Electronic Communication/Transactions
http://www.gnb.ca/0062/acts/acts/e-05-5.htm
•    In most provinces now, there is some for of an Electronic Transactions Act.
•    Uniform Law Conference of Canada – contract law in Canada is a matter of property and civil rights – provincial responsibility
o    Can be different in each province – this can be odious not only for citizens, but for corporations.
o    Indirectly in Canada, we have tried to do what the Constitution doesn’t (though does mention) – the Uniform Law Conference of Canada (estb’d ~1914).  Takes the basic statutes from provinces (usually based on English statute), and tries to eliminate their differences as much as possible.  For areas of law that need new statutes, the ULCC drafts a new statute, which provinces can voluntarily adopt (either it, or a close approximation).
o    The NB Electronic Transactions Act is the result of one of these conferences.
•    NB’s ver is a mild version.
•    It is wholly permissive and facilitating.
•    Doesn’t require the use of electronic signature or anything of the like.
•    Facilitates:  As long as one intends something to be their signature, then it counts as a signature.
•    Has a provision for an electronic equivalent of registered mail.

Time of sending and receipt
16(1)Unless the sender and the addressee agree otherwise, electronic information is sent
(a)when it enters an information system outside the control of the sender, or
(b)if the sender and the addressee are in the same information system, when the sender takes the appropriate steps to make the information accessible to the addressee.
16(2)Electronic information is presumed to be received
(a)when it enters an information system designated or used by the addressee for the purpose of receiving information of the type sent and it is capable of being retrieved and processed by the addressee, or
(b)if the information enters some other information system and it is capable of being retrieved and processed by the addressee, when the addressee becomes aware that the information is in that other system.
16(3)Nothing in this section shall be interpreted as determining the place from which electronic information is sent nor the place at which it is received.

•    Sending and receiving is covered, and important.
•    This section covers time.
•    Note the use of the word “presumption” in 16(2).
o    Presumptions are rebuttable.
•    16(3) negates any link between the “when” and ther
•     “where”.  This would otherwise be very pertinent.
o    The significance of this can likely be ascertained from looking at the Eastern Power case.
•    Ordinary rules of contract law mean that wherever one opens one’s email could be where the contract is made (ex:  Sitting on a stopover in Hong Kong, whence neither party is from [is that a redundent phrase?])
•    To the extent that courts have given hints, they will use the ordinary rules of offer and acceptance.

“Firm” Offers
•    An offer which is expressed by the offerer to be open for a specified time.
o    All offers are open for some period of time – they have an expiry date.
•    A “firm” offer, the expiry date has been expressed.
•    “I offer to sell you my car for $1000.  This offer is open until 9am on Friday morning to accept.”
•    Basically saying, ‘I will not revoke it until 9am on Friday.’
•    Conveys to offeree that the offer does not have to be accepted right away – can take until the firmly specified time.
•    But (disillusioning moment) firm offers are not worth the paper that they may or may not be written on.
•    The offerer is not bound by this condition.
o    “Firm” offers are not firm at all.  End up being a trap for the offeree.
o    Even though the offer has been phrased that way, can be revoked at any time.
•    The key here is the word “revoke”.  It does not mean simply, “I’ve changed my mind.”
o    It involves communicating the ‘change of mind’ – revocation, like acceptance, is not revocation until communicated.
o    To prevent the other party from Accepting and forming a contract, must communicate the revocation before they communicate their Acceptance.
•    Why is this promise to keep the offer open not binding?
o    Lack of consideration – there is nothing being offered to keep the deal open.  [Bilateral v. unilateral?  P448 – “an offer in the unilateral sense can be revoked up to the last moment before complete performance”]
o    “The law does bind us to our word.”
o    In fact, we are not bound by any promise we make unless that is inside a contract.
•    There can be a contract to keep an offer open.
o    There must be consideration.  In other words, one can buy the right to, for instance, buy land.
o    This “buying” the right to accept or reject is called an Option.
o    An Option is a Firm Offer.  It is irrevocable.
o    The Offeree has paid the Offerer to keep the offer open for a specified period.

Unilateral v. Bilateral
Bilateral
•    Generality of offers is what the law calls bilateral offers or bilateral contracts.
•    A bilateral offer is one which, if accepted, gives rise to a bilateral contract.
•    So phrased so as to be open to verbal or promissory acceptance.
•    The offer must be phrased to be open to Acceptance (verbally)
Unilateral
•    “I offer you £100 to walk to York.”
o    This type of offer is so phrased that it is not susceptible to verbal acceptance – only by doing something.
o    It calls on the offeree to do something to accept – must be completed to form an acceptance.
o    In order to get $100 to find a lost cat, the cat must be found to constitute acceptance.
•    So phrased that it can be accepted only by doing some action.
•    Only when the offeree has completed the “thing” does the Acceptance occur.
•    This something, when done, constitutes Acceptance.
•    Often referred to as “if” Offers.
•    Either literally or analytically, they begin with an “if”.

What if this idea is filtered through the idea of revocability?
•    Unless accepted, an offer is just a promise.
•    “£100 to walk to York”
o    If this is Accepted by walking to York, then unless one has reached York (even 99% the way there), the offer can be revoked.
o    The law does not enforce promises.

Dawson v. Helicopter Exploration
•    Justice Rand is considered the greatest Jurist in the first half of the 20th-century.
o    “The Rand Formula” –
o    Rand worked to settle the boundary between Israel and its neighbours.
o    Son of a railway worker from Moncton.  Grew up poor.  Went to harvard, became lawyer, AG of NB.
o    Intercolonial in Moncton – bankrupted railways – became CN and moved to Montreal.
o    Rand became head of CN and followed to Montreal
o    Turned down SCC once, but did accept eventually.
o    Militant agnostic.
o    Served on SCC for about 15 years – short at the time. (44-’59)
o    Went off in 1959 to found law school at UWO.
o    None in ON are very old (law schools)
o    Taught at UNB.  Long-time selector of Beaverbrook scholarships.  Taught at law school here.
o    Writing style indicative of Harvard education.

Dawson
•    Cannot sue unless there is a contract
•    Company held that there was no acceptance.
•    Dawson did not go with them to find the claim.
•    Rand says that it is beyond doubt that it is not unilateral agreement – it is a bilateral offer, subject to promissory agreement.
o    This makes it a contract – enforceable.
o    It was the defendant’s fault that the “if” was not completed.
o    The “Acceptance” required complimentary action on the part of both parties.
o    [I see the reasoning here this way (it escapes Bell, he says).  If I say, “Bob, I’ll give you $10,000 to walk to Moncton by 5:00 tomorrow evening with me on your back.  If at 4:45 the next day, Bob is about to cross into Moncton, after having walked the entire way. I jump off and break Bob’s legs with a baseball bat.  Bob is put into an ambulance and brought to a Moncton Hospital..  In the course of the Criminal proceedings against me, could Bob not also sue me for the $10,000 “owed” to him under our alleged contract?]

Contrast between the ordinary rule of acceptance (that acceptance is acceptance when the acceptance is communicated to the offerer – deals with time, not place), and the Postal Rule of Acceptance (Acceptance occurs when the acceptance is mailed).

When does the Postal Rule of Acceptance apply?  Obviously enough, when the post is involved.  Just because the post has been used, however, does not mean that it does apply.  The theoretical rule is that it applies when the offerer intended that the offeree’s acceptance would have the benefit of this rule of acceptance.

However, when will the court deem that the offerer has deemed this acceptable?  If the offerer made the offer by post (this makes it implicit).  Not all responses by post attach this rule.  Secondly, the courts have decided that the postal rule of acceptance will attach to an acceptance if use of the post in that context would not be unusual.

30 years ago, much contracting was done by post.  Somewhat less true today.

If the offeree was not intended to have the benefit of the postal rule of acceptance, then they simply do not have it.

