       only minor details
                                   (market value       missing
                                   went up)
                 FOLEY V.          Agreement to        Equity remedy:
                 CLASSIQUE         supply gas during injunction (can‟t
                 COACHES           the lifetime of     buy from anyone
                                   vendor of land at a else)
                                   price to be agreed
                                   upon (made work
                                   for three years –
                                   ongoing
                                   relationship)
                 COURTNEY &        Builder introduced Law does not
                 FAIRBAN V.        owner to financier, recognize a
                 TOLAINI           assuming builder    contract to
                 BROTHERS          would be used       negotiate
                                   (first-time
                                   relationship)
                 EMPRESS           Landlord seeking Writ not granted
                 TOWERS LTD. V.    writ of possession
                 BANK OF NOVA      (so he can evict    Needed better
                 SCOTIA            tenants, who want drafting
                                   to renew); rent of
                                   renewal to be
                                   agreed upon with
                                   use of market
                 WALFORD V.        Respondents         No duty in U.K.
                             MILES                withdrew from      law to bargain in
                                                  selling photo      good faith
                                                  company and sold
                                                  to third party
                                                  (concerned for
                                                  employees,
                                                  profits, etc.)
                                                  despite lock-out
                                                  agreement
                             EDPERBRASCAN         Clause providing   Common law rule:
                             CORP. V. 117272      that Labatts was   Contracts to
                             CANADA LTD.          to get shares of   negotiate are
                             (2000)               equivalent value   inherently
                                                                     uncertain and
                                                                     therefore
                                                                     incapable of
                                                                     creating binding
                                                                     and enforceable
                                                                     obligations
                LETTERS OF
                INTENT
                             CANADA SQUARE        Only location of   Bargain
                             CORP. V.             the cart was not
                             VERSAFOOD            agreed upon; not
                             SERVICES LTD.        enough to render
                                                  contract void
                             L.C.D.H. AUDIO       Major items not    No bargain
                             VISUAL V .I.S.T.S.   finalized (% of
                             VERBATIM LTD.        profits)
                                                  Seems unethical;
                                                  hard bargaining
                VERBAL
                AGREEMENTS
                             PENNZOIL V.          Verbal agreement   Here, there is an
                             TEXACO               for shares         agreement

                                                                     Court will look at
                                                                     the words to see if
                                                                     there is intention
PROTECTOIN OF
EXPECTATIONS
ARISING FROM
NEGOTIATIONS
                DUTY TO
                BARGAIN IN
                GOOD FAITH
               MARTEL BUILDING   Thought had             No tort duty of
               LTD. V. CANADA    contract with           good faith; parties
                                 government to           must be free to
                                 lease space; did        bargain
                                 not
               BIG QUILL         Didn‟t black-line       No contract
               RESOURCES V.      the removal of a
               POTASH CORP.      word                    Here, court
               OF                                        recognized duty to
               SASKATCHEWAN                              bargain in good
                                                         faith; called this a
                                                         „unilateral mistake‟
               978011 ONTARIO    Changed a form          Not required to
               CORP. LTD. V.     contract                bring the change
               CORNELL                                   to someone‟s
               ENGINEERING                               attention
               LE MESURIER V.    Plaintiff relied on a   Duty to perform in
               ANDRUS            very technical          good faith
                                 interpretation in
                                 the standard
                                 agreement of
                                 purchase and sale
               GATX CORP. V.     A “cute” attempt to     Duty to perform in
               HAWKER            avoid restrictions      good faith
               SIDDELELY         in a shareholders‟
               CANADA INC.       agreement
RESTITUTION
AND RELIANCE
               BREWER STREET     Prospective tenant      Awarded
               INVESTMENT V.     got owner to make       restitution
               BARCLAYS          renovations; didn‟t     (equitable) despite
               WOOLLEN CO.       rent                    no contract

                                                         The person who
                                                         would have
                                                         benefited from the
                                                         renovations
                                                         should pay – both
                                                         were innocent
                                                         parties (usually
                                                         happens when
                                                         one benefits to
                                                         detriment of the
                                                         other)
               BREWER V.         Expectation he          Award via unjust
               CHRYSLER          would get the           enrichment;
                  CANADA LTD.        dealership he         inferred intention
                                     worked to set up      to pay for benefits
                                                           received
DUTY OF
CONFIDENTIALITY
                  LAC MINERALS       Lac bought            Court created
                  LTD. V.            neighbouring          constructive trust
                  INTERNATIONAL      property based on     for Corona
                  CORONA             information in
                  RESOURCES LTD.     negotiations          Can have a
                                     Duty of confidence    fiduciary obligation
                                     Fiduciary             even if no contract
                                     obligation            is reached
BATTLE OF THE
FORMS
                  BUTLER MACHINE     Buyer‟s or seller‟s   The last shot rule
                  TOOL CO. LTD. V.   terms prevail?        is used in Canada
                  EX-CELLO-O
                  CORP (ENGLAND)
                  LTD.
THE KINDS OF PROMISES THE LAW WILL ENFORCE

