11/7/13 -INTRODUCTION TO CONTRACTSBailey v.

West horse care taking Mirror Image Rule: A contract must have meeting of the minds. Restatement [Second] of Contracts S. 1 Contract: a promise or a set of promises for the breach of hich the !a gives a remed". S. # Promise: A manifestation of intention to act or refrain from acting in a specified a". Promisor: $he person ho makes the promise% i.e. manifests this intention to act. Promisee: $he person ho accepts the promise. S. & A promise is made ora!!"% in riting% or imp!ied through conduct. C D Contracts
2 The formation of a contract is generally dependent upon the existence of subjective assent to all the terms of a proposed contract by both parties, but in certain circumstances one party may be estopped from denying the reality of his or her objectively apparent consent.

3 Absence of assent by one of the parties to a contractual term proposed by the other party will prevent the creation of a binding contract but, whatever a party's real intention may be, if he or she acts in such a way that a reasonable person would believe that he or she was assenting to the terms proposed by the other party, and if that other party, upon that belief, enters into an agreement with him or her, a binding contract will come into effect. Similarly, whether a statement is to be construed as an offer capable of direct acceptance to form a contract depends upon a reasonable, objective interpretation of the words used . ailure to allege lac! of agreement until after a subse"uent default in a schedule of agreed payments may permit an inference of prior consensus.

Sale of Goods Act! "art #! Section $ % Sale and Agreement to Sell:

A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a money consideration, called the price, and there may be a contract of sale between one part owner and another.

Lucy v. Zehmer Must loo& to t'e out(ard e)*ression of a *erson as manifesting 'is intention rat'er t'an to 'is secret and une)*ressed intention' if his ords and acts% (udged b" a reasonab!e standard% manifest an intention to agree% it is immaterial ('at ma+ ,e t'e real ,ut une)*ressed state of mind Bail v. Hardy )utua! assent not necessar" for a contract so !ong as there is a manifestation of mutua! assent ******Lucy v Zehmer and Bail v Hardy are go-to cases for o,-ecti.e anal+sis/0000 C D Contracts % 1Consensus Ad Idem2
6 #t would seem that the conduct of the parties subse"uent to the purported ma!ing of a contract may be considered in determining whether the parties did in fact ma!e

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a binding contract and, if they did, what the contractual terms are.

-T3 DOCTRIN O4 CONSID RATIONConsideration: *enefit to the promisor/detriment to the promisee. *rice for ('ic' a *romise is ,oug't and t'ere,+ made enforcea,le. *argain $heor": +ontracts are a!! about reciprocit". ,ou have to give something of va!ue to get something. classic li,eral t'eor+ % *ri.ate indi.idual ! .alue! reci*rocit+ +onsideration has to be somet'ing t'at is of .alue in the eyes of the law t'at mo.es from t'e *romisee to t'e *romisor )-$-A./$,: *oth parties must be bound in some a". "ast consideration is not .alid consideration 0i.e. consideration is not an act "ou ere going to do an" a"1. Seals: /n +anada% an agreement 0promise1 under seal is ,inding% and doesn2t re3uire consideration. 5ill al(a+s ,e t'e *romisee see&ing to enforce t'e *romise Hoffman v. Wausau Concrete Co. 4!ements re3uired for a gift: o donor2s intention to give o de!iver" to donee o termination of donor2s dominion o dominion of the donee Hamer v. Sidway promises unc!e not to smoke/drink +onsideration doesn2t have to be materia!!" va!uab!e% on!" va!uab!e in the e"es of the !a ' relin6uis'ing a legal rig't is consideration 0b/c it2s a detriment1 Thomas v. Thomas ido to get estate if she pa"s 51/"ear for grounds Consideration ma+ ,e nominal! courts2 ro!e not to (udge va!ue of consideration Currie v. Misa Def7n of consideration: Some right% interest% profit or benefit accruing to the one part"' or some forbearance% detriment% !oss or responsibi!it" undertaken b" the other. Restatement [Second] of Contracts s89#
$%& To constitute consideration, a performance or a return promise must be bargained for. $'& A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. $(& The performance may consist of $a& an act other than a promise, or $b& a forbearance, or

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$c& the creation, modification, or destruction of a legal relation.

-OFFER

!"

