Contract Law

Waltons Stores (Interstate) Ltd. v. Maher

Facts:

•    Negotiating towards a lease
•    Waltons leads the prospective landlord to believe that there will be a lease.
•    As such, the landlord does what they have to do get the new building up on time for Waltons
•    New building 40% completed when Waltons walked away.
•    Landlord sues, alleging in effect that Waltons promised to enter into the lease, and that they should be estopped from walk away.
•    Council for Waltons held that there was no promise there.
•    Council had to construct the promise – this was done satisfactorily
o    However, looked like a mere promise
o    Reliance was non-bargained for.
o    Looks like Dalhousie
•    We are in the realm of promissor estoppel.
o    Though cast widely in High Trees, was reigned in in Combe v. Combe.
o    Promisee here is suing to have the promiser esoptted
o    Offensively…
o    Court acknoledges all of this
o    Promissory estoppel usually used as defensive equity, not offensive.
o    Concern is that if we allow ppl to sue on promises alone, then what is left of the doctrine of consideration
•    If we allowed ppl to use estoppel offensively, then in effect, we could be doing the very thing that Dalhousie was accused of doing – allowing the recipient of a promise to retrospectively convert what was meant to be a gratutious promise into an enforceable promise just by relying on it.
o    Would be getting into the business of enforcing gratuitous promises.
•    Will we require the doctrne of consideration or a seal to enforce promises offensively, or is there some other basis?
•    Para 22
•    Normally say, as per combe v. combe that we will not enforce promises offensively
o    However, these is a small area of jurisprudence where we do enforce promises based on nothing more than reasonable reliance.
o    Promissory estoppel
o    If the promisor has promised the promissee an interest in land (real property) and the promissee has relied on this to their detriment, then the law can enforce the promise.
•    They look at the U.S.
•    Second-class enforcement
o    Promise enforced to the extent that the promissee relied on it
o    Only so much enforcement as necessary.
o    Get the value not of the [ticket to florida].  Get the value of the [preparations one made for the trip].
o    In the U.S., the restatement (NOT A STATUTE) is accepted in some states.
•    Accepted generally that one can sue on estoppel.
•    Para 25, 26
o    Start making the point – (26) – make an important point
•    Having just said that in the U.S. they allow Ps to sue on the basis of nothing but an estoppel, they then observe that the words of s. 90 of the restatement, the substance is of promise enforcement.
•    Whereas they say in the Anglo-Australian context that estoppel is not about promise-enforcement, but about injustice prevention (prevention of unconscionability).
•    So does vary in its emphasis with American contract theory.
•    Links U.S> restatement of estoppel with obsession with consideration, and have in common promise enfircement.
•    Even estoppel section cast as if it were about promise enforcement (even though as we look at it (through high trees) that we look at the victim, not the promisor’s promise).
•    It is not that we so love promises that the law will enforce promises no matter what – it is that estoppel has at its root (for us) injustice prevention.
•    Then say something new:
o    Say that promise breaking itself is not unconscionable
o    Say that even the promissee’s reasonable reliance, per se, does not create unconscionability.
o    Why is this not unconscionable?
•    People in our culture just know that the law does not enforce gratuitous promises.
•    People know that reliance on such a promise is at one’s own risk.
o    Something more is required…
•    Making distinction between the sword and the shield
•    In trad. Estoppel, all one needs is a promise intended to be relied upon and relied upon.
•    Now say that to use estoppel offensively need more than this.
o    Whether they intended to create two sets of criteria for estoppel, they seem to have done so.
o    What is this ‘something more’ that is required.
•    In this case, say there are two special factors
o    1)  Sense of urgency because of the tenant’s timeline
o    2)  The tenant’s inaction when it knew the landlord was acting on the promise.
•    Say that the inaction acted as encouragement
•    In this case, doing nothing effected doing something.
•    Note para 25 – “The object of the equity is not to compel the promisor to fulfill the promise, it is to avoid the detriment which, if the promise goes unfulfilled, works to the detriment of the promissee.”
•    Conclusion:
o    The court does estop the tenant from denying that it has a lease with the landlord
•    (though of course they do not have a lease)
o    here, estoppel used as a sword.
o    “Is this just one of many semi-interesting cases which languih unnoticed, or is this considered to be important in the common law?  What is Waltons status in Canada?
Has enough time passed that we can conclude that the idea went nowhere?
Will want to, before the exam, reasearch the case – not whether it has been followed.
Is the hurdle so high (the two conditions) for unconscionability that the cases have just not come up since?

