Contracts Chart Notes

A. Pre-Formation 1) Is there a valid contract - 1) Offer - intent to be bound - 2) Counter Offer- if applicable - 3) Revocation- valid any time before acceptance - 4)Acceptance - intention to be bound - 5) Formalization and Certainty - K can't be uncertain (incomplete, vague, ambiguous, agreement to agree) - 6) Consideration - Benefit - Detriment (must give up a legal right) - Forbearance (Stott requirements if forbearing a right to sue) - Unilateral K - acceptance/consideration through performance (can you imply?) - Bilateral K - exchange of mutual promises (can you imply?) - Can't be past consideration, ok if inadequate - 7) Intention- assessed objectively by 3rd party if there was intent to give rise to legal relations 2) Representations/Warranties: - Mere puff - meaningless - Innocent misrepresentation- equitable remedy of rescission if parties are able to be restored to original position - Fraudulent misrepresentation- tort remedy; reliance, rescission - Negligent misrepresentation- concurrent liability, reliance - Warranty/collateral K: intent for rep to be contractually binding 3) Parol Evidence Rule - Usually just written K- if evidence contradicts its inadmissible - Warranty - elevated to a term of K (exception to PER) - Gallen -only a presumption that PER operates B. During Formation 1) Duress 2) Undue Influence - Actual (shown by how it occurs) - Presumed (rels of trust and confidence) 3) Unconscionability - In= of bargaining power and improvident K - Ct looks to capacity of parties - Onus on party seeking to uphold K to deny 4) Is there a mistake in formation/ terms - Are parties ad idem? - True ambiguity (objective) - Important/fundamental term - Result - void; but rare 5) Is there mistaken identity? - K is void if arises from forgery, theft - K voidable if arises from fraudulent misrep 6) Is there a mistaken assumption - Mistake around motive/reason for entering K - Nature vs. Quality - Law unclear, equitable remedy (K voidable) may apply 7) Is there non es factum? - Induced by fraud - Narrowly applied, based on incapacity 8) Is there a mistake in recording - Remedy - rectification - goes against PER - 4 legal requirements - Sylvan 9) Standard Form Ks - Person seeking to rely on onerous terms must take reasonable measures to bring them to attention to signer, in absensce of this, signer can assert non es factum or misrep (Tilden) C. Post-Formation 1) General framework of interpretation: - Objective, reasonable person standard - Look to language, terms, context - Contra proferentum 2) Estoppel: - Applicable when a party has detrimentally relied on a promise - Can only be used as a shield - Need a pre-existing legal rels 3) Privity: - Fiduciary/ trust - Agency (Euromedyon) - independent contractors (non-employees) - Agency-like (employees) - London Drug; Fraser River - relaxed to reflect commercial reality 4) Clauses excluding liability: - Fundamental breach does not negate their application - Ct looks to triggering event, words of clause, unconscionability, context 5) Penalties and Forfeiture - Sum must be proportional - Penalties will be struck out 6) Illegality - CL illegality- restraint of trade, criminal acts, public policy - Statutory illegality- includes policy analysis 7) Frustration: - Is K'al enterprise impossible bc of unforeseen event? - Does not apply if event is foreseeable, in K - Narrowly applied Pre- Formation Topic Principles/Cases 1) Is there a valid K? -an invitation to offeree to accept; intent to be bound i. Offer ii. Counter Offer iii. Revocation iv. Acceptance -contains all essential terms (3 Ps- parties, product, price) -ascertained by theorizing its policy consequences (Boots) -distinguished from an invitation to treat (Johnston- price quote not binding; > Dickinsonpromise not binding) -if offer is rejected, it is terminated -Option K- offer can be left open for a "reasonable" period of time -firm offers- offer open for stipulated amount of time, often written -Not essential to K, but useful to distinguish in terms of discerning offer + acceptance -If counter offer is made, it terminates original offer (Butler) -If acceptance does not occur w/in a reasonable time, offer = null (Manchester Diocesan) -revocation is valid any time before acceptance -cannot occur once performance occurs in unilateral Ks (Dale; Errington) -Must be communicated to other party (Larkin) and is not binding until received (Byrne) -If no consideration, then can revoke at any time bc no K (Dickinson) -charitable donations: cannot revoke if cheque is in the mail -When both parties agree to be bound to perform or pay DMs; intention to be bound -Party making offer controls mode of acceptance (Eliason; Manchester Diocesan) -Must be communicated to other party, cannot be given to agent (Larkin); must be done in manner in which offeror is aware of liabilities -In retail, acceptance = when seller accepts customers' $ (Boots) -Bilateral Ks- exchange of promises to complete their end of K -Unilateral Ks- offers made to entire world, acceptance = performance (Denton, Lefkowitz; Williams; Carbolic Smoke) -Cannot add a term after K is accepted (Lefkowitz; Eliason) -Accepting goods > silence is not acceptance (statutes for consumer protection) but it can be in CL -Battle of the forms > last K w/terms is binding- if you accept goods on terms different than desired, you may be held accountable to those terms (Butler- attempted to change this approach thru looking at all the documents to determine where there is an agreement but has not been adopted) -Written communication w/in a reasonable amount of time =acceptance even if on different v. Formalization and Certainty vi. Consideration terms unless acceptance is conditional on diff terms not being present, if it alters the K or if objection is already expressed (Universal Commercial Code US) -If acceptance beats attempt to revoke, then K is accepted, and vice versa -Postbox rule: offer considered accepted when it is posted (Henthorn) -Exceptions: does not apply to Option K (Howell Securities) and instantaneous technology> acceptance = when it is received (Eastern Power; Electronic Commerce Act) -2 forms of uncertainty: vagueness and "agreeing to agree" -"agreeing to agree" > cts typically wary of enforcing (May) but will if there is a long term relationship or mechanisms for determining a "reasonable" price (Foley) -Ks can imply terms based on parties conduct, nature of industry and external evidence (Hilias) or to support business ease (Empress Towers) but are reluctant to enforce K if parties do not agree -Cts concerned w/ unjust enrichment and degree of unfairness/surprise -Something of value given by both parties that induces them to enter into a K -Cts will only enforce a promise supported by full consideration (must be reciprocal - Tobias) -Required for a K bc it is evidentiary basis of K and mechanism of accountability -An issue if parties assert there is no K, if K is vague, if nothing is exchanged, if a party tries to change terms or when party doesn't perform K -Can be a benefit or a detriment (loss/responsibility- Hamer), but it must be something of social utility (White v. Bluett) -Good consideration: rescission and replacement of K w/new K (Gilbert Steel) (consideration = promise not to sue), performance in an open agency K; past consideration if P performs act w/o parties agreeing to payment at that time, subsequent promise to pay is enforceable if act was done act request of promisor or w/expectation of compensation (Lampleigh); performance of original K (Williams- caution- not widely adopted) -Bad consideration: burden that comes w/accepting a gift (Thomas), performance of original K (Stilk, Gilbert Steel; exception- Williams, but not yet adopted); past consideration (Roscoria, but there are exceptions); promise made under duress (Harris; Williams), something that creates negative policy implications (Harris), lacks evidentiary basis (White v. Bluett); paying smaller sum than was originally owed (Foakes; but is overruled by Law Equity Act) -change in a term of the K must be supported by consideration (Gilbert Steel; Stilk) but NAV held do not need new consideration for variation unless there is economic duress -compromise: consideration can be forgoing right to continue action; if no foundation, then no consideration (Zellers) -charitable donations: require consideration to be valid, something beyond a promise required for good consideration (Dalhousie) vii. Intention -non bargain promises: promises under seal perform a similar function as consideration, e.g. for charitable donations -cts can imply consideration based on evidence of parties conduct, operation of K and if it prevents unjust enrichment (Wood) -assessed objectively by 3rd party, reasonable person standard if parties intended to give rise to legal relations (Jones; Rose) -family relations- assumed not to be legally binding, but can be rebutted (Jones) -clause where parties agree to no legal action> memoranda of understanding 2) Representations and Warranties -legally meaningless statement used to encourage a purchase (Carlil) Mere puff Innocent misrepresentati on Fraudulent misrepresentati on Negligent misrepresentati on Warranty/Collate ral Ks -protects caveat emptor -no remedy -may give rise to liability if is false, material, induces K, relied upon, mistake not made intentionally -gives rise to equitable remedy of rescission but requires that parties can be put in original place (too much time cannot have elapsed); no reliance or expectation DMs (Redgrave; Leaf) -no recovery for innocent misrep in CL (Peak v. Derry: Helibut) -CL remedy via tort for intentional misrep where D tries to take advantage of misrep -distinguished from innocent misrep as it central to K -high standard of proof -limitation on liability clauses and parol