##E$% !#E& ' ()# $R)!#)$*E(-

An acce*tance is actuall+ a counter-offer if t'ere7s a material c'ange8 A material c'ange to an offer s'ifts t'e ris& from one *art+ to t'e ot'er8 An immaterial c'ange doesn7t8 $ o tests for materia! change: 11 Does it s'ift t'e ris&: #1 6o !arge is the risk in the conte7t of the big picture of the contract8 Acceptance has to be c!ear and abso!ute. 6o ever% acceptance can be imp!ied through c!ear conduct. An acceptance e7pressed through conduct must be interpreted as such b" a 9easonab!e )an 0ob(ective standard1. An offeree cannot accept an offer he kno s that the offer is made in a mistake.

(()+!,E!% - . /O0(E'O % )no revocation of offer communicated prior to the acceptance, mooring fees re"uest not a material change and therefore not a counter*offer, S+A doesn,t apply because it,s more of a lease than a sale of goodsOwen v. Tunison . confusion over landowner,s desired price as an offer /alid contracts need an offer and acceptance, meeting of the minds Ruble v. Ruble . brothers, acceptance made for different terms ,irror ima1e rule . acceptance must be made in terms of the offer Canadian Dyers Assn. Ltd. v. Burton . defendant gives price "uote for property twice 0here defendant,s conduct immediately after receiving purported acceptance plainly indicated that he understood a contract had been formed, than communications construed as an offer 0here there,s an offer depends on language and circumstances of case )mmaterial variance . minor variations allowed Phar aceutical Soc. Of GB v. Boots Cash Che pharmacy ists . self*service

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&

1osting prices is merely an invitation to treat2 customer,s presentation of goods to cashier is the offer, which is then accepted by cashier

Restatement 2(econd3 of #ontracts ; <=8 Counter-offers

011 A counter:offer is an offer made b" an offeree to his offeror re!ating to the same matter as the origina! offer and proposing a substituted bargain differing from that proposed b" the origina! offer. 0#1 An offeree7s *o(er of acce*tance is terminated ,+ 'is ma&ing of a counter-offer Mere in6uir+ re6uesting different>,etter terms is not a counter-offer

456 $urported acceptance which adds 7ualifications

A reply to an offer which purports to accept it but is conditional on the offeror,s assent to terms additional to or different from those offered is not an acceptance but is a counter*offer.

-0!)* %ER * #O!%R #%(o uni!atera! offer on one side% performance on the other side entai!s acceptance and consideration' one promise invo!ved o if "ou do 7% / promise " o acceptance is b" performance% and acceptance is the consideration o offer is usua!!" made genera!!"% but cou!d a!so be specific to one person o offeree can stop performance once started 0note: offeror cannot revoke once performance has begun1' hereas% in bi!atera!% once accepted% offeree must perform (()+!,E!% 2& 8/)%EF)(/ +E!O#)"E . )advertisement for free something, ad is revo!ed but two guys had already performedGadsen Ti es v. Doe .Times publishes ad of reward for !iller coming from police, 3oe brought in info and got suspect caught One can onl+ collect on a re(ard if one &no(s a,out it ,efore t'e *erformance occurs 0meeting of the minds;1 Lef!owit" v. Great #innea$olis Sur$lus Store . ad for fur coats for 4% each, man shows up, store says 5house rule6 they are for women only Store argues that their offer was an 5invitation to sale6, not an offer Rule& advertisement will be treated as a unilateral offer if its clear, definite, and e9plicit: if the ad see!s some performance $and not a reciprocal promise . ie. a chec!& it will be treated as a general offer. See also Carbolic S o!e Ball Dawson v. %elico$ter &'$loration Co. . $7anadian 7ase& * buyer leads seller along 5'at ma+ seem li&e a unilateral contract ma+ ,e construed to ,e a ,ilateral contract! ('en it is 1instinct (it' o,ligation2 it seems !ike there2s a contract ith t o promises there' 6e!icopter argues it as uni!atera! offer but court sa"s bi!atera!

11/7/13 <arties ho demonstrate an intention to be bound ma" be contractua!!" bound. $his case i!!ustrates ho arbitrari!" the court chooses an offer and acceptance.