Schiller v. Fisher. P 423.
•    Negotiating a land purchase.
•    Going back and forth, so the role of offerer and offeree changes.
•    Kingsmont makes final offer, by letter.
•    This offer expired on Sept 1.
•    P 424 – actual agreement with expiration date.  This is an express expiration (as opposed to implicit).
•    Covering letter said, “return one copy of the Agreement to us as soon as possible.”
•    In this case, what does the word “accepted” mean in “This offer is to be accepted on or before September 1, 1976”
•    Normally, the fact of the assent would needs be communicated to the offerer by this date.
•    Nu-towne signed on Sept 1, mailed Sept 3, rec’d Sept 8.
•    Under any of the normal rules of Acceptance, it was too late…
•    The counter-argument was that the words in the cover letter expressed the offerer’s view that an acceptable acceptance was different in this case.
•    The argument went that the covering letter, stating “as soon as possible” altered the “normal” rules of acceptance.
•    This also does not fall under the Postal Rule of Acceptance – the covering letter overrules both.
•    The trial judgement was in favour of Nu-towne.  Court of Appeal was in favour of Kingsmont (offerer).  SCC found in favour of Nu-towne.
•    Basically, the would-be purchasers, Kingsmont, obviously wants out of the contract.  We don’t know why – perhaps a better offer, who knows¿  They are using this legal pretext to try to get out.  A legal nitpick.

The rules of acceptance are about the “when” of acceptance.
Under the general rule, it is not acceptance until it is communicated.  Under the postal rule, it is when it is posted, whether the Acceptance actually arrives or not.

The When of acceptance also determines the “Where of Acceptance”.
When people form contracts inter-jurisdictionally (as in Canada, where we have 12+ jurisdictions – Contract law is the responsibility of provinces), it follows that sometimes the “Where” is very important – potential law suits depend on the where.
Not just relevant between different countries – also relevant, say, between NB and NS.
This is relevant because if one of the parties decides to sue the other, the plaintiff will typically decide to sue in his or her own home jurisdiction.
Courts have to decide whether they have jurisdiction over disputes.  In the Rules of Court of any jurisdiction, there are rules to guide judges in determining whether to accept jurisdiction over cases.  One of the rules is whether the contract was formed in the jurisdcition.
P427 – Ontario rules.

Cannot ascertain where a contract is made without first determining when it was made.  This often hinges on the rules of acceptance.

P427 - EASTERN POWER LTD. v. AZIENDA COMMUNALE ENERGIA AND AMBIENTE

A cooperation agreement assented to between parties.
Is a cooperation agreement an enforceable agreement at all?  This will be examined next class.
EP looking for loss of profits on a contract that was never carried out.
If Azienda had actually appeared in the courts in Ontario, it might have changed the case.  Did eventually, and argued to have the case set aside on the grounds that the courts there did not have jurisdiction over them in Italy.
The determining factor was whether the contract was formed in Italy or Canada (Ontario).
The medium is important here – acceptance was sent my facsimile.  Does the postal rule apply?
Is fax more analogous to personal communication or postal communication?
The court judged that it was more analogous to personal communication…
This hinges again on the presumtion that the offerer has not specified what constitutes Acceptance.  The ordinary rule of acceptance applied here.  This was in part formed on the basis that a fax is instant.
This case is about the choice of forum – which court has jurisdiction.
In Canadian jurisdiction, for instance, in a case between NB and AB, a court in NB may use NB procedural law, but AB substantive law.  Forum clauses can effect this.
There is a question of whose substantive law will be used.

There is a subtext here.  Considering forum non conveniens grounds here.  Takes into account whether a judge in Ontario would have to use Italian law, and how difficult that would be.

Must take into account wehther it is a convenient or not convenient venue for the trial.  The parties did not appear to be accustomed to International Trading.  They did not have a choice of law clause, nor a choice of forum clause.

Sometimes courts will overrule these clauses if it is believed that one party is using its dominance to subvert the other.  This could have come up in the Rudder case.

Choice of forum versus Choice of Law.  Distinguish.

Postal rule does not apply to couriers…  The Ordinary rule of acceptance applied to phone, fax, emails, and couriers.  It is a tightly confined rule.

Rudder v. Microsoft Corp.

Plaintiffs saying that one particular clause (choice of forum clause) should not be binding.

Want to sue MS in Ontario, because it is cheaper in Ontario (and perhaps more sympathetic).  Ontario, since this time, has likely tightened up their class-action laws.

Ask the judge to strike out this part of the Agreement.  Argue that they did not give assent to this clause though they clicked ‘I Accept’.

Judge disagrees.  The pl says that one should liken everything not currently on the screen to fine print.  Courts approach fine print in a rather hostile way.  Judge says that it literally is not fine print (all the same text).

This is a more straightforward argument – ‘I didn’t assent.  I didn’t assent because I didn’t know about it.  I didn’t know about it because it was “fine print”.’

If the parties have chosen their forum, then it doesn’t matter about rules of acceptance regarding jurisdictions.  The contract tells you what will be the forum.

For next day, look at Electronic Transactions Act of NB.  We will examine s16, but read it all.
Will look as far as Dawson.  This examines one issue in Carlill.  Read notes on 445-446.    We might also look at the uncertainty jurisprudence.  Read opening notes of next section of syllabus.

Carlill v. Carbolic Smoke Ball Co.
•    Mrs. Carlill suing, alleging a contract between the two.  Not on the basis of a contract of sale, but on a more elusive contract.
•    “The Law is like Prince Philip.  It’s always a step and a half behind life.”
•    What is there in this ad (and its context) that make it different from other ads (which usually cannot be construed as contracts).
o    An advocate would want to know more than just the words – would also want to know the context – type of newspaper (reputation of publication might colour the reading of the advertisement.  I.e.  A gossip rag versus the British Journal of Medicine).  A better lawyer will make such things relevant to the case.
•    What arguments could be made for the Carbolic Smoke Ball Co.?
o    A reasonable person would understand that no company would intend to put themselves into this situation.  £100 would be an incredible amount of money.
o    If this is the offer, then the offeree is everyone whose eyes fell upon that ad.  Is it reasonable to assume that it offered it to the entire world?
o    Either there is no direct offeree, or there is no offeree
o    Company also argues that there is no acceptance.
o    A pamphlet could be viewed as a literay form.  Literary forms are prone to exagerration and hyperbole.
o    There were no instructions given in regards to claiming of the moneys.  In order to be claimed as an offer, something must be fairly complete.  This is essential information.
o    The word “reward” is not a contractual word.
o    Nudum pactum – naked agreement.  A considerationless agreement.  Non-enforceable [from page 444 – para 9]
o    “…any disease” is extravagant.  Tempered somewhat by “…by taking cold”

For Mrs. Carlill
What makes this ad different from other ads?  What makes it an offer?
•    The £1000 deposited into the account adds a ‘sincerity factor’.  It is a preemptive measure against skepticism, meant to convey confidence and promote sales.
•    The detailed instructions amount to an onerous path of acceptance.  The inference is that if this path is followed, then it constitutes acceptance, which means there must also have been an offer.
•    The Offer is made only to the subset of the world who:  buys the product; uses it while strictly adhering to the product’s directions; still contracts influenza.

When one examines a case, not necessarily looking for “rightness” or “truth”.  When analyzing the cases in the book, must look for the rationale and reasoning.  Must be able to make reasonable arguments based on the words.

•    P444:  One of the company’s arguments that were was no acceptance was that Mrs. Carlill did not send a letter, etc. to notify acceptance
•    The first the company knew about it was when the claim was made for the £100.
•    What of the idea that Acceptance is not Acceptance until communication is effected?
o    The judges say that the offeror is entitled to waive the terms of acceptance.
o    Here they say that Carbolic implicitly waived the terms of acceptance.
o    Say that she did accept at the point where she had completed the path of Acceptance and notified them of her claim.

