Contract Law

Consideration
•    Promises – the law does not enforce promises per se.
o    Promises of gifts are not enforceable.
o    The law considers the spirit of altruism rare.
•    What criteria should we use to categorize the subset of promises that attract legal enforceability?
o    What would be a sensible way to do this?
o    The promises which the law should be designed to enforce should be “serious promises”.
•    Non-trivial
•    Or seriously-intended
o    This is approximately the majority approach of the world’s legal systems.
•    The majority of the world uses the civil system
•    In Qc. law, there is a proposition that goes back to Roman law, that a cause is enforceable (from Latin, causa).
•    This is a straightforward approach.  “We’ll enforce where there is a good reason.”
o    This is intuitive.  It is not a technical rule – aligns with the ordinary instinct of ordinary law.
o    This is not the approach that we take.
•    What criteria should be use to categorize the subset of promises that attract legal enforceability…?
o    Could go from the intuitive approach
o    The Roman approach used formality.
•    If ppl want to know that their arrangement is enforceable, then we could have (in our legal scheme), a way to formally attach something to their promise…
•    The act of “attaching” something to the promise could act as a signal that it is meant to be enforceable.
•    Ex:  ‘A promise in writing could signify that a party meant for it to be enforced.’
•    Ex:  Signature – could make it so that something would have to be signed to be an enforceable promise [problem with this is that every contract, in order to be enforceable, would require this – even simple transactions between vendor/purchaser]
•    “stamps” – issued by gov
•    shaking hands, spitting and shaking hands
•    In Rome, the parties stood facing one another, and recited to one another the terms of the contract. Stipulatia
•    Ex:  “I _____, take you _______…”

•    We do not work under this system
o    Exception:  Promises made under seal are enforceable.  This is a hold-over of (at least) the middle ages.
•    In order to give, must have intention (animus) and transfer.
•    (as well as offer, acceptance, and consideration).
o    Some things are not susceptible to manual tradition.
•    Shares (Choses in action) – how does one give a share?

•    Primarily, we no longer use “seals”

•    Scenario:
o    Person A promises person B a plane ticket to Florida.  Person B goes out and makes purchases for the trip, racking up expenses of $150.  Person A’s circumstances change, and the offer for the ticked is revoked.
•    What if Person B sues Person A for the $150, to put them back into the circumstances where they were (it is obvious that they would lose a suit for the cost of the ticket itself).
•    The court, for the most part, does not recognize even reasonable reliance on promises.
o    Our legal system does not enforce any promises that are not contained within a contract.
•    [American language]  The law enforces bargains – something for something – a trade-off.

•    In order to approach these cases, must recontextualize
o    If the problem in front of you has nothing to do with offer/acceptance (more to do with whether there was consideration [I offer you my car for $1000; I accept]), then this type of analysis will get you nowhere.
o    Will need to identify a consideration problem, which will lead to an abandonment of offerer/offeree.
•    “I promise to convey title to my car to you if you pay me $1000.”  “I promise to pay you $1000 if you convey to me the title to your car.”
•    Same sale transaction constructed as an exchange of promises.
•    In a contract, both parties are promisers, and both are promisees.
•    When we try to analyse whether there was consideration, we need to use the language of promisers/promisees.
•    Consideration is what you paid to the other side in exchange for the other side’s promise.
•    Can view the formation of a contract as an exchange of promises.
•    By the time the parties get to court, one party is suing the other (at least).
•    Plaintiff and defendant
•    Plaintiff is always suing in his/her capacity as promisee, and the defendant is defending in his/her capacity as promiser
o    By the time we get to litigation, only one of the original two-fold promiser/promisee relationships is relevant.
o    The one that is relevant is the relation whereby one allegedly promised something to the other, and broke that alleged promise.
o    In a contracts case, every defendant is an alleged promise-breaker; every plaintiff is a disappointed (alleged) promisee.
•    Mu    st understand which of the two promises is broken.
•    All contract litigation (besides the odd exception, of course…), it will always be promisee vs. promiser.
•    “Why is the plaintiff in a contracts case always suing as promisee?”
•    “Why is the defendant in a contracts case always defending in their capacity as promiser?”

