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Section
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Case
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Facts
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Principle
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1. Mutual assent
1.1 6: counter-offer and cross-offer
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Tinn v. Hoffman & Co. (1873), 29 L.T. 271
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When two parties forward offers to each
other simultaneously and in substantially the same terms, there is no contract.
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Livingstone v. Evans, [1925] 4 D.L.R. 769
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Butler Machine Tool Co. Ltd. v. Ex-Cell-O
Corp., [1979] 1 All E.R. 965
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Battle of the forms. First form said all
offers are accepted based on their terms which will prevail over all terms
and conditions
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Usually in battles of the forms,
whoever gets the first shot wins. But in this case, the idiots signed the tear-off
part of the other party’s form.
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2. Consideration
2.1 Existence and sufficiency of consideration
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Thomas v. Thomas (1842), 2 Q.B. 851, 114 E.R.
330 (Q.B.)
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Motive is not consideration.
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Have to look at the document as a whole
sometimes to find consideration.
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What the document calls
“consideration” is not necessarily the consideration.
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Harrison v. Cage and his Wife (1698), 5 Modern
411, 87 E.R. 736 (K.B.)
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A promise which is seriously given
and exchanged between parties is good consideration.
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If there is mutuality of exchange of
promises, either party can bring an action.
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DeWolfe v. Richards (1908), 43 N.S.R. 34
(N.S.S.C.)
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A change in a legal position, however
slight, can be good consideration. Whether or not this change was of any
benefit to the other is immaterial.
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Loranger v. Haines (1921), 50 O.L.R. 268, 64
D.L.R. 364 (Ont. S.C. A.D.)
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City and Westminster Properties [1934] Ltd. v.
Mudd, [1958] 3 W.L.R. 312, [1958] 2 All E.R. 733
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Sleeping in the store even when lease said
not to
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Loopy decision.
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Collateral K.
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A request to sign a K can be
sufficient consideration for another, collateral, K.
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Oral agreement allowed to override
written K with inconsistent terms.
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Shanklin Pier Ltd. v. Detel Products Ltd.,
[1951] 2 K.B. 854, [1951] 2 All E.R. 471 (K.B.)
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Paint, pier and warranty in tender situation.
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Device of unilateral K can be used
to enforce a representation made by one party in exchange for a term in
another K.
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Consideration for the warranty was
that the Ps would make the TP buy D’s
paint for the project.
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Scivoletto v. DeDona (1961), 35 W.W.R. 44
(Alta. Dist. Ct.)
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Father brings woman over from Italy to marry
son. She falls in love with D and D
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Consideration that turns out to be
worthless, but was believed to have some value by both parties at the
time of the K is sufficient to sustain the K.
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Attorney General of British Columbia v. The
Deeks Sand and Gravel Co. Ltd., [1956] S.C.R. 336, 2 D.L.R. (2d) 305
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If parties had an honest belief that
there could be a possible successful legal action then the agreement not to
go to court is good consideration.
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2.2 Performance of an existing duty
2.2.1
existing contractual duty, same
parties
2.2.1.1
one party seeks add’l rights for
performing an existing duty
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Dempster v. Bauld (1905), 37 N.S.R. 330
(N.A.S.C. en banc)
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The performance of an existing duty is
not good consideration.
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Peerless Laundry & Cleaners v. Neal
(1953), 8 W.W.R. (N.S.) 309, [1953] 2 D.L.R. 494 (Mb.C.A.)
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Non-competitionagreement with employees when
owner of store changed
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2.2.1.2
Discharge of an obligation by part
performance
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Foakes v. Beer (1884), L.R. 9 A.C. 605 (H.L.)
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Goes after the other party for interest on a
previous judgement.
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Part performance
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Consideration cannot be found in an
agreement to give less than that which you are already obliged to do under
some pre-existing legal arrangement.
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Bank of Nova Scotia v. MacLellan (1977), 78
D.L.R. (3d) 1, 25 N.S.R. (2d) 181 (N.S.S.C. A.D.)
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Promise to help find the co-debtor
is sufficient consideration to make an agreement to settle a debt binding.
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Consideration can be inferred from
the communications of the parties.
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Hirachand Punamchand v. Temple, [1911] 2 K.B.
330 (C.A.)
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Part payment by a third party
can be good consideration to extinguish a debt.
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Mercantile Law Amendment Act, R.S.O. 1990, c.
M-10
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2.2.1.3
Discharge of obligation by
substituted performance
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Kaulbach v. Eichel, [1930] 1 D.L.R. 983
(N.S.S.C. en banc)
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Substitute consideration
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“Payment of a lesser sum cannot be satisfaction
for the greater sum; but the gift of a horse, hawk or robe in satisfaction is
good ...”
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A K required to be in writing by the
Statute of Frauds may be rescinded
by a subsequent parol agreement notwithstanding that the latter may not be
enforceable under that Act.
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Van Bergen v. St. Edmunds Properties Ltd.,
[1933] 1 K.B. 345 (K.B.)
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Went out of his way to a particular
solicitor’s office to pay.
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Doing something, however small,
above and beyond the original obligation can be valuable consideration for
accord and satisfaction.
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Foot v. Rawlings, [1963] S.C.R. 197, 41 W.W.R.
650 (S.C.C.)
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Consideration can sometimes be found
in part-payment using another means, negotiable instrument.
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As long as D continues to abide by the terms of their agreement, the P’s right to enforce the debt is suspended.