Charles Pharol( Contract Law Basics =ffers are terminated hen: o =fferor revokes o offeror dies o =ffer !apses due to passage of time o =fferee re(ects offer /f the offeror can reasonab!" notif" ever"one ho might accept the offer% revocation is not effective as to a particu!ar offeree un!ess it has been communicated to that offeree 43ua! pub!icit" of revocation 0compared to offer/advertisement 1 is sufficient for revocation -"ROMIS S: CONSID RATION Cont7dASSI?NM NT <: @ RNON ?A?N AIB : >=2+onnor given !and/house as gift% 1??/month rent and !abour' @ernon gives promissor" note of 1#???% sa"s not to pa" 1??' fire ki!!s Aagne and propert"% no i!!B=2+onnor not !ike!" to recover b/c past consideration no good% not rea!!" evidence of an" materia! benefit received b" AagneC Wolford v. Powers o!d gu" promises to pa" for chi!d2s e!fare if he2s named after him A *romissor+ note (ill ,e ,inding! in lieu of a (ill! if t'ere is consideration for it 0naming of chi!dDconsideration1 Mills v. Wyman doctor gives kid board ti!! he dies% dad rites !etter promising to pa" "ast consideration is not considerationC no material ,enefit to dad% no need to pa" promisor i!! on!" be made to carr" out promise if there as materia! benefit to him' moral o,ligation irrele.ant' material ,enefit as e)ce*tion to *ast consideration 0in cases here promisor a!read" received some gift% promised to pa" it back1 Manwill v. yler man makes pa"ment on others beha!f for catt!e graEing% a!!eged that there as ora! promise to pa" him back A D,are7 *romise>gift is not sufficient consideration to enforce a *romise' circumstances must be so that it was reasonably to be supposed that the promisee (plaintiff) expected to be compensated in some way for his previous gift We!! v. Mc"owin # and ## !aborer (umps off !edge% saves co orker from fa!!ing b!ock' o Saving one2s !ife is consideration' obvious materia! benefit *" (umping off and risking in(uries it is imp!ied that he e7pected to be compensated $e"lman v. %uaranty Trust Co. of Canada aunt ora!!" agrees that nephe covered in i!! if he2s good to her% his efforts vie ed as part performance i!! be

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All acts done must ,e referred to t'e actual contract' ho ever% based on 6uantum meruit 0as much as is deserved1 one can recover for the un-ust enric'ment resu!ting from their actions 0b/c nephe 2s actions ere based on his re!iance of promise1

Restatement [Second] of Contracts s8 EF - $romise for 'enefit Received

$%& A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice. $'& A promise is not binding under Subsection $%& $a& if promisee conferred benefit as a gift or for other reasons that promisor has not been unjustly enriched2 $b& to the extent that its value is disproportionate to the benefit. C D Contracts ;$#$: An act done or permitted to be done at the e7press or imp!ied re3uest of another is sufficient consideration to support a promise% even if the act to be done is for the benefit of a third part". C D Contracts ;$$=: Ade3uac" of consideration is on!" a 3uestion for courts if there is evidence of fraud. C D Contracts ;$<$: =nce performance under a contract has been substantia!!" comp!eted% or even after the terms of an agreement have been definitive!" sett!ed% an" additiona! promise or disc!aimer of rights b" one of the parties i!! not be binding un!ess supported b" fresh consideration% as the past consideration under the origina! contract cannot serve as consideration for the further promise

-"ROMISSORG STO"" H must be an enforceab!e contract 0some e7isting !ega! re!ationship1 on hich subse3uent promise is made' promisee re!ies on the subse3uent promise to his/her detriment 0some conduct induced b" the promise1 estoppe! can enforce a promise !acking consideration% but on!" hen used as a shie!d 0ie. promisor ants to put situation back into position of origina! contract and denies that there as consideration for subse3uent promise% promisee app!ies estoppe! as a defense to enforce the promise1 o using estoppe! as a s ord ignores entire notion of consideration has arisen as some hat of a compromise in courts to avoid in(ustice here re!iance on promise causes promisee detriment but there is no consideration to make it binding

ASSI?NM NT I: @ RNON ?A?N AIIB >assumed that there is no consideration for the promissor" note of 1#???% =2+onnor be!ieves it ma" be enforceab!e b" promissor" estoppe!C &ic'etts v. Scothorn granddaughter given note in hopes that she stops orking a *romise t'at induces a c'ange in t'e ot'er *art+ for t'e (orse ma+ ,e enforced% even if it !acks consideration% on grounds of e3uitab!e estoppe! (ein!er" v. Pfeiffer secretar" given retirement benefit promise a gratuitous retirement promise b" a business is enforceab!e if it induces a change in the p!aintiff to their detriment A *romise ('ic' t'e *romisor s'ould reasona,l+ e)*ect to induce action or fore,earance of a definite and su,stantial c'aracter on t'e *art of t'e *romisee and ('ic' does induce suc' action or fore,earance is ,inding if in-ustice can ,e