Formality
•    page 226
•    Begin with famous article by a famous U.S. legal realist from 1930s.  German origins.
o    Fuller – we have snippet of introduction
o    Taxonomy on variety of purposes of legal formalities.
o    Not all formaities serves all of these purposes
o    Identification of the three poss. functions
•    Formalities:  No set list – anything that the law requires you to do to have a binding contract:
o    Writing
o    Witnesses
o    Written
o    Handshake
o    Handshake with witnesses
o    Gov. licence, like a stamp
o    A seal
o    Witnessed by a notary
•    Fullers 3 functions:
o    Evidentary:  Something like a written contract generates physical evidence of what the agreement was.
•    A handshake, on the other hand, does not have much evidentary functions (unless, perhaps, it was in front of witnesses)
o    Cautionary:  the more elaborate the formality the law requires one to go through, the more the compeltion of it causes a person to acknowledge the importance of their agreement.
•    Ex:  If the law requires that an agreement be made in front of a lawyer, enforces the seriousness of the legal agreement.
•    To the extent that the formality is awkward or ritualistic, the parties have time for second-thoughts.
o    Channelling:  There could be the sort of formality which, if envoked, would tell the parties that they had the sort of agreement which the courts would enforce.
•    Suppose there were a way to make a gift promise enforceable – such as going to the gov. for a certain type of stamp.
•    A stamped contract then would be channelled into the realm of enforceability
•    We have this in regards to seals.
•    Seals put promises into the realm of enforceability.
•    The only formalities in the common-law tradition are the seal, and writing.
•    The seal is a positive formality.
•    If one seals one’s promise, the promise is destined for a certain outcome – it adds a positive result.
•    Writing is a negative formality.
o    In a certain narrow set of contracts, the law says that the contract can’t be enforced unless it is written.  This is negative – WON’T be enforced unless it is written.
o    The seal is the pos formality.
•    In other words, the common-law tradition puts very little emphasis on formalities
o    Fuller argues that the doctrine of consideration in itself is a type of formality.

Seals
•    A SPECIAL contract
o    This is the term
•    Also called a formal contract – in distinction from a normal contract – a “simple contract”
•    A deed – an instrument under seal.
•    The major significance is that the promissee of this promise has alonger period under which to bring action to enfore the promise, than if the promise were not under seal.
•    Under ordinary promise, have 6 years
o    BUT, under seal, in most provinces (except Ontario), the victim has 20 years with which to sue.
o    Good for the victim, but inconveneintly long – memories fade.
•    Rarely see lawsuits after so long
•    What constitutes a seal?
o    In the past, a seal was a blob of melted wax, into which something was impressed to make it obvious that it was one’s seal.
o    No seal is a seal unless it is one’s personal seal.
o    A blob of wax beside someone’s name is not a seal unless it is adopted as a seal and can be identified as such.
o    A thumbprint would do it.
•    Modern approach:
o    To have it pre-printed on the form – probably intended that the client be handed a seal to put on the document – can be purchased at stationary shops
o    Question arises:  What if the client does not do this?  What if the area to place the seal is there (page 250 – suggest L.S. is the latin for the place for the seal)
•    Is this then the seal?
•    This would defeat the cautionary function.
•    This comes up in the courts, and they go back and forth on the answer.
•    Question is, is this the client’s seal?
•    Doen’t count unless it is someone’s seal.  The client must have done something to adopt it.
•    Argument that signing beside it is enough for adoption
•    Courts reluctant to come to an answer on this.
•    Note recommendations of Ontario commission
•    In Foakes v. Beer
o    Hint at a side-light of the seal – if the parties made a contract under seal, it was the law that both sides could nt vary the contract, except by another contract under seal.