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D. & C. Builders Ltd. v. Rees, [1966] 2
Q.B. 617, [1965] 3 All E.R. 837 (C.A.) Denning
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On the brink of bankruptcy took part payment
for debt. Now enforcing the rest of it.
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2.3 Existing contractual duty owed to third party
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Shadwell v. Shadwell (1860), 142 E.R. 62 (C.P)
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A promise to do what you are already
bound to do is not good consideration, but a previously existing obligation
under K to a TP can constitute good consideration
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2.4 Existing duty imposed by law
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Ward v. Byham, [1956] 2 All E.R. 318, [1956] 1
W.L.R. 496 (C.A.) Denning
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A promise to perform a duty imposed
by law is sufficient consideration to support a reciprocal promise to pay £1
child support.
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Willaims v. Williams, [1957] 1 W.L.R. 148,
[1957] 1 All E.R. 305 (C.A.) Denning
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A promise to perform an existing
duty is sufficient consideration to support a promise as long as there is
nothing in the agreement that is contrary to public interest.
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Promise not to pledge his credit is
a benefit to the P, so good
consideration.
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Glassbrook Brothers Ltd. v. Glamorgan County
Council, [1925] A.C. 270 (H.L.)
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Police protecting a coal mine during a strike
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Police were bound to provide
protection, but they had discretion as to the form it should take, and an
undertaking to provide more protection than in their discretion they deemed
necessary was consideration for the promise of reward. [C&F]
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2.5 Past consideration and moral obligation
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Eastwood v. Kenyon (1840), 11 Ad. & E.
438, 113 E.R. 482 (Q.B.)
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For a promise to become legally binding,
the law requires some additional factor to the D’s promise. Moral obligation aint’ enough. [C&F]
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Webb v. McGowin (1935), 27 Ala. App. 82, 168
So. 196 (Ala. C.A.)
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“It is well established that a moral
obligation is a sufficient consideration to support a subsequent promise to
pay where the promisor has recieved a material benefir, although there was no
original duty or liability resting on the promisor.”
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Roscorla v. Thomas (1842) 3 Q.B. 234, 114 E.R.
496
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Bought a horse with no representations re:
quality. Later promised that “it was free from vice.”
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Promise/warranty was made after the
sale and was not supported by fresh consideration. Doesn’t cut it.
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Spencer v. Herrerde, [1922] 2 A.C. 507 (H.L.)
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Loans made long before and could not be
collected due to statute of limitations.
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Possible exception to the necessity
of consideration.
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A later affirmation of an obligation
to pay an old debt is a new K, the old debt being the consideration.
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Three conditions: (1) written
promise to bring it within Limitations,
(2) promise to repay is implied in the acknowledgement, (3) where ack. is
coupled with other statements, it is up to the ct. to determine the status of
the statement.
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Limitation of Actions Act, R.S.N.S. 1989, c.
258
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Rex v. Rash (1923), 53 O.L.R. 245 (C.A.)
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A person who sells goods, other than
necessaries, to an infant, and who has no enforceable claim for the price, is
not a “creditor” within the meaning of the CC at the time.
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Necessaries are evaluated based on
the situation in life of the infant.
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Statute of Frauds, R.S.N.S. 1989, c. 442
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“No action shall be maintained
whereby to charge any person upon any promose made after full age, to pay any debt contracted during infancy, or
upon any ratification after full age of any promise or simple contract made
during infancy, unless such pomise or ratification is made by some writing
signed by the party to be charged threewith or by his agent duly authorized
to make such promise or ratification.”
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3. Estoppel - intention and reliance
Fridman: “estoppel simply refers to the notion that once a person had
told a lie s/he canot afterwards tell the
truth if in the meanwhile an innocent victim has has acted upon it.”
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Ricketts v. Scothorn (1898), 57 Neb. 51, 77
N.W. 365 (Neb. C.A.)
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US Case
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A promissory note given by the maker
to the payee to enable her to cease work, but without any condition being
imposed, or promise exacted, is without consideration, and may be
repudiated, in the absence of circumstances creating an equitable estoppel.
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But, where the payee of the
obligation has been induced to abandon a paying job in reliance on the note
being paid, and has taken the action in accordance with the expectation of
the maker, neither the maker nor his representatives will be permitted to
resist payment on the ground that there was no consideration for a promise.
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Re Boutilier, [1933] 1 D.L.R. 699 (N.S.S.C. en banc)
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Subscription made in consideration of the
subscription of others.
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A provision that a promise is made
“in consideration of the subscriptions of others” does not show the existence
of consideration moving form the promisee so as to enable him to recover upon
the promise.
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Relying on a gratuitous promise
without specific authorisation for expenditure does not make an otherwise
unenforceable K enforceable.
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The doctrine of estoppel cannot be
invoked where the representation is not one of fact, past or present, but
merely a statement of future intention.
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Dalhousie College v. Boutilier Estate, [1934]
S.C.R. 642
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Above affirmed
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Public Subscriptions Act, R.S.N.S. 1989, c.
378
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Subscriptions to public undertakings
will be upheld even if seen as wanting of consideraton.
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Hughes v. Metropolitan Railway Co. (1877), 2
App. Cas. 439 (H.L.)
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Estoppel comes into play where one party
by words or conduct gives an assurance to the other party with the intention
of affecting the legal relations between them and where the other party acts
on the principle accordingly.
