Contract Law

Our first line of defence in this course (on reserve):
•    Waddems: Contract Law in Canada
•    Cheshire and Fifoot – designed for students and practitioners.  Authoritative.
•    Attyah – Introduction to the Law of Contract.  This one is designed for students, but is at times advanced (bold, unorthodox).
o    1x/week, should be reading material on reserve.  Pick one of the cases we are doing in class, then look it up (index) in one of these books.

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?]

Acceptance

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.

•    Contracts are a creation – they are legally enforceable obligations that did not previously exist (prior to the contract) [self-imposed obligations]
•    Through the free exercise of our wills we impose these obligations on ourselves.
o    Hence the derivative idea that if our will isn’t free (ex: intoxication or subversion) we are not bound – this is because it was not, in such situations, an exercise of free wills.
•    The basis of contracts is the freely functioning human will.
•    Issue of Intention:  A contract is the product of two intentions meeting.
o    How do we ascertain what the other party intends?
o    How does the court know?
o    The approach that courts take is to say (implicitly, by rulings) that they take the object approach.  The court does not ask what was intended.
o    Ex:  In Carbolic Smoke Ball, did not call the president of the company to the stand to ask what the intent was.  Rather, when one has to decide what the parties intended, the judge decides based on what the party would seem to have intended, to a reasonable observer.
o    We apply the test of reasonableness p481 – par7
o    We must understand the words in the way that an ordinary, resonable person would. P 442 – bottom of para2.
•    Note that we attribute that intention to the parties.
o    Still a product of the will of the parties.
o    We (the court) just get to say what that will is.
o    A person can end up “intending” what was furthest from their mind at the time of the agreement.
o    Do remember that even though the judge decides what was intended, it is imputed to the parties.
•    Headings (abbreviations):
o    Q.B. – Queen’s Bench
o    C.A. – Court of Appeal
o    L.J. – Lord Justice
o    M.R. – master of the roles (the keeper of the records – as result of adjudicature acts, made CJ of the civil cases.  The LCJ fulfilled the same role for the criminal cases.  Lindly M.R. spoken as, “Lord Lindly, Master of the Roles)

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.

Consideration
•    Promises – the law does not enforce promises per se.
o    Promises of gifts are not enforceable.
o    The law considers the spirit of altruism rare.
•    What criteria should we use to categorize the subset of promises that attract legal enforceability?
o    What would be a sensible way to do this?
o    The promises which the law should be designed to enforce should be “serious promises”.
•    Non-trivial
•    Or seriously-intended
o    This is approximately the majority approach of the world’s legal systems.
•    The majority of the world uses the civil system
•    In Qc. law, there is a proposition that goes back to Roman law, that a cause is enforceable (from Latin, causa).
•    This is a straightforward approach.  “We’ll enforce where there is a good reason.”
o    This is intuitive.  It is not a technical rule – aligns with the ordinary instinct of ordinary law.
o    This is not the approach that we take.
•    What criteria should be use to categorize the subset of promises that attract legal enforceability…?
o    Could go from the intuitive approach
o    The Roman approach used formality.
•    If ppl want to know that their arrangement is enforceable, then we could have (in our legal scheme), a way to formally attach something to their promise…
•    The act of “attaching” something to the promise could act as a signal that it is meant to be enforceable.
•    Ex:  ‘A promise in writing could signify that a party meant for it to be enforced.’
•    Ex:  Signature – could make it so that something would have to be signed to be an enforceable promise [problem with this is that every contract, in order to be enforceable, would require this – even simple transactions between vendor/purchaser]
•    “stamps” – issued by gov
•    shaking hands, spitting and shaking hands
•    In Rome, the parties stood facing one another, and recited to one another the terms of the contract. Stipulatia
•    Ex:  “I _____, take you _______…”

•    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.

Assignment #1
There are some agreements that seem to have the outwards signals of a contract – offer, etc.  There are some agreements to look like contracts, but courts do not enforce.
For example, “I’ll make supper tonight if you make supper tomorrow night.”  There we have offer, acceptance and consideration.  However, if the person did not make supper the second night, and was sued, the court would likely find in favour of the defendant – not because either offer, acceptance of consideration were missing, but the court would be likely to say that the arrangement was not meant to be binding legally.  This is based mostly on triviality.
This means that the parties did not intend for it to be a legal compact.  Normally, this is no defence.  It is an absurd proposition in a business or commercial context.
Where it typically comes up is in “family arrangements”.
This is where our assignment #1 comes up.
Should these agreements be legally binding?  One had to research, not the law, but one’s mind as to what human factors are relevant in such a situation.
Ultimately, it is about the Offerer.  Did the Offerer intend for the arrangement to be legally binding?
Editors of case book bring to attention two of leading cases.  Be careful when using antiquated cases as a source for modern law.  May also look at some of the books on reserve.  Ultimately not a research essay.

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;