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CONTRACTS MITERM CAN THE NATURE OF CONTRACT - Must have intention to create legal relations: willingness to be bound (animus contrahendi) - Must have offer and acceptance: a meeting of the minds (consensus ad idem); have to be on exact same terms - Must have consideration: an exchange of value - the bargain element; must give something to get something INTENTION TO CREATE LEGAL RELATIONS - no K unless there is intention – intention to create legal relations - Reasonable Person Test: objective standard; what would the reasonable person think in the situation? - Burden of proof: P has to prove their case on a balance of probabilities (“it’s probably true”) Rose & Frank Co v JR Crompton & Bros (1923 England) Ratio: Generally assumed that parties in business relationships intend to be bound, unless stated otherwise Facts: - P was distributer for D; D stopped selling P goods; P sued for breech of K - clause in K said the agreement was not intended to be a formal legal agreement Issue: Is contractual intention presumed in commercial context? Yes Held: - No K; Bc in K law it is the intentions of the parties that matters; here they didn’t intend to be bound - each time there was a transaction bw the parties, there was a discrete K (implied Ks) - other possibility: unjust enrichment – bc the purchaser was enriched, the vendor was deprived Balfour v Balfour (1919 England) Ratio: No presumption of intention to create legal relations in family relationships Facts: Husband (D) promised to pay wife (P) £30/month; relationship soured and D stopped paying Issue: Did D have intention to create legal relations? No Held: - No K bc if they enforced this deal it would open floodgates of litigation - contrary to public policy: private matters bw spouses ought to stay away from courts Similar cases: - Merrit v Merrit (separated before K) adversarial parties, presume they intend legal relations - Anderson v Luoma (gay marriage) – Balfour rule applies to social context, not just trad. values TD Bank v Leigh Instruments (1999 OnCA) Ratio: In a commercial sense, comfort letters are not legally enforceable; no intention to create legal relation Facts: P gave D a loan bc of “comfort letters” from D’s umbrella company, Plessy. D went bankrupt; P sued D Issue: Are comfort letters legally binding Ks? No (use reasonable person test) Held: Plessy refused to give a direct guarantee; Only gave comfort letters (used to put reputation on the line) OFFER AND ACCEPTANCE OFFERS AND INVITATIONS TO TREAT - An Offer is the expression of willingness to be bound by the K on certain terms (Reasonable Person Test) - Presumptions: - an advertisement is not an offer (it’s an expression of a willingness to entertain an offer) - a statement of intention is not an offer (“I intend to offer widgets at $5) - a statement of inquiry is not an offer (“would you buy a widget for $5?) - a statement of a price quotation is not an offer (“we sell widgets for $5 per unit”) Pharmaceutical Society v Boots Cash Chemists (1953 England) Ratio: Display of item on the shelf is not an offer to sell, but rather an “invitation to treat”; offer is at the till Facts: 2 ppl got medicine from the shelf at a store; P argues the K was made when they took it from the shelf Issue: At what stage of a purchase in a self-serve store is there an acceptance of offer? At the cashier Held: if the K was created once it was put in the basket, the customer can’t change their mind & put it back

Carill v Carbolic Smoke Ball (1893 England) Ratio: An advertisements can constitute a unilateral K, which can be accepted by fulfilling the K’s conditions Facts: D claimed in ad that product would keep away the flu or would pay £100; P used it & got sick, wanted $ Issue: Was the advertisement an offer capable of acceptance? Yes: unilateral K; if ppl follow rules, K is made Held: - performance of conditions is sufficient acceptance w/o notification (eg “reward for finding lost dog”) - consideration was using the Smoke Ball as directed - problem with unilateral Ks: can be revoked at any time, even if someone is in the middle of performance - Reasons: (1)D acted in bad faith & (2)contemplated they may have liability; (3)detrimental reliance of P Detrimental Reliance: 3 parts: (1) enrichment to D; (2) deprivation to P; (3) no juristic reason for enrichment Goldthorpe v Logan (1943 OnCA) Ratio: An ad constitutes an offer that can be accepted on the terms it extended; (look to words & actions) Facts: P went for electrolysis; results were guaranteed to be permanent; they weren’t Issue: Did the ad constitute a valid offer for a K to be formed? Yes Judge Erred in Compensation: should have only given P cost of procedure, not damages; bc no det. reliance Diff bw this & Carbolic: Here it was possible for parties to get together; offer should’ve been made in person The Tendering Process - The need for commercial certainty and the integrity of the tendering process - Call for Tenders (bids): an invitation to treat; NOT an binding offer - Party Submitting Tender: entitled to revoke offer prior to acceptance - Party Calling for Tenders: entitled to accept or reject each or all tenders - Tenders:

- A tender is an offer to undertake a project on particular terms. - A city’s call for tender serves two purposes:

1. It constitutes an offer to enter into a special K, called Contract A, to hold a fair tendering process in exchange for the submission of an irrevocable bid.

2. Also constitutes an invitation to treat to receive offers to enter into a K, called K B, to build the item - A company’s tender also serves two purposes:

1. It constitutes acceptance of the city’s offer to enter into a fair and irrevocable tendering process under Contract A.

2. It also constitutes an offer to enter into a contract for the construction of the item under Contract B. - There will be many Contract As, but only one Contract B.

Bids & Auctions - Auctions: bidder may retract offer before it’s accepted; auctioneer may retract item before offer to buy is made - Fixed Bid: offer to buy at a fixed price; typically, bidder can only place 1 offer (& doesn’t know competing #s) - Referential Bid: an offer to purchase at a designated amount over the highest bid Harvela Investments v Royal Trust (1986 England) Ratio: Parties must abide by what’s implied by the offer (ie fixed bidding vs auction bid) Facts: - D held a fixed bid auction for shares in company (1 bid each; highest bid accepted); P gave highest bid - Sir Leonard gave referential bid ($2,100,000 or $101,000 above the highest offer); D accepted this bid Issue: Was the referential bid a valid offer (considering it was a fixed bid auction)? No (RP Test) Problem: why isn’t a referential bid allowed since the D is not bound to accept a bid? R v Ron Engineering & Construction (1981 SCC) Ratio: If accepted, a bid is irrevocable if filed in conformity with the terms & conditions of call for tenders Facts: - D submitted bid to P and upon being accepted, noticed they made a big calculation error - P gave K to another company and kept D’s $150,000 deposit

Issue: Is there a K formed during the tendering process? Yes (incl deposit, submission, withdrawal clause) Held: There are 2 Ks formed (KA & KB); KA: call for tenders; KB: the building K, when tenderer selects a bid MJB Enterprises v Defence Construction (1951 SCC) Ratio: There is an obligation to award a K to a compliant bid (even in cases where there is a privilege clause) Facts: - D held a fixed bid (call for tenders) & included a “privilege clause” (don’t have to accept lowest offer) - Sorochan submitted a tender not in compliance with fixed bid, but D accepted it anyways Issue: Does the Privilege Clause allow the D to accept non-compliant bids? No Held: - An implied term in K is to accept only valid and compliant terms; Privilege clause doesn’t apply to this - On a balance of probabilities, P probably would have gotten K, so P gets profit they would have earned Officious Bystander Test: look for business efficacy; are there implied terms in the K; K nonsensical if missing COMMUNICATION OF OFFER - Offer has to be explicit; if no communication of offer & acceptance, it’s ineffective (bc RP wouldn’t see K) Blair v Western Mutual Benefit (1972 BCCA) Ratio: - One making an offer must intend it & communicate it to the intended party for acceptance to be okay - One accepting an offer must (1) do the stipulated act & (2) for the purpose of accepting the offer Facts: P says K was made when D discussed at a meeting that P would get approx 2yrs pay upon retirement Issue: Do the minutes of the meeting count as an offer capable of acceptance? No; D didn’t express as an offer Held: - no evidence that P was motivated to retire bc of her desire to accept the offer Williams v Carwardine (1833 England) (better decision than Blair; motivation is irrelevant) Ratio: Motivation is irrelevant if offeree knowingly performs stipulated act Facts: P gave info leading to arrest (didn’t do it for the reward money); P claimed reward from D, but D refused Issue: Must P be motivated by the desire to perform the act of acceptance, or is knowledge of it good enough? Held: - P knew about the reward; So although P didn’t do the act to get the reward, P is still entitled to it R v Clarke (1927) (Austrialia) Ratio: Offeree need not be motivated by desire to accept offer, BUT they cannot accept an offer in ignorance Facts: P gave info to police, but didn’t know of attached reward (unlike Williams case); P wanted reward Issue: Is there a K if the offeree does not know of the offer at the time of the act? No - offer has to be in mind Held: - there was no complete performance of acceptance (P didn’t remember the offer at the time he acted) ACCEPTANCE - offer and acceptance are determined objectively (not subjective intention); based on RP test & circumstances - Consensus Ad Idem: must be a response to an offer (no K if identical offers exchanged w/o connection) - acceptance must be absolute & unconditional assent to offer (counter offer voids original offer) - Occurs when an offeree agrees to enter into the contract proposed by the offeror. - Gen, must be communicated to offeror; Must be unequivocal & must correspond precisely with terms of offer - If offeree changes the terms, it does not create an acceptance but a counter-offer. COUNTER-OFFER Livingstone v Evans (1925 ABSC) Ratio: If offeror, after receiving a counter-offer, implies that the original offer is still valid, the K is binding Facts: D offers to sell land; P counter-offers; D says he “cannot reduce price”; P accepts 1st offer; D says no Issue: Was “cannot reduce price” a renewal of the original offer? Yes; it revived original offer Held: Usually, a counter-offer is the rejection of an old offer and a creation of a new offer

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- BATTLE OF THE FORMS - use of standard form Ks make business more efficient - if an acceptance is on diff terms than the offer, then it constitutes a counter offer - If BOF is noticed prior to execution no K bc no consensus ad idem (no det rel); courts want to find K - If BOF is not notices and the K is executed courts tend to try to reconcile 2 conflicting Ks (there is det rel) - Last Shot analysis: when 2 standard form Ks conflict; the terms of the final K hold Butler Machine Tool v Ex-Cell-O Corp (1979 England) Ratio: In a battle of forms, generally, the last shot wins; use objective look at the Ks as a whole to decide Facts: - P to sell D machine subject to an escalation clause (1st K); D has P sign their own K instead w no clause - P signs D’s K (w/o escalation clause) and sends it back to D; P later wants to sell it for higher amount Issue: Is there a K? If so, is it incl the clause or not? Yes, w/o clause; P signed D’s K, they were on same page Held: 3 approaches to reconciling: 1) last shot wins; 2) first shot wins; 3) reconcile the shots (court chose this) Tekdata Interconnections Ltd v Amphenol Ltd (2009 England) Ratio: In a battle of forms, generally, the last shot wins (RP Test) Facts: - P sent purchase order to D saying: 1) needed arrival date; 2) certain quality; 3) terms are above all else - D provided acknowledgment doc w/ clause that covered limitations on liability (doesn’t cover quality) Issue: (1) When was the K created? (When P sent PO or when D sent doc?) Yes, on the D’s terms (RP test) Held: - K created by P’s acceptance of D’s terms; focuses on certainty of terms and predictability of results --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ACCEPTANCE BY PERFORMANCE Acceptance of Incorporated Terms - terms cannot be added after K has been formed, but they may be incorporated by reference - terms may exist at outset, but not discoverable until later (eg: concert ticket, software, etc) - existence of terms must be sufficiently disclosed at the outset - can get out of the K if the undisclosed terms are deemed to be unusual or unreasonable ProCD v Matthre Zeidenberg (1996 USA) Ratio: You must have all the terms of the K at the beginning, but they don’t need to be specified Facts: D bought CD and sold contents (terms listed “inside the box”); P said D agreed to terms by clicking Issue: Are shrinkwrap licenses enforceable? Yes; terms accepted through conduct Held: - impractical to state all terms on package; impossible to externally state terms in no packaging - product is returnable if terms unsatisfactory once discovered - 2 Ks: (1) bw user and store (purchasing the software); (2) bw user and manufacturer (agreeing to terms) Unilateral & Bilateral Contracts -With acceptance, need to distinguish between two situations:

- (1) Acceptance by promise (bilateral contract) & (2) Acceptance by performance (unilateral contract) - Unilateral Ks: acceptance is through “complete” performance by the other side; only one party has obligation

- Occurs when an act is exchanged for a promise (offeree accepts by actually performing his part of agr) - The unilateral act/perf must be done w the intention of accepting the offer - Two things:

1. No contract exists unless and until the offeree fully performs; and 2. If the offeree performs & the K is created, the offeror is the only one who has an outstanding obl

- Bilateral Ks: offer and acceptance through exchange of promises (consensus ad idem) - The offer consists of the offeror’s promise to do something; the acceptance consists of the offeree’s

promise to do something; So, when the K comes into existence, both parties have promises to fulfill - Courts gen prefer bilateral Ks bc they provide more protection:

- The offeree knows that if it performs, it will be entitled to the offeror’s performance & vice versa

- BUT, a unilateral K might operate unfairly ex: acceptance of a uni K isn’t effective until the stipulated act is completed & an offeror is generally free to revoke an offer any time before acceptance

Dawson v Helicopter Exploration Co (1955 SCC) Ratio: If in doubt, presume bilateral K; protects parties at the outset to make sure no one can just walk away Facts: - P would take D up to area to explore; if land is valuable, P gets 10% stake, conditional on helicopter - D told P they couldn’t get a helicopter so K’s off; D went up there anyways w/o P; P sued: breach of K Issue: Is the K formed a unilateral or bilateral K? Bilateral K; P gets 10% stake Held: - if unilateral: D says if P takes us up, he gets 10% stake; since P never took D up, there is no K - if bilateral: D meant if you say yes now, the K is sealed; P ready to take D up; D cancels = breach of K - the party in breach of K cannot end K themselves (the P can end K with damages or continue with K) - P didn’t respond when D put off the K, so P didn’t end the K --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ACCEPTANCE BY SILENCE OR CONDUCT Felthouse v Bindley (1862 England) Ratio: A K cannot be accepted through silence or inaction; acceptance must be communicated directly Facts: - P agrees to buy N’s horse for 30; confusion on price, so P sent N a letter with compromised price - letter said if he didn’t hear back, he will assume N accepted - N held auction and auctioneer (D) mistakenly sold the horse; P sued D Issue: Did N legally accept P’s offer? Was the horse at the time of auction already bound to P? No Held: Even if both parties thought there was a K, you still can’t accept a K on silence or inaction (RP Test) Saint John Tug Boat v Irving Oil Refinery (1964 SCC) Ratio: If, by your actions, you convey acceptance, even if you don’t say anything, there is still a K (RP Test) Facts: - P’s K w/ D for standby time for boat service expired; P wrote to D saying they wanted to reinstate K - D didn’t respond, but continued to use the service; Invoices built up and D refused to pay Issue: Can silent agreement be construed as acceptance (if the party is performing actions of K)? Yes (RP Test) Held: D must have known the tugs were still on standby for his use and the RP would expect payment COMMUNICATION OF ACCEPTANCE - requirement of communicated acceptance protects the offeror (against mischief of having unknown of Ks) - the obligations incurred prior to communication of acceptance - offeror can to stipulate any mode of acceptance (courts take a more flexible approach if mode is ambiguous) - If not stipulated mode of acceptance, any reasonable form will be allowed - only offeror can waive the requirement for communication of acceptance (waiver can be express or implied) WAIVER OF COMMUNICATION REQUIREMENT: UNILATERAL CONTRACTS Carlill v Carbolic Smoke Ball

- A promise to do something if a person performs a requested act or course of conduct may be an “offer.” - A party can imply that notification of acceptance of the offer is not required and knowledge of this

acceptance can be delivered with notice of performance of the contract - Consideration is defined as:

o Any act of the P from which the D derives a benefit or advantage, or any labour, detriment, or inconvenience sustained by the P, provided such act is performed or such inconvenience suffered by the P, with the consent, either express or implied, of the D

MODE OF COMMUNICATION Eliason v Henshaw (1819 USA) Ratio: An offeree must follow the terms of the offeror for an acceptance to be binding Facts: - E (buyer) writes to H (seller) saying they’re willing to buy his flour; E wants response sent by wagon - H sends acceptance by regular mail & to wrong location; P gets offer and refuses to pay (H is too late) Issue: Must the offeree communicate acceptance precisely as directed by offeror? Yes (with flexibility)

Held: - precise mode may not be necessary, but timeliness of acceptance was implied by “wagon” Carmichael v Bank of Montreal (1972 ManQB) Ratio: If offeror sets out a mode of acceptance, they have an obligation not to reasonably frustrate that Facts: - D gives P counteroffer on sale of a house; D says acceptance must be in by 6 the next day & in writing - P tried to accept offer, but D wasn’t at home or in office; when P got message at 6:15, he rejected it Issue: Must offeree communicate precisely as directed by the offeror? Not always (you have to be flexible) Held: P’s attempts to accept (verbal and written) before 6 were sufficient for acceptance (courts were flexible) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- INSTANTANEOUS COMMUNICATION (eg: in person, phone call, email, fax, telex, etc) Brinkibon v Stahag Stahl (1983 England HL) Ratio: With instantaneous communication, K is formed when and where acceptance is received Facts: D (in Vienna) telexed P (in London) a counteroffer; P telexed back accepting; K broke down Issue: When & in what jurisdiction does K formation occur? In Vienna, when/where acceptance is received Held: - Rationale for rule: accepting party is better able to determine if telex fails (offeree can phone to confirm) - offeror must reasonably check messages/monitor machines (K created when RP would get around to it) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- POSTAL RULE - The Postal Rule: acceptance is communicated & K is created at the time/place it’s is put in mail - Rule still applies when the acceptance is mailed to an incorrect address provided by the offeror - Rule wont apply when it would lead to manifest inconvenience or absurdity (eg: gets lost bc of offeree’s fault) - PR applies except when: (1) material in Q is notoriously volatile; (2) PR is expressly excluded in the offer Household Fire & Carriage Accident Insurance v Grant (1879 England) Ratio: K created where and when acceptance is sent, regardless of receipt (Offeror can specify otherwise) Facts: D offered to buy shares from P; P accepted by post; D never got letter; P sued bc D never paid Issue: When are where does posted acceptance become effective? The moment you get it in the mail Held: - Policy consideration: desire to let offeree have certainty in existence of K (so they can act on K) - Exception to rule: If offeror stipulates required acceptance in the offer (may also be implied) Holwell Securities v Hughes (1974 England) Ratio: Postal Rule doesn’t apply where offer expressly states that the acceptance must reach the offeror Facts: P sent acceptance to D for house; it never arrived; D said no K bc must be exercised by notice in writing Issue: What is the scope of the postal rule? When is it inapplicable? See ratio Held: Postal rule is applicable only if reasonable in the situation (not the case here) TERMINATION OF OFFER 5 ways: revocation of offer, rejection/counter-offer, lapse of time, use of contemplated termination clause, death - generally, an offer may be withdrawn at any time before it is accepted - counter-offeree cannot unilaterally revive offer, but offeror may restate original offer (eg: Livingstone case) - Firm Offers: an offer that remains open for a set period of time; may be revoked any time before acceptance - Options: offeree pays a certain amount & has “bought” the option to accept K until a certain date REVOCATION Byrne v Van Tienhoven (1880 England) Ratio: Revocation is only effective where and when the offeree receives notice (doesn’t follow postal rule) Facts: P accepted D’s offer by mail; while in post, D sent P revocation letter; P said he already accepted K Issue: Does the postal rule apply to revocation? No, postal rule only applies to acceptances; K still exists

Dickinson v Dodds (1876 England) (Revocation of firm offer) Ratio: A firm offer is revoked if the offeree is reliably informed (by anyone reliable) of a sale to a 3rd party Facts: - D offers to sell P his house & gives him until Monday to decide; D sells to 3rd party before Monday - P is informed of the sale be a 3rd party and responds to original offer before Monday; D says too late Issue: (1) Is offeror bound by “firm offer”? (2) Is knowledge of sale to a 3rd party revocation? (1) No & (2) Yes Held: D’s offer was withdrawn when P learned of sale; there was no meeting of minds when P accepted so no K --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- REVOCATION OF UNILATERAL OFFER - offer revocable by same means of communication as offer & may be revoked after a lapse of reasonable time Errington v Errington & Woods (1952 England) (Revocation of unilateral offer) Ratio: In a unilateral K, once the performance of K has begun, there’s an implied promise not to revoke K Facts: - father buys house for son (P) (pays the down payment) & says P will get title when P pays off mortgage - Dad dies & widow (D) wants to evict P and revoke offer; P regularly paid mortgage, but much remains Issue: Is unilateral offer revocable after performance of a K begins? No, must give P opportunity to finish act Held: - P under no obligation to perform act (no liability if P stops paying), but no title until full performance - If P fails to pay & breaches unilateral K, D can get all paid mortgage money bc of unjust enrichment Note: - courts don’t take orthodox view that bc no complete performance, there was no acceptance & no K - there are really 2 Ks here: A) exists after final payment; B) begins as soon as P starts making payments --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- LAPSE OF TIME - offer may expressly or impliedly state duration of offer; offeror can stipulate unreasonable duration - if no limit specified, determination of “reasonable time” is based on circumstances of the subject matter - ie: perishable goods, volatile market, other interested parties, trade practice (if any), parties’ negotiation Barrick v Clark (1951 SCC) Ratio: The reasonable time to accept an offer is determined by conduct of parties & circumstances Facts: - P’s wife asks if D’s counter-offer can be held open for 10 days; D doesn’t respond to letter - D sells land; P responds after 20 days and accepts counter-offer; P sues for specific performance Issue: When/why will offer lapse if no duration is stipulated? After a ‘reasonable time’ to accept has passed Held: - factors in favour of P: non-volatility of land, no possession until March, land was on market for a while - factors in favour of D: 3rd parties were interested, party’s communication indicates urgency --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- DEATH (there is uncertainty around scope of rule) - death revokes an offer if the K pertains to the deceased’s personal characteristics (eg: actor dies; K for movie) - the estate can carry on a K if it’s simply buying land or items - revocation effective only when communicated by estate; offeree may accept prior to knowledge of death CERTAINTY OF TERMS - Orthodox Rule: No K unless terms sufficiently clear; courts will not create terms - Practical Approach: Courts try to find (if not create) a K that has already been concluded - Recurring Themes: detrimental reliance, bad faith, reasonable expectations of concluded K VAGUENESS - courts rarely refuse enforcement due to vague terms; want to find K (esp if there has been det. reliance) - words always have to be given meaning through context - If hopelessly vague/ambiguous, term can be severed if what’s left behind makes sense & looks like a K R v CAE (1986 FedCA) Ratio: Vagueness is avoided by definition taken from circumstances; courts try to find K in vague terms Facts: - P buys facility from gov’t (D); D says they’ll use “best efforts” to provide a certain amount of hours

- D loses money bc D didn’t provide enough hours; P sues; D said no K bc of uncertainty of terms Issue: Was there intention to create legal relations? Was the K void for uncertainty (“best efforts”)? K exists Held: - court felt, under the circumstances, that “best efforts” means a higher obligation than reasonable efforts Nicolene v Simmons (1953 England) Ratio: Vague/ambiguous terms can be severed as long as a useable K remains & no new negotiations arise Facts: D accepts K on “usual conditions”; D says no K bc phrase has no meaning (no prior Ks / industry norms) Mischief: if we allowed such circumstances, then parties can put in nonsensical terms into Ks to escape liability --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- MISSING TERMS (following 3 cases = The Trilogy) - No K unless certainty of terms; courts cannot create terms within the K - Options: (1) court can imply terms in circumstances; (2) Mechanism (3rd party/arbitrator) can supply the terms - Courts try to give proper legal effect to any clause that the parties understood & intended to have legal effect - A K may fail to specify matters such as price/quality, but may lay down criteria for determining those matters Hillas Ltd v Arcos Ltd (1932 HL) Ratio: Missing terms may be implied by circumstances (especially in cases of sever det. reliance & bad faith) Facts: - D offered P a 2 part K: (1) P pays price in 1930 on “fair specifications” (‘FS’); (2) P gets 5%off in 1931 - D sold 1931 stock to 3rd party; D said no K bc the option had no clause for ‘FS’ (agreement to agree) Issue: Was the option provision a binding K or merely an agreement to agree? HOL said it was a K (det rel) Held: - 1931 option was part of D’s consideration; so 1931 clause irrevocable (Ks are connected) - Terms of K construed from circumstances; court implied K terms using same terms as 1930 K - HL found K bc: 1.Det Rel: P did 1930 K bc of 1931 K; 2.Bad Faith: D breached when got better deal --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- AGREEMENT TO AGREE - Orthodox Rule: No K if agreement to agree (no consensus ad idem bc further negotiation is required) - Exceptions: 1) Parties can say they’ll agree to details later and if not, they’ll use a mechanism (eg: arbitration) 2) May be a K if parties are silent on terms; taken to accept objective reasonable price May and Butcher Ltd v R (1934 HL) Ratio: An agreement to agree is not enforceable Facts: - P has K with D to buy excess tents; price & delivery will be agreed from time to time; P pays deposit - Disputes are to be settled via arbitration; K worked before, but new management of D says no K Held: - we have no idea as to the specifics of future dealings; P alleges gaps can be filled in with: 1) Arbitrator: but without certainty of terms, there’s no K, & arbitration cannot create terms 2) Sale of Goods Act: only applies to fill gaps for sale of goods in a K, doesn’t create the K Foley v Classique Coaches Ltd (1934 England) Ratio: If parties show intention to be bound, an agreement to agree may be enforceable (esp with arb. clause) Facts: - Sale of land deal where D was obligated to purchase gas from the P for his coaches as part of the deal - K said they would agree to gas price “from time to time” & if dispute, then arbitration clause - D follows deal for a whole, but can get gas cheaper from 3rd party so he stops buying P’s gas Issue: Is there a binding K w/o a fixed price? Yes bc of the arbitration clause (implied price should be reas.) Held: - Parties showed intention to be bound (followed K for 3yrs) - Court interprets Butcher flexibly, so that agreement to agree isn’t necessarily fatal Reconciling The Trilogy - courts often depend on soft underlying factors when dealing with agreements to agree (det rel & bad faith) -Detrimental Reliance - Hillas: court finds a K bc the P has detrimentally relied on the fact that there is one - May & Butcher: no det rel bc no overarching K; K was made one day & didn’t impact next K - Foley: P had det rel bc he wouldn’t have sold the land at that price without the gas assurance