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Central London Property Trust v. High Trees
House, [1947] 1 K.B. 130, [1956] 1 All E.R. 256 (K.B.) Denning
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The big one for estoppel.
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Where two parties enter into an
arrangement intended to create legal
relations between them and in pursuance of such arrangement one party makes a
promise to the other which he knows will be acted on and which is in fact
acted on by the promisee, the ct will treat the promise as binding on the
promisor to the extent that it will not allow him to act inconsistently with
it even although the promise may not be supported by consideration in the
strict sense and the effect of the arrangement made is to vary the terms of
the K made under seal by one with less value.
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Errington v. Errington and Woods, [1952] 1
K.B. 290, [1952] 1 All E.R. 149
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Hint that once someone had acted
upon a promise, it would be inequtable to go back on it.
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Combe v. Combe, [1950] 2 All E.R. 1115 (K.B.)
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P wife who had divorced her husband was claiming maintenance from
him based on letters. He had promised to pay £100 p.a. free of income tax.
She took no steps toward maintenance, he failed to make payments promised and
she sued.
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Bad itnerpretation of Denning.
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Though the husband’s promise was
made without consideration, it was made in expectiation of her acting upon it
and she did act upon it.
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Estoppel used here as a sword to
found a cause of action.
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Combe v. Combe, [1951] 1 All E.R. 767, [1951]
2 K.B. 215 (C.A.) Denning
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Denning stepping back from estoppel.
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“The principle stated in High Trees does not create new causes
of action where none existed before. It only prevents a party from insisting upon his strict legal
rights, when it would be unjust to allow him to enforce them, having regard
to the dealings which have take place between the parties.”
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P can use
estoppel, but not to found a cause of action. P has to have an independent cause of action to use estoppel.
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Conwest Explorations Co. Ltd. v. Letain,
[1964] S.C.R. 20, 41 D.L.R. (2d) 198 (S.C.C.)
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John Burrows Ltd. v. Subsurface Survey, [1968]
S.C.R. 607, 68 D.L.R. (2d) 354 (S.C.C.)
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Terms of loan were that if payments were
late, then the whole amount would be called in. Most payemnts were late
without complaint. Late payment resulted in loan being called in.
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Being indulgent and not enforcing
your strict rights does not estop you from later enforing them.
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W.J. Alan
& Co. Ltd. v. El Nasr Export, [1972] 2 All E.R. 127 (C.A.) Denning
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Does there have to be real detriment
for estoppel to apply? It means only that one has been led to act differently
from the way one would otherwise have acted. May just mean a change in
position.
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“Principle of waiver: if two parties
enter into negotiation and one party by his conduct, leads the other to
belive that the strict rights arising under the K will not be insisted upon,
expecting the other party to act upon that belief and he does act on it, the
first party will not be allowed to insist upon those strict legal rights when
it would be inequtable to do so.” — May be able to revert with sufficient
notice.
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3.1 Third party beneficiaries: consideration and privity
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A K cannot infer rights or impose obligations
on anyone except for the parties to the K. only a party to the agreement can
sue on the agreement.
Third party beneficiary: One for whose benefit
a promise is made in a contract but who is not a party to the contract. Chitlik v. Allstate Ins. Co. A person not a party to an insurance
contract who has legally enforceable rights thereunder. A prime requisite to the status of
"third party beneficiary" under a contract is that the parties to
the contract must have intended to benefit the third party, who must be
something more than a mere incidental beneficiary. McKinney v. Davis, 84 N.M. 352, 503 P.2d 332, 333. See also Privity.
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Dunlop
Penumatic Tyre Company v. Selfridge and Co., [1915] A.C. 847 (H.L.)
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If, in strange way, the TP can find
a connection through consideration, an action may be sustained.
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General rule:TP cannot sue on a K.
If one can establish consideration between the two parties, a way might be
found to circumvent the general rule.
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Drive Yourself
Hire v. Strutt, [1953] 2 All E.R. 1475 (Denning)
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Denning re-writing the history of
K-law.
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Scruttons v.
Midland Silicones, [1962] A.C. 446 (H.L.) Denning
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Strong statement by H.L. that only
those party to a K can sue upon it.
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New Zeland
Shipping Co. v. A. M. Satterthwaite & Co., [1974] 1 All E.R. 1015 (P.C.)
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Stevedores tyring to obtain benefit of
exclusion clause in bill of lading.
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“P made an offer to the D that
if the D would unload P’s goods from
a ship (which the D was already
bound to do by a K with a TP), the P would
treat the D as exempt from liability for damage to the goods. The PC held
that the D’s act of unloading the ship was good consideration.” [C&F]
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An attempt to create a direct K
between the potential P and the
potential D.
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“the clause could be treated as an
offer by the consignor of a unilateral contract, viz tat if those involved in
performance of the man contract would play their part (e.g. in the case of
the stevedore, unload the goods) the consignor would hold them free from
liabilty. The stevedore was held to have accepted the offer by unloading the
goods and the P consigneee by presenting the bill of lading to have contracted on
bill of lading terms” [C&F]
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Miida
Electronics v. Mitsui O.S.K. Lines, [1986] 1 S.C.R. 752, 28 D.L.R. (4th) 641
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SCC upholds himalaya clause as facilitator
of international commerce. “Court is giving effect to that which the parties
themselves clearly agreed to in writing.”
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Beswick v.