11/7/13 a.oided onl+ ,+ enforcement of t'e *romise

Tudale )*+lorations v. Bruce e7tension agreement retracted <romissor" estoppe!% in +anada% to be app!ied as a 1s'ield not s(ord2 )ust have a c!ear and une3uivoca! representation/promise A *art+ is a,le to rel+ on e)*ress e)tensions of a contract if t'e *art+ offering t'e e)tension intends for t'e ot'er *art+ to act u*on it8 /f a promise is made% in the presence of a previous contract% the promisee is ab!e to act on the ord of the other% and specific and contrar" provisions of the origina! contract 0ie. e7pir" of the agreement1 cannot be enforced. Com!e v. Com!e ife tries to use </4 to enforce husband2s promise of 1??!. Can7t use "> as a s(ord% especia!!" if no e7isting contract underneath H 4uller J M isen,erg! Basic Contract Law ,-.,/ A successfu! estoppe! !eads to specific performance or e7pectation damages.

-O44 R AND ACC "TANC : DUTG TO N ?OTIAT IN ?OOD 4AIT3 Aenera! ru!e: no dut" to negotiate in good faith $he !onger the process of negotiation% invo!ving various counter:offers% increases the !ike!ihood that the court i!! decide the parties never intended to bind themse!ves ithout having a forma! document created <hrases such as sub(ect to contract are strong indicators that parties intend to be bound on!" b" a forma! contract% same ith having so!icitors invo!ved ASSI?NM NT K % C3 @G COR@ TT >Hunke! ants to bu" 9ando!ph2s car% takes it to mechanic for F??% 9ando!ph te!!s him he and his ife don2t ant to se!!' mentioned to Hunke! !ater that 9ando!ph never intended to se!!C 01S 0+othe'ernes La!oratorium .8 #.M.C. Chemical %rou+2 #nc. !etter of intent signed for sa!e of division% president never had authorit" ithout board of directors Hetter of intent not a ,inding contract' ho ever% it ma+ o,ligate *arties to ,argain in good fait'' e7press dut" to bargain in good faith sti!! doesn2t mean "ou have to accept Bawit'o #nvestments Ltd. v. 3ernels Po+corn Ltd. "arties cannot 1contract to ma&e a contract% this is not a contract 4enture 0ssociates Cor+. .8 Zenith $ata Systems Cor+8 Ienith re3uests @enture to get a third part" guarantee but then se!!s to someone e!se Se!f:interest is not bad:faith' bad:faith is de!iberate misconduct

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4reedom not to contract s'ould ,e *rotected as stringentl+ as freedom to contract /f there is a dut" to bargain in good faith and it is breached% re!iance damages are appropriate 0for continuing in futi!e negotiations1' but% if it can be sho n that contract ou!d2ve been reached if not for the bad faith% then e7pectation damages 0rare1

Martel Buildin" Ltd. v. &., >#???C gov2t doesn2t rene its !ease agreement% opens tendering process instead% )arte! !oses out Aoa! of commercia! negotiations is to gain most advantageous position 0hard bargaining1' no dut+ to ,argain in good fait' recogniLed to date <o!ic" reasons for no dut" (ould act as after-t'e-fact insurance for disa**ointed negotiators' ou!d defeat essence of negotiation and hobb!e market p!ace Jo tort !iabi!it" for neg!igence in commercia! negotiations

-T ND RIN? "ROC SS 9ationa!e is to rep!ace negotiation ith competition +ourts strive to maintain: o business efficienc" o integrit" of bidding process bids usua!!" submitted at !ast minute bid bonds often re3uired% to ensure performance of gen. contractor2s ob!igations $endering <rocess 0set out in Ron ngineering)B o +ontract A uni!atera! offer from o ner% ca!!s for tenders' contractors enter into this b" submitting their bids' submission of bid is not on!" acceptance of +ontract A 0consideration1 but a!so offer to enter into contract * bids are irrevocab!e once submitted o +ontract * bi!atera! construction contract bet een inning bid and o ner

