Contract Law

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.

Exception Clauses p. 838
•    Warranty, in its technical meaning, is a sub-contract
•    It has a technical meaning
o    Close reading; strict construction
•    Wallis v. Pratt – “warranty” did not apply to exclude the implied statutory “condition” of the Sale of Goods Act that products must correspond to their description.
o    ¶5 - exclusion of “any warranty of condition” does not avail a seller if there has been a ‘negligent misstatement’
o    ¶6 – in the absesnce of an explicit mention of negligence, a judge is likely to find that exemption cluases do not exclude liability for negligence.
•    Judges believe that it should be very difficult to exclude oneself from the possibility of negligence, and that it must at the very least be explicit.
•    “The rule in Canada Steamships” – adopted this extreme example of reading down.  If an exemption clause could be given a meaning but the meaning was not broad enough to extend to negligence, then it does not extend to negligence.
•    If the exemption clause could refer to something other than negligence, then it is deemed to refer to that thing.
•    P. 839 – Inconsistency.
o    A number of ways that judges tackel ‘internal inconsistency’
•    To say that the provision that the parties agreed on explicitly takes precedence over some provision that is simply there as part of a form-document.
o    The passage on 839 is accurate, but misleadingly simplistic.

Parker v. Southeast Railway
•    A case that refers to the imp. of railway
•    Bottom Page 849 – caput lupinum – “Having the head of the wolf”.  Anyone might legally ‘kill’ them.
•    Railway companies were often the targets of juries, as insurance companies are today.
•    Railway takes the pos. that the passenger signed away their rights.
o    There was a notice on the wall of the cloak-room
o    There were conditions written on the ticket
•    Page 847 – “see back”; several clauses relating to articles left by passengers – “The company will not be resonsible for any package exceeding the value of £10.”
•    Bag could not be found.  Claimed that his bag was worth £24 10s.
•    Mellish L.J. – “In and ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absesnce of fraud, it si wholly immaterial that he has not read the agreement and does not know its content …in the case [where the agreement has been reduced to writing so that the writing is the sole evidence of the agreement without signing it]there must be evidence of the agreement itself to prove that the defendant assented to it.”
•    P said that he knew there was writing on the ticket, but not what the writing was.  Said thought it may have been a receipt ¶3.
o    No question that had he read the writing, he would have been bound.
•    Contract law presumes that people, if given something to read, will read it.
•    Bramwell L.J.
o    For this judge, the question is whether the person who does not read the conditions in a better condition than he who does.
•    Bottom 848 – Mellish’s famous repropositions:
o    ¶3 – 3 propositions.  I am of the opionion there fore that the proper direction to leave to the jury in these cases is:
•    1)  That if the person receiving the ticket did not see or know that there was writing on the ticket, he is not bound by the conditions;
•    2)  that if he knew there was writing, and knew or believed that the writing contained conditions, then he is bound by the conditions;
•    [should this be subject to the condition that the writing be relevant and ‘usual’ to the circumstances?; that anything out of the ordinary would be brought specifically to the attention of the purchaser?]
•    3)  that if he knew there was writing on the ticket, but did not know or believe that the writing contained conditions, nevertheless he would be bound, if the delivering of the ticket to him in such a manner that he could see there was writing upon it, was, in the opinion of the jury, reasonable notice that the writing contained conditions.
•    [Would the purchaser be bound to every single condition on the ticket, or just the not-unusual contractual provisions?  Could they insert provisions to do with seizing first-born children and have done with it?]
•    page 849 – Bramwell L.J.
o    Bramwell is skeptical
o    Proposes that putting it into his hand should be no different than saying “read that” by the porter.  Asks what more the railway company could have done
o    Page 850 – qualifies what he says – says that the market has the answer.  If railway companies (or anyone else) began putting unreasonably terms in their contracts, then the public would hear of it and begin using alternative [forms of transportation, for example].
o    “What if there was ome unreasonable condition… Would the depositor be bound?  I might content myself by asking:  Would be be, if here were told ‘our conditions are on this ticket,’ and he did not read them.  In my judgment, he would not be bound in either case.  I think there is an implied understanding that there is no condition unreasonable to the  knowledge of the party tendering the document and not insisting on its being read – no condition not relevant to the atter in hand.”
•    Important qualification regarding ‘unreasonable conditions’

Note 5 page 851
•    J. Spurling Ltd. v. Bradshaw
o    Post-war case involving 8 casks of orange juice.
o    Most of the OJ disappeared while being stored in a bailee warehouse.
o    Decision of Denning L.
•    “I agree that the more unreasonable a clause is, the greater the notice which must be given of it.  Some clauses which I have seen would need t be printed in red ink on the face of the docuent with a read hand pointing to it before the notice could be held to be sufficient.”
•    “Next it was said that the landing account and invoice were issued after goods had been received and could not therefre be part of the cotract of bailment:  but the defendant admitted that he had receive many landing accounts before.  True, he had not troubled to read them.  True, he had not troubled to read them.  On receiving this account, he took no objection to it, left the goods there, and went on paying the warehouse rent for months afterwards.  It seems to be that by the course of business and conduct of the parties, these conditions were part of the contrat.  In these circumstances, the plaintiffs were entitled to rely on this exempting condition…”

read p 851-852

Thornton v. Shoe Lane Parking Ltd. – page 857
•    sign at entrance:  “All cars parked at ownder’s risk”.
•    Then drive up a ramp and press a button for a ticket.
•    Denning L. finds that the ramp is the offer, and driving up the ramp and pressing the button is the acceptance.
•    Even if the ticker were part of the conditions, how could one be bound by conditions that one could not see until after ‘acceptance’?
•    Same as the conditions posted inside the garage.
•    ¶2 – offer accepted when the P drove up the entrance and had the ticket thrust at him by the weight-sensor.  The contract was the concluded, and could not be altered by any words printed on the ticket.
•    ¶3 - Then gives analogy whereby the ticket machine is a booking clerk ‘in disguise’
o    goes back to 3 questions pose by Mellish L.J. in Parker
o    ¶4 – counsel for the ds admitted that the Ds did not do what was reasonably sufficient to give the P notice of the exempting condition.
o    “I do not pause to enquire whether the exempting condition is void for unreasonableness.”
•    BE CAREFUL.  There is no jurisprudence that allows courts to say that an exempting clause was void for unreasonableness.  Denning L.J. was likely trying to begin this jurisprudence, but it didn’t take.
•    Denning determines that the P was not bound by the exempting condition as there was no evi. that he knew of it.

Page 860 – Signed Contracts
•    “When a documet containing contractual terms is signed, then, in the absense of fraud, or I will add, misrepresentation, the party signing is bound, as it is wholly immaterial whether he has read the codument or not.”
o    Ie:  You signed, you’re bound.
•    Courts often want to save people from their own folly.
o    This causes tension.

For next day:  Tilden, Photo Production.