Acceptance (when not in person): a general discussion
•    Contract law is based on old rules.
•    The paradigm for centuries was a contract of sale.
•    In the mind’s eye of trad. contract law, a contract takes place when people are interacting in person.
•    This became problematic once people began interacting by post.
•    In person, easy to say, “I accept,” or “I do not accept”, or to “hear” the silence (rejection)
•    However, by post, there are often complications along the way.  The letter of Offer could get lost on the way, or it may have arrived and been rejected by silence, or that the Offeree did write back, but it got lost on the way.
•    The Offeror, dealing at a distance, after having consigned a letter to the post and received no response, may be perplexed.  Likewise, the Offeree may be in a similar situation.
•    The silence on either end is perplexing.
•    The law has developed a rule that some say help, and some say hinder:
o    The Postal Rule, or The Postal Rule of Acceptance.
o    The ordinary rule of Acceptance is that it is not Acceptance until it is communicated (unless this has been waived by the Offeror)
o    Inter praesentes:  Present parties.
o    Communicated means communicated successfully!
o     The Postal Rule of Acceptance, where it applies, has Acceptance occur as soon as the letter of Acceptance is posted.
o    This applies even if the letter of Acceptance is miscarried enroute.
o    A clause in a contract can contravene this successfully.  The Offeror is the master of the Offer.  Ex:  “We don’t have an offer until your Acceptance reaches me.”
o    The Postal Rule of Acceptance puts the burden of interpreting silence, and therefore the risk of silence, on the Offeror.

•    Why doesn’t the hypothetical situation whereby one promises to write off a $100 debt in exhange for $50 fall under the rule that we saw earlier (stilk v. merit)
o    S & M was a legal dispute
o    The answer is that the s & m type scenario was about a compromising legal dispute
o    Whereas, in our hypothetical situation, there is no legal dispute.  One is not claiming that one does not owe the money.  One is simply admitting that one cannot pay it.

Given the similarity between the Foakes v. Beer and Stott v. Merit Investment Corporation, would the way around exhibited in williams v. roffey brothers be gotten around the same was as in Stott v. Merit?
o    Williams v. Roffy brother scenario takes some of the sting out
o    Why is it not equally applicable to the Foakes v. beer scenario?
•    It would be.
•    The English courts have addressed this.  They have said that one cannot use a Williams approach to defang the approach of Foakes.
•    This is because Foakes is a decision of the house of lords, and it would take a decision of that same house to overturn it.
•    Further, the argument goes that if Williams got one out from under Foakes, there would be nothing left to Foakes.
•    Whereas, in Williams, all three judges said they were not overturning Stilk v. Merit.
•    Why won’t a Williams argument apply?  (Consideration can be found in practical benefit…)
o    The answer is because the courts have said that it won’t.
•    Williams v. Roffy Brothers says that a prac. benefit can be consideration
o    applies only if the parties already have a contract
o    though limited in this way, nevertheless, is a precedent of great interest.
o    The natural question is, “what can Canada do?  Will they follow?”
•    If Gilbert Steel were decided today, would it go another way?
•    Under Quicklaw, search “Roffey” and see what the cndn courts do when they cite Williams v. Roffey Brothers.
•    ***Look and see whether it is being followed in Canada.  This may be important for midterm.
•    Will it stand as a great precedent of our time, or will it be forgotten?
•    P. 309, para 1. – “The case not being one of a composition with a common debtor, agreed to, inter se, by several creditors. “
o    If the first creditor who gets judgment against a credit gets 100%, then the fifth creditor (for instance) may get nothing as there is nothing left.
o    Sometimes, creditors will agree amongst themselves that none of them will actually execute a judgment against the debtor.  They will take the entire assets of the debtor and divide them up.
o    Earl of Selborne says that this arrangment is binding, but cites it in a way that it would seem to be an exception to the Foakes v. Beer way, but does not mean it in this way.  In fact means that there is consideration in this arrangment.
•    This agreement between creditors is called a composition.
o    Note on page 310 para 3 – there is a point that the “chequeness” is not consideration unless it is a bargained-for chequeness.
•    Nothing is consideration unless it is treated as consideration – unless it is bargained for.  Read this over to clarify.
o    P 312 – contracts with a 3rd party.

Criteria to select promises worthy of legal enforcement
•    Promises given in return for something which the law is prepared to regard as consideration.
o    This is narrower than what ordinary people might view as consideration.
•    Promises under seal (will look at later).

•    Does our legal tradition enforce promises merely because the promisee has relied on them?
o    This is against theory, but may exist practically.
•    We now come to a series of cases where this appears to be the scenario.
o    What is going on will look like promise enforcement, but the question is whether it is really promise enforcement, or protecting resonable reliance.
•    Is it harm prevention as opposed to promise enforcement?
•    With promise enforcement, all the attention is on the promisor.
•    With harm prevention, all the attention is on the promisee.
o    The case that discovered the possibility that there might be something that strongly resembled considerationless promise enforcement was Central London Property Trust Ltd v High Trees House ltd.
•    Lord Denning, prior to becoming a Lord.  He is a Justice here – trial judge.
•    One of the few trial cases in our text.
•    Friendly parties – just want an answer, which they will be willing to accept.
•    In this case, one of the two parties (plaintiff) have become insolvent, and is in the hands of a receiver.  The receiver has a fiduciary duty to try to take in as much money as legally possible.
•    99-year leases are quite common in England.
•    The landlord sues for 2 things (which may be the same thing, 2 ways)
o    Full rent prospectively
o    Full rent retrospectively.
•    First thing we look for is consideration (to enforce the landlord’s promise to let them pay ½ rent).
o    The promissee did rely on this promise
o    Consideration:  The tenant did pay the ½ rent, but that is not consideration – that falls under pre-existing duty.
o    There is no seal on the changed contract.  No change vis-à-vis the change.  No consideration vis-à-vis the change.
o    Denning J. does something revolutionary while saying that he is not doing anything revolutionary.
•    Claims to be following jurisprudence.
•    He makes up something and attributes it to the widom of the past.
•    Estoppel – this is the leading case of estoppel.
•    What Denning J. is faced with is a situation where the promisor made a promise to the promisee, the promisee relied reasonably on the promise, and now the promisor wants to break the promise.
•    The landlord gave the tenant a representation of the future – we call this a promise
•    This case is about whether to enforce a promise.
•    Because it is a promise.  Does not fall under trad. Jurisprudence of estoppel.
•    Allows us to make some enforcement.
•    (para 1 on page 316) – “With regard to estoppel, the representation made in relation to reducing the rent was not a representation of an existing fact.  It was a representation, in effect, as to the future, namely, that payment of the rest would not be enforced at a full rate but only at a reduced rate.  Such a representation would not give rise to an estoppel, because, as was said… a representation as to the future must be embodied as a contract or be nothing.”
•    (Para 2) “There have been a series of decisions over the last fifty years which, although they are said to be cases of estoppel, are not really such.  They are cases in which a promise was made which was intended to create legal relations and which to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on.  In such cases the courts have said that the promise must be honoured…  As I have said they are not cases of estoppel in the strict sense.  They are really promises – promises inteded to be binding, intended to be acted on, and in fact acted on.”
•    “In each case the court held the promise to be binding on the party making it, even though under the old common law it might be difficult to find any consideration for it.”
•    Continues – is this promise enforcement, or is it something that looks like promise enforcement, but is not?
•    Is there a meaningful difference between ordering a defendant to keep their promise, and ordering a defendant to act consistently with their promise.
•    Para 3 & 5 address the question (which we would never have to address with consideration)
•    How Binding?
•    The tenant had the audacity to argue that the promise was for the entire 99-year lease.
o    Lord Denning says no.  Will enforce the promise to some extent, but not that extent.
o    Says that the promisor can take back their promise to this promise

Reset.
•    It may be that the promisor can take back their promise
•    Estoppel-based promise-enforcement differs.
•    Promisory-estopple, or equitable-estoppel.
o    A different category of estoppel.