Next day:  will look at writing requirements just notes page 385

Mitigation
•    The victims of a broken contract must act reasonably to mitigate their losses.
•    This will reduce the damages that the D will have to pay in the case of a law suit.
o    From Chicoutimi, a victorious P is to get their expectations.
•    So in the case of a broken employment contract, the expectation would be salary for the length of the contract.
o    However, our economic prosperity depends on people being in the workforce selling their talents.  Someone sitting at home collecting money goes against society’s interests.
•    Common law says to the victim that they must immediately act to minimize their loss.
•    The effect of the plaintiff mitigating is wholly on the defendant.
o    A successful mitigation minimizes the damages paid by the defendant.
o    If, for instance, a plaintiff does not attempt to mitigate their losses, a court will deduct this from their damages.
•    In the case of a contract for sale of goods, if one manages to replace the goods in the open market and they are more costly, then one can sue for the difference.  However, if one manages to find the goods for cheaper…
•    If reasonable mitigation costs the P money, then P is allowed to add the cost of the reasonable mitigation to the ‘tab’.

Payzu Limited v. Saunders
•    A text-book example of mitigation
•    The contract was broken – no dispute
•    P declined to mitigate their losses by dealing with the D after feeling “insulted” by the suggestino of possible insolvency.
o    Did the P adequetly mitigate?  Was refusing to buy the silk in future from the D and paying a higher price reasonably?
o    Court said that even though there were hard feelings, P should have made a business decisoin to deal with the D under the new terms – would still have been cheaper than from other suppliers.
o    Therefore did not properly mitigate their losses, and will not recover to the extent they would have had they done so.

•    What if, for instance, one is selling a car and the buyer, after making the agreement, backs out?
o    One is required to try to sell the the nonetheless.
o    Must mitigate by selling to buyer #2.
o    However, what if one has more than one car for sale (like a dealership)?
o    Though it might look superficially as if one has mitigated their damages, in fact, has lost a sale.  The car sold to buyer #2 would have been in addition to the car that was originally going to be sold to buyer #1.

White and Carter (Councils) Ltd. v. McGregor page 198
•    Contract whereby the council would be advertisements for the D on their litter bins.
•    3-year contract
•    when the contract was up, the advertiser renewed.
o    …then cancelled
•    the council refused to accept the cancellation, and proceeded as planned
•    The contract had an acceleration clause
o    Meant that if the balance due was in default for 4 weeks, the balance of the contract would become due.
•    In theory, once the defendents ‘cancelled’ the contract, the P would have immediately tried to obtain a new advertiser.
•    General Proposition of Law ¶4 page 199
o    “If one party to a contract repudiates [a contract] in the sense of making it clear to the other party that he refuses or will refuse to carry out his part of the contract, the other party, the innocent party, has an option.  He may accept that repudiation and sue for damages for breach of contract, whether or not the time for performance has come; or he may if he chooses disregard or refuse to accept it and then the contract remains in full effect…”
•    If you keep a contract alive, you keep it alive for both parties.
o    Cannot sue for breach of contract if the other party says they are breaking the contract, but the other party disregards this and acts as if it is still alive.  This gives the other party the chance to change their minds.
•    This case is not analogous to the ‘usual case’
o    Usually, one side of the contract needs the other sides’s cooperation.
o    Here, the municipality could go ahead and affix the advertisements without the cooperation of the advertiser.
o    So, do they have a duty to mitigate?
•    According to this case, no.
•    This scenario arises only when there has been a breach.  In this case, the other side breached only when it hadn’t paid the bill for the first week’s advertisement (however, there was a four-week grace period – def. in breach at the end of these four weeks).
•    The P has a duty to mitigate as soon as it is a victim of a breach.
•    This case had in it the fluke of the acceleration clause.  Instantly accelerate to the end of the contract.  If we are at the end of the contract, there is nothing left to mitigate.
•    ¶6 page 200
o    the example of the expert sent abroad to write a report
o    the expert can decline to accept repudiation of the contract and go abroad and write the report.
o    Another example where the party can go ahead without the cooperation of the other party.
o    Once the report is submitted and the party does not pay, they are in breach.
o    The contract is fully performed, so there are no losses to mitigate.
o    This is, in fact, a better example that White and Carter Councils v. McGregor, because it doesn’t have the acceleration clause.
•    Important to understand why the duty to mitigate did not arise.

