Contract Law

Foakes v. Beer (missed last class – interviews)
•    Why doesn’t the ruling in this case come under pre-existing duty?
•    Why do we need a separate rationale?
o    We do not need the rule from Foakes v. Beer – equally analysable under pre-existing duty
o    Separate island of jurisprudence all to itself, very similar to pre-existing duty rule
o    Could be under Stilk v. Meryk
•    Is is a subset of a preexisting duty, but we treat it separately for historical reasons.

•    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.

Writing
•    Contracts do not have to be either written or oral
o    They can be party written or party oral.
•    All common law jurisdictions have adopted some form of the Statute of Frauds
•    To what does the statute of Frauds apply?
o    What contracts are caught by the contracts?
o    What contracts are within the statute?
o    Chiefly 2 types in ordinary practice that are caught:
•    Contracts of guarantee (or suretyship)
•    When one is a guarantee or surety, one is making oneself answerable for someone else’s legal debts or wrongs
•    One says that even thought one is not the tortfeasor, one will pay the victim for the tortfeasor’s actions
•    The law looks at this as rare, and therefore wants to be very sure that someone did mean to do this – wants to see it in writing.
•    Explains why contracts of guarantee have to comply with the statute of frauds.
•    Banks take the most guarantees – want everything in writing anway.
•    Contracts in issue of land
•    Contracts in sale of fee simple have to be in writing, obviously enough
•    The statute is not confined to fee simple
•    It is confined to interest in land
o    Profits a prendre, etc.
•    Not validly conveyed unless it complies with the statute.
•    Lawyers get sued a lot because they forget that an option to obtain land is an interest.
o    If not done in writing, does not comply with statute of frauds.
•    Keep in mind that statute of frauds applies not only to FS and life estates (and fee tail), but also to anything that is an interest in land, including the option.

•    In most provinces, there is another category – “contracts not to be performed within a year.”
o    The jurisprudence is an exotic one
o    The drift is that if the contract could possibly be performed within a year, then does not apply.
o    Only contracts that could not possibly be performed within a year.

•    If a contract must comply with the Statute of Frauds (page 233)
o    “No action shall be brought…”
•    Note:  Unless the contract is in writing
•    Does not mean that the whole contract in question has to be in writing, only that enough of it has to be in writing.
•    Likewise, signed does not mean “signed” necessarily.  Can be printed, pre-printed on a letterhead – the court might well say that this is enough.
o    Could even be on a cheque – even if in the memo “re: purchase of land” might be enough to satisfy the memorandum in writing requirement
•    Law requires that certain narrow categores are satisfied, but once they are, makes them easy.
•    Quite easy on finding that the requirement has been met, in order to not simply fail valid contracts on technicalities.
o    Make the satisfaction extremely elastic.

•    “No action shall be brought” are the most elastic words of the statute.
o    Can’t sue on such a contract
o    Says plaintiffs cannot sue on such a contract
o    Doesn’t say, “there isn’t such a contract”
o    Logically, implies that the contract is there, but cannot be invoked affirmatively.
o    If somehow a defendant could defend him or herself based on this contract…
•    For example, to explain why they built their castle on Blackacre
•    The defendant could invoke the existence of the contract
o    Might be able to raise an estoppel based on such an agreement, but cannot sue on it.  Another example of a shield but not a sword.

•    Original Statute of Frauds said that contracts above a certain value had to be in writing.
o    Was taken out of the SoF and put into Sale of Goods Act
o    Was a nuisance, because the value probably hadn’t changed since 17th century.
o    The English figure was originally £10 – was, in the 17th century, a staggering amount.
o    Was translated, like many, many English statutes, into $40CA.
o    Most provinces (like NB) have repealed it.
•    Ontario only in 1994.

First propostion:      Few have to be in writing
Second proposition:     Even if yours does, courts are liberal in interpretation.
Remember that contracts which have to comply with the statute that fails with the statue, does not fail as a contract, but just means that pl.’s cannot sue.