- Bad Faith - Hillas: D realized it was a bad bargain so they tried to back out (so the courts found a K) - May & Butcher: both parties in good faith (D didn’t want to be bound by unknown specification) - Foley: D acted in bad faith by wanting to keep good part of K (land) & getting rid of bad part (gas) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- AGREEMENTS TO NEGOTIATE (GOOD FAITH NEGOTIATIONS) - Can’t give effect to an agreement to negotiate (AtN) bc we don’t know what the terms would look like - BUT AtN can impose an obligation (in certain circumstances) to negotiate in good faith (but rare) - Damages are focused on the possibility of reaching an agreement (if you lost a chance at K, not the K itself) Empress Towers v Bank of Nova Scotia (1991 BCCA) Ratio: The courts will impose a duty of good faith negotiations if the circumstances call for it Facts: -D leases P space; lease allows 2 5yr renewals subject to rent agreed upon under prevailing market forces - K says that if no agreement, either party can end K; 1st lease renewed; D attempts to renew 2nd term - P doesn’t respond to D’s offer until day before lease expires; P says will accept offer + $15000 on top Issue: Must parties negotiate in good faith? Under the circumstances, Yes Held: - if P&D agree to agree on price & there’s an objective benchmark available in K, good faith is necessary - implied good faith terms arise under the officious bystander test & business efficacy test - obligation reflects P’s bad faith (P acted vindictively) & D’s det rel (entered prior K on value of option) APPLICATION: Empress is rarely used to impose good faith obligations (too hard to determine damages) Mannpar Enterprises v Canada (1999 BCCA) Ratio: There is no obligation to negotiate in good faith (bc you can’t quantify damages) Facts: - K let P remove + sell gravel on Indian Reserve for 5yrs w/ right to renewal, subj to reneg of royalty rate - P issued notice to renew K, but neither gov’t (D) nor band wanted to renew Issue: Does the D have an implied obligation to negotiate in good faith? No Held: - No clear objective value for parties to use as a marker, just ‘subj to reneg’ (Empress had ‘market rate’) - lack of arbitration clause suggests the D wanted some leeway to get out of it if they wanted - D also had duty to the interest of the Indian Band involved - Officious Bystander Test: parties would have intended this course of action to be an option - Court will only imply a term if both parties intend it to apply (not just bc it’s more reasonable or better) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ANTICIPATION OF FORMALIZATION - There is only an immediate K if (a) the parties so intended & (b) if all existing terms are sufficiently certain - Agreements “subject to formalization” (STF) might be 1 of 3 things: 1) we have a K (STF means making it look nice (ie hire a lawyer to draft it)) 2) we have all the required elements, but still haven’t decided to commit (lacking intent) 3) we have not gotten all the elements yet (further negotiation required for additional details) - ‘STF’ cases are decided case-by-case by factors such as: A) parties’ reasonable understanding as to whether they had an agreement, and B) the language used in preliminary agreements Bawitko Investments v Kernels Popcorn (1991 OnCA) Ratio: An oral agreement w no intention to create a formal written K is not enforceable (lack of certainty) Facts: - P wants to set up franchise & gets info pkg incl standard franchise agreement, which is long & complex - P & D discuss & agree upon some terms diff than in SFA; D: “you gotta deal”; still had terms to haggle - when they later meet to negotiate details, K falls apart; P says D must continue & act in good faith Issue: Is an enforceable K premised upon a future formal document? No K (no consensus ad idem) Held: - oral agreement only related to certain terms; there were still essential terms to be agreed upon - decision turns on parties’ intentions; is written doc intended to formalize or create an agreement? - both parties indicated further negotiations were required (eg: P hadn’t arranged a mall lease yet) - if you do work on speculation (no formalized K), you assume the risk of disappointment

CONSIDERATION AND RELIANCE NATURE OF CONSIDERATION - Promises supported by consideration are enforceable (both sides give value); doesn’t matter if value is equal - Can either be positive or negative - positive: right, interest, benefit, or profit provided by promisor - negative: forbearance/restraint, detriment, loss, or responsibility by promisor - consideration can be from promisor to a 3rd party (eg: pay for the car and title goes to the brother) - The Peppercorn Theory: consideration needs to be sufficient (anything of value), it need not be adequate - peppercorn style consideration is called nominal consideration - Non-economic value may constitute consideration (eg: giving up freedom to do something) - moral promises (eg: promises to give love and affection) are not good consideration & not enforceable - a promise not to remarry is not good consideration - It is sufficient to give up something that has no value (‘I promise to quit smoking’; even if you don’t smoke) - A spouse ‘behaving’ is good consideration - There’s no consideration if a party has not provided a practical benefit or suffered a detriment Thomas v Thomas (1842 England) Ratio: Motivation is irrelevant and isn’t the same as consideration; cons. needs to be sufficient, not adequate Facts: - H wanted to leave house to W, but died before it went in will; executors (P) signed K with W - K said W could live in house if she paid them £1/yr for ground rent; 1 P died, other wanted to evict W Issue: Is respecting the wishes of her dead husband (motive) sufficient consideration? No, but the rent is Held: - No K bc of dead husband’s wishes, but K is made with estate honouring his wishes (£1/yr for rent) - Nominal consideration is good consideration (peppercorn theory) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- PAST CONSIDERATION Mutuality of Consideration - You need mutuality of consideration; mere concurrent exchange of consideration insufficient consideration - One’s consideration must be exchanged for the other’s consideration Executory Consideration: a promise to act in the future; In a bilateral K = parties; In a Unilateral K = offeror Executed Consideration: an act performed in exchange for a promise; elements of exchange share mutuality Past Consideration: an act performed prior to issuance of a promise; insufficient consideration (no mutuality) - eg: you walk to Calgary, McInnes is impressed and says he promises to pay you $50. No K bc past cons. Eastwood v Kenyon (1840 England) Ratio: There is no sufficient consideration in past consideration or in moral obligation Facts: - P is guardian of Sarah & borrowed $ to pay for her school; she promised to pay him back + 1yr interest - S married D, who also promised to repay P; D failed to make any payments Issue: Can a subsequent promise revive earlier obligation? Is moral obl. or past cons. sufficient cons.? NO Held: - P’s consideration is not ‘new consideration’; D didn’t get anything new in exchange for the promise - P’s incurred expense was long before D’s promise (no mutuality) - A voluntary promise is not sufficient consideration Lampleigh v Braithwait (1615 England) Ratio: Promise coupled with a prior request constitutes good consideration Facts: D murdered man & asked P to seek pardon from King; After, D promised to pay P £100; D never paid Issue: Can a promise to pay after a request has been fulfilled be binding? Yes (or else unjust enrichment) Held: - D’s request for services imploied promise of repayment (bc of nature of request) - Rule may not apply if you think you’re getting it for free (bc you’ve always gotten it free in the past) Past Cons OK When: (1) the promisee was clearly asked to perform the act, (2) the promisee performed the act, (3) there’s reasonable expectation of payment, (4) if promise was given before act, K would have been good. --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

FOREBEARANCE TO SUE - Most common form: when P could sue, but promises not to (eg: you owe me $100, so pay me it & I won’t sue) - If the potential claim is valid, this is good consideration (eg: D going to go bankrupt unless pays P less) - If the potential claim is invalid, it’s not good consideration (doubtful claims are still good consideration) - Claims wrongly believed to be valid are still good consideration BUT: 1) There must be a reasonable claim (one made on reasonable grounds) 2) A must honestly believe that his claim had at any rate a fair chance of success 3) A must not conceal from B any facts, which, if known to B, would enable him to resist the claim 4) A must show that he seriously intended to enforce the claim - Public Policy Consideration: it lightens judicial burden & facilitates commercial progress - P gets certainty of some $$ instead of maybe nothing; D gets certainty of small cost vs possible big cost B (DC) v Arkin (1996 ManQB) Ratio: Forbearance to sue is valid if it’s a legitimate, good faith, honest claim Facts: - P’s son steals from Zellers (D); goods returned undamaged; D forbears right to sue if P pays $225; - P pays in fear of lawsuit, not knowing that she was not liable for tort of her child; P sues for the $ back Issue: Was forbearance to sue valid consideration in this case? No, D’s lawyers should have known better Held: - D had no reason to believe the claim was valid, and therefore had no intention of proceeding w the claim - Unjust Enrichment bc D had no juristic reason to get the money (no right to sue) - Parents are only liable for their children if they are found negligent --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- PRE-EXISTING LEGAL OBLIGATION - if there’s an obligation to do something, can you reiterate that promise as fresh cons. for a promise to pay $$? - Depends on the circumstances; policy consideration is avoiding exploitation PRE-EXISTING DUTY OWED TO PROMISOR - Reiteration of the same original offer is not good cons.; concern over abuse of power, econ. duress & bad faith - May be diff if longer term Ks and situations/circs change (practical benefit w no bad faith/economic duress) Gilbert Steel v University Construction (1976 OnCA) Ratio: A prior duty owed to the promisor is not legally sufficient consideration Facts: - D buys steel from P; P’s price rises and D tells P if they want next shipment cost has to go up; P agrees - In middle delivery, P’s price rises again; P alleges a new agreement was reached; D says no fresh cons. Issue: Can pre-existing contractual obligations serve as fresh consideration? No, D’s got nothing new Held: There was an oral agreement to raise price, but this was a variation on the original K (no fresh cons.) Problem w Gilbert: - Rule is too harsh; needs to be balance for when markets legitimately change - Alternative is to recognize practical benefit of actual performance over opportunity to sue - Ways around the rule in Gilbert Steel:

1. Use the process of novation to discharge their initial K and enter into a new K that includes a higher price • To abandon the orig K. As long as both parties agree to end the old contract and create a new contract.

2. Can agree that something new is to be done in exchange for the extra price (deliver more steel for same $) 3. D’s promise in Gilbert would’ve been binding, despite the lack of any new C from P, if made under seal 4. Simply ignore the rule 5. Just change the old rule & adopt a rule that says there is fresh C and to the extent that we’re worried about

ED, just go after those cases. Then don’t have to throw out good cases. Williams v Roffey Bros & Nicholls Ltd (1990 England) Ratio: Prior duty to promisor (P) can be sufficient consideration if P gets practical benefit from agreement Facts: - D has K to renovate 27 flats; Hires P as subcontractor; P gets $ difficulties bc agreed upon price too low - if work not done on time, D in trouble so D pays P more $ for each flat done; D stopped paying; P sued Issue: Is there sufficient consideration for the increased amount for in time completion? Yes, there’s fresh cons

Held: - there was no economic duress or fraud (was all good faith); both parties benefitted from new agreement - consideration may consist of actual payment instead of legal right to sue for payment - But there was ev that they needed an alteration in payment Note: This is not Canadian law yet – but can still argue it on an exam Greater Fredericton Airport v Nav Canada (2008 NBCA) Ratio: Variation of existing K is enforceable, without consideration, if no economic duress (bad judgment) Facts: - D handles navigation at all airports incl expenditures; P to extend runway, D says new system cheaper - D says P needs to pay; P under pressure to finish so agrees, but refuses to pay when project’s done Issue: Was there consideration? Is cons. required to enforce a contractual variation? No, D not liable to pay Held: - court implements ‘incremental change’ & allows variations to be enforced w/o cons., if no econ duress - Court said D wasn’t liable bc D was under economic duress Problem: - Huge change in consideration policy; Williams at least required practical benefit - This is a bad judgment; do not use as guiding principle on exam Part Payment of a Pre-Existing Debt (Promises to Accept Less) - past payment of a pre-existing debt isn’t fresh cons. for promise to accept less (regardless of practical benefit) Foakes v Beer (1884 England) Ratio: A promise to get lesser sum in satisfaction of a larger debt is only valid if accompanied by fresh cons. Facts: - F owes D £2000; Both agree that F will pay initial £500 sum & £150 increments until all paid off - The offer included a clause that D couldn’t collect the interest & D agreed; D still sues for interest Issue: Can D be held to her promise to accept a lesser sum in discharge of a larger debt? No, interest due Held: - it would be desirable to hold D to her promise bc parties entered in good faith, but can’t bc of precedent - Payment of lump sum & payments is a practical cons., but offers nothing that D isn’t already entitled to Re Selectmove Ltd (1995 England) (affirms Foakes) Ratio: Payment of a lesser sum cannot serve as satisfaction for a larger amount, unless fresh consideration Facts: - S fails to pay taxes to gov’t; S & gov’t agrees that S will pay all future taxes and slowly pay back debt - Crown later demands full payment & says new agreement lacked consideration Issue: Was the gov’t’s acceptance of lower sum enforceable? No (court want to, but held back by precedent) Held: - even though gov’t had practical benefit, they can still demand the full amount (bc no fresh cons.) Foot v Rawlings (1963 SCC) (use to avoid Foakes v Beer application) Ratio: Lesser payment by different mode is sufficient consideration Facts: - D owed P a lot of $; D’s K says to pay P $400/month + 8% interest; D can’t afford to pay - They agree for D to pay lesser amount in a series of post-dated cheques; P wants to go back to 1st deal Issue: Is P bound to the promise of accepting the lesser amount in the form of post-dated cheques? Yes Held: - New K bc sufficient consideration is given (cheques are distinguishable from cash) - Note: supplying fresh consideration can be as simple as adding a peppercorn to every change - examples: changing amount slightly, paying by cheque instead of cash, paying a day early, using a seal - Agreement is enforceable if it’s within the Judicature Act (s.13(1)) – (overrides the principle from Foakes) - Part performance of an obligation shall be held to extinguish the obligation

a) when expressly accepted by a creditor in satisfaction, or b) when rendered pursuant to an agreement for that purpose though without any new consideration.

- Applies in both cases where this consideration and where there is not - Requires full satisfaction upon the lesser sum. If payments are not made, the act is not invoked - If (a) happened before this act, and part perf was done before the br, it would have still been enforceable - Meaning of act: Payment of an existing debt, or promise to pay part of an existing debt, can be

considered valid consideration for the other party's promise not to enforce the entire amount of the debt - Applies only once some of the money changes hands (doesn’t apply to promises to accept)

PRE-EXISTING DUTY OWED TO THIRD PARTY - Considered valid consideration; less concern with abuse of power & bad faith (economic duress still possible) - When 3rd part receives assurance of K performance & gives promisor cons. (eg 2 ppl pay you to paint 1 house) PRE_EXISTING PUBLIC DUTY - Considered to be no fresh cons. to avoid extortion by public servants; may be if going beyond scope of duty --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- PROMISSORY ESTOPPEL - PE is a rule that precludes a person from disrupting or retracting a statement they made earlier - PE only works if you have existing legal relationship & is not a cause of action in and of itself - No consideration needed - When a party precludes from asserting legal rights under a K - PE and Waiver, for our purpose, is the same thing (Waiver in law; PE in equity) - PE Requirements: (representor = party making promise // representee = party receiving the promise) 1) representor has a pre-existing legal relationship with representee 2) representor makes a clear promise or representation to not assert their strict legal rights 3) representor intends representation to be relied upon; Representee cannot act in bad faith 4) representee (detrimentally) relies on representor’s promise - If A shows promise to take a lesser sum and relies upon it to his detriment, the promise can be enforced by PE Central London Property Trust v High Trees House (1947 England) (creates PE) Ratio: If A makes a promise & B relies upon it, the original promisor (A) cannot later recant his promise Facts: - Under seal, P leased flats to D for £2500/yr; WWII led to drop in renting so P agreed lower to £1250/yr - D paid £1250/yr until war was over & all flats were rented again; P wanted to reinstate original amount Issue: Was the altered rent indefinite or only for during the war? Is PE applicable? PE applies only to war time Held: - present case: limited enforcement of promise: can’t go backwards to collect rent, but PE only for war yrs - Even if PE existed, representor can retract it with reasonable notice & if D can go back to orig position - PE can only vary existing rights, not create new rights --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- PROMISE John Burrows Ltd v Subsurface Surveys Ltd (1968 SCC) Ratio: To create PE, the representation has to be a clear promise that was intended to be enforced Facts: - P buys D’s business; Promissory note said if payment was >10 days late, P could sue for entire $ owed - D was often late, but P never enforced clause; Finally P tries to enforce clause; D claims it was waived Issue: Is habitual non-enforcement a sufficient representation? Silence is not evidence of a promise Held: - No PE bc promise not to initiate clause wasn’t clear bw the 2 parties (it was friendly indulgence) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- EQUITIES D & C Builders v Rees (1966 England) Ratio: PE cannot operate if representee acted in bad faith (inequitably) Facts: - D hired P for job worth £746; After work was done D said they’ll pay P £300 or nothing; - P in tight financial conditions so they reluctantly agreed; P sued for remaining balance Issue: Is PE precluded by representee’s (D) bad faith? Yes, P can sue Held: Cannot use an equitable remedy (PE) when you come to the table with dirty hands (Clean Hands doctrine) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- NOTICE - PE generally terminated upon notice of reassertion of strict rights - Notice protects representee’s reliance; ineffective if representee’s reliance is irreversible

Saskatchewan River Bungalows v Maritime Life (1994 SCC) Ratio: Reassertion of strict rights is effective following reasonable notification Facts: - P pays D to insure F; P’s premium cheque got lost in mail (sent in Jul); D said to send it again (in Aug) - P thought D meant orig cheque wasn’t enough $ so P mails cheque in Jul only for difference owed; - D said they still hadn’t gotten payment; D says policy out of force unless P paid immediately (in Nov) - In Feb, D wrote saying policy lapsed; P got letters in Apr & sent new cheques in Jul; - F was uninsurable by then; P claims D waived right to timely payments through its actions Issue: Was D estopped from strictly enforcing the lapse due to their conduct in the Nov letter? No Held: - D waived right to lapse by offering reinstatements, but then sent a formal lapse notice in Nov - PE always subject to retraction on reasonable notice (this is flexible, but 3 months is defs reasonable) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- RELIANCE - PE is premised upon some reliance by promissee - Cannot reinforce original rights if it would result in unfair hardship for the representee - Detrimental Reliance = reliance on promise detrimental if promise is revoked - Reliance Creating Inequity if Promise Revoked = if going back to original position would be a hardship - Simple Reliance = promise merely acted on basis of promise (not sufficient for PE) --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- SWORD OR SHIELD? - Generally, PE is seen as a shield in law rather than a sword - Range of possibilities: 1) Shield – defence to action in a K (protection if someone tries to take action on the original rights) 2) Blunt Sword – take action against someone only on the variation of existing rights - eg: if I work 60/100 contracted hrs bc boss told me to stop, I can raise PE to get paid for those 60hrs 3) Sharp Sword – basis of action outside an existing K (PE is never a sharp sword) - eg: when someone promises to hire you so you stop looking for work, and then you never get the job Combe v Combe (1951 England) Ratio: PE only works within existing K (cannot create new rights); PE is only used as a shield & not a sword Facts: - Upon divorce, husband (D) agrees to pay wide (P) $100/yr; K is signed, but D stops paying P - P waits 6-7 yrs before she sues D for alimony (P said this was detriment to her) Issue: Can the D be estopped from not carrying through on his promise? No (PE can’t be used as a sword) Held: - PE cannot be used to create obligations; PE cannot create new cause of action - PE can only be used as a defence when someone is claiming that a promise they made didn’t have cons. - There was no consideration; P waiting 7yrs to sue may have been detriment, but wasn’t at D’s request Petridis v Shabinsky (1982 OntHC) Ratio: PE operates only within an existing K Facts: - P leased premise from D; term expired June 30, 1981 & P had option to renew up until Dec 31, 1980 - P asked to renew on time; D said they’d deal with it in new year; In Apr, D said he’s renting to 3rd party Issue: Can P go back and exercise the renewal option? Does PE work here, or is it being used as a sword? Yes Held: - PE doesn’t work here bc their relationship ended (option had expired) & PE can’t create new rights - But judge ruled in favour of P based on equitable principles McInnes’ Thoughts: - Should always ask if there was an existing relationship when the promise was made - Promise in this case was made prior to the 1980 option expiring Robichaud v Caisse Populaire (1990 NBCA) Ratio: PE can be used as a cause of action (a blunt sword) Facts: - P promises D $1000 in exchange for larger debt; D accepts; D later refuses; P sues to force D to accept Issue: Can PE be used as an independent cause of action? Yes (on varying existing rights) Held: There is PE & the D can’t go back on their promise (D’s benefit = immediate & certain payment)

Waltons Stores v Maher (1988 HCA Australia) Ratio: PE may be used as a sharp sword Facts: - D planned to lease land from P; D said it’ll make a K if P tears down old buildings & builds new ones; - P starts demolition, thinking D was making K; D had 2nd thoughts & backed out; P left w/ 1 less building Issue: Can PE be used as a cause of action to create a K? Yes (in certain circumstances) Held: - PE can be used as a sharp sword when: 1) both parties believed that a K would come into existence, 2) the D induced the P to act in reliance upon that belief, and 3) the D subsequently attempted to prevent the creation of the K --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- PROMISES UNDER SEAL Royal Bank v Kiska (1967 OnCA) Ratio: An agreement “under seal” is good enough consideration to make a promise enforceable Facts: On guarantee doc from D to P, D printed the word “seal” & signed beside it; P says this equals a trad seal Held: It was a binding agreement bc it was supported by consideration; had same intent as a physical seal

Contracts)–!Winter!2013%(McInnes)"!PRIVITY"OF"CONTRACT!..............................................................................................................................!1!

Tweedle&v&Atkinson&(1861)&–&(classic&view)!..............................................................................................!1!Dunlop&Pneumatic&Tyre&v&Selfridge!...........................................................................................................!1!

1."Specific"Performance!......................................................................................................................!1!Beswick&v&Beswick&(1968&HL)!....................................................................................................................!1!

2."Assignment"of"Contractual"Rights!.................................................................................................!2!3."Trusts!...............................................................................................................................................!2!Vanderpitte&v&Preferred&Accident&Insurance&(1933&Privy&Council)!..........................................................!2!

4."Agency!..............................................................................................................................................!3!McCannell&v&Mabee&McLaren&Motors&(1926&BCCA)!..................................................................................!4!New&Zealand&Shipping&v&Sattethwaite&(1975&Privy&Council)!...................................................................!4!

5."Employment"(the"only"true"exemption"to"privity)!......................................................................!4!London&Drugs&v&Kuehne&&&Nagel&(1992&SCC)!...........................................................................................!4!Edgeworth&Construction&v&ND&Lea&&&Associates&(1993&SCC)&–&(the&scope&of&London&Drugs)!.................!4!

6."Subrogation!.....................................................................................................................................!5!Fraser&River&Pile&&&Dredge&v&CanVDive&Services&(1999&SCC)&–&(Extends&LD&beyond&employees)!............!5!

CONDITIONAL"(CONTINGENT)"AGREEMENTS!..........................................................................................!5!THE"PARTIES"OBLIGATIONS!..................................................................................................................!5!

Wiebe&v&Bobsein&(BCCA)&–&(how&to&interpret&a&condition&precedent)!......................................................!6!Dynamic&Transport&v&OK&Detailing&&(1978&SCC)&–&(DON’T&FOLLOW&THIS&CASE)!...................................!6!

UNILATERAL"WAIVER"OF"CONDITIONS!................................................................................................!7!Turney&v&Zhilka&(1959&SCC)&–&(a&BAD&decision&–&unpredictable,&but&may&still&be&followed)!...................!7!Beauchamp&v&Beauchamp&(1973&ONCA)&–&(“distinguishes”&Turney)!.......................................................!7!Barnett&v&Harrison&(1976&SCC)&–&(BAD&decision)!.....................................................................................!7!

REPRESENTATIONS"AND"TERMS!...............................................................................................................!8!MISREPRESENTATION!............................................................................................................................!8!Fraudulent"Misrepresentation!..........................................................................................................!8!Negligent"&"Innocent"Misrepresentation!.........................................................................................!9!Smith&v&Land&&&house&Property&(1884)&–&(nature&of&representation&–&fact&&&opinion)!.........................!10!Bank&of&BC&v&Wren&Development&(&1973&BCSC)&–&(silence&as&representation&–&innocent&misrep)!........!10!Redgrave&v&Hurd&(1881)&–&(representee’s&neg&–&presumption&of&inducement)!......................................!10!Kupchak&v&Dayson&Holdings&(1965&BCCA)&–&(monetary&restoration/laches&&&fraud)!..........................!10!

TERMS!....................................................................................................................................................!11!

2!

Express"Terms!...................................................................................................................................!11!Hong&Kong&Fir&Shipping&v&Kawasaki&(1962)&–&(innominate&terms)!.......................................................!11!Krawchuk&v&Ulrychova&(1996&ABPC)&–&(innominate&terms)!..................................................................!11!

Parol"Evidence"Rule"(parol"="spoken"communication)!.................................................................!11!Implied"Terms!...................................................................................................................................!12!

EXCLUSION"CLAUSES!................................................................................................................................!14!INCORPORATION"AND"NOTICE!............................................................................................................!14!Unsigned"Documents!........................................................................................................................!14!Parker&v&South&Eastern&Railway&(1877&EN)&–&(notice&of&written&conditions&–&unsigned)!.....................!14!Thorton&v&Shoe&Lane&Parking&(1971&EN&CA)&–&(incorporation&of&conditions)!.......................................!14!Interfoto&Picture&Library&v&Stiletto&Visual&Programmes&(EN)&–&(Particularized&notice&&&substantive&fairness)!...................................................................................................................................................!14!McCutcheon&v&David&MacBrayne&(1964&HL)&–&(importing&an&EC&from&past&dealings)!..........................!15!

Signed"Documents!.............................................................................................................................!15!Tilden&RentVaVCar&v&Clendenning&(1978&ONCA)&–&(signed&docs&–&the&new&rule?)!..................................!15!

STRICT"CONSTRUCTION"OF"EXCLUSION"CLAUSES!.............................................................................!15!Karsales&(Harrow)&v&Wallis&(1956&EN&CA)!..............................................................................................!16!Hunter&Engineering&v&Syncrude&(1989&SCC)&–&(the&Canadian&ruling&on&FB&–&doesn’t&exist)!.................!16!

CONTRACTUAL"DEFECTS!.........................................................................................................................!16!IMPROPERLY"INDUCED"CONTRACTS!..................................................................................................!16!Duress!................................................................................................................................................!17!Undue"Influence!................................................................................................................................!17!Unconscionability!.............................................................................................................................!20!

ILLEGALITY!............................................................................................................................................!20!Kingshott&v&Bunskill&–&(unVgraded&apples&–&in&word&but&not&spirit)!.......................................................!21!New&Solutions&Financial&v&Transport&North&America&(1994&SCC)&–&(notional&severance)!....................!21!

FRUSTRATION!.......................................................................................................................................!22!Cutter&v&Powell&(1795)&–&(shows&the&harshness&of&the&trad&CL&rules&of&frustration)!.............................!22!Chandler&v&Webster&(1904)&–&(harshness&of&trad&CL&rule)!......................................................................!22!Fibrosa&Spolka&Ackcjna&v&Fairbairn&Lawson&Combe&&&Barbour&(1943&HL)!..........................................!22!AB’s&Frustrated&Contracts&Act!.................................................................................................................!23!CanVTruck&Transportation&v&Fenton’s&Auto&Paint&Shop&(1993&ONCA)!...................................................!23!

MISTAKE!................................................................................................................................................!23!Shogun&Finance&v&Hudson&(2004&HL)&–&(mistake&of&identity&V&credit)!....................................................!23!Raffles&v&Wichelhaus&(1864)&–&(mistake&of&identity&of&subj&matter)!......................................................!24!

TERMINATION"OF"CONTRACT!.................................................................................................................!24!DISCHARGE"BY"PERFORMANCE!...........................................................................................................!24!DISCHARGE"BY"AGREEMENT!................................................................................................................!24!DISCHARGE"BY"OPERATION"OF"LAW!..................................................................................................!25!DISCHARGE"FOR"BREACH"OF"CONDITION!..........................................................................................!25!DISCHARGE"FOR"ANTICIPATORY"BREACH"(REPUDIATION)!.............................................................!25!

DAMAGES"FOR"BREACH"OF"CONTRACT!..................................................................................................!26!THE"INTERESTS"PROTECTED!...............................................................................................................!26!Expectation"Damages!........................................................................................................................!26!Reliance"Damages!.............................................................................................................................!26!McRae&v&Commonwealth&Disposals&(1951)&–&(expectation&dams&barred&bc&immeasurable)!................!26!Bowlay&Logging&v&Domtar&Ltd&(BCCA)&–&(can’t&get&rel&dams&to&avoid&conseq&of&a&bad&bargain)!.........!26!

QUANTIFICATION"OF"DAMAGES!..........................................................................................................!27!Chaplin&v&Hicks&(1911)&–&(damages&for&loss&of&chance&–&difficulty&of&assessment)!................................!27!Groves&v&John&Wunder&(1939&US)&–&(cost&of&cure&–&the&view&in&Canada)!................................................!27!

REMOTENESS"OF"DAMAGE!...................................................................................................................!27!Hadley&v&Baxendale&(1854)&–&(test&for&remoteness)!...............................................................................!28!Victoria&Laundry&v&Newman&Industries&(1949)!......................................................................................!28!Koufos&v&Czarnikow&(1969&HL)&–&(foreseeability&of&changing&market&price&–&K&as&a&gamble)!..............!28!Scyrup&v&Economy&Tractor&Parts&(Man&CA)&–&(remoteness&goes&to&type&of&loss,&not&extent&of&loss)!......!28!Transfield&Shipping&v&Mercator&Shipping&(2008&HL)&–&(new&EN&test&for&remoteness)!..........................!28!

DAMAGES"FOR"INTANGIBLE"INJURIES!................................................................................................!29!Fidler&v&Sun&Life&Insurance&(2006&SCC)!...................................................................................................!29!

