Contract Law

Contracts and Torts
•    The relevance of tort principles and contract principles differ in different scenarios.
•    when trying to determine whether a pre-contractual utterance is of legal significance, and whether that significance sounds in contract or sounds in tort, it is an either/or choice.
•    Most pre-contractual utterances don’t have any legal significance, but supposing it does (it induced the subsequent contract) that legal sig. is in one or the other.
•    It is either a statement/representation (any legal significance it has will only be in tort).
•    OR it is a promise/warranty (any legal significance it has will only be in contract).
•    Possibilities:  No legal significance; legal sig. in tort; legal sig. in contract
•    This is not a choice.  A pre-contractual utterance has a true characterization.

Murray v. Sperry Rand Corp.  (page 673)
•    Breach of the collateral contract, not the contract of purchase and sale.
•    Entering into the principle contract for purchase was the consideration and the acceptance for the collateral contract.
•    Manufacturer:  After dealing with the Canadian distributor, judge turns his eye to the U.S. manufacturer, who also printed the brochure upon which the plaintiff relied.
•    ¶10 – “representations” – about to tell us that the representations are assurance about the future.
•    Does not formulate how the promises get into the collateral contract.
•    Became a unilateral offer:  “If you offer into a contract to purchase our machine, it will have these characteristics.”
•    [note that there are 3 collateral contracts resting on the shoulders of the main contract here].
•    In general, it would not be true that one can be liable for breach of promise even though the promise is not inside a contract…
•    has just held them liable for breach of promise
•    ¶s 10 &11 are contradictory.  10 – says there is a contract.  11 – says that may be liable for the promise even though no contract.
•    “would be better if we could cross out ¶11”
•    Breach of promise.
•    Has all of them liable – not in contract, but in contracts collateral to the principle contract.

Esso Petroleum v. Mardon
•    Esso lining up a location for a gas station.
•    Estimated, based on access to an adjoining busy street, that the thoroughput would be 200,000 gallons / year.
•    Before built, local planning auth. forced them to build the pumps where they could not be seen from the front, and gave access only from a side-street.
•    Didn’t change estimate.
•    The person who owned the ‘franchise’ eventually was forced to close his business.
•    The pre-contractual study induced him to lease the location and to pay moneys to esso for the use of their brand and what have you.
•    Suing on the pre-contractual ‘utterances’
•    Must determine whether it had any legal sig. at all  – if so, whether in tort or contract.
•    statement/representation=tort.  Promise/warranty=contract.
•    ¶7, saying the well-trod way around Heilbut, Symons, is to take a statement and say that it is a promise.
•    ¶8 – says that Esso warranted (promised) that the forecast / study was sound.
•    ¶10 – negligent misrepresentation – if not warranty, liable for neg. misstatement
•    ¶11 –
•    courts try to find the intersection of contract and tort.
•    Used to be that the easiest conclusion to reach was that if a contract covered a particular incident, then courts would look to the contract and the contract only to determine the responsibilities and liabilities between the parties.
•    Esso saying that because they chose to define their relationship concerning that site in a contract, Marsden must find a way to vindicate his claim in the contract.  Since they are asserting this, it is likely that there is a limitation of liability clause inside the contract.
•    This is not an unorthodox argument.
•    Denning, here, says that there is a certain type of contract, under which, if the undertaker of the contract breaches is, he falls under the standard of care usual for the profession – can equally be characterized as a breach of contract or tort.
•    Most contracts don’t involve a standard of care.
•    Think of the standard of care of a lawyer to a client.  There is a duty of care to the client due to the retainer, but also under tort.  A lawyer’s negligence can equally be characterized under breach of contract or the tort of negligence.
•    Denning says that Esso’s study was a negligent misprepresentation, and Esso is therefore liable in tort for damages.

V.K. Mason Construction v. Bank of Nova Scotia – page 715
•    Mason doesn’t want to enter into contract to build for Courtot Investments Ltd. unless Courtot’s bank ‘stood behind’ the contract.
•    The Bank writes Mason Const. a letter.
•    This pre-contractual utterance doesn’t involve a contract with the ‘person’ making the utterance.
•    Bank says, “…financing sufficient to cover the constrution of the subject complex.”  page 717
•    rather reckless wording… no limit involved.
•    Based on this assurance, Mason signed the building contract with Courtot.
•    Things went bad.
•    Sued in contract; sued in tort.
•    No good to sue Courtot – insolvent.
•    page 718-719-720
•    719 – contract
•    720 – tort
•    Wilson J.  takes the view that intention was lacking to form a contract.  There was no animus.
•    ¶19 – would be a unilateral contract
•    Does not believe that reasonable business people would construe the bank’s letter as a guarantee.  Reasonable – objective test.
•    ¶22 – Negligent Misrepresentation analysis.
•    Finds that the bank was indeed careless.
•    says overlooked the fact that what Mason was seeking was an assurance that Courtot would have sufficient funds
•    Bank should have known that the letter would be construed as an assurance of something over and above the terms of the loan.
•    Says induced Mason to sign a contract with Courtot ¶24

Read:
page 723-24 – suing on election promises
725 – first time  SCC struggled with… something.  Nunes Diamonds Ltd. v. Dominion Electric Protection.
726 – Queen v. Cognos Inc.