Dalhousie College v. Boutilier
•    Boutilier does promise Dalhousie $5000.
•    Dalhousie, however, does not promise Boutilier anything.
o    Yes, they built building, etc., but they did not promise Boutilier that this would be in exhange for this $5000.
o    They promised him nothing – it was not a bargain; not something for something; not an exchange.
o    Even if these buildings, purchasers, etc., had been made on the strength of his promise, that does not retroactively convert his promise into a contract promise.
•    Subscription form:  Does Boutilier not say, “In consideration of the subscription of others…”?
o    Why is this not consideration?
•    His motivation is irrelevant.  Motive is not consideration.
•    They did not promise to rely on his $5000
o    Mere reliance
o    Only kind that matters is “bargained-for reliance” – if they had bargained their ability build buildings for his $5000, it might have been consideration.
•    The difference is how the parties treated the building of the building.
•    Dal did not do it in exachange for his $5000.
•    He promised, and they reacted by building the building – this is not  consideration.
**Nothing is consideration, unless the parties have handled it as consideration.**

“To hold otherwise would be to hold that a naked, voluntary promise may be converted into a binding legal contract by the subsequent action of the promisee alone without the consent, express or implied, of the promisor.” P 357 para 6.

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;

Promissory Estoppel:

•    There are 57 different types of estoppel under our legal system.
•    This is why it must be qualified as promissory estoppel.
o    Invented by Denning L. in 1940s.
o    Original formulation had in it ambiguitiy almost to the point of contradiction.
•    Para 2 on page 316
o    3 or 4 diff formulations just in that one paragraph.
o    Retreats later from “create” legal relations in regards to a promise
o    “Promise must be honoured” – is this retreated from?
o    Most succinct formulation:  “Promises intended to be binding, intended to be acted on, and in fact acted on.”
•    This is acceptable today…
•    “In each case the court held the promise to be binding on the parky parking it,e ven though under the old common law it might be difficult to find any consideration for it.”
•    The courts do not enforce the promise but do not allow the promisor to act inconsistently with it…?
•    Runs around Foakes v. Beer in this way.  Uses estoppel as a work-around.