Beswick, [1966] 3 All E.R. 1 (C.A.) Denning
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D nephew bought the business of P’s husband. Part of the deal was that he would pay a certan amount
to P. D didn’t and P is suing.
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Denning, being the weirdo that he
is, feels that P has right as adminstratrix of her husband’s estate and on her
own. Some srot of trust thing.
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HL overrules it (below)
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Beswick v.
Beswick, [1967] 2 All E.R. 1197 (H.L.)
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In her personal capacity, the wife P does not have a right to bring an action.
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A satisfactory result for Tps can
often be brought by action by the other original party. [C&F]
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The Santanita,
[1985] P. 248 (C.A.)
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Rule in yacht race that if one racer damaged
another’s boat, the damager would pay.
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No clear ratio. Created a unique
exception to the TP rule.
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Mulholland v.
Merriam (1872), 19 Gr. 288
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Trust can be created / constructed
to circumvent the TP rule.
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Not the law today. Now has to be a
clear intention to set up a trust.
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Mulholland v.
Merriam (1873), 20 Gr. 152
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Greenwood
Shopping Plaza v. Neil J. Buchanan Ltd (1979), 31 N.S.R. (2d) 168 (N.S.S.C.
A.D.)
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Employees are not strangers to
employer’s contracts, can have benefit of exclusion clauses. Overruled.
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Greenwood
Shopping Plaza v. Beattie, [1980] 2 S.C.R. 228, 11 D.L.R. (3d) 257
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Only way to get around TP rule are through
agency or trust. Neither here, so employee loses.
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London Drugs
v. Kuehne & Nagel International, [1992] 3 S.C.R. 299, 2 Casebook 308
(S.C.C.)
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Negligently dropped transformer.
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Major relaxation of privity
requirement. Employees can take advantage of limitation ofliability in K
between employer and another party.
̃
Distinguished Greenwood Shpping Plaza.
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Employees may get the benefit of
employer’s exemption clauses when: (1) The limitation of liability clause must,
either expressly or impliedly, extend its benefit to the employees seeking to
rely on it; and (2) the emplyees seeking the benefit of the limitation of
liabilty clause must have been acting in the course of the their employment
and must have been performing the very services provided for in the K between
their employer and the customer (P) when the loss occureed.
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4. Mistakes preventing formation of a contract
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Mistake.: Mutual mistake is where the parties
have a common intention, but it is induced by a common or mutual
mistake. "Mutual" as used
in the expression mutual mistake of fact expresses a thought of reciprocity
and distinguishes it from a mistake which is a common mistake of both
parties. There is something of the
thought of a common mistake because it must affect both parties. Mistake of fact as ground for relief may
be neither "mutual" nor common in the strict sense because it may
be wholly the mistake of one of the parties, the other being wholly ignorant
both of the fact upon the faith of which the other has mistakenly acted and
that the other has acted upon such an understanding of the fact situation.
Unilateral mistake. A
mistake by only one party to an agreement and generally not a basis for
relief by rescission or reformation.
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4.1 Unilateral and mutual mistakes
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Smith v.
Hughes (1871), L.R. 6 Q.B. 597, 2 Casebook 313 (Q.B.)
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Shows the difficulty sometimes to
determine what the parties actually agreed to.
̃
“If whatever a man’s real intention may
be, he so conducts himself that a reasonable person would believe that he was
assenting to the terms proposed by the other party, and that other party upon
that belief enters into the K with him, the man thus conducting himself would
be equally bound as if he had intended to agree to the other party’s terms.”
[Quoted in C&F]
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Hartog v.
Shields, [1939] 3 All E.R. 566, 2 Casebook 315 (K.B.)
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̃
Unilateral mistake: It was held that
the buyer must be taken to have known the mistake made by the sellers in the
formulation of their offer.
̃
A man in taken to have known what
would have been obvious to a reasonable person in the light of the
surrounding circumstances. [C&F]
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Imperial Glass
v. Consolidated Supplies (1960), 22 D.L.R. (2d) 759, 2 Casebook 316 (B.C.
C.A.)
|
Calculation error results in wrong figure
being quoted.
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̃
A unilateral mistake by a party in
the motive or reason for making an offer, e.g., where it uses the wrong
figure in computing the price at which it would supply certain goods, does
not prevent a valid contract from arising when the offer is accepted. Where
the offeree is aware at the time of acceptance of the mistake made by the
offeror, it does not necessarily follow that the offeree comes under a duty
to reveal its knowledge or awareness or that failure to do so gives ground
for rescission, unless the circumstances are such as to support an inference
of fraud in concealing awareness of the mistake.
̃
Held, there was no ground for
setting aside the contract herein when the offeree, acting upon a price
quotation from the offeror before any contract was made, bound himself to a
contractor on the basis of the quoted price, even though the offeree became
aware before a firm contract was made with its offeror that the latter had
based its offer on a mistake in quantitative computations. The unilateral
mistake had not been induced by any representation of the offeree; and while
the offeree's conduct may not have been ethical, the offeror could not be
relieved from its own negligence or carelessness.
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McMaster
University vWilchar Construction (1971), 22 D.L.R. (3d) 9, 2 Casebook 320
(Ont. H.C.)
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Esacalation clause obviously omitted from
tender
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̃
Equity can step in and make the K
void so that the offeree cannot snap up the offeror’s erroneous offer.
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Raffles v.