Doctrine of Hard Performance
•    A judge-created exception
•    Even though a contract may be caught by the statute, and non-compliance has happened, still, if one falls within an exception, the court will say that you did comply
•    The doctrine of hard performance
•    If can show that the contract has been performed in part by the time of a law suit, then will not be out of luck.
•    Creates a category of contract that otherwise would fail on a technicality, that do not fail on a technicality

Doctrine of hard performance – says that if the plaintiff can show that the alleged contract was partly performed so that it cannot be explained what the parties did except to say that they did it under contract, then the court will use what was done as existence of that contract.

Page 238 – example

Deglman v. Guaranty Trust Co. of Canada and Constantineau [1954]
•    The aunt thought that she promised to give her nephew the house in exchange for his little services.
•    He did do the services – years later, she died, but the will did not note that the house should be left to him
•    He sued the estate
•    The court noted that even though she thought she was giving him the house, she was in fact entering into a contract with him
o    His consideration was the services rendered.
o    A contract made within a lifetime take precedence over a will.
•    Page 239, the court turns to the doctrine of hard performance.
•    SCC says no – in order for an action to count as hard performance, must be uniquely referable to the existence of that alleged contract.
o    must have an unequivocal character.
o    Only way to account for the behaviour must be to resort to the existence of a contract.
o    Says the nephews actions do not constitute this.

•    This case emphasises that the doctrine of hard performance is interpreted quite narrowly.
•    Page 240, send him away with the consolation prize of $3000 (a great sum at the time)
o    We will come back to this in January to look at remedies.

•    The notes after the case show that English courts have moved away from the idea that the acts must be unequivolcally attributable to the existence of a contract.
o    Page 241-242 Steadman v. Steadman case.
o    Say that we must interpret on the balance of probabilities.
o    Yes, must be referable unequivocally, but we judge this on the balance of probabilities.
•    This considerably lowers the barrior to finding hard performance.
•    Bottom of page 242-243-244
o    Loosening of hard performance in Canada?
o    Editors imply that the Canadian courts will follow the English courts, but haven’t done so yet.
•    Even if a contract is caught by the statute, even if one hasn’t literally caught by the statute, then the doctrine of hard performance still gives hope.
o    Oral evidence is admissable to explain what the contract was, once courts have accepted the doctrin of hard performance as applicable.

Third Parties – Privity

Contract between A & B
A promises B the title to car for $1000
B promises A $1000 for title to car
•    A does convey to B the title to the car
•    B has not paid A $1000
•    A meets B to discuss
•    C is a bystander.  Decides on his own to sue B as a promise-breaker to force him to keep his promise.  May even establish a foundation for the suing of promise-breakers.
o    C v. B
•    Will not win.  C is not the promissee.
•    A contract is a private arrangement between [A & B]
•    Each has assumed obligations voluntarily
•    C is not in privy to the contract.
•    C did not give consideration.
•    Cannot enforce any promise against any promisor without consideration

A promises that when B dies, will pay a benefit to C.
B promises to A to pay premiums during his lifetime.
•    B dies
•    A does not pay the benefit to C (the beneficiary)
o    C v. A
•    Promise broken
•    2 objections:
•    C is not the promissee
•    C did not give consideration

•    The common law treats perfect strangers and intermeddlers (as in example 1) the same as beneficiaries.

What if one person makes travel arrangments for a group, and one of that group is the victim of a breach of contract, from the carrier, for instance.
•    Only a person who is party to a contract can sue – Dunlop Tyre
o    Page 378-379 – HoL invited to overturn Dunlop Tyre
•    Lord Denning sitting at this time
•    Would have relaxed the doctrin of privy to allow the intended beneficiary to sue – minority
•    Answered by Viscount Simonds
•    “For to me heterodoxy, or as some might say, heresy, is not the more attractive because it is dignified by the name of reform.  Nor will I easily be led by an undiscerning zeal for some abstrat kind of justice to ignore our first duty, which is to administer justice according to law, the law which is established for us by Act of Parliament of the binding authority of precedent.”

