- LAW 108A - Final.docx · Web viewAcceptance by word/ return promise is a bilateral contract....

Sharon Zheng | LAW 108A | Spring 2012| Andrew Newcombe

THE LAW OF K

General Policy Considerations

Reasonable expectations vs. unfair surprise Sanctity of K vs. allocation of risk (who should bear the loss of a rogue,

frustration) Caveat emptor v. reliance/ unjust enrichment Promotion of private ordering vs. social utility: Will this type of promise

contribute to social utility, or is it an area that should be left to private ordering? Who’s the least risk avoider?

Unjust Enrichment? Has one party gained at the expense of another, for example, as a result of money being exchanged for the promise to perform an act?

o Restitution: one party gave up something for a long-term relationship and then 2nd party acts opportunistically.

Reasonable Reliance? Did one party rely on the other party’s promise to their detriment?

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K FORMATION: IS THERE A K?

It appears that there is a K, as the requisite elements: offer, acceptance, consideration, are present

Offer1. General

- The offeror is the master of the K- The offeree can bind the offeror to the K (has the power of

acceptance) and thus to claim expectation damages

Denton v. Great Northern Railway

2. Specific Rulesa. There must be an intent to be bound – mere advertisement,

enticement or invitation to treat (ie. negotiate) is insufficienti. An ad quoting prices and showing puffery is not an offer to

sell (K)Johnston Bros

ii. Exception: An ad that is clear, definite, explicit and leaves nothing open for negotiation amounts to a K. Can change offer anytime before acceptance, but cannot change it after

iii. A display in a store is like an ad (NOT an offer). Customer bringing goods to cashier is the offer, cashier taking money is the acceptance

Lefkowitz

Boots

b. The offer must be sufficiently specific and comprehensive that the terms of the agreement can be identified (the problem of uncertainty)

c. An offer ceases to exist if it is rejected, and in any event expires after a reasonable time (the length of which determined by the context)

i. AKA a refusal of the offer by offeree if not accepted within reasonable time (conduct of both parties post offer is assessed)

Manchester Diocesan

d. An offer can be revoked anytime before being accepted. But unless the offer has expired (passage of reasonable time), effective revocation may require notice

Dickinson v. Dodds

e. An offer is binding once it is accepted, and cannot be revoked

Intention1. General

- Acceptance by word/ return promise is a bilateral contract

- Acceptance by performance/ action is a unilateral contract

2. Specific Rulesa. Must be a clear intent to be bound

i. Jones K unenforceable (3 concurring in result):

Jones v. Padavatton

Daughter argues there is a K with her mother allowing her to stay in the house until she passes the par exam. Held: no K

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1. Due to uncertainty (meant to be flexible family arrangement, not K)

2. Other judgment: K, but implied term of a reasonable time period had elapsed

ii. Parties can agree that a [business] arrangement won’t give rise to legal relations

Rose v. JR Compton

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Acceptance and Correspondence1. Acceptance must sufficiently correspond to the offer – otherwise it is

a counter-offer2. Offeror can specify how the offer is to be accepted (place/ time/

method)

Eliason v. Henshaw

3. Generally, acceptance must be communicated (letter, verbal) to the offeror and must be done before the offer has expired or been revoked

a. Method of communication may be stipulated by offerorb. Silence is not acceptance

Larkin v. Gardiner

4. K formation generally occurs where acceptance is received5. Specific rules

a. Postal acceptance rule: offer accepted when offeree puts notice in the mail. K formed where the letter is posted.

i. Applies when post is the contemplated method of communication only

Henthorn (post in cont)

Howell v. Hughes (post not accepted)

i. Does not apply to revocation – offer open until revocation communicated

Byrne v. LeonHenthorn v. Fraser

ii. If you post a rejection/ counter-offer and then an acceptance, the r/c-o is valid as long as it’s received first

Pollock

iii. Rationale:a. Policy: efficient (2 letters v. 3), offeror can control

how offer is acceptedb. Doctrinal: postal service is the offeror’s agent

b. Faxed document: instantaneous communication rule applies – K forms where the acceptance is received

Eastern Power v. Azienda

c. Email: acceptance is likely instantaneous: made when and where the email is available (lands in the server/ inbox)

Electronic Transactns Act

Formalization and Certainty1. Courts will not enforce an incomplete

agreement:a. Lacking an essential term (ex. agreement

about price)

May v. Butcher

Tentage – no K because prices, quantity and delivery not agreed upon. Court likes certainty.

Hillas v. Arcos

Lumber – K despite uncertainties because parties acted as if there was a K (intent). K to enter into K is a K.

Foley v. Classique Coaches

Petrol for land – K, okay to K to agree upon reasonable price (there was intent to K).

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Between May and Hillas.

b. Vagueness/ ambiguity (ex. I’ll take your butter if good”)

c. Agreement to agree/ to negotiate (letters of intent, memo of understanding)

2. Policy: Generally, where the courts are willing to read a term as being forming of a contract, there has been an agreement that already works (and hint of unjust enrichment). K likes certainty + commercial efficiency.

- Sale of Goods Act: where there’s no agreement on the price of sale, courts can read in term of reasonable price (generally only for executed Ks)

3. Courts can enforce an agreement to negotiate for mutual agreement

o There’s a duty to negotiate in good faitho Questionable – but good authority in BC so

far

Empress v. Bank of NS

Rental agreement. Ongoing relationship that had worked in the past, a whiff of unjust enrichment

o HL recognized no duty to negotiate in good faith

Walford v. Miles

o No tort duty to negotiate in good faith Martel Building v. Canada

Consideration1. Policy: to control the kinds of promises that are legally

enforceablea. Evidentiary Function: the need for evidence of the

existence of a contract.b. Cautionary Function: ensure that parties deliberate

before they contract.c. Channelling Function: ensure there is a simple,

external test of enforceability.2. General

a. Bargain promises must be made for consideration in order to be enforced

b. Usually, issues arise when there are contractual modifications or for personal Ks

3. Background considerations for determining if there’s consideration:

a. Evidence of the Kb. Deliberation (arriving at an attempt to be legally

bound)c. Unjust Enrichmentd. Reliance (someone relies upon a promise, courts much

more willing to enforce when there’s been detrimental reliance)

e. Social utility/ facilitate private ordering/utility of exchange (ex. not everything is subject to exchange, and policies are in place addressing illegality of certain

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contracted agreements)4. Specific rules

a. Motive and consideration are separate things

b. Court will not look into the adequacy of consideration if it has economic value since this indicates formality and intent

Thomas v. Thomas

1$ and maintaining the property for life interest in house is good consideration – binding K

5. Personal relationships (no consideration of economic value)

a. Abstaining from complaining is not adequate consideration – no right to complain

i. Newcombe: no right to receive $ but perhaps right to complain – evid issues!

