Contract Law

Essay:  Do not quote essays and books that you’ve never read – quoting quotes.
In order to cite quotes within quotes, cite properly [“…as quoted in…”].

J. Nunes Diamonds v. Dominion Electric Protection Co.  page 725
•    There was a contract between the diamond store and the alarm company for an alarm system.
•    P called D to ask if the alarm was sound in a certain respect.  Was assured that it was.
•    turned out to be negligent, but it was not sound in that certain respect.
•    The store was robbed.
•    Was defended on the basis that as the merch. had a contract with the alarm co., the rights and liabilities had to be ascertianed in reference only to the contract.
•    Alleged that could not sue for tort of negligence outside of the contract.
•    Undoubtedly, there was a limitiation of liability clause within the contract.
•    SCC – for the tort of neg. misrepresentation to be actionable the tort has to be “independent” of the contract.
•    A tort may be “independent” in at least 2 ways:
•    i)  The representation may have been made to a party who was not a party to the contract
•    ii)  the duty owed by the D may be unaffected by the contract.

Central Trust Co. v. Rafuse
•    Lawyer hired to oversee a mortgage and sale of property
•    missearched the title
•    Rafuse had committed the negligence, years later the problem was discovered.  Central trust suing their old lawyer for negligent conduct.
•    Problem:  By the time Central Trust was suing, more than 6 years had passed, so it was too late to sue for breach of contract.
•    sued for negligence in tort.
•    In tort, the limitation period doesn’t begin until the alleged negligence is discovered.
•    SCC said that in context of suing a lawyer, can sue in either contract or tort.
•    Easier in the lawyer context, because rarely have a contract with their lawyers.
•    Have rarely signed away rights via a limitation of liability clause.
Queen v. Cognos page 726
•    SCC does a 180º turn from Nunes Diamonds
•    Can sue concurrently in contract and torts.
•    Begin from proposition that liability is concurrent.
•    Contract does not oust tort.
•    Pre-contractual utterance inducing contract
•    Hired to do a major project.
•    Co. had not yet decided to actually do the project, and then decided not to.
•    P had moved his family from Calgary to Ottawa
•    Company let him go
•    Did not breach contract, as gave the one-month severance that was due.
•    Suing, saying he would not have accepted the position had he been told the truth.
•    On one hand, covers what he was suing on: [employment:  Hiring, course of employment, end of employment]
•    On the other hand, it does not.
•    Say that if Pigeon was right in Nunes Diamonds, then this is one of the exceptions.
•    Iaccobucci ¶3 –  Two different legal questions re. contract and tort.
•    addressses the Pigeon question:  Tackles the issue of having a contract with the other side and suing in tort under that subject matter – Pigeon said no.  Cannot.  Ever  – Iaccobucci is about to say he can.
•    Addresses issue of what if you had signed a contract saying that you will not sue in tort.
•    Subsequent contract may play an imp. role in whether one can succeed in tort.
•    fact that one has a contract does not necessarily preclude sueing in tort, though may play this important role.
•    However, even if the tort claim is not barred altogether by the contract, the duty of liability of the D with respect to neg. misrep. may be limited or excluded by a term of the subsequent contract so as to diminish or extinguish the P’s remedy in tort.
•    So even if the fact that a contract does not oust all duties of error, the wording of the contract may extinguish the ability to sue in tort.
•    Must also ask whether the tort duty was written right into the contract.
•    In this case, say that clauses 13 & 14 does not support an interpretaiont that would protect the respondent from te breach of a duty of care – let alone the breach of the particular duty invoked by the appelland in his action for engligent misrepresentation.

•    Cannot sue in tort merely to escape the fact that one signed away all one’s rights in contract.