ASSI?NM NT F % T ND R MOM NTS &on )n"ineerin" 5 Construction Ltd. genera! contractor submits mistake bid% o ner doesn2t !et him revoke it% contractor refuses to sign and !oses bond +ontract A -J/.A$49A. +=J$9A+$ o Mids are irre.oca,le once submitted o *id is the consideration and acceptance of o ner2s offer to receive tender% as e!! as offer for +ontract * +ontract * actua!% bi!atera! construction contract 0terms set out in docs ca!!ing for the tenders1

11/7/13 =n!" a gross mistake i!! be !et off' other ise tender is binding

6orthern Construction Co v. %lo"e Heatin" 5 Plum!in" subcontractor A!oge submits mistaken !o bid to genera! contractor Jorthern' Jorthern ins contract% A!oge refuses to perform% Jorthern had to pa" higher costs to keep tender hi!e hiring ne subs Same rules a**l+ to su,7s ,ids as general7s' become binding once submitted% regard!ess of mistake 4fficienc" of bidding process paramount M7B )nter+rises Ltd. v. $efence Construction o ner accepts !o est bid% turns out to be non:comp!iant% ne7t !o est bidder sues O(ners are o,ligated to acce*t onl+ com*liant ,ids 0imp!ied under +ontract A1 $ou!le 6 )arthmovers Ltd. v. )dmonton non:comp!iant bid a!!o ed 0 inning bidder rong!" !isted their e3uipment as up:to:date% therefore had !o er costs1 Jo imp!ied dut" re3uiring o ner to investigate comp!ianc" of bids Case ,ro&e *re.ious rules set out in &onC sa+s t'at once contract M comes into effect! an+ o,ligations from contract A Aeg8 Com*lianc+B are null Dissent ANo'nsonB: ,ad la(! undermines integrit+ of *rocess o =b!igation to accept on!" comp!iant bids ou!d be meaning!ess if it didn2t imp!" taking the reasonab!e steps to ensure the inning bid as comp!iant -MATTH O4 T3 4ORMS $raditiona! a" of dea!ing ith batt!e of forms in common !a ' each successive form that materially alters terms or conditions of previous form is to be considered a counter:offer o <rob!em often arbitrari!" favours the se!!er

ASSI?NM NT 9 % CHOCO5ORO 4AMRICATORS suitcases for 9+)< Butler Machine Tool Co v )*.Cell. Cor+. batt!e of forms% price esca!ation c!ause b" se!!er Henning !ooks at overa!! series of transactions% three outcomes possib!e: o Hast s'ot (ins o 4irst s'ot (ins o Onoc& out rule : Shots fired on both sides irreconci!ab!e differences% must therefore be rep!aced b" a reasonab!e imp!ication Hast s'ot rule doesn7t al(a+s a**l+C court can ma&e decision ,+ considering corres*ondence as a ('ole % *olic+ reasons % *rotect ,u+er Tywood #ndustries Ltd. v. St. 0nne.6ac'awic Pul+ and Pa+er : batt!e of forms' bu"er/defendant inc!udes arbitration c!ause in !ast form% p!aintiff/se!!er never ackno !edged it% defendant didn2t comp!ain Se!!er2s conduct% not signing the !ast form% indicates an o,-ection % therefore se!!er2s terms prevai!' (udge decides neither part" pa"ed much attention to the c!ause so it

11/7/13 shou!dn2t be part of contract 0knock:out ru!e1 : See +4H s. LF

1?

C D ;=KMhi!e contract terms that are to be considered binding in the case of variances bet een the content of standard contract forms e7changed b" the parties are conventiona!!" se!ected on the basis of those found in the !ast document to be e7changed% it ma+ ,e t'at courts (ill c'oose to ignore *rinted terms not s*ecificall+ negotiated or ot'er(ise considered of a**arent im*ortance ,+ t'e conduct of t'e *arties in ma&ing t'e contract8 UCC AUniform Commercial Code % USB s8 $-$P9 An acceptance ith additiona! terms i!! become part of the contract 0bet een merchants1 un!ess: o $he offer e7press!" !imits acceptance to the terms of the offer o $he" materia!!" a!ter it o Jotification of ob(ection to the ne terms has a!read" been given or is given ithin a reasonab!e time after notice of them is received 8nited 6ations Convention for the #nternational Sale of %oods2 0rt. 9: 11 A rep!" to an offer hich purports to be an acceptance but contains additions% !imitations or other modifications is a refection of the offer and constitutes a counter:offer. #1 6o ever% a rep!" to an offer hich purports to be an acceptance but contains additiona! or different terms hich do not materia!!" a!ter the terms of the offer constitutes an acceptance% un!ess the offeror% ithout undue de!a"% ob(ects ora!!" to the discrepanc" or dispatches a notice to that effect. /f he does not so ob(ect% the terms of the contract are the terms of the offer ith the modifications contained in the acceptance. <B Additional or different terms relating! among ot'er t'ings! to t'e *rice! *a+ment! 6ualit+! and 6uantit+ of t'e goods! *lace and time of deli.er+! e)tent of one *art+7s lia,ilit+ to t'e ot'er or t'e settlement of dis*utes are considered to alter t'e terms of t'e offer materiall+