Next class:  Down to D & C Builders v. Rees

On TWEN is last year’s midterm.  Address questions 2 & 3 by way of sample.

*The pl always sues in his/her capacity of promisee
*The consideration is that which the promisee must demonstrate to the court that he/she exchanged to the promisor for their promise
Must take this decision path initially to get one’s bearings in the actual case.
Identifying the promise and dispute will tell you who the parties are – will coincide.

Too often students do not know where to begin with a problem.  Must orient oneself as per above.

*A promise of consideration is as good as consideration for this purpose.

In the eyes of the law, for this purpose, the law is prepared to treat the promise of something as equivalent to consideration – which is why it can be that my promise to convey my car to you for $1000, and your mutual promise to pay me $1000 for title to my car, gives rise to a binding agreement.

*Consideration is always a bargained-for detriment to the plaintiff-promissee
•    Always; bargained-for; detriment
•    Bargained-for is not just any detriment that counts as consideration.
o    It must be a detriment that was part of the bargain.
o    Ex:  In Dalhousie, the buildings (though a detriment) were not bargained for.
•    Something for something – an arrangement.
•    Consideration is always a bargained-for detriment.
•    **”Always”:  will come back to this word in this statement.

*Past Consideration is no consideration.

P 264
*Consideration need not be adequate;
or, the law does not inquire into the adequacy of consideration.
•    But, law does look at the sufficiency of consideration.
•    By adequacy – we mean the equivalence of the exchange; the quantum; quantity
•    Ex:  Arguing that selling one’s $10,000 car to another person for $1000 – the court does not allow us to go back and examine the adequacy of the arrangement.
o    If one is prepared to part from one’s property for a given price, then the value is simply seen as subjective; as in the appetite of the contractor.
•    By sufficiency (quick and dirty distinction between the two), we mean the ‘substance’ as opposed to the quantity.
o    Comes up in a surprising number of cases.
o    Means the consideration must partake of the substance of things that the law is prepared to accept as consideration.
•    Obvious example is moral consideration.
•    Cannot enforce moral considerations.
•    Past consideration does not count as sufficient consideration either.
•    Means that for something to be considered consideration, it needs to be of the substance of things that the law is willing to look at as consideration.
•    Mere detriment is not sufficient consideration – only bargained-for detriment.
•    Non-bargained-for reliance on a promise does not count as sufficient reliance.
•    SO, the law does not look at the adequacy of the consideration, but does require that it be sufficient
o    Means that the law doesn’t care how much consideration is involved, as long as it is consideration.

Past Consideration is no consideration
o    Implies a reference to something that is present.
o    The ‘something’ that is present is the promise.

Eastwood v. Kenyon
o    The husband undoubtedly made the promise, but this is not enough.
o    What did Eastwood exchange to Kenyon?
o    The consideration was rendered to Sarah a long time before her husband made the promise (or likely even knew her).
o    Could simply say that consideration is always a bargained-for detriment, and there was none of that here.
o    Can also say here, more particularly, that past consideration is not consideration.

o    Eastwood v. Kenyon is the case where consideration ceases to be simply ‘a word’.  It is a watershed in giving ‘consideration’ its modern meaning.
o    Goes to having a technical meaning in the law.
o    Para 9, page 267 – Lampleigh v. Brathwait (1615) – “the leading case on the subject…”
o    Distinguishable from Eastwood and Kenya
o    In E. v. K., have 1) Eastwood’s spending, then 2) Kenya’s promise
•    (1) had already been done before (2) came along.
o    In L. v. B., there are 3 acts:
•    Facts:  braithwaite killed someone, and was sentenced to hang.  At the time, those who were sentenced to hang were in fact not hanged.  They were usually pardoned (either conditionally or unconditionally).  Braithwaite told Lampleigh to go to the King and lobby for a pardon.  This is Act (1).
•    Next sig thing that happens (2), is that Lampleigh does attempt to find the court, to lobby it.  It takes him awhile, but he does it – successfully.
•    (3) – Braithwaite promised Lampleigh compensation
•    In this case, the court said that braithwaite’s promise was enforceable.
•    Said that Lampleigh’s actions were consideration.
o    In Eastwood, the judge says that Lampleigh v. Brathwait was distinguishable from a past-consideration scenario.
o    Says that in L. v. B., the consideration was implicit in the original request.
o    (3) is implicit in (1).
o    P 267 – Hobart C.J. says that a mere voluntary courtesy will not have a consideration to uphold a promise.
o    If someone offers someone something as a courtesy for something already done, then the consideration is already in the past, and not-binding.
•    Ex: ‘b’ mows ‘a’s’ lawn.  ‘A’ offers ‘b’ $20 as compensation.
o    If the courtesy were moved at the request of the party who made the promise, then it is binding.  Then, it is not naked (nudem pactum) – but couples itself with the suit before…
o    This means that if, for example, ‘a’ asks ‘b’ to mow their lawn, ‘b’ mows the lawn, and then ‘a’ promises to pay $20 – the promise for $20 can be interpreted as implicit in the original request.
•    The coupling is through an implication.
•    It is implicit that one is not asking for a gratuitity.  This is, of course, much clearer in the realm of business as opposed to friends or neighbours.
o    [Aside:  Remember that juries determine questions of fact, judges determine questions of law.]

p 282.  Guiding Transaction Adjustments
o    a pre-existing legal relationship, that the parties wish to adjust.
o    How is this accomplished in a way that ‘sticks’?
o    Ex: ‘a’ promises ‘b’ to sell his car for $1000.  ‘B’ says yes.
o    ‘A’ regrets selling for too little, so ‘B’ agrees to up the price to $1200.
o    Often times, this would result in an amendment  – cross out $1000, write in $1200, and both parties initial.
o    Had a living contract, and decided to adjust it.
o    The question is whether this perfectly intuitive action is actually legal…
•    Does this actually result in a legal obligation to pay the $1200.
•    No.
•    This is very likely not legal.

Stilk v. Myrick [1809]
•    Napoleonic wars
•    Embargoes on Britain forced them to go far-afield for materials such as timbre.
o    In this case, there is a contract of hire for a vessell.
o    £5/month for the sailors.
o    2 sailors desert at Cronstadt (now Finland, then Russia).
o    The captain promised the other men that, were the places not filled, they would have the deserters’ wages split amongst them.
o    The places proved impossible to fill, and the remaining 9 crew worked the ship back to London from what is now Finland.
o    The captain, upon their return to London, would only pay the £5.
•    Garrow, for the masters of the ship, was one of the first famous lawyers – known for his appeals to juries
o    Garrow argues that if this sort of action were permitted, crews could extort captains to pay them more, or they would allow ships to sink during emergencies, etc.
o    Judges say that the deal is in fact unenforceable because the sailors gave the captain no consideration.
•    At this time, the answer to the question “Why can’t one sell oneself into slavery?” changed.
•    The trad answer was that it was against public policy.
•    Around this time, the answer changed to ‘beause there was no consideration’ – the property of the slave becomes the property of the master.
•    The law was becoming more theoretical.
o    The sailors who remained with the ship were already legally bound to do so.
o    Those who remained were bound by the terms of their original contract to do their utmost to bring the ship safely to its destination.
o    Therefore, the sailors were only promising to do their pre-existent legal duty – this does not make up new consideration for a new bargain.
o    A promise to do that which is already one’s legal duty is not sufficient to form consideration.