Combe v. Combe
•    The text points out the absurdity of the fact of a matrimonial case becoming a contract precedent.
o    This is in fact what our legal tradition began doing in the 19th century.
o    The Victorial era began inventing contract law by abstracting out of all the contracts that had always existed and began to find common elements in them all.
•    Led to basic rules such as offer, acceptance, and consideration.
•    Divorced contract law from its particular situation and created a general-field theory – “The law of contracts”
•    The facts are remniscent of Balfour v. Balfour.
o    Here, the couple, during divorce, came to an agreement between them for him to pay her £100 / year.
o    After 6 ¾ years, she sues him for the arrears (he had paid nothing)
o    She wants to enforce a promise.
o    But our legal system doesn’t enforce promises.  We need consideration – a bargain.
o    What is it suggested that she swapped with him?
•    Forbearance – forebore to take him to Divorce Court.
•    This sounds like consideration.
o    Denning L. has 2 answers:
•    1)  Nothing to suggest that this was intended by either the husband or wife.  It was not a bargained-for forbearance.
•    Similar to Dalhousie v. Boutilier
•    2)  Even if she had promised to forebear, she would never lose the right to apply to the Divorce Court – there was (and still is, in a sense – in the sense that it now applies to either sex) a rule that a wife could not bar herself from getting court-ordered maintenance.
•    Denning L. says that she didn’t make this promise anyway, but even if she did, it would not be binding because it has no value.  She cannot contract herself out of this right.
•    This means that the rule, which appears to be solicitous to wives, can be read in a way to be beneficial to husbands (as in this case).
•    Normally, a bargained-for forbearance is consideration.  This is a special case because of this aforementioned rule.
•    Whenever one has a scenario where the enforceability of a promise is in dispute, then consideration must be considered first.
o    If consideration is found, then there is no need to go forth and talk about estoppel.
o    Estoppel is what makes this case famous.
•    Trial judge, having found that there was no consideration, went on and upheld the husband’s promise.
o    Did so because he believed the case fit neatly under the High Trees principle.
•    A promise relied on, and intended to be relied on, is binding.
o    Denning L. says that though it looks like it fits, he had been too broad with his wording in High Trees.
•    Combe v. Combe introduces a refinement on High Trees.
•    Page 318 – para 3:  “…lest it should be endangered.”   In other words, lest it be overruled by a higher court.
•    It is not a creative doctrine – it is a preventative doctrine.
•    “It only prevents a party from insisting on his strict legal rights when it would be unjust to allow him to do so, having regard to the dealings with have taken place between the parties.”
•    Though he says this, he immediately goes on to say that that is not to say that it is only available to defendants.
•    When one thinks of estoppel, naturally equates it with defendants.
•    Denning L. says that plaintiffs can use it just as readily, but it must always be a defensive doctrine.
•    Gives examples on top of 319.
•    Foakes v. Beer comes into play in these examples.
•    “Example 2 is breath-taking” – Bell
o    “Can even say that example #1 is breath-taking.” – Bell
o    Denning gives account of a gov. dept and the war-service disease.
•    There was a statute that said anyone whose disease was due to war service got a pension
•    Robertson made a claim as such.  Ministry accepted it, and Robertson stopped collecting evidence.
•    Then, the ministry changed its mind and said that they needed more evidence.
•    Robertson sues on his statutory entitlement to a pension.
o    Ministry says that they need evidence
o    Roberson claims they are estopped, because he put reasonable reliance on their word that they needed no more.
o    This is a case where the plaintiff estopps a defendant.
•    Robertson wasn’t suing the ministry saying, “You promised me.”  He sued on his statutory right for pension.
•    Then when they raised the inevitable defence, he put forth that they were estopped.
•    In none of these cases were the plaintiffs suing on the promise.
•    Estoppel is never part of the cause of action, but plays a key role in determining whether someone is going to win or lose.  Is a subsidiary feature of the case.
o    Denning gives a new formulation.  Less succinct than previous formulation.  Enormously wordy.  P 319 end of para 3.
•    Has inserted “conduct”
•    Could be relevant – case where a landlord allows rent to be late for 6 months, then on the 7th uses it ‘as an excuse’ to kick the pl. out.  The pl would argue that the conduct of the landlord had led them to believe it was okay.
•    “only by his word” is not accurate.  Should read, “by reasonable reliance”
•    Still has not given qulification.
o    Para 4
•    Says that if we took seriously the principle form high trees, (reasonable reliance), then why would we need consideration?
•    There is an answer…
•    Denning now accepts that this principle would overturn 9/10 of the doctrine of consideration…
•    “Its ill effecta have been largely mitigated of late, but it still remains a cardinal necessit of the formation of a contract, although not of its modification or discharge.  I fear that it was my failure to make this clear in High Trees which misled [the trial judge] in the present case.”
•    SO, cannot sue based on estoppel, but if have another issue, then can bring estopple into play.
•    Likewise, if one is being sued (and is therefore compelled into court), then can use estoppel
•    Unfortunately for Mrs. Combe, she is relying on estoppel.  This is why her action ends up being dismissed.
•    Aside:  There is no difference between variation and modification.
o    Denning says that one can use estoppel defensively, not offensively. (“to be used as a shield and not as a sword”. – Birkett L.J. page 321.  Famous disctinction created by Birkett here.)
•    WHY DIDN’T COMBE APPLY TO…[this is Bell’s favourite exam question.  Figure out what he said.  Was purposefully elusive.]  Wilbur?
•    High trees made it seem as though reasonable reliance alone would be enough to enforce a promise.
o    This would have revolutionized contracts – would have been just about fatal to doctrine of consideration.
o    To sue to enforce a promise requires consideration.
•    This is why the wife cannot win.
•    Promissory Estoppel goes from 2 factors to 3
•    1)  Promise and intention to be relied on
•    2)  And relied on by the promisee
•    3)  except that, a promisee cannot sue on the promise based on estoppel.  It cannot be the foundation of the case – the cause of action.
•    Each side can use estoppel, but the plaintiff can never sue successfully using estoppel as a cause of action.
o    This is for no good reason other than Denning L. says so
o    Denning L. made his career on making cases stand for things that judges could not foresee them standing for…
o    “Law is an awful lot like fairy tales… We often treat the past with as much profundity as a fairy tale.  …We make the wisdom of the past say something that it didn’t say yesterday.”
o    Everyone is happy to see Foakes v. Beer be defanged, so we all go along with it an pretend it makes sense.