Wichelhaus (1864), 2 Hurlstone & Coltman 906, 2 Casebook 322 (Ex.)
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Confusion over boats of the same name.
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̃
It was open to the D to show that the contract was ambiguous and that he intended the
October ship. If the cas had gone to trial it would have been up to the jury
to hold either that there was no K or to hold that there was a K for either
the Oct. ship or the Dec. ship. In modern times, it would depend upon the
reasonable person to find which ship. [C&F]
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Lindsey v.
Heron (1921), 50 O.L.R. 1, 2 Casebook 323 (Ont. S.C. A.D.)
|
Buying stocks with similar names. D says to K.
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̃
The P used clear language and
the D was ambiguous. The objective bystander would say that the K was
aobut P’s stock.
̃
Mistake was on the part of the D by using ambiguous language. D may be thinking of something else, the reasonable person would
have interpreted the P’s version of the facts in a clear manner.
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Hobbs v.
Esquimalt & Nanaimo Ry. Co. (SCC 1899)
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̃
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Brooklin
Heights Homes v. Major Holdings & Development (1977), 17 O.R. (2d) 413, 2
Casebook 325
|
|
̃
|
|
|
|
|
̃
|
4.2 Common mistake — both enter k with shared misunderstanding
|
Sherwood v.
Walker (1887), 66 Mich. 568, 33 N.W. 919, Casebook 326 (Mich. S.C.)
|
A fecund cow is an entirely different species
of cow than a barren cow.
|
̃
“If there is a difference or misapprehension
as to the substance of the thing bargained for; if the thing actually
delivered ore recieved is different in substance from the thing bargained
for, and intended to be sold, — then there is no contract; but it if be only
a difference in some quality or accident, even though the mistake may have
been the actuating motive to the purchaser or seller, or both of them, yet
the K remains binding.”
̃
If the thing you both bargained for
turns out to be fundmentally different in the end from what you though you
were bargaining for, the K is void. If you both bargain tu buy/sell a pinto
and tt turns out to really be a house, the K is void.
|
|
|
Bell and
Another v. Lever Brothers, [1932] A.C. 161, 2 Casebook 330 (H.L.)
|
Parties thought they were dealing with a
non-terminable contract when they were dealing with a terminable one.
|
̃
Courts will be very hesitant to
throw out contracts, particularly when both parties get what they thought the
were to get out of the K.
|
|
|
Solle v. Butcher,
[1950] 1 K.B. 671, 2 Casebook 333 (C.A.) Denning
|
Rent controlled flats
|
̃
A common mistake, though clearly
fundamental, does not as a general principle nullify a K at common law.
̃
Denning and revisionist doctrine of
mistake. Makes up law: Says two kinds of mistake. Some which will make the K
void and second kind is that which makes it voidable and can be set aside as
the court saw fit and was dealt with by the cts of equity. We now have to say
that the scope of mistake is far broader than contemplaed in Bell v. Lever
Brothers.
̃
Contracts which are liable to be set
aside in equity: if the parties were under a common misapprehension either as
to facts or as to their relative rights, provided that the misapprehension
was fundamental and that the party seeking to set is aside was not himself at
fault.
|
|
|
McRae v.
Commonwealth Disposals Commission (1951), 84 C.L.R. 377 (H.C. Australia)
|
|
̃
Ct finds a fundamental mistake, but
it is not equitable to set the K aside.
̃
The ct found an implied term that
the ship existed
|
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|
Sale of Goods
Act, s. 9
|
|
̃
If the subject of a K has perished
without the knowledge of the seller, the K is void.
|
|
|
F.E. Rose
(London) Ltd. v. Wm. H. Pim, Jr. & Co., [1953] 2 All E.R. 739 (C.A.) Denning
|
feves v. feveroles
|
̃
Where the parties in a K use
incorrect terminology, where the words they use are written down incorrectly,
the remedy of rectification may come into play. However, in this case, the
court does not allow the K to be rectified because the words used in the K
were not erroneous, because Horsebeans was what they wanted to use but the
error was only in what they wanted them to mean.
̃
And K could have been set aside in
equity, but innocent third party was involved and court will not trample TP.
̃
A K will be void only if there is
nothing to contract about, either because the subject matter does not exist
at the time of the agreement or because the object of the purported sale
already belongs to the buyer; and the ground of such a nullity is not the
mistake but the absence of a res.
[C&F]
|
|
|
Magee v.
Pennine Insurance Co. Ltd, [1969] 2 All E.R. 891 (C.A.) Denning
|
Insuring a car based on lies about licence,
etc.
|
̃
In almost all cases, a K will not be void even on the basis of a
common mistake on a fundamental term but can be set aside by court of equity.
̃
Even though the parties were
mistaken about the rights of the insured, each party correctly understood
that the purpose of their agreement was to settle the amount to which the P was entitled. Majority found it was enough to set it aside in
equity.
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4.3 Mistaken identity
|
Phillips v.
Brooks, [1919] 2 K.B. 243 (K.B.)
|
Bought crap and passed himself off as someone
else for credit. P was a
jeweller and D was pawnbroker.
|
̃
Either P intended to sell to whoever wandered into his shop or intended to
sell to Sir Bullough only.
̃
If P would sell to whoever, the sale was voidable for the fraudulent
misrepresentation that payment would be made by Bullough. Since it was
voidable, good title passed to the D via
the swindler.
