Comm Law Lecture Notes 2014

7/23/2019 Comm Law Lecture Notes 2014

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Lecture 2: Comm Law 393 September 8, 2014

!Authority Roles: Government

Courts

3 Sources of Laws in Canada (parties who can make laws):

1) Constitution Acts 1867 1982 Charter

2) Legislation provincial federal

3) Court Decisions

!residual laws were given to the federal government!federal government powers are limited due to the constitution act (gavepowers to provincial government) and the charter!federals decision is paramount; provincial cant change

!Why cant the court get involved in Trinity Western? Because it is not a government

!Issues with Human Rights Code:

1) Not entrenched (can be easily changed)2) Not applicable in any other jurisdiction

!Canadian Bill of Rights 1960

!Human rights code applies to individuals, therefore, very important

!1982 Charter:1) Charter onlyapplies to public matters governments

2) Charter is entrenched in constitution (can not be easily altered)3) Can not have ordinary legislation that infringes the charter4) Section 33:Sunset Clause !permits legislation to override certain

charter sections5) Section 1:allows for legislation that can be brought in saying that

none of the rights under the charter such reasonable limits!Government can bring in legislation that infringes charter if it

benefits the peace and safety of Canada


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!rights may be infringed if there can be suchreasonable limits prescribed by law in a free and democraticsociety

!none of the rights in the charter are absolute!search and seizure

1) Section 2:Fundamental Freedoms2) Section 3:Equality Rights (check)3) Section 7,8,9,10:Legal Rights

3 criteria that determines whether the Charter applies and if rights are infringed:

1) Does the charter apply? Yes2) Were the rights infringed under the Charter? Yes3) Is it allowed by Section 1? No

1.A statute is presumed valid2.Onus is on person trying to prove it is invalid3. If one of the rights guaranteed by the charter is infringed the provision in the

statute will be presumed invalid, unless,4. The government can prove that the infringement is demonstrably justified

Types of Laws in Canada

Procedural Laws:laws that govern how an action is brought Provide organization, must bring case following

Substantive Laws: body of law

Public Laws:criminal laws, tax laws, constitutional laws

Private Laws:torts, contacts, property, trusts

!Parties: Plaintiff vs. Defendant * known by name*Ex. Brown vs. Jones

Criminal vs. Civil Procedures

1) The parties are different: Regina vs. accusedPlaintiff vs. defendant

2) Procedure3) Proof

!beyond a reasonable doubt on the balance of probabilities4) Decision:

!Guilty, not guilty, liable, partially liable, not liable


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5) Outcome:

!Punishment!Remedy: damages, injunction, specific performance

!Common Law:theory of precedents, stare decisis!Civil Law:based on written code

!Follow precedent: stare decisis (follow previously decided cases)!Courts of Chancery: ask for equitable solution to get around the harshness ofthe rule of precedent of the common law

Law of Trusts

!Courts of Chancery and Common Law merged in 18

!Common Law: theory of precedents, stare decisis

!Statutes prevail over Equityprevails over Common Law

!Statues: legislative enactments brought in by government that alter commonlaw; rules and regulations

!Equity: acceptions to the rules of common law

Alternate Dispute Resolution (ADR)

1) Negotiation:allow parties to work out a situation themselves2) Mediation: mediator tries to facilitate and agreement between 2 parties

(flexibility, works with parties, their decision is not binding)3) Arbitration: makes a binding decision which is usually not appealable incourts

!Why use ADR?

Flexibility (dont abide by any rules) Less expensive Speed and finality Confidentiality (can choose who is sitting in; not public) Choice of decision-maker Certainty and enforceability (can be enforced in courts) Relationship preservation

!Disadvantages of ADR:

Cannot ensure full disclosure (because rule of courts arent followed) Power imbalance (one party may be more prepared, or more quiet) May not be as predictable (because doesnt follow rule of precedent)


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Contract:a promise that the law will enforce Cannot be forced to enter into a contract

Flexible in terms of how contract can be made (can be written but doesnthave to be; only 3 types that do have to be in writing)!oral!conduct!written

All contracts contain 6 or 7 parts1) Offer2) Acceptance3) Consideration4) Intention

5) Capacity6) Legality7) Writing

Offeror: person who makes offer Controls the offer (person who has power)

Offeree: person who accepts the offer Person who has to do what theyre told

Unilateral Contract:the offer is out there, but dont have to accept contract

!only one party has to do something: they make an offer, and are onlybound to pay out if the other party accepts; the other party does nothave to accept

!as long as someone performs the terms, the offer remains openEx. Dont have to look for lost dog but if you do and return it, you

should be paid; cannot withdraw the offer made to pay thereward amount

!usually reward situations

Bilateral Contract:two parties each have to perform somethingEx. I will sell you my car if you give me $500

!both parties are the promisor and the promisee!usual type of contract


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Law of Intention

Intent is presumed (voluntary agreement) Presumption is less clearfor agreements with family and friends, unless

relationship is formalized (dont intent to be legally bound) If intent becomes an issue, they will use the test of a reasonable person:

Would a reasonable person looking at the outward conduct of the partiessay that they showed a serious intent to make a contract?

Ex. Carbolic Smoke Ball Case Intention is resumed unless one of the parties can show that they didnt

intend to enter into a binding contract

Law of Writing

Contracts can be in any form of communication (invoice, 18 pieces of

paper, serviette, conduct in doing something) ; doesnt have to be inwriting unless it is 3 types of contracts:

3 types of Contracts that must be in writing:1) Contract for the sale of land (Requirement of Form)!except leases and agreements to lease under 3 years duration!must contain all the essential terms, it can leave out

considerations, may state fair value (it is unambiguous)!contact is enforceable if it is signed by the party against whom

the contract is to be enforced: the person denying the existenceof the contract must sign the contract

!must contain explanation of what land is involved, important

details

!if one of the parties has done something which is indicative of there being acontact, the contract will be enforced even if they dont have it in writing

Ex. Taken out money to pay for mortgage, even though wasnt in writingthe evidence is sufficient to show the sale of the property

2) Personal Guarantee:a conditional promise to pay only if debtordefaults on payment (if the other partydoesnt pay)

3) Contracts not to be performed by either party within 1 year

!written form can be in several documents (doesnt have to be in 1 document)!documents can be written up after the contract was formed!doesnt have to be signed unless one of the parties is denying the existence of

the contract



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*Look at law related to offer, consideration, and acceptance for midterm*

Law of Offer

Offer:proposal of some sort made with the intent to be bound should the offer beaccepted

contract cannot come into existence until there is an offer and ithas been accepted

can be communicated orally, written, by conduct, or by all 3 terms may not be ambiguous the form of the offer is unimportant, just needs to convey all the terms in

clear form offers must be communicated prior to acceptance

!law and moral obligations differ crossed offer must be communicated before it can be accepted unsolicited intervention

!if havent asked for something, no obligation to be bound!a consumer has no legal obligation in respect of unsolicited

goods or services unless the consumer expressly acknowledgesto the supplier in writing his or her intention to accept the goodsor services (supplier has no cause of action)

Invitation to do Business:when a business is inviting you to make an offer

!when goods are on display, it is an invitation to do business!when you go to the cashier desk to pay, it is an offer!when the store accepts the cash, it is accepting the offer!however, certain types of displays are offers

Ex. For the first 10 customers in line, we will sell dvds for $10

Standard form Contracts: offers presented in document or action that cannotbe charged to the offeree and must be accepted orrejected

Ex. You cannot negotiate payment for bus, either hop on or hop off

!unqualified acceptance!when have unusual terms, court needs to decide whether the offeror

has done a reasonable job in notifying the terms / bring the terms toattention at the time of entering to the contract

Lapse of an Offer:once an offer has been made it can lapse


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When can an offer lapse?