White v. Bluett

The whining son.

b. Consideration can be a detriment to the promise

i. Newcombe: evidence was sound

Hamer v. Sidway

The puritan nephew

c. If not a K, promises to make charitable donations not enforceable (incomplete gift)

Dalhousie v. Boutilier

Said he would pay money, but gift not in will

6. Exchange of mutual promises is good consideration

a. Mutual obligations are good consideration – each promise must have value though

Tobias v. Dick

No K because no mutuality – Tobias didn’t promise anything for exclusive selling rights

b. Courts may imply a promise to use reasonable efforts on behalf of the defendant to find a K

Wood v. Lady Duff Gordon

K - because looks like a K

7. Going transactional adjustment (modifications)a. Traditionally: K modification w/o fresh

consideration is unenforceablei. Promise to do what you have already

Ked to do is not consideration

Stilk v. MyrickHarris v. Watson

Sailors already sold all their services. Today, would be dealt under economic duress

b. Modern law (leading case) adopts the trad’l approach

Gilbert Steel

c. How can GTAs be made enforceable?i. Sealii. Find new nominal considerationiii. Find new additional consideration

1. Promise of good price in future K’s is not good consideration (too vague)

2. Additional credit provided is not good consid

Unsuccessful in:Gilbert Steel v. University Construction

D (Uni) refuses to pay increase in price, claiming no new consideration. Held successful.

3. Forbearance on a legal right (ex. right to sue, to fire) is good consideration

Techform v. Wolda

Not firing an employee given for signing a non-competit’n agreement is ok

4. Paying a lesser sum for a Foakes v. 6


greater sum id not good consideration

Beer

iv. Find a new practical benefit Williams v. Roffey

Practical benefit of completing building on time is good consideration for price increase

v. Find rescission of K1 and new K21. Change in price considered

variation, not a new KGilbert Steel

Evidentiary issue – not found in this case

2. Change in price can be considered creation of a new K, if price is the only important element of K

a. Oblig. under K1 are the consideration under K2

Deluxe French Fries

Change in price can be considered creation of a new K, if price is the only important element of K

vi. Promissory estoppeld. Super modern law: dispose of the

requirementi. “Post K modification, unsupported by

consideration may be enforceable as long as the variation wasn’t procured under econ. duress”

Nav Cda v. GFAA

8. Forbearance on a right to sue is good consideration

Fairgrief v. Ellis

Agreement to pay $1000 for past services good, even though underlying claim would’ve failed

a. BUT only if the claim isi. Reasonable,ii. Made in good faith (no extortion)iii. And no concealment of material facts

Scott v. Merit

b. Claim based on invalid claim not good consideration

BDC v. Arkin

i. Wife’s waiving right to sue husband is not consid - she couldn’t give it up under statute

Combe v. Combe

9. Debt Settlement/ Compromise Agreementsa. Agreement to pay partial sum (lesser for

greater) is enforceable if expressly accepted by creditor

Law and Equity Act

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Non-Bargain Promises1. Under Seal (clear intention)2. Consideration given after K transaction is not

good:a. Consideration must be contemporaneous

with promise, not after the factb. Policy: lack of deliberation, lack of

reliance, no unjust enrichment, moral v. legal obligations, concerns re: fraud on creditors from “paying” family back

Roscorla v. Thomas

Promise that horse was free of vice was given after K transaction (horse for $) – no consideration for this

3. Acts done before consideration generally not good:

a. Can’t sue for voluntary courtesy,b. But if past act was done at the request of

promisor, can characterize as unilateral K to get around consideration

Lampleigh v. Braithwait

Asks to get pardon for killing a man (like snow shoveling). Held: K good, since requested.

c. BUT may be considered K if:i. Act must be done at promisor’s

requestii. Parties must have understood that

there would be paymentiii. Payment must have been legally

enforceable if promised in advance

Pao On v. Lau Yiu Long

4. Even absent consideration, may be able to use reliance (estoppel)b. Reliance is not consideration, but can use promissory estoppel to protect

against detrimental reliance on another’s statement, incl. in the context of GTAs

c. Party is barred from denying the truth of their statements re: future action

Hughes v. Met. Railway

Landlord can’t enforce strict rights, counter to dealings between parties. Estoppel.

High TreesPromise to accept smaller sum is binding, even absent consideration. Estoppel.

d. Elementsi. Existing legal relationship between

the parties;

High trees and Owen Sound Library

1. In personal cases, may not find legal rel.

N.M v. A.T.A

P gives up job to move to Canada to be with D. No estoppel.

ii. a clear promise or representation;iii. made with the intention/knowledge

that it be relied upon;1. That one party grants

indulgences to another isn’t enough to create an

John Burrows Ltd v. Subsurface

No intention that the legal relationship re: payments would be altered

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expectation that the strict rights of the K wouldn’t be enforced

2. BUT doesn’t require direct evidence – can be inferred based on evidence (obj test)

Owen Sound Library

Negotiations may be “assumed” to be moved to a later deadline Newcombe: it’s a stretch …

iv. reliance; andv. no compelling reasons to excuse

person from representation (i.e. coercion, duress)

D & C Builders

Builders abt to go bankrupt coerced by woman into accepting lesser sum

vi. equity, therefore clean hands required

e. Shield only – not a cause of action Gilbert Steel

i. Don’t stretch High Trees too far Combe v. Combe

Wife unsuccessfully using it as a sword against husband who promised to pay

ii. Policy: estoppel as a cause of action would makes K tort-like (injurious promise)

iii. Is a cause of action in US … perhaps the SCC will recognize it in the future if v. egregious

Red Owl, Waltons v. Maher

Unilateral K1. Historically: motive does not matter, only

conductWilliams v. Carwardine

Reward for info leading to murder conviction

2. Modern C/L: motive is relevanta. To be eligible for award, must have

knowledge of the offer and act with the intention to accept it

Crown v. Clark (Australia)

Reward for into leading to murder conviction

3. Performance of the unilateral K = acceptance, no notification required

Carlill v. Carbolic Smoke Ball

Ad, intended as promise and not puff

4. Government programs must have clear windows of eligibility – otherwise following the program leads to entitlement of benefits

a. Note: how do characterize performance?