LEGAL
FORMALITIES
                 THE WRITING
                 REQUIREMENT
                                STATUTE OF                             Suretyships,
                                FRAUDS                                 deceased debts,
                                                                       marriage, future
                                                                       performance, and
                                                                       land sales must be
                                                                       in writing
                                MOUNTSTEPHEN     Man does work,        No surety, so not a
                                V. LAKEMAN       was promised he       statute case –
                                                 would be paid;        straight agreement
                                                 after the fact told   between these two
                                                 the board didn‟t      (said “I will see you
                                                 want to work          paid”)
                 UNJUST
                 ENRICHMENT
                 AND THE
                 DOCTRINE OF
                 PART
                 PERFORMANCE
                                DEGLMAN V.       Nephew said he        Given damages for
                                GUARANTEE        was promised the      doing the work
                                TRUST CO. OF     house for helping     (instead of giving
                                CANADA AND       his aunt, but         him the house); got
                                CONSTANTINEAU    promise is not in     around statute of
                                                 writing               frauds
PROMISES THAT
WILL BE DENIED
                 UNFAIRNESS
                                THE PORT         Tug boat              Today, recognized
                                CALEDONIA        demanded $1000        as doctrine of
                                                 to save ship          unconscionability
                                                                       or duress
FORMAL
CONTRACTS
                 PROMISES
                 UNDER SEAL
                                RE/MAX GARDEN    Black circle that     Any evidence of a
                                CITY REALTY V.   resembled a seal      seal is sufficient for
                                828294 ONTARIO   with words            a seal – intention
                                LTD.             underneath, etc.      to be bound is the
                                                                       determining factor
CONSIDERATION
                BASIC CONCEPT
                                THOMAS V.          Lease of land to  Court: $1/year and
                                THOMAS             the widow (not    repairs consisted
                                                                     of consideration for
                                                   willed; not a gift);
                                                   executors want to the new contract
                                                   evict her         between herself
                                                                     and the executors
                                                                     (as themselves),
                                                                     so need not be in
                                                                     writing
                                WHITE V. BLUETT Son stated that      No consideration
                                                father agreed to     between father and
                                                forgive debt if he   son; could have
                                                didn‟t complain      torn up the I.O.U.;
                                                about getting his    also, no „right‟ to
                                                fair share; executor complain, so it‟s
                                                sued on I.O.U.       not valuable
                                                                     consideration
                                HAMER V.        Promised that if he Consideration: a
                                SIDWAY          refrained from       clear detriment to
                                                smoking etc. he      the nephew
                                                would be given
                                                $5000.00
                                WESTLAKE V.     “A robe, a hawk, a Courts will not
                                ADAMS           peppercorn, etc”     inquire into the
                                                                     adequacy of
                                                                     consideration
                PAST
                CONSIDERATION
                                EASTWOOD V.        Guardian paid          Past consideration
                                KENYON             expenses; Sarah        is no consideration;
                                                   promised to pay        husband doesn‟t
                                                   later; does            need to pay debt
                                                   husband owe?
                                LAMPLEIGH V.                              EXCEPTION: if
                                BRAITHWAIT                                you do X because
                                                                          B requested it and
                                                                          you expected
                                                                          payment or were
                                                                          subsequently
                                                                          promised payment
                                                                          by B, your act IS
                                                                          consideration
                                ROSCORLA V.        Horse –                Warranty not
                                THOMAS             subsequent             enforceable; past
                                warranty as to          consideration is no
                                fitness                 consideration
MUTUALITY
              GREAT             Tender for supply       Standing offers are
              NORTHERN          of stores               revocable unless
              RAILWAY V.                                consideration is
              WITHAM                                    given, but once the
                                                        order is received it
                                                        must be filled
              BERNSTEIN V.      Order placed for        Plaintiff is not
              WB MFG. CO.       clothing; plaintiff‟s   bound, therefore
                                form had exception      no consideration
                                clause: order           given
                                subject to credit       Not mutual
                                approval;               because WB said
                                defendant refused       they could back out
                                to accept delivery
              WOOD V. LUCY,     Clothing                Express promise is
              LADY DUFF-        endorsements;           not necessary.
              GORDON            exclusive rights to     Instinct with
                                sell designs or         obligation: implied
                                license others for      promise to be
                                half of profits;        bound – implied
                                defendant               that Wood will sell
                                endorsed clothing       her clothing, so this
                                without Wood‟s          is consideration for
                                knowledge               exclusivity