1) offeree fails to accept within a time specify in the offer2) when offeree fails to accept within a reasonable time3) when a counter-offer has been made

!when an offer has been made, and you dont reply in aspecific way / to specific terms, it has become acounter offerand the original offeror is free to accept orreject it and the previous offer is now terminated

4) when either of the parties die or becomes insane prior toacceptance

5) offer is rejected6) offer is revoked

!when a party wishes to withdraw an offer, they can do soanytime prior to acceptance, even when they havepromised to leave the offer open, unless its under seal or

with option to contract!Revocation Rule:revocation by mail is accepted whenreceived; for revocation to be effected,it must be communicated to the offeree

7) an internet consumer is considered the offeree, and afterseeing the terms required to be disclosed by the supplier, he orshe will be bound by the terms of the internet contract at suchtime as he/she clicks and I accept icon on the computerscreen

Law of Acceptance

must contain all the terms of the agreement and be a mirror image of theoffer

offeror controls the contract, including how the acceptance should bemade and time offer is open for (if you dont, you are inadvertently makinga counter offer)

acceptance must be made in a manner requested o implied acceptance must be made in a positive form

!silence is only okay if they have agreed on it as a means ofacceptance, or they have used it before, otherwise it cannot be

taken as acceptance, more so as forcing acceptance is effective when communicated to the offeror

Postal Acceptance Rule:where the offer stipulated acceptance by mailor the offer has been made by mail and there is no stipulation how theacceptance show be made


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!acceptance is complete when a properly stamped andaddressed envelope is placed in the mailbox, not when theofferor receives the letter

!varies from revocation rule (very important to remember!!)

Payment:term of a contract

Key Points

Offer can be revoked at any time prior to acceptance unless its beensent under seal or has an option contract assigned to it

It must be communicated before accepted Ads are just invitation to business/make an offer Tenders are offers that can not be revoked (under seal) Postal acceptance rule says may be made by mail if mail is used or

mail is requested (effective when and where the mail is placed in

mailbox) Revocation must be received at address, or through reliable

source/person


Law of Consideration

Must be some reason for entering into a contract = an exchange (benefit)

!Unilateral Act: promise in exchange for an act!Bilateral Act: promise for another promise

Consideration is not restricted to the payment of moneyEx. Cleaning of house

Consideration must have some material value; love and affection are notsufficient consideration, there must be market value(quantified by amaterial amount)

Adequacy of consideration is not an issue for the courts (wont undue badcontracts/bargains), unless there is:

!fraud!undue influence

!duress physical domination of one person on another; threat ofphysical violence, also expanded to include the threatof disclosing political or social information from past

Ex. Doctor/patient, parent/child relationship

3 promises are not made with binding law:


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1) Gratuitous Promises:promises made without consideration

!a promise made without bargaining for, or accepting, anything in return(no exchange between the parties)

!because a gratuitous promise lacks consideration, it is notbinding in

law

Donations: basically are gratuitous promises that are not binding unless:1) made under seal2) where a charity has done something in response to the donation

2) Past Consideration:a gratuitous benefit previously conferred upon apromisor

!act has already been done so it is not binding!

if someone does you a favour, that is not binding

a promise to reward another who has previously done an act gratuitouslyor given something of value is not binding

there is no element of bargain, no benefit being performed in return for apromise

3) Existing Legal Duty:

a new bargain requires new consideration is a promise to pay extra forwhat is already owed under an existing contract is not binding

there must be either new consideration or promise under seal to be

binding (if they dont get any more value out of new contract, it is notbinding) if existing legal duty is owed to a third party, a promise to do the same

thing for someone else is enforceable

Gratuitous Reduction of a Debt

1) Section 40 of Law and Equity Act of BC:

!creditor who accepts a lesser sum in full satisfaction of a debt will not be

permitted to later claim balance due if lesser sum has already been paid

2) Equitable estoppel may prevail

Get around the rule in Foakes and Beer case by:

1) payment before due date2) give another form of consideration (bottle of wine)


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3) rule only applies to money4) doesnt apply to third party paying lesser sum if creditor cancels

remaining debt

Equitable Estoppel

Law of Equitable Estoppel / Promissory Estoppel:you said you wouldnt dothat, and now you are going back on your word, and I am going to suffer for it(cant go back on your word in a legal situation)

courts will exercise of its equitable jurisdiction to estop/prevent/deny apromisor from claiming that she was not bound by a gratuitous promisewhere reliance on that promise caused injury to the promisee

Rule: when a person makes a gratuitous promise and another relies on

that promise in good faith to his detriment, the make of the promise will beestopped (prevented) from later denying that he made the promise!When one party gives the impression to another party that strict

legal rights will not be enforced, they cannot take the other partyby surprise

Equity will enforce the gratuitous promise if the following is present(criteria): *must remember them all*

1) the must be a pre-existing legal relationship between the parties!contract must still exist, if at the time the promise is made you

are not in a contract, there is no equitable estoppel

2) one of the parties releases the other from obligation, even byimplication

3) the existing contract is modified/varied by a gratuitous promise (therequirement to give notice was ignored/modified)

4) the person relying on the gratuitous promise must suffer somedetriment if promise not lived up to

5) equitable estoppel may only be used as a defence, not as a cause of

action; a shield, not a sword (AMS was suing dukes cookies)

* If question on exam about equitable estoppel, set out 5 criteria, and then relateeach one to the facts *

Quantum Meruit


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Quantum Meruit:when goods or services are requested in a business context,and no price is set, there is an obligation to pay a reasonable price

!pay what is reasonable worth, or quantum meruit

Payment/ Consideration

the courts interpret the time set for a payment as a warranty unless theparties have expressed themselves otherwise. Consequently, a seller isnot entitles to rescind the contract of sale and have the goods back simplybecause payment is not made on time. He must be content with an actionfor the price of the goods (contract doesnt just end)

Use of a Seal

Seal: a seal is an alternative way to make a promise binding!can replace consideration the seal must be present at the time of signing party signing must be aware of the seal and its legal significance must be affixed at the time of document signed binding without consideration charities use a seal with donations so the offer is binding, can not revoke now a days, seal is just a little red circle by your name, must be put on

when you sign document (historically, wax blob with initials)


Law of Interpretation

Express Terms:terms explicitly agreed to by the parties

Implied Terms:deemed to exist where standard in trade, and facilitate business

!Not expressly included!Not in contract, but courts imply as if they are

Ex. When buy food, dont ask if you can eat it or not, implied that is it safefor human consumption

Interpretation of Express Terms


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General Rule: a person who voluntarily signs a contract will be bound byits terms

Look at the following:

1. Strict, literal or plain meaning approach; ordinary or dictionary meaning!Usually doesnt work well because there are multiple definitions

in dictionary

2. Liberal approach!Looks at intent of parties circumstances surrounding the

contract, knowledge of the parties and trade usageEx. Do you have any wheels? Actually mean a car, not just wheels

3. Contra Proferentum!Interpret the term against the party who is seeking to rely

(party who suggested the term)

Courts ultimate goal is to keep contract alive

Use reasonable person test what would they have thought the wordsmeant

The Aircraft Accident

Insurance intended to cover risk of flying low, but there was ambiguity inthe contract

Could have said: where the plane was loaded with chemicals

Implied Terms

1. Courts see if intention of parties can be achieved through existence(get rest of sentence)

2. Type of contract will determine implied terms for example, if a statuteapplies

3. Implied terms make business sense

4. Implied terms enforced as if express terms

5. But, courts will not imply a terms contrary to express intention set out inagreement

!If matter explicitly dealt with, this precludes use of an impliedterm


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!For example, if vendor explicitly says these oranges are not safefor human consumption, yet you still buy it regardless, will not becovered

If terms are too vague in contract, courts will set the contract aside, cannot

make one for you

Difficulty in interpretation is NOT the same thing as ambiguity


Sale of Goods Act

Criteria:

1) Must be a sale!where property transfers for a money consideration!must have an exchange for money

2) Of Goods!tangible personal property!not real estate

3) Does not apply to services!on the balance is it a contract of sale, or a contract of labour and

materialsEx. Getting hair dyed

4) Ownership must pass to the buyer

Note: Food is considered a good

Two main conditions the Sale of Goods Act sets out:

1) Warranty: breach of a non-essential term, contract must continue butcan sue for damages

2) Conditions: breach of an essential terms which relieves the injuredparty from any further duty to perform the contact

!may sue for damages

British Columbia:


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s.16 SGA: implied condition as to right to title implied warranty as to freefrom charges or encumbrances