Grant v. New Brunswick

Potato stabilization program. Finds program is offer, meeting elig and submitting form is accept

a. Also, government officials are ppl who have apparent authority (in this case), implied authority, actual authority

Dale v. Manitoba

ACCESS funding for U of M students throughout degree, binding

5. How can courts protect from revocation before performance complete?

a. Imply 2 K – the second being a promise not to revoke

Errington v. Errington

K1- pay mortgage and house will be yoursK2- as long as you pay mortgage, you remain in possession

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b. Imply bilateral K by an exchange of mutual promises

Dawson v. Helicopter

Dawson gave Helicopter info re: mines w/o reward

c. Offer cannot be revoked when performance has commenced

Ayerswood v. Hydro1, Dale

Energy efficiency program

d. Interpretation of what promise called for Grant, Carbolic

e. Find a relationship for trust and confidence between the parties, hold 1 liable for breach of trust

Standard Form Ks and the Tendering ProcessBattle of the forms

- Seller and buyer use standard form contracts. Each relies on its standard form, but overlapping terms

Approaches:1. First shot rule: first set of terms governs2. Last shot rule/ performance doctrine: last form wins (C/L

adopts this)3. Reconcile the terms. If contradictory, they cancel each other out and

the court implies reasonable terms

Tendering process- Owner/ buyer makes calls for tenders/ bids. Two contract approach:- Contract A: governs the tendering process. The call for tenders is an

offer and the submission of bid is acceptance. If a bid is accepted, the bidder must enter into K B

o Contract A terms depend on the call for tenders- Contract B: The contract for the provision of goods/ services- Generally, contract A must accept only compliant tenders (otherwise

the next K in line has right to damages), and must treat all bidders fairly and equally

MJB Enterprises

Double N Earthmovers

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K FORMATION: WHO IS INCLUDED IN THE K?

Third-Party Beneficiaries1. Only the contracting parties have rights and

obligations, beneficiaries of the K who are not party to it have no privity

a. POLICY: beneficiary gave no consideration, want to avoid coercion from beneficiary

b. Natural love and affection is not consideration

Tweddle v. Atkinson

2 fathers agree to exchange dowry. One father dies, son in law sues for promised contribution. HELD: no privity of K!

Beswick v. Beswick

Man sells coal business to nephew (K), nephew agrees to terms (to pay widow) but ceases. HELD: no privity with widow but she could sue as executor of his will!

Dunlop v. Selfridge

Manuf->Wholesaler->Retailer. W is not an agent of M. No privity between M and R even though price control between W and R is for benefit of M

2. Only those in a K have protection under exclusion of liability clauses

3. To get around these issues can argue:a. Trust (trustee in K beneficiary is 3P)b. Assignment (assignor is in K assignee is

3P)i. Governed by Law and Equity Act s.

36c. Agency (agent is in K principal is 3P)

THE AGENCY TEST FROM NZ SHIPPING

NZ Shipping: stevedores negligently damage a drill while unloading it. Are they protected by the limitation of liability between plaintiff and carrier? YES!

Greenwood: employees of CT negligently cause fire. Are the protected by the limitation of liability between the shopping centre (lessor) and CT (lessee)? NO! Held: risk was allocated in lease arrangement.

1. Negotiating parties intended 3rd party to benefit

Yes. Bill of lading (K) had clause extending protection to “every IC of the carrier”

No. No evidence that clause intended to apply to employees.

2. Contracting party must also be contracting as agent of the 3rd party

Yes. Bill of lading state carrier was acting as agent for ICs

No. No evidence that CT was contracting for employees.

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3. Party acting as agent must have had authority to do so

Yes. Carrier authorized because stevedores is a subsidiary. Also, this can be granted ex post factos.

No. No authorization or ratification.

4. There must be consideration moving from 3rd party to the non-agent party

Yes. Stevedores unloaded the drill from the boat (unilateral K – you unload drill, I accept you’re covered)

No. No consideration from employees to Greenwood. It was a lease – no performance by employees that could count as consideration

4. ISSUE: Greenwood shows that the NZ Shipping agency test is formalistic, causes unfair surprise, provides poor distributive justice (employees unable to pay), inefficient (if employees have to get own insurance)

5. MODERN LAW: relaxing privity in the context of employment relationships (relaxed NZ Shipping test)

a. POLICY: corporations have no arms and legs

THE RELAXED AGENCY TEST FROM LD – for employment relationships

London Drugs: LD enters into K with KN to store a transformer. K limited KN warehouseman’s liability to 40$, LD gets own insurance. LD asks to retrieve transformer employees negligently damage transformer.

Hypothetical Greenwood: Does LD overrule Greenwood? Court holds no – it’s consistent (distinguishes G, see below). Newcombe: Greenwood is likely overruled.

1. Express or implied terms in limitation of liability clause to include the employees

Yes. Exclusion clause identified warehouse employees

Likely no. K was about lease of space – employees not necessary to perform K (Newcombe: unconvincing, without employees no reason to lease space)

2. Employees acted in course of their employment and were providing the very services provided in the K when loss occurred

Yes. It was the job of employees to move the transformer.

Likely no. Employees strangers to K. Clause was a lease provision, not limitation clause.

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b. ISSUES: employees still unprotected if employers have no insurance/ limitation clauses, or if they aren’t extended to employees

6. MODERN LAW: relaxing privity in the general commercial context (Fraser River v. Can Dive)

THE RELAXED AGENCY TEST FROM FRASER RIVER – for non-employment relationships

Fraser River: FR rents out vessels to charterers. Boats are insured, K between FR and insurer includes waiver of subrogation. CD charters and negligently sinks ship – insurer pays, but can’t sue CD since no subrogation. Can insurance co amend K to get subrogation rights? No – charterer can rely on waiver of subrogation even though they are not in privity. Since 3P had a right to rely, it cannot be revoked once crystallized.

1. Did the King parties intent to give a benefit to 3rd party?

Yes – express reference to charterers in insurance

2. Are the actions of the 3rd party in the contemplated scope of the contracting parties?

Yes – chartering the boat was within the contemplated scope

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K INTERPRETATION: WHAT IS IN THE K?