•    Note 4 page 203
o    The contractor req’d cooperation from the other party to fulfill his duties (permission to enter on the land), so his failure to get permission disentitled him from suing for the contract price.

Equitable remedy
•    For any other remedy other than damages (money), in the past, had to go to chancellory court.
•    Was to correct a problem in the law
•    Explains why equity is so difficult sometimes to comprehend
o    Equity is ‘unteachable’

Next day – entire section on equitable remedies; will get into first section of next part of syllabus

Remoteness
•    A great many reactions can be construed to have spawned from a single action.
•    The question is how many of these reactions are worthy of being compensated as the result of a broken contract
•    Out of necessity, many contract plaintiffs will be under-compensated.
o    Example. Page 48.
•    2 questions:  Practicality & Policy
o    the law says that there is an ambit of compensability within a certain ‘radius’ of a breach of contract.
o    There are consequences beyond this ambit where we do not try to translate reaction (result) into an award of money.
o    These four cases address “where we draw the line” in contracts

Hadley v. Baxendale
•    Historic case.  The other cases here explain  this case.
•    A carrier transporting revenue-producing chattel
•    In breach of contract, took took too long, causing lost profits.
•    P 50 – “object is to discriminate between that portion of the loss which must be borned by the offending party and that which must be borne by the sufferer.”
o    Almost an acknowledgment that contract law will under compensate the victim.
•    ¶3 – “The damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered [Rule 1] either arising naturally, according to the usualy course of things, from such breach of contract itself or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probably result of the breach  of it”
•    Rule 2:  “…id the special circumstnaces under which the contract was actually made were communicated by the plaingiffs to the defendents, and thus known to both parties, the damages resulting from the breach of tushc a contract which they would reasonably contemplate, would be the amt of  injury which would ordinarily follow from such a breach of contract under these special circumstances so known and communicated.
o    The relevant moment for the court to examin in this test is the moment of formation.
o    ¶3 key words:  Arising naturally; usual course of things; probable result
o    compensable consequences of the breach are those consequences which are probable.

Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. – p. 55
•    Newman Industries selling a boiler to the plaintiffs for £2,150.
•    Req’d boiler asap.
•    Ds promised to deliver on 5 June 1946.
•    Boiler damaged by contractors dismantling for transport – not repaird for 20 weeks
•    Ps sought to recover for loss of profits during the delay.  Proved they had extremely lucrative dyeing contracts as well as the normal business of launderers and dyers.
•    Trial judge gave judgment for the Ps for the costs incurred in a futile trip by the P to pick up the biler on 1 June, but disallowed claim for profits.
•    Special circumstances:  The lucrative contracts
o    Court says that there was no communication of these special circumstances and so does not fall under the rule.
o    What is imp. Is the attempt by Asquith L.J. to explain Hedley v. Baxendale
o    Apparenlty, forcing the victim to subsidize the defendant is a policy…
•    In the full version, says that Contract law compensates far fewer consequences than tort law.
o    “Reasonably foreseeable as liable” – this phrase from this case causes much consternation in the next case.
•    Puts into new words, the Hadley v. Baxendale formula
o    We will compensate the P for consequences of the breach which need not be probable consequences – need only be a serious possibility

Koufox v. C. Czarnikow Ltd. (“The Heron II”)
•    Transporting sugar.
•    No debate that the voyage took 9 days longer than it should have as a result of deviations made to other ports in breach of contract.
•    Load of 3000 tons
•    Because of another shipment that arrived in the interim, the price of sugar was down by the time this load arrived.
•    HoL uses this as an opportunity to review what the CA had said 20 years earlier in victoria laundry
•    Our editors have made the choice to include what other judges said in this case.  Most only include what Lord Reid said.
o    The “full flavour” leaves the case much murkier…
•    Lord Reid:
o    ¶6 – can the P recover as damages for breach of contract a loss of a kind which the d, when he made the contract, ought to have realized was not unlikely to result from a breach of contract causing delay in delivery.
o    Just as victoria laundry is the reasonably foreseeable as liable case, this is the ‘not unlikely’ case.
o    “Not unlikely” – not the same as ‘likely’.
o    If you stop reading with Lord Reid, would probably toss out Victoria Laundry altogether.  With the judges together, however, might see it as still somewhat useful.
•    Note page 66  - when drafting tentative replacement for Sale of Goods Act…