MITIGATION"OF"DAMAGES!...................................................................................................................!29!Asamera&Oil&v&Sea&Oil&(1979&SCC)!............................................................................................................!30!White&&&Carter&(Councils)&v&McGregor&(1962&HL)!..................................................................................!30!

EXCEPTIONAL"MEASURES"OF"RELIEF:"NOMINAL,"DISGORGEMENT,"AGGRAVATED"&"PUNITIVE!..!30!Disgorgement"(“Restitution”)!..........................................................................................................!31!Attorney&General&v&Blake&(2001&HL)!.......................................................................................................!31!

Punitive"Damages"and"Aggravated"Damages!.................................................................................!31!Vorvis&v&Insurance&Corp&of&British&Columbia&(1989&SCC)&–&(tests&for&aggravated/punitive&damages)!32!Whiten&v&Piolet&Insurance&Co&(2002&SCC)&–&(observations&on&punitive&damages)!................................!32!

LIQUIDATED"DAMAGES,"DEPOSITS"AND"FORFEITURES!....................................................................!32!NONaMONETARY"REMEDIES"FOR"BREACH"OF"CONTRACT!...................................................................!33!SPECIFIC"PERFORMANCE!.....................................................................................................................!33!

4!

INJUNCTIONS!.........................................................................................................................................!34!

!

1!

PRIVITY"OF"CONTRACT"

"!Privity:!pertains!to!status!as!a!K’al!party!–!privity!Q:!who!can!sue/enforce!on!a!K!• Vs"Consideration!=!goes!towards!the!creation!of!the!K!(Con!Q:!has!a!K!been!formed?!Exchange!of!value?)"

"!Classic!View:!K’al!rights!&!liabilities!affect!only!parties!to!a!K!(3rd!parties!cannot!sue!or!be!sued!–!Tweedle)!"!Modern!View:!You!have!privity!to!the!K!(a!party!to!the!K)!if!and!only!if,!you!were!part!of!the!consensus&ad&idem&

• So!long!as!there’s!consideration!from!both!sides!of!bargain,!&!the!3rd!party!contributes!to!the!negotiations!in!some!way,!all!parties!will!acquire!privity!to!the!K!

• Why!the!change?!Privity!tends!to!lead!to!an!unjust!result,!so!the!courts!have!tried!to!find!ways!around!it!"!FOR"EXAM!!both"views"can"be"argued"–"you"just"need"to"provide"support"(modern!view!is!better!though)!

Tweedle&v&Atkinson&(1861)&–&(classic&view)&Ratio:&A&3rd&party&beneficiary/stranger&cannot&enforce&a&K,&even&if&the&agreement&was&made&for&his&benefit&Facts:!P!&!W!are!married;!both!dads!agreed!to!pay!P!£!&!say!P!has!a!right!of!enforcement;!1!doesn’t!pay;!P!sues!Issue:!Can!P!enforce!a!K!formed!for!his!benefit?!No,"P"cannot"sue"Held:!The!person!seeking!enforcement!must!have!provided!consideration!(Love!&!affection!to!W!is!not!suff)!

Dunlop&Pneumatic&Tyre&v&Selfridge&Ratio:&If&you&want&to&sue&on&a&K,&you&must&have&both&consideration&and&privity&Facts:!"!P!=!manufacturer;!X!=!wholesaler;!D!=!retailer;!Y!=!customer!!!!!!!!!!!!!"K1!P&X:!X!can’t!sell!tires!below!list!price!unless!sells!to!party!in!auto!trade!&!buyer!agrees!to!sell!at!list!price!!!!!!!!!!!!!"!K2!X&D:!X!gives!D!discount!if!D!agrees!to!abide!by!list!price;!D!says!if!sell!at!lower!price!it’ll!pay!£5!to!P/tire!!!!!!!!!!!!!"!K3!D&Y:!D!sells!to!Y!at!discount;!Y!not!in!auto!trade;!D!breached!agreement!w!X;!P!sues!D!for!£5/tire!Issue:!Can!P!enforce!the!contractual!term!bw!X!&!D!that!was!created!for!its!benefit?!No,"3rd"parties"cannot"sue"Held:!"!Judge!1:!P!cannot!satisfy!either!consideration!or!privity!(need!both!to!sue)!!!!!!!!!!!!"!Judge!2:!P!does!have!privity!by!way!of!agency!(X!acting!as!P’s!agent),!but!didn’t!provide!any!consideration!!Privity"is"harsh"–"what"are"the"CL"ways"around"it?"1. Specific!Performance!(Beswick&v&Beswick)"2. Assignment!of!contractual!rights"3. Trusts!(Vanderpitte&v&Preferred&Accident&Insurance)"4. Statutory!Exemptions!–!ex:!beneficiary!under!a!life!insurance!policy!has!statutory!right!to!enforce!the!policy!"5. Agency!(McCannell&v&Mabee&McLaren&Motors)"6. Employment!(London&Drugs&v&Kuehne&&&Nagle)"7. Subrogation!(Fraser&River&v&CanVDive)"

***These"areas"of"Ks"may"be"tested"independently"as"well"–"know"how"they"exist"outside"of"privity***"

1."Specific"Performance"

"!A!3rd!party!may!be!able!to!sue!on!a!K!and!obtain!a!remedy!of!SP!where:!a. That!3rd!party!has!a!legitimate!interest!in!that!K!and!b. Sues!in!the!name!of!one!of!the!parties!to!that!K!

"!SP!must!have!mutuality!–!no!SP!for!P!until!same!remedy!available!against!P!himself!"!No!SP!for!promises!of!personal!services!(too!much!like!slavery,!hard!to!judicially!supervise!quality!of!perf)!

Beswick&v&Beswick&(1968&HL)&Facts:!"!P’s!husband!(H)!&!P’s!nephew!(D)!made!K!that!gave!D!H’s!business!in!exchange!for!2!things:!!!!!!!!!!!!!"!(1)!D!to!give!H!£/wk!until!P!dies;!(2)!D!to!give!P!£5/wk!until!she!dies;!After!H!dies,!D!refuses!to!pay!P!!!!!!!!!!!!!"!P!sues!2!ways:!1.!as!agent!to!the!estate!(as!H);!2.!asks!to!be!treated!as!a!3rd!party!benef!(sue!in!personal!cap)!Held:!"!P!has!a!right!as!executrix!of!H’s!estate,!but!not!in!personal!capacity!(as!a!3rd!party)!–!D!liable!to!pay!P!$!!!!!!!!!!!!"!Suing!as!executrix!of!estate!would!only!get!nominal!damages!(H!had!nothing!o!gain!from!the!K)!!!!!!!!!!!!"!But!in!equity,!P!could!be!granted!specific!performance!(that!is!what!H!would!ask!for)!!!!!!!!!!!!"!This!is!not!a!true!exception!to!Tweedle!–!HL!tried!to!find!creative!way!around!privity!by!invoking!spec!perf!

2!

!!!!!!!!!!!"!SP!avail!if!damages!are!inadequate!(if!no!amount!of!$!could!get!you!a!substitute!or!if!dams!are!just!not!fair)!

2."Assignment"of"Contractual"Rights"

"!A!K’al!right!is!a!form!of!property!(chose&in&action)!!generally!assignable!in!equity!or!by!statute!"!As!a!form!of!prop,!a!chose&in&possession&can!be!gifted!or!sold!"!Chose&in&Action!=!something!you!can’t!enjoy!by!touching!it,!but!by!taking!action!on!it!"!Ex:!A!gives!car!to!B!if!B!pays!$5K!to!C.!If!B!does!not!pay,!A!could!sue,!but!would!only!get!nominal!damages.!C!could!not!sue!as!she!has!no!privity.!So,!A!assigns!her!rights!to!C.!C!sues!as!‘A!&!C’!and!as!such!has!both!privity!and!a!loss!• So!assignee!(C)!can!enforce!the!promise!of!the!debtor!(B)!

"!Assignment!is!a!way!around!privity!• A!true!exception!to!privity!is!to!allow!enforcement!to!someone!that!is!not!a!party!to!the!K!• Assignment!is!just!redefining!privity,!not!so!much!an!exception!

"!2!types:!equitable!&!statutory!(always!try!to!find!a!statutory!assignment!first!–!both!can!coexist!for!the!same!sit)!"Equitable"Assignment""!Equitable!ass!can!be!oral!or!written!(oral!just!harder!to!prove)!"!Can!assign!a!portion!of!the!full!value!or!the!whole!thing!"!Debtor’s!knowledge!or!consent!is!not!required!!Ass!valid!as!soon!as!assignor!assigns!to!the!assignee!"!Notice"can"be"important"

• Assignee!should!provide!notice!to!debtor!ASAP!–!as!debtor!can!discharge!debt!to!assignor!prior!to!notice!• Ex:!X!owes!B!$15K/mo!to!teach,!but!B!only!teaches!1/3!of!the!time!!X!only!needs!to!pay!assignee!(A)!$5K!• Ex:!If!X!&!B!make!K2!that!X!gives!B!a!car!&!also!take!out!$5K!from!next!mos!pay!!only!owe!A!$10K!

o BUT!if!A!gave!debtor!(X)!notice!before!this!K2,!then!X!needs!to!give!A!the!full!$15K!o If!A!didn’t!give!X!notice!&!X!made!K2,!then!only!owes!A!$10K!(A!can!sue!B!for!the!other!$5K)!

"!Debtor!can!use!any!equities!against!the!assignee!that!it!could!against!the!assignor!for!the!same!transaction!• D!can!rely!on!some!Ds!(ones!arising!from!the!same!transaction!&!ones!arising!from!other!trans!before!notice)!!

o Ds!arising!from!the!same!transaction!!ex:!if!B!only!shows!up!½!the!time,!A!only!gets!½!of!B’s!pay!!Statutory"Assignment"1)!Requires!written!assignment!2)!Requires!written!notice!to!debtor!(no!assignment!exists!until!debtor!is!notified)!3)!Must!be!an!absolute&&&unconditional!assignment!(must!assign!the!whole!debt!wo!conditions!!or!else!it!fails)!

3."Trusts"

"!The!nature!of!trusts!!split!title!to!property!(legal!title!held!by!trustee!/!equitable!title!held!be!beneficiary)!• Title!held!by!trust!for!benefit!of!another!(this!protects!beneficiaries!from!creditors!–!can’t!take!any!of!trust)!

"!Creation!of!trusts!!settlor!may!declare!self!as!trustee!for!beneficiary!or!may!appoint!another!as!trustee!for!benef!"!Proof!of!creation!!Express!words!unnecessary,!BUT!clear&intention!required!(can!be!oral!or!written)!"!A!trust!is!directly!enforceable!by!a!beneficiary!against!a!trustee!"!Another!apparent!exception!to!the!privity!rule!–!not!an!exception,!but!redefining!privity!(new!parties!to!the!K)!"!Ex:!A!gives!car!to!B!if!B!pays!$5K!to!C!!A!can!ask!B!to!give!his!promise!on!trust!to!A!

• So,!A!legally!owns!the!promise,!but!C!beneficially!owns!the!promise!(A!=!trustee;!B!=!beneficiary)!• So!if!B!doesn’t!pay!C,!then!C!has!standing!to!sue!bc!B’s!promise!is!hers!equitably!• Consideration!is!B’s!promise!supported!by!exchange!with!A!

"!But!Vanderpitte!makes!it!really!hard!to!establish!a!trust!!very!clear!evidence!that!a!trust!exists!is!necessary!

Vanderpitte&v&Preferred&Accident&Insurance&(1933&Privy&Council)&Ratio:&In&order&for&a&trust&to&be&valid,&there&must&be&a&clear&intent&to&enter&into&a&trust&at&the&outset&Facts:!"!Dad!has!car!insur;!Daughter!drives!&!crashes!w!P;!P!wants!to!sue!insur!co!bc!16yo!has!no!$;!2!privity!issues:!!!!!!!!!!!!!"!(1)!girl!is!not!part!of!insur!K,!nor!is!P;!(2)!the!K!is!bw!dad!and!insurance!co!(D)!!!!!!!!!!!!!"!Must!get!girl!into!dad’s!shoes;!V!says!there’s!a!relationship!of!trust!!dad!held!insur!in!trust!for!the!girl!Issue:!When!Can!a!trust!analysis!circumvent!problems!with!privity?!Was!there!a!trust!here?!NO;"P"has"no"privity"

!

3!

Held:!"!A!trust!only!works!when!true!on!the!facts!–!You!can’t!construe!a!trust!after!the!fact!!!!!!!!!!!!"!You!need!a!clear!intent!to!make!a!trust!at!the!outset!–!Only!lawyers!would!think!to!make!a!trust!at!the!outset!!!!!!!!!!!!"!Re!P’s!privity!issue:!s.24!Ins!Act!says!if!you’re!injured!by!someone!who!has!valid!ins,!you!can!get!privity!of!K!!!!!!!!!!!!"!P!could’ve!used!MVA&s.12:!create!a!statutory!exemption!to!priv!rule!for!kids!being!covered!by!parents’!insur!

4."Agency"

"!An!agent!acts!on!behalf!of!another!individual!(most!agencies!result!from!K!!hired!to!be!an!agent)!• Doesn’t!have!to!be!contractual!(ex:!I!give!you!money!to!go!and!get!me!a!coffee)!• Agents!have!a!fiduciary!obligation!to!their!client!(have!to!act!in!their!best!interests)!

"!Agency!is!just!a!redefining!of!privity!(not!so!much!an!exception)!"!When!an!agent!signs!a!K,!they!sign!it!on!their!client’s!behalf!(an!extension!of!that!person)!

• Once!signed,!the!agent!is!no!longer!relevant!&!K!exists!bw!principle!(client)!&!vendor!• The!client!is!a!party!to!the!K!(not!a!3rd!party!beneficiary)!!So!P!may!directly!enforce!the!K!

Sources"of"Authority"1. Actual"Authority!(P!liable!if!this!exists)"

• Express&Authority!–!telling!the!agent!expressly!to!go!and!buy!a!widget!for!you"• Implied&Authority!–!authority!implied"inVfact!from!relationship"

o If!you!give!agent!express!authority!to!buy!stuff,!there’s!implied!authority!to!do!incidental!things"2. Apparent"Authority"(P!liable!if!this!exists)"

• Rule:!If!I!make!you!look!to!the!world!as!my!agent,!and!you!go!out!and!make!a!K!on!that!basis,!then!I!am!bound!by!that!K"

• Policy!reason:!I!created!the!reas!expect!that!the!agent!has!auth!to!act!on!my!behalf,!so!I’m!bound!by!that"• Apparent"authority"may"survive"the"termination"of"actual"authority"• Any!K!created!on!apparent!auth!of!agents!are!binding!even!though!the!‘agent’!was!never!auth!as!official!agent"• It’s!based!on!appearance!of!agency!to!the!perception!of!outsiders!(ex:!lawyer!settling!wo!client’s!auth)"

"Ratification"of"Authority!(unauthorized!action!by!agent!for!P,!&!P!subsequently!ratifies)!(P!liable!if!this!exists)!"!P!can!only!ratify!the!K!if!the!agent!purported!to!act!as!for!P!(named!or!not)!at!the!time!of!K!formation!

• Ratification!impossible!if!A!purported!to!act!for!self!"!P!can!only!ratify!if!it!had!legal!capacity!to!do!so!at!the!time!of!the!K!formation!"!P!must!ratify!before!performance!occurs!or!within!a!reasonable!time!!Disclosed"&"Undisclosed"Principles""!Disclosed&P!–!If!the!A!discloses!that!they!are!acting!as!an!agent,!then!they!cannot!be!held!liable!under!K!

• Unless!parties!agree!otherwise!"!Undisclosed&P!–!If!you’re!acting!as!an!agent,!but!you!don’t!disclose!you’re!doing!so!

• Both!the!A!&!P!might!be!on!the!hook!• Counterparty!entitled!to!rely!on!A’s!apparent!assumption!of!liability!• Counterparty!may!also!enjoy!rights!against!P!if!A!had!P’s!actual!authority!

o A!must!have!had!P’s!actual!authority!at!the!time!of!the!K!formation! An!undisclosed!P!cannot!ratify!if!no!actual!authority!

Agent’s"relations/liability"with"3rd"parties""!Presume!no!liability!if!purportedly!acted!as!agent!rather!than!principle!(3rd!party!knew!A!didn’t!accept!pers!liab)!"!There!may!be!liability!if!A!has!actual!authority!but!doesn’t!disclose!principle!"!Even!if!not!on!hook!contractually,!may!still!be!on!hook!via!torts:!breach!of!warranty!of!authority!(wo!actual!auth)!"Summary"of"Liability"" Actual" Apparent" Ratified" None"Disclosed" Principal! Principal! Principal! Agent!(tort)!Undisclosed" Principal!and!agent!

(rely!on!apparent!personal!liability)!

impossible! Agent!only! Agent!only!

4!

Identify"the"party(s)"who"will"be"liable"in"the"following"circs"(if"you"were"the"vendor,"who"could"you"sue?)""• 1.!! disclosed!principal!+!actual!authority!=!the&principal&only&• 2.!! disclosed!principal!+!apparent!authority!=!the&principal&only!• 3.!! disclosed!principal!+!ratified!authority!=!the&principal&only!• 4.!! disclosed!principal!+!no!authority!=!agent!(bound!in!tort,!not!K)!• 5.! undisclosed!principal!+!actual!authority!=!both&agent&&&principal!• 6.!! undisclosed!principal!+!apparent!authority!=!impossible!• 7.!! undisclosed!principal!+!ratified!authority!=!agent!

o you!can!only!ratify!if!there!is!disclosure!at!the!time!o agent!needs!to!sign!on!principles!behalf!in!order!to!ratify!

• 8.!! undisclosed!principal!+!no!authority!=!agent!

McCannell&v&Mabee&McLaren&Motors&(1926&BCCA)&Ratio:&If&an&agent&is&obvious&in&acting&on&behalf&of&2&principles,&then&there&may&be&liability&bw&the&2&principles&Facts:!"!2!dealers!(P&D)!in!diff!provs!have!K!w!S!that!if!they!sell!to!ppl!inside!another’s!jur,!they!give!50%!of!profits!!!!!!!!!!!!!!"!P!wants!to!sue!D!directly!for!breaching!their!agreement!w!S!Held:!"!S!acted!as!an!implied!agent!for!all!the!dealers!in!their!K!w!each!other!!!!!!!!!!!!"!All!dealers!were!subj!to!the!clause!except!for!S;!S,!as!agent,!provided!means!for!dealers!to!K!w!each!other!!!!!!!!!!!!"!There!was!consideration!(parties!promised!to!pay!penalty!&!suffered!detriment!of!not!selling!outside!jur)!!!!!!!!!!!!"!S!did!not!provide!any!consideration!!!!!!!!!!!!"!The!test!for!agency!depends!on!the!actions!and!intentions!of!the!parties!

New&Zealand&Shipping&v&Sattethwaite&(1975&Privy&Council)&Ratio:&4&criteria&for&agency&mechanism&(Agency&Test):&

1. The&K&extended&exemption&provisions&to&NZS&2. Carrier&intended&to&act&for&itself&&&NZS&3. NZS&authorized&or&ratified&carrier&to&act&as&its&agent&4. NZS&provided&consideration&to&S&for&K&provisions&(met&through&stevedore&services)&

Facts:!"!A!in!EN!sell!drill!to!S!in!NZ;!A!makes!K!w!F!(carrier);!K!has!EC!(limitation!apply!to!F!&!NZS!(unloaders))!!!!!!!!!!!!!"!A!sold!drill!&!sent!a!bill!of!lading!to!S!(sort!of!assignment:!holder!of!BoL!holds!all!rts!covered!by!bill!of!sale)!! "!Drill!dropped!by!NZS!(owned!by!F);!NZS!claims!they’re!covered!under!the!EC!bc!F!signed!as!their!agent!! "!BUT,!S!brought!the!claim!over!1!yr!after!it!happened!(EC!clause!said!they!need!to!sue!within!a!yr)!Held:!"!NZS!not!liable!bc!they!are!covered!–!privity!was!overcome!through!agency!(F!acted!as!NZS’s!agent!in!K!w!S)!! "!F!acquired!the!EC!from!S!on!NZS’s!behalf!! "!To!satisfy!#4!in!the!test:!NZS’s!consideration!was!that!they’d!unload!the!drill!in!exchange!for!EC!protection!Problem:!If!you!have!an!implied!unilateral!K,!then!you!don’t!need!agency!at!all!

5."Employment"(the"only"true"exemption"to"privity)"

London&Drugs&v&Kuehne&&&Nagel&(1992&SCC)&Ratio:&To&gain&the&benefit&from&a&privity&clause,&you&must&satisfy&3&criteria:&(exception&to&priv&only&in&lim&circs)&

1. The&limitation&clause&had&to&expressly&state&that&it&covered&the&concerned&parties&2. The&damage&that&occurred&must&have&occurred&in&the&contemplated&acts&of&employment&3. The&act&must&be&w/in&the&spirit&of&the&rule/policy&considerations&(ex:&employees&hopelessly&vulnerable)&

Facts:!"!P!had!expensive!item!in!storage;!When!KN’s!employees!were!moving!it,!they!neg!caused!damage!(40K)!! "!K!bw!P!&!KN!had!a!clause!limiting!liability!of!workers!to!$40!unless!P!purchased!insurance!Issue:!When!can!an!employee!benefit!from!an!exemption!clause?!!Held:!"!Employees!had!no!standing!to!sue,!but!still!allowed!protection!under!the!privity!clause!(met!the!test!above)!! "!A!matter!of!policy!!Ds!cannot!protect!themselves!! "!Also!P!knew!it!was!paying!a!lower!prince!in!exchange!for!having!to!get!own!insurance!(allocation"of"risks)!! "!The!privity!rule!generally!remains!!this!exception!only!applies!to!the!EC!(employees!still!cannot!sue!in!K)!

Edgeworth&Construction&v&ND&Lea&&&Associates&(1993&SCC)&–&(the&scope&of&London&Drugs)&Ratio:&London&Drugs&rule&is&fairly&narrow& &must&meet&the&specific&criteria&

!

5!

Facts:!"!P!constructs!rd!for!BC;!BC!hires!D!to!design!rd;!K!bw!BC!&!P!exempts!BC!from!any!liab!from!design!errors!! !"!Big!errors!in!design!cost!P!more!$;!P!sues!D!for!tort!of!Hedley!Byrne!(negligent!misrepresentation)!! !"!D!says!protected!under!LD!bc!employment!bw!P!&!BC!said!there’s!an!EC!(P!agreed!not!to!sue!BC)!Issue:!Can!D!rely!on!the!EC!bw!BC!&!P?!NO" "the"clause"does"not"extend"to"D"Held:!"!Case!distinguished!from!LD&(no!ev!of!intent!that!D!would!be!covered!&!D!should’ve!gotten!own!prof!insur)!! "!This!case!is!also!“not!within!the!spirit!of!the!rule&in!LD!(no!vulnerable!party!who!can’t!protect!themselves)!

6."Subrogation"

V&Assumption&of&rights&by&operation&of&law&(assignment&without&agreement/intention)&"!2!types:!simple/persistent!&!reviving!(both!types!are!forms!of!unjust!enrichment)!"!Not!an!exception!to!privity!!it’s!a!context!similar!to!the!privity!issue!Simple"Subrogation!–!parties!assume!existing!rights!

• Property&insurance!!insurer!sells!policy!to!me;!when!tortfeasor!wrongfully!destroys!it,!insurer!indemnifies!me!&!assumes!my!rights!in!tort!against!the!tortfeasor!

o As&soon&as&the&insurer&indemnifies&my&loss,&they&step&into&my&shoes&legally&&&can&sue&the&tortfeasor&o Alternatively,!you!can!sue!the!tortfeasor!yourself!and!not!get!indemnification!(you!can’t!do!both)!

• This!is!simple!subrogation!bc!the!insurer!takes!over!the!rights!that!still!exist!o Just!bc!you!get!the!$!from!I!doesn’t!let!the!tortfeasor!off!the!hook!!the!tort!stays!there!

Reviving"Subrogation!–!party!assumes!revived!rights!(ex:!subrogation!under!guarantee!on!debt)!• Debtor!(D)!provides!security!(on!chattel)!for!debt!to!creditor!(C)!(ie!bank)!• D!then!persuades!surety!(S)!(ex:!Uncle)!to!guarantee!payment!to!C;!Then!D!defaults!on!the!debt!• C!enforces!guarantee!against!S!!D’s!debt!&!security!are!thereby!discharged!once!S!pays!off!debt!• S!then!enjoys!right!of!indemnification!against!D!(discharged!debt!revived!to!enhance!prospect!of!payment)!• Surety!now!has!all!of!the!rights!the!creditor!initially!had,!&!can!get!any!security!that!was!put!up!by!debtor!• The!subrogation!here!is!really!to!get!the!security!bc!the!surety!can!sue!in!UE!even!wo!subrogation!

Fraser&River&Pile&&&Dredge&v&Can]Dive&Services&(1999&SCC)&–&(Extends&LD&beyond&employees)&Ratio:&Privity&exception&in&London&Drugs&can&be&extended&if:&

1. The&K’ing&parties&intended&(explicitly&or&implicitly)&to&extend&protection&to&a&3rd&party&2. The&3rd&party&performed&the&activities&contemplated&by&the&K’al&parties&3. The&spirit&of&LD&is&satisfied&

Facts:!"!P!owned!barge!&!had!insur!K;!said!if!there’s!an!indemnification!claim,!no!subrogation!against!a!“charterer”!! "!P!charters!to!barge!to!D;!D!damages!it;!P!gets!indemnification!from!I;!bc!of!the!no!subrogation!cl,!I!can’t!sue!! "!P!&!I!change!K!after!the!fact!to!eliminate!the!no!subrogation!clause;!I!tries!to!sue!the!D!Issue:!Can!P!eliminate!the!clause?!NO" "D"successfully"defends"claim"through"extension"of"London&Drugs"Held:!"!Despite!being!a!sophisticated!party,!D!didn’t!buy!insurance!bc!thought!they!were!covered!under!the!clause!! "!A!waiver!of!rights!becomes!crystalized!once!it’s!relied!upon!(ie!D!relied!upon!waiver!by!not!getting!insur)!! "!After!reliance,!K’ing!parties!cannot!vary!the!relied!upon!terms!!Once!crystalized,!rts!cannot!be!taken!away!

• This"is"a"true"exception"to"the"privity"rule!

CONDITIONAL"(CONTINGENT)"AGREEMENTS"

THE"PARTIES"OBLIGATIONS"

"!Regular&Bilateral&Executory&Ks:!K!is!created!immediately!&!primary!obl!exist,!but!can!be!performed!in!the!future!"!Contingent&Ks:!(ie!cond!sale!of!a!house)!–!K!is!created!immediately!&!the!primary!obl!are!created!immediately!

• But!the!performance!of!the!primary!obligations!is!suspended!pending!satisfaction!of!a!condition!• This!is!known!as!a!“true!condition!precedent”!• When!the!contingent!K!is!made,!the!performance!of!any!subsidiary!obligations!are!immediately!required!

o There’s!obligation!to!immediately!do!something!to!make!that!cond!happen!(their!best!efforts)!o Ie.!Attempt!to!arrange!financing!in!order!to!meet!TCP!to!but!the!house!

"!Terms"in"Contingent"Agreements"• Cond!Precedent!!there’s!a!lack!of!consensus!ad!idem!(still!a!matter!of!offer!&!acceptance)!–!no!K!in!place"

6!

o Where!one!party!does!not!intend!to!enter!into!a!K!unless!or!until!the!contingency!is!satisfied"• True!Cond!Precedent!A!K!is!formed!&!primary!obligations!are!suspended,!pending!satisfaction!of!the!TCP"

o Subsidiary!conditions!remain!ongoing!–!there!must!be!a!good!faith!attempt!to!fulfil!the!TCP"o If!good!faith!attempt!fails,!then!there!is!no!relief!(the!K!ceases!to!exist)"o There!is!consensus!ad!idem!with!TCPs"

• Subsidiary/promissory!Cond!!An!immediately!effective!obligation!that!will!aid!in!meeting!the!TCP"o Passive!obligation!to!not!frustrate!the!K!–!relief!is!available!if!breached"o Active!obl!to!fulfil!a!cond!often!(impliedly)!imposed!upon!one!party"

Relief!is!available!on!basis!of!breach!in!bad!faith!(ie.!don’t!try!to!get!approval)"• Condition!!An!important!K’al!term!(has!an!impact!on!remedies!–!ie!was!it!a!condition!or!a!warranty?)"

