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Law Notes Contract Law Notes

Pre Existing Duties Notes

Updated Pre Existing Duties Notes

Contract Law Notes

Contract Law

Approximately 65 pages

This class was co-taught by Dr. Ian Kerr, Canada Research Chair in Ethics, Law and Technology Dr. Anne Uteck at the University of Ottawa. Professor Kerr taught Part I of the course, and Professor Uteck completed Part II of the course pertinent to remedies....

The following is a more accessible plain text extract of the PDF sample above, taken from our Contract Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

THEME 13: PRE-EXISTING DUTIES

Generally, the law will see that which must be done as a result of legal obligations is something that simply ought to be done (A is giving up nothing for B because the law already requires A to do X). From the law’s point of view, a promise to do what one is already bound to do should be indistinguishable from a promise to do what someone has already done. Given that A must do X, the law sees this as non-optional and a necessary act. A is giving up nothing in exchange for B’s promise. This concept has slowly lost its strength in the courts today.

RECISION: This is an equitable remedy. If awarded, the judge is going to attempt to give back to both sides so that they are back in their initial positions.

PART 1: ORIGIN OF PRE-EXISTING DUTIES (PROMISE)

  1. PRE-EXISTING PRIVATE LAW

  • Contract that has been struck between two parties gave rise to a duty that I owe you

  1. PRE EXISTING PUBLIC DUTY

  • Such as a statutory duty or a duty created by common law (ex. Reasonable care)

  • Courts say that a pre-existing public duty is not sufficient consideration (I already have a public duty

    • I promise to do something for you within the same scope, then my agreement doesn’t give rise to consideration

    • only way prior public duty is consideration is if something is done over and above the duty

  1. PRE-EXISTING DUTY TO A THIRD PARTY

  • Entering into a contract with you and your neighbor

  • Could amount to sufficient consideration – depends on whether you could have enforced the duty without a contract

CASE RULE FACTS REASONS

Stilk v Myrick (1809)

SAILORS + CAP

I: Was there consideration in captain’s promise?

D: Judgment in favour of CAP

A voluntary gratuitous promise is of no force or effect unless under seal. If extra money is offered for pre-existing obligation, agreement is not enforceable.

- pre existing duty given from captain to crew to give them wages of 2 members that were deserted if he didn’t find anyone between London and Baltic

- he found crew and dint’ pay them

- action against captain

- courts trying to avoid economic duress for policy reasons such that mutiny will not threaten ships in the future

- for a contract to be enforceable, fresh consideration must be provided

- the captain’s promise carried no consideration – the crew had pre-existing duty to get the ship home

Gilbert Steel Ltd v University Cont Ltd (1976)

STEEL PRICES

I: Was there consideration that supported the promise to the varied agreement?

D: oral agreement not consideration

William v Roffey Bros & Nicholls Contractors Ltd (1990)

CARPENTERS + $

I: Was there consideration when DF offered more $?

D: appeal dismissed

Carries Stilk ratio.

Gratuitous promise in a post contractual situation is unenforceable. Fresh consideration needed at T2.

*Narrow conception of consideration to achieve social justice. If you allow consideration, you’d be allowing one party to assert financial power

If both parties receive a practical benefit from a new promise after pre-existing duty and there is no economic duress, benefits could give rise to sufficient consideration.

*major policy shift in consideration

- PL entered into contract w DF for steel delivery for 3 different projects; pre-existing duty owed to promisor on fixed price

- prior to commencement of 3rd project, PL announces steel price so oral agreement happens

- prices again; new agreement with provisions that were unilaterally imported by PL – contract not executed

- DF kept accepting steel and against invoices with different prices; left balance owing on cheque

- DF subcontracted PL for carpentry

- PL bargained badly and hurt themselves in the contract (didn’t have enough money to finish)

- DF worried PL wouldn’t complete job due to financial difficulties so they made promise to pay more $ to speed up work (after pre-existing contractual duty was made) – had penalties if the building didn’t finish at a certain time

- when they failed to make more payments, PL sued for damages (of remaining $ in promise)

WILSON J: the oral agreement later drafted did not give rise to new consideration (Wasn’t a new contract)

- just because PL said it’d give ‘good price’ to DF, that is not consideration

- there is no need for recision in this case (wipe out the obligations and start from scratch with new consideration) – Wilson says that doesn’t benefit party who needs $ for steel

- does not necessarily uphold Stilk because Stilk does not allow for promise conferring benefits after a pre-existing duty was decided to give rise to consideration

- if there is no hint of duress, so long as there’s a practical benefit arguable by both sides, we can find sufficient consideration

- slight relaxation of Stilk

Greater Fredericton Airport Authority Inc v Nav Canada (2008) NBCA

I: Was there duress that did not give rise to consideration?

D: appeal by NAV dismissed due to duress

* Adopts same ratio from Gilbert and Williams. Brought this principle to Canada. Stilk still applies, but when there is no duress, consideration may exist.

- NAV indicated to airport that it ought to install equipment that was more economical, but that airport would have to pay – refused to install...

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