Gilbert Steel Ltd. v. University Construction Ltd.
o    The promise being sued on is the promise to pay an increased rate for the steel beams.
o    What consideration did Gilbert Steel give to University Construction Ltd. in exchange for this promise?
o    G.S. alleged that they agreed to give a good price on the second building in exchange for this agreement to pay an increased rate now.
•    2 problems:  i) too vague;  ii) doubt that it was agreed up (even if it was mentioned)
•    Does not work as consideration
o    The delivery of the steel is the obvious consideration.
•    Why is it not?
•    They were already obliged to provide this steel, as part of the original agreement.
•    There is not detriment here.
•    This is why they switched to the “good price” arguument.
o    Pl.’s lawyer argued that the consideration of the oral contract was the mutual abandonment of the prior agreement.
•    Variation scenario – does not work unless one has a mini-contract to change an already existing contract, which in itself requires consideration.
•    If they had decided to call the whole thing off, leaving them (at least for a millisecond) contractless, and entered into a new contract, then that would be binding.
•    Why is it binding to agree to call a contract off?
•    Each side is sustaining the bargained-for detriment of releasing the other side from their obligation.
•    Releasing another from an obligation is a detriment.  Here it is also a bargained-for detriment.
•    It is binding.
•    “Recision + new contract” analysis – this would work.
•    “variation” will never work, unless it is that mini-contract to vary.
o    Recision + new contract is the argument that Mr. Morphy makes here.
•    Wilson J.A. says that this is perfectly legitimate, but that there is no evidence to support the idea that this is what the parties believed they were doing.
•    How does one know whether a particular action is variation or recision?
•    very difficult.
o    This is why the correcting-and-initialing is likely not legal.
o    The editors of our text portray this case as one of the worst decisions ever made.
o    The article on page 297 is by one of the editors – Barry J. Reiter.

Williams v. Roffey Bros and Nicholls (Contractors) Ltd.
o    Very similar case
o    Another contract case.
o    Another case where the project was half-finished.  Promised more to finish the project – how could this be binding?
o    Very rare in English C.A. for all three judges to write (as in Canada).
o    In this case, all three write.
o    Ever rarer for all three to write when they agree – they do in this case.
o    This is something different about this case…
o    Agree that this is enforceable, but are obviously so uncomfortable with enforcing it that they take a stab at explaining it.
o    Each of the three say that they are not overturning Stilk v. Myrick.
o    Say that it still stands for something.
o    Facts:  Roffey Bros have a contract with the municipality whereby they need to have the repairs completed by a certain date.
o    The pl. was a carpenter.  Def. was supposed to make progress payments to the plaintiff.
o    By april 9 1986, Pl. had completed the work on the roof, and first repairs to all 17 flats, and the second repairs on 9 flats.
•    Defendants had made interim payments of £16,200
o    By end of March, pl had run out of money
•    Roffey Bros. approach them and offer more money
•    Williams still went insolvent – had the audacity to sue Roffey Bros.
•    The fault was of Williams for putting in an unrealistic bid.
•    Had Roffey bros. over a barrel, due to the time restrictions on the other contract.
•    Under orthodox analysis, the plaintiffs already had a duty to finish the flats.
•    By promising again to do so for more money, they have insufficient consideration.
o    Where is the consideration that the judges find?
o    What the court has always required is that the pl. promisee exhange a legal detriment to the promiser.
o    In Hamer v. Sidway, in the real world, the kid was benefitting from not smoking, drinking, gambling but in the eyes of the law, giving up ones rights to do something is a detriment.
o    This case acknowledges the diff between a practical benefit and a legal benefit.
o     A practical benefit is not one that the law would normally recognize
o    at the end of this case, the practical benefit turns out to be the legal benefit.

Para 15 – page 303
o    Judge says that Roffy Bros was in fact deriving practical benefits from Williams completing the project at the new price.
o    Keeping Williams on the job should have been to the Roffy Bros benefit, as they did not have to try to find new contractors if that were even possible.
o    Says that the underpining of the rule in Stilk v. Myrick was to save masters from economic duress.
o    P 305 – para 22
o    Propositions
o    The obvious objection to these propositions is that consideration is a bargained-for  detriment
•    What new detriment did Williams sustain?  None.  They are already bound.
•    This judge ignores this.  Says that it is enough that it is a practical benefit to the promisor.
•    Bell thinks the judge is responsible for an enormously significant improvement in the law that is not based on sound theory.
o    Judge #2 – Russell L.J.
o    Says that it does not overturn stilk and myrick.
•    Sure…
o    S v M is not about a promised gift, despite what he says.
o    What he says it stands for bears no relation to what was in the case.  This is a trick.  It is a manipulation of the common law.
o    Judge #3 – Purchas L.J.”
o    Also says not overturning Stilk v. Myrick
•    Takes a different approach – changes the def’n of consideration away from detriment
•    Calls this the modern approach (para 33)
•    Note “Economic Duress”

While this case may be a good decision, it cannot possible be commensurate with contract theory.

For Friday:  finish cases on this page of syllabus

Hamer v. Sidway
•    Is a case where one might at first thing that there was not consideration, but yes indeed there was.
•    The “assignee” in this case – a right is a species of property.  The nephew has sold his $5000 claim to some money-lender (likely for a much lesser value).
•    Family promises – not addressed, though this was between family, and at a family gathering where they had no doubt been drinking…
•    The facts of the case is not contested.
•    What is contested is the existence of consideration on the nephew’s part.
•    Uncle’s estate argues that he didn’t receive any benefit, but in actuality the nephew benefitted.
•    The law does not recognize “moral consideration” – could not argue that the uncle received the pleasure of seeing his nephew do well.
•    It is enough that the nephew gave up his legal rights based on the promise of his uncle.  This is enough of a basis to constitute consideration.
o    Consideration does not have to be a benefit traded to the promiser – it can be simply a detriment, loss, or responsibility given, suffered, or undertaken by the other (p 258).
o    Can shorten the benefit concurred / detriment sustained formulation to simply detriment sustained.
•    There is not case where the defendant promisee did not sustain a detriment.  All benefit conferred cases are also detriment sustained.
•    In typical contracts case, what one gives up with typically benefit the other.  However, this is not a universal rule.
•    Can take a formula in currie v. Misa and collapse it into “detriment sustained”
o    This is broader.
•    P 261 is a little more concise.  It is, however, useful to take it to the next level.

Eastwood v. Kenyon
•    A case of the guardian versus the husband.
•    Sarah Eastwood left orphaned.  Guardian borrowed money to spend on her upkeep during her infancy.
•    At 21, Sarah got married.  First promised to compensate her guardian.
•    New husband then made the same promise.  Does not complete this promise
•    Must identify the promise being sued on.
o    The relevant consideration is the one that the the guardian bargained to the husband.
o    Only thing that the guardian could say is that he took care of Sarah during her infancy.
o    Could not have actually been made in consideration of the husband’s promise, as it pre-dated the promise by many years.
o    The thing which is consideration was sustained long before the promise being sued on.  Was already in the past.  Could not have been an exchange or bargain as the law demands.  The guardian is remedyless.

For tomorrow:  will return to Eastwood v. Kenyon – will do entire next section of outline. – 3 cases..

•    We do not work under this system
o    Exception:  Promises made under seal are enforceable.  This is a hold-over of (at least) the middle ages.
•    In order to give, must have intention (animus) and transfer.
•    (as well as offer, acceptance, and consideration).
o    Some things are not susceptible to manual tradition.
•    Shares (Choses in action) – how does one give a share?

•    Primarily, we no longer use “seals”

•    Scenario:
o    Person A promises person B a plane ticket to Florida.  Person B goes out and makes purchases for the trip, racking up expenses of $150.  Person A’s circumstances change, and the offer for the ticked is revoked.
•    What if Person B sues Person A for the $150, to put them back into the circumstances where they were (it is obvious that they would lose a suit for the cost of the ticket itself).
•    The court, for the most part, does not recognize even reasonable reliance on promises.
o    Our legal system does not enforce any promises that are not contained within a contract.
•    [American language]  The law enforces bargains – something for something – a trade-off.