"!Generally,!TCP!=!cond!subseq!(immediate!K!subj!to!cessation)!//!Cond!prec!=!Unless!_______!happens,!there!is!no!K!• So!if!CP,!no!K!at!outset;!if!TCP,!there’s!a!K!at!the!outset!

Wiebe&v&Bobsein&(BCCA)&–&(how&to&interpret&a&condition&precedent)&Ratio:&TCP&depends&entirely&on&the&parties’&obj&intentions;&Real&estate&transactions&are&presumed&to&be&a&TCP&Facts:!"!D!wants!to!sell!house!to!P!subj!to!the!cond!that!P!can!sell!his!current!house!by!Aug!29;!! "!Also!K!says!that!if!D!gets!better!offer!before!Aug!18,!P!has!72hrs!to!match!the!price;!D!tries!to!rescind!offer!! "!P!refuses!to!accept!it,!sells!his!house!and!now!sues!D!to!enforce!the!K;!D!says!it’s!a!CP;!P!says!it’s!a!TCP!Issue:!When!does!a!condition!suspend!the!formation!of!a!K?!Did!a!K!exist!here?!Here"it’s"a"TCP"–"K"enforceable"Held:!"!TCP!depends!entirely!on!the!parties’!objective!intentions;!D!had!no!grounds!to!repudiate!the!K!unilaterally!! "!There!was!a!K!w!a!TCP;!D!is!bound;!P!fulfilled!the!TCP!so!the!K!must!proceed!!Language:"4"types"of"condition"precedent"situations"(1) Where!the!cond!is!worded!in!such!a!way!that!the!transaction!is!still!in!a!novel!stage!–!ie.!“subj!to!the!approval!

of!the!corporate!purchaser”.!Treated!as!a!mere!offer/cond!precedent!until!the!cond!has!been!met!"!Until!then!either!party!may!walk!away!

(2) Where!the!cond!is!clear,!precise!&!objective!–!ie.!“subj!to!the!election!of!B!in!the!municipal!election!of!May!1”.!Neither!party!can!withdraw!–!must!wait!&!see!if!the!TCP!is!fulfilled.!If!it!is!not!fulfilled,!either!party!may!terminate!the!K!"!Here!there!is!a!preliminary!K!

(3) Where!the!TCP!is!objective!but!requires!someone!to!act!–!ie.!“subj!to!the!approval!of!the!municipal!planning!authority”.!Impliedly,!the!obligation!will!be!on!the!vendor!unless!otherwise!stipulated!by!the!K!(bc!a!non!owner!of!the!land!cannot!submit!it!for!approval!–!or!subdivide!it,!etc)!

(4) Where!the!condition!is!so!uncertain!a!K!will!be!void!for!uncertainty!

Dynamic&Transport&v&OK&Detailing&&(1978&SCC)&–&(DON’T&FOLLOW&THIS&CASE)&Ratio:&Courts&may&imply&subsid&obl&on&parties&if&they’re&nec&to&effect&the&completion&of&the&primary&obl&in&the&K&Facts:!"!P!signs!K!to!buy!D;s!land;!As!matter!of!law,!the!K!can’t!go!through!wo!subdivision!approval!(TCP)!(not!in!K)!! "!Neither!P!or!D!do!anything!to!satisfy!this!TCP;!D!tried!to!get!out!of!K!when!deadline!is!up!bc!land!value!rises!! "!P!asks!for!declaration!of!specific!performance;!P!says!D!had!the!subsidiary!obl!bc!only!he!could’ve!done!it!Issue:!Do!subsidiary!obligations!relating!to!the!satisfaction!of!a!TCP!exist!in!the!absence!of!express!K’al!provisions?!Held:!"!There!was!an!implied!TCP!by!the!circs!–!even!if!parties!don’t!express!it!–!somebody!has!to!get!approval!! "!SCC!said!they!can!imply!subsidiary!obl!–!D!must!use!best!efforts!to!do!it!bc!statute!says!only!D!can!do!it!! "!So,!D!is!in!breach!of!this!implied!subsidiary!obligation!!SCC!gives!order!for!specific!performance!! "!If!D!uses!best!efforts!&!unsuccessful!!no!K!//!but!if!D!didn’t!use!best!efforts!!P!gets!full!damages!SCC&Errors:!"!The!trad!approach!to!K!relief!is!expectation!damages!–!where!you!expected!to!be!if!K!was!performed!!

• But!SCC!presumed!a!successful!perf!of!the!subsidiary!cond!in!the!event!that!specific!perf!was!breached!• SCC!SHOULD’VE!had!damages!reflect!the!probability!that!D’s!best!efforts!would!have!worked!in!the!1st!place!

o Chaplin&v&Hicks!–!the!Loss!of!Chance!Doctrine!o Ascertaining!past!facts!(something!you!can!prove)!on!a!BoP!(damages!granted!on!all"or"nothing!basis)!o For!past!hypotheticals!&!future!acts!–!if!you!can!prove!a!certain!%!chance!that!it!would’ve!gone!your!

way,!then!you!can!get!that!%!of!your!damages!(this!is!what!should’ve!been!done!in!this!case)!]&For&Exam:&apply&the&Chaplin&method&&&explain&why&Dynamic&is&flawed&!!

!

7!

Contingent"Agreements"–"Ancillary"Matters""!Communication!of!fulfilment!of!subsidiary!obligation!is!a!Q!of!objective!intention!"!Need!not!invariably!communicate!satisfaction,!BUT!the!obligation!to!do!so!may!be!implied!in!certain!circs!

UNILATERAL"WAIVER"OF"CONDITIONS"

"!A!party!may!unilaterally!waive!a!condition!if!the!agreement!expressly!allows!them!to!do!so!"!If!there!is!no!express!right!of!waiver:!!

• Condition!cannot!be!waived!if!it!is!a!true!condition!precedent!• If!it’s!not!a!TCP!it!may!be!waived!if!it’s!for!the!sole!benefit!of!party!waiving!&!is!severable!from!the!rest!of!K!

Turney&v&Zhilka&(1959&SCC)&–&(a&BAD&decision&–&unpredictable,&but&may&still&be&followed)&Ratio:&No&right&to&unilateral&waiver&unless&condition&is&internal&and&for&waiver’s&benefit&only&Facts:!"!P!in!K!to!buy!D’s!land!on!cond!of!zoning!approval;!neither!party!makes!an!effort!to!get!planning!approval!! "!D!gets!a!better!offer;!at!closing!P!waives!rt!to!approval!bc!it!was!exclusively!for!his!benefit!! "!D!says!the!K!is!subj!to!the!TCP!&!cond!hasn’t!been!satisfied!(really!it’s!bad!faith);!P!sues!for!specific!perf!Held:!"!SCC:!this!is!an!external!cond,!therefore!the!condition!cannot!be!waived!(doesn’t!define!“intenal”/”external”)!! "!Waiver!not!allowed!if!the!cond!is!external!or!for!partial!benefit!of!the!other!party!! "!“External”!means!one!has!to!go!outside!the!K!(ie!to!City!Planning!Board)!in!order!to!satisfy!the!TCP!! "!“Internal”!means!a!general!condition!precedent!–!lack!of!consensus!ad!idem!(the!only!plausible!meaning)\! "!So!basically,!the!rule!of!Turney!is!that!you!cannot!waive!a!TCP!(bc!it’s!always!external)!!General"CL"Rule"of"Waiver"(Use"this"for"an"exam)""!If!I!have!a!rt!&!it’s!exclusively!for!me!benefit,!then!I!can!always!waive!that!right!(ex:!waive!my!rt!to!sue)!"!BUT!sometimes!we!are!still!bound!by!the!rule!of!Turney!(cannot!waive!a!TCP)!***!you!won’t!know!the!answer!until!you!get!it!in!front!of!a!judge!(may!apply!Turney!or!follow!the!CL!rule)***!

Beauchamp&v&Beauchamp&(1973&ONCA)&–&(“distinguishes”&Turney)&Facts:!"!P!to!buy!D’s!land!for!$15,500;!2!conds:!P!getting!1st!mortgage!of!$10K!&!P!getting!2nd!mortgage!of!$2,500!! !"!P!just!gets!1!mortgage!for!$12K!&!is!going!to!pay!the!rest!himself!(wants!to!waive!cond);!D!gets!better!offer!Held:!"!This!was!not!a!TCP!(applies!Turney,!but!distinguishes!this!case!on!the!facts)!! "!Really,!the!court!is!trying!to!avoid!the!bad!rule!of!Turney!through!erroneous!distinguishment!

Barnett&v&Harrison&(1976&SCC)&–&(BAD&decision)&Facts:!Identical!Turney&situation&Held:!Turney!upheld!–!cannot!waive!a!TCP!Note:!On!exam,!can!argue!against!Turney!–!argue!that!you!can!unilaterally!waive!a!TCP!if!for!sole!benefit!of!P!

8!

REPRESENTATIONS"AND"TERMS"

""!3!types!of!pre"contractual!statements:!puffs,!misrepresentations!and!terms!"Misrepresentation:!(mere!representations)!Things!said!that!induce!me!into!the!K,!but!are!not!part!of!the!K!itself!

• Possible!legal!effect!if!untrue!!they’re!not!terms,!so!no!K’al!relief,!but!may!get!rescission!or!tort!relief!• Various!grounds!of!rescission:!duress,!undue!influence,!unconscionability,!etc!• Even!innocent/careless!misreps!that!wrongfully!induce!someone!into!a!K!can!provide!a!remedy!

!Puffs:!The!sort!of!typical!lies!you!expect!to!hear!when!someone!is!selling!you!something!(sales!talk)!!

• No!legal!consequences,!even!if!you!fall!for!it!(bc!RP!would!see!it!as!mere!puffery!&!no!RP!relies!upon!them)!!Terms:!Things!so!important!to!the!K!that!it’s!not!just!an!inducement,!but!it’s!a!term!itself;!3!possibilities:!

1. Conditional&terms:!so!imp!that!if!you!breach!the!term!of!the!K,!you!can!discharge!the!K&2. Warranty:!imp!enough!to!be!in!K,!but!if!breached,!doesn’t!give!you!the!right!to!discharge!(only!$!damages)&3. Innominate&term:!when!you!can’t!tell!at!the!outset!if!a!term!is!a!condition!or!a!warranty&

!How"to"know"which"one"it"is?""!Unless!you’re!speaking!w!a!lawyer,!the!diff!bw!puffs,!misreps!&!terms!are!obj!(look!at!substance)!"!Merely!using!the!words!does!not!make!it!so!–!no!magic!words!(test!is!obj!RP)!"!In!reality,!courts!just!reason!it!backwards!]&On&an&exam,&the&parties&will&likely&expressly&say&that&it’s&a&term&or&representation&(he&won’t&try&to&trick&us)&

MISREPRESENTATION"

Fraudulent"Misrepresentation"

"!Must"meet"5"criteria:"1. Must"prove"that"there"was"a"representation"

• Positive!communication!bw!the!parties!–!silence!is!not!a!misrep"• May!be!silence!+!something!else"

o If!it!is!a!statement!of!half"truth!(we!earned!1!million…!(but!lost!2!million))!o If!it!is!a!failure!to!correct!a!previously!true!statement!(I!was!worth!2K…!(but!now!worth!1K))!o If!it’s!a!positive!duty!of!disclosure!(ex:!insurance!K,!if!selling!house!&!know!of!dangerous!defect)!

2. Has"to"be"a"representation"of"fact"(past"or"existing)"

!

9!

• Can’t!be!a!representation!of!a!future!act"• Sometimes!a!st!of!future!implies!a!present!statement!of!fact!(I’ll!do!all!I!can!to!help!(but!I!wont!be!here))"• Can’t!be!st!of!opinion,!unless!there’s!an!implied!st!of!fact!(I!think!A’s!a!good!T!(though!he’s!an!arsonist))"• Cannot!be!a!st!of!law,!unless!an!implied!st!of!fact!(you!have!to!pay!key!money!(though!law!prohibits)"

3. Has"to"be"fraudulent!(has!to!be!a!deliberate!lie)"• Included!in!this!is!recklessness!or!wilful!blindness!(may!be!negligent,!but!not!fraudulent)"• Have!to!be!careful!in!a!fraud!claim!(if!you!allege!fraud!&!don’t!prove!it!you!can!get!hammered!in!costs)"

4. Must"be"an"intention"to"induce"you"into"the"K"5. Must"have"actually"induced"you"into"the"K"

• We!usually!presume!the!causal!connection!bw!#4!&!#5!once!#4!is!proven!• Onus!is!on!the!D!to!disprove!the!causal!connection"

a"Relief"For"Fraud"Misrep"in"equity"(remedies)!• General!rule!bw!law!&!equity!is!law!gives!money,!but!not!things,!and!equity!gives!things,!but!not!money!• Rescission!!wipe!out!the!K!retroactively!as!if!the!K!never!was!• Implications!depend!on!circs:!

o If!parties!haven’t!performed,!it’s!easy!to!rescind!o If!perf!has!happened!it’s!more!difficult!–!can!still!rescind,!but!messier!–!needs!to!be!ancillary"relief:!

Must!give!back!the!primary!perf!&!must!make!it!as!if!the!K!never!happened!(monetary!rescission)!• Ex:!profits!made!from!a!sold!business,!taxes!from!transaction,!rent,!utilities,!etc!

If!there!are!still!losses,!the!other!party!has!to!compensate!for!the!loss! Tries!to!put!both!parties!back!in!the!same!position!they!were!in!

"!Defences"to"Rescission"1. If!it’s!impossible!to!rescind!(ex:!in!a!K!where!services!were!given!(ie.!lecture,!massage,!etc)!2. Impossible!bc!a!3rd!party!has!stepped!into!a!position!that!has!prevented!us!from!going!back!

• Ex:!If!you!sold!the!house!involved!in!the!original!K!to!a!3rd!party!prior!to!rescission!3. Laches!(unexcused!delay)!–!If!you!dither!w!prejudice,!then!you!can’t!complain!in!court;!2!ways:!

• 1.!If!you’ve!unreasonably!delayed!• 2.!If!that!delay!would!prejudice!the!other!party!if!you!were!to!take!action!

4. If!you’ve!affirmed!the!K!• If!you!carry!on!after!you!know!the!other!party!has!lied!to!you,!then!you’ve!affirmed!the!K!

• Neg!is!no!D!to!rescission!(if!P!fails!to!look!at!the!prop!prior!to!buying!&!the!misreps!would’ve!been!obvious)!"!Relief"in"law"for"fraudulent"misrep"

1. Can!rescind!the!K!(rules!the!same!as!equity)!–!K!is!voidable!at!P’s!option,!not!void"2. Can!sue!for!tort!of!deceit!or!tort!(can!get!damages!–!law!awards!damages,!not!equity)"• Can!combine!action!in!Equity!and!Law!in!the!same!case!(Judicature&Act)!"

Negligent"&"Innocent"Misrepresentation"

"!Negligent!misrep!!if!D!carelessly!lied!to!you!"!Innocent!misrep!!What!D!said!isn’t!true,!but!D!didn’t!deliberately!lie!"!Relief"in"Equity"

• You!can!rescind!the!K!(for!all!forms!of!misrep!–!fraud,!neg!or!innocent)!o The!same!Ds!to!rescission!are!also!available!o Laches!is!reckoned!from!the!date!of!misrepresentation!

• With!neg!&!innocent!misrepts,!the!court!is!less!inclined!to!allow!monetary!ancillary!relief!&!more!inclined!to!recognize!affirmation!

"!Relief"in"Law"• In!law,!can!only!rescind!for!fraud!misrep!(also!can!only!sue!for!tort!of!deceit!w!fraud!misrep)!• For!neg!misrep,!you!can!sue!for!the!tort!of!Hedley!Byrne!&!get!damages!(backward!looking)!• No!remedy!in!law!for!innocent!misrep!

10!

&

Smith&v&Land&&&house&Property&(1884)&–&(nature&of&representation&–&fact&&&opinion)&Ratio:&If&an&opinion&is&made&by&party&w&inside&knowledge,&it&may&be&interpreted&as&fact&Facts:!D!sells!hotel!to!P;!D!says!T!is!“most!desirable”;!T!is!bad!T!&!is!insolvent;!P!sues!D;!D!says!didn’t!make!st!of!fact!Issue:!When!does!a!statement!of!opinion!entail!a!representation?!Held:!"!A!statement!of!opinion!alone!cannot!be!a!misrep!–!but!in!this!case,!there’s!an!implied!statement!of!fact!! !!"!Even!an!innocent!misrep!is!enough!to!rescind!the!K!bc!P!would!never!have!known!better!! !!"!When!facts!are!not!known!to!each!party,!a!st!of!opinion!by!party!in!a!better!position!(or!who!should!have!

particular!knowledge)!is!regarded!as!a!st!of!fact!if!relied!upon!by!the!representee!! !!"!“Most!desirable!T”!wrongly!suggested!no!past!problems!in!an!area!which!D!should’ve!known!about!! !!"!Since!P!asked!for!only!rescission,!doesn’t!matter!if!it’s!a!fraud,!neg!or!innocent!misrep!(only!tort!relief!cares)!

Bank&of&BC&v&Wren&Development&(&1973&BCSC)&–&(silence&as&representation&–&innocent&misrep)&Ratio:&Silence&+&something&else&may&be&misrep&(see&above&criteria&–&req&#1)&Facts:!"!P!loans!to!D;!P!gets!security!for!in!the!form!of!shares!in!another!company!(C);!!& &&&&V!P!also!gets!S!&!A!to!guarantee!the!loan!(guarantee!is!a!diff!K);!S!exchanges!shares!(new!ones!worth!less)!! !!!!"!P!wants!a!renewed!guarant!in!order!to!extend!the!loan;!A!checks!to!see!if!anything!changed!in!the!security!! !!!!"!P!says!“We!think!nothing!has!changed,!we’ll!look!into!it.”;!P!sues!A!when!load!defaults!! !!!!"!A!says!there!was!an!innocent!misrep!in!the!uncorrected!statement!and!he!was!induced!Issue:!When!can!silence!constitute!a!mistrep?!Held:!"!Sit!of!half"truth!–!K!unenforceable!if!P!fails!to!disclose!a!change!of!a!material!fact,!which!induces!D!into!K!& !!"!When!A!signed,!he!was!misled!by!words!of!P!into!believing!there!was!no!change!in!the!security!! !!"!If!A!had!known!that!the!security!was!diff,!he!probs!wouldn’t!have!personally!guaranteed!the!loan!extension!! !!"!Previous!truth!was!now!untruth!–!silence!implicitly!represented!un!unchanged!status!(onus!on!P!to!correct)!! !!"!P’s!innocence!is!irrelevant!in!the!circs!–!A!sought!equitable!rescission!so!no!proof!of!fraud!needed!

Redgrave&v&Hurd&(1881)&–&(representee’s&neg&–&presumption&of&inducement)&Ratio:&]&Inducement&is&presumed&if&representation&intended&to&induce&(representor&must&then&rebut&pres&by&

showing&no&reliance&or&actual&knowledge)&&&&&&&&&&&&&&]&It’s&no&D&to&say&that&the&other&party&should’ve,&through&due&diligence,&discovered&the&misrep&(no&

positive&duty&on&the&representee&to&check&the&validity&of&a&representation&Facts:!"!P!wants!to!sell!business;!D!asks!how!much!$!it!generates;!P!says!an!amount!&!pts!to!some!files!that!show!it!! !"!D!doesn’t!investigate;!in!reality,!there!were!no!docs!&!the!real!amount!of!$!was!much!lower!! !"!P!sues!for!specific!perf,!while!D!wants!to!rescind!the!K!&!also!sues!for!deceit!Issue:!Does!neg!preclude!a!party!from!receiving!rescission?!Must!a!party!seeking!rescission!prove!inducement?!Held:!"!Equity!–!not!nec!to!prove!party!making!rep!knew!it!was!false!at!the!time!the!rep!was!made!! "!On!facts,!no!proof!of!fraud!or!recklessness,!so!tort!damages!precluded!!only!rescission!available!

Kupchak&v&Dayson&Holdings&(1965&BCCA)&–&(monetary&restoration/laches&&&fraud)&Facts:!"!P!&!D!swap!props;!D’s!motel!for!D’s!2!props!&!$;!1st!thing!D!does!is!sell!½!interest!in!1!prop!to!a!3rd!party!! !!!"!P!finds!out!motel!is!not!the!prop!he!was!promised!&!wasn’t!bringing!in!the!$!he!was!told!it!would!earn!! !!!"!P!wants!to!rescind;!D!says!no;!While!waiting!for!court!date,!P!operates!the!business!Issue:!When!can!monetary!relief!be!ordered!as!restitution?!When!will!affirmation!or!laches!bar!rescission?!Held:!"!It!was!a!fraud!misrep!–!so!court!said!they!can!be!very!flexible!w!putting!parties!back!in!orig!positions!& &!"!Court!says!the!parties!don’t!have!to!give!back!exactly&the!same!thing!! !!"!Motel!goes!back!to!D!–!but!have!to!deal!w!things!done!to!the!motel!in!the!meantime!

• Equity!can!give!$!as!ancillary!relief!to!P;!P!has!to!give!D!the!profits!earned,!but!also!gets!reimbursed!for!expenses!occurred!from!running!the!motel!

! !!"!The!$!&!the!prop!that!wasn’t!sold!goes!back!to!P;!but!the!sold!prop!can’t!go!back!to!P!bc!of!the!3rd!party!• Bc!it’s!fraud!misrep,!court!gave!$!instead!(value!of!the!prop)!–!rescission!in!the!form!of!$!(not!dams)!

! !!"!Laches!&!affirmation!don’t!apply!to!this!case!• Laches!–!no!hard!&!fast!limitation!period!–!but!no!laches!here!bc!no!delay!• P!didn’t!affirm!the!K!–!he!had!no!choice!but!to!operate!it!in!the!meantime!bc!D!wouldn’t!take!it!back!

o For!affirmation!you!need!to!hang!on!with!the!view!to!keep!the!K!

!

11!

Ratio: Equity has 4 forms of relief available, including: (a) Restoration in specie- return of actual property; return as much of property as we can. (b) Indemnification- reparation of necessary liabilities- return expenses while operating hotel, (c) Account of profit- disgorgement of gains earned by prop- return all profits earned upon reversing transaction, and (d) Compensation- money in lieu of in specie restoration- not technically damages

TERMS"

Express"Terms"

"!There!are!2!types!of!terms!but!three!forms:!conditions,!warranties!and!innominates!• Condition:!a!term!going!to!the!root!of!the!K!(discharge!&!damages!–!goes!to!identity!of!purchased!item)!• Warranty:!a!term!not!going!to!the!root!of!the!K!(damages!only!–!goes!to!quality!of!purchased!item)!• Innominate:!a!wait!and!see!term!(after!event!occurs,!does!it!turn!out!to!be!a!condition!or!a!warranty?)!

"!If!a!term!of!the!K!is!untrue!there!are!a!variety!of!remedies!depending!on!the!nature!of!the!term:!• These!remedies!are!forward!looking!"!expectations!• Condition:!term!is!so!important!that!the!K!is!discharged!and!damages!can!be!awarded!in!event!of!a!breach!

o Discharge!is!not!same!as!rescission!(discharge:!K!existed!&!brought!to!an!end!&!damages!are!given)!o In!the!event!of!a!discharge!all!subsidiary!or!remedial!obligations!remain!(ie.!exclusion!clause,!etc)!o Discharge!does!not!get!rid!of!the!K…!simply!provides!relief!of!primary!obligations!

• Warranty:!can!only!get!damages!for!a!breach!(both!parties!must!continue!K!but!damages!may!be!awarded)!• Innominate:!(wait!and!see)!–!unsure!of!the!damages;!dependant!on!whether!it!is!found!to!be!a!cond!or!war!

Hong&Kong&Fir&Shipping&v&Kawasaki&(1962)&–&(innominate&terms)&Ratio:&Courts&may&wait&&&see&what&the&conseq&of&the&br&are&in&order&to&determine&whether&it’s&a&cond&or&war&Facts:!"!P!rented!ship!to!D!for!24mos;!P!said!ship!was!fitted!for!use!in!ordinary!cargo!service!! "!But!ship!held!up!for!5wks!&!needed!15wks!of!repairs;!D!repudiated!the!K!&!P!sued!for!wrongful!repudiation!Issue:!Was!P’s!orig!breach!(lack!of!sea"worthiness)!a!condition!or!a!warranty?!Grounds!to!discharge!the!K?"Held:!"!D!cannot!rescind!(courts!take!a!flexible!approach)!! "!Test:!Did!the!events!that!occurred!as!a!result!of!the!breach,!deprive!the!party!attempting!to!rescind!of!the!

benefits!that!it!expected!to!receive!from!the!K?!• The!br!must!lead!to!the!party!not!being!able!to!obtain!all!or!a!substantial!proportion!of!the!benefits!

that!they!intended!to!receive!by!entering!into!th!K!! "!Here,!Ds!still!get!to!have!the!boat!for!20!more!mos!!the!expected!benefit!can!still!be!received!

• Therefore,!this!breach!should!only!lead!to!damages,!not!rescission!

Krawchuk&v&Ulrychova&(1996&ABPC)&–&(innominate&terms)&Facts:!"!P!buying!D’s!horse;!D!said!horse!was!“sound”;!It!actually!bucks,!but!that’s!not!grounds!for!being!“unsound”!! !"!Horse!also!cribs;!This!makes!it!unsound;!a!cribbing!collar!fixes!the!problem;!D!offered!$50!for!the!collar!Issue:!When!will!the!purchaser!have!the!right!of!discharge?!Held:!"!Courts!describe!it!as!an!innominate!term!(bc!soundness!can!mean!many!things)!! "!Even!though!it’s!unsound,!it!counts!as!a!br!of!warranty!bc!the!problem!can!easily!be!solved!! "!So!P!can’t!discharge!the!K,!but!can!get!damages!!!!!!!!!!!!!"!Inducement!is!pres!if!rep!intended!to!induce;!D!must!then!rebut!pre!by!showing!no!reliance!or!knowledge!

Parol"Evidence"Rule"(parol"="spoken"communication)"

"!A!written!K!generally!cannot!be!modified!by!external!ev!(parties!cannot!go!beyond!the!“4!corners”!of!document)!• The!rule!excludes!any!external!ev!(not!just!oral)!

"!If!K!is!written!&!the!PER!applies,!then!you!can’t!go!outside!the!K!itself!(can’t!introduce!oral!terms!/!outside!things)!"!The!presumptive!rule!is!!if!it!looks!like!a!complete!K,!then!the!PER!applies!

• Traditional!view:!external!ev!is!not!admissible!in!order!to!prove!that!a!K!is!incomplete!• Modern!view:!external!ev!can!be!used!to!show!that!a!K!is!incomplete!• Canadian!courts!have!not!decided!–!external!ev!may!or!may!not!be!admissible!to!prove!a!K!is!incomplete!

12!