!have to have the right to sell the good when you go to sell it

s.17 SGA: implied condition that goods will correspond to the description

minor misrepresentation regarding secondary characteristicmay be treated as a breach of warranty!if the goods dont look like they were supposed to,

different from description, it is a breach of warranty

Ex. Have pleather in car rather than real leather, this would be abreach if thats not what the client had asked for, and they willget enough money to change it to leather

s.18 SGA: fitness for purpose

!implied condition goods are fit for a particular purpose if:

1) buyers communicates expressly/by implication particularpurpose for goods

2) buyer makes it known he is relying on sellers skill and judgment3) goods are in sellers course of business to supply4) buyer not purchasing by trade name, relying on own skill and

judgment

s.18b SGA: Merchantability (durability)

!implied condition that goods can be used for at least one of thepurposes for which goods of that description would normally beused

s. 19 SGA: Corresponding to sample implied condition that bulk willcorrespond to same and description/sample

!if you inspect something reasonable, you will be able to see ifthere is something wrong

s.20 SGA: parties free to exclude/override provisions of SGA!but see s.20 SG in BC:!dealer bound by SGA if he sells new goods to an ordinary

consumer!may contract out of s.17, 18, 19 if private sale, used goods,

business use, trustee in bankruptcy!.!but never s.16 (title)!buy exemption clause must precisely describe the type of liability


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disclaimed!so if it says all warranties then all conditions still apply!so all consumer sales in BC come with non-excludable statutorily

implied conditions and warranties

Risk and Title

Transfer of Title to goods under the sale of goods act

Subject to a contrary intention of the parties: 5 Rules

Rule 1: unconditional contract for sale of specific goods in a deliverable state title passes when the contract is made (delivery & payment irrelevant)

Ex. If you buy a bunch of goods from Ikea, go to get the car andyou come back and theyre gone, the risk is on you becauseyou owned them at that time

Rule 2: sale of specific goods where seller bound to do something to put then ina deliverable statue

title passes when the thing is done and the buyer receives notice

Rule 3: sale of specific goods in a deliverable state but the seller is bound toweigh, measure, test, etc. to set the price

title passes when the thing is done and the buyer receives notice

Rule 4: sale of goods on approval (adopted the transaction)

Title passes when the buyer signifies approval or acceptance to the seller,or after a specific or reasonable length of time

Anything that indicates that you want to keep those goods

Ex. Go get a suit for brothers wedding, fianc is fussy, if we donthear from you by Tuesday at noon, well assume the suit is okay.Tuesday you find out from fianc that she doesnt like it, you then ownit

Rule 5: sale of unascertained or future goods by description


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The passes when the goods are unconditionally appropriated to thecontract by the seller with the assent of the buyer or the seller delivers thegoods to a carrier pursuant to a contract and does not reserve a right ofdisposal

Lecture 8: Comm Law 393 October 1, 2014

Donut Questions

1) If the donut cannot be eaten for any reason, discuss whether the SGAwould apply and if so, what sections

!yes it does apply, because donuts are goods!s. 19 sale by sample!sale by description!

fitness for purpose: because specifically laid out the criteria!merchantability: not fit for the main purpose which it was meantto be used

Ex. Fly in the donut

2) Would your answer be any different if the donuts were purchased forcustomers of ABC Ltd.

!its a company, therefore, its a sale to a business!yes, it still applies; the only way it wouldnt apply is if there was

an exemption clause

3) If I spilled the donuts on the way out the store, can I get a new batch who bears the risk?!the risk has already passed to you, and therefore, you bear the

risk if you drop it!no cannot get new ones, title has passed!Rule #1 contract was made, goods were specific good, in a

deliverable state, and you took them out to the car!in the scenario that she called ahead of time, which she did, it

would be Rule 5 that applied- applied when they were packaged, wrapped, and had themon the trolley


Exemption Clauses

Used frequently in:


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Standard form contracts Back of ticket contracts

Used to:

Limit the risk Transfer the risk to the purchaser

When Exemption Clauses dont work:

Unsigned contracts:!no reasonable notice of the clause (has to be brought to

attention)!onus is on defendant to prove plaintiff adequately informed

Signed Contract:!effective when bargaining power and knowledge of law are equal!ineffective if law such as SGA applies!where exemption does not precisely cover event, then Contra

Proferentum will apply

Ex. If coat gets ruined, soaking wet, would this beexempted? No, they would not be exempt because onlysays not responsible for lost and stolen clothing

Ex. If your laptop and notes are stolen, not exemptedbecause only said clothing, not goods

!Can be ineffective when there is a fundamental breach

Courts will generally enforce exemption clauses because object ofcontract law is to carry out whatever parties have bargained to do

But any ambiguity, then narrow or restrictive meaning will be used, willfavour the party who did not draft contract

Ex. Not responsible for lost of stolen clothing

Capacity/Capability

Must have capacity at time entering into contract, or the contract will be declaredvoidable

2 types of contract:


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1) Void: agreement with no legal effect, therefore, doesnt form a contract

!legal nullity!lacks capacity, intention, consideration, legality (not binding)

2) Voidable:had legal effect until declared invalid

Age of majority: 19 in BC (Infants Act of BC)

!gain capacity at 19 years!textbook is incorrect in regards to capacity in infants!rule is in BC: law is to protect those who are incapable due to youth

a contract with a minor is voidable at their option but enforceable bythem against the adult, regardless if the adult was unaware thatthey were entering into a contract with a minor

- (adult bears all the risk)

except for student loans (binding as if the infants are of legal age)

!will be enforceable when you turn legal age if:(when you buy something at 18)

1) partially perform the contract within one ear2) dont repudiate the contract3) affirm the contract within one year

!waiver form has no effect on minors!there is a way around waiver forms being signed by adults to protect

infants: get parents to sign an indemnity agreement:they will payback any money claimed, so that they can recuperate their losses


Infants act subsection a) refers to student loans

Contracts made by Intoxicated/Insane can be exempt:

Permanently or temporarily insane

Bound to contract for necessities (infants are not bound)

!only responsible for a reasonable cost

These contracts are voidable if they show:1) they were incapable of a rationale decision at the time of contract


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2) AND the other party was aware of it!people are not normally out on their own

If want to get out of contract, must repudiate contract immediately andaccept no benefits under contract

Ex. Ferrari example!signed lease when you were drunk, need to repudiate assoon as you are in normal state, cant drive it around for awhile and then take it back (accept no benefits)

In marriage, can get a certificate of independent legal advice

Bankrupt debtors cant enter into contracts until theyve been discharged

Discharge of Contracts

5 ways:

1) Performance: when both parties have fully performed all their obligations =the expected result

2) Agreement:a) Waiver: agreement not to proceed

b) Substituted Agreement:- material alteration of terms- accord and satisfaction- novation

c) Condition Precedent or Subsequent or option to terminate- set out in contract

3) Frustrationi. must relate to an event that occurs after making the contractii. must make performance impossible, not just a hardshipiii. frustration must not be self-induced

4) By Operation of Law (Bankruptcy)

5) Breach: party that has been damaged by breach of contract has thechoice to choose whether to continue or not; not automatically terminationof contract


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By Performance: parties all perform contractual terms satisfactorily

"Tender of Performance: an attempt by a party to perform according toterms of the contract

!can be accepted or rejected!

once youve tendered performance, your obligations are overbesides paying back the initial debt (dont have to pay interest)

Substantial Performance: performance that does not comply in someminor requirement of the contract

!cannot seize upon a trivial failure of performance to avoid ownobligations

!Example: 2/1000 items not in perfect condition for resale

By Agreement:

!

parties may agree to not perform contract!replace the original contract with another contract!The parties will not have to perform in certain conditions are met of not

met!cannot change the terms of the contract without both parties agreeing

(there must e some form of exchange)

a) Waiver: an agreement not to proceed with performance of a contractalready in existence

!there must be consideration for this!if each party has rights and obligations outstanding, these are

consideration for the waiver of each party!in only one party has performed, release should be under seal or

consideration provided

b) Substitute Agreement:

Accord and Satisfaction:where one party is unable to completelyperform the original obligation, so the parties may agree that it should bereplaces with by new obligation (compromise)

!A compromise between contracting parties to substitute a newcontractual obligation if the original obligation cannot be carriedout (reached an agreement)