Free Agent
Must understand 3 analyses.
Not really exceptions to privity problem
Mean, in fact, that if they are true, there is no privity problem.
•    1)  Agency – if in a contract between A & B, it turns out that A was acting for someone else (for example, a corporation)
o    principal
o    C is the corp.
o    In fact, C was always a party to the contract.  It was never an A/B contract.  It is a C/B contract.
•    2)

For next class, read notes page 381
Read case page 384
Read London Drugs page 385

Intention
Intention refers to the time of formation.
•    The contract is the contract that was formed at that moment.
•    Nothing that happened afterwards is at all relevant.
•    Do not discuss intention without acknowledging that it is crystalized at the moment of formation.
•    Intention must be judge objectively.
o    People intend what we say they intend.
o    Ex:  Esquimalt:  Land means land, no matter what you thought you meant.
o    Carlill – the ad means what the public thought it meant.
o    The objective view is the view that we impute to the person who utters the words that we call offer.
o    Smith v. Hughes p 417
•    Passage is quoted everywhere.
•    Beware of speaking of meeting of the minds.
•    NEVER mention this.  Then cannot go wrong.
Intention to affect relations
•    Law strongly presumes that if we participate in an arrangment with offer, acceptance and consideration, we mean to affect our legal intention.
•    Letters of comfort, government policy announcements (whether the gov was simply announcing a gratuity, or making something that with much processing could be called an offer), contexts which complicate this idea – other than that, not a major issue.

•    Family-type – contrary presumption prevails.
o    Presumption that they did not intend to affect legal relations.  Also family-like relations.
o    The land-lady and the boarder.
o    Of course the presumption is rebuttable.
o    Again, must judge in an objective way.
•    Going to lawyer, signing before witnesses, etc., can show objectively, an intention to affect legal relations.

•    Technically, offers are only offers if the person uttering it intended it to be an offer.
o    It is what a reasonable observer would infer – whether the would surmise that it was intended to be an offer.
o    If the words fall short of the unequivocal and detailed character req’d to const. an offer, then the words have no contractual sig.
o    May not be right to say they have no legal significance, but have no contractual sig.
o    Doesn’t matter what they are called if they have no contractual sig.
•    Can be invitations to treat, negotiations, etc.  Doesn’t matter, because they are legal terms without contect.  Cannot enforce.
•    Sufficiently detailed may well mean that it has very few details.
•    Just need essential details.
o    Sale of goods, for example, price is important.
o    Offer does not have to be terribly detailed.

•    Courts usually understand ads to be invitations to treat
o    Ads are usually by merchants, and therefore have limited stock.
o    Cannot be offering to all who might see the ad.
o    Since no merch could have enough products to satisfy the public if every memeer who saw the ad “accepted”, courts think it is implausible that the merch advertiser intended to offer.
o    That being said, sometimes ads do transcend being an invitation to treat, and are Offers.
•    The lawnmore argument from the last test – argueable, the for sale sign could be an offer instead of an invitation to treat.  The ordinary idea of being an invitation to treat arguably does not apply to non-merchants with their one-product and sign.

Firm offers
•    An offer so phrased as to be open until a set date.
•    Irony is that they are not firm.
•    “called firm offers just to trick people who haven’t been to law school” – Bell
•    they, like any offer, can be revoked at any time, because there is no consideration for the promise to keep the offer open.
•    Firm offers are not firm at all.
o    Suppose we did want to make an offer firm.
o    Can give consideration – buy the option.
o    Enter a contract to keep the offer open.
•    This is called an option.
•    If it is an option about land, then it has to comply with the statutes of Frauds:  has to be in writing, signed by the party to be obligated by the agreement (the offerer of the land); the party who is sought to be bound.

Acceptance
•    Offerer is the master of the acceptance – can reject the acceptance unless it corresponds quite exactly with the offer.
•    Provided the court does infer that the offerer did intend that the offeree do something to accept
•    Offere may overlook, however, that acceptance was, for instance, to be made by certified cheque.
•    Must correspond to offer.
•    In most cases, the when of acceptance is when the offere succeeds in communicating Acceptance to the offerer, unless some other means was specified.
o    When the postal rule applies (which is rare), communication happens when the Acceptance is posted (provided there is nothing in the offer negatingthis)
Postal Rule
•    Just because fact of post is present, does not mean that the law of the postal rule is present.
•    However, jurisprudence tends to say that the postal rule applies when the post was used, and it is a not-unusual way of accepting in the circumstances (and it is not precluded in the contract).
•    More novel ways of communication have not been subject to the postal rule of acceptance – the have been equated to inter-personal means of acceptance.