GOING-
TRANSACTION
ADJUSTMENTS
              HARRIS V.         Navigation for          Promise for extra
              WATSON            extra pay when          pay is not
                                had to do that          enforceable due to
                                anyway                  public policy
              STILK V. MYRICK   Said they would do      You‟re already
                                the extra work for      bound to do the
                                the two who             work; no
                                jumped ship             consideration (note
                                                        that public policy
                                                        above becomes no
                                                        consideration)
              RAGGOW V.         Mantel makers –         Analyzed as
              SCOUGALL          agree to lower          postponement of
                                wages during the        old contract (a
                                war                     completely new
                                         agreement, not just
                                         a going-transaction
                                         adjustment)
                                         Consideration:
                                         retaining the
                                         employees, albeit
                                         under different
                                         terms
STOTT V. MERIT   Stott‟s customer        Forbearance is
INVESTMENT       failed to pay a         good consideration
CORPORATION      debt; boss stepped      (even if it wouldn‟t
                 in and made the         be true, but they
                 debt even higher.       reasonably think
                 Stott is persuaded      they‟d have an
                 into signing an         action)
                 agreement saying        NOTE:
                 he is responsible       forbearance of a
                 for paying debt.        non-existing claim
                 Implicit in the         is not consideration
                 agreement is D‟s
                 forbearing to fire or
                 sue P.
GILBERT STEEL    Increased price of      A promise to
LTD. V.          the steel during the    perform a
UNIVERSITY       construction of the     preexisting
CONSTRUCTION     building                contract is not
LTD.                                     good consideration
                                         for the new terms,
                                         unless the existing
                                         contract has been
                                         mutually rescinded
                                         - Can‟t increase
                                         price
WILLIAMS V.      Sub-contractor          Substantial
ROFFEY BROS.     under-priced the        performance: you
AND NICHOLLS     job; claim of no        may et damages
(CONTRACTORS)    performance             for incomplete
LTD.                                     performance, but
                                         will not be
                                         considered no
                                         performance at all
                                         Consideration: not
                                         having to find
                                         someone to finish
                                         the job and getting
                                         more flats finished
                               FOAKES V. BEER   Beer asked for        Creditor not bound
                                                time to pay;          by an undertaking
                                                Foakes undertook      to accept part
                                                not to take           payment in full
                                                proceedings           settlement of a
                                                provided              debt
                                                immediate             “Payment of lesser
                                                payment of some,      sum rule:” payment
                                                plus monthly          of a lesser sum in
                                                installments of the   satisfaction of the
                                                rest. Did not agree   whole is not
                                                to waive interest,    sufficient, unless
                                                as Beer contested     there is
                                                                      consideration for
                                                                      the new promise
                               MERCANTILE                             Payment of less
                               LAW                                    can be
                               AMENDMENT                              consideration if
                               ACT                                    expressly agreed
                                                                      (professor
                                                                      suggests you can
                                                                      claim duress to
                                                                      counter evidence
                                                                      of an express
                                                                      accord)
                CONTRACTS
                WITH A THIRD
                PARTY
                               SCOTSON V.       A promises to pay     Consideration
                               PEGG             B a sum of money      exists between A
                                                if B promises to      and B; B has
                                                performance his       assumed liability to
                                                contract with C       A should he breach
                                                                      his contract to C,
                                                                      and hence his
                                                                      contract to A
RELIANCE AS
THE BASIS FOR
THE
ENFORCEMENT
OF PROMISES
                RELIANCE IN
                THE
                COMMERCIAL
                CONTEXT
                               CENTRAL          Reduction in rent     Promissory
LONDON          to $1500 during         Estoppel: a
PROPERTY        war time; prior to      promise which is
TRUST LTD. V.   this was $2500 –        intended to create
HIGH TREES      receiver wants          legal relations, and
HOUSE LTD.      $2500 all the way       to the knowledge
                including during        of the person
                the war                 making the
                                        promise was going
                                        to be acted upon,
                                        and was so acted
                                        upon, is a binding
                                        promise
                                        $1500 during the
                                        war is fine; but now
                                        it‟s back to $2500
                                        (war is over)
HUGHES V.       Six month               Doctrine of waiver:
METROPOLITAN    obligation to repair;   I could enforce my
RAILWAY         entered into            rights, but will
                negotiations to         waive them in this
                extend time;            instance
                landlord said
                tenant had
                breached
COMBE V.        Divorce                 Drawing
COMBE                                   boundaries for
                                        promissory
                                        estoppel:
                                        sword/shield
                                        distinction – need
                                        previous existing
                                        agreement
D&C BUILDERS    “Take 300 pounds        No true accord
LTD. V. REESE   or get nothing”         - economic duress
RE TUDALE       Mining rights; three    Where by his
EXPLORATIONS    year option; time       words or conduct
TD. V. BRUCE    expired; president      one party makes
                agreed to               an unambiguous
                extension, then it      promise which is
                was terminated          intended to affect
                                        the legal relations
                Was there an            and the other party
                extension or did        acts on it, altering
                Teck‟s option           his position to his
                expire?                 detriment, the party
                                        making the
                                        promise will not be
                                        permitted to act
                                        inconsistently with
                                        it. It does not
                                        matter that the
                                        promise was oral,
                                        lacked
                                        consideration or
                                        related to a future
                                        event.
WALTONS          Maher demolished       Promissory
STORES           store, built new to    estoppel as a
(INTERSTATE)     Waltons                sword: where the
LTD. V. MAHER    specifications;        behaviour of the
                 Walton did not         pary is so
                 respond to             egregious that it
                 agreement              has led to other
                                        party to believe
                                        that there is an
                                        agreement (not
                                        that there will be
                                        an agreement) and
                                        watched them
                                        carry on to their
                                        detriment
BAXTER V.        Said he would          Brought in
JONES            notify the other       negligence:
                 insurers, but did      Liability even
                 not                    though the task
                                        was voluntary
                                        If not undertaken at
                                        all, no liability, but
                                        since he began,
                                        failure to finish
                                        made him
                                        negligent
SLOAN V. UNION   Asset sale:            Reliance –
OIL OF CANADA    property was sold      continuing service
LTD.             off                    (retroactive
                 Sloan sued Union       reliance)
                 for termination
                 allowance after
                 working for B.A. oil
                 (which had bought
                 the assets and
                 terminated the
                                           contracts, making
                                           new ones)
                             MCCUNN ESTATE Termination of           Exception to the
                             V. CANADIAN   insurance upon           concept that
                             IMPERIAL BANK reaching age 70;         silence does not
                             OF COMMERCE   premiums                 constitute
                                           continued to be          acceptance
                                           deducted
               RELIANCE IN
               THE NON-
               COMMERCIAL
               CONTEXT
                             SKIDMOMRE V.     Warehouse             Reliance on
                             BRADFORD         purchase; uncle‟s     Uncle‟s promise is
                                              estate must pay for   sufficient to
                                              it – reliance – put   enforce the
                                              down nephew‟s         promise (it is an
                                              name                  incomplete gift)
                             DALHOUSIE        Boutillier made a     Gift, not contract.
                             COLLEGE V.       pledge to the         Not enforceable –
                             BOUTILLER        university but did    not supported by
                                              not follow through    consideration
                                                                    Not relied upon
                                                                    (cost of buildings
                                                                    way more than
                                                                    pledge)
INTENTION TO
CREATE LEGAL
RELATIONS
               THE NON-
               COMMERCIAL
               CONTEXT
                             BALFOUR V.       Husband promised      Promises between
                             BALFOUR          to support wife       spouses were
                                              while overseas        presumed to be
                                                                    unenforceable