"!PER!is!strictly!applied!if!the!parties!intended!the!doc!to!be!complete!(incompatible!if!didn’t!intend!to!be!complete)!Exceptions"to"the"PER" "External"ev"can"be"admissible"when:"• Ev!that!K!was!subj!to!a!cond&precedent!(that!a!cond!was!satisfied!in!order!to!bring!about!the!creation!of!the!K)"• Ev!of!existence!of!a!collateral&K!(separate!K!standing!alongside!main!agreement)"• Proof!that!the!K!was!wrongly&induced!(&!is!therefore!defective!due!to!fraud,!undue!influence!or!misrep,!etc)"• It’s!always!subj!to!the!rule&of&rectification!(effectively!an!unjust!enrichment!remedy)"

o If!you!haven’t!captured!the!essence!of!the!K!in!the!written!word,!you!can!go!in!after!&!fix!the!wording"o If!you!can!prove!that!both!parties!intended!the!written!word!to!be!something!else,!you!can!correct!the!doc"

• If!the!parties!decide!to!vary&or&terminate&the&K"• Proof!of!waiver&or&promissory&estoppel"• Ev!of!misrepresentation&of&meaning&of&a&written&term"• If!you!can!prove!some!ambiguous&term&in&the&K"

Implied"Terms"

"!PER!!parties!gen!cannot!add!written!terms!into!K!once!it’s!made,!BUT!implied!terms!can!sometimes!be!included!"!Implied!terms!cannot!create!a!K!(bc!there!will!be!a!lack!of!consensus)!

• K!must!be!up!and!running,!only!then!can!implied!terms!be!used!to!recognize!unstated!intentions!o Obj!test!!what!the!RP!would!think!the!intent!was!

"!Scope"of"implied"terms:!• Must!be!necessary!(not!merely!reasonable)!for!business!efficacy!• Terms!must!be!precisely!definable!and!consistent!with!intentions!!• Parties!must!have!presumed!to!have!intended!the!term!

"!All!implied!terms!go!to!parties’!implied!intentions.!!• Presumptively!this!is!what!parties!intended!–!this!is!what!is!reasonably!there.!!• Can!do!this!in!number!of!ways:!

a) Previous!dealings!(Hillas&v&Arcos)!• Import!terms!from!the!past!if!we’ve!had!previous!dealings!• Not!all!terms!implied!into!new!K!–!must!be!necessary,!definable,!and!consistent!with!intentions!

b) The!business!efficacy!rule!(Dynamic&v&OK&Detailing)!• The!parties!would!have!adopted!the!term!wo!Q!at!the!formation!of!the!K!if!an!officious!

bystander!would!have!butted!in!&!said!“don’t!you!mean!to!have!that!in!there?”!• A!term!so!obvious!that!it!has!not!even!been!talked!about!

o Wo!it,!the!K!wouldn’t!make!sense!(a!high!threshold)!c) Certain!industry!(if!2!parties!are!in!a!specific!business!of!dealing,!the!context!may!imply!term)!d) Statute!(Applies!without!regard!to!parties’!intentions!–!ex:!Sale&of&Goods&Act)!

!"The"Sales"of"Goods"Act""!**Applies!only!to!goods/things…!not!land!or!services!

• a!high!class!restaurant!is!likely!to!be!a!service!where!low!class!place!is!more!good!orientated!"!Applies!to!natural!and!manufactured!goods!"!While!these!terms!are!implied,!they!can!be!modified!with!express!negation!by!the!contracting!parties!!V&The&Sales&of&Goods&Act&implies&various&terms&into&a&sales&transaction&for&goods,&they&include:&

• Title!to!sell:!o There!is!a!condition!that!the!seller!has!title!to!sell!o There!is!a!warranty!that!the!buyer!will!receive!clear!title!(no!lien!or!encumbrance!on!the!asset)!!

• Nature!of!the!goods:!o There’s!a!cond!that!the!goods!will!match!the!description!(if!I!buy!peas!&!get!nuts!I!can!get!a!disch!o There!is!a!condition!that!the!goods!will!correspond!with!the!sample!!

Unless!the!defect!is!reasonably!discoverable!by!the!purchaser! The!purchaser!is!entitled!to!a!reas!inspection!of!the!goods!(but!there!is!no!duty!to!inspect)! The!goods!must!be!free!of!un"merchantable!defects!

!

13!

• There!is!a!condition!that!goods!are!of!merchantable!quality!(means!to!be!free!of!any!defects!that!would!cause!a!RP!to!insist!upon!a!reduction!in!price)!

o There’s!no!duty!to!inspect,!but!if!you!do!&!should!have!discovered!the!defect,!the!cond!doesn’t!apply!• There!is!a!condition!that!the!goods!are!fit!for!the!intended!purpose!

o If!the!vendor!normally!deals!in!such!goods!&!the!purchaser!openly!relies!upon!his!judgment!(if!the!salesperson!says!it!will!work!for!your!goal),!if!it!turns!out!that!it!is!not!fit!for!your!use!you!can!bring!it!back,!discharge!the!K!and!get!money!back!!

• There!is!a!warranty!that!a!purchaser!will!pay!on!time!• Theres!a!cond!that!the!vendor!will!deliver!on!time!(more!onus!on!delivery!bc!it!may!effect!an!imp!timeline)!• There!is!a!condition!that!the!goods!conform!with!the!K!!

***&For&Exam:&use&this&checklist….&If&there&is&a&sale&of&goods&in&the&problem,&find&out&where&it&goes&wrong&and&if&it&can&be&discharged&or&not***&"Classification"of"Contractual"Terms""!Effect!of!breach!almost!always!function!of!parties’!intention!(cf!statutory!terms)!

• Intention!reckoned!objectively:!reasonable!person!test!!• Easily!resolved!if!parties’!intention!express!• Clouded!if!parties’!intention!unstated!and!unconsidered!!

"Ascertaining"Classification"of"Term"in"Event"of"Breach"(steps"to"take"when"finding"condition"or"warranty)"

1. Is!a!right!of!discharge!provided!by!the!operation!of!some!rule!of!law?!• Ex:!statutory!conditions!provided!by!Sale&of&Goods&Act!• Ex:!judicial!precedent!interpreting!specific!category!of!term!as!condition!

2. Does!the!K!expressly!provide!the!right!of!discharge?!• Parties!free!to!allow!discharge!for!any&breach!(regardless!of!actual!effect)!

o Right!not&limited!to!objectively!serious!breaches!• Was!it!pre"decided!by!the!parties!that!a!term!would!be!treated!like!a!condition!or!a!warranty?!

3. Does!the!K!impliedly!provide!the!right!of!discharge?!• Implication!gleaned!from!total!circs!

o Ex:!terms,!reason!for!K,!market,!subj!matter,!parties’!positions!o Judge!placed!in!parties’!mental!state!at!time!of!contracting!

• Would!parties!say!any&breach!supports!right!of!discharge?!4. Has!the!innocent!party!been!deprives!substantially!of!the!expected!benefit?!

• Term!is!now!described!as!an!innominate!term!o A!new!test!rather!than!a!new!rule!

• Right!of!discharge!depends!upon!effect!of!breach!on!innocent!party!o Best!explained!as!parties’!presumed!intention!

Parties!did!not!intend!to!commit!themselves!to!pre"factual!conclusion! Parties!intended!rights!to!be!dependent!upon!actual!consequences!

o Would!parties!say!this!breach!supports!right!of!discharge?!o If!it!destroys!all!benefit!(deprives!of!substantial!benefit)!!a!condition!o If!only!mildly!annoying!!a!warranty!

• Test!in!Hong&Kong&Fir&Shipping&Co:!Did!the!events!that!occurred!as!a!result!of!the!breach,!deprive!the!party!attempting!to!rescind!of!the!benefits!that!it!expected!to!receive!from!the!K?!o The!br!must!lead!to!the!party!not!being!able!to!obtain!all!or!a!substantial!proportion!of!the!

benefits!that!they!intended!to!receive!by!entering!into!th!K! On!exam!!usually!#1!or!#4! If!K!has!been!breached!due!to!misrep!or!breaching!a!cond/term!!you!cannot!discharge!the!K!if!you!affirm!it!!

14!

EXCLUSION"CLAUSES"

"!ECs!are!a!secondary!or!remedial!obligation!that!remains!after!a!K!is!discharged!(discharge!is!NOT!rescission)!"!EC’s!&!Limitation!clauses!are!K’al!provisions!that!effect!liability!in!the!event!of!a!breach!"!3"variations:"

1. Complete!exemption!clause!!exempts!all!liability!(but!there!can!be!no!exemption!for!fraud)!2. Liability!excluded!w!respect!to!certain!acts!(certain!acts!will!not!result!in!damages)!

• Ex:!exclude!liability!for!carelessness!that!causes!damage!3. Can!exclude!liability!in!part!(limit!damages!that!can!be!recovered)!

• Ex:!a!limitation!clause!that!says!the!D!will!only!be!liable!for!a!certain!amount!if!a!breach!occurs!"!EC’s!often!exist!in!standard!form!Ks!!it’s!an!allocation!of!risk!&!allows!parties!to!know!who!must!buy!insurance!

• They!generally!lead!to!overall!lower!prices!as!the!seller!doesn’t!need!to!have!blanket!insurance!• The!negative!!they!can!lead!to!imposing!unconscionable!or!unreasonable!terms!

"!Courts!take!a!restrictive!approach!to!ECs!–!increasing!trend!toward!non"enforcement!of!ECs!• EC!less!acceptable!if!there’s!inequality!of!bargaining!power!• EC!less!acceptable!if!liability!totally!excluded!rather!than!limited!

INCORPORATION"AND"NOTICE"

Unsigned"Documents"

Parker&v&South&Eastern&Railway&(1877&EN)&–&(notice&of&written&conditions&–&unsigned)&Facts:!"!P!checked!bags!on!train;!given!stub!w!#!on!one!side!&!small!print!on!the!other!(EC!that!D!only!resp!for!£10)!! !"!P!had!received!the!stub!before!but!never!read!the!back;!lost!bag!&!wants!value!back!(worth!more!than!£10)!Issue:!Was!P!bound!by!the!terms!of!the!EC!on!the!ticket?!!Held:!!1.!Historically,!bound!to!a!signed!K!even!if!you!didn’t!read!it!(changed!in!Tilden)!! 2.!Generally,!if!you’re!aware!of!the!existence!of!the!conds!&!give!your!assent,!you’ll!be!bound!

• If!you!assent,!you’re!bound!regardless!of!your!actual!knowledge!or!what!a!RP!would’ve!thought!• Assent!=!a!positive!indication!that!you!are!willing!to!be!bound!to!the!conditions!of!the!K!

! 3.!If!RP!would!expect!terms,!you’re!generally!bound!to!them!(regardless!of!knowledge)!• Bound!only!to!the!extent!to!which!a!RP!would!think!the!clause!extends!to!

Thorton&v&Shoe&Lane&Parking&(1971&EN&CA)&–&(incorporation&of&conditions)&Ratio:&]&Customer&is&only&bound&to&conditions&when&reasonably&sufficient&notice&of&the&terms&is&given&&&&&&&&&&&&&&]&The&more&onerous&or&destructive&the&clause&is,&the&greater&steps&required&for&notice&Facts:!"!P!parks!car!in!D’s!lot;!Sign!on!outside!of!lot!says!“all!cars!parked!at!O’s!risk”;!P!never!been!to!lot!before;!! !"!P!buys!ticket!from!machine;!Stub!says!it’s!subj!to!all!terms!located!inside!lot!(posted!signs!somewhere)!! !"!P!parks;!fails!to!read!conds;!gets!injured!in!the!lot;!D!attempts!to!use!EC!to!negate!liab!Held:!"!Terms!not!sufficiently!disclosed!at!the!outset!(see!ratio)!!!!!!!!!!!"!Burden!is!on!K’s!creator!to!draw!the!info!to!the!customer’s!attn;!more!unusual/onerous!!higher!the!burden!!!!!!!!!!"!w!machines,!acceptance!is!when!you!put!$!in!–!terms!that!matter!are!those!suff!brought!to!buyer’s!attn!before!!!!!!!!!!!"!***NOT!bound!by!terms!on!stub!if!they!differ!form!the!notice!bc!the!stub!comes!too!late!(after!K!is!formed)!

• Cannot!unilaterally!add!terms!in!after!the!K!is!formed!!!!!!!!!!!"!If!P!was!bound!by!sign!outside!of!lot!bc!there!was!suff!notice!of!display,!sign!still!only!pertains!to!prop!dam!!!!!!!!!!!"!Matter!of!practicalities!–!highly!impractical!for!P!to!get!conds!before!K!formation!

Interfoto&Picture&Library&v&Stiletto&Visual&Programmes&(EN)&–&(Particularized&notice&&&substantive&fairness)&Ratio:]If&a&term&is&more&onerous&than&what&RP&would&expect,&more&effort&must&be&taken&to&bring&to&party’s&attn&&&&&&&&&&&&&]&The&more&onerous/punishing/extraordinary&the&term,&the&larger&the&onus&to&bring&to&party’s&attn.&Facts:!"!P!delivers!47!pics!in!a!bag!to!D;!D!says!they!were!only!going!to!use!1!or!2;!there!were!conds!in!a!note!in!bag!!!!!!!!!!!!!"!Conds!on!a!delivery!note;!One!cond!says!there!was!a!holding!fee!of!£5/pic!for!each!day!over!14!days!!!!!!!!!!!!!"!After!about!a!month,!P!sent!a!bill!for!£3,783.50;!D!refused!to!pay;!P!sued!Issue:!Does!it!matter!that!D!didn’t!read!the!K?!Is!D!bound!by!the!onerous!terms!in!the!K?!!Held:!"!Unless!your!attn.!is!purposefully!brought!to!the!spec!cond,!it’s!req!to!be!on!par!w!what!the!RP!would!expect!

!

15!

• RP!only!expects!reasonable!conditions!–!In!this!case!RP!would!only!expect!a!reas!charge!! !!"!Sliding!scale!(see!ratio)!!in!this!case,!the!onus!on!P!was!larger!than!just!putting!a!note!in!a!bag!! !!"!Payment!instead!is!based!on!the!market!value!for!such!late!fees!(£3.50/wk)!! !"No!overriding!obl!of!good!faith!in!Ks,!but!bc!this!was!such!an!unusual!obl,!it!doesn’t!count!(not!enough!notice)!

McCutcheon&v&David&MacBrayne&(1964&HL)&–&(importing&an&EC&from&past&dealings)&Facts:!"!D!was!only!ferry!service!avail;!D!had!all!customers!sign!EC!to!exempt!from!liability!(not!consistent!w!this)!&&&&&&&&&&&&"!P!just!exchanged!goods!for!$,!but!didn’t!sign!a!K!(oral!agreement!w!no!mention!of!EC);!Ferry!sinks!Issue:!Can!the!EC!in!the!written!K!be!imported!into!this!agreement!(based!on!past!dealings)?!NO"Held:!"!Conds!not!automatically!imported!due!to!past!dealings!& "&Past!deal!may!be!relevant!if!it!establishes!actual!knowledge!of!the!cond!&!its!substance!(not!the!case!here)!! "!There!are!3!ways!to!be!bound!by!an!EC:!

1. If!you!sign!the!K,!then!you’re!bound!(not!true!in!this!case)!2. Conds!binding!if!“assented”!to!by!offeree!(no!need!to!sign!K)!

• No!proof!of!assent!here!–!Looks!to!RP!that!they!were!creating!a!bare!K!to!deliver!the!goods!3. No&sig&&&no&assent&&you&can&import&implied&terms&from&previous&dealings&if&you&prove&2&things:&

a. Prove!that!it!was!a!consistent!pattern!of!past!dealings!(not!found!here!bc!didn’t!always!sign!a!K)!b. Must!show!that!there!is!not!just!reas!knowledge!of!the!terms,!but!actual!knowledge!(subj!test)!

• No!ev!of!this!here;!P!didn’t!think!to!much!about!it!at!all!

Signed"Documents"

Tilden&Rent]a]Car&v&Clendenning&(1978&ONCA)&–&(signed&docs&–&the&new&rule?)&Ratio:&The&party&offering&the&EC&must&draw&to&the&other&side’s&attn&unusual&or&onerous&terms&when&the&

offering&party&knows&that&the&sig&would&not&evidence&the&true&intention&of&the&signer&Facts:!"!P!rents!car!from!D!(had!done!so!many!times!before);!P!signed!K!wo!reading!it;!on!back!of!K!was!EC!& "!EC!said!despite!the!add’l!insur!(which!P!had),!there’s!no!coverage!whatsoever!if!any!alcohol!is!consumed!! "!P!had!a!drink;!gets!into!accident;!Courts!hold!he!had!been!drinking,!but!was!not!drunk!Issue:!Should!onerous!terms!in!a!signed!K!be!permissible/binding?!Held:!"!The!EX!conflicts!w!the!total!coverage!clause!–!the!clause!is!also!onerous!as!it!is!overbroad!& a"Even"if"you"sign"the"K,"you’re"not"necessarily"bound!(sig!is!just!a!shorthand!way!of!showing!assent)!

• Even!if!you!sign,!you!can!rebut!the!pres!!show!you!didn’t!really!intend!to!be!bound!by!that!disclaimer!• This!clause!was!so!unusual!and!onerous!that!a!RP!would!not!have!anticipated!that!sort!of!term!• The!onus!is!on!the!party!making!the!EC!to!draw!it!to!the!D’s!attn!bc!of!it’s!unusualness!

Note:!"!SCC!hasn’t!yet!signed!off!on!this!decision!(courts!still!split!bc!it’s!such!a!marked!departure!form!trad!view)!!

STRICT"CONSTRUCTION"OF"EXCLUSION"CLAUSES"

"!Operable!ECs!narrowly!construed!against!party!drafting!them!"!Contra&proferentem&–!ambiguities!are!resolved!against!the!drafter!of!the!clause!"!Strict!construction!of!nature!of!loss!or!injury!

• “No!warranty!express!or!implied”!liability!not!excluded!for!breach!of!condition!• “All!car’s!parked!at!owner’s!risk”!exclusion!for!property!damage,!but!not!for!personal!injury!(Thorton)!

"!Strict!construction!of!nature!of!the!breach!• Negligence!not!under!general!exclusion!if!other!head!of!liability!!• But!modern!trend!is!towards!holistic!construction!of!intentions!

"!Strict!construction!of!protected!parties!!(narrow!interpretation!of!who!falls!under!the!EC)!• Servant!may!not!fall!under!employer’s!EC,!depending!on!wording!(London&Drugs&v&Kuehne!(1992!SCC))!

!Fundamental"Breach"(FB)""!When!the!breach!deprives!the!innocent!party!of!substantially!the!whole!benefit!of!the!K!!!

16!

Karsales&(Harrow)&v&Wallis&(1956&EN&CA)&Ratio:&When&there&is&a&“FB”&of&the&K,&it’s&a&ROL&that&you&cannot&rely&on&a&EC,&regardless&of&parties’&intentions&Facts:!"!D!makes!deal!to!buy!a!car!from!P!&!signs!K!to!pick!up!in!2!days;!EC!in!K!says!no!liab!for!br!of!cond!or!war!! "!When!D!picks!it!up,!its!been!completely!stripped!down;!P!says!tough!luck!&!sues!D!for!payment!Held:!"!K!had!implied!term!that!car!will!be!delivered!in!inspection!state!! "!If!it’s!a!FB,!EX!is!inapplicable!as!a!matter!of!law,!so!P!is!unable!to!recover!$!! "!If!the!br!goes!to!the!root!of!the!K,!it!disentitles!the!party!from!relying!on!the!EC!Note:!"!HOL!slaps!Denning!down!many!times!regarding!FB!doctrine!!it!DOES!NOT!EXIST!! "!In!EN,!it’s!simply!a!matter!of!interpretation;!If!the!clause!covers!the!events,!even!if!unfair,!the!EC!is!upheld!! "!In!a!similar!case,!Photo&Productions&v&Securicor&Transport,!HOL!again!deny’s!Denning!&!says!FB!doesn’t!exist!

Hunter&Engineering&v&Syncrude&(1989&SCC)&–&(the&Canadian&ruling&on&FB&–&doesn’t&exist)&Ratio:&Canadian&judges&in&the&extreme&cases&have&a&residual&power&to&negate&an&EC&(follow&the&2&tests&below)&Facts:"S!buys!H’s!mining!boxes!&!AC’s!extraction!boxes;!Each!w!warranty!for!12mos!of!use!or!24mos!after!purchase!! "!In!AC!K!it!says!no!liab!for!any!statutory!applied!conds!&!warranties;!Boxes!break!after!2!yrs!&!cause!damage!!Relevant&Sales&of&Goods&Act&sect:!If!you!buy!goods!for!certain!purposes,!the!goods!must!be!suitable!for!that!purpose!Held:!AC!is!not!liable!(due!to!EC);!H!is!liable!Reasons:&Dickson&CJC&• AC!protected!from!liab!due!to!EC!!freedom!of!K!(courts!shouldn’t!disturb!bargains!unless!unconscionable)!• The!fundamental!breach!doctrine!doesn’t!exist!in!Canada!• Test"of"ex"ante"unconscionability:!ask!at!time!of!K!formation!whether!a!term!is!so!unfair!that!it!would!be!

unreasonable!to!enforce!it!(creates!a!new!type!of!unconscionability!not!ltd!to!unequal!bargaining!power)!o This!arises!from!the!need!for!a!residual!doctrine!in!order!to!negate!some!ECs!in!exceptional!cases!o Problem:!the!term!“unconscionability”!here!is!not!the!same!as!the!existing!doc!of!unconscionability!

Reasons:&Wilson&J&• Freedom!to!K!(if!RP!would!think!that!the!EC!applies!to!the!circs,!then!it!does,!regardless!of!fairness)!• We!do!need!a!residual!doctrine!in!certain!cases!in!order!to!protect!consumers!• Ex"post"unfairness"test:!If!after!the!K!is!made,!it!is!grossly!unfair!to!apply!the!EC,!then!it!does!not!apply!• An&EC&is&not&necessarily&precluded&by&FB&–&it’s&precluded&only&if&FB&created&ex&post&unfairness&• Here!is!not!ex!post!unfairness!bc!S!should’ve!known!that!AC!was!allocating!the!risks!&!should’ve!gotten!insur!

!Outcome"from"Hunter&"!There!are!2!tests:!Test!of!ex!ante!unconscionability!(Dickson)!&!ex!post!unfairness!test!(Wilson)!"!We!run!both!together!!If!the!circs!meet!either!one,!then!the!EC!does!not!apply!"!On!the!exam,!if!the!sit!w!the!EC!seems!outrageous,!cite!Wilson!&!explain!why!it’s!ex!post!unfair!"!On!the!exam!just!give!some!explanation!as!to!why!it’s!an!EC!that!shouldn’t!apply!!"!Fraser&Jewellers&Ltd&v&Dominion&Electric&Protection!followed!the!rules!in!Hunter!• ECs!are!prima!facie!enforceable!even!if!FB;!relief!only!if!clause!meets!one!of!the!2!tests!(only!in!extreme!cases)!

"!Solway&v&Davis&Moving&Storage!was!an!ex!of!a!bad!judgment!• Shouldn’t!have!said!the!EC!was!inapplicable;!br!arose!through!carelessness,!not!deliberate!or!recklessness!• Obligation!of!care!is!implicit!in!every!moving!K!(parties!had!their!price!&!EC!&!took!the!allocation!of!risks)!

CONTRACTUAL"DEFECTS"

]&Duress,&undue&influence,&unconscionability,&illegality,&frustration&&&mistake&

IMPROPERLY"INDUCED"CONTRACTS"

"!When!K!is!improperly!induced!(via!misrep,!duress,!undue!infl!or!unconscion),!you!have!the!option!to!rescind!it!• You!can!rescind!bc!if!one’s!mind!has!not!gone!w!the!K!(not!your!free!will/autonomy),!then!the!K!is!not!valid!

"!***These!are!fragile!rights;!Can!be!lost!if!a!bona!fide!purchaser!for!value!has!become!involved!• If!before!you!void!the!K,!the!item!has!been!sold!to!a!3rd!party!–!at!that!pt!you’re!stuck!w!the!K,!even!if!unfair!• Therefore,!if!it’s!a!case!of!undue!influence,!you!need!to!tell!someone!right!away!(even!the!police)!in!order!to!rescind!the!K!before!BPV!gets!involved!

!

17!

Duress"

a"Duress:!illegitimate!external!pressure!that!induces!a!person!into!a!K!(the!K!was!not!truly!a!product!of!free!will)!a"In"order"to"prove"Duress"a"P"must"show:"(1)"improper"pressure"from"the"D"&"(2)"coercion"of"the"P’s"will"!a"A!P!does!not!need!to!prove!that!the!transaction!was!in!any!way!disadvantageous!a"Dur"must"be"a"(but"not"necessarily"the)"causal"trigger"of"transaction"(can!be!one!of!multiple!forces!working!to!get!someone!into!a!K)!"Different"Types"of"Duress"1. Duress!of!the!Person:!A!threat!of!violence!or!detention!against!P!or!person!close!to!P!(the!threat!must!be!

believable!and!believed)!2. Duress!of!Goods:!When!a!K!is!induced!through!a!threat!of,!or!actual,!wrongful!detention!of!property!

• 1.!K!must!be!induced!through!(threat!of)!wrongful!detention!of!property!• 2.!Must!not!be!justified!by!law!(ex:!distress!for!rent)!• 3.!Purported!requirement!of!“urgent!&!pressing!necessity”!(easily!satisfied)!

o Illegitimate!external!pressure!to!ones!goods!(ex:!pawn!shop!wont!give!item!back!until!unfair!$!is!paid)!3. Abuse!of!(legal)!Process:!It!is!impermissible!to!threaten!proceedings!in!bad&faith!or!stifle!criminal!prosecution!

in!exchange!for!benefit!• You!can!threaten!proceedings!in!good&faith!(eg!settlement!of!claim)!

4. Economic!Duress:!Illegitimate!external!economic!pressure!• There!is!a!fine!line!between!driving!a!hard!bargain!and!economic!duress!• TEST&for&Economic&Duress:!there!must!be!illegitimate!economic!pressure!&!a!lack!of!a!feasible!alternative!• Factors!indicating!an!illegitimate!pressure:!

o Pressure!applied!in!bad&faith!(hard!bargaining!is!not!bad!faith)!o P!could&not&reas&resist!(no!reas!alternative!(you!over!a!barrel)!–!can!only!do!it!now!and!complain!later!o Plaintiff!commenced&proceedings&promptly!after!pressure!relieved!(a!prompt!complaint)!o Plaintiff!protested!at!time!of!pressure!(if!feasible)!!o P!succumbed!to!pressure!without&legal&advice!(if!you!got!advice!to!capitulate,!it!was!a!case!of!hard!bargaining.!If!you!did!not!get!legal!advice!your!claim!will!be!easier)!

"Remedy"for"Duress""!Duress!operates!at!law,!not!in!equity!"!Duress!is!not!an!independently!actionable!wrong!—!merely!renders!transaction!voidable!!P!can!rescind!!

• Incapable!of!supporting!compensation!or!disgorgement!(giving!back!profits!obtained!unlawfully)!"!The!transaction!not!void!ab&initio!and!remains!valid!until!the!option!to!rescind!is!exercised!by!the!plaintiff!!*!On!exam:!dur!allows!you!to!void!the!K;!IT!NEVER!allows!you!to!get!the!person!on!the!hook!for!their!losses!

Undue"Influence"

"!Undue!influence:!Occurs!when!the!transaction!is!induced!by!inequitable!psychological!dominance!"• Can!occur!even!if!neither!party!recognizes!it!at!the!time!(almost!always!seen!in!hindsight)!• Doesn’t!mean!wrongful,!manipulative,!or!deliberate!–!it!means!too!much!influence!

"Plaintiff’s"Elements"of"Proof:"Summary"

• Type!1:!Actual!=!influence!+!transaction!+!cause/induce"• Type!2B:!Presumed!=!influence!+!suspicious!transaction!+![cause/induce]"• Type!2A:!Presumed!=![[influence]]!+!suspicious!transaction!+![cause/induce]"

o in!certain!relationships,!we!assume!there!is!always!UI!"o […]!=!rebuttable!presumption!"o [[…]]!=!irrebuttable!presumption"

!!!

18!

"!Two"types"of"Undue"Influence"1. Type!1:!Actual!Undue!Influence:!the!P!is!responsible!to!show!all!the!elements!of!the!cause!of!action:!

a. A!relationship!of!influence!(psychological!influenced!exercised)!b. A!transaction!c. &!A!causal!connection!between!the!relationship!and!the!transaction!