Material Alteration of the Terms:changed to the root of the contract parties can agree to discharge their original contract and replace it with anew one

Ex. Thornhill and Neates see text page


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Novation:parties may replace one of the parties to the contract anddischarge the former party from its obligations under the contract

!there must be consent

Ex. In a sale of business, keeping independent contractors requires

consent

c) Condition Precedent:an event or requirement that must be satisfiedbefore either party to the contract is required to do anything

!contract itself has binding force from outset

Condition Subsequent: terms are included in a contract that bring theobligations to an end upon some event or condition taking place

Option to Terminate:term that gives either party the option of bringing acontract to an end before performance completed, by giving notice

Ex. Mortgage, employment

Discharge by Frustration: an event beyond the parties control

!the frustrating event must take place after the making of the contract

!frustration event must make the contract impossible to perform, not justmore difficult/ expensive

Ex. Death, bridge burns

!event must not be self-induced

Frustrated Contracts Act:

!the loss will be portioned between the parties


Breach of Contract:When one of the parties wrongfully pails to perform itsobligations under the contract

Breach does not automatically lead to termination of the contract:

The breach must be sufficiently serious The injured party must choose to terminate

In order to discharge the contract, the breach must be of the whole contract or ofan essential term so that the purpose of the agreement is defeated


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Terms condition and warranty distinguish essential from non-essential terms in acontract

Condition:breach of a fundamental, essential term

Leads to option to terminate contract unless doctrine of substantialperformance applies

Warranty:breach of a non-essential term

Does not discharge contract Can only claim damages

Write contracts with remedies in mind set out if breach is of a condition orwarranty in advance

How may a breach occur:

1) by repudiation of liabilities expressly!saying I quit to boss!repudiate means: page 482 to reject or declare a an intention to no

longer bound you want out

2) by acting in a way that makes performance impossible to perform!goes to play soccer therefore, wont be attended work

3) by either party failing to perform at all or by tendering performance notequivalent to its promise!sitting and talking, eating donuts, therefore, probably not doing work

Express Repudiation: a declaration by one contracting party to the other that itdoes not intend to perform as promise under the contract

!can treat contract at end and sue for damages or insist on performance

Anticipatory Breach:notifies other party in advance that it will not be able to

perform its obligations = A breach occurring in advance of the time agreed on forperformance of the contract

!form of express repudiation but its in advance/prior to the contractbeing performed

!can treat the contract as breached or wait to see if shows up, and if not,they have not tendered performance theres been a breach of contract


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!if you let an anticipatory breach go, if an event of frustration occurs,then you cant do anything

Failure of Performance:

!is it a breach of a condition or warranty?!could be liable for wrongful repudiation if it was only a minor breachwhich entitled damages only

!if you called contract off and it was only a breach of warranty, youwould then be in breach of contract for calling contract off!

!is it minimal to the whole contract? Is that behaviour likely to occur?

What you are capable of claiming when a breach occurs:

1) Damages: are subject to:

a) mitigation: minimized the lossEx. If youve been terminated, you have to find another jobb) remoteness

2) Equitable Remedies

!specific performance: only allows in situations where theressomething unique or special, and damages wont do, wont beawarded where involves an element of supervision

!injunction: stop it (you cant do it)

!rescission: unravelling of a contract; puts parties in position theywere in prior to the contract as long as that position is still ableto be achieved

3) Quantum Meruit: when only half of the job is doneDamages are awarded to place the injured party in the position it would havebeen in had the contract been preformed

!subject to mitigation!remoteness, or foreseeability

Mitigation: duty of harmed party to minimize the loss suffered

!Can only recover for losses not reasonable avoidable!Note re anticipatory breach: promisees duty to mitigate only arises

upon acceptance for the anticipatory breach, or if the promiseecontinues to demand performance, upon the time the breach becomesevident


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Remoteness: a loss must be within the foreseeable boundaries of what theparties would have expected as a likely consequence of a failure to perform had they thought about it when they drew up their contract

!damages not generally awarded to compensate an injured party for

some unusual or unexpected consequence of a breach must flowdirectly from breach

!Case: Hadley vs. Baxendale Rule 1854 (imp on exam)only responsible for the usual damages that could be expected if the contractwas breached, unless otherwise communicated at the time contract was enteredinto - werent awarded for the full amount, only loss of profit for being shut down

Expectation Damages:expected profits lost due to breach!opportunity cost lost!

must be foreseeable calculated at time of making contract

Consequential Damages:

Reliance Damages:waster effort reasonable made in preparation for thecancelled contract

Nominal Damages:token award!made when loss sustained is minimal!done as a matter of principle: wants to prove a point

Liquidated Damages:amount allowed to be claimed for breach predeterminedin the contract

!must be genuine attempt to anticipate consequences of breach, not apenalty (what a court would award as damages)

!agreed n advanced what a breach is worth

!doesnt actually matter what the actual loss is - matters of whether it isa good estimate of what the loss could be

!if it is punitive, then court will not award it

!if it was an outstanding amount, the liquidate damage turns into apenalty clause and will not be enforced, and they could only sue for lossof actual cost


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!Deposit:a form of liquidated damages, advanced at outset of theagreement

- retained if purchaser fails to perform- must be an honest attempt to estimate damages that would besuffered due to breach, not a penalty

Down Payment:sum paid, usually as a partial payment, returned wherethere is a breach upon which vendor can then sue for damages

!considered towards the purchase price (is not a deposit)

HEBB theatre 6:30


Remoteness Hadley vs. Baxendale Rule

Damages Westcoast Transmission vs. Cullen deals with the Hadley vs.Baxendale Rule

Nominal Damages not monetary

Liquidated Damages Blackcomb and Schneider!not penalty (actual reasonable was 20%, they only charged 10%)!deposit is a form of liquidated damages

Parol Evidence Rule:if the language of the written contract is clear andunambiguous, then a term previously agreed to by the parties (oral or written) butnot included in the final written contract, will not be permitted to add to, vary oralter/modify the final written document

The per operates to exclude terms one party claims should be added tothe contract

It does not exclude evidence about the formation of the contract, such aslegality, capacity, mistake, duress, undue influence or fraud

That is, it does not affect the evidence of any of the circumstancessurrounding the contract

It operates only to exclude the introduction of terms not found in the

written document

Applies:

1) Where there is a written contract

2) One party alleges that there are further oral terms not included


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3) Those excluded terms:

a) Add tob) Varyc) Contradict

d) or Alter the contract

4) Then the Parol Evidence Rule will operate to exclude that evidence

5) Only the written contract is enforced

Exceptions to the Rule:

Parol Evidence is permitted as evidence to prove:

1) a misrepresentation took place prior to the making of the contract

2) the formation of an oral contract

3) the interpretation of express terms in contract where those terms areunclear

4) the evidence of a condition precedent

Subsequent Oral Agreement:

The per does not exclude evidence of an oral agreement that the partiesmay reach after they have entered into the written agreement thesubsequent oral agreement may change the terms of a prior writtenagreement

Collateral Agreement:

A collateral agreement is a separate undertaking agreed on by the partiesbut not included in their written contract

Accepted by courts only when a separate consideration can be found for

the collateral agreement

Condition Precedent

Events which much must occur, or conditions which must be met before acontract takes effect


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If the party alleging that a conduction precedent was agreed on and notmet can product evidence to support the claim, a court will recognize itdespite the existence of a complete and unconditional written form ofcontract, and will declare the contract void

Misrepresentation need to know definition for exam

Made prior to contract being entered into, turns out to be false, then it is amisrepresentation (if it was not made as a part of the contract)

!made during bargaining process

Definition:False statement of a material or important face which inducedor persuaded the other party to enter info the contract an was not made aterm of the final contract

It must be an allegation of fact

May be 3 types:

1) innocent: statement false, but they thought it was true, if find outfalse and dont correct it, it become fraudulent

Ex. Agent was told by sons that the mother died in hospital and sawhospital receipt on counter relaying info based on what saw/heard

2) negligent: somebody is careless as to what the said didnt careif was true or false careless

Ex. Saw stuff in the bed, but didnt bother to find out whether diedthere or not, and was asked and said no she died in hospital

!have onus when know that something was up

!maybe told my neighbours died in bed but sons said hospital wouldbe negligent if agent didnt find out then