•    In order to approach these cases, must recontextualize
o    If the problem in front of you has nothing to do with offer/acceptance (more to do with whether there was consideration [I offer you my car for $1000; I accept]), then this type of analysis will get you nowhere.
o    Will need to identify a consideration problem, which will lead to an abandonment of offerer/offeree.
•    “I promise to convey title to my car to you if you pay me $1000.”  “I promise to pay you $1000 if you convey to me the title to your car.”
•    Same sale transaction constructed as an exchange of promises.
•    In a contract, both parties are promisers, and both are promisees.
•    When we try to analyse whether there was consideration, we need to use the language of promisers/promisees.
•    Consideration is what you paid to the other side in exchange for the other side’s promise.
•    Can view the formation of a contract as an exchange of promises.
•    By the time the parties get to court, one party is suing the other (at least).
•    Plaintiff and defendant
•    Plaintiff is always suing in his/her capacity as promisee, and the defendant is defending in his/her capacity as promiser
o    By the time we get to litigation, only one of the original two-fold promiser/promisee relationships is relevant.
o    The one that is relevant is the relation whereby one allegedly promised something to the other, and broke that alleged promise.
o    In a contracts case, every defendant is an alleged promise-breaker; every plaintiff is a disappointed (alleged) promisee.
•    Mu    st understand which of the two promises is broken.
•    All contract litigation (besides the odd exception, of course…), it will always be promisee vs. promiser.
•    “Why is the plaintiff in a contracts case always suing as promisee?”
•    “Why is the defendant in a contracts case always defending in their capacity as promiser?”

Dalhousie College v. Boutilier
•    Boutilier does promise Dalhousie $5000.
•    Dalhousie, however, does not promise Boutilier anything.
o    Yes, they built building, etc., but they did not promise Boutilier that this would be in exhange for this $5000.
o    They promised him nothing – it was not a bargain; not something for something; not an exchange.
o    Even if these buildings, purchasers, etc., had been made on the strength of his promise, that does not retroactively convert his promise into a contract promise.
•    Subscription form:  Does Boutilier not say, “In consideration of the subscription of others…”?
o    Why is this not consideration?
•    His motivation is irrelevant.  Motive is not consideration.
•    They did not promise to rely on his $5000
o    Mere reliance
o    Only kind that matters is “bargained-for reliance” – if they had bargained their ability build buildings for his $5000, it might have been consideration.
•    The difference is how the parties treated the building of the building.
•    Dal did not do it in exachange for his $5000.
•    He promised, and they reacted by building the building – this is not  consideration.
**Nothing is consideration, unless the parties have handled it as consideration.**

“To hold otherwise would be to hold that a naked, voluntary promise may be converted into a binding legal contract by the subsequent action of the promisee alone without the consent, express or implied, of the promisor.” P 357 para 6.

Walford v. Miles
•    Addresses a question – whether an agreement to negotiate is enforceable
•    Is there such a thing as an enforceable agreement to negotiate?
•    An oral agreement is no less an agreement than a written one.
•    This case raises the collateral and no-less interesting question – what if an agreement is an agreement to negotiate in good faith (IGF)?
o    Is this distinguishable from an agreement to agree?
•    Express agreement to negotiate, but the pl says that there was an implicit agreement to negotiate IGF.
o    Good faith comes up in two contexts:
•    1) Performance of an already-existing contract – law will normally say that the business efficacy test, or the bystander test will lead to the conclusion that the parties did impliedly promise one another to fulfill duties of a contract IGF.
•    2)  Negotiation in good faith towards having a contract in the first place – the law balks at this.  Says that there is no source of this legal duty
•    In law, duties arise from something – legislation, agreements
•    Cannot locate the origin of a duty to negotiate in good faith.
•    However, what if someone agrees to negotiate IGF?
•    The law does not hold us to any promise to anyone unless that promise is contained within a contract (contract - something the law is prepared to recognize).
•    What is the origin of a duty to negotiate in good faith?
o    The House of Lords declines to impose such a duty
•    P 508 – an agreement to negotiate is no more enforceable than an agreement to agree – too uncertain.
•    Doesn’t help to add an implied promise to negotiate IGF.
•    Cannot translate a promise into an award of money, because do not know what they would have agreed, had they agreed.
•    Contract law presumes that ppl are not altruistic.
•    Presumes that ppl act as egoists – that we are selfish.  Dog-eat-dog, survival-of-the-fittest realm.
•    Presumes that the realm of contracts and the economy is one of warfare.  All’s fair (except lying).
•    P 507 (bottom) – American Jurisprudence tries hard to find an enforceable duty to negotiate in good faith.  Does not sway Lord Ackner.
o    Best endeavors – the law does recognize an obligation (when promised) to use best endeavors.
•    “I want to buy your land to build my shopping mall, but if I can’t get your land re-zoned, then I do not want to buy your land.”  The purchaser will typically enter into an agreement.  The vendor will promise the potential buying that it will use its best endeavors to carry out an application to re-zone the land.  Then, if the vendor of the land does not use best endeavors to procure rezoning
•    Courts, though will not judge whether someone has acted IGF, does involve itself in whether someone has used best endeavors – this is likely because this involves actual actions instead of intentions.
•    This sometimes looks like IGF, but is in fact distinguishable.
•    The parties have a contract, which calls on one of them to do something using best endeavors.
•    P 507 para 2 – “Apart from the absence of any term as to the duration of the collateral agreement, it contained no provision for the respondents to determine the negotiations, albeit that such a provision was essential.”
o    Often law preserves the original meaning of an English word, which in general parlance has changed its meaning.  This can be confusing.
o    “Several” – means in general parlance that there are 3 or more
•    In law, it retains its original meaning of individual – “Several states of the United States” means the individual states.
o    In this paragraph, “Determine” is used in this way.  Here, it means to terminate.

Empress Towers Ltd. v. Bank of Nova Scotia
•    Commercial lease, with renewal clause
o    Renewal clause is common for commercial leases, for stability of presence
o    Leases do, however, want to re-negotiate periodically, to adjust rent for inflation, rising property values, etc.
o    How to balance stability with this idea.
o    In this lease, allowed to do this every five years.
•    Whoever framed this final renewal left out a saving grace of the first renewal – the mechanism to determine the negotiation – an arbitrator.
•    If the words “as mutually agreed between the Landlord and the Tenant” were not in the agreement, the preceding words could be used as a mechanism to determine fair rent.  Could have called experts – likely realtors – to determine what the fair rent was in that neighborhood.
•    But, someone thought it would “sound nicer” to mention an agreement between the parties.  This was fatal.  Takes away all objectivity.  Parties do not typically agree straight-off.
•    Looks like an agreement to agree…
o    Is this in fact what the judges are saying?
o    Look at the first sentence of the case.
o    Distinguishable from Walford v. Miles.
o    An ordinary remedy at the end of a civil case is a legal remedy – money; damages
•    Here, Empress Towers seeking a writ of possession (a writ issued to recover the possession of land - Black’s)
•    Equitable remedy
•    It is discretionary – no one has a right to an equitable remedy – one has a claim.  Equity is not in the realm of rights.
•    Courts will deny an equitable remedy if one has misconducted oneself.
•    Must go to court with clean hands
•    Here, the landlord ultimately cannot have the writ of possession because it has not bargained towards the renewal terms IGF, so not with clean hands.
•    Exercises their discretion in denying the writ of possession.
•    Saying that the landlord failed to negotiate in good faith is not the same as saying that they had a duty to do so.

Canada Square Corp. Ltd.v. Versafood Services Ltd.
•    Here the problem is mostly that of things left out of a contract.
•    Interesting from the p.o.v. of a potential draftsperson.
o    A lawyer’s primary role is not to solve problems, but to prevent them.
•    Certain parts of the desired contract here were too uncertain to determine at that point.
o    The answer is to put in a formula to render the uncertain aspects certain.
o    If a formula is incongruous with the factors left to be determined, then an arbitration clause effectively does the the same thing.
•    Significant things left out of this agreement.
o    Did not specify what area was meant to be leased
o    When the lease was to commence
o    When rent due
•    Versafoods tried to use these as an excuse to get out of the contract.  Said the contract was too uncertain.
o    The real issue is not a legal issue.
•    When judge turns to a US authority (in contracts) one knows that the judge is looking for a slightly unorthodox precedent which will allow the judge to do something that our more conservative Canadian jurisprudence does not allow.
o    Says that the U.S. case law distinguishes between the primary issues of a contract, and subsidiary issues.
o    Says that while the parties have to have agreed up on the fundamental terms (which courts cannot fill in) a lesser issue on which there is silence can (with some hesitation) be filled in by courts.
•    Courts can infer that the parties intended a reasonable term if it is a subsidiary term.
•    Normally, at this point, the court stops and tells the parties they have to agree on something, which the court then endorses.
o    In paragraph 4, the California court refers to these ‘blanks’ as “minor”

*The winners in these cases are never fully compensated – the costs that are paid to the lawyers are never fully reimbursed.  This is likely an discouragement of litigation.