Canlin v. Thiokol Fibres Canada Ltd.
•    Facts:  sale of goods case.  Goods not suitable for purporse which would amt. to breach of contract under the Sale of Goods Act.
•    Statute says that in a contract for sale of goods, measure of damages is estimated loss directly resulting from loss from breach of… warranty?
•    Essentially a case on common-law remoteness sense, with sale of goods act trying to codify this principle.
•    T. judge held that the defendant had breached a warranty impled by the sale of goods act s. 15(1) – that the goods supplied would be “reasonably fit for their known and intended purpose.”
o    In add’n to the $93k for losses on the covers actually manufactured and sold in ’75, the t. judge included an award of $100k in respect of loss of profits for business for ’76-’80.
•    Note 2 – saying that the test is the same doesn’t mean that the recovery will be the same

Damages
•    When discussing non-pecuniary damages (pain and suffering; loss of state of mind; etc.) law tends to view these heads of loss with suspicion.
o    Though jurisprudence says we will compensate for these, it awards these damages somewhat… begrudgingly.
•    Addis v. Gramaphone Co. – page 99 held that an employee that had been wrongfull dismissed was entitled to compensation for the loss of contractual expectation, but not for any pain and suffering, mental distress, or damage to reputation.
•    The extent that we under-compensate victims, we are forcing victims to subsidize defendents.
o    Tends to stimulate economic activity
o    Similar:  In tort law, one is liable only if one is negligent.  Proving the act alone does not make one liable.
•    This in itself is a rule which undercompensates victims and subsidizes defendents.
•    “The people who are out there breaking legs are those who are out in the economy.”
•    Addis v. Gramophone shows the tendency of contract law whereby there are certain losses which may well be real, but for which we do not compensate.
•    There were at least two trad. exceptions:  Breach of promise of marriage; if a bank dishonoured a legitimate cheque.
o    In these two situations, invisible damages could be awarded.
•    In the last ¼ century, under the influence of Jarvis v. Swans Tours (Thanks to Lord Denning), things have begun to change.

Employment Contracts page 97
•    Indefinite duration – an employer has the right to terminate the employment of an employee either “for cause” or, having given “reasonable notice.”
•    2 kinds of implied terms:  officious bystander; business efficacy
o    implied-in-fact – this is different from what they editors are discussing here.  Here they are discussing implied-in-law.
o    Into contracts, the law implies certain terms, whether the parties would have considered them at the moment of formation or not.
•    The parties can explicitly preclude these implications.
o    Courts tend to, for instance, imply the IGF principle into contracts.

•    Vorvis v. Insurance Corp. of British Columbia – page 99
o    A conscientous lawyer being tormented by his employer
o    Sought damages for mental distress (aggravated damages) – non-pecuniary – compensatory
o    Judges agreed that in a proper case, could get aggravated damages, and could get punitive damages.
•    Clear that the damages would be very limited.
o    Not the end of the line – just the beginning of the SCC jurisprudence on this issue.  Bottom line is that the possibility of damages for non-pecuniary loses in breach of contract cases was legitimized.

Whiten v. Pilot Insurance Co. page 123
•    Page 128-129 – list of 10 factors /  general principles
•    Goes on to discuss in rel. to this particular case
•    Page 126 – against the americanization of our justice system
•    Tells lower courts how to approach damages
o    Upheld the $1-Million award…
o    Hinted that this was the limit of what the SCC would be willing to uphold
•    Binnie authorizes the Run-Away Jury (Grisham) approach in Canada.
o    Punitive damages must be proportionate to the means of the defendant if they are to serve their purpose.