First class after break – print provisions of something or other.
Vertical privity
Horizontal privity
Read up to Bow Valley Husky (Bermuda) v. Saint John Shipbuilding 687-701

Heilbut, Symons, v. Buckleton p. 661 (cont’d from last day)
•    Rubber company case.
•    P not suing on the contract itself.  The contract is not a broken one.
•    The complaint is regarding what went on prior to entering into the contract.
•    At trial, P argued that “we are” is a representation; a statement of existing fact.
•    It has legal significance if it turns out to be a misrepresentation
•    At trial, suing in tort.
•    Jury (page 662) said that there was no fraudulant misrepresentation.
•    The P wanted damages.
•    for fraud misrep., 2 poss remedies:  Damages or remedy (leading to recision)
•    Here, recision was not an avail. remedy since the contract was already executed.
•    On appeal, the tactic changed:
•    argued that “we are” was a promise (as opposed to, at trial, a statement of fact).  It was an assertion about the future.
•    Must establish that “we are” is part of a contract collateral to the main contract.
•    The link is that the consideration for the smaller contract is the entering into of the main contract.
•    Unilateral contracts – “if…then” contracts.
•    entering into the contract to buy shares would be both the acceptance and the consideration of the unilateral (collateral) contract.
•    P is suing on the collateral contract, not the main one.
•    The damages for the breach would be the losses on the main contract.
•    ¶5 – acknowledges that this collateral situation is legally possible.
•    It just doesn’t make sense to make 2 contracts instead of the one.
•    The effect would be to increase the consideration of the main contract and the normal way to do so would be to simply add it to the main contract.
•    This sort of contract must be proved strictly, because they are counter-intuitive.
•    ¶6 – saying that there is an absense of evidence in this case of the existence of the collateral contract
•    innocent misrepresentation gives to right to damages
•    saying that if we allowed people to take pre-contractul utterances and to turn them into contract collateral, then we would be doing an end-run around tort law.
•    tort law won’t give damages for a non-fradulant misrepresentation.
•    This would, however, give people a recourse for non-fradulant misrep.
•    ¶8 – quotes Hold C.J.  “an affirmation at the time of the sale is a warranty, provided it appear on evidence to be so intended.”
•    animus comprehendi – concerns the intention to form a contract.
•    contract was argued on appeal because the tort route would not have worked.
Note 2 p665
•    still a leading case.  However, since the time of Heilbut Symons, there have been developments in tort law – development of 3rd class of misreprentation.
•    Hedley Byrne
•    since mid-60s
•    what was once a vast field of innocent mis rep, was divided.  Not innocent means innocent and non-negligent.
•    New class is ‘innocent, but negligent misrepresntation’
•    To prove innocent but neg. misrepresentation, get damages.
•    So today, do not have to prove fradulant misrepresentation – can prove negligent misrepresentation, which is usuall less onerous.

Dick Bentley Productions Ltd. v. Harold Smith Motors Ltd. (page 666)
•    Denning by now had already invented Promissory estoppel (40s), Fundamental breach (50s).
•    Now it is the 60s and Denning decides to take on Heilbut Symons
•    Car dealership.  Salesperson asserts something which ends up not being true – that the car was owned by a German Baron and was driven on 20k miles since its engine was replaced.
•    pre-contractual utterance (this term denotes neither ‘statement’ nor ‘promise’)
•    says, “If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice.”
•    His approach to get around the ‘problem’ of Heilbut Symons is to make it much easier for ppl to classify collateral contracts as such.
•    Gives a path around Heilbut Symons
•    Hedley Byrne wouldn’t be a way around here, since a salesperson wouldn’t be an expert.
•    Denning saying, “You always argue collateral contract.”
•    In effect, both of these contracts cases have been overtaken by the developments in tort law.
•    neither has been overturned.  They are valid, but practically obsolete.
•    Obviated by this cahnge in tort law.
•    Today, the contract route would not be likely to be taken at all.
Murray v. Sperry Rand Corp.  (page 673)
•    Contract to buy/sell a harvestor.  This contract is not in dispute.
•    It is about what legal significance can be given to the pre-contractual utterances.
•    Purchased on reliance of brochure printed by manufacturer and distributed by local salesman and representative of Canadian distributor.
•    Suing 1)  local dealer, 2)  Canadian distributor, and 3)  American manufacturer.
•    Find that the P was induced to purchase based on oral representations of local dealer/representative, and the brochure
•    ¶3 – local dealer.  P was induced to sign the contract by representations made by or on behalf of the local dealer.
•    ¶5 – collateral warranties – unilateral contract; collateral contract
•    “…the breach of which creates liability in damages…”
•    ¶11 – “a person may be liable for breach of a warranty, otwithstanding that he has no contractual relationship with the person to whom the warranty is given…”

Finish syllabus for next day.