Page 322 – Note 5.
•    Suggestion that estoppel principle might have been a substitute for consideration
Note 6
•    A) a profound question that we must eventually be able to think about…
o    The effect of the sword/shield distinction means that my promise to take less from you than I’m entitled to may be binding on me,
•    Suppose B owes A $100.  If A promises to take only $90, then the estoppel principle says that A can take the $90 (enforecable), but, if instead A owes B $100, and A promises to pay $110, then then law won’t enforce the promise.
•    This is despite that in both examples, B is $10 better off.
•    When estoppel works in high-trees, the land-lord is estopped from going back on his promise
•    When it doesn’t work in combe, the wife cannot enforce the husband’s promise that she will get money
•    6a asks us to thing about whether there is a sensible distinction between a promise to take less, versus a promise to pay more…
•    they both amount to one person being $10 richer than they otherwise would be.
•    This case did make its way to the JCPC – they gavem ultiple factors to come into an estoppel, but amounted to what Denning L. has already said.
o    “resile” – abandon a position or course of action.

D. & C. Builders Ltd. v. Rees.
•    15 years later
•    Denning L. by this time the most famous judge in the common-law world.
•    Had been promoted to house of lords, but found there was less influence here.
o    Arranged for his won demotion to chief justice of court of appeal
o    Assigned all good cases to himself.
o    M.R. – master of the roles.

Read this case for next day.  Read on to the two other decisions on pa 326 to think about where Denning’s decision stands in regards to the two others.
Also, go on to Waltons – a potentiall spectacular case from Aus. – goes back to High tress without Combe v. Combe.

Mitigation
•    The victims of a broken contract must act reasonably to mitigate their losses.
•    This will reduce the damages that the D will have to pay in the case of a law suit.
o    From Chicoutimi, a victorious P is to get their expectations.
•    So in the case of a broken employment contract, the expectation would be salary for the length of the contract.
o    However, our economic prosperity depends on people being in the workforce selling their talents.  Someone sitting at home collecting money goes against society’s interests.
•    Common law says to the victim that they must immediately act to minimize their loss.
•    The effect of the plaintiff mitigating is wholly on the defendant.
o    A successful mitigation minimizes the damages paid by the defendant.
o    If, for instance, a plaintiff does not attempt to mitigate their losses, a court will deduct this from their damages.
•    In the case of a contract for sale of goods, if one manages to replace the goods in the open market and they are more costly, then one can sue for the difference.  However, if one manages to find the goods for cheaper…
•    If reasonable mitigation costs the P money, then P is allowed to add the cost of the reasonable mitigation to the ‘tab’.

Payzu Limited v. Saunders
•    A text-book example of mitigation
•    The contract was broken – no dispute
•    P declined to mitigate their losses by dealing with the D after feeling “insulted” by the suggestino of possible insolvency.
o    Did the P adequetly mitigate?  Was refusing to buy the silk in future from the D and paying a higher price reasonably?
o    Court said that even though there were hard feelings, P should have made a business decisoin to deal with the D under the new terms – would still have been cheaper than from other suppliers.
o    Therefore did not properly mitigate their losses, and will not recover to the extent they would have had they done so.

•    What if, for instance, one is selling a car and the buyer, after making the agreement, backs out?
o    One is required to try to sell the the nonetheless.
o    Must mitigate by selling to buyer #2.
o    However, what if one has more than one car for sale (like a dealership)?
o    Though it might look superficially as if one has mitigated their damages, in fact, has lost a sale.  The car sold to buyer #2 would have been in addition to the car that was originally going to be sold to buyer #1.