Guiding Principles to K interpretation1. Purpose of K interpretation is to ascertain the

true intentions of the parties at the time the K is signed

2. If ambiguity:a. Literal meaning should not be applied

where it would bring about unrealistic result

b. Where the words can bear 2 construction, choose the more reasonable one/ the more fair result

3. If no ambiguity: above rule is not determinative – presume that parties intend the legal consequences of their words unless result is absurd

a. No need for extrinsic evidence (see Parol Evid below)

4. Objective approach to determining parties’ intention at time of K

5. The “factual matrix”, “commercial context” and “surrounding circumstances” are almost always relevant to the written K, regardless of extrinsic evidence

6. Interpretation must give effect to all parts of the agreement – presumption that no provision is redundant/ meaningless

a. Resolve inconsistencies if possibleb. In reality, lawyers often use duplicative

language7. Subsequent conduct8. Related agreements: if agreements are a

component of a larger transaction9. Meaning of words: natural/ ordinary meaning,

unless evid of otherwise10. Contra proferentem: ambiguities to be

construed against the drafter

Consolidated Bathurst v. Mutual Boiler

Eli Lilly v. Novopharm

Waddams

Reardon Smith v. Yngvar Hansen

BG Checo v. BC Hydro

Re CNR and CP

Parol Evidence1. If there’s a conflict between written K and

extrinsic evidence, there’s a strong presumption that the written K contains the entire agreement

Carman

2. General: parol evidence is presumptively Prenn K re: purchase of shares. Parole ev not

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inadmissiblea. Even without parole evid (ex. evid of

negotiations), the K is still to be interpreted in its context

admitted, but commercial context used in K interpretation to achieve the same thing

Hawrish v. BMO

Signed guarantee is binding despite oral assurance by bank manager that are contrary to the signed K

a. If language of K is clear and unambiguous, extrinsic evidence not admissible to alter it

b. Policy: administrative ease, prevents fraud, enhances certainty, efficacy of commercial docs, prevents unfair surprise, controls agents/ employees

Fridman, KPMG v. CIBC

3. Exceptions – parol evidence admissible if:a. Parol evidence of a distinct collateral

agreement that doesn’t contradict main K

i. Therefore a way to get parol evidence into a K is to characterize it as 2 Ks

b. Written agreement not the whole Kc. There was a separate agreement along

with written K claimed (collateral K, warranty, but NOT condition): follow modern rule

d. There’s an ambiguity that needs clarifying

e. There’s a claim of:i. Misrepresentationii. Mistakeiii. Rectificationiv. Condition precedentv. Unconscionabilityvi. Modification and dischargevii. An equitable remedy

f. However, inadmissible:i. To show the subjective intention of

the partiesii. To introduce evidence of a collateral

K contrary to the written K

Gallen v. Allstate Grain

Hawrish v. BMO/Bauer/Carmen

Hawrish: oral assurance by bank manager that are contrary to the signed K

4. Modern rule:Gallen v. Allstate Grain

Oral warranty that wheat would grow over weeds, but written exclusion clause states no warranty re: productiveness. Held:

g. If the oral representation was a warranty, then:

i. Parol evidence is admissible;ii. Oral warranty and document must be

interpreted together and

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harmoniously if possible;1. Ex. can read down exclusion

clause: if you mean for something to be excluded, do so explicitly

iii. If no contradiction, then Hawrish/Bauer/Carmen has no application; and

iv. If there is a contraction, follow Hawrish: strong presumption in favour of the written K (but not absolute); and

v. If on the evidence it’s clear that the oral warranty was intended to prevail, it will prevail

vi. Note: contra proferentem

Zippy Print

written clause is about yield, doesn’t affect its ability to grow over weeds

Franchisor – franchisee, clear disparity in power between the two parties

h. If there was a representation:A general exclusion clause will not override a1) specific representation on a2) point of substance which was3) intended to induce the K unless the4) intended effect of the exclusion clause was made clear. Factors:

i. General: intent, reliance, reas. exp, unfair surp

ii. Nature of representation: quality of evidence, clarity and specificity, significance

iii. Seriousness/ nature of contradictioniv. Nature of document: whole

agreement? Clarity? Read by parties (knowledge)?

v. Bargaining relationship: power, standard form K, past relations/ experience, sharp practice?

i. Presumption in favour of written K increases:

i. Adds a term -> varies -> contradicts

j. Today, exclusion clauses explicitly exclude a lot of things

Misrepresentations, Warranties and Conditions

Classification Remedy Interests Protected

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(a) Mere Puff None Caveat emptor(b) Innocent Misrepresentation

Rescission Restitution (prevent unjust enrichment)

(c) Negligent Misrep

These are tort } actions, not actions in K

Reliance Reliance (tort damages for the fraud)

(d) Fraudulent Misrep

Rescission and reliance Reliance (tort damages for the fraud)

(e) Warranty Expectation Reasonable expectation

(f) Condition Repudiation and expectation Reasonable expectation

(g) Innominate term (Hong Kong Fir event)

Damages or repudiation Reasonable expectation

1. Puffa. Legally meaningless, to encourage a sale,

no remedy – caveat emptor2. Innocent misrepresentation

a. Testi. Representation of fact that

unknowingly are false;ii. Material (important matter);iii. Induces the making of the K; andiv. relied upon (can be presumed)

b. Policy: caveat emptor v. unjust enrichment

Redgrave v. Hurd

K to sell law firm to lawyer. Buyer finds it’s not worth as much as represented, refuses to buy. Note: lawyer had opportunity to see books. Seller argues specific performance (P). Buyer argues rescission (D). Held: innocent misrep, rescinded.

c. Remedy: rescission (equity) to protect unjust enrichment (restitution), but only possible if:

i. It’s possible to put the parties back into the state before K was formed (ex. can return goods as they were)

ii. K is not executed1. In sale of land, rescission not

available once K is executed

Redican v. Nesbitt

K for sale of cottage cannot be rescinded after performance, since land is land, regardless of electric.

2. More leniency in sale of consumer goods: reasonable inspection period

Ennis v. Klassen

Sale of BMW, misrep of model discovered 3 days later, rescission allowed

a. 5 years is too long – should argue warranty or condition (if not under Sale of Goods Act) instead

Leaf v. Int’l Galleries

Sale of “Constable painting, 5 years later found out it wasn’t real. No rescission – too late.

3. Note: Sale of Goods Act has reasonable inspection period (1-2 days)

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d. Note: can only get equitable remedies (restitution, rescission), no reliance damages (which are C/L)

3. Negligenta. Tort, not K (therefore can get around

privity of K)b. Remedy: Reliancec. Application:

i. In providing information/advice/opinion, a professional has a duty of care in tort even without a K relationship

Hedley Byrne

Bank negligently provides positive credit report, causing economic loss to lender. Establishes the tort of neg. misrep. but neg. misrep not found since express disclaimer

Esso Petroleum

Neg misrep found: Esso has professional knowledge re: expected fuel output and did not usereasonable care in providing it.