Unilateral offers
•    A bilateral offer is one which is so phrased to contemplate promissory acceptance.
o    “I accept” is enough to accept it.  Does not have to do anything.
•    A unilateral offer is so phrased that it calls not for promissory acceptance, but to do something.  This something, when done, constitutues both the consideration and acceptance.
o    Allegedly called unilateral because it contemplates action by only one side.
o    “If you swim across the river, I will give you $1000.”
•    Can’t be accepted (strictly speaking) by saying, “I accept”.
•    If it says, “You accept by [swimming across the river; finding the lost dog; walking to York; etc.]” then it is unilateral.
o    “If you buy our product and use it to these specifications, and still get the flu, then I will pay you $xx.”
o    Carlill was a unilateral offer, but didn’t say so as it had not been invented yet.
•    Dawson discusses them (and is therefore in the case book), but is not a unilateral offer.
o    Why do courts tend to construe offers as bilateral rather than unilateral?
•    All offerees are vulnerable to revocation as long as they are mere offerees
•    Can end their vulnerability simply by saying, “I accept.”
•    These words cost nothing – make one no longer vulnerable as it is already binding.
•    By contrast, the offeree of a unilateral offer can do nothing to protect themselves besides completing the task at hand.
•    Meaning the person can be 99% of the way to York (or across the river), and the offerer can revoke the offer.  The offeree is vulnerable throughout, up until the moment of 100% completion.

•    The when of formation usually determines the where of acceptance, which can be important in establishing court jurisdiction.
o    Note:  The where is not the only basis for judicial jurisdiction.
•    It is the one under discussion in Eastern Power
•    There are Various bases for court jurisdiction.

Uncertainty
•    Even with offer, acceptance, and consideration, may not have enforceable contract.
o    Besides no intention…
o    May be too uncertain for courts to enforce.
•    In general, courts enforce broken contract by translating broken promises into awards of money to the victim.
•    If it is too uncertain, we mean that the court cannot do this calculation
•    This is not high-theory, but low-practicality.  Simply cannot be done.
•    Comes up in variety of sub-contexts.
o    Silence:  A contract may be uncertain because the parties have left things out.  Gaps.
•    If it is a major term, then it is fatally flawed.  L.C.D.H. Audio case.
•    Only cure for such a gap is if it is for sale of goods and the gap is over price, the Sale of Goods Act in every province allows the court to set a reasonable price.
•    Also, if the two parties have entered into many contracts before, courts may be able to depend on past practice.
•    Trade practice:  They may be participants in a well-established trade (such as baltic timber trade to England).  The courts will infer that they intended to go by standard trade practice.
o    These are the 3 exceptions.  Other than this, if there is a major gap, the contract is non-enforceable.
•    Minor term:  If the gap or silence is on a minor term, Versafoods tells us that courts have the jurisdiction to fill in the blanks.
•    Courts have to say that they are following the will of the parties here.
•    Have to say that the parties would have intended a reasonable solution.  Must say for idealogical reasona that everything is as the parties intended.  Courts do not make agreements, they enforce them.
•    The entirelty of the authorties quoted in Versafoods is American.  Not as much jurisprudence in this area in Canada (Common-law Canada)
o    Agreements to Agree:  Cannot enforce.  Do not know what the parties would have agreed.
•    DIFFERENCE BETWEEN AGREEMENTS TO AGREE AND SILENCE
•    Agreements to Agree, simpliciter, are… bad.
•    Bad because cannot translate into an award for money because the promise for performance is unknown.
•    On other hand, if want to have certainty for contract today and leave out something important to be filled in tomorrow, can have an agreement to agree + a mechanism or formula to render certain what is otherwise uncertain.
•    Foley – mechanism was an arbitrator (to set the price of petrol).  Legally sound contract with a point to be determined in the future.
•    If it is “from time to time” it is non-enforceable.  Must have the mechanism or formula in the agreement.
•    Foley – be clear on sentence, “The parties thought they had a contract and acted under it for 3 years.”  Do not conclude from this that this is a basis for saying tha tthey therefore had a contract.  We do not judge by what the parties thought they intended.  Doesn’t matter if they were under a mutual delusion of being under a contract [if they were truly under this delusion, would likely not be in court fighting].  The mere fact of thinking that they had a contract doesn’t mean anything.
o    Estoppel could be used here (but was not) (questionable – Bell said he made it up).  They do not have a contract under contract theory.  But the court will work hard to uphold the contract, as it is evident that one party is trying to “work out” of it.  If a judge wants to do something, then 99% of time will find a way to do it.
o    Strictly and legally speaking, the fact that the parties thougth that they had an agreement is irrelevant.
•    Agreement to negotiate:  practical question:  how does one translate an agreement to negotiate into an award of money?  You can’t.  period.  If they did agree, we do not know what the parties would have agreed, so cannot calculate the worth of the broken promise.
•    Argument goes that if we have an agreement to negotiate, then it is implied that one will negotiate in good faith.
o    Very few ppl put these words into a contract, but courts will usually say that if we promise a performance, we promise the performance in good faith.
o    Walford v. Miles – focus not just on duty to negotiate, but does it matter than performance of binding promises are implied to be performed IGF?
•    Page 508
•    Says a duty to negotiate IGF is antithetical to our adversarial system of negotiation (in our liberal economy)  “Inherently repugnant”
o    Once we have a contract, the law will say that the parties promised to perform in good faith, but this does not translate into negotiating in good faith towards having a contract in the first place.