̃
If P would sell to Bullough only, then the P’s mistake would prevent a K from arising and no rights of
ownership would pass to D.
̃
Found that P would sell to anyone who darkened his door, so voidable. Good
title passed to D. P loses. [C&F]
|
|
|
Ingram and
others v. Little, [1961] 1 Q.B. 31 (C.A.)
|
|
̃
Court found that the offer was made
to PGM Hutchinson and could not be accepted by the rogue. The P succeeded in their claim for the car, or damages.
|
|
|
Lewis v. Averay,
[1971] 3 W.L.R. 603 (C.A.) Denning
|
Thought they were selling car to movie actor.
|
̃
Despite mistake, the P concluded K with the rogue. He had failed to rebut the prima
facie presumption that he had made a K with the rogue when he allowed the car
to be taken away. The K was voidable for fraud, but too late since it was now
in the hands of an innocent TP. [C&F]
|
5. Non es factum
|
Gallie v. Lee,
[1969] 1 All E.R. 1062, 2 Casebook 358 (C.A.) Denning
|
|
̃
Denning: If someone signs a document
knowing that it has legal consequences and does not take care to read it,
they should not be able to plead it was not their act. Particularly if TP has
acted upon it.
̃
|
|
|
Sunders v.
Anglia Building Society, [1970] 3 All E.R. 961 (H.L.)
|
|
̃
Overrules Gallie v. Lee: You can use
non es factum if the document you signed was “fundamentally different” than
the one you thought you were signing. (1) can’t be negligent. (2) if you
think you thing is intended to have legal consequences and you are literate,
in almost all case you will be bound to your signature.
|
|
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Prudential
Trust Co. v. Cugnet (1956), 5 D.L.R. (2d) 1 (S.C.C.)
|
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̃
Idiot signed the document but since
it was of a different type that what he thought he was signing, he gets to
use non est factum. Moron.
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Marvco Color
Research, 1982 (S.C.C.)
|
|
̃
Any person who fails to exercise
reasonable care in signing a document is precluded from relying on non est
factum as against a person who relies upon that document in good faith and for
value.
|
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Northside
Economic Development Assistance Corporation v. Strickland and Strickland
(N.S.S.C. T.D.)
|
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̃
Co-signed at husband’s request.
Finds non est factum for
unconscionability reasons. She was mistaken as to type of document and the bank
should have told her about it.
|
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Lloyd’s Bank
v. Bundy, [1975] 1 Q.B. 326 Denning
|
|
̃
Introducing economic duress and
inequality of bargaining power.
̃
“The english law gives relief to one
who, without independent advice, enters into a contract upon terms which are
very unfair or transfers property for a consideration which is grossly
inadequate, when his bargaining power is seriously impaired by reason of his
own needs or desires, or by his own ignorance or infirmity, coupled with
undue influences or pressures brought to bear on him by or for the benefit of
the other.”
̃
Law has not followed exactly with
Denning’s pronouncement, but there are signs it is moving in this direction.
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6. Contractual rights and obligations
6.1 Termination: Repudiation, recission and frustration
6.1.1
Misrepresentation, breaches of
warranty and conditions distinguished
|
Wallis v.
Pratt, [1910] 2 K.B. 1003 (C.A.)
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|
̃
If a condition is breached,
and the parties have not excluded any liability for the breach of the
condition, the innocent party should be able to recover damages, or repudiate
the contract.
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Sale of Goods
Act
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|
̃
Even if you call it a warranty, it
is a matter of construction for the court: it can be determined to be a
condition
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|
Redgrave v.
Hurd (1881), 20 Ch.D. 1 (C.A.)
|
Selling law practice which turns out to be
worhtless.
|
̃
In 1881, damages only are available
if it is a fraudulent misrepresentation. Fraudulent misrepresenation
is a common law tort and all common law courts can do is award damages. Cts
of equity can’t give damages.
̃
Innocent misrepresentation is dealt
with in cts of equity and the remedy is recission.
̃
A man cannot benefit from a
statement which turns out to be false.
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Redican v.
Nesbitt, [1924] S.C.R. 135
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|
̃
Where a conveyance has been
executed, it will only be set aside in equity on the ground of fraud.
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Heilbut,
Symons & Co. v. Buckleton, [1913] A.C. 30 (H.L.)
|
|
̃
Trite law: Innocent
misrepresentation gives no right to damages.
̃
Was the misrepresentation to be a
contractual term? (1) at what stage in the negotations was the statement
made? If preliminary, probably not a contractual term. (2) Was it ever
reduced to writing? If yes, leads to presumption that it was a contractual
term. (3) Did the person who made the statement have special knowledge, skill
with regard to the other parties? Ct will be more willing to make it a term.
[C&F]
̃
Consider if it is a statement of
fact or of opinion. Equality of bargaining power/information.
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|
|
Dick Bentley Productions
v. Harald Smith (Motors) Ltd., [1965] 1 W.L.R. 623 (C.A.) Denning
|
Seller says car has new engine. Really is old
piece of crap.
|
̃
The test of whether or not a
representation is a warranty is based on what the intelligent bystander would
say.
̃
Ample foundation for warranty —
should have known the answer and he gave it without foundation.
̃
Can look for a colateral contract
based on the misrepresentation. Not needed in this case.
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Misrepresentation
Act [Don’t have one in Canada]
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|
̃
Negligent misrepresentation is the
same as fraudulent misrep. as far as damages go.