4. Fraudulent misrepresentationa. Tort, not K (therefore can get around

privity of K)b. A known false statementc. Remedy: rescission, reliance, to protect

reliance damages

Peek v. Derry

5. Warrantya. A term of K that the parties intend to be

binding, but not central (“intelligent bystander” test for intent, based on words/ behavior, not thoughts)

i. We can characterize a warranty as a collateral (2nd) K – but this is a legal fiction

b. Remedy: Expectation damages, to protect reasonable expectatn

Heilbut Symons

Buys shares in rubber co, held no warranty. Found innocent misrep but no rescission available since they had sold their shares

Esso Petroleum

Warranty found. See under negligent misrepresentation.

c. Test: prima facie a warranty if:i. Representationii. Made in the course of dealingsiii. For the purpose of inducing the

other party to act (an important issue)

iv. Induces entry into the K (reliance)v. And reliance is reasonable

Dick Bentley

Care salesman makes statement about mileage, buyer finds later that it’s false. Was the representation innocent misrep or a warranty? Held: warranty, sellers should have known

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d. Representations made by a brochure can also amount to warranty if they meet the Dick Bentley criteria

i. Manufacturers who would be liable for direct sale are also liable for indirect sale

e. Representer can rebut this by showing innocent misrep, ex. if the representer truly didn’t know, and for good reason

Murray v. Sperry Rand

Manufacturer liable to farmer for a forage harvester that did not meet the represented expectations (defective or unsuitable). Brochure, which indicated the machine’s specs/performance, held to be a warranty.

7. Conditiona. A term of fundamental importance (going

to the root of the K) ex. price or type of good

b. Remedy: Repudiation and expectation damages to protect reasonable expectation

c. Sale of Goods Act (can K out of these)i. s. 32: unless otherwise agreed,

delivery of goods and payment are concurrent conditions

ii. Goods are reasonably fit for their purpose, are of a merchantable quality, durable for a reasonable time

iii. Once goods have been accepted and after a reasonable inspection period,

Hong Kong Fir

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a condition is treated as a warranty (damages but no repudiation)

8. Innominate Terma. Between a condition and a warranty –

remedy depends on whether the breach is fundamental (repudiation and damages) or not (damages only), to protect reasonable expectation

9. Analytical approachesa. Doctrinal: legal testb. Policy: protect reliance, reasonable expectation, while avoiding unfair

surprisec. Economic: who is the least cost avoider?d. Remedial: categorization is remedy driven

Concurrent Liability in K and Tort1. Historically, courts reluctant to recognize right of action in a tort in the context of a

ka. commercial is the arena of contract – risks should be allocated by contractb. floodgates concerns re economic lossc. words are different from acts: potential plaintiffs unlimited, especially once

you put them in printd. words exist forevere. economic not physical loss

2. SCC: where a given wrong is prima facie actionable in K and tort, party can sue in either or both, subject to any limits the parties themselves have place on that right by their K

3. Tort modified by Ka. K-ing into more obligations: K oblig > tortb. K-ing out of obligations (express terms only

– exemption/ exclusion of liability clause): K oblig < tort

c. K = tort: K is easier case to make, but tort may have longer limitation period (in BC, 2 yrs)

d. These modifications by K apply only wrt the wrongs falling within the scope of the K

BC Checo

Central Trust

You can K out of torts

4. Remedy: Torts give rise to reliance damages, but with a “whiff” of expectation damages = a lot like K damages

a. Capital, interest overdraft, lost wages, time it’ll take to re-establish self after wasted endeavour

Esso Petroleum

Reliance damages from neg misrep, but included his opportunity costs. Looks like expectation measure!

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Exclusion of Liability (Exclusion Clauses, Waivers, and Limitations)1. Doctrine of Fundamental Breach –

a. Exemption clause can’t excuse liability for a breach that goes to the root of the K (Denning)!

Karsales v. Wallis

D (purchaser) refused delivery of severely damaged used car, P relies on exclusion clause. Denning finds fund breach

b. Rejects Doctrine of Fundamental Breach as a rule of construction, not a rule of law

Suisse Atlantique

i. No more doctrine of “fundamental breach” for exclusion clauses! Contra Proforendum

ii. Replaced with test of reasonableness: examining the reasonable intentions of the parties at time of K re: what falls in the exclusion clause. Ex. Commercial context

iii. Breach brings K obligations to an end

Photo Production

K to provide security to building, burns it down. Exclusion clause applies – services for security cost very little, more cost effective for factory to have insurance

2. Canadian Approach:a. Lay the doctrine of fund breach to rest and

deal explicitly with unconscionabilityHunter Engineering v. Syncrude

K for conveyor systems, gears fail. Exclusion clause applies. Clause clear an unambiguous. No evidence of unconscion.

b. The end of Fundamental Breachi. As a matter of interp, what is the

exclusion clause meant to incl?1. Ambiguity, contra prof etc. Ex.

Is the exclusion lmtd to the subject matter of THAT K? Can there be a collateral K for other stuff?

ii. If the exclusion clause applies?2. Unconscionability at the time

K was made?3. Public policy and illegality

(Plas Tex v. Dow)?iii. Newcombe: removes lots of flexibility

Tercon Contractor v. B.C.

Exclusion clause does not apply, but because the issue was outside the tendering process which had the exclusion clause.

Defences – How to Get Out Anyways

Non Est Factum (it is not my deed)1. General: Signature rule – signed contract is proof

of acceptancea. No estoppel available

2. Exceptions:a. Fraud/ forgery (person had no signed)b. Person did not know what they were

signing (blind, illiterate, lack of mental

L’EstrangeSaunders v. Anglia

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capacity)c. EFFECT: rescission – K voidd. For plea to be available:

i. Document must be fundamentally different from what the signer believed it to be. If you know you’re signing a legal doc, non est factum not avail

ii. Signature must not be brought about by carelessness of signer in taking precautions

e. If you’re a literate adult of a normal mental capacity, then presumption that your signature is binding

Saunders v. Anglia

Aunt relied on nephew, did not ask for it to be read aloud when her glasses were broken and there was no mistake re: essence of the doc. K is good.

f. Rationale: signer is in the best position to avoid loss

Marvco Color

Parents held careless

Doctrine of Reasonable Notice1. Generally: signature rule – signed contract is

proof of acceptanceL’Estrange

2. Exception: unsigned docs that contain conditions (ex. tickets: train, bus, movie, amusement park, parking, museum, skiing etc.):

a. Doctrine of reasonable notice: where customer did not know of the specific conditions, evidence is required to show assent to terms:

i. Actual knowledge that docs contain conditions

ii. Reasonable steps taken to provide notice that doc contained conditions

Mellish Rule inParker v. South Eastern Railway

Ticket received for storage of bag at railway. Bad lost, ticket limited damages to 10 pounds

a. The more onerous the condition (unusual, unexpected) the more notice required

J. Spurling v. Bradshaw

3. Exception: party may not rely upon terms if signer had no actual knowledge and no reasonable steps were taken to bring it to his attention (adopting Doctrine of Reasonable Notice)

a. Limitation: applies only when contract writer knew/ ought to have known there was no actual assent (applied narrowly)

i. Ex. transaction supposed to be fast – situation does not anticipate that customers will read the K

ii. Ex. onerous provisions in standard form K

Tilden Rent-a-Car

Karrol

Standard form K. Exclusion clause was very broad, and had an onerous provision that was inconsistent with the purpose of the K.