• The!transaction!need!not!be!unfair!or!have!(threat!of)!violence!to!get!rescission!under!undue!influence!o You!can!always!get!out!of!it!because!the!K!wasn’t!a!function!of!your!free!will!

• Can!always!rescind!the!transaction!whether!it’s!good,!bad!etc.!!• Substantive!unfairness!need!not!been!established!for!actual&UI!• Special!relationship!need!not!be!established!!

2. Type!2:!Presumed!Undue!Influence!a. Type&2A:!Presumption!that!one!party!exercises!influence!within!a!relationship!b. Type&2B:!Presumption!that!undue!influence!has!been!exercised!

• Presumed"Undue"Influence:"General"Comments"!o P&must&show&

1.!That!the!parties!shared!a!relationship!of!influence,!AND! 2.!That!the!parties!created!a!transaction!that!calls!for!explanation!(suspicious!transaction)!

• Transaction!may!need!to!be!manifest!disadvantage!to!weaker!party!(below)! If!you!show!both!reqs,!equity!puts!a!rebuttable!pres!of!causal!connection!(D!must!rebut)!

o D&must&rebut&this&rebuttable&evidential&presumption&by:&& *Proof!that!transaction!was!function!of!free!will!(independent!legal!advice!is!best!evidence)! Scales!of!probability!must!be!at!least!re"balanced!! If!D!doesn’t!rebut,!the!transaction!is!presumed!induced!by!defendant’s!undue!influence!!

• Type"2A:"Presumed"UI"(rel"of"influence"presumed"existent)!o Relationships!supporting!presumption!

Included:!solicitor"client,!physician"patient,!parent"child,!trustee"beneficiary! Not!incl:!husband"wife,!employer"employee,!bank"customer!

o Nature!of!presumption!!Presumed!that!D!generally&exercised&influence!over!plaintiff!o Effect!of!presumption!!

Obviates!need!for!plaintiff’s!element!#1!(relationship!of!influence)!! Doesn’t!obviate!need!for!plaintiff’s!element!#2!(transaction!calling!for!explanation)!!

o Observations!on!presumption!"!Type!2A!presumed!UI!invariably!entails!two!presumptions:! 1.!Irrebuttable!pres!re!general!existence!of!influence!(triggered!by!inherent!nature!of!rel)!! 2.!Rebuttable!presumption!regarding!exercise!of!undue!influence!(triggered!by!suspic!trans)!

o Ex:!P!is!D’s!mom.!D!gave!P!an!expensive!bike!for!her!bday.!Given!the!parties’!rel,!the!law!irrebuttably!presumes!that!P!exercised!influence!over!D’s!actions.!The!gift!nevertheless!will!stand!unless!add’l!facts!are!such!that!the!transaction!calls!out!for!an!explanation.!P!need!not!otherwise!tender!any!explanation!for!the!good!fortune!!!

A!suspicious!trans!can!occur!if!they’re!not!wealthy!&!doesn’t!usually!give!these!sorts!of!gifts!• Type"2B:"Presumed"UI"(UE"presumed"exercised)"

o Situation:!possibility!of!influence!not!inherent!in!nature!of!parties’!relationship!! No!presumption&of!defendant’s!influence!over!plaintiff!! Plaintiff!must!establish!defendant,!in!fact,!exercised!influence!

• Ex:!husband–wife,!banker–customer,!agent–principal!o Proof!of!influence!–!Evidence!indicating!relationship!of!significant!influence!!

Not!necessarily!a!rel!of!dominance!and!control!—!persuasive!influence!is!enough!o Tate&v&Williamson&(1866)!

P!needed!$;!D!talked!P!into!selling!prop!for!£7K!(worth!£20K);!D!knew!of!the!diff!in!value! Court!set!trans!aside;!P!had!reposed!trust!&!confidence!in!D;!So!D!had!a!power!of!influence! The!transaction!itself!calls!out!for!an!explanation!(discrepancy!in!the!value)! So!a!pres!arose!that!the!K!had!been!UI;!D!was!unable!to!rebut!that!pres!

!Presumed"Undue"Influence:"Manifest"Disadvantage"""!If!a!case!of!actual!UI!occurs!!the!trans!does!not!need!to!be!a!bad!deal!(bc!it!is!already!not!a!product!of!free!will)!

!

19!

"!In!cases!of!presumed!undue!influence!!sometimes!the!court!wants!to!see!a!really!bad!trans!(a!manifest!disadv)!• Manifest!disadvantage!=!patently!contrary!to!plaintiff’s!interests!(a!really!bad!bargain)!• Examples!of!manifest!disadvantage!!

o provision!of!gift!(ie!benefit!without!reciprocal!consideration)!!o guarantee!debt!incurred!exclusively!for!benefit!of!another!

clear!if!guarantee!of!friend’s!business!obligations!! less!clear!if!guarantee!of!husband’s!business!(family!income)!!

"!Canadian!Courts!View!On!Manifest!Disadvantage!• In!a!social!context!you!don’t!need!to!show!a!bad!trans!(manifest!to!the!P’s!disadvantage)!• In!a!commercial!context!you!do!need!to!show!manifest!disadvantage!to!have!presumed!UI!

"!*Canadian!courts!often!ignore!the!Canadian!rule! In!exam!you!can!say!that!you!never!need!manifest!disadvantage!(the!courts!often!either!ignore!it,!or!

speciously!distinguish!it)! Say&“even&though&Geffen&v&Goodman&(SCC)&should&apply&you&should&always&be&able&to&get&out&of&a&case&

of&presumed&UI,&regardless&of&disadvantage,&because&a&lack&of&free&will”&!Third"Party"Participation"Ex:!If!R!does!something!that!induces!O!to!hand!over!the!prop!to!R;!then!R!sells!prop!to!P;!then!R!flees!&!is!out!of!pic!

Issue:!Do!we!favour!O!or!P?!(only!one!can!win)! 2!diff!rules:!

1. Nemo&Dat!(favours!the!Owner)!!you!cannot!give!what!you!do!not!have! If!title!didn’t!actually!of!to!R,!then!O!still!has!valid!title!(it!never!left)!

2. Bona!Fide!purchaser!for!value! If!you!in!good!faith!honestly!thought!you!were!in!a!valid!trans!&!gave!good!consid!to!R,!you!win!

When!do!the!2!rules!apply?!o In!equity!!always!favours!the!BFPV!(favours!the!3rd!party)!o In!law!!if!something!other&than&$,!the!law!favours!the!original!owner!&!applies!Nemo&Dat!rule!o In!law!!if&it’s&$,!then!law!favours!the!BFPV!(so!if!$!stolen!from!O,!then!P!wins!it)!

Bc!$!only!works!if!it!works!freely!though!the!market!place!(so!ppl!don’t!need!to!be!suspicious)!o Law!also!favours!the!BFPV!if!we’re!dealing!w!rights&of&rescission!(2!ex:!duress!&!misrepresentation)!

If!O!has!rt!of!rescis!&!R!gets!watch!&!sells!to!P,!O!can!exercise!rt!against!R!&!P,!unless!P!is!BFPV!!Remedies"for"Undue"Influence" Traditional&rule:!undue!influence!supports!rescission!of!transaction!!

o Restitutionary!rescission!triggered!by!strict!liability!unjust!enrichment!!o Remedy!merely!restores!parties!to!status!quo!ante!!o Action!requires!proof!of!vitiated!intention!(no!autonomy)!but!not!proof!of!wrongdoing!!

Potential&development:!undue!influence!supports!compensation!of!plaintiff’s!loss!!o Remedial!obligation!to!repair!loss!must"be"triggered"by"breach"of"obligation!! Remedy!restores!plaintiff!but!adversely!affects!defendant!! Adverse!effect!justified!only!by!proof"of"wrongdoing!(wrong!consists!of!D’s!knowledge!of!vitiated!intent)!

Potential&problem:!high!threshold!for!minimal!relief!!(risk!that!fault!will!become!invariable!req!of!OU)!!Ex:!P!&!D!co"workers.!D!was!oblivious!to!the!fact!that!P!idolized!him!&!hung!on!his!every!word.!Honestly!unaware!that!it!was!worth!$400K,!D!offered!to!buy!P’s!house!for!$200K.!P!couldn’t!resist.!Some!time!later,!P!recognized!the!degree!to!which!she!had!been!infatuated!with,!and!influenced!by,!D,!and!accordingly!sought!rescission!of!the!sale! If!P!wants!to!sue!in!law,!have!to!show!that!D!exercised!the!infl!AND!that!D!knew&that!he!was!exercising!the!infl!

o But!P!can’t!meet!this!threshold!o So!UI!isn’t!an!independent!actionable!wrong!in!this!case,!it!just!reverses!the!trans!that!ought!not!to!have!happened!(lesser!threshold)!

Does!Pam!seek!restitution!or!compensation?!Restitution! If!the!law!is!designed!to!provide!compensation,!will!Pam!be!able!to!establish!undue!influence?!!

o No!bc!she!has!to!prove!that!D!knew!he!was!exercising!that!influence!

20!

Unconscionability"

"!A!transaction!so!divergent!form!societal!morality!as!to!warrant!rescission! It’s!not!a!case!of!vitiated!intention!–!it’s!about!extreme!immorality!(even!if!you!knew!you!were!doing!it)" Only!have!to!prove!it!was!a!very!bad!K!(no!need!to!prove!vitiated!consent/no!automatism)" Not!about!the!validity!of!the!K,!but!the!fact!that!it!was!so!immoral!that!it!can’t!be!abided!by" An!equitable!doctrine!to!prevent!taking!advantage!of!a!weak!party"

"!Ex:!expectant!heir!case:!if!an!EH!has!signed!away!a!fortune!bc!of!a!bad!deal,!they’ll!let!them!out!of!the!K!(immoral)!"!2"Requirements:"

1. P!must!show!extreme&unfairness!in!the!procedure!(ie!inequality!in!bargaining!power)" P!has!to!be!at!a!hopeless!disadvantage!AND!the!D!ought!to!have!known!(exploitation)"

2. P!must!show!extreme!unfairness!in!the!substance!of!the!transaction" Not!just!a!bad!bargain,!but!a!very!bad!bargain!(must!be!hopelessly!unfair)"

a"Has"a"very"high"threshold!–!look!for!sits!where!P!is!at!a!distinct!disadvantage! Maybe!P!suffers!from!disability,!not!intelligent,!hopelessly!love!struck,!etc! D’s&(constructive)&knowledge&of&the&disadvantage&probably&required&

"!If!P!can!prove!both!elements,!then!equity!raises!the!pres!tha!the!unfair!bargain!came!out!only!bc!of!the!unfair!bargaining!power! D!must!rebut!by!showing!that!it!was!a!fair!process!or!bargain!(near!impossible!to!do)! Really!the!only!way!to!rebut!is!to!show!you!sent!P!off!to!get!independent!legal!advice!&!P!still!signed!

"The"Nature"of"Unconscionability:"Procedural"or"Substantive?"

Trad!view!favours!procedural!focus!o Relief!unlikely!if!substantively!unfair!bargain!results!from!fair!process!o But!no!relief!if!substantially!fair!bargain!resulting!from!unfair!process!

!Remedy"for"Unconscionability""!Traditional!remedy!of!equitable!rescission!(subk!to!all!equitable!bars!–!ex:!3rd!party!rights,!acquiescence,!etc)!!Statutory"Unconscionability"V&Unconscionable&Transactions&Act!"governs!unfair!terms!in!loans!Ks!"!Some!loans!are!so!unfair!we!won’t!allow!them!V&Fair&Trading&Act!—!governs!unfair!consumer!transactions!(can’t!use!in!business!transactions)!

• Consumer!=!goods!or!services!purchased!primarily!for!personal!or!household!use!!o Goods!include!new!houses!//!services!include!repairs,!club!membership,!time"share!!

• Consumer!protection!cannot!be!overridden!by!terms!of!the!K!(the!leg!is!mandatory!–!cannot!work!around)!!• Sanctions!and!remedies!

o Broad!powers!of!investigation!and!compliance!!o Two!years!imprisonment!and/or!$100!000!or!triple!disgorgement!!o Statutory!action!for!compensation!by!victim!

ILLEGALITY"

"!All!of!the!docs!we’ve!looked!at!so!far,!render!the!K!voidable!–!BUT"illegality"just"makes"the"K"void!"!Voidable!=!even!the!if!K!is!properly!induced,!K!is!find!&!only!is!void!if!P!elects!to!do!so!in!a!prompt!amount!of!time!"!A!K!can!be!rendered!invalid/void!based!on!either!CL!illegality!or!statutory!illegality!"COMMON"LAW"ILLEGALITY""!Under!the!CL!!ultimately!it’s!the!judge!that!decides!if!the!thing/act!is!illegal!(a!very!broad!&!flexible!doctrine)!"!Incl!thing!like!crimes,!torts,!actionable!wrongs!&!anything!that!just!ought!not!to!be!(immoral!or!contrary!to!PP)!

Ex:!lend!D!$!for!illegal!gambling!(not!illegal!to!lend!$,!but!if!you!know!it’ll!be!used!for!immoral!act!later!(PP))!"!Statutory!propositions!relevant,!but!not!determinative!(judicial!discretion)!"!Categories!of!illegality!evolve!over!time!to!reflect!prevailing!community!values!(ex:!race"based!restrictive!covs)!"STATUTORY"ILLEGALITY""!Where!a!statute!prohibits!a!particular!act!or!certain!types!of!transaction!(No!judicial!discretion)!

!

21!

!Effect"of"Violation"(incl"reawriting"&"severance)""!Category"dependent!&!fact"dependent!!effect!of!violation!tailored!to!nature!of!the!wrong!&!nature!of!the!circs!

Void!&!unenforceable!transaction!(note:!void,!not!voidable)!"!Strategies!for!dealing!w!illegal!provisions!within!otherwise!legal!Ks!

1.!Offending!provision!entirely!excised!&!K!otherwise!enforce!(blue!pencil!approach)!o Problem:!it’s!too!broad!(all!or!nothing)!

2.!Offending!provision!re"drafted!within!otherwise!valid!agreement!(notional!severance)!o SCC!has!taken!this!approach!as!the!modern!view!(if!the!parties!were!acting!in!good!faith)!

!CL"Illegality:"Acts"Pertaining"To"Legal"System""!A!K!requiring!or!facilitating!criminal!or!tortuous!acts!will!be!void!"!A!K!for!a!lawful!act!to!be!performed!for!unlawful!purpose!will!be!void!(ex:!K!price!mis"stated!to!avoid!tax!=!fraud)!"!A!K!interfering!w!admin!of!justice!(ex:!maintenance!–!improper!support!of!litigation!by!non"interested!party)!!CL"Illegality:"Restraints"On"Trade"Clauses"(most"common)""!A!covenant!restricting!person’s!ability!to!carry!on!trade,!profession!or!business!may!be!illegal!• Ex:!nonVcompetition!clause!in!employment!context!(ex:!employee!prohibited!from!working!in!same!field)!• Ex:!nonVsolicitation!cl!in!employment!context!(ex:!employee!prohibited!from!contacting!clients!of!ex"employer)!• Ex:!nonVcompetition!cl!in!context!of!sale&of&business!(ex:!vendor!prohibited!from!est!new!competition!for!old!bus)!"!A!covenant!in!restraint!of!trade!is!not!necessarily!invalid!(covenant!valid!and!enforceable!if!reasonable!in!circs)!

• When!I!sign!on!w!a!job!or!sign!K!when!I!leave!that!says!I!won’t!compete!with!you!(non"competition!clause)!• None!of!these!are!necessarily!void.!Many!of!these!are!valid.!It’s!up!to!court!whether!it!goes!too!far.!

a"Exercise:"P!worked!for!D.!When!she!left,!she!signed!a!K!in!exchange!for!the!receipt!of!a!settlement!package.!That!K!restricted!her!ability!to!earn!income!from!new!endeavours.!In!determining!whether!or!not!the!restraint!of!trade!clause!in!the!K!is!valid,!a!court!would!consider!a!number!of!factors.!It!would!balance!(i)!D’s!legitimate!right!to!protect!his!own!business!interests!vs!P’s!right!to!earn!a!living!and!pursue!her!calling,!and!(ii)!employers’!interests!in!controlling!competition!vs!the!public’s!interest!in!access!to!competitive!markets.!"1. The!clause!is!more!likely!to!be!enforced!if!it!involves!non"solicitation!rather!than!non"competition.!It!is!more!reas!to!prevent!P!from!contacting!old!clients,!than!to!prevent!her!from!working!in!the!same!field!

2. A!non"competition!clause!is!more!likely!to!be!valid!if!it!is!confined!to!a!small!area!(eg!a!neighbourhood!or!city,!rather!than!a!region!or!province),!or!a!limited!time!(eg!a!year!rather!than!ten!years)!

3. A!non"compet!cl!is!more!likely!to!be!enforced!if!it!pertains!to!a!spec!market,!rather!than!an!entire!trade!or!prof!!STATUTORY"ILLEGALITY"(SI)""!Trad!view:!SI!will!invalidate!a!K!bc!it!violates!a!statute!(there!is!no!judicial!discretion!here)!"!Modern!view:"K"must"violate"the"statute’s"words"AND"spirit!(the!mischief!that!gov’t!was!seeking!to!address)!

So!automatic!invalidity!no!longer!suitable!–!look!to!see!if!the!K!undermines!the!purpose!of!the!leg!&!words! Leg!is!typically!silent!–!sanction!requires!judicial!interpretation!

o Statutory!purpose!+!protected!class!+!effect!of!breach!+!deterrence!

Kingshott&v&Bunskill&–&(un]graded&apples&–&in&word&but&not&spirit)&Facts:!Leg!barred!sale!of!un"graded!apples;!P!sold!D!un"g!apples;!D!graded!them!&!sold!to!public;!D!refused!to!pay!P!Held:!"!Purpose!of!leg!was!to!protect!public!(end!consumer);!So!leg!here!was!broken!in!letter,!but!not!in!spirit!!!!!!!!!!!!"!BUT!court!took!narrow!view!&!found!for!the!D;!Now!it’s!cited!as!WHAT!NOT!TO!DO!(diff!conclusions!today)!

New&Solutions&Financial&v&Transport&North&America&(1994&SCC)&–&(notional&severance)&Facts:!"!D!borrowed!$5K!from!P;!Loan!K!req!payment!of!various!sums,!in!addition!to!the!repayment!of!the!principal!!!!!!!!!!!!!"!At!law,!those!sums!constituted!interest,!which!exceeded!the!legal!60%!per&annum&limit!!violated!the!CC!Held:!"!SCC!said!parties’!intention!&!gov’t!intention!was!better!respected!by!notional!severance!(not!blue!pencil)!!!!!!!!!!!!"!Clause!was!re"written!to!60%!interest!(court!was!split!4"3;!dissent!said!blue!pencil!approach!better)!!"

22!

Restitution"Of"Transferred"Benefits"Under"Illegal"Contracts""!K!prima&facie!trumps!unjust!enrichment!(restitution!only!available!if!K’al!allocation!of!risk!is!circumvented)!

Avoidance!of!K!appears!to!facilitate!UE!!o D!enriched!by!benefit,!P!has!deprivation,!absence!of!jur!reason!(no!longer&K’al!explanation!for!transfer)!

"!UE!nevertheless!may!be!defeated!by!D&of&Illegality& Trad!view:!no!restitution!for!benefit!under!K!void!for!illegality& Trad!excpetions:&

1. Timely!repentance!(before!K’al!perf!or!illegality!revealed)!–!so!you!must!repend!(go!to!police!or!courts)&2. Plaintiff!non&in&pari&delicto!(ex:!P!is!party!protected!by!leg)&

If!I!can!show!that!I!was!implicit,!but!you!were!more!involved!in!the!illegality! This!is!usually!true!if!you!improperly!induced!me!into!the!K!or!tricked!me!into!giving!you!

money!3. Action!not!dependent!upon!revelation!of!illegality!

If!you!can!make!out!your!cause!of!action!wo!relying!on!illegality! Ex:!giving!away!a!watch!for!free!!pres!of!resulting!trust!

o Can!get!it!back!if!you!show!it!was!given!wo!consideration!o As!long!as!you!don’t!need!to!explain!the!illegal!action!to!the!court,!then!you!can!get!$!back!o BUT!if!you!give!the!gift!to!your!child,!then!equity!applies!pres!of!advancement!(gift!stands)!

Then!you!can!only!rebut!the!pres!by!showing!ev!of!illegality!o Modern!trend:!Effect!of!illegality!dependent!upon!purpose!of!statute!

Restitution!denied!if!recovery!contrary!to!legislative!intention! Restitution!ok!if!it!wouldn’t!undermine!the!policy!reason!that!made!the!act!illegal!in!the!1st!place!

FRUSTRATION"

"!Occurs!when!performance!is!rendered!impossible!or!essentially!different!from!what!was!agreed!upon!(rare!circs)! Ex:!We!K!to!rent!a!cabin,!before!you!go,!the!cabin!burns!down!!K!is!frustrated!

"!Can’t!have!self"induced!frustration!(if!it’s!impossible!to!do!something!&!it’s!your!fault!!it’s!a!breach)!"!Trad!CL:!Very!harsh!–!At!moment!of!frustr,!everything!is!simply!frozen!in!place!(If!$!already!paid,!can’t!get!it!back)!

Release!from!obl!that!have&not!accrued!due!//!enforcement!of!obl!that!have&accrued!due!

Cutter&v&Powell&(1795)&–&(shows&the&harshness&of&the&trad&CL&rules&of&frustration)&Facts:!P’s!husband!K’ed!to!serve!on!a!boat;!Payment!due!on!arrival;!K!was!frustrated!when!he!died!en&route!Held:!"!Agreement!was!an!entire&K!&!denied!P’s!claim!(Entire"K!!Get!paid!if,!and!only!if,!the!K!is!fully!completed)!!!!!!!!!!!!"!Severable"K!!Payment!accrues!every!day!(so!has!obligation!to!pay!at!the!moment!of!frustration)!

Chandler&v&Webster&(1904)&–&(harshness&of&trad&CL&rule)&Facts:!P!rents!rm!for!coronation;!Under!K,!P!paid!part!now!&!part!later;!K!frustrated!when!procession!cancelled!Held:!"!P!not!entitled!to!recover!earlier!payment!&!D!was!entitled!to!receive!the!outstanding!instalment!!!!!!!!!!!!"!P!had!to!pay!the!rest!bc!he!should!have!paid!the!rest!of!the!$!to!the!D!by!that!point!!2"Reforms"to"the"Trad"CL"Rules"

1. Judicial!reform!(Fibrosa)!2. Frustrated&Contracts&Act!

Fibrosa&Spolka&Ackcjna&v&Fairbairn&Lawson&Combe&&&Barbour&(1943&HL)&Facts:!EN!co!to!sell!to!Polish!co!for!4800.!After!pre"pay!of!1000,!K!was!frust!by!war;!P!claimed!restitution!of!pre"pay!Held:!"!Allowed!relief!on!the!basis!of!a!total&failure&of&consideration!(TFC)!(only!a!TFC!if!got!NOTHING!you!expected)!!Rules"Following"Fibrosa& Accrued&obligations&remain!enforceable!(Chandler)! Restitution!for!money&paid!on!total!failure!of!consideration!(Fibrosa)! No!relief!for!wasted&expenditures!(ie!resources!spent!in!reliance!on!K)! No!relief!for!services!rendered!under!entire&K!(Cutter)!

!

!

23!

AB’s&Frustrated&Contracts&Act&• Statutory&default&rules&subject&to&modification&by&parties![7]!

o These!are!default!rules!so!if!parties!want!other!regime!to!operate!then!entitled!to!do!so.!! Force!majeure!clause!"!act!of!god!(if!added,!means!you!allocated!the!risk!–!frustr!contemplation)!

• Severable&portion&of&contract&unaffected&by&frustration![8]!o Party!entitled!to!enforce!payment!if!fully!performed!severable!portion!

• Money&paid&is&recoverable!(Fibrosa!extended)![3(a)]!o As!gen!rule,!sums!payable!before!discharge!are!recoupable.!Don't!need!to!show!total!failure!of!

consideration.!Just!apply!the!usual!UE!principles.!!• Accrued&monetary&obligations&are&discharged!(Chandler!abolished)![3(b)]!• Expenditures&compensable&in&court’s&discretion&if&money&received&or&due![4]!!

o Expenditures!capped!by!payments!received!or!accrued!o If!incurred!expenses!(ie!through!service)!then!you!can!get!relief,!but!if!and!only!if!money!has!been!

paid!or!an!obligation!has!accrued!to!paying!money!(at!the!court’s!discretion)!• Beneficial&services&recoverable&in&court’s&discretion!(Cutter!abolished)![5]!!

o If!the!other!party!has!conferred!a!beneficial!service!on!you,!then!they!can!get!restitution!

Can]Truck&Transportation&v&Fenton’s&Auto&Paint&Shop&(1993&ONCA)&Facts:!D’s!truck!in!P’s!shop;!got!$28K!in!repairs;!fire!ruined!it;!D!want’s!remains;!P!claimed!lien!&!also!$!for!work!Held:!1)!P!enjoyed!a!statutory!lien!over!the!remains!of!the!truck!pending!payment!!!!!!!!!!!!2)!P!had!no!claim!for!value!of!beneficial&services!(bc!it!was!destroyed!by!fire,!P’s!services!had!no!benefit!to!D)!!!!!!!!!!!!3)!P!might,!however,!be!entitled!to!relief!for!the!wasted&expenditures!

By!time!of!frustration!P!had!provided!services!&!generated!an!accrued!right!to!payment!(s.4)!

MISTAKE"

"!Mistake!can!vitiate!a!K!when!it!results!in!no!consensus!ad!idem!(assessed!by!the!RP!–!obj!basis)!"!General!CL!rule:!even!if!mistaken,!can’t!get!out!of!K!except!for!exceptional!circs!(CL!rule!very!narrow)!"!When!can!you!get!out!of!K?!Snapping"up:!When!2!parties!agree!on!K!but!1!mistakenly!writes!price!down!wrong!

If!party!knows!the!other!mistakenly!wrote!down!the!wrong!prince!!no!consensus!ad!idem!(RP!test)! Gen!rule:!can’t!snap!up!to!create!a!K!(but!w!Ron&Engineering,!parties!can!always!agree!to!change!the!rule)!

"!Can’t!get!out!bc!of!mistaken"identity!(it’s!neither!here!nor!there)!–!Only!makes"a"diff"in"2"situations:"1. If!the!person!you!purport!to!be!has!some!special!skill!that!you!don’t!actually!have!

If!they!have!the!skill,!but!much!less!than!they!said!they!did,!may!be!misrepresentation,!but!not!mistake!2. In!the!context!of!credit"worthiness!–!if!they!have!to!pay!over!a!period!of!time,!credit!can!be!important!

"!Where!there!is!an!error!as!to!the!subject"matter! No!consensus!ad!idem!if!no!obj!agreement!on!terms! BUT!generally,!no!relief!for!unilateral!mistake!(ex:!buyer!thought!painting!was!a!real!Picasso)!

• This!is!bc!parties!agreed!on!that&painting!(may!be!misrep!regarding!identity!of!artist)! Relief!possible!if!mistake!affects!the!identity!(not!quality)!of!the!subj!matter!(Raffles)!

• No!agreement!on!which!item!is!subj!to!agreement!!"!Mistake!rendering!K!impossible"to"perform"

Mutual!mistake!regarding!existing&fact!affecting!possibility!of!performance! Ex:!In!Dec,!P!rents!cabin!to!D!for!Jul;!in!Apr!discovers!that!a!fire!destroyed!it!in!Nov!!Prima&facie,!parties!

have!no!K!bc!they!shared!a!mistake!pertaining!to!an!existing&fact!that!affected!the!possibility!of!perf!the!K!o BUT!if!the!K!had!a!force!majeure!clause,!that!places!burden!of!loss!upon!a!party,!then!diff!conclusion!o If!it!was!destroyed!in!Jan!(after!K!creation),!it!would!be!an!issue!of!frustration!(instead!of!mistake)!