-CONTRACT MODI4ICATIONS +ourts i!! tr" to find a a" to avoid faci!itating post contract modifications b" one part" taking advantage of the other2s economic duress o /e. no consideration for the fresh +romise; occurs in situations ith e7isting contract and then subse3uent promise is reneged

ASSI?NM NT E % OIRMG OH N R >Nirb" threatens to !eave un!ess baseba!! team matches offer of footba!! teamC 0DUR SS/B 0las'a Pac'ers 0ss<n v $omenico fisherman demand more mone" kno ing o ner as stuck' boss agreed to ne contract for 51?? under same terms as o!d one R: a *romise to *a+ a *art+ for doing t'at ('ic' t'e+ are alread+ under contract to do is (it'out consideration 0past consideration is not consideration1' duress %il!ert Steel Ltd. v 8niversity Construction Ltd. price of stee! goes up% N gets renegotiated' is there consideration for ne N here the on!" thing changed is cost8 no consideration for a ne( contract ('en an increase in *rice is t'e onl+ c'ange *re-e)isting contractual duties are not good consideration o Ai!bert shou!d2ve inc!uded a price variation c!ause into the origina! contract since supp!" cost increases ere foreseeab!e Connors $rillin" Ltd. v Cementation Co =Canada> Ltd. subN b/ +onnors and +ement.% +onnors to!d to move stuff% hen the" came back onsite the" had ne pricing

11/7/13 terms b/c of the costs of moving' Je subN had different terms% fresh consideration o Consideration for an increase in cost can ,e found ('ere t'ere are clearl+ different *erformance re6uirements for t'e *art+ ('o ,enefits from t'e increased cost - +ontractua! modification i!! be a!!o ed

11

(oa'es v. Beer part performance: modification to pa" some but not a!! of hat2s o ed o "art *erformance is not satisfaction of the ho!e% because there2s no consideration for the ne promise. : 0=verru!ed b" Mercantile Law 0mendment 0ct' b/c parties shou!d be a!!o ed to cut dea!s to pa" !ess than ho!e debt' saves time and effort on part of creditor% that shou!d constitute as consideration1 Mercantile Law 0mendment 0ct2 &.S. . 9::?2 s. 9@ o "art *erformance of an ob!igation% hen e7press!" accepted b" the creditor in satisfaction of an agreement for that purpose% even without any new consideration% s'all ,e 'eld to e)tinguis' t'e o,ligation. 0dea!s ith creditor/debtor situations1 Z. Pittes A Philoso+hy of Contract Law
Common Ha( Rule - Jeither the performance of a pre:e7isting dut" nor the promise to perform it constitutes sufficient consideration for a ne return promise 0e.g. more 51 ?ood 4ait' > Mad 4ait' fforts to Modif+ Contracts !ood faith efforts to modif" contracts can be th arted due to !ack of consideration% even here there are good business reasons to make the changes. "ad faith efforts are often successfu! because the bad part" ho2s tr"ing to e7tort a change 0e.g. more 51 is a schemer and i!! make sure to ork in some kind of consideration so it ho!ds up in court.