4. Relevant factors re: reasonable notice:22


a. reasonableness/ onerousness of exclusions,

b. whether notice was in plain English,

c. when it was made available

d. size of the fonte. length of the Kf. context (ex. standard form K)

5. Modern law: traditional rule prevails - in absence of evidence of unconscionability, fraud, misrepresentation, non est factum

Delaney v. Cascade

a. Tilden is only applicable in special circumstances: where person knew or had reason to know of other’s mistake as to its terms

Karrol v. Silver Star

Waiver for ski race upheld – K said that it was a “waver of liability”, clear language, short, routine, no contradicting purpose

Penalties and Forfeitures1. Damages clauses ok: parties can K for their own

damages based on the damages estimated to suffer

2. Courts will not enforce penalties/ forfeitures, where there’s no relationship between the amount to be paid and the amount damages would be

a. Penalty: whether it would terrify you into K performance, sum is extravagant compared to loss

Thermidaire Corp

Provision requiring payment of gross trading profit for breach of convenant not to sell competing goods is “grossly excessive and punitive?

b. Forfeiture: whether it would be grossly disproportionatee and unjust enrichment

3. Law and Equity Act s. 24: court may relieve against all penalties and forfeitures, and in granting the relief may impose any terms as to costs, expenses, damages, compensations and all other matters that the court thinks fit

Stockloser v. Johnson

Default on machinery leading to repossession and retaining all installment payments is grossly disproportionate – 1 day late and 10 day late lead to same forfeiture

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Illegality (residual)1. Contrary to public policy: “No court will lend its

aid to a man who founds his cause upon an immoral or illegal act”

a. Injurious to the state (bribery, corruption)b. Contracts injurious to the administration of

justice (paying a witness not to testify)c. Contracts involving immoralityd. Contracts affecting marriagee. Contracts in restraint of tradef. Contracts to benefit from crimeg. Contracts for surrogacy

HolmanWorld duty free v. Kenyan Airport

ShafronAssisted Human Repro Act

Trade of the from France to UK

Restrictive covenant for employment

2. Common Law illegalitya. Re: restraint of trade, non-competition

clauses must be clear and certaini. Remedy: doctrine of severance (blue

pencil test)b. Person committing illegal act cannot

benefit from it (ex. cannot be paid insurance)

Shafron v. KRG

Brisette

Clause struck out, since the legal entity did not exist

Man kills wife. Insurance cannot be paid out, even if it’s to create a trust for the children, since husband is the beneficiary

c. Innocent parties should not be disentitled benefits

Oldfield Husband dies while smuggling cocaine. Wife doesn’t know, allowed to collect insurance.

3. Statutory illegality Rogers v. Leonard

Sale of cottage void since signed on Sunday contrary to Lord’s Day Act

4. Mitigating the consequences of illegality (remedies)

a. Traditionally: if there’s illegality, the K is void as contrary to statute

b. Modern law: there’s a spectrum of remedies

i. Void ad admissio because illegal from the beginning (ex. K to sell heroine)

ii. Regulatory illegality (ex. transport truck doesn’t have insurance) – court may find K is valid, but with administrative sanctions

c. Exceptions to non-enforcement (where court will find K despite illegality)

i. Parties are not in equal fault – less blameworthy can seek action against more blameworthy

ii. One party repents prior to K completion

Outson v. Zurowski Pyramid schemed, find

both parties are in equal fault. Ignorance of the law makes you no less blameworthy

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d. Notional severance: capping interest rate to non-criminal rate (CC s. 347, >60%/annum)

New Solutions SCC 2004

Interest rate is 60.1%

e. Severance (blue pencil test)f. General principle post-Still: what public

policy is engaged? On these facts and given the purpose of the statute is it contrary to public policy to permit P an action?

Shafron

Still v. Minister of Natl Revenue

Still applied for permanent res and worked. EI benefits later denied because her employment was illegal. Court held she is entitled to relief: she acted in good faith and paid into EI, she wasn’t en illegal immigrant.

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Unconscionability, Undue Influence and Duress (residual)1. Issues re: fairness of bargain can be dealt with

using undue influence, unconscionability, duress at the time of K formation

2. Remedy: rescission

Unconscionability:1. Focus on overall commercial morality of the

bargain2. TEST:

a. Procedural - Inequality in bargaining power; AND

i. Contextual factors: economic resources, knowledge, education, need, disability

ii. Common categories: tend to be from existing relationships (employment, family) but no express categories

b. Substantive – improvident bargaini. Assume pareto efficiency

3. A combination of a) and b) means agreement should, prima facie, be set aside. Onus on party seeking K performance to show they considered the interests of the other party (Mundlinger)

Marshall v. Canada Perm Trust

Agreement by Walsh (elderly man, mentally incapacitated) to sell his estate held to be unconscionable

Mundlinger v. Mundlinger

Wife, while on medication, agrees to relinquish rights to support and the family home to husband for $10,000 (husband angry when she contacts lawyer). Held: unconscionable.

St. Pierre v. St. Pierre

House with taxes in arrears. K by family with grandson that if he pays taxes, he can have the house after grandmother leaves. Kicks grandmother out. Held: unconscionable. Also found undue influence.

Lidder v. Munroe

Punjabi man and ICBC adjuster. Held innocent misrep, also found unconscionability.

6. Measured at the time of the K Hunter Eng7. Community standards test (less accepted): is the

transaction a s a whole sufficiently divergent from community standards of commercial morality that it should be rescinded?

Harry v. Kreutziger

Undue Influence:1. Focus on improper exercise of influence by

someone in a special relationship of trust/ confidence that overbears will

2. TEST:a. 1. Actual undue influence: emotional,

physical violence (onus on undue influence claimant)

b. 2. Presumed undue influence:i. a. De jure (of law): fiduciary

relationships, trustee/beneficiary, solicitor/client, doctor/patient, priest/worshipper (onus on K claimant)

Earl of Aylesford v. Morris

Lloyd’s Bank v. Bundy

Elderly Mr. Bundy signs bank guarantees for debt of son’s company, secured by his farm (only asset). Held undue influence, relationship of trust between bank

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ii. b. De facto (of fact): if 1) relationship of trust/ confidence and 2) improvident bargain (onus on undue influence claimant) then up to K claimant to discharge proof

1. Ex. spousal relationships: 1) often both parties trust one to manage finances 2) fear of damaging the relationship is a ready weapon

2. The greater the disadvantage, the more cogent the relationship will have to be

manager and Mr. Bundy.