Fidler v. Sun Life Assurance Co. of Canada page 143
•    Disability insurance case
•    Turns into a piece of mind case
o    Should provide the assurance of knowing that if something catastrophic happens, one will be provided for.
o    It is a promise not only of payments, but piece-of-mind.
•    Takes aggravated damages into an new direction.
•    Make defendents compensate victims for ordinary injuries which would be expected to arise from a breach – if these are aggravated damages, then we would award accordingly…
•    Page 148 – distinguishes 2 types of aggravated damages:
o    True aggravated damages – arise from aggravating circumstances.  Not awarded under general principle of Hadley.  Rest on defamation, oppression, fraud, etc.
•    Have nothing to do with type of contract – could, in theory, be awarded for any breach of contract which occasioned aggravated mental suffering
o    Second – mental distress damages which do arise out of contractual breach
•    Are awarded under principles of Hadley v. Baxendale – independent of any aggravating circumstances and are based on parties’ expectations at the moment of contract formation.
•    Says that this is not actually aggravated damages, but simply expectations…
•    Here, Sun Life promised piece of mind to Fidler, and did not provide it
o    Failure to deliver the promised ‘happiness’
o    ‘Aggravated’, under these terms, is a more active phenomenon.
•    Courts now believe that there are such things are ‘injuries’ even if they are invisible.
o    Willing to compensate for these injuries
o    Willing to award punitive damages

Deglman v. Guaranty Trust – page 238
•    Page 240 – the nephew-aunt scenario
•    No one disputes that there was a contract, but didn’t satisfy the Statute of Frauds
o    Deglman loses on the contractual issue, but does not go away empty-handed
•    Page 240-241 – first case where SCC awarded restitutionary (damages?)
•    The acts done were persuent to the contract
•    Accordingly, embrace the propostion that if Deglman was not give something, the aunt (estate) would be rewarded unjustly.
o    The services were not give gratuitously.
•    ¶6 – “It would be inequitable to allow the promisor to keep both the land and the money and the other party to the bargain is entitled to recover what he has paid.”
o    Statute of Frauds doesn’t preclude from bringing a restitutionary claim
o    Not for contract; not for tort; not for trespass – it is to alledge that otherwise a defendant would be unjustly enriched.
•    Quantum meruit.
•    Normally, (F&P language) in a restutitonary scenario, a pl. has given a benefit to a def. (prepaid, for instance)…
o    The pl is minus the payment (say, -$100), and the def is plus the payment (+$100).
o    Court, enforcing its equitable power to police the defendant, can force the D to give back the measure of the benefit.
o    In pure restitutionary theory, to quanitfy what the Pl receives, you look at how the Def was enriched (not how much the pl paid).
o    In Quantum meruit, one asks how much the pl deserves – put a fair market value on what the pl supplied.
o    Could lead to the same conclusion – but may be cases in which it cost the pl more than the def was enriched.
•    Evaluated by a Quantum meruit procedure, would look at what the pl paid.  Pure restutionary, would look at how much the Def benefitted and award that to the pl.
•    Note 5 page 245 – example of the pl incurring much expense, but suing on restitutionary theory… read this note
o    The pl got nothing

For next day:  Do all cases on the rest of the syllabus to this point

This is the second class.  Last week’s class was replaced by visit to N.B. C.A.

Remedies:  Review from last day
•    Principle remedy for a broken contract is a money-remedy – damages
o    Again, do not confuse damages with damage.  Damage is the injury.  Damages is a technical term for the money remedy awarded by courts.
•    The traditional first principle of damages is that the obj. of the award of damages is to put the plaintiff in the pos. he/she would have been in had the contract been properly performed.  This works on the theory that the pl. can then take this quantum of money to go into the marketplace to buy a replacement for performance.
•    Reliance principle:  To put the pl. back to even.  Calculate how much the pl has relied up on the def’s broken promise… to make the “whole” again.
o    Fuller and Purdue – say that damages could be calculated so as to vindicate what they call the pl’s restitutionary principle.  Often, in pursuance of a contract, a pl. will have conferred a benefit on a def., enriching the def. and impovershing the pl.  Restitution to the pl. in this situation is the unjust enrichment principle, or restitutionary principle.
o    These are not a hierarchy of quantum.

•    In Peevyhouse, both the majority and the minority wish to give the Peevyhouses their expectation, but both camps interpret this expectation differently.