̃
For a contract that may be struck
down, the [ct] can award damages instead where it is equitable to do so.
|
|
|
Zien v. Field
(1963), 43 W.W.R. 577 (B.C.C.A.)
|
|
̃
Dissent adopted by the SCC.
̃
Test for whether a term is a
condition or a warranty comes from Bettini v. Gye: Depends upon the intent of
the parties and upon interpretation.
̃
Can make anything a warranty or a
condition if we are clear about it.
̃
The court will look at the term in
the context of the whole thing. If non-performance of that term would result
in a completely different result than that contracted for, it is a condition.
̃
Just because you use the language of
“warranty”, “covenant”, “condition”, “term”, they may be used in the
non-technical sense. If they don’t convey the true meaning, have to look at
what the reasonable person would see the term to mean.
̃
Third class of term. If the degree
of breach is minor, it is a warranty. If the degree of breach of this term is
major, it is a condition. Objective test of an observer at the time of the K
can’t really tell you if it is condition or warranty, since the degree of
breach was not known. Only apparent quasi ex contractu.
̃
Brings foreseeability to contract
law.
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|
|
Hong Kong Fir
Shipping v. Kawasaki Kisen Kaisha, [1962] 1 All E.R. 474
|
Charter ship that ends up in the shop for most of the time.
|
̃
Heading toward a doctrine that you
can’t always identify a warranty or a condition.
̃
Some breaches will or wont deprive
the non-breaching party of the subbstantial benefit of what was intended by
the contract.
̃
Don’t deal with it yourself, let the
court decide.
̃
If you see the breach of the other
party as a breach of a condition and then repudiate it, it may be found to be
a breach of a warranty and you are screwed for wrongful repudiation. Take it
to court.
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|
|
Schuler v.
Wickman Machine Tool Sales, [1973] 2 All E.R. 39 (H.L.)
|
Distributorship agreement calls for 1,400
visits by salesperson. Doesn’t live up.
|
̃
If you call it a condition, there is
a presumption that it is a condition. But if it is unreasonable to say that
the breach of the “condition” would kill the K, then you have to construct
the meaning of the term within the whole of the K.
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|
|
Barnett v.
Harrison, [1976] 2 S.C.R. 531
|
|
̃
Can a party in whose benefit a
condition is made waive the condition in his favour and still insist upon
specific performance? No clear answer.
̃
An express condition precedent
cannot be waived where the outcome of which depends upon the actions or
decisions of a TP.
̃
Ratio on p. 411: Obligations under
the K [where] the obligations ...
|
|
|
Hedley v.
Byrne
|
|
̃
There is a tort of negligent
misrepresentation.
̃
Requires a special relationship between
the parties: The courts are willing to find the special relationship whenever
the person giving advice holds himself out as possessing some special skills
and knows the other party will rely on the advice given, irrespective of
whether or not that person is a professional advisor.
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|
|
Esso Petroleum
v. Mardon, [1976] 2 All E.R. 5 (C.A.) Denning
|
Grossly inflated estimates of “throughput”
induced D to set up a gas station.
|
̃
Representation by Esso was a collateral
warranty that the estimate was sound.
̃
Negligently misrepresented, outside
of K but still gives rise to an action in damages. Held out special skills,
made representation intended to be relied upon, he relied upon it with
disasterous results.
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|
|
Sodd
Corporation v. Tessis (1977), 79 D.L.R. (3d) 632 (Ont. C.A.)
|
|
̃
You have remedy in tort for
negligent misrepresenation.
̃
In contract, you are restricted to
innocent misrepresentation, fraudulent misrepresentation, breach of term or
warranty, condition.
|
|
|
BG Checo,
[1993] 1 S.C.R. 12
|
|
̃
Can bring concurrent actions in tort
and contract.
|
6.2 Rights and remedies of the innocent party
|
Hochester v.
De La Tour (1853), 2 Ellis 678 (Q.B.)
|
|
̃
Can an action be brought for breach of
a K even before performance is due?
̃
If a person wronfully renounces a
contract, the other party is not bound to act as though the contract is still
in force. He has option of waiting until performance is due (and maybe or
maybe not forthcoming) to sue or can bring an action immediately.
̃
Anticipatory breach can be
constructive: Can infer it from actions on part of breaching party.
|
|
|
Canada Egg
Products v. Canadian Doughnut Co., [1955] S.C.R. 398
|
|
̃
What amounts to an adoption of
repudiation?
̃
Can adopt the repudiation with all
reasonable dispatch — not immediately — with regard to the circumstances.
̃
Issuance of the writ can be adoption
if it is a writ for breach of K. If it just to have the contract constructed,
not adoption.
|
|
|
MacNaughton v.
Stone, [1949] O.R. 853, 2 Casebook 429 (Ont. H.C.)
|
|
̃
Three options for innocent party in
anticipatory breach: (1) can treat the K as at an end and demand return of
deposit (or whatever), (2) can treat the K as broken as of the date that the
other party renounced it and sue for damages, (3) can treat the K as valid
and decide to wait and bring an action for specific performance.
|
|
|
White and
Carter (Councils) v. McGregor, [1961] All E.R. 1178 (H.L.)
|
|
̃
Innocent party has normal options.
̃
Is it ethical to allow the innocent
party to go ahead and treat the contract as still on?
̃
The innocent party should not insist
on the contract if it has no legitimate interest to do so. If you are
vicdictive or wishing to impose a hardship on contract-breaker, you should be
limited to a remedy in damages.