Pridmore ICBC adjuster is like de jure relationship between solicitor and client. Note: discusses the fact that these categories aren’t actually separate.

3. Spousal/ co-habitant relationshipsa. There is always constructive notice of the

risk of undue influence where spouses/ co-habitants co-sign for debts and they meet the de facto category

i. Banks put on notice, to absolve themselves of liability should;

1. Meet with spouses privately2. Explain extent of liability3. Warn of the risks4. Urge the person to obtain indep

legal advice

Royal Bank of Scotland v. Etridge

Wife charges matrimonial home as security for husband’s debts. Bank tries to collect, wife asserts undue influence.

Duress1. Focus on coercion of will that vitiates consent –

no alternatives2. Traditionally: K void – vitiated consent3. Modern approach: voidable at the option of the

party who was the object of the duress4. Categories:

a. Duress to personb. Duress to goods, propertyc. Economic duress

5. Test:a. Pressure amounting to compulsion of the

will of the victimi. Victim’s intentional submission from

the realization that there are no practical alternatives

ii. Factors: whether the coerced party protested, the availability of alternative options (determinative!), existence of indep legal advice, whether the coerced party tried to avoid the K

Pao On

Universe Tankships v. ITWF

Lidder

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b. Illegitimacy of the pressure exerted, in light of the nature of the pressure and the nature of the demand

i. Ex. threat of unlawful actionc. If the victim expressly or implicitly

approves the K after the pressure ceases to exist, no duress will be found

6. Applies to GTAs, but the illegitimacy test is hard to apply (incoherent, unruly)

Gordon v. Roebuck

Coercion found in GTA in real estate transaction, but no duress because no illegitimate use of power.

Gotaverken Energy Systems

GTA in a pulp contract, court found duress because pulp co had no effective alternative. Pulp co agreed under protest, hadn’t taken legal advice re: duress and avoided the K once work completed.

a. New test for GTAs?i. Was the promise extracted as a

result of “demand or threat”ii. Did the coerced party have no

practical alternativeiii. Assuming i and ii, did the coerced

party consent to the variation?b. Factors: was promise supported by

consideration? Was the coerced promise made “under protest”? If no, did the coerced party try to disaffirm the promise ASAPractical?

7. Not yet adopted by SCC

NAV Cda v. GFAA

Duress found

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Mistake (residual)Mistakes occur when there's a misunderstanding in assumption regarding the facts. Mistake can be pleaded during a K, or after it’s been completed

Common Law Mistake1. TEST (a common mistaken assumption):

a. If there is a true ambiguity;b. regarding an important/fundamental

term of the agreement;c. there is no reason to prefer one party’s

understanding over the other; andd. parties have not allocated this risk

contractually already (express or implied),e. the agreement may be void for mistake.

2. Remedy: K void3. Policy: assignment of risk: who ought to bear it?

Raffles, Sherwood, Bell

Staiman Steel (sharp practice), Smith

4. Traditionally, mistake was based subjectively on whether there was a meeting of the minds

Raffles v. Wichelhaus

Peerless 1 and 2. Court finds K void due to fundamental mistake – no subjective meeting of the minds. Newcombe: likely wrongly decided

5. Modern Law: when the mistake is based on K formation, the test is objective: what would a reasonable person have thought?

Smith v. Hughes

D believed he was buying old oats, P was selling the present oats. Held no mistake based on objective K formation. He relied on his own judgment of what the oats looked like (didn’t ask specifically) therefore own mistake.

Staiman Steel v. Commercial

K for “all the steel in the yard. K formation issue. Court held a reasonable person would assume all the old steel, therefore no mistake - there is a K for all the old steel.

6. When the mistake is based on terms of the K, court may find mistake if:

a. Identity of contracting partiesb. Res extincta and res suac. Quality of subject matter is fundamentally

mistaken

Sherwood v. Walker

Rose II of Aberone: beef or breader? Mistake, K void.

Bell v. Lever Bros

No fundamental difference between terminating with severance and terminating with cause. No mistake. Note: courts rarely interfere with settlement agreements

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Equitable Mistake (common, unilateral or mutual mistakes)

1. Factors:a. Neither party can be at faultb. Must rise to the level of unreasonableness

for a party to profit from the mistakec. There must be no injustice to innocent 3rd

partiesd. The mistaken terms may not have to be

fundamental?

Ron Eng

2. Remedy: K voidable Solle v. Butcher

B rents apartment to S, both believe it’s not subject to rent control. Common mist. Equitable mistake, K voidable.

3. The UK no longer recognizes equitable mistake Great Peace Shipping

Ships mistakenly 36 hours apart. CoA overrules Solle – no equitable mistake.

4. Canada still recognizes equitable mistake, to retain the policy flexibility to correct unjust results. But it’s hard to differentiat from C/L and equitable mistake

Miller PavingRon Engineering

Affirms Solle v. Butcher

Mistaken Identity – The Rogue1. In cases of a rogue, which innocent party bears the losses?

a. C/L and Sale of Goods Act: no one can transfer to another something that she does not have – buyers beware. Protects seller

b. Equity: tends to protect the BFPVc. Economics: favours buyer, because seller is the least cost avoider (ex.

require full payment before transfer)2. Remedies are fact based, not premised a principled solution. Issue: who should

bear the loss?a. No offer. K A->B is void ab initio because

the offer was not made to the rogue – it was made to the person rogue was impersonating. Therefore B cannot pass to C. A retains title, C bears loss.

Ingram v. Little

K void. Car sale to “Hutchinson”. The identity of the rogue mattered because it’s the only reason seller agreed

i. Issue: are you intending to K with the claimed person, or the person present? Presumption that you’re intending to K with the person in front of you - to rebut it must show otherwise

Phillips v. Brooks

K good. Jewellery for cheque. A bears loss, held K was with person present. Bcus rep. occurred after K?

ii. Note: Lewis v. Avery holds that Ingram and Phillips aren’t reconcilable 31


– in both K wasn’t complete until goods exchanged handsb. Fundamental mistake (re: the identity of

the contracting party), void. C bears loss.c. Fraudulent misrepresentation – K

voidable. K between A->B is good, but A has a right to rescind under equity. A can regaining title.

i. If voidable K not rescinded before sale to BFPVw/oN, then C takes title. A bears loss.