                                                                   If you want to
                                                                   make a family
                                                                   promise binding,
                                                                   you should put it
                                                                   under seal
                             JONES V.         Mother/daughter      It is presumed that
                             PADAVATTON       dispute; studying at in the family, there
                                              the bar              is no intention to
                                                                   create legal
                                                                             relations
                                                                             Also, if there was
                                                                             intention, it was
                                                                             limited by a
                                                                             „reasonable time‟
                 THE
                 COMMERCIAL
                 CONTEXT:
                 LETTERS OF
                 COMFORT
                                 TORONTO           Plessey is Leigh‟s        No
                                 DOMINION BANK     parent company;           misrepresentation,
                                 V. LEIGH          had to approve            even though they
                                 INSTRUMENTS       letter of comfort;        didn‟t notify the
                                 LTD.              policy in place that      bank, because the
                                                   subsidiaries are          policy was in place
                                                   managed to meet
                                                   financial
                                                   obligations
THIRD PARTY
BENEFICIARIES
AND PRIVITY OF
CONTRACT
                 THE DOCTRINE
                 OF PRIVITY
                                 DUNLOP            Dunlop tries to sue       Only a party to a
                                 PNEUMATIC         Selfridge based on        contract can sue
                                 TYRE CO. V.       the agreement             on it (consideration
                                 SELFRIDGE &       between Dunlop            must be given for
                                 CO. LTD.          and Dew                   the promise)
                                 TWEEDLE V.                                  Groom is not a
                                 ATKINSON                                    party to the
                                                                             contract, so he
                                                                             can‟t enforce it
                                 SCRUTTONS         Bill of lading – did      Privity of contract;
                                 LTD. V. MIDLAND   limitation of liability   stevedores not a
                                 SILICONES LTD.    extend to                 party to the
                                                   stevedores?               contract, so they
                                                                             can‟t benefit from
                                                                             limitation of liability
                                                                             clause
                 EXCEPTIONS TO
                 THE DOCTRINE
                 OF PRIVITY
                                 NEW ZEALAND       Himalaya clause:          Carrier is agent for
                                 SHIPPING CO. V.   “we the shipper           the purpose of
A.M.               offer limited liability   communicating
SATTERHWAITE       to all parties who        unilateral offer to
& CO. LTD. (“THE   touch the goods”          stevedores, who
EURYMEDON”)                                  accept by
                                             performance
GREENWOOD          Two welders               INDEPENDENT
SHOPPING           working for               CONTRACTORS:
PLAZA LTD. V.      Canadian tire burnt       Welders were not
BEATTIE            it down; landlord         covered by the
                   sued the welders          insurance
LONDON DRUGS       Test: 1) clause           EMPLOYEES:
V. KUEHNE &        must, expressly or        Implies protection
NAGEL              impliedly, extend         to third parties, but
INTERNATIONAL      its benefits to the       doesn‟t overrule
LTD.               employees (telling        doctrine of privity
                   other side to get         explicitly
                   insurance)                Employer‟s
                   2) identity of            limitation of liability
                   interest:                 automatically
                   employees must            includes
                   be acting in              employees
                   interest of
                   employment and
                   performing
                   services in contract
                   between employer
                   and plaintiff
LAING              Christmas display     Same as above
PROPERTY           in mall catches fire;
CORP V. ALL        landlord is covered
SEASONS            by insurance,
DISPLAY INC.       which extends to
                   the employees
                   responsible for the
                   fire
            INTERPRETATION OF CONTRACTS