3) fraudulent: deceit know it is incorrect

Ex. Agents told her died in bed but said not to say anything

!difficult to determine between negligent and fraudulent (merge together)


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!innocent can only get rescission

Experts opinion is considered a statement fact

If its made into a term on contract would be a breach of contract

Misrepresentation By Omission:

Occurs where a material factis withheld by one party from the otherduring negotiations

Try and conceal information from somebodyEx. Patent defects caveat emptor let the buyer beware

Latent Defects must disclose all you are aware of at time or itis a fraudulent misrepresentation

Contract of utmost good faith:

!party has access to information not available to the othercontracting party in special power of knowledge in comparisonto other

!superior position of knowledge, therefore, duty to inform riskswhich would be taken under contract

!insurance and securities must disclose all relevant information(require absolute disclosure cant conceal info)

!if you do not, then it is misrepresentation

Silence may be a misrepresentation try and hide the facts

!contracts of utmost good faith

!must disclose latent defects in real estate

!misleading half-truths

Remedies: limited damages often are not what you want!can exempt out of innocent or negligent misrepresentations

1) Rescission: an unmaking of the contract!only remedy for innocent misrepresentation


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!returns both parties to the position they were in before contractwas entered into (not always possible)

!must act quickly, take no benefits or lose right to rescind!innocent party compensated for out of pocket expenses!not available if it will adversely affect a 3rdparty

Ex. Land sale (once title has passed)!it is a type of equitable remedy!if subject matter of contract is destroyed, this is not possible

!for negligent and fraudulent misrepresentation, can claim damages ORrescission, not both

2) Damages!only allowed for negligent or fraudulent misrepresentation!can also claim rescission for negligent or fraudulent

misrepresentation, plus indemnity four out of pocket expenses

Ex. Cab fares when car breaks down


Duress:actual or threatened violence or imprisonment as a means of coercing aparty to enter into a contract

!contract is voidable at the option of the victim (will be set aside)!feel forced or pressured or obligated to do something against your will

by violence or perceived violence!includes threats of criminal prosecution, and threat to reveal

scandalous or embarrassing information about something

Undue Influence: domination of one party over another; someone feels forced toenter into a contract

!often found in special relationshipsEx. Parents and child, doctor and patients

!impossible to bargain freely!contract is voidable at the option of the weaker party (victim)!Victim must have clean hands and fast feet!contract is voidable, but must act promptly!certain relationships have a presumption of undue influence (person in

position of power has to prove that they did not use undue influence)!also occurs when someone signs a contract because they are in

financial distress desperateEx. Loan transaction with large percent (60% illegal)

!stronger party has obligation to show other party was not forced intocontract and the other party received a benefit ( benefit shifts to them;


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they have to prove this)!when weaker party, should have access to independent legal advice

1) look at degree of domination2) look at the extent of the advantage (can be measured in market)

Unconscionability

!caused by incapacity, will set the contract aside

3 criteria to determine whether contract was Unconscionable:

1) Bargaining position of the parties is unequal

Ex. Lesser education, doesnt speak the language very well

2) One party dominates and took advantage of the other

3) The consideration involved was unfair!person did not get what they were entitled to

Bomek v. B Case

Lecture 14 Notes

A contract has to be legal or it cannot be enforceable

!an illegal contract is void, but a void contract is not necessarily illegal

Legality: if a contract lacks legality it would be void

!Contracts must be legal to be enforceable OR void

May be illegal but statute

!Criminal Code of Canada!Competition Act!Customs Act


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May be void by statute

!If you enter into a contract before being discharged frombankruptcy, it is void

!WCB Act!

Bankruptcy!Insolvency Act

Courts may sever a void term, if its only a term, but not the entire contract

Courts will not aid parties in an illegal contract

!If one party did not knowit was an illegal contract, then they willcome to the aid of this party

When a Contract is Illegal by Statute (void)

!Agreements contrary to the purpose of legislationEx. WCB, Bankruptcy Act)

!Promises to pay under betting debt- Unless okay under legislation

!Wagers vs. Insurance Contract

-Wager:a bet where one person will win and the other will lose!Wagering contracts are not enforceable

- Insurance contracts only valid if party-making contract hasinsurable interest in insured things/person

- Consent required for writing for purchase of life insurance!business partners are often insured so that in case of their

death, you can own their share of the business

Agreements Illegal by Statute

!Criminal Code, Customs Act, Competition Act

!Lack of proper licensing may make a contract illegal

!If purpose of statute is to protect public from unqualified or unethicalwork, the contract will be unlawful if no license held

!Variation in acceptability of violations


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!If an improperly licensed person is being sued, they cannot use theclaim that they were not properly licensed to get themselves out ofthe liability

Contracts Illegal by Commission of Private Working or Tort

!Common Law:

1. If a contract contemplates the commission of a private wrong or tort, thecontract is illegal.

- To compensate a person with a contract under a tort would beillegal

2. Or where the contract provides for compensation for a party who suffersdamages as a result of private wrong they have committed

Public Policy:Contracts held illegal based on public policy (ex. Not turning in anembezzler, paying witness to fabricate evidence)

Agreements in Restraint of Trade:agreements that affect your businessobligations (between companies, between purchasers, in your employment)

1) Agreements between two parties contract to the Competition ActS. 45 of Competition Act: you may not conspire combine agree orarrange with another person to lessen competition unduly

!Mergers over a certain size have to be okayed by the CompetitionBureau

!

Can be prosecuted criminally and civilly2) Agreements between vendors and purchasers (of a business)

!Used to protect goodwill of a business!Vendor may promise not to compete in vicinity!These agreements are prima facie void because they offend public

policy regarding competition!* However, enforced if a party seeking to enforce clause can prove

reasonable(size of area and time denied will vary according to natureof the business)

!If unreasonable, clause will be void courts will sever term, not rewriteit (will be set aside)

!Demand no more than reasonable so that clause will be upheld bycourts

3) Agreements between employer and employee (restrictive covenants)

!What courts look at most strictly and are hardest to enforcea. In present employee/employer relationships


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# Agreement not to compete (Ex: an accountant working for

the firm doing bookkeeping for clients in their own time.

Okay as long as it is cleared with the employer, as is oftendone with pro-bono work)

b. Restriction of revealing valuable trade secrets/confidential

information/expertise, after leaving employmentc. Agreements which restrain employment after leaving current

employer

# Trying to govern you against keeping that line of work !almost impossible to do

Test for reasonableness: if unreasonable, will sever them

1. Is restrictive covenant reasonable with respect to the public interest?

a. Is it a restraint on competition looking at the nature of the businessand competition?

b. Would it deprive the public of the employees special services?

2. Is it necessary to protect the parties to the contract?

a. Any proprietary interest to be protected?

b. Geographical area (size) unreasonable?c. Length of time unreasonable?


Privity of Contract

Rule: a contract does not confer any benefits or impose any obligations on astranger to the contract. To succeed in an action in contract, to enforcecontractual rights, you must have privity of contract, that is, be a party to thecontract

!parties dont have the power to uphold the contract to a third party

Third Party:a person who is not one of the parties to a contract but who isaffected by it

Exceptions to the Rule of Privity:

1) Insurance


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!legislations allows a 3rdparty beneficiary of an insurance policy torecover from an insurer

2) Trusts

!type of equitable principle

!any arrangement whereby property is transferred with the intent that isbe administered by a trustee for anothers benefit

!3rdparty has a right to the property and can compel the trustee totransfer it

!beneficiary is called the Beneficial Owner even though the trusteetechnically is the legal owner of the property

3) Land

!land law is not covered by the concept of privity, as property law applies!restrictions and obligations run with the land, despite parties to the

agreement

4) Tort

!direct action in tort for negligence Donoghue v. Stevenson Case,1932, House of Lords

!friend bought beer for girl but had a rotten snail in it, until this,she would not have been able to do anything because her friendbought the drink

!prior to this, consumer had a contract only with the retailer and not withthe manufacturer

!so had no cause of action against manufacturerEx. If you dyed your hair at your friend's house, and your hair colour

never comes back, you can sue the manufacturer, even thoughyour friend bought the dye privity wont apply

5) Novation (sometimes)