Lewis v. Avery

Lewis sells car for cheque. Held voidable, but only if BPFV is not punished

1. This is the position in the Sale of Goods Act

ii. Issue: what’s the diff between fraudulent identity v. fraudulent attributes?

Lewis v. Avery

K voidable. A bears loss

Frustration1. Frustration is a mistake in assumption regarding

future events. It may be available when an event occurs after K formation but before K completion, that makes performance problematic

a. Impossible to perform: promisor to marry dies, painter loses sight, music hall burns down

b. Undue hardship: imposes inordinate and unexpected expense

2. Remedy: relieves parties of future performance obligations

3. Policy: assignment of risk4. Historically:

a. Stage 1. Rule of absolute promises. K liability is strict.

Paradine v. Jane

D’s land is invaded and he’s expelled, so fails to pay rent under lease (no income). Held: no frustration, should’ve anticipated this in K

a. Stage 2: Relaxing the absolute rule and imply a condition of the continued existence of the subject

i. Critique: the test is based on presumed intent of the parties (that if they thought about the situation, they would have agrees this way)

Taylor v. Caldwell

K for music hall, hall burns down. Held: frustration

b. Stage 3: Doctrine of Frustration as a rule of law and implying that a K is frustrated if the foundation/ commercial purpose of the K is destroyed

Krell v. Henry

Rooms rented to view coronation, coronation cancelled (Edward VII sick)

c. Land: frustration is not available for sale of land – land is unique and can’t be destroyed

2. Modern law: K to sell land for 8.8 mill

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a. Land: K for land can be frustrated if it involves not just the land but the commercial development of the land

i. Note: if K is completed, SOL

KBK v. Safeway

(Safeway to KBK). Zoning in ad. City rezones land, loss in value of 3.4 mill. Held: frustrated. Newcombe disagrees.

b. TEST: whether, due to changed circumstances, the risk of unfair hardship to one party outweighs the policy of enforcement (caveat emptor)

c. A “multifactorial approach” to determine whether what happened is radically different than expected, making performance unreasonable

Sea Angel

Vessel charter to salvage oil tanker. Port authorities prevent vessel leaving. Are costs of delay part of the K? Held: no frustration – charterer must pay cists if delay. Delay is foreseeable, risk of delay contemplated, not unjust for charterers to bear the risk

d. FACTORS:i. The disrupted circumstance is

fundamental to the Kii. Substantial hardship: major

economic impact, more than an increase in expense, deprives a party of the intended benefit

iii. Unanticipated risk (could be foreseeable, but unanticipated)

iv. No allocation of risk by K (expressly, impliedly)

v. No Fault

Krell, Taylor. KBK

Sea Angel

Sea Angel

3. Lossesa. C/L: losses lie where they fall. Issue: losses

are pure chanceAppleby v. Myers

b. Reform: restitutioni. Issue: recovery on restitution is

limited to monetary payments, not expenses incurred in reliance

Fibrosa v. Fairbain

c. Modren law: Frustrated Contracts Acti. Losses (ex. reliance damages)

apportioned equallyii. Does not apply to lost profits!

Rectification1. Rectification applies to a typographical or

transcription error – to restore what the parties’ agreement actually was

2. TEST (Sylvan Lake)a. Plaintiff must prove the existence and

content of the prior oral agreement

Sylvan Lake

480 by 110 yard, accidentally wrote 110 feet

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b. There must be “convincing proof” of the oral agreement (between balance of probabilities and beyond a reasonable doubt)

c. Plaintiff must provide precise wording for the rectification

d. Plaintiff must show that the defendant knew/ ought to have known of the mistake in the written doc

Shafron Rectification does not apply to change “Metropolitan City of Vancouver” (which is not a legal entity). Doesn’t meet a) or c)

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Consumer Protection1. Policy rationale:

a. Prevents monopoliesb. Accounts for externalitiesc. Adjusts for information failures (prohibiting fraud, mandatory disclosures)d. To ensure adequate consumer educatione. Paternalistic concerns: protecting vulnerable people from predatory sellersf. Redistributive concerns: ex. rent control, interest rates

2. Sale of Goods Acta. Applies only to goods: software is a disc (property) + a licence to use the

software (servive)b. Cannot K out of Sale of Goods Act if it’s a new good for retail sale (and not

business use)c. S. 17-19 = statutory warrantiesd. S. 20 = cannot waive/diminish Sale of Goods Act warranties and conditions if

it’s a new good for retail sale (and not business use)3. Business Practices and Consumer Protection Act

a. Applies to:i. Goods, services and landii. “Consumer” includes consumers outside of BC dealing with a BC

companyiii. “Consumer transaction” includes pre-K activities (representations)iv. “Suppliers” includes suppliers outside BC doing business with BC

consumers, regardless of privityv. “Supply” = sale, lease, assignment …

b. Scopei. S.5: if deceptive act or practice alleged, burden of proof on supplier

to show it didn’t occurii. S.9: if unconscionable act or practice alleged, burden of proof on

supplier. S.10: if found, transaction is not binding on the consumeriii. Express provisions for:

1. door to door sales (10 day cancellation if >50$)2. future performance K (ex. dance classes/ gym memberships have

a 10 day cancellation period)3. internet (distance) sales (certain information must be provided)4. unsolicited goods (if unsolicited, you can keep it)5. time share (10 day cancellation)6. prepaid purchase cards (no expiry date)7. consumer credit and debt collection8. funeral services Ks

iv. s. 3: no waivers/ releases of areas covered under the act, unless expressly permitted by act

v. Remedies: damages recoverable (s. 171), and can bring an action a) to declare that a contravening act/ practice has occurred/ is about to occur, b) an injunction restraining a supplier from contravening the Act

4. Rushak v. Henneken: P purchases 14 year old Mercedes, described as a “very nice car”. Held: breach of Trade Practices Act – car salesman’s conduct had the effect of

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misleading a person, “puffery” can’t be used to give an unqualified opinion when the representer knows it may be wrong. Act is to protect consumers, not punish vendors (deception doesn’t have to be deliberate)

5. Telus Arbitration Clause: in BC, cases relating to the K must be settled under the arbitration clause, but claims of statutory breach under the BPCPA can go to court

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- LAW 108A - Final.docx · Web viewAcceptance by word/ return promise is a bilateral contract....

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Transcript of - LAW 108A - Final.docx · Web viewAcceptance by word/ return promise is a bilateral contract....