THE BASIC
RULES
                     FEDERAL          Congestion in port   Allocate loss to who
                     COMMERCE &                            they intended to
                     NAVIGATION                            allocate it to in the
                     CO. V.                                bargaining process
                     TRADAX                                (who signaled to one
                     EXPORT S.A.                           person that the other
                                                           needed insurance?)
                     SCOTT V.         Teenager burned      Majority: clear and
                     WAWANESA         down the house       unambiguous; joint
                     MUTUAL                                liability, family cannot
                     INSURANCE                             recover – court will not
                     CO.                                   give different meaning
                                                           to clear terms of a
                                                           contract
                                                           Minority: intention of
                                                           parties; several liability
THE PAROL
EVIDENCE
RULE
                     LAMPSON V.                            Where there is a
                     CITY OF                               written document
                     QUEBEC                                evidencing the
                                                           contract, extrinsic
                                                           evidence will not
                                                           usually override the
                                                           clear, plain and
                                                           unambiguous meaning
                                                           of the words of the
                                                           written document
                     ELI LILLY &      Potentially          Also supports strict
                     CO. V.           misleading           interpretation
                     NOVOPHARM        statement: because
                     LTD; ELI LILLY   of the parol
                     & CO. V.         evidence rule it is
                     APOTEX INC.      unnecessary to
                                      consider any
                                      extrinsic evidence
                                      at all when the
                                      document is clear
                                      and unambiguous
                                      on its face
                     BAUER V.         Creditor failed to  Wording of document
                                  BANK OF        perfect, thereby       in the guarantee
                                  MONTREAL       increasing debt        governed
                                                 owed by guarantor
                                                 - anything that a      - here, separate
                                                 creditor does to       wording into the
                                                 increase the risk on   guarantee by the
                                                 the guarantee of       creditor allowed the
                                                 the guarantor will     creditor to do this
                                                 release the
                                                 guarantor from
                                                 their obligations
MISREPRES-
ENTATIONS
AND
WARRANTIES
             REPRESENTATIONS,
             CONDITIONS &
             WARRANTIES
                                  HONGKONG       Ship broke down        Innominate terms: not
                                  FIR SHIPPING   (in contract, was to   the intention of the
                                  CO. V.         be seaworthy); is      parties, but the
                                  KAWASAKI       seaworthiness a        consequences of the
                                  KISEN KAISHA   condition or a         breach
                                  LTD.           warranty?              - here, courts awarded
                                                                        damages only
                                                                        (charterer still stuck
                                                                        with the ship)
                                  SALE OF
                                  GOODS ACT
                                  CONSUMER
                                  PROTECTION
                                  ACT
             MISREPRESENTATION:
             INNOCENT
                                  REDGRAVE V.    Solicitor selling      Innocent
                                  HURD           business and           misrepresentation,
                                                 house; claimed         leading to recission
                                                 made $300/year;
                                                 really only $200;
                                                 purchaser refused
                                                 to complete the
                                                 deal
             MISREPRESENTATION:
             FRAUDULENT
                                  DERRY V.                              Requirement of fraud:
                                  PEEK                                  representation made
                                                   knowingly or without
                                                   belief in its truth, or
                                                   recklessly, careless
                                                   whether it be true or
                                                   false
COLLATERAL
CONTRACTS
             HEILBUT,        Underwriters are      Statement of fact
             SYMONS &        willing to buy        (innocent
             CO. LTD. V.     unsold shares – is    misrepresentation);
             HELLER &        this a warranty       not a warranty
             PARTNERS        (must know it was     To show a warranty
             LTD.            good)?                (collateral contract)
                                                   there must be
                                                   intention to enter into
                                                   the contract, since
                                                   collateral contracts are
                                                   rare
                                                   A statement intended
                                                   to induce another
                                                   party into a contract
                                                   and does will be
                                                   considered a warranty
             BENTLEY         Purchase of a car     If seller is in a position
             (DICK)          with 20000 miles      to know or find out if
             PRODUCTIONS     on the replacement    statements are true
             LTD. V. SMITH   engine. Warranty?     then should ascertain
             MOTORS LTD.                           the truth of the
                                                   statement (have the
                                                   knowledge so it can
                                                   be deduced there‟s a
                                                   warranty)

             MURRAY V.   Buyer wants to get Warranty: show that
             SPERRY RAND at the manufacturer there was a side
             CORP.       Brochure was        contract that induced
                         highly promotional you into the contract,
                                             and were affirmations
                                             of future performance
                                             instead of just facts

                                                   Implied term that
                                                   goods will conform to
                                                   their description
             SHANKLIN        Manufacturer told     Statement by
             PIER V. DETEL   contractor to use a   manufacturer that
                      PRODUCTS        certain type of       paint was good for the
                                      paint; paint washes   job
                                      off; owner goes
                                      after manufacturer    Consideration is
                                      via side contract     owner entering into
                                                            the main contract
                                                            (thereby using the
                                                            paint)

                                                            Collateral contract can
                                                            be with a third party
                                                            (as with above)
                      FREISER REID    A completed           Express warranty is
                      V.              house. Warranty?      found here against the
                      DROUMTSEKAS                           construction company.