White and Carter (Councils) Ltd. v. McGregor page 198
•    Contract whereby the council would be advertisements for the D on their litter bins.
•    3-year contract
•    when the contract was up, the advertiser renewed.
o    …then cancelled
•    the council refused to accept the cancellation, and proceeded as planned
•    The contract had an acceleration clause
o    Meant that if the balance due was in default for 4 weeks, the balance of the contract would become due.
•    In theory, once the defendents ‘cancelled’ the contract, the P would have immediately tried to obtain a new advertiser.
•    General Proposition of Law ¶4 page 199
o    “If one party to a contract repudiates [a contract] in the sense of making it clear to the other party that he refuses or will refuse to carry out his part of the contract, the other party, the innocent party, has an option.  He may accept that repudiation and sue for damages for breach of contract, whether or not the time for performance has come; or he may if he chooses disregard or refuse to accept it and then the contract remains in full effect…”
•    If you keep a contract alive, you keep it alive for both parties.
o    Cannot sue for breach of contract if the other party says they are breaking the contract, but the other party disregards this and acts as if it is still alive.  This gives the other party the chance to change their minds.
•    This case is not analogous to the ‘usual case’
o    Usually, one side of the contract needs the other sides’s cooperation.
o    Here, the municipality could go ahead and affix the advertisements without the cooperation of the advertiser.
o    So, do they have a duty to mitigate?
•    According to this case, no.
•    This scenario arises only when there has been a breach.  In this case, the other side breached only when it hadn’t paid the bill for the first week’s advertisement (however, there was a four-week grace period – def. in breach at the end of these four weeks).
•    The P has a duty to mitigate as soon as it is a victim of a breach.
•    This case had in it the fluke of the acceleration clause.  Instantly accelerate to the end of the contract.  If we are at the end of the contract, there is nothing left to mitigate.
•    ¶6 page 200
o    the example of the expert sent abroad to write a report
o    the expert can decline to accept repudiation of the contract and go abroad and write the report.
o    Another example where the party can go ahead without the cooperation of the other party.
o    Once the report is submitted and the party does not pay, they are in breach.
o    The contract is fully performed, so there are no losses to mitigate.
o    This is, in fact, a better example that White and Carter Councils v. McGregor, because it doesn’t have the acceleration clause.
•    Important to understand why the duty to mitigate did not arise.

•    Note 4 page 203
o    The contractor req’d cooperation from the other party to fulfill his duties (permission to enter on the land), so his failure to get permission disentitled him from suing for the contract price.

Equitable remedy
•    For any other remedy other than damages (money), in the past, had to go to chancellory court.
•    Was to correct a problem in the law
•    Explains why equity is so difficult sometimes to comprehend
o    Equity is ‘unteachable’

Next day – entire section on equitable remedies; will get into first section of next part of syllabus

This is the second class.  Last week’s class was replaced by visit to N.B. C.A.

Remedies:  Review from last day
•    Principle remedy for a broken contract is a money-remedy – damages
o    Again, do not confuse damages with damage.  Damage is the injury.  Damages is a technical term for the money remedy awarded by courts.
•    The traditional first principle of damages is that the obj. of the award of damages is to put the plaintiff in the pos. he/she would have been in had the contract been properly performed.  This works on the theory that the pl. can then take this quantum of money to go into the marketplace to buy a replacement for performance.
•    Reliance principle:  To put the pl. back to even.  Calculate how much the pl has relied up on the def’s broken promise… to make the “whole” again.
o    Fuller and Purdue – say that damages could be calculated so as to vindicate what they call the pl’s restitutionary principle.  Often, in pursuance of a contract, a pl. will have conferred a benefit on a def., enriching the def. and impovershing the pl.  Restitution to the pl. in this situation is the unjust enrichment principle, or restitutionary principle.
o    These are not a hierarchy of quantum.

•    In Peevyhouse, both the majority and the minority wish to give the Peevyhouses their expectation, but both camps interpret this expectation differently.