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Assignment of Rights

Assignments:a transfer by a party of its rights under a contract to a third party

Assignor: the party that assigns its rights under a contract to a third party

Assignee:the third party to whom rights under a contract have been assigned

Statutory Assignment:allows the assignee to bring an action directly againstthe debtor without having to join the assignor, as long ascertain conditions are met

!the assignment must be absolute and unconditional!assignment is in writing, signed by the assignor!proper notice of the assignment is given to the original debtor

What cannot be assigned:

!alimony and maintenance!champerty

Notice to the Promisor

all assignments require notice to the promisor

promisor must make payments to the assignee once given notice!if not, and he pays the original party, the assignor, he could be

forced to pay twice

there can be more than one assignee of the same right

Rule RE Competing Assignees:

!the first assignee to give notice is entitled to payment, unless aware of a priorassignment at time of assignment to him (otherwise it would be a fraudulent totake payment assignees

Assignees Title

takes subject to the equities

so only has as much right to collect the debt as the assignor had

or subject to any defences that the debtor may have against makingpayments to the assignors


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The Right to Set off

promisor is allowed to deduct an existing debt owed to it by the assignor

until assignee gives notice of the assignment, acts of the assignor orpromisor could affect the assignees rights

but once notice is given, any subsequent claims between the debtor andassignor, excluding claims dealing with performance of the contract itself,will not affect the right of an assignee

Assignment of Book Debt

extremely common business transaction

involves assignment of accounts receivable (A debt) to secure credit

these assignments must be registered in a public office or they are of noeffect against creditors of the assignor (under personal property securityact in BC)

if prior claim, may decide not to lend funds

In class Problems Privity

From textbook:

6) Glashov and Trade Creditors:

!trade creditors will get the money, because they gave notice first

7)

When southern gave notice, they knew the assignment was contingent onsatisfactory completion of the contract

!therefore, Southerns claim was conditional on the completion ofcontract

!parties still in negotiations

York actually owed the city the balance of 125,000 68,000 =


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Southern Foundaries would now have to sue York (for the 68,000) on the

original contract, but they could not sue the City of Vancouver

!read negotiations at end of chapter 11

Lecture 16 Notes

Negotiable Instruments:a contract containing a promise, express or implied, topay a specific sum of money to the order of adesignated person or bearer

!they represent the right to claim funds from a particular debtor orfinancial institution

!they can be transferred between parties not associated with the originaltransaction without the requirement of any notice and withoutdiminishing the right of the eventual holder to collect on the negotiableinstrument from the original parties

3 types of Negotiable Instruments:

1) Promissory Note2) Cheque3) Bill of Exchange (drafts)

Criteria:

1) Are a claim for funds against person designated in instrument2) Freely transferable3) Used as an instrument4) can give greater rights to bearer of instrument than on the party from whom itwas received

Drawer:the person drawing up the instrument responsible for insuring the draftor cheque will be paid as required

Drawee:party who is requested to make payment, usually a financial institution

Payee:the party who is named to receive payment

Requisitions for Liability (S.17 Bills of Exchange Act)

1) Must be in writing


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2) For a money payment3) Must be for a definite sum4) Must be unconditional5) Money must be payable at fixed or future date or on demand6) Must be signed by drawer or authorized agent or by maker of a

promissory note7) Negotiation must be for the whole instrumentPromissory Note:a written promise by one party, the maker (Debtor), to pay a

specified sum of money to another party at a fixed ordeterminable future time o r on demand (an IOY)

!used to advance credit, so used by a party wishing to purchase goods!merchandiser negotiates the promissory note!legislation in a place dealing with consumer notes

Cheques:a bill of exchange drawn on a bank and payable on demand

!limited to situations in which the drawee is a bank and payment can bedemanded immediately the drawer directs the drawee bank to makepayment of a sum certain to the payee

!a cheque contains the implied promise of its drawer that the drawerhas funds on deposit at the bank sufficient to meet its amount

Certification:undertaking by the bank to pay the amount for the cheque to theholder when presented for payment

Stop Payment/Countermand:advising bank not to pay cheque

!if certified by drawer, cheque may be countermanded before the payeepresents it for payment

!if certified by payee, not may be countermanded bank obligated topay certifying makes drawer bank liable directly to the payee

!bank is not held liable if paid to payee if stop payment

Bill of Exchange:an order made by one person to another to pay an amount ofmoney to a third party

!often referred to as a draft!can be used as a means of collecting a debt & then the drawer orders

the debtor to make payments to a third party

Endorsements:a notation on the back of an instrument, which is usually theendorsers signature


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!order instruments must be endorsed!bearer instruments are negotiated by delivery alone!endorsement transfers title to an instrument payable to order!endorser liable to any subsequent holder for the amount set out!

endorser who is held liable has recourse against any prior endorser butnot against a subsequent oneForgery:if bank cashes cheque that has been forged by the person cashing it,

the bank has no right to take funds from the drawees account

!if a drawers signature is forget and the bank cashes a cheque, the bankis liable for any funds it pays out of the drawers account

!the drawer and any endorser prior to the forgery are freed from liability!the loss where there is a forgery is suffered by the person who acquired

the instrument immediately following the forgery!this is why banks will not usually accept endorsements

Holder in Due Course: Bills of Exchange Act s.56

Holder has taken a bill:

1) complete and regular on its face2) before its overdue3) without any notice or prior dishonour (when someone refuses to pay)4) for value (consideration)5) in good faith (no noticeable problems)6) without notice of an defect in the title of the person who negotiated it

!so takes free from any defects between drawer and payee!therefore, not subject to equities!once a cheque has been dishonoured, very hard to cash cheque

Consumer Bills and Notes

!allows a buyer, who buys on credit, to bring against a finance companyall the defences which he could raise against the seller where the selleris the holder of his promissory note

!problems would arise when there were defects in the product, as thefinance company could still demand payment as a holder in due course,despite any contractual dispute between the customer and merchant

!legislation now required all consumer bills and notes be stamped assuch removes advantages of being a holder in due course of negotiableinstrument


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!merchant can be fined for failure to do this

Retailer Consumer

Assigns

Finance Co

!must be stamped as a consumer purchase before or at time ofsigning

!the holder in due course takes subject to the equities betweenthe retailer and the consumer

!

if not stamped, then the assignment is void

Lecture 17 Notes

Page 257 !defrauder may transfer is wrong

Cant give title if you dont have title Therefore, the analogy is wrong, you cant pass title to an innocent

purchaser

Tort: a social wrong, other than a crime or a breach of contract

The Law of Torts

Torts are private matters between individuals Brought by a plaintiff against a defendant The role of tort law is to compensated the victim of harm, rather than to

punish the offender (criminal law) It is a civil wrong, for which the victim may claim compensation from the

wrongdoer for the harm suffered

Tort Law vs. Contract Law

1) No privity of contract is required!Donaghue v. Stevenson

2) In contract law, the contractual relationship makes a violation of the termsunacceptable, even where it is not socially wrong; In tort there is inherently wrongconduct, which falls below a socially acceptable standard


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3) Contributory negligence is allowed in tort, but not in contract

!if you could have lessened the damage, by wearing a seatbelt in anaccident, you automatically suffer 25% contributory negligence

!in tort, you can split up the negligence, in contract you cannot

Basis for Liability in Canada

3 ways you can be held liable for negligence:

1) Strict Liability(US method)

!responsible for harm caused, regardless of whether at fault or not

!as long as harm is caused, blame is attached

!often set out in statutes

2) Fault(% of how much you are at fault)

!found liable only where actions intentionally or carelessly disregard theinterest of others and cause unjustifiable harm to their person, propertyor reputation

!standard of care rises proportionally as danger increases, so can

virtually be strict liability

3) Vicarious Liability

!employer is liable for torts committed by employees if within the scopeof their employment or engaged in work = not an independent act

!liable even where employer has forbidden such conduct

!employer has right to sue the employee after having been held liablefor their negligence

!based on fairness, employee generally have limited assets

!employer cannotcontract out of vicarious liability

!not usually liable for independent contractors, only employees andagents


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!has to be within the scope of employees job

Intentional Torts

Committed deliberately or voluntarily

Motive and mistake is irrelevant Can pleas defences, such as consent, self-defence

To person:

Assault !threat of violence Battery !actual violence Defamation (must be in front of an outside party)

To property:

Trespass !but cant set traps for trespassers (Ex. Pit) Nuisance

Intentional Torts Unique to Business

Inducing breach of contract Deceit Conversion Passing off Defamation with respect to product Inducing infliction of mental suffering

Also!Privacy Act Violations!contrary to privacy act (federal) and personal information protection and

electronic documents act (pipeda)

Unintentional Torts

Negligence

!the careless causing of injury to another!negligent behaviour that causes no harm is not actionable

!you do not require privity of contract to sue in tort, but must be aloss suffered

Defences:

!Consent: level of interference cannot exceed the level of consent!Self- Defence: may use reasonable force in defending yourself


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Must Prove:

1) Defendant owed plaintiff a duty of care2) The defendant breached that duty of care3) Defendants conduct caused the injury

4) Damages are reasonably foreseeable

A: A lossB: Breach of DutyC: CausationD: Duty of Care Owed

!if dont have this 4 criteria, will get E for effect, but F for grade

Duty of Care

Did the defendant owe the plaintiff a duty of care?