Empress Towers
•    The great question of contract law:  Is there a duty to negotiate in good faith?
•    The reason we have this case in our course is not just to differentiate mechanisms and formulae, but to also (though we might think it establishes and enforces duty to Negotiate IGF), what it does, strictly speaking, is to penalize a party that does not negotiate IGF
o    This does not establish a duty to negotiate IGF…
o    Flirts with what looks like an enforceable duty to negotiate IGF
o    This is not  a straightforward Contracts case.
•    Not A suing B for alleging breach of promise and demanding performance (money)
•    Empress Towers is the villian seeking the court’s assistance
•    Any remedy given by the court that is not a damanges remendy is by def’n an equitable remedy – must come to court w/clean hands.
•    SO the court here concludes that the landlord is not worthy to turn out the tenant, because of the way it has misbehaved – could be described as having acted in bad faith.
•    This is a negative conclusion – the landlord has not acted in good faith, therefore we won’t help him turn out the tenant.
•    Only by udnerstanding the pleading here – it is not a contracts case – it is application for ejection – write of possession.
o    The landlord’s failure to act in good faith is why the court gets away with this.
o    Really is not a precedent for enforcing the duty – how do we transfer the lack of performance into money still remains.  The writ of possession and equity here are key.

Tomorrow:
At 12:30 will have Q&A.  Room 2A.