Anglia Television Ltd. v. Reed P. 68
•    Denning L. here brushes aside a traditional problem in contract law.
o    The pl. will not get its expectation here – this is a question of damages.
o    Do not know what the profits of the film would have been.
o    In Fuller and Purdue terms, supposed to put the pl. in the pos. they would have been in had the film been produced, but here, doing so is so speculative that it is in fact impossible.  This is so obvious that it goes largely undiscussed.
o    The courts have a slogan:  The fact that awarding damages may be very difficult does not excuse the court from doing so.
o    Here the pl. is asking for reliance.
•    Problem:  Most of the expenditure for which they seek compensation, was made prior to Reed’s promise.
•    If this is the case, then how can it have been made in reliance to Reed’s promise…?
•    Denning:  “If the pl. claims the wasted expenditure, he is not limited to the expenditure incurred after the contract was concluded.  He can claim also the expenditure incurred before the contract, provided that it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken.” ¶4.
o    Denning here sounds like he is citing a know proposition of law.  It is not.  He is making it up.

Bowlay Logging Ltd. v. Domtar Ltd.  p. 72
•    The twist in this case is that the pl. was losing money on the contract, and was in fact better off having it broken off.
•    In F&P language (and this is the first Canadian case that uses F&P), the pl. is suing, not for their expectation (as they expected to lose money), but for their reliance – the money thrown away in pursuit of a broken contract.
•    The judge does not deny that they can sue for either, but says that the court will not put a pl. into a better position than they would have occupied had the contract been fully performed. ¶4.
o    There is a limit to their recovery under the reliance interest.
o    They would have lost money under the contract.
o    Can give them their reliance, but will make deductions.
o    The court awards, in this case “nominal damages”
•    Any contract victim is entitled to token damages.
•    Unlike negligence, where one is entitled only to the damages one can prove.
•    Contract suit is more like a trespass suit.  Victorious pl. is always entitled to something.
•    Pl. can sue on expectation or reliance theory.  Reliance here would be more than expectation.
o    Though pl. may have that election, reliance recovery may not put one in a better position than had the contract been performed.

Jarvis v. Swan’s Tours p. 92
•    Here the law confronts an invisible emotional injury.
•    Denning notes that the law has had great difficulty bringing itself to a situation where it will award damages for invisible injuries.
o    In this case, the law made a sort of breakthrough.
•    Swan’s Tours’ brochure set up certain expectations of their resort.
o    Whether the brochure promised him these things is an issue.  We will take this up later in the term.
•    Jarvis, after his sub-par vacation, sues for breach of contract.
•    Denning begins by citing two prior railway cases in which he says courts declined to award for mental distress or for “mere inconvenience, sich as annoyance or loss of temper, or vexation, or for being disappointed in a particular thing which you have set your mind upon.”
•    Denning goes on to say, “I think those limitations are out of date.” ¶4.
o    Here lies the basis for the new law.  Denning.  Making it up as he goes along.  What a guy.
•    Denning gives Jarvis twice what he paid for the tour.  The trial judge had given him half his cost.
o    There is no basis for this award of damages.

•    Are employment contracts covered under state-of-mind?
•    Pages 94-97 show the consequences of Denning’s ruling in this case.

Damages:  discussion
•    Divided into two categories:  General and Special
•    General
o    The type that the law presumes a pl. would have to have incurred in the course of the contract.
o    Compensate for damage which the law presumes that such a pl. under such a breach, would have incurred.
o    Can included annoyance, frustration, etc.
•    Special damages are of the type for which one can produce a receipt.
o    Things purchased, etc.
•    Aggrevative and punative / exculport
•    Aggrevative compensate the victim for aggrevated damage.  They are compensatory.
•    Where the breach has occurred in circumstances where the victim of the breach has sustained more annoyance, disappointment, etc. than the norm, then the court can award aggrevative damages to recognize that the victim has suffered aggrevated damage…
•    Punitive damages – Contrasted with aggrevative damages.  When these arise, it is in circumstances similar to aggrevative damages.  Point though, is not to compensate the pl., but to punish and make an example of the defendant.
•    In reading the materials, note that the courts do not like to award aggrevative damages, and really do not like to award punitive damages.
•    When courts do award these types of damages, the damages are most often low.
•    There is one ON case where a civil jury awarded against an insurance company a very large sum.
•    Judges, on the other hand, have had an unwritten vow to not let Canadian civil litigation evolve into that which the U.S.’ has become.

For next day, read the notes.  Of course feel free to read the associated cases.  Read Fidler v. Sun Life Assurance, and Hadley  v. Baxendale.