L.C.D.H. Audio Visual Ltd. v. I.S.T.S. Verbatim Ltd.

o    The would-be subcontractor sued and lost.
o    Again refers to the business world as Darwinian and dog-eat-dog

For next day, read down to end of first section of new syllabus.
Consideration section.

•    When we say a contract is uncertain, we mean that there is not enough specificity for a judge to nail down anything to enforce.
•    True that judges do have rules that can be applied to find certainty.
•    Judges make difficult decisions.  Though judges will try hard to find a determination to a contract.
•    There is a point at which the shell of an agreement is so lacking in detail that it is impossible to enforce.

The Agreement to Agree
•    Nothing more than an agreement today that tomorrow we shall agree on something.
•    Judge cannot say what the parties would have agreed had they agreed.
•    It only has the appearance of a contract.
•    Agreements to Agree Simpliciter are bad – naked agreement.  Unenforceable.
•    Not bad if the parties have agreed on a formula whereby the judge can render certain that which is otherwise uncertain, or a mechanism (such as a third party, typically an arbitrator).
•    Arbitration is consensual dispute resolution.
o    Parties have agreed to channel dispute out of court system and into arbitration.
o    2 broad types of Arbitration:  Labour arbitration – usually statutorily provided and imposed by labour regimes.  Doesn’t have one of the characteristics of arbitration – privacy?
•    Non-labour goes under generic term – Commercial arbitration
o    Must remember that an arbitrator is as much bound by the prevailing law as a judge is.
•    How is an arbitrator’s decision enforced?
o    Exactly the same way as a judge’s.
o    “Judgment” is a document which calculates payment, interest, etc.
o    Plaintiff’s lawyer takes it to the Sheriff.  Can seize the property of the defendant to raise the funds for judgments.
o    Arbitration board enforced in same way.  Gives an “award” which looks like a judgement of the court – can again be registered with the Sheriff.
•    Usually refer to the mechanism as an arbitrator.
o    Technically, the arbitrator resolves a legal issue
o    If it is not a legal issue, technically not arbitration
o    Referees and umpires, for example, are different names for someone doing the same thing in a non-legal setting.
•    Agreement to Agree + Mechanism, renders certain what would otherwise be unenforceable.

Foley v. Classique Coaches
o    P 495.  Just because the parties think they have a contract doesn’t mean that they do.  The court decides whether it was and what they intended.
o    “And they worked under it for 3 years…”  Neither here nor there as to whether they had a contract.
o    This case shows that judges will work hard to find an agreement – do not like to disappoint the reasonable expectations of parites.  Do not like to see someone have it “both ways” – have their cake and eat it too.  In this case, would not want the company to get the land and not have to buy their petrol from Foley.

P 497
o    Helpful statement:
o    Notes 7 – diff between relational contract and discreet contract
o    Discrete:  One time deal.  A buy and sell contract, for instance.
o    Relational contract – can last for years, or is a contract in a series of contracts that combine to last for year (ex: a retailer who does all their buying from one wholesaler).
o    Where there is a relational contract courts can more readily find certainty than in a discrete contract
o    discrete |disˈkrēt| |dəˌskrit| |dɪˌskriːt| adjective:  individually separate and distinct

Uncertainty
o    Agreement to agree = bad
o    A2A + Mechanism = good

Silence
o    Better than an Agreement to Agree
o    Courts sometimes will cure gaps like this.
o    1)  If it falls under Sale of Goods Act, for instance.
o    Price, and time of delivery
o    If one has a contract for the sale of goods (e.g.:  contractual rights – the right to buy a car do not apply), and terms are left out (price/date of delivery), the sale of goods act in each province says that the judge can fill in that gap.
o    2)  If the silence is a relatively minor one, judges can fill in the gap, on the theory that they are doing what the parties intended when they formed the contract.
o    3)  If the parties have had a past practice, the court may fill in what might otherwise be a fatal gap, on the basis of past practice.
o    4)  Trade Practice:  If both parties are members of a well-recognized trade, then their (gapped) contract may be filled in based on trade practice.
o    Even though these two parties might never have dealt with one another before, they are assumed to have intended to follow normal trade practice.
o    Mainly remember the first three, in regards to when Silence is not fatal.

“In Good Faith” (IGF)
o    An agreement to negotiate i.g.f.
o    Is this enforceable, or too uncertain?
o    Addressed in Courtney and Fairbairn Ltd V. Tolaini Brothers (Hotels) Ltd.

Courtney and Fairbairn Ltd v. Tolaini Brothers (Hotels) Ltd.
o    Court ruled that despite the “formula”, the word “negotiate” was fatal, rendering the agreement an agreement to agree.
o    If it must be negotiated, then it is not objectively ascertainable.
o    Lord Denning’s judgement (most famous judge of 20th-century) says that it is an agreement to negotiate, which is likened to an agreement to agree.  Not good for practical reasons – how to know what would have been the outcome of the negotiations.
o    Applies general principle that when there is a fundamental matter left undecided and to be the subject of negotiation, there is no contract.
o    Lord Diplock (assenting): points out the area of “dictum” – not part of ratio decidendi.  Says that we can ignore the part of Lord Wright’s part of Hillas v. Argos as it is obiter (dicta).

Walford v. Miles
o    Now dealing with House of Lords – 5 judges present
o    Sueing for the difference between what they would have paid, and what it was actually worth:  £3-million - £2-million.
o    May be something that looks like a contract, but says within it (subject to contract) that it is not a contract. Ie: ‘We do not intend this to be a legal contract / change our legal relationship.’
o    Look at a telephone exchange March 17 – that they allege itself was a contract to continue negotiating until the sale was complete – IGF.
o    It is this contract (the lock-out agreement) that they allege was violated.  Cannot sue on the principle contract, because it is “subject to contract”.
o    Ap’s allege that it was a term of the lock-out necessary to give business efficacy, that as long as the would-be vendors continued to try to sell the business, they would continue to negotiate IGF with the would-be purchasers.
o    Sue on the basis of a contract which they allege was incidental to the contract of purchase/sale.  Was a telephone conversation, so not very exact.
o    Say there was an implied term that they would continue to negotiate IGF
o    IMPLIED terms.
•    Aside:  Contracts have some implied terms.  Usually irrelevant to a dispute, but occasionally instrumental.
•    Some parts of agreements are usually left to implication.
•    There comes a point where the things not made explicit are so obvious that the parties do not bother to spell them out.
•    Ex:  Would “St. John’s” in a contract mean “St. John’s, NL”, or “St. John’s, Caracas”?  It is likely very obvious based on the context.
•    Even in a very elaborate contract, some terms are implicit.  In the case of a non-elaborate  contract, there will be many implicit terms.  Have to establish the implied terms – parties must agree to it.
•    When trying to establish the implied terms (remember the taxi example) must convince that they were clear implications – ex:  The taxi taking the shortest route, and not going to the airport via Woodstock.
•    2 tests:  1)  Business efficacy test:  [Also noted in Dawson – p 448.] In order to give business efficacy to an agreement (make practical sense of), it is necessary to infer some term in the contract, then the court can say that it was intended.  If without the term it does not make business sense, then it can be said that the parties intended it.  The court verbalizes that which they say the parties intended.    2)  Officious  Bystander [noted in Empress towers p. 502]  If a bystander spoke to the parties just after a contract was agreed upon, and asked what an implied term meant, then they would be likely to receive a certain answer (ex: “of course we meant St. John’s, NL).
•    To qualify under these tests, a term cannot be something that one of the parties would obviously have rejected (e.g.: would make business sense, but would have been rejected by one party), then cannot be imposed.
o    The lawyer here argues the business efficacy test – that IGF was implied by both parties.
o    Argue that so long as the would-be vendors (respondents) continued to desire to sell the business and the premises, the respondents would continue to negotiate in good faith with the appellants (would-be purchasers)
•    Aside: “Good faith” – arises in contract law in two contexts:  “good faith” in performance of an already-existing contract, and “good faith” in forming a new contract.
•    In performance – the law does infer that the parties have promised one another to perform their duties in good faith.  Rarely will parties say that they will do something IGF, but it is here a standard implied term (after a contract is formed).
•    In negotiation – in general, courts have said that there is not duty to negotiate in good faith.  One reason is that in contract-law, the law does not enforce promises (only promises inside contracts).  There is only one source – the will of the parties.  How then can one say that there is a legally enforceable duty to negotiate IGF?  So whence would this duty spring?  This is an insurmountable hurdle.