                                                            Warranty must be a
                                                            collateral undertaking
                                                            forming part of the
                                                            contract by agreement
                                                            of the parties, express
                                                            or implied, and must
                                                            be given during the
                                                            course of the dealing
                                                            which leads to the
                                                            bargain and should
                                                            then enter into the
                                                            bargain as part of it
WARRANTIES AND THE
DOCTRINE OF PRIVITY
                      MCMORRAN V. Bottle of                 Contract is invoked to
                      DOMINION     carbonated water-        find manufacturer
                      STORES LTD.  soda – exploded,         liable by vertical privity
                                   injuring eye             Latent defect
                      SIGURDSON V. Installation of          No negligence on the
                      HILLCREST    defective brake          part of the defendant –
                      SERVICE LTD. hose; no way to tell     couldn‟t tell it was
                                   that it was              defective
                                   defective
                                                            Defendant could
                                                            recover from supplier
                                                            for breach of implied
                                                            warranty or condition
                                                            from Sale of Goods
                                                            Act “goods reasonably
                                                            fit for purpose”
                     WINNIPEG                                Extension of tort
                     CONDOMINIUM                             liability to circumvent
                     CORP. NO. 36                            the problem created
                     V. BIRD                                 by doctrine of privity
                     CONSTRUCTION                            Extends beyond first
                     CO. LTD.                                purchaser
BOUNDARIES OF TORT
AND CONTRACT:
CONCURRENT
LIABILITY
                     BOW VALLEY      HOOL and BVI,           Majority: exclusionary
                     HUSKY           through Bermuda,        clause covered duty to
                     (BERMUDA)       have oil rig. SJSL      warn (you can contract
                     LTD. V. SANT    is the builder; RAY     out of tort liability)
                     JOHN            is the supplier. Fire   Minority: exclusionary
                     SHIPBUILDING    on the rig.             clause should be
                     LTD.            Exclusion clause        conveyed strictly; did
                                     between SJSL and        not include duty to
                                     Bermuda – tort          warn; Bermuda was
                                     liability?              contributorily negligent
                                                             (60%)

NEGLIGENT            Falls between
MISREPRESENTATION    innocent and
                     fraudulent
                     ESSO            200,000 gallons         If a man who
                     PETROLEUM       throughput – not        professes to have
                     V. MARDON       mentioned in the        special knowledge or
                                     contract                skill, makes a
                                                             representation by
                                                             virtue thereof to
                                                             another (advice,
                                                             information, opinion)
                                                             with the intention of
                                                             inducing him into a
                                                             contract, he is under a
                                                             duty to use reasonable
                                                             care to see that the
                                                             representation is
                                                             correct, and the advice
                                                             is reliable

                     V.K. MASON      Bank gave               No contract between
                     CONSTRUCTION    assurance to            bank and Mason
                     V. BANK OF      Mason for Courtot;      So, uses negligent
                     NOVA SCOTIA     bank took the           misrepresentation: 1)
                                   money via its           untrue statement 2)
                                   mortgage‟s              made negligently 3)
                                   consensual lien;        special relationship
                                   not enough left for     giving rise to a duty of
                                   Mason‟s                 care 4) reliance which
                                   construction lien       is foreseeable
                     KEITH         In reliance of bank     Negligent
                     PLUMBING &    letter, plaintiff did   misrepresentation
                     HEATING CO.   work for developers     here as well, despite
                     V. NEW PORT   that was not paid.      “without any
                     CITY CLUB                             responsibility” in the
                                                           letter
NEGLIGENT
MISREPRESENTATION
AND CONTRACTUAL
ALLOCATION OF RISK
                     J. NUNES      Assurance that          Clear allocation of risk
                     DIAMONDS      alarm would be          to the merchant in the
                     LTD. V.       good negligently        contract
                     DOMINION      given                   Where there is
                     ELECTRIC      Alarm system            allocation of loss via
                     PROTECTION    resulted in lower       contract, negligent
                     CO.           insurance; should       misrepresentation will
                                   have used savings       not be allowed (it is a
                                   to obtain better        tort)
                                   insurance
                     QUEEN V.      Employment              Statement is outside
                     COGNOS INC.   situation lured to      of the contract, so not
                                   Ottawa; one month       excluded by the
                                   clause in contract      contract term
                                   (board takes this)
                                   Can‟t sue for           So, possible to have
                                   breach of contract;     two concurrent
                                   what about              sources of liability
                                   statement of 2 year
                                   employment?
                     CENTRAL                               Where a given wrong
                     TRUST V.                              prima facie supports
                     RAFUSE                                an action in contract
                                                           and in tort, the party
                                                           may sue in either or
                                                           both, except where the
                                                           contract indicates that
                                                           the parties intended to
                                                           limit or negative the
                                                           right to sue in tort
                                B.G. CHECO                              SCC adopted the
                                INTL. LTD. V.                           above rule
                                BRITISH
                                COLUMBIA
                                HYDRO AND
                                POWER
                                AUTHORITY
                                HERCULES        Claim of                While they owed a
                                MANAGEMENT      negligence against      prima facie duty of
                                V. ERNST &      a firm of               care, it was, in the
                                YOUNG           accountants             circumstances,
                                                                        negated for policy
                                                                        reasons
TECHNIQUES
OF CONTROL
             CONTRACTS OF
             ADHESION AND
             INEQUALITY OF
             BARGAINING POWER
                                PARKER V.       NOTE: not a             Exculpatory clause
                                SOUTH           signed contract         will be incorporated
                                EASTERN         Checked bag and         into the contract only
                                RAILWAY         got a ticket that       if recipient either
                                                excluded liability on   knew that the
                                                the other side;         document contained
                                                claimed he didn‟t       or is likely to contain
                                                read it                 such a clause, or if
                                                                        reasonable notice of
                                                                        its existence is given

                                                                        If signed, it‟s assumed
                                                                        you accepted the
                                                                        terms
                                HEFFRON V.      Parked car, paid        could not rely on
                                IMPERIAL        rate, left keys in car exemption clause b/c
                                PARKING CO.     as told. Ticket said a fundamental breach
                                LTD.            “no liability for theft thus normal rules of
                                                or damage”              bailment apply
                                                                        Burden of proof: not
                                                                        sufficient to say don‟t
                                                                        know what happened.
                                                                        Have to show loss not
                                                                        the fault of the bailee,
                                                                        not due to negligence.