evidence does not apply to fraud -remedy is reliance and rescission DMs -statement made carelessly -more likely to be remedied by the ct than fraudulent misrep -requires special relationship, false rep, negligence (failing to meet SoC), reasonable and detrimental reliance (Hedley) -D can be concurrently liable in tort or K if they have expertise, make rep w/o reasonable care, w/intent to induce party to enter into K, detrimental reliance of P (Esso; Central Trust) -separate K that is an addition to original K -attempted to fill gap of lack of remedies for innocent misrep> can sue for breach of collateral K, do not need to prove innocent misrep -distinguishing bw innocent misrep and warranty: time of settlement, importance of statement, foreseeability of reliance, skills/ capacity of parties; context; content and specificity of statement; price; disclaimers; policy factors (Bentley) -typically narrowly interpreted> test if if reasonable person would assess it was intended to be a warranty (Helibut; Hawrish; Murray) 3) Parol Evidence Rule -Gallen: warranty if it became part of K, est on i) extent which accuracy of oral rep would affect performance and ii) extent rep party assumed responsibility of the rep -collateral K will not be enforced if it is inconsistent w/ written K (Hawrish) > but is only a strong presumption- if they do not (e.g. if it adds, modifies, subtracts), invoke harmonious construction rule, both apply (Gallen) -remedy for breach is expectation DMs -use of collateral K theory suggest shift back to subjective interpretation of K, counter parol evidence rule typically, only the written K represents the K; once K is in writing verbal evidence is not admitted as to vary the K; buttressed by policy reasons for administrative ease, economic efficiency, prevention of fraud (Prenn; Hawrish) -relaxing the rule can give respite to parties to release them from K'al obligations despite absence of fraud or misrepresentation -often applies where there is an ambiguity, invalid K, mistake, rectification, condition precedent, collateral K, unconscionability, modification, need for equitable remedy (Gallen) -other influencing factors: intent, reliance, nature of conflict, bargaining relationship, nature of rep, custom of trade -however, if evidence contradicts the K it is usually inadmissible -in context of oral rep asserted as warranties, assess if it is indeed a warranty; harmonize if possible; if there is a contradiction then written K governs (Gallen) During Formation Topic Duress Undue Influence Unconscionabi lity Mistake in K Formation/ K'al Terms Principles/Cases -defined as lack of consent (NAV) -consideration not enforceable if it was made under duress (Harris) -economic duress: defence to performance of K - if economic pressure was severe and unreasonable, the K would not be enforced; pressure must be outstanding and extreme (Williams; Whiten) -equitable doctrine that predates unconscionability; similar to duress -can show it in 3 ways; i) actual influence > how it was exercised (e.g. will overbourne); ii) presumed influence- est rels of trust and confidence; specific rels (parental, advisor, solicitor, etc.) -includes duress of goods (Lloyd's Bank) -factors: inadequate consideration, misreps, assignment of risk, reliance, lack of independent legal advice (Lloyd's Bank) -once proven, onus shifts to party to disprove by asserting that transaction was to their benefit (Lloyd's Bank) -banks> doctrine of constructive notice> if guarantor is a spouse, bank is presumed to know it is a rels of trust and the onus rests on them to ensure no undue influence; if undue influence is found, bank must ensure spouse knows consequences, must take reasonable steps, which includes spouse procuring independent legal advice (Royal Bank of Scotland) -solicitors> duty to make sure spouse understands consequences (Royal Bank of Scotland) -test is vague -un= bargaining power (absence of meaningful choice) + improvident K - unfavourable terms or unfair agreement (Williams; Marshall; Mundinger; Pridmore; Llyod's) -typically not found bw two corporations -potentially an issue in standard form Ks -ct looks to capacity and intelligence of parties (Marshall; Pridmore) -onus is on party seeking to uphold K to negate unconscionability (Marshall; Mundinger) -framework: i) assess if parties were ad idem (of the same mind); ii) assess if term can be defined objectively by standard of a reasonable person> if met, then K is likely not void;l if so, ct can rescind or rectify (Hobbs; Raffles; Staiman; Smith) -intent is more important than knowledge of parties in assessing mistaken terms; parties are expected to inquire about terms if they are unclear (Staiman) -caveat emptor applies, making K not void unless there is a warranty (Smith) -factors: price, knowledge of parties, ease of avoidance, custom of trade, knowledge of

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