For next day:  Empress, walford and miles, and may finish this first page of syllabus
Come with briefs, as usual.

Letter of comfort
•    A letter from a bank or a parent company, designed to ‘comfort’ another party (like a landlord or financial institution).  They are not promises.
•    If something went wrong, the issuer of the letter would argue that they did not have legal effect.

Government program
•    Might see this argument in a non-family arrangement also in a government program setting.
•    For instance, there might be a student employment program that specified in the ad certain criteria for eligibility.
o    If too many students applied, might be sued, construing the ad as an Offer.
•    The court would have to decide whether a reasonable reader would have understood it to be an offer.  Did the government intend this ad to affect its legal relationship with the reader?

Indefiniteness
•    One of the characteristics of an Offer is that it must be sufficiently detailed that, if accepted, the court must be able to enforce it.
•    This means that the contract must have sufficient detail to be enforced by the courts.
•    By getting into a taxi and giving a destination, to which the only response is to put the car in drive, one forms an enforceable contract.  This is all implicit.
•    Uncertainty does not mean that there weren’t enough words exchanged, but that words + context ≠ enforceable.
•    “I offer to sell you my car.”  “I accept.”  No good.  Price missing.  Impossible to enforce.

•    How does a court enforce a transaction?
o    What if one received, for instance, money for a car, but didn’t provide the car?
o    How does the court, in a subsequent suit, enforce this.
o    Judges for the plaintiff, but then what?
o    The court gives to the victorious plaintiff not the thing being fought over, but the value of it.  Translates the issue into an award of money.
o    This works great for things that have a market value, like a new car, but not for things that don’t – like broken legs.

•    Indefiniteness – Courts cannot enforce a contract against a defendant unless there is enough detail present to translate a broken ‘agreement’ into a monetary value.
•    Court does not demand that it have every single detail – can import reasonable terms.  Take the view that they can’t patch up glaring holes in the contract.
•    Notes on indefiniteness (488…).
o    Sometimes, parties deliberately write contracts that are indefinite on some point.  Consider that the point isn’t a critical one.  Parties usually contemplate only the happy performance of a contract.
o    Lawyers are often the ones who have to remind their clients to include clauses “in case something goes wrong.”
o    These points are hard to agree on.
o    Difficulty lies in the fact that these points could be the sticking point in forming a contract.  This is why these are often left out…
o    Takes a risk in assuming that nothing will go wrong – most ppl do, however, keep their promises.  This is what these parties count on.  Dodgy.

•    Another situation where parties often leave something out of a contract:
o    Suppose two parties want to enter into an agreement.
o    Suppose one wants to build a hydro-electric damn
o    This party might not want to spend the money to build without a guaranteed market – may form an agreement with a market that will run many years in the future.
o    The contract is about the purchase and sale of electricity.
•    How do we know what the price of electricity will be in the future??
o    How does one construct a contract that in binding today, but leaves blank a critical term?  (The price term)
o    Such contracts are fairly common.  Long-term procurement contracts with suppliers.
•    Could include a clause to re-negotiate at set terms in the future
•    Could include a way to change the prices to fair market value at set intervals.
o    Option 1 would likely lead to a non-enforceable contract.  Option 2 would likely be enforceable.
o    Enforceability of a promise is sticky.  Can negotiate in good faith, but not agree.
o    How does one know what agreement parties would have reached?  One cannot.  Therefore, cannot translate a decision into dollars.
o    Courts have taken the obvious route, and have been inhospitable to the idea of working in good faith.
o    Whereas if there is some sort of formula, such as to be applied to annually recalculate the fair price of, for instance, electricity.
o    Labour contracts often work this way: “Consumer price index, plus 1%.”

Foley v. Classique Coaches, Ltd.
•    Basically a land purchase agreement, with a tacked-on supplementary agreement.
•    Says that the bus company must buy all petrol from the gas station of Foley, in return for selling them the gas.
•    Stops buying gas from Foley – Foley sues.  Must prove that there was a contract and that it was broken.
•    Price was left out of the contract.  1.  The vendor shall sell to the company… petrol… at a price to be agreed by the parties in writing and from time to time.
•    Those words are often fatal – an agreement to agree.  Unenforceable.
•    How does the court know what the parties would have agreed had they agreed?  Cannot calculate the loss.
•    Agreements to agree simpliciter are unenforceable.  This is an important distinction.
•    A formula to calculate what they have not agreed upon, for instance, is enforceable.
•    Agreement to agree + Mechanism is enforceable.
•    Here, it is clause 8 – the arbitration clause.
•    The arbitrator is the person that the parties have chosen, so is not imposing anything on the parties.  They are agreed by the parties to be suitable to do this.
•    Sale of Goods Act has a provision for where the court may step in, but this is an exception.  Courts do not want to do this.  This exception is statute-authorized.  Note 4&5 on page 505.
•    In order for this to apply, the contract must be a silent contract.
•    Without the arbitration clause in clause 8, one could say that it involves the sale of petrol, which places it under the jurisdiction of Sale of Goods Act.  In this situation, it does not save it, because it applies only when the parties are silent about price – in this clause, on the contrary, there is an agreement to agree.
•    Repeat:  Sale of Goods Act applies only only only where the parties have been silent on the point of price (and typically only to one-off transactions).
•    Note 1:  “The pressure to enforce will be a function of the extent to which one party has relied on the agreement, the degree to which the parties are committed…”
o    If the contract was defective at the moment of creation, then it is defective, and nothing thereafter will redeem it.
o    So this note is somewhat inaccurate.
o    However, the reality is that if parties have worked successfully under a contract for some time (as in Foley), then it is relevant to the question of whether this was a workable, enforceable contract.  Makes the argument less plausible, but not impossible.
o    Judges tend to view the fact that ppl have worked successfully under a contract somewhat pragmatically.  Theoretically, if a contract was flawed at conception, then it is flawed inherently and irredeemably.

P 496 – importance of arbitrators
•    Arbitrators are often included in standard-form contracts.  Many insurance companies now include them in their contracts as standard.
o    This is often to keep out of the public eye events that would be seen as unfavorable, and to avoid the expense of lengthy court battles.
•    Parties can then later agree to skip arbitration.  Sometimes there are clauses to set up an “arbitration court of appeal” in case one party is unhappy with an arbitration.
•    Sometimes people involved in arbitration might feel somewhat under-valued law.
o    However, arbitrators are just as bound by the law as judges are.  They use the same law.
o    They write a legal decision.  They must give the decision based on the law.
o    Should not be second-class justice.

Next day:  Walford v. Miles; Empress Towers v. Bank of NS;