Anglia Television Ltd. v. Reed P. 68
•    Denning L. here brushes aside a traditional problem in contract law.
o    The pl. will not get its expectation here – this is a question of damages.
o    Do not know what the profits of the film would have been.
o    In Fuller and Purdue terms, supposed to put the pl. in the pos. they would have been in had the film been produced, but here, doing so is so speculative that it is in fact impossible.  This is so obvious that it goes largely undiscussed.
o    The courts have a slogan:  The fact that awarding damages may be very difficult does not excuse the court from doing so.
o    Here the pl. is asking for reliance.
•    Problem:  Most of the expenditure for which they seek compensation, was made prior to Reed’s promise.
•    If this is the case, then how can it have been made in reliance to Reed’s promise…?
•    Denning:  “If the pl. claims the wasted expenditure, he is not limited to the expenditure incurred after the contract was concluded.  He can claim also the expenditure incurred before the contract, provided that it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken.” ¶4.
o    Denning here sounds like he is citing a know proposition of law.  It is not.  He is making it up.

Bowlay Logging Ltd. v. Domtar Ltd.  p. 72
•    The twist in this case is that the pl. was losing money on the contract, and was in fact better off having it broken off.
•    In F&P language (and this is the first Canadian case that uses F&P), the pl. is suing, not for their expectation (as they expected to lose money), but for their reliance – the money thrown away in pursuit of a broken contract.
•    The judge does not deny that they can sue for either, but says that the court will not put a pl. into a better position than they would have occupied had the contract been fully performed. ¶4.
o    There is a limit to their recovery under the reliance interest.
o    They would have lost money under the contract.
o    Can give them their reliance, but will make deductions.
o    The court awards, in this case “nominal damages”
•    Any contract victim is entitled to token damages.
•    Unlike negligence, where one is entitled only to the damages one can prove.
•    Contract suit is more like a trespass suit.  Victorious pl. is always entitled to something.
•    Pl. can sue on expectation or reliance theory.  Reliance here would be more than expectation.
o    Though pl. may have that election, reliance recovery may not put one in a better position than had the contract been performed.

Jarvis v. Swan’s Tours p. 92
•    Here the law confronts an invisible emotional injury.
•    Denning notes that the law has had great difficulty bringing itself to a situation where it will award damages for invisible injuries.
o    In this case, the law made a sort of breakthrough.
•    Swan’s Tours’ brochure set up certain expectations of their resort.
o    Whether the brochure promised him these things is an issue.  We will take this up later in the term.
•    Jarvis, after his sub-par vacation, sues for breach of contract.
•    Denning begins by citing two prior railway cases in which he says courts declined to award for mental distress or for “mere inconvenience, sich as annoyance or loss of temper, or vexation, or for being disappointed in a particular thing which you have set your mind upon.”
•    Denning goes on to say, “I think those limitations are out of date.” ¶4.
o    Here lies the basis for the new law.  Denning.  Making it up as he goes along.  What a guy.
•    Denning gives Jarvis twice what he paid for the tour.  The trial judge had given him half his cost.
o    There is no basis for this award of damages.

•    Are employment contracts covered under state-of-mind?
•    Pages 94-97 show the consequences of Denning’s ruling in this case.

Damages:  discussion
•    Divided into two categories:  General and Special
•    General
o    The type that the law presumes a pl. would have to have incurred in the course of the contract.
o    Compensate for damage which the law presumes that such a pl. under such a breach, would have incurred.
o    Can included annoyance, frustration, etc.
•    Special damages are of the type for which one can produce a receipt.
o    Things purchased, etc.
•    Aggrevative and punative / exculport
•    Aggrevative compensate the victim for aggrevated damage.  They are compensatory.
•    Where the breach has occurred in circumstances where the victim of the breach has sustained more annoyance, disappointment, etc. than the norm, then the court can award aggrevative damages to recognize that the victim has suffered aggrevated damage…
•    Punitive damages – Contrasted with aggrevative damages.  When these arise, it is in circumstances similar to aggrevative damages.  Point though, is not to compensate the pl., but to punish and make an example of the defendant.
•    In reading the materials, note that the courts do not like to award aggrevative damages, and really do not like to award punitive damages.
•    When courts do award these types of damages, the damages are most often low.
•    There is one ON case where a civil jury awarded against an insurance company a very large sum.
•    Judges, on the other hand, have had an unwritten vow to not let Canadian civil litigation evolve into that which the U.S.’ has become.

For next day, read the notes.  Of course feel free to read the associated cases.  Read Fidler v. Sun Life Assurance, and Hadley  v. Baxendale.