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

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

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

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

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

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

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

•    Cases where the consumer was convinced to sign a contract which was induced by an oral statement inconsistent with the written contract.
•    Cases where the prod. was defective, and the consumer wants to sue based on the defect.
o    but has promised in a clause of the contract that they won’t complain of any defect in the product, or even that there was no defect in the contract.
o    In our legal system, people are “free to be foolish”
o    for the courts to simple “fix” this situation would be to do away with freedom of contract (that contracts are the will of the parties – not the state), then contract-law would not, in effect, exist anymore.
•    The will of the parties is the only difference between contract law and tort law.
•    The characteristic of all these cases is that in the written contract there will be a problematic clause
•    depending on what the limit is in a limitation of liabilty clause, it can practically be an exclusionary clause (for all practical intents and purposes).
o    Sometimes there are hints in the jurisprudence that courts should not come down as hard on limitation of liability clauses as they do on exclusionary clauses, however.
•    A consumer contract is a contract between a business and a consumer.
•    courts are more solicitous to the consumer than to businesses in a commercial contract – businesses are assumed to be on equal footing and ought to be able to take care of themselves.
•    the question is often whether the words of the clause are broad enough to shield the business from liability
•    If the judge cannot interpret a way to the desired solution, more drastic action may be taken…
•    some of the more intersting cases involve whether judges have another technique beyond interpretation
•    hint of this in Denning’s Thornton v. Shoe Lane Parking
•    resp. for a line of juris. which said that if the judge cannot interpret a way around a clause, can bring down the rule of law that says that judges can interpret a contract without out reference to the problematic clause.
•    “The clause will be void for unreasonableness”
•    Again, if this maintained, contracts could be thrown out the window.
•    [Handout – Clauses Excluding Liability]
o    in the omitted part, says, basically, but there there came along the super-clause.  The perfect limitation of liability clause (because had been so perfected by redrafting)
o    Thence came the rule of ‘fundamental breach’ in 1956.  If the big concern was guilty of a breach whih went to the very root of the contract, then it could not rely on the printed clause to exempt itself from liability.
o    says that to some it was a mistake, because it was elevated into a rule of law.
o    this is because once it becomes a rule of law, it must be put into the architecture of contract law – there is no place in contract law for such a principle, as it negates freedom of contract…
o    says it was a mistake for them to elevate it as such – says should have used it as a method of interpretation – the “true construction of the contract”

Photo Production Lrd. v. Securicor Transport Ltd.
•    Is the case that brings to an end in England the history and career of the doctrine of fundamental breach
•    in Mitchell [our handout], Denning is trying to resurect the doctrine.  It failed.
•    It is a commercial contract case, so the court has less pity here – easier for them to get rid of the doctrine.
•    say that as long as the company wasn’t negligent in hiring the guard, then even if the employee did set the building on fire, the co. would not be liable.
•    Judge here said that Denning’s attempt to resurect the doctrine of fundamental breach is a non-starter.
•    ¶16 – says that Harbutt’s Plasticine must be overruled.
•    ¶13 – says Parl. has taken a hand and passed the Unfair Contract Terms Act 1977 –parl refrained from legislating over the whole field of contract.  Court says that Parl. intentionally left commercial parties free to take their risks.
•    this made it easier for the judges to abolish the doctrine – the most troubling cases had been taken care of by legislation.
•    ¶19-20 – the provision in the contract which at first glace appears onerous, in fact is sensible.  The security company was receiving only 26p per visit in exchange for its freedom from liability.
o    placing the risk on the client company.
o    The security company has no knowledge of the value or fire-precautions, for example, of the plant.
o    context is imp here.
o    Rule in Canada Steamships:  If wishing to exempt oneself from liability, the words of the clause have an extremely high threshold of clarity.
•    This case says there is not and never was  doctrine of fundamental breach – cannot declare a clause void for unreasonableness.
o    all contract clauses are to be interpreted according to their true construction.
o    if the words are drafted broadly enough to cover an incident, then they simply do.

Tilden Rent-a-Car Co. v. Clendenning
•    Clendenning rented a car from Tilden, signed the agreement and purchased insurance.
•    Had an accident, and had had a drink or two (apparently not enough to cause a ‘loss of control’)
•    Pled guilty in criminal court to impaired driving (on the advice of his lawyer)
•    “customer shall be fully liable for all collision damage if vehicle is used, operated or driven in violation of any of the provisions of this rental agreement…”
o    the provisions are on the back ¶3 “in particularly small type and so faint… as to be hardly legible…”
o    “by any person who ahs drunk or consumed any intoxicating liquor, whatever be the quantity…”
•    can Clendenning get out of liability by being foolish?
•    ¶7 – stated that he hd known the full terms of the contract, he would not have agreed to it.  Bell does not believe him.
•    The other options avail. to him, car-rental wise, would have had the exact same provision.
•    Clendenning is, far from the ideal consumer, the typical consumer.
o    he is ‘everyman’ – he can read, but fails to.
•    The business party promises something, and tries to get away from delivering it.

For next day, Hunter Engineering, down to