                                THORNTON V.     “All cars parked at     Contract was
                                  SHOE LANE          owner‟s risk”         completed when the
                                  PARKING LTD.       Injured n an          ticket was given;
                                                     accident 50% the      couldn‟t be altered by
                                                     fault of the          what was on it.
                                                     employees of the      Need a red hand
                                                     garage                pointing towards the
                                                                           exemption clause
            SIGNED CONTRACTS
            AND THE DOCTRINE OF
            FUNDAMENTAL
            BREACH
                                  L‟ESTRANGE                               If the party signed the
                                  V. GRAUCOB                               contract, it is assumed
                                  LTD.                                     they understood all the
                                                                           terms of the document
                                  PHOTOPRODUCTIONS   Negligent security    Rule of construction
                                  LTD. V.            guard set fire        approach: parties
                                  SECURICOR                                bargained for this
                                  TRANSPORT                                position
                                  LTD.                                     Here, they are
                                                                           charged less for
                                                                           security, so they
                                                                           should have bought
                                                                           insurance
                                  BEAUFORT           Refused payment,      Adopted the rule of
                                  REALTIES INC.      which a               law approach after the
                                  V. COMEDY          fundamental           above ruling
                                  ALUMINUM           breach, so the
                                  CO. LTD.           other side could      Doctrine of
                                                     assert a              fundamental breach
                                                     mechanics‟ lien       was accepted in
                                                     despite saying it     Canada
                                                     would not
                                  HUNTER             Hunter contract did   Rule of construction
                                  ENGINEERING        not exclude “all      approach adopted
                                  CO. V.             warranties”, so       here
                                  SYNCRUDE           liable                Not sure if look for
                                  CANADA LTD.         A-C contract did     unconscionability or
                                                     exclude all           leave it up to
                                                     warranties, so not    competition, but
                                                     liable                tendency to go this
                                                                           way
SIGNED
STANDARD
FORM
CONTRACTS
AND
INEQUALITY
OF
BARGAINING
POWER
             MCCUTCHEON Shipping calves;          Burden on the carrier
             V. DAVID   signed the contract       to show that he
             MACBRAYNE                            actually did
             LTD.                                 understand the
                                                  conditions (in a hurry –
                                                  good reason for not
                                                  reading the terms)
             TILDEN RENT- Accident while            In commercial
             A-CAR CO. V. ostensibly                context, L’Estrange
             CLENDENNING impaired; took             may be fine, but this
                          extra insurance           is different
                          said to cover             Party should draw
                          everything                these terms to the
                                                    attention of the other
                                                    party (red hand)
             978011         Commercial            L’Estrange applies;
             ONTARIO LTD.   context; signed       mentor trusted the
             V. CORNELL     document without      junior (no advisory
             ENGINEERING    reading it            responsibilities,
             CO. LTD        Only hits trust and   consider their
                            confidence            positions, past
                            requirement of        dealings, how they
                            reliance, so no       were brought together)
                            good
                   REMEDIES
DAMAGES

THE
COMPENSATION
PRINCIPLE
                 WERTHEIM V.                         The party
                 CHICOUTINI                          complaining
                 PULP CO.                            should, so far as
                                                     can be done by
                                                     money, be placed
                                                     in the same
                                                     position as he
                                                     would have been in
                                                     if the contract had
                                                     been performed
QUANTIFICATION
OF VALUE
                 PEEVYHOUSE V.    Leveling after     Cost of
                 GARLAND COAL     getting coal not   performance
                 & MINING CO.     done on farm as    exceeds value
                                  agreed
                                                     Difference in value,
                                                     where otherwise
                                                     would amount to
                                                     economic waste

                                                     Damages are to be
                                                     measured by the
                                                     cost of completing
                                                     performance,
                                                     unless that cost is
                                                     vastly
                                                     disproportionate to
                                                     the value to be
                                                     derived there from
                                                     (unjust enrichment)
                 GROVES V. JOHN                      Measure of
                 WUNDER CO.                          damages here was
                                                     the cost of
                                                     performance
                                                     (minority view
                                                     above)

                 RUXLEY           Swimming pool      Court will not
                 ELECTRONICS       was built too         award cost of
                 AND               shallow               reinstatement
                 CONSTRUCTION                            where loss
                 LTD. V. FORSYTH                         sustained does not
                                                         extend to the need
                                                         to reinstate