"!Criteria"of"nonaenforcement!• Mistake!was!known&to!defendant!(subject!of!mistaken!identity)!!• Mistake!was!material!to!creation!of!contract!!

Shogun&Finance&v&Hudson&(2004&HL)&–&(mistake&of&identity&]&credit)&Facts:!"!P!sold!car!to!rogue!(R)!on!false!credit!identity!check;!R!then!sold!car!to!innocent!D;!P!found!out!after!!!!!!!!!!!!!"!P!tried!to!seize!car!from!D;!EN!law!said!P!could!reclaim!if!K!signed!w!R!was!not!truly!a!K!(if!mistake)!

24!

Held:!"!Maj!held!in!favour!of!P!on!basis!of!material&mistake&of&identity;!No!consensus!ad!idem!bc:! (1)!D!never!intended!to!enter!into!K;!P!intended!to!enter!into!K!only!w!the!real!“Mr.!Patel”!

! "!Maj!noted!that!P!took!special!precautions!to!verify!“Mr!Patel’s”!identity!&!credit!rating!(credit!v!imp!to!P)!

Raffles&v&Wichelhaus&(1864)&–&(mistake&of&identity&of&subj&matter)&Facts:!"!D!buys!cotton!from!P;!to!ship!on!boat;!there!were!2!boats!w!same!name;!D!shipped!on!later;!P!didn’t!want!it!Held:!"!No!K!–!as!a!result!of!the!mistake,!there!was!no!consensus!ad!idem,!neither!obj!nor!subj!!!!!!!!!!!!"!Mist!of!identity!"!which!ship!(not!the!quality!of!the!ship)!is!a!fundamental!error!–!simply!void!(not!voidable)!!

TERMINATION"OF"CONTRACT"

DISCHARGE"BY"PERFORMANCE"

1. Time"of"Performance"" Time&of&performance&prima&facie&is&not&of&the&essence&&

Late!performance!supports!damages!but!not!discharge!(it’s!a!breach!of!warranty)! Time&of&performance&may&be&made&to&be&of&the&essence&&

Parties’!agreement!at!time!of!contract!creation!! Inherent!nature!of!agreement!(ex:!quickly!perishable!goods)!! If!a!party!gives!notice!after!a!reas!chance!to!perform,!it!may!turn!it!into!a!condition!

!2. Tender"of"payment""

Debtor&bears&obligation&to&tender&reasonable&payment&(seek&out&creditor)& Reasonableness!of!tender!depends!upon!circumstances!(Ex:!during!business!hours)! Need!not!tender!if!response!of!rejection!is!obvious!! If!creditor!improperly!refuses!tender!!debtor!remains!liable!but!need!not!seek!out!creditor!!

Debtor"prima&facie"must"provide"legal&tender!(Currency!Act!s!8)!! If!somebody!has!obl!to!pay!in!cash,!must!pay!in!the!exact!amount;!No!obligation!for!creditor!

to!make!change;!Don't!have!to!accept!credit,!cheque,!etc.!(But!to!not!accept!is!bad!business)!3. Tender"of"performance""

K’al&obligations&prima&facie&subject&to&strict&liability&(must!be!performed!precisely!as!promised)& Reasonable!care!is!no!excuse!! Obligation!may!be!varied!by!exclusion!clause! So:!!1.!If!talking!about!UE,!then!liable!even!though!you've!done!nothing!at!all!

• Ex:!if!somebody!puts!money!into!your!bank!account,!you're!liable!right!away!2. In!context!of!wrongdoing,!strict!liab!is!you're!on!hook!if!you!breach!even!though!you!

didn't!do!so!deliberately!(In!breach!unless!you!do!exactly!what!the!K!calls!for)!! Exception!is!the!doctrine&of&substantial&performance!

Doctrine&of&substantial&performance&& Virtually!entire!performance,!but!a!minor!defect!or!incompletion! Performing!party!entitled!to!discharge!the!agreement!&!payment! Recipient!party!entitled!to!damages!for!loss!or!repair!

• Ex:!if!you!build!my!house!but!there!are!defects!throughout,!you!still!get!paid!but!it!might!be!deducted!!

DISCHARGE"BY"AGREEMENT"

"!Option"to"Terminate!–!Inserted!into!K!at!outset!–!contemplates!that!a!K!might!come!to!an!end!at!some!point!• Must!be!exercised!&!done!on!a!reas!notice!(unless!in!form!of!a!cond"subsequent!–!auto!terminate!cond)!

"!Rescission!–!When!neither!party!has!performed!in!full,!each!provides!consideration!to!give!up!right!to!perf!• An!agreement!not!to!enforce!your!rights!(detriment/consideration)!in!exchange!for!rescission!• Before,!rescission!meant!retroactively!wiping!K!out!(for!sits!where!K!was!improperly!induced)!• Here,!the!K!is!just!being!brought!to!an!end;!So,!not!wiping!out!retroactively,!but!gone!from!this!pt!forward!

"!Accord"&"Satisfaction!–!If!one!party!has!fully!performed!&!the!other!hasn’t,!but!both!want!to!end!it!early!

!

25!

• However,!the!person!who!finished!their!part!can’t!give!up!any!new!consideration!(ie!giving!up!rt!to!perf)!o So,!they!need!to!provide!fresh!consideration!o “Accord”!=!agreement!to!end!K!//!“Satisfaction”!=!the!new!benefit!you’re!giving!o Ex:!P!paints!D’s!house;!D!plants!P’s!garden;!P!finishes,!but!parties!find!out!D!needs!to!do!extra!work!

Fresh!consideration:!in!exchange!for!providing!double!landscaping,!P!will!also!paint!shed!"!Release"the"K!–!A!promise!under!seal!(this!is!instead!of!consideration!as!a!promise!to!get!a!party!out)!"!Variation!–!Agree!to!retain!agreement,!but!on!slightly!new!terms!!need!consideration/seal!"!Novation!–!Agreement!to!retain!agreement,!but!on!substantially!new!terms!(using!same!K,!but!in!much!diff!way)!

• Ex:!When!parties!have!spent!a!long!time!negotiating!the!1st!part!of!the!K;!don’t!want!to!restart!• 2Vparty&novation:!Each!party!gives!up!right!under!orig!K!in!exchange!for!acquiring!new!rights!under!new!K!

o Ex:!O!negotiates!w!bank!for!a!while!&!gets!loan!for!car;!Then!decides!he!wants!a!motorcycle!instead!• 3Vparty&novation:!Agreement!terminated!by!both!orig!parties!&!revived!by!1!orig!party!&!new!3rd!party!

o Ex:!P!buys!house!yrs!ago!&!enters!into!a!long"term!loan!w!bank!&!got!great!terms.!If!loan!is!still!ongoing,!but!P!sells!house!to!X,!P!can!either!get!a!new!loan,!or!maintain!the!K!&!replace!a!party!

"!Waiver!–!If!you!represent!to!me!that!you!will!not!insist!upon!the!rest!of!my!performance,!then!technically!I'm!not!discharged!but!you!might!be!estopped!from!coming!after!me!later!

• Similar!to!promissory!estoppel!(simple!jurisdictional!diff:!law!vs!equity)!!

DISCHARGE"BY"OPERATION"OF"LAW"

"!Frustration!–!Situation!rendering!performance!impossible!or!substantially!different!(ie!an!act!of!God)!• Ineffective!if!it's!self"induced!frustration!(this!is!a!breach!&!that!party!will!be!on!the!hook)!• Ineffective!if!one!party!contractually!responsible!for!event!(force!majeure!clause)!

"!Lapse"of"Limitation"Period!–!Action!must!commence!within!2yrs!of!discoverability!of!essential!facts!• Concern!re!reliability!of!(1)!old!ev!&!of!(2)!fairness!of!lingering!threat!of!liability!• Period!may!be!prolonged!by!debtor’s!acknowledgment!of!debt!• If!LP!has!lapsed,!then!in!essence!the!K!has!come!to!an!end!procedurally,!but!not!substantively!

o If!D!somehow!readmits!the!act,!then!the!LP!starts!again!(ex:!re"starts!paying!back!loan)!"!"Bankruptcy!–!Bankrupt!individual!generally!discharged!from!debts!after!finished!w!the!bankruptcy!process!!

DISCHARGE"FOR"BREACH"OF"CONDITION"

"!Optional"Discharge!–!Br!of!cond!doesn’t!auto!discharge!K!(breaching!party!cannot!unilaterally!discharge!K)!• Innocent!party!(generally)!enjoys!the!option!to!discharge!K!(only!arises!for!br!of!conds,!not!warranties)!• This!is!a!one"time!choice!and!election!–!cannot!subsequently!be!altered!

"!Bars"to"Affirmation"of"K!–!Discharge!required!if!performance!requires!close!cooperation!• Discharge!perhaps!required!if!no!legitimate!reason!for!performance!exists!

"!Bars"to"Discharge"of"K!1. Unreasonable&Delay&(deemed!acceptance)!!election!must!occur!within!a!reas!time!2. Affirmation!!unequivocal!act!indicating!adherence!to!K!3. Promissory&Estoppel!inequitable!reliance!upon!promise!to!waive!breach!

"!Discharge"and"Rescission!• Rescission!!K!retroactively!void!ab&initio&(no!basis!for!secondary!(remedial)!consequences)!• Discharge!!Performance!of!primary!obligations!unnecessary,!but!secondary!obligations!remain!

DISCHARGE"FOR"ANTICIPATORY"BREACH"(REPUDIATION)"

"!Breach"vs"Anticipatory"Breach"• “Breach”!=!unsatisfactory!performance!of!accrued!obligation"• “Anticipatory!Breach”!=!indication!that!future!condition!will!not!be!satisfied"

"!Mechanics"of"discharge"for"Anticipatory"Breach!–!Innocent!party!may!accept!repudiation!&!discharge!K!• K!not!automatically!discharged!upon!repudiation!

"!Danger"of"Discharge"for"Repudiation!–!If!no!true!repudiation,!then!discharging!party!liable!for!breach!

26!

• Repudiation!not!lightly!inferred!by!courts!• If!they!decide!to!discharge,!the!innocent!party!is!taking!a!chance:!• If!you!discharge!immediately,!you!lock!D!into!the!damages!they’re!liable!for!(this!is!the!better!option)!• But!if!P!rejects!it!&!insist!upon!perf,!something!may!happen!to!P!in!the!interim!that’ll!prevent!P!from!perf!

DAMAGES"FOR"BREACH"OF"CONTRACT"

THE"INTERESTS"PROTECTED"

Unjust"Enrichment""!True!Strict!Liability!!As!long!as!you!receive!something!that!ought!not!to!have!gone!to!you,!you!have!an!

obligation!to!pay!restitution!(ie!mistaken!transfer!of!$!into!your!account)!"!Requires:!(1)!Enrichment!to!D,!(2)!corresponding!deprivation,!&!(3)!an!absence!of!juristic!reason!for!the!transfer!"!The!only!remedy!is!restitution!(simply!putting!parties!back!in!orig!positions!–!not!hurting/benefitting!anyone)!!Breach"of"K""!A!species!of!wrong!that’s!actionable!per&se!(mere!fact!of!br!gives!you!license!to!sue!–!regardless!if!dams!occurred)!"!Strict!liability!(does!not!require!a!deliberate!or!negligent!wrong)!"!Remedies!depend!on!the!circs!and!can!incl:!nominal,!punitive,!expectation,!reliance!&!restitution!(disgorgement)!"!Generally,!you!can!sue!for!all!types!of!damages!&!then!elect!which!one!you!want!based!on!the!largest!amount!

1. Expectation&Damages!!P!placed!in!a!position!he!expected!to!enjoy!after!D!performed!2. Reliance&Damages!!P!compensated!for!losses!incurred!in!reliance!upon!K!3. Restitutionary&(disgorgement)&Damages!!D!required!to!give!up!enrichments!received!at!P’s!expense!

Expectation"Damages"

"!This!is!only!if!you!sue!in&the&K!–!Suing!in!the!K!holds!you!to!the!allocation&of&risk&"!P!placed!in!a!position!he!expected!to!enjoy!after!the!D!performed!(what!was!the!expected!benefit?)!a"Formula:"Calculate"net"profit"expected"+"$"already"spent"="expectation"damages""!It’s!about!fulfilling!expectations!!what!was!the!net!benefit!expected!to!be?!"!***Only!consider!the!value!of!the!widget!AT&THE&TIME&OF&PERFORMANCE,!not!the!day!of!the!K!

• Once!K!occurs,!you’re!locked!into!the!risk!–!the!gamble!is!that!your!expectations!may!change!at!delivery!

Reliance"Damages"

"!P!compensated!for!losses!incurred!in!reliance!upon!K!&!opportunities!foregone!"!Intended!to!make!the!breach!as!if!it!never!happened!(put!me!back!into!my!original!position)!"!P!cannot!be!awarded!both!reliance!&!expectation!damages!(P!may!have!power!of!election!though)!"!Damages!incl:!1.!All!wasted!expenses!in&reliance&upon&K&(can’t!get!rel!dams!if!you!would’ve!spent!the!$!anyways)!

!2.!Net!profits!that!P!would!have!earned,!(revenue!forgone!in!reliance&upon&the&K)!

McRae&v&Commonwealth&Disposals&(1951)&–&(expectation&dams&barred&bc&immeasurable)&Ratio:&Simply&bc&calculation&is&difficult,&expec&damages&are&not&precluded;&Only&precluded&if&calc&is&impossible&Facts:!D!sold!salvage!rts!to!P!for!sunken!ship;!didn’t!exist;!P!bought!&!retrofitted!new!boat,!hired!ppl!&!got!equip!Held:!"!Reliance!damages!only!avail!for!P!–!No!expectation!dams!bc!it!was!impossible!to!calculate!bc!didn’t!exist!! !!"!Not!a!case!of!frustration,!but!mistake!! !!"!Reliance!only!to!the!extent!that!P!wasted!expenses!or!suffered!a!loss!in!reliance!to!the!K!! !!"!So!if!you!would!have!spent!the!$!anyways!(ie!retrofitting!new!boat),!you!don’t!get!those!damages!! !!"!You!also!can’t!get!reliance!damages!if!you’ve!bought!something!and!you!still!have!it!! !!"!Not!an!exercise!in!accounting!–!more!of!a!judicial!estimate!of!damages!

Bowlay&Logging&v&Domtar&Ltd&(BCCA)&–&(can’t&get&rel&dams&to&avoid&conseq&of&a&bad&bargain)&Ratio:&Rel&dams&avail&only&for&losses&attributable&to&the&D’s&breach;&None&to&extent&P&entered&into&bad&bargain&Facts:!P!made!bad!bargain!to!cut/load!wood;!D!resp!for!driving!it!out;!D!br!K;!P!already!spent!more!than!D!paid!for!Held:!"!No!damages!available;!No!expectation!damages!bc!no!expected!profits!(P!lucky!D!breached!bc!P!losing!$)!

!

27!

! !!"!P!can!have!reliance!dams,!but!not!to!the!extent!that!he!entered!into!a!bad!bargain;!stuck!w!the!loss!expected!• D!must!show!that!this!is!a!losing!K!for!the!P!–!that!it!was!unprofitable!(easy!to!prove!here)!• All!$!wasted!was!P’s!own!fault!bc!he!entered!into!a!bad!bargain!&!can’t!escape!that!by!claiming!dams!• P&can&get&dams,&but&only&to&the&extent&that&those&expenses&would’ve&been&recovered&if&K&had&been&perf&

! !!"!An!award!of!damages!should!not!put!P!in!a!better!position!than!he!would’ve!been!in!if!the!K!were!performed!!Reliance"Damages"&"Restitution"–"The"Bowlay"Oversight""!If!presented!w!a!br!of!cond,!you!can!either!discharge!or!elect!to!continue!

• If!you!discharge!you!can!sue!in!K!for!expectation!or!reliance!dams!OR!outside!the!K!for!unjust!enrichment!• Bowlay’s!lawyer!should’ve!sued!in!UE!bc!then!wouldn’t!have!been!bound!by!the!allocation!of!risk!

"!If!you!want!to!avoid!the!bad!bargain!(&!allocation!of!risk),!you!should!sue!in!unjust!enrichment!(outside!the!K)!"!When!you!discharge!the!K!upon!the!breach,!you!can!elect!to!sue!for!expectation,!reliance!or!unjust!enrichment!"!If!you!sue!in&the&K!(expectation/reliance)!you’re!bound!by!the!K’s!allocation!of!risk!&!the!bad!bargain!"BUT!if!you!sue!outside&the&K,!you!get!market&value!(restitution)!for!services!rendered!(not!bound!by!bad!bargain)!

QUANTIFICATION"OF"DAMAGES"

Chaplin&v&Hicks&(1911)&–&(damages&for&loss&of&chance&–&difficulty&of&assessment)&Facts:!P!in!contest!has!24%!chance!of!winning;!D!br!K!by!not!telling!P!of!interview,!which!loses!P’s!eligibility!to!win!Held:!"!2!Different!ways!of!calculating!expectation!damages:!

1. Past"Fact!–!Must!prove!on!a!BoP!that!you!would!have!made!$!on!that!deal!(either!100%!or!0%!dams)!2. Past"or"Future"Hypothetical!–!when!dealing!with!what!might!be!or!what!might!have!been!

• You!discount!damages!based!on!probabilities!(the!total!loss,!discounted!for!the!probability)!• So!here,!P!got!24%!of!the!prize!for!winning!• Don’t!have!to!get!the!amount!exactly!right,!just!within!the!realm!of!what!is!reasonable!

!Difference"in"Value"of"Cost"of"Cure?""!3!options:!1.!Cost&of&cure&(Courts&apply&this&presumptively)!"!how!much!it!would!cost!to!fulfill!the!orig!expectations!

!2.&Difference&in&value&(May!award!this!if!cost!of!cure!is!unreasonable)&!3.!Loss&of&amenity&(Not!yet!applied!in!Canada!–!but!a!good!balance)!

Groves&v&John&Wunder&(1939&US)&–&(cost&of&cure&–&the&view&in&Canada)&Facts:!"!P!granted!7yr!lease!of!land!for!gravel!pit;!D!had!obligation!to!return!land!to!a!level!grade!at!end!of!K!! "!D!br!by!failing!to!do!so;!grading!would’ve!cost!D!$60K!&!would!only!improve!the!land!by!$15K!Issue:!Are!expenses!calculated!by!the!value!of!the!land!($15K)!or!by!what’s!expected!in!the!K!($60K)!Held:!"!Cost!of!cure!awarded!!based!on!how!much!it!would!cost!to!fulfill!the!original!expectations!! "!If!CoC!wasn’t!awarded,!D!gets!a!windfall!as!the!K!is!dramatically!changed!! "!Idea!is!that!the!orig!negotiations!would’ve!been!different!if!you!didn’t!expect!to!pay!$60K!for!grading!! "!P!does!not!have!to!use!the!damages!to!fulfill!the!orig!expectation!(can!use!it!for!whatever!they!want)!!"!Prima&Facie,!you!get!the!cost!of!cure,!but!disallowed!if!intolerably!wasteful!(presumption!that!CoC!isn’t!wasteful)!V&In!cases!where!K!isn’t!fulfilled!precisely,!but!the!net!result!is!the!same!value!(ie!pool!2in!shallower!than!K!says)!

• There!can!be!damages&for&loss&of&amenity!when!the!CoC!would!be!simply!wasteful!(Ruxley&v&Forsyth&HL)!• Random!amount!chose!for!damages!based!on!the!loss!of!perfect!performance!($!to!recognize!P’s!loss)!

REMOTENESS"OF"DAMAGE"

"!There!is!a!presumption!of!compensation!for!a!breach!of!K!"!BUT,!factual!cause!(‘but!for’!test)!is!too!broad!–!remoteness!deals!w!the!legal!causation!(based!on!reasonableness)!V&***&You&are&only&liable&for&those&damages&that&were&reasonable&foreseeable&at&the&time&of&entering&into&the&K***&

• Bc!a!K!is!an!allocation!of!risks!–!terms!of!bargain!reflect!contemplated!consequences!• There’s!an!element!of!subjectivity!in!this!test!–!silent!significance!of!soft!factors:!

o The!cost!of!the!products,!the!price!it!was!charged,!&!the!amount!of!damage!o Also!look!at!the!possibility!of!insurance!(who’s!position!is!easier!or!more!appropriate!to!get!insur)!

28!

• If!personal!injury,!courts!more!likely!to!say!it!was!reas!foreseeable!(opposite!w!property!damage)!"!A!broad!policy!question:!Is!liability!reasonable!on!the!facts?!

Hadley&v&Baxendale&(1854)&–&(test&for&remoteness)&Facts:!"!P!owns!mill!&!needs!new!crankshaft;!P!tells!D’s!employee!that!he!needs!new!one!ASAP;!! "!!D!delays!making!new!CS;!this!is!a!br!of!K;!P!loses!£300!in!profits!bc!it!can’t!do!any!work!at!all!Held:!"!Damages!too!remote!!D!not!aware!of!the!special!circs!(ie!P’s!dependence!on!the!CS/lack!of!replacement)!! "!2"part"test"for"remoteness!(D!liable!only!if!damages!are!reasonably!foreseeable)!

1. Obj!component:!Those!damages!that!a!RP!would!think!were!reas!foreseeable!at!the!time!of!the!K!2. Subj!comp:!What!the!RP!would!foresee!as!a!result!of!the!special!info!provided!to!the!D!

• Based!on!D’s!actual!knowledge!at!the!time!• Would!an!RP!in!the!D’s!position!foresee!the!potential!for!these!types!of!damages?!

Victoria&Laundry&v&Newman&Industries&(1949)&Facts:!"!P!running!laundromat;!P!orders!boiler!from!D;!D!delivers!it!20wks!late;!! "!P!sues!for!2!types!of!loss:!(1)!loss!of!profits!from!normal!weekly!business!&!(2)!loss!of!a!special!huge!gov’t!K!Held:!"!Dams!for!weekly!profits!foreseeable;!Loss!of!gov’t!K!was!not!(bc!D!had!no!knowl!of!it’s!possible!existence)!! "!Remoteness!considered!at!the!time!of!the!K,!not!in!hindsight!(D!needed!to!know!the!possibility!of!it!existed)!!!!!!!!!!!!!"!Rules"governing"recovery"of"expectation"damages&

1. P’s!expectation!monetarily!fulfilled!within!reason!(if!no!perf!!prima&facie!you!get!damages)!2. Recovery!of!losses!reasonably!foreseeable!as!liable!to!occur!3. Reasonable!foreseeability!turns!on!knowledge!at!time!of!K!4. Requisite!knowledge!takes!two!forms:!(1)!imputed:!arising!in!ordinary!course!of!things!!

!!!!!!!!(2)!actual:!special!circumstances!conveyed!by!P!to!D!5. Test!of!foreseeability!—!not!foresight!(objective!RP!standard)!

Whether!it's!1st!branch!or!2nd,!don't!care!what!D!thought;!want!to!know!what!the!RP!thought!6. No!requirement!of!foreseeability!of!necessity!of!loss!

! "!Here,!D!was!imputed!w!knowledge!of!the!ordinary!weekly!profits,!but!needed!more!info!about!the!special!K!

Koufos&v&Czarnikow&(1969&HL)&–&(foreseeability&of&changing&market&price&–&K&as&a&gamble)&Facts:!"!D!to!deliver!P’s!sugar;!No!fixed!expectation!for!arrival,!just!within!a!reas!amount!of!time;!! "!D!didn’t!know!P!had!K!w!3rd!party!to!sell!sugar;!D!br!for!not!arriving!in!a!reas!time;!!! "!If!delivered!on!time,!sugar!market!was!up;!but!market!value!dropped!at!time!of!delivery!Held:!"!Market!flux!is!foreseeable!–!P!enters!into!a!gamble!&!it’s!reas!fore!that!D!should!know!that!markets!fluctuate!! "!P!had!the!right!to!the!expectation!that!it!would!be!sold!on!time!(regardless!of!profit!or!loss)!! "!By!depriving!P!of!this!right,!the!D!must!pay!the!difference!(just!so!happens!it!works!out!in!P’s!favour!here)!

Scyrup&v&Economy&Tractor&Parts&(Man&CA)&–&(remoteness&goes&to&type&of&loss,&not&extent&of&loss)&Facts:!P!had!K!w!concrete!co!(C);!P!needs!hydraulic!party;!D!sells!it!to!P!&!says!it’ll!work;!it!doesn’t;!P!loses!K!w!C!Held:!"!For!P!(full!losses)!–!D!knew!of!the!P’s!K!&!therefore!could!foresee!the!loss!! !!"!Doesn’t!matter!that!D!didn’t!know!how!much!he!would!be!liable!for!!look&at&the&type&of&loss,&not&extent&! !!"!If!the!type!of!loss!is!reas!foreseeable,!then!it!doesn’t!matter!if!the!extent!of!the!loss!is!reas!foreseeable!Problem:!To!be!liable!for!the!entire!K,!you!should!at!least!know!the!ballpark!figure!that!you!may!be!liable!for!in!

order!to!allocate!risks!by!buying!insurance!!***On!exam,!you!can!rectify!the!Scyrup!problem!by!bringing!in!the!EN!case!of!Transfield&Shipping!(not!in!Can!yet)!

Transfield&Shipping&v&Mercator&Shipping&(2008&HL)&–&(new&EN&test&for&remoteness)&Ratio:&The&new&test&for&remoteness&does&not&focus&on&reasonable&foreseeability,&but&rather&on&the&parties’&

objective&allocation&of&risk&(incl&risks&implied&by&industry&practices)&Facts:!"!D!chartered!P’!ship;!returned!it!9!days!late,!causing!P!to!have!to!renegotiate!a!3rd!party!K!to!their!detriment!! !!!!!!!!!"!P!arg!D!liable!for!total&loss!(loss!of!profits!per!day!for!entire!6mo!3rd!party!lease);!D!said!only!liab!for!9!days!Held:!"!In!some!cases!a!type!of!risk!may!be!reas!foreseeable!

• But!it’s!not!the!risk!that!is!allocated!bw!the!2!parties!(it’s!a!risk!due!to!industry!practice)!!!!!!!!!"!The!test!takes!into!account!the!mischief!(not!simply!what!is!beyond!reas!foreseeable)!

!

29!

!!!!!!!!!!!"!In!this!case,!shipping!industry!practice!would,!normally,!only!hold!the!D!responsible!for!the!days!that!the!ship!was!over!held,!not!the!diff!in!the!price!of!the!P’s!next!K!owing!to!market!shifts!• Although!that!loss!is!reas!foreseeable,!it!was!not!a!type!of!loss!that!was!allocated!at!the!outset!• The!parties!included!the!implied!term!on!the!basis!of!industry!practice!(goes!to!allocation!of!risk)!

!***So&on&exam&you&can&use&this&test&instead&of&Hadley&if&it&works&better&for&the&situation***&!

DAMAGES"FOR"INTANGIBLE"INJURIES"

"!You!can!be!compensated!for!losses!such!as!disappointment,!frustration,!sadness,!anger!and!embarrassment!"!Compensation!only!available!for!“peace&of&mind”&style&Ks!–!generally!not!in!purely!commercial!agreements!

• Peace!of!mind!Ks!!If!the!reason!for!the!K!is!not!for!the!thing!itself,!but!for!the!peace!of!mind!it!brings!• Ex:!Peace!&!quiet!in!country!cabin,!relaxation!of!a!vacation,!PoM!of!long"term!disability!insurance!

"!It!must!be!true!that!the!upset!was!one!of!the!allocated&risks!(so!it’s!not!just!a!test!of!reas!foreseeability)!• Must!be!reas!foreseeable!at!the!outset!that!the!party!would!be!on!the!hook!for!those!types!of!losses!

"!There!is!limited!and!inconsistent!compensation!for!intangible!losses!"!(punitive!damages!and!aggravated!damages!are!much!of!the!same!idea)!!Sokosky&v&Canada&

• Facts:!Students!book!travel.!They!get!there!and!said!no!peace!of!mind!bc!just!rowdy!kids!• Held:!They!did!get!compensation!bc!peace!of!mind!should!go!with!it.!!