̃
It takes two parties to end a
contract: one to repudiate it and the other to accept the repudiation. One
party, acting alone, cannot end the contract.
|
|
|
Finelli v. Dee
(1968), 67 D.L.R (2d) 393 (Ont. C.A.)
|
Paved driveway while D was away.
|
̃
Where carrying through with the
contract must be done illegally if you don’t have other party’s consent (like
paving their driveway), you are stuck with suing for damages.
|
|
|
Decro-wall International
v. Practitioners in Marketing, [1971] 2 All E.R. 216 (C.A.)
|
|
̃
To be repudiation, an action must go
to the root of the contract, must be of a fundamental nature.
̃
Courts can award injunction,
recission, specific performance. All are equitable remedies available.
̃
Aside: Contracts for personal
services will never give an injuction for specific performance.
|
|
|
General
Billposting v. Atkinson, [1909] A.C. 118 (H.L.) NOT ON EXAM!
|
|
̃
As soon as there has been a wrongful
repudiation and both parties bring the contract to an end, all of the
conditions of that contract are dead.
|
6.3 Problems of remoteness of damages
|
Hadley v.
Baxendale (1954), 156 E.R. 145 (K.B.)
|
|
̃
When one party breaks a contract,
the other party ought to receive damages which may fairly and reasonably be
considered either arising nauarlly (in natural couse of things) from the
breach, or such as may reasonably habe been in the contemplation of both
parties.
|
|
|
Victoria Laundry
v. Newman Industries, [1949] All E.R. 997 (C.A.)
|
|
̃
(1) aggrieved party is only entitled
to recover the part of the actual loss that was foreseeable at the time of
the contract as liable to result from the breach, (2) what isreasonably
foreseen depends on the knowledge then possessed by the parties — or at least
by the party in breach — either actual or imputed; (3)
̃
What was at the time foreseeable
depends upon actual knowledge then possessed by the parties, or at leas by
the breaching party.
̃
This knowledge can be actual or
imputed.
̃
“Serious possbility” or “real
danger” of happening is sufficient foreseeability.
|
7. Fundamental breach
|
Karsales v.
Wallis
|
Contract for sale of a car. The thing
delivered was not a car in a platonic sense.
|
̃
Clear statement by Denning that the doctrine of
fundamental breach exists.
̃
When the thing delivered is not the
thing contracted for, the seller cannot rely on exclusion clauses.
|
|
|
Suisse
Atlantique Societe d’Armement Maritime v. Rotterdamsche Kolen Centrale,
[1966] 2 All E.R. 61 (H.L.)
|
|
̃
You can’t avail yourself of
exclusion clauses when the breach you are guilty of goes to the root of the
contract. Denning-esque doctrine of fundamental breach to get around
exclusion clauses.
|
|
|
Harbutt’s Plasticine
Ltd. v. Wayne Tank and Pump Co., [1970] 1 All E.R. 225 (C.A.)
|
|
̃
When one party has been guilty of a
funamental breach of contract which goes to the very root of the contract,
and the other side accepts it, (the K comes to an end either due to the
acceptance or due to the breach), the guilty party cannot rely on an
exclusion clause to escape liability for his breach.
|
|
|
Photo
Production v. Securicor Transport, [1978] 3 All E.R. 136 (C.A.)
|
Idiot guard starts fire at paper factory
|
̃
The House of Lords has firmly stated
that Denning and his fundamental breach boosters are full of shit. Exclusion
clauses will not be weaseled around by claiming that the contract has been
fundamentally breached.
|
|
|
Photo Production
v. Securicor Transport, [1980] 1 All E.R. 556 (H.L.)
|
|
̃
The House of Lords firmly did away
with the notion of fundamental breach to get around exclusion clauses. If the
parties decide to bargain away certain rights, they are free to do so.
̃
Also question of who can best cover
the risk. In this case, the factory through its insurance.
|
|
|
Hunter
Engineering Co. v. Syncrude Canada, [1989] 1 S.C.R. 426
|
|
̃
Majority: In Canada, there is no
rule of law preventing the operation of exclusionary clauses in cases of fundamental breach of contract.
̃
Per Wilson, L’H-D: A fundamental
breach occurs where the event resulting from the failure of one party to
perform a primary obligation has the effect of depriving the other party of
substantially the whole benefit that the parties intended should obtain from
the contract. Fundamental breach represents an exception to the rule that the
contract continues to subsist and that damages be paid for the unperformed
obligation for it gives the innocent party an election to put an end to all
unperformed primary obligations of both parties. This exceptional remedy is
available only where the very thing bargained for has not been provided. // The "rule of law" approach
to fundamental breach should be discarded and the construction approach to
exclusionary clauses already adopted by this Court should be reaffirmed. The
relevant question for the courts is whether the parties, on a true and
natural construction, succeeded in excluding liability at the time the
contract was made. After considering the provision's true construction, the
court must consider whether or not to give it effect in the context of
subsequent events, such as fundamental breach. The courts are quite unable to
assess in isolation whether or not a contractual provision is reasonable and
any notion that the courts should refuse to enforce a provision for want of
its being reasonable should not be imported into the law. Exclusion clauses
can be rendered unforceable even if no fundamental breach is found.
Legislative protection exists and other judicial avenues such as
unconscionability might apply in appropriate circumstances.
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