                                                         Loss of amenity:
                                                         contractor pays
                                                         reasonable sum for
                                                         the loss of depth
                                                         (midway between
                                                         cost of
                                                         performance and
                                                         diminished value)
                 VICTORY           Breached contract     Because supply
                 MOTORS LTD. V.    to buy car; car was   can meet demand,
                 BAYDA             in high demand;       plaintiff can sue for
                                   sold to another       selling one car,
                                   person                instead of two
                                                         When supply
                                                         cannot meet
                                                         demand, it is the
                                                         other way around
THE SCOPE OF A
DAMAGES
AWARD:
REASONABLE
CONTEMPLATION
                 HADLEY V.         Mill – carrier        Remoteness for
                 BAXENDALE         delayed in taking     damages
                                   shaft for repair
                                                        Loss of profits
                                                        must be fairly and
                                                        reasonably
                                                        contemplated by
                                                        the party
                                                        OR
                                                        Special
                                                        circumstances
                                                        must be
                                                        communicated
                 VICTORY           Delay in getting the Plaintiff only
                 LAUNDRY           boiler               receives damages
                 (WINDSOR) LTD.                         for loss if it
                 V. NEWMAN                              happens in the
              INDUSTRIES LTD.                         “usually course of
                                                      things”
              KOUFOS V. C.     Chartered vessel       Whether the loss is
              CZARNIKOW LTD. to carry sugar;          sufficiently likely to
              (“THE HERON II”) delayed; market        result from the
                               price fell             breach – here, yes

                                                      If there is a real
                                                      possibility, but only
                                                      happens in a
                                                      minority of cases,
                                                      rule 2 of Hadley
                                                      applies (must
                                                      demonstrate
                                                      special
                                                      circumstances)
THE
APPROPRIATE
MEASURE OF
DAMAGES
              ANGLIA            Film company got      Can claim for
              TELEVISION LTD.   production ready;     amount used up
              V. REED           leading man           before contract
                                backed out after      was signed as well
                                signing contract
                                                      Went for reliance
                                Sued for expenses     instead of
                                incurred (reliance)   expectation;
                                instead of loss of    expectation is too
                                profits               speculative here
                                (expectation): must
                                pick one
              BOWLAY            Trucker was to        Nominal damages
              LOGGING LTD. V.   ship logs;            only; won‟t
              DOMTAR LTD.       breached in that he   compensate the
                                didn‟t have enough    plaintiff for making
                                trucks                a bad bargain or
                                                      putting him in a
                                Trucker proved it     better place than if
                                was a bad bargain     the contract had
                                for logger – was      been performed
                                losing money
              HORNE V.          Shoes delivered to    Liable for ordinary
              MIDLAND           carrying, saying      profit on the
              RAILWAY           they must arrive at   contract, but not
              COMPANY           a certain time or     extraordinary
                                  would be rejected
                                                        Common carrier
                                                        did not take on this
                                                        burden, unless
                                                        specifically
                                                        informed of the
                                                        importance of the
                                                        date
                CORNWALL        Tender had to be        Special
                GRAVEL CO. LTD. delivered by a          circumstances
                V. PUROLATOR    specific deadline       were
                COURIER LTD.                            communicated;
                                                        Purolator is liable
                CANLIN V.         Swimming pool         Loss of profits is a
                THIOKOL FIBRES    covers                natural
                CANADA LTD.       disintegrated         consequence of
                                  despite being told    the breach (would
                                  material was sun-     be in parties‟
                                  proof                 contemplation)
LOST
ENJOYMENT AND
NON-ECONOMIC
INTERESTS
                JARVIS V.         Holiday that was      Compensated for
                SWAN‟S TOURS      not fun               his loss of
                LTD.                                    enjoyment
EMPLOYMENT
CONTRACTS AND
AGGRAVATED
DAMAGES
                BARDAL V.         Test to determine     Test: Character of
                GLOBE AND MAIL    length of notice      employment,
                LTD.                                    length of service,
                                                        age, available of
                                                        similar
                                                        employment,
                                                        experience,
                                                        training, and
                                                        qualifications
                VORVIS V.         Solicitor dismissed   Aggravated and
                INSURANCE         following             punitive damages
                CORP. OF          humiliation and       were denied
                BRITISH           harassment by
                COLUMBIA          senior                No actionable
                                                        wrong here;
                                                        termination was
                                                  permissible
           WALLACE V.        Left job because     Employees are
           UNITED GRAIN      told this one would  vulnerable group in
           GROWERS LTD.      last until           society
                             retirement; abruptly
                             dismissed            Majority:
                                                  aggravated
                                                  damages etc.:
                                                  would award 24
                                                  months salary in
                                                  lieu of notice

                                                  Minority: would
                                                  consider manner of
                                                  dismissal only as it
                                                  affects future
                                                  employment; rest
                                                  should be separate
                                                  cause of action
                                                  Would give same
                                                  as above and more
                                                  for mental distress
                                                  and loss of
                                                  reputation
PUNITIVE
DAMAGES
           WHITEN V. PILOT   House caught fire;   Jury awarded $1
           INSURANCE CO.     insurance            million in punitive
                             company rejected     damages beyond
                             claims for a long    insurance policy
                             time, battles in
                             court, etc.          Punitive damages:
                                                  malicious,
                                                  oppressed, and
                                                  high-handed
                                                  misconduct

                                                  - they are
                                                  exceptional; for
                                                  deterrence,
                                                  retribution, and
                                                  denunciation;
                                                  where conduct
                                                  would otherwise go
                                                  unpunished; must
                                                  consider all other
penalties; plaintiff
keeps this money
as a windfall

Appellate courts
can reduce awards
if they are
irrational, but here
the award stands

				
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