Test: would a reasonable person, a normally intelligent person, haveforeseen this conduct causing harm to this plaintiff or someone in theplaintiffs position

In order to be owed a duty of care, you must be reasonably foreseeablevictim a neighbour

!not someone out of ordinary/went out of their way

Within an identifiable group of people who could be harmed, even thoughnot specifically identified

Duty may be owed to persons other than the person actually injured Only party that can claim for shock are parents

Standard of Care

The standard of care exists when the circumstances of time, place andperson would make a reasonable person aware of a probability of thattype of harm resulting from that activity to other people at the time and

place

Standard of care is usually that of reasonable person whose conductwould not fall below a certain standard

Profession can affect the standard


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Standard varies according to the activity in question

Likelihood of harm vs. social utility of the activity and feasibility ofeliminating the risk

Causation

Test: would the plaintiff have suffered damage but for the defendantsnegligence?

Must be causal link between act of the defendant and loss of the plaintiff

Loss may be too remote, therefore defendant would not be liable!must be connected

Courts only allow a defence of remoteness when the defendants could not

have reasonable anticipated the general nature of the injury of damagesuffered

Liable for all types of injury that are reasonably foreseeable regardless ofwhether the extent of the damage could be foreseen

!liable if only different in degree (extent) and not in kind

!Remoteness:where the extent of the damages can be foreseen

Burden of Proof

!must prove case on the balance of probabilities, this is more likelythan not that the defendants conduct caused the harm (more than 50%)

Contributory Negligence!judges may apportion loss according to the degree of responsibility of

the parties

Res IPSA Loquitor

!legal rule on principle

!shifts burden of proof to the defendant!where something owned by defendant caused the loss

Thin Skull Rule:

If a person experiences greater injury from our conduct than would beexpected because of a unique physical condition, there is none the less aresponsibility to compensate for all consequences of the injury


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Defences:

1) Contributory Negligence

!appointment of loss legislation

2) Mitigation

!must at reasonable tominimize any damages suffered!cannot allow subsequent conduct to contribute to the extent of the

injury

3) Volenti Non Fit Injuria!the volunteer suffers no wrong

1: Did the plaintiff understand the risk?2: Did the plaintiff consent to the risk?

Lecture 18 Notes

"#$% &'($)* $%+ ,-.-/+) -00'1+,2

34 56+7#-0 8-.-/+) !9:-;$#4 ?+;+(-0 8-.-/+) !6-#; -;, ):


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!-660#7-$#'; '< /+;+(-0 6(#;7#60+) '< ;+/0#/+;7+ =:$ 1#$% )6+7#


47/59

!L+/0#/+;$ W.#))#';2 ,:$I '< 7-(+ #;70:,+) ,:$I ;'$ $' '.#$ +))+;$#-0 )$+6)

!5V#00 -;, 7-(+ $%-$ #) -66('6(#-$+ -;, +7';'.#7-00I X:)$#


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Breach of Standard Care!professional-competent member!time and effort for task

Causation!

Reliance!Remoteness

Duty of Care!special relationship!purposed proposed for (Hercules)

Defences:!contributory negligence!Volenti: accepted full risk, having known the risk (Bertuzzi vs. Moore)!Mitigation: minimize your loss

!Vicarious liability: find someone else liable for the lossEx. employer liable for acts of employee (foot the bill for employees torts)

Raegen: no special relationship!no duty of care because no special relationship and didnt know

purpose of information

Hercules: purpose of information!didnt know the purpose of information

Fiduciary Duty: a relationship of good faith, fidelity and loyalty, confidentiality

Exists where:

1) The fiduciary has the capacity to exercise the discretion or power2) The fiduciary has the sole capacity to use their power or discretion in a

way which would affect the other partys interest3) 3rdparty is vulnerable due to their relationship of reliance on the

fiduciary

!occurs where there is a special relationship of trust or confidence whereone party has powers it exercises for the benefit of a second party

Must act in principals best interests Cannot take advantage of any personal opportunity Cannot benefit personally without disclosure and consent Must not compete Breach may arise even though there is no negligence

!said things that were in confidence


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Duty extends beyond term of contract!current view is 1 year beyond end of being director/partner

Breach of Fiduciary Duty = Hodgkin and Simms

Lecture 20 Notes

The Agency Relationship

Where one person (the agent) is authorized by another (the principal) tobind the latter to contractual obligations

2 separate contract

1) the principal has a contract within the agent2) the principal has a contract made by the agent with a third party

an agent has only the same capacity as the principal has

what is done to the agent is done to the principal, what the agent does isdone by the principal

4 ways to establish an agent relationship:

1) Express agreement

2) Estoppel3) Ratification4) Necessity

1) Express Agreement

!may be written or oral

!can confer general or limited authority

!power of attorney is an express agreement

!authority is real (real estate) of actual

!as long as agents acts within scope of her authority, the principal aloneis liable to third parties

2) Estoppel/ Conduct


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!agent has apparent authority

!a reasonable person could assume agent had actual authority

# Agent has no real authority, but

# The circumstances (the principal) conveys the impression tothird parties that the agent has some authority by conduct,representation (cards, title, car, circumstances),acquiescence

# Third party is lead to believe agent has some authority

# Induced into contract based on that impression

#

Is not aware of any restrictions on the agents authority!

thenthe principal is estopped from denying that the agent hadauthority

!presumption of authority if contracts of agents are usual in that particular trade

!problems when contracts are terminated and third parties need to be notified

!if a reasonable person could assume that the agent was acting within thescope of actual authority, the principal is bound by the acts of the agent

3) Ratification

!principal may ratify/adopt contract made by agent who exceeded theirauthority or who acted with no authority

!ratification is retroactive

!must be of the whole contract

!can only ratify if principal was name or easily identified

!if party holds themselves out as an agent, and a principal does notratify a contract made, the agent may be personally liable to 3 rdpartiesand can be sued for breach of warranty of authority

!but must first querie if there was reliance and estoppel so principal isbound without ratification


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4) Necessity

!very seldom occurs

!agent enters into a contract for the benefit of the principal but without

authority

!allowed in a few circumstances:

- salvage- perishable goods

- where agent has restricted authority but must exceed authorityto protect the principals authority

!must be able to show couldnt communicate withprincipal and action taken was reasonable in the

circumstances

Termination of Agency Agreement

At time specified At completion of a particular project Upon notice of either party Upon death or insanity of either Bankruptcy of principal Upon an event that makes performance of the agency agreement

impossible Can be discharged by frustration

Liability of Principal and Agent

1) Only principal is liable if agent acting within scope of actual authority anddiscloses they are agent

2) Only principal is liable if agent acting within scope of apparent authorityand discloses they are agent

3) Only agent is liable if holds out he is the principal

4) Either principal or agent is liable if agent does not disclose they are agentand does not hold out that is it the principal and acting within authority

5) Only agent liable if agent has no authority and principal does not ratify


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6) Principal Is liable if agent acting within apparent/actual

7) Authority and commits a tort

4 Kinds of Business Organizations:

1) Sole Proprietorships2) Partnerships3) Corporations4) Joint Ventures

1) Sole Proprietorships: oldest and simplest form

Advantages:

Ease of formation and termination Low start of costs No legal requirements other than any licences required to do

business and registration of name if required All profits belong to owner Pay taxes as an individual Own boss, ownership flexibility

Disadvantages:

Unlimited Liability personal liability, vicarious liability Financing limitations Lack of continuity may be no company when pass on

2) Partnerships

!Section 2 Partnership Act: The relationship that exists between two ormore persons carrying on a business, together with a view to profit

!A partnership does not have a separate legal identity from the partnerswho make up the partnership

!Partners are the partnerships and are personally liable for the debtsand actions of the partnership

Existence of a Partnership may be:

1) Express:where 2 or more parties agree either in writing or orally tocarry on business as a partnership


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!may require registration in certain provinces

2) Implied:

!Courts will deem a partnership!Look at substance rather than form of relationship!S.2 met, management role, share profit, contribute to capital

Liability of Partners

1) Each party is the principal and agent of the other!unless outside apparent authority or third party aware of limits

2) Each partner liable for debts of the partnership!

to the full extend of their assets

3) Partners share of partnerships assets available to personal creditors

4) Responsible for torts of partners while acting within apparent authorityof the business of the firm

5) New Partners!not liable for partnership debts incurred prior to joining firm

6) Retiring Partners!liable for debts incurred while a partner!concern regarding apparent authority

Lecture 21 Notes

1 year limitation fiduciary duty monarch v. StrotherRelations Between Partners

Implies terms into partnership agreements when the parties have notaddressed the issue in question

Unless specified otherwise, partners are equals: implied terms whenpartners dont have their own agreement!equals say in management!equal share of profits and losses!equal distribution of capital

Partnership agreements only allow partners to vary terms that govern theirrelationship with each other


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May not vary terms that govern responsibility to third parties Are fiduciaries, must act in good faith

Limited Partnerships: silent partners

Used to limit certain partners liability (hide your investment)

Partnership managed by one or more general partners who have no limiton liability for the acts and debts of the partnerships

!only thing they can lose is how much they contributed/ invest.

Must be registered, expressly formed

Can contribute money or property

Cannot provide services or take active role in management without losingbenefit of limitation on their liability

Used mainly as tax shelters

Limited Liability Partnerships: LLP at the end of a name

Was introduced later on

Formed expressly, must be registered

Only available in certain provinces, used only for specific purposes, suchas formation of professional partnership

A partner in a limited liability partnership is not liable!for the debts,liabilities or obligations of the partnership or any partner arising from thenegligent acts or omissions that another partner or an employee, agent orrepresentative of the partnership commits in the course of the partnershipbusiness while the partnership is a limited liability partnership page 387

Corporations

3 Methods of Incorporation: doesnt matter which way you use

1) Articles of Incorporation2) Letters Patent3) Memorandum of Association


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Incorporate and Obtain:

Articles of Incorporation - Charter!will bind that company

By-Laws!day to day basis guidelines

Articles: basic document governing the existence of the corporation!set out constitution of company

Name Place of registered office Classes and maximum number of shares Rights of classes of shares Share transfer restrictions

Number of restrictions May set out restriction on business

By-Laws: rules which govern the operation of the corporation!approved by a majority of shareholders!easy to amend!deal with terms of directors, powers of directors!any new or amended by-laws brought into effect by the directors need

to be confirmed by a simple majority of shareholders at the next annualgeneral meeting (AGM)

!can incorporate federally (Canada Business Corp. Act) or provincially

!Chart page 404!company must abide by act under which they were incorporated!If not incorporated in a province, must comply with registration

requirements of that province see footnote 35, page 404 (only non-Canadiancorporations need a license to do business in Ontario

Corporate Name

Can use a number for a nameEx. 11235

May not use a name that:!mimics royalty or appears to be a business associated with

government or professional bodyEx. Prince Charles of Englands Polo Company

May not be confused with previously registered companyEx. Starducks


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May not be obsceneEx. xxx

Types of Corporations

1) Public2) Private

1) Public

No limit on number of shareholders No restriction on the right to transfer shares Permitted to make public offering of shares Generally means that a company has shares listed for trading on a stock

exchange As a Distributing corporation is subject to regulation under Provincial

Securities Act

2) Private (over 90% of corporations in Canada)

Used where shareholders seek advantages of incorporation along with theadvantages of partnership

Restriction placed on the transfer of shares Allows shareholders to choose their business associates like partners can Shares are usually held by a few members, not traded in market Management and ownership are substantially identical

!creditors dont have a claim on assets of shareholders, corporation is liable foritself own debtsSalomon v. Salomon (1897) : Precedent Case * read *

!establishes complete separation of a company from its shareholders

!corporation alone with be responsible for its debts

!as long as a company has been duly formed, the shareholders are notliable for the debts of the company, company alone is liable

!no evidence of fraud

Lecture 22 Notes

The Nature of Corporation


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A corporation has a separate legal existence from its shareholders, itsdirectors and its managers

It is an entity recognized by the legal system as having rights and dutiesunder the legal system separate from its members

It has the capacity to enter into contracts, can sue and be sued

!no longer deemed to have knowledge of the Charter (apparent authority)

!Indoor Management Rule:corporation is bound by the agents actions

!Directors Liability

- shareholders appoint directors, directors appoint the officers- directors owe duty to the corporation, not the shareholders

- owe a duty of care and skill- must not be negligent (ignore misconduct)- has fiduciary relationship with company duty of good faith- refrain from corporate opportunity, insider trading- Personal Liability: environmental torts, human rights, competition act,

waste management act, employment standards, for debts, for contract!Liable if: 1) Breach their fid. duty

2) Under certain statues

3) Tort Liability

!not liable if do due diligence

- have a moral duty to shareholders

Remedies as a Shareholder:

1)Derivative Action:1) directors wont bring on an action2) shareholders acting in good faith3) best interest of the corporation

2) Oppression Remedy:directors have done something wrong

3) Dissent: court order to buy out sharesSignificance of a Separate Existence

Limited Liability:


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Company is solely responsible for payment and its debts Liability is limited to its assets Creditors have no claim on the personal assets of shareholders Shareholders risk is limited to the price of their shares This separate legal existence is the main benefit of incorporation

Transfer of Ownership

Share transfer is simple Unless rules to contrary in corporations constitution, there are no

restriction on the transfer of ownership of shares You do not need approval to buy/sell shares Share transfer makes it easier to raise capital to fund corporations

operations

Management is Streamlined

No individual owners Shareholders delegate powers to board of directors who name officers of

the corporation to manage corp., shareholders cannot bind corporation

Continuous Existence

Change of shareholders does not dissolve corporation

Limitations on Separate Legal Existence

Associated Companies

!income tax act deems income from associated companies,whose shareholders are closely related, to be income from justone of the companies

!$500,000 lower tax rate

Personal guarantees

!shareholders may be required to giver personal guarantees orother security

Improper Distributions of Corporate Assets/ Funds

Shareholders who have received a dividend in situation where corporationhas made no profits may be liable for corporation debts to the extend oftheir payment


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Lifting the Corporate Veil

Done to prevent abuse of concept of the corporation Usually shareholders own an interest through the purchase of shares Unpaid creditors may not look to the shareholders if unpaid However, court may look to shareholders the individual controlling the

corporation will be personally liable for the actions/debts of thecorporations

1) Individual must control the corporation2) Must have used control to commit improper act, such fraud,

wrong or breach3) The misconduct must be the cause of the injury/loss

Corporate Capital

Corporation can raise funds through sale of shares or through bonds Bonds are sold to creditors, paid interest as set out, regardless of whether

company has made a profit Bondholders are secured creditors in the event of bankruptcy Bondholders do not have right to vote, etc. Corporation can issue shares May be more than one class of shares Rights attached to each share set out in charter documents Shareholders appoint directors, and may vote at Annual General Meeting Under articles of incorporation system, corporation may set out the

number of shares that can be issues Must keep a stated capital account of all shares paid for and price paid

(Referred to as paid-up-capital) All shares must be fully paid for at time of issue no more par value shares

(shares has s nominal value attached to them, paid dividends)

Documents

Comm Law Lecture Notes 2014