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.

Consideration:
•    Number of plausible ways to look at the different types of agreements that the law will enforce
o    In common law, we enforce almost none of these
o    Consideration:  The type of promises that we enforce end up coinciding with what would be looked at if we said we would enforce “serious promises”, etc.
•    Requires evidence of an exchange.  If an exchange occurs, it ought to be fairly conspicuous.
•    Has an elemet of formality.
•    Although it is at first glance eccentric and non-intuitive, it does largely yield the same approach as if we had taken a more intuitive approach.
•    Analytical vocabulary for consideration as a problem:
o    Must approach the problem in a certain way.
•    Who is the offerer, who is the offeree?
•    Analytical tools involved the vocab of promiser and promisee – not the equivalent of offerer and offeree, in any way shape or form.
•    They are incommensurate ideas.
•    At the formation of a contract, we can conceptualize the formation of a contract as an exchange of promises.
•    If each party is receipt of a promise from the other, then we have two promisers and two promisees
•    This is the formation perspective.
•    But by the time time has passed and we have entered litigation, only one of the orginally dual promiser/promisee relationships is relevant.
•    One promisee sues one promiser.  This is the promise that the promisee must show that they gave consideration in exchange for.
•    This is the promise that has allegdedly been broken.
•    This tells us what the relevant consideration was.
•    Must show the court that the relevant consideration was giving.
•    In a contracts case, the plaintiff is always the promisee; the defendant is always the promisor.
•    The relevant consideration is the one that the promisee must show that he provided to the promisor in exchange for his promise.
o    Our legal system only enforces bargains.
o    In our legal system, a promise of consideration is as good as consideration – this explains how offer/aceptance can result in a binding contract.  The law says that a promise of title (for example), in exchange for money (for example), is equivalent to having made the exchange.
o    There is virtually no reason, but the alleged reason is that the promise is as good as consideration, because the alternative fulfilling the promise is to be sued (and have the court impose payment).
•    Great conclusion:  The relevant consideration is the one that the pl. promisee must show that he/she promised to exchange with the def. promisor in exhange for the defendant’s promise.
•    Dalhousie – one cannot look at just anything and decide that it’s consideration.  Dal built buildings and hired teachers (in theory) on the basis of this pledge, and yet it was not consideration.
•    The point made by the scc is that Dal did not bargain the building of buildings.  It received Arthur’s promise, and then built buildings in response.  It did not exchange the building of buildings for the promise.
•    Cannot be made in reaction to a promise – that is not consideration.  “Here’s a plane ticket.”  “Wow.  Thanks.  I’ll give you some money.”  This is not consideration.  It is a reaction.
o    The essence of consideration is that it won’t be such unless it was exhanged in return for the promise.
•    P 357:  “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.”

Hamer v. Sidway
•    Is a case where one might at first thing that there was not consideration, but yes indeed there was.
•    The “assignee” in this case – a right is a species of property.  The nephew has sold his $5000 claim to some money-lender (likely for a much lesser value).
•    Family promises – not addressed, though this was between family, and at a family gathering where they had no doubt been drinking…
•    The facts of the case is not contested.
•    What is contested is the existence of consideration on the nephew’s part.
•    Uncle’s estate argues that he didn’t receive any benefit, but in actuality the nephew benefitted.
•    The law does not recognize “moral consideration” – could not argue that the uncle received the pleasure of seeing his nephew do well.
•    It is enough that the nephew gave up his legal rights based on the promise of his uncle.  This is enough of a basis to constitute consideration.
o    Consideration does not have to be a benefit traded to the promiser – it can be simply a detriment, loss, or responsibility given, suffered, or undertaken by the other (p 258).
o    Can shorten the benefit concurred / detriment sustained formulation to simply detriment sustained.
•    There is not case where the defendant promisee did not sustain a detriment.  All benefit conferred cases are also detriment sustained.
•    In typical contracts case, what one gives up with typically benefit the other.  However, this is not a universal rule.
•    Can take a formula in currie v. Misa and collapse it into “detriment sustained”
o    This is broader.
•    P 261 is a little more concise.  It is, however, useful to take it to the next level.

Eastwood v. Kenyon
•    A case of the guardian versus the husband.
•    Sarah Eastwood left orphaned.  Guardian borrowed money to spend on her upkeep during her infancy.
•    At 21, Sarah got married.  First promised to compensate her guardian.
•    New husband then made the same promise.  Does not complete this promise
•    Must identify the promise being sued on.
o    The relevant consideration is the one that the the guardian bargained to the husband.
o    Only thing that the guardian could say is that he took care of Sarah during her infancy.
o    Could not have actually been made in consideration of the husband’s promise, as it pre-dated the promise by many years.
o    The thing which is consideration was sustained long before the promise being sued on.  Was already in the past.  Could not have been an exchange or bargain as the law demands.  The guardian is remedyless.

For tomorrow:  will return to Eastwood v. Kenyon – will do entire next section of outline. – 3 cases..

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;

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.