Turczinski&v&Dupont&Heating&• Facts:!Hired!renovators!and!complained!about!noise!//!Held:!No&compensation!bc!expected!to!make!noise!

Fidler&v&Sun&Life&Insurance&(2006&SCC)&Facts:!"!P!had!long!term!disability!insurance;!D!delayed!payment!&!drew!out!court!proceedings!for!5!years!!! !"!P!claimed!aggravated!damages!for!the!mental!distress!of!5yrs!of!waiting!Held:!"!P!can!get!$20K!for!intangible!damages!!insurance!purchased!for!benefits!&!peace!of!mind!! !!"!Problem!1:!SCC!said!it’s!all!about!reas!foreseeability!no!matter!the!type!of!damage!(incl!intangible!damages)!

• But!this!can’t!be!true!for!intang!dams!bc!all!K!breaches!give!rise!to!upset!&!disappointment!• So!you!can!have!intangible!injury!compensation!in!just!about!any!K!• BUT!read!bw!the!line!!SCC!meant!not!Hadley,!but!rather!the!new!EN!approach!

The!test!isn’t!reas!foreseeability,!but!it!also!has!to!be!one!of!the!allocated!risks!(PoM!K)!! !!"!Problem!2:!SCC!didn’t!say!why!$20K!was!chosen!–!don’t!kow!if!there’s!a!cap!to!intang!injuries!compensation!

MITIGATION"OF"DAMAGES"

"!The!compen!that!you’re!entitled!to!receive!for!a!br!may!be!diminished!if!the!innocent!party!fails!to!mitigate!dams!• One!cannot!sit!back!and!allow!the!losses!to!pile!up!!try!to!stop!the!bleeding!

a"D&is&on&the&hook&for&loss&of&profits&only&up&to&the&day&where&P&could&have&reasonably&mitigated&• P&can&get&compensation&if&P&had&to&pay&a&higher&price&to&the&3rd&party&• P&can&get&compensation&for&the&cost&of&going&out&and&getting&a&3rd&party&

a"There"is"no"‘duty’"to"mitigate"per&se"–"BUT"a"failure"to"do"so"will"result"in"a"loss"a"The"duty"to"mitigate"involves"taking"reas"steps"to"mitigate"(take!steps!to!limit!D’s!exposure!to!liability)!

• Ex:!if!it!would!take!2wks!to!find!new!supplier,!then!only!2wks!damages!should!be!paid!+!diff!in!new!price!a"The"claimant"need"not"use"unreasonable"effort"or"take"unreasonable"risks"in"order"to"mitigate"a"There!is!a!heavy!burden!on!the!D!to!establish!a!reas!course!of!avoidance!"!The!“Thin&Wallet&Principle”!has!been!rejected!!it!comes!down!to!remoteness!

• If!it!was!reas!foreseeable!at!the!K’s!outset!that!a!breach!by!D!might!be!unmitigatable!(due!to!lack!of!$!of!the!P),!then!the!D!will!be!on!the!hook!for!the!whole!amount!

a"Mitigation"will"also"depend"on"the"circumstances"(add’l"K"or"mitigation?)"• ***!Pay!attn.!on!exam!–!Not!true!that!anything!P!does!after!the!breach!is!done!for!mitigation!!!***!

o Ask!if!the!2nd!transaction!was!in!substitute!for!the!1st!one!or!in!addition!to!the!1st!one!

30!

• Ex:!if!P!has!only!1!widget!&!there’s!a!br!!if!P!finds!a!customer!for!the!same!price!that!day,!dams!will!be!small!• Ex:!But!if!P!has!multiple!widgets!laying!around!&!there’s!a!breach!!that!new!customer!could!have!rented!one!of!her!other!ones.!Therefore,!finding!the!new!customer!will!not!be!viewed!as!mitigation!&!damages!will!accumulate!until!P!can!rent!it!out!(idea!of!an!additional!K!vs!a!mitigation)!

Asamera&Oil&v&Sea&Oil&(1979&SCC)&Ratio:&The&damages&should&be&calculated&on&the&day&you&should&have&mitigated&Facts:!"D!supposed!to!return!shares!in!‘60;!P!gets!injunction!so!D!can’t!sell!shares!&!waits!till!’67!until!case!is!settled!!! !"!In!’67!the!P!found!out!that!D!had!illegally!sold!the!shares!in!’65!–!P!didn’t!think!he!needed!to!mitigate!! !"!Matter!gets!in!court!in!’71;!prices!fluctuated!widely!bw!’60!&!’71!(highest!in!’69)!! !"!P!asked!for!specific!damages!(wants!shares!back)!&!for!expectation!damages!in!lieu!of!specific!performance!Issue:!What!is!the!appropriate!value!of!the!shares?!The"value"in"’67"–"when"P"found"out"they"were"sold"already"Held:!"!!It!was!reas!for!P!not!to!do!anything!bw!60"67!–!but!when!P!knew!D!sold!shares,!then!duty!to!mitigate!arose!& V&If&you&can&legitimately&show&that&you’re&after&the&very&thing,&not&the&dams,&then&you&have&no&duty&to&mitigate&

• There!must!be!something!special!about!the!widget!though!to!get!specific!performance!! "!P!can’t!get!specific!performance!bc!D!already!sold!them!!Repudiatory"Breach"&"Mitigation"of"Losses""!In!the!case!of!an!anticipatory!breach!(notice!of!a!breach!of!a!future!obligation),!the!innocent!party!generally!has!a!right!to!either!reject!the!repudiation!&!insist!on!perf!OR!accept!the!repudiation!&!discharge!the!K!(get!damages)!"!Is!it!ever!reasonable!for!a!P!to!reject!the!repudiation!when!they!knowingly!will!be!allowing!losses!to!accumulate!bc!the!K!won’t!be!performed?!(ie.!failing!to!mitigate)!

• The!innocent!party!can!elect!to!carry!on!despite!accumulating!expenses!only!in!cases!where!there!are!other!intangible"benefits"involved!

• Ex:!need!to!work!certain!#!of!hrs!to!maintain!professional!designation!OR!publicity!from!performance!• If!there!are!no"intangible"benefits,!there!would!be!the!duty!to!mitigate!(lest!not!be!compensated)!

"!RULE!(White&&&Carter):!You!don’t!have!a!duty!to!mitigate!&!you!can!continue!on!with!performance!if!you!have!a!substantial&&&legitimate&reason!for!doing!so!(otherwise,!it!was!reasonable!to!mitigate)!

White&&&Carter&(Councils)&v&McGregor&(1962&HL)&Facts:!"!P!in!bus!of!creating!ads!&!putting!on!garbage!cans;!D!hired!P!for!3!yrs!of!ads;!D!calls!&!cancels!entire!K!! !"!D!says!they’ll!pay!P!profits!for!whole!K;!D!says!they’re!not!discharging!the!K!&!is!carrying!on!Issue:!Whether!P!was!entitled!to!insist!on!perf!or!if!they!had!an!obligation!to!mitigate!Held:!"!P!can!continue!–!had!a!legitimate!&!substantial!reason!for!doing!so!(publicity/exposure)!***On&EXAM& &Find&any&reason&to&support&a&legitimate&&&substantial&reason&(or&not)***&

EXCEPTIONAL"MEASURES"OF"RELIEF:"NOMINAL,"DISGORGEMENT,"AGGRAVATED"&"PUNITIVE"

"!General!response!=!compensation!(expectation!(looking!forward)!&!reliance!damages!(looking!backwards))!"!Exceptional!responses:!

• Nominal&Dams:!dams!that!serve!to!acknowledge!the!wrongdoing!of!another!party!–!v!small!amt!(symbolic)!o Occur!bc!a!breach!of!K!is!actionable!per&se!(wo!damages)!

• Restitutionary&(disgorgement)&damages:!D!required!to!give!up!enrichments!received!at!P’s!expense!o Stripping!away!all!the!wrongful!gain!from!br!–!P!gets!windfall,!but!justified!in!most&extreme&cases!

• Punitive:!If!malicious!breach!+!independent!actionable!wrong!• Liquidated:!If!pre"established!by!parties!+!not!penalty!(can!decide!at!outset!what!the!remedy!may!be)!• Specific&Enforcement:!If!legitimate!interest!in!performance!per&se!

o Specific&performance:!fulfillment!of!positive!obligation!o Injunction:!Usually!fulfillment!of!negative!obligation!

"Purely"LossaBasedaaaaaaaaaaaaLoss"and"GainaaaaaaaaaaaaaaaaaaaaPurely"GainaBased" "" " """"|" " """""(transfer"between"parties)" " """|"" " """"|" " " " """|" " " "" """|"

""""""compensation"" """"""""""""""""""""""restitution"" " """"disgorgement"""""""""""""""""""""""""""""""""""""""""""""""""""""""" " " " " """"(“restitution”)" !

!

31!

Disgorgement"(“Restitution”)"

Restitution"for"Unjust"Enrichment"vs"Disgorgement"for"Wrongdoing"]&Restitution&for&unjust&enrichment&

• rationale&=&reverse&unjustified&transfers&&o liab!is!strict&]&liab!triggered!by!mere!fact!of!unjustified!transfer!(not!premised!upon!proof!of!br!of!obl)&

• cause&of&action&=&always&unjust&enrichment&&o enrichment!to!the!D,!corresponding!deprivation!to!the!P,!absence!of!juristic!reason!for!transfer!"

• remedy&=&always&restitution!!D!must!give!back!benefit!to!P!(remedy!ltd!to!reversing!transfer!bw!!parties)!&o P!or!D!will!never!benefit"

]&Disgorgement&for&wrongdoing&&• rationale&=&stripping&wrongful&gains&&(liability!is!fault]based&–&D&unable!to!profit!from!wrongdoing)&• cause&of&action&=&something&other&than&UE&(some!species!of!civil!wrongdoing!(most!torts!will!do))&

o precedent!against:!breach!of!contract!(until!recently)"• remedy!=!exceptionally!disgorgement!(often!called!“restitution”,!but!it’s!not)"

o presumptive!response!to!civil!wrong!=!compensation!" D!must!monetarily!repair!P’s!loss!(D!almost!always!detrimentally!affected!by!remedy)"

o extraordinary&response&to&civil&wrong&=&disgorgement&& D!must!give!up!all!wrongful!benefit!(this!is!more!about!giving!it!up,!not!giving!it!back)! Remedy!not!limited!to!transfer!between!parties!(incl!wrongful!gains!from!3rd!party)"

Attorney&General&v&Blake&(2001&HL)&Facts:!D!was!MI6!spy;!Signed!K!that!he!would!never!divulge!info;!D!publish!book;!Gov’t!sued;!wanted!disgorgement!Held:!"!Gain"based!relief!(disgorgement)!can!only!be!granted!in!the!most&exceptional&of&cases&!!!!!!!!!!!"!If!P!has!legit!interest!in!preventing!D!from!profiting!in!the!wrong,!then!may!get!disgorgement!(still!unlikely)!!!!!!!!!!!!"!No!disg!if:!it’s!skimped!perf,!if!D!does!what!promised!not!to!do,!just!bc!it!led!to!economically!efficient!result!!"!For"exam:!if!you!can!somehow!classify!case!as!exceptional,!then!P!has!option!of!disgorgement!or!compensation!

• You!should!use!disgorgement!(strip!D’s!profits)!when!you!can’t!really!quantify!P’s!loss!(or!there!is!none)!• Make!sure!it!doesn’t!fall!into!one!of!the!exceptions!above!(3!lines!above)!

Punitive"Damages"and"Aggravated"Damages"

Punitive"Damages!!Damages!to!punish!&!deter!specifically!and!generally!(not!for!compensation!purposes)!• Rule:!P!must!prove!that!a!br!of!K!was!something!outrageous!&!an!independently!actionable!wrong!

o That!wrong!can!be!a!tort!or!another!breach!of!K!(Whiten&v&Pilot&Insurance)!o The!outrageous!act!must!be!so!outrageous!that!you!want!to!punish!D!&!deter!similar!future!conduct!

!Aggravated"Damages!!Damages!to!compensate!for!aggravation!of!a!loss!–!Awarded!for!compensatory!purposes!

• A!normal!injury!is!aggravated!due!to!D’s!conduct!(provides!monetary!reparations!for!the!psych!loss)!• Monetary!reparation!for!emotional&or&psychological&injury!• You’re!eligible!for!aggravated!dams!if!you!meet!the!test!of!Fidler&v&Sun&Life!(same!thing!as!intangible!dams)!• Test:!Aggravated!damages!can!only!be!awarded!if!it!was!one!of!the!allocated!risks!of!the!K!

o Reasonable!foreseeability!&!a!K!dealing!w!peace!of!mind!!NonaPecuniary"Damages"for"Breach"of"K""!Traditional&rule&against&nonVpecuniary&recovery&&

• Addis&v&Gramophone!(1909!HL)!!harsh!and!humiliating!dismissal!from!long"held!job!o Recovery!limited!to!pecuniary!losses!flowing!from!lack!of!notice!o No!recovery!for!humiliation,!distress,!embarrassment!

• Exceptions!to!general!rule:!recovery!for!embarrassment!and!shame!o Ex:!breach!of!promise!of!marriage!//!banker’s!breach!of!promise!to!honour!customer’s!cheque!

32!

Vorvis&v&Insurance&Corp&of&British&Columbia&(1989&SCC)&–&(tests&for&aggravated/punitive&damages)&Facts:!P!worked!for!D;!P!was!a!nuisance,!D!tried!to!get!P!to!leave!by!humiliating!him;!nothing!works;!So!D!fires!P!Issue:!Aside!from!compensation!for!wages,!can!P!get!punitive!(bc!outrageous!br)!or!aggravated!(bc!humiliated)?!Held:!"!Recovery!denied!for!both!punitive!and!aggravated!damages!(D!already!entitled!to!$!he!ought!to!have!gotten)!! !!"!Aggravated"Damages!!only!in!exceptional!cases!

• Must!show!that!there!is!a!br!&!an!independent&actionable&wrong!• Also!have!to!show!that!the!humiliation!was!contemporaneous!with!the!breach!

o This!wasn’t!true!in!this!situation!bc!the!humiliation!came!1st!! !!"!Punitive"Damages!!Must!show!2!things:!

• 1.!That!there!was!some!outrageous!or!vindictive!breach!of!K!• 2.!That!there!was!some!independently!actionable!wrong!

o This!isn’t!true!in!this!case!bc!there!was!no!independently!actionable!wrong!

Whiten&v&Piolet&Insurance&Co&(2002&SCC)&–&(observations&on&punitive&damages)&Facts:!P!had!insur!on!home;!it!burnt!down;!D!tried!to!squeeze!them!hard,!says!P!started!fire!himself;!P!sues!D!Issue:!What!is!the!status!of!an!“independently!actionable!wrong”?!Held:!"Confirmed!Vorvis&reqs:!here,!1st!K!br:!failure!to!pay!benefits;!2nd!K!br:!failure!to!act!in!good!faith!(req!in!insur)!! !!"!Punitive!dams!are!not!necessarily!precluded!by!criminal!sanction!(no!double!jeopardy!issue!here)!! !!"!The!principle!of!rationality!requires!the!least!punitive!element!to!be!used!to!meet!the!court’s!obj/goals!! !!"!No!mechanical&formula&or!artificial&cap!for!punitive!damages!(amount!must!flexibly!reflect!misconduct)!! !!"!Must!be!a!rational!connection!for!the!amount!&!precedent!should!be!followed!(not!a!random!amount)!! !!"!Governing!princ!of!proportionality!!Pun!dams!if!but!only!if!other!sanctions!inadequate!to!satisfy!goals!

• And!only!add!as!much!as!you!need!to!fulfill!the!goal!Problem:!Bad!decision,!should!have!overruled!Vorvis!–!bc!any!good!lawyer!can!find!another!br!in!the!K!

LIQUIDATED"DAMAGES,"DEPOSITS"AND"FORFEITURES"

Liquidated"Damages"&"Penalties"V&Liquidated&Dams!!a!genuine!pre"estimate!of!losses!that!will!occur!in!the!event!of!a!breach!"!Effect!!The!party!pays!the!liquidated!amount!regardless!of!the!actual!consequences!of!the!breach!

• Ie.!If!br!cost!10K,!but!clause!was!for!100K,!you!get!100K!as!long!as!it!was!a!genuine!pre"est!at!K’s!creation!"!Advantages:!"!1.!Facilitates!freedom!of!K!

• 2.!They!help!to!flush!out!the!risks!as!you!will!know!exactly!what!will!happen!in!the!event!of!a!br!• 3.Eliminates!need!for!complex!&!costly!calculation!of!dams!when!a!br!is!proved!(just!go!w!liq!dams!amount)!• 4.!Minimizes!the!risk!of!judicial!error!in!calculation!of!damages!

"!Disadvantages!–!danger!of!unconscionability!of!exploitation!of!vulnerability!a"Note:"LD"will"be"enforced"by"the"court"–"penalty"clauses"will"note"

• How"to"distinguish?"It!will!be!considered!penal!(and!therefore!ignored)!if:"1. If!damages!greatly!outweigh!the!actual!risk!of!loss"2. Penal!(is!presumed)!if!the!same!sum!is!payable!for!different!types!of!breaches"3. Penal!if!a!greater!sum!is!required!to!be!paid,!if!the!party!fails!to!pay!a!smaller!sum"

• *The!classification!is!determined!at!the!time!of!K!(not!at!the!time!of!breach)"]&Liquidated&sum&payable&regardless&of&actual&conseqs&of&breach&(whether&damage&was&more&or&less)&!Part"Payments,"Deposits,"Penalties"&"Relief"From"Forfeiture""!Part&Payment!!Early!payment!toward!final!satisfaction!of!price!

• If!in!br,!can!get!PP!back!as!long!as!it!restores!both!parties!to!the!orig!position!• But!if!one!party!has!incurred!an!expense!(ie!started!to!make!the!widget),!then!the!PP!is!not!recoverable!• **If&denying&restitution&would&be&too&unfair&then&there&is&judicial&discretion&to&come&up&with&a&fair&solution!!

o If!K!worth!1mil!&!P!paid!200K!&!D’s!done!a!bit!of!work,!court!might!think!it!not!fair!for!D!to!keep!200K!"!Deposit!!Early!payment!+!inducement!to!perform!(payment!in!exchange!for!holding!the!K!open!–!buying!time)!

• You!cannot!get!a!deposit!back!bc!there’s!an!exchange!of!consideration!($!for!time)!o Can!only!get!deposit!back!if!it’s!considered!a!penalty!(same!test!as!liquidated!damages)!

"!Part&payments&&&deposits&unpaid&at&time&of&br&!payment!req!unless!payment!would!entail!circularity&of&actions&

!

33!

"!Action&for&Agreed&Sum&(Action&for&the&Price)!!A!claim!for!specific!enforcement!of!an!accrued!obligation!to!pay!• D!is!merely!ordered!to!perf!the!accrued!obligation!(paying!the!$)!–!a!hybrid!of!spec!enf!&!claim!for!dams!1. The!sum!must!be!liquidated!&!agreed!upon!–!a!specific!sum!(ie!sale!of!a!used!car)!2. The!debt!must!have!accrued!due!(P!must!have!fully!performed!reciprocal!obligations)!

• P!must!have!perf!or!is!ready!to!perf!the!reciprocal!action!&!D’s!obl!to!pay!must’ve!fallen!due!under!the!K!• Statute!must!not!dictate!payment!otherwise!(ex:!SoG!Act:!prop!passed!or!due!on!date!wo!delivery)!

3. ***K!cannot!have!been!discharged!(as!it!is!an!action!for!specific!enforcement!of!the!agreement)!• It’s!like!dams!in!that!if!you!can!make!out!the!facts,!you’re!entitled!to!it!as!a!right!(not!at!court’s!discretion)!• Possible!to!sue!for!agreed!sum!plus!consequential!losses!

NONaMONETARY"REMEDIES"FOR"BREACH"OF"CONTRACT"

SPECIFIC"PERFORMANCE"

V&A&court&order&compelling&the&perf&of&a&K’al&obligation&(an&equitable&doctrine&–&when&$&simply&won’t&do)&"!The!court!commands!that!the!primary!obligation!be!fulfilled!"!If!you!SP,!you!cannot!discharge!the!K!when!faced!w!a!breach!(as!a!discharge!gets!rid!of!the!primary!obligation)!

• Any!mitigation!is!an!implied!disch!–!if!looking!for!SP,!then!alternatives!don’t!exist!in!the!market!anyways!"!Non"compliance!is!civil!contempt!of!court!and!punishable!by!imprisonment!or!damages!"!2&Types:!(1)!Specific!Enforcement!&!(2)!Injunction!"!SP!can!take!a!long!time!–!sometimes!it!may!be!better!to!discharge,!mitigate!&!take!the!compensation!damages!Requires!!Available"only"if"Substantial"&"legitimate"reason"+"damages"at"law"are"inadequate"

• If!no!amount!of!$!would!allow!for!a!suitable!alternative!• Item!must!be!unique!(ex:!a!house,!art,!heirloom,!private!shares!in!a!company)!• Mutuality!!The!court!won’t!award!SP!to!me,!unless!it!would!reward!SP!against!me!

o Ie.!The!court!won’t!award!SP!against!a!child!(and!therefore,!a!child!cannot!get!SP)!!Grounds"for"Denial"

1. Personal"Services!!No!SP!for!personal!services!(money!for!land!is!ok,!but!services!for!land!won’t!get!SP)!2. Impossibility!!No!SP!if!there!is!an!innocent!bona!fide!purchaser!for!value!involved!(ie!sold!to!a!3rd!party)!3. Misrepresentation!!Equity!will!not!assist!a!wrongdoer!(even!an!innocent!one)!–!“clean!hands!principle”!4. Hardship!!If!it!would!be!too!much!of!a!hardship!to!give!SP,!then!it!won’t!be!enforced!5. Ongoing"Judicial"Supervision!!Court!will!only!enforce!a!‘one"off"!event!&!won’t!supervise!ongoing!perfs!6. Acquiescence"&"Laches!!No!SP!if!you!affirmed!a!K!or!have!let!things!go!too!long!(unreas!delay!that!

would!prejudice!you)!!Remedial"Advantages"to"SP"• P!can!elect!date!of!assessment!in!the!event!of!refusal!of!specific!performance!!(dams!gen!assessed!at!date!of!br)!

o plaintiff!enjoys!election!of!damages!awarded!in!lieu!of!specific!performance!!• (Possible)!enforcement!of!K!for!benefit!of!third!party!(Beswick)!(can!get!around!privity!through!SP)!!Election"&"Specific"Performance""!If!P!wins!SP!but!no!longer!wants!it,!P!enjoys!an!election!of!damages!awarded!in!lieu!of!SP!

• Can!elect!damages!at!(1)!the!time!of!trial!(if!value!increased),!or!(2)!the!time!of!the!br!(if!value!decreased)!!Specific"Performance"&"Constructive"Trusts"(CT)""!Perfectionary!CT!(imposed!by!law)!–!Imposed!in!order!to!perfect!the!parties’!actions!(so!D!lives!up!to!his!word)!

• Ex:!If!we!create!a!K!today!that’s!subj!to!SP!(ie!sale!of!house)!as!soon!as!K!is!signed,!equity!imposes!a!CT!on!the!house!until!the!closing!date!(O!still!holds!legal!title,!but!buyer!now!owns!equitable!title)!

"!In!the!case!of!breach!of!trust/fiduciary!duty!!you!can!get!disgorgement!damages!(not!just!compensation)!• Ex:!if!the!O!sells!the!house!bc!the!land!value!has!increased,!then!you!can!get!the!gain!

"!As!soon!as!the!trust!is!created,!you!can!register!it!at!the!Land!Titles!Office!• Tells!everyone!that!they!can’t!but!the!land!bc!I!already!have!the!equitable!interest!(prevents!br!altogether)!

34!

"!Lord&Cairns&Act!• Says!equity!has!the!ability!to!award!damages!(if!you!opt!for!dams!in!lieu!of!SP,!then!equ!can!award!dams)!• W!injunctions,!if!the!court!finds!that!you!can!usually!get!one,!but!uses!discretion!against!awarding!the!

injunction,!then!it!will!award!damages!in!lieu!• Historically,!dams!can!be!awarded!only!for!past!losses!–!LCA!says!dams!can!go!backwards!&!forwards!

o So!under!the!LCA,!court!can!order!dams!for!past!&!future!losses!

INJUNCTIONS"

"!Injunctions!!A!court!order!to!act!in!compliance!with!a!pre"existing!obligation!"!Species!of!Injunction!(timing!of!order):!

1. Quia&Timet&Injunction!!Intended!to!prevent!the!br!that’s!about!to!happen!(the!occurrence!of!the!br)!2. Interim&or&Interlocutory&Inj!!Protect!rights!pending!final!resolution!

• If!there’s!a!br,!but!not!ready!to!go!to!trial!!Freezes!the!situation!in!place!–!prior!to!it!going!to!trial!3. Final&or&Permanent&Inj!!Conclusive!resolution!of!rights!–!ordering!an!injunction!to!the!D!

!"!Nature!of!the!Order!"!Prohibitory&Inj!!refrain!from!stipulated!act!(you!have!an!obligation!to!not!do!something)!"!Mandatory&Inj!!Perform!stipulated!act!(ie.!if!D!built!a!fence!on!P’s!land!–!May!get!a!mand!inj!to!take!it!down)!"!Positive!obligations!are!usually!dealt!w!in!SP!(but!a!mandatory!inj!looks!very!similar)!

• Imp!diff!!Courts!much!more!inclined!to!award!an!injunction!(refrain!from!NOT!perf!the!obl)!over!SP!• Rule:!SP!principles!applicable!if!SP!in&effect!(If!in!essence!P’s!asking!for!SP,!then!P!must!ask!for!SP)!

o Can’t!frame!it!as!an!injunction!in!order!to!get!the!broader!scope!of!relief!!Warner&Bros&Pictures&Inc&v&Nelson&(QB&1937)&

• Bette!Davis!(D)!signed!a!K!with!P.!That!K!contained!positive!and!negative!undertakings.!Positively,!D!promised!to!act!in!P’s!films.!Negatively,!she!promised!not!to!act!for!anyone!else.!By!1937,!however,!she!had!enjoyed!great!success.!She!therefore!decided!that!her!K!w!P!did!not!pay!enough!for!someone!of!her!stature.!She!wanted!to!work!elsewhere!for!more!money.!

• P!did!not!seek!SP!of!D’s!positive!promise!to!perform!in!its!movies.!And,!indeed,!the!court!said!that!such!an!order!would!not!have!been!granted!(bc!it’s!a!personal!service).!P!did,!however,!obtain!an!inj!w!respect!to!D’s!negative!promise!not!to!appear!in!anyone!else’s!movies.!The!court!held!that!if!D!wanted!to!appear!on!film!during!the!life!of!her!K!w!P,!she!had!to!work!for!that!studio.!The!court!also!held,!however,!that!she!was!free!to!earn!a!living!in!other!ways!if!she!chose.!

Page&One&Records&Ltd&v&Britton&(Ch&D&1968)&• Ds,!4!young!English!musicians!who!played!as!The!Troggs!signed!a!K!with!P.!Under!the!terms!of!that!K,!the!

Ds!gave!a!positive!promise!to!employ!P!as!their!manager!and!a!negative!promise!to!not!employ!anyone!else!in!that!capacity.!The!rel!bw!the!parties!deteriorated,!and!Ds!decided!that!it!could!no!longer!work!with!P.!P!sought!an!injunction!preventing!Ds!from!hiring!anyone!else!to!act!as!their!manager!

• The!court!refused!to!grant!an!inj!for!several!reasons.!Most!significantly,!the!judge!recognized!that!an!inj!would!have!effectively!prevented!the!Ds!from!earning!a!living.!Bette!Davis!could!have!made!money!by!doing!things!other!than!acting!in!film.!Ds,!in!contrast,!had!no!skills!outside!of!music.!And!could!work!as!musicians!only!if!they!had!a!manager.!It!therefore!would!have!been!unfair!to!make!them!choose!bw!unemployment!and!working!with!P.!

!!!!!!&!