-MISR "R S NTATIONS and COHHAT RAH CONTRACTS o 4raudulent made ith kno !edge of its fa!sit" 0or reck!ess!"1 o Negligent made care!ess!" and in breach of dut" that representor has to take reasonab!e care that representation is accurate 0 i!! !ike!" resu!t in reliance damages1 o Innocent !ess used no % as once the on!" a!ternative to fraud o 9escission is avai!ab!e to innocent part" induced into N b" misrepresentation o if a re*resentation induces ot'er *art+ to contract! it ,ecomes a unilateral contract t'at is collateral to t'e main contract ASSI?NM NT = % SAAM STORG >=tt" ants to bu" SAAb / origina! parts% Neane se!!s him car ithout% bi!! of sa!e ith as is c!auseC Heil!ut2 Symons 5 Co v Buc'leton misrep. that co. issuing shares as rubber compan" o collateral contract a N the consideration for hich is the making of some other N o R: in genera!% a person i!! not be !iab!e for damages for an innocent misrepresentation' to argue t'at a misre*8 (as actuall+ a (arrant+! must s'o( t'at it (as intended to ,e a (arrant+ and not mere *uffer+ 0more of a strict test than in #ic$ "entley hen the test as re!a7ed to conduct% rather than intention1 $ic' Bentley v Harold Smith Ltd. Smith se!!s Hick a *ent!e"% fa!se c!aim of fitness o /ssue of innocent misrepresentation v. arrant" o Mhether arrant" as intended depends on conduct of parties

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1#

o R: If re*8 is made in course of dealings for a O for t'e .er+ *ur*ose of inducing ot'er *art+ to act on it! and it actuall+ induces 'im to act on it ,+ entering into O! t'at is *rima facie ground for inferring t'at re*8 (as intended as a (arrant+8 o Henning: rep. i!! be vie ed as arrant" if representor has e7perience/privi!eged access to info not avai!ab!e to representee% and here representee re!ies on this Sodd Cor+ v. Tessis misrepresentation overstates va!ue of stock of bankrupt furniture business% p!aintiff re!ied on it% submitted bid for business' ad said no arranties to be imp!ied 0e7emption c!ause1 e7amp!e of an entire agreement c!ause% defendant as accountant dut" of care; o R: Hia,ilit+ can ,e im*osed! des*ite e)istence of an e)em*tion clause! if a negligent misre*8 is made in a situation ('ere a DofC is *resent! and t'e *art+ ma&ing t'e misre*8 oug't to 'a.e &no(n it (ould ,e relied on ,+ anot'er o >No'nson doesn2t !ike% shou!d be bu"er2s responsibi!it" to va!uate/e7ercise due di!igence (it' negligent misre*s! ris& is often too easil+ s'ifted to t'e sellerC B% Checo #nt<l Ltd. v. BC Hydro +heco enters tender N ith 6"dro to bui!d transmission to ers' neg. mis. b/c areas eren2t c!eared and +heco cou!dn2t do ork o R: 5'ere a gi.en (rong *rima facie su**orts an action in contract and tort! *art+ ma+ sue in eit'er or ,ot'! e)ce*t ('ere t'e contract indicates t'at t'e *arties intended to limit or negati.e t'e rig't to sue in tort +ontracts i!! trump torts hen app!icab!e <arties susceptib!e to actions in both if there is a neg!igent misrep. in the contract -UNCONSCIONAMIHITG AND HIAMIHITG 5AI@ RS)cul*ator+ clause: !imits !iabi!it" 0ie. aivers% disc!aimers% as:is c!auses% etc1. $ o methods around e7cu!pator" c!ause: 1. )isrep. #. -nconscionabi!it". A!! a,out ris& allocation o contra +roferentem ru!e of interpretation% provides that an ambiguous term i!! be construed against the part" that imposed its inc!usion o fundamental ,reac' : breach so big that innocent part" didn2t get hat as bargained for% used to override e7c!usion c!auses' Photo Production struck do n doctrine' no % hen there2s a breach "ou then e7amine ho it affects the terms of contract 0construction a**roac'1% usua!!" / strict adherence to contra proferentem $raditiona!!"% a fundamenta! breach ou!d invo!ve the court confining/giving a narro interpretation to the e7cu!pator" c!ause Jo % e7cu!pator" c!auses stand% even hen there2s a fundamenta! breach% un!ess the c!ause is unconscionab!e. o Unconsciona,ilit+ % lements % e7amp!es in Consumer Protection 0ct2 s. 9/=,> /ne3ua!it" of bargaining po er as e!! as some undue advantage or benefit secured as a resu!t of that ine3ua!it" b" the stronger part" o ASSI?NM NT #P % SCUMA ACCID NT >gir! signs !iabi!it" aiver before scuba in(ur"' a!!ocation of risk to gir!' 0c!ass can on!" strike out aiver if it as signed ith unconscionabi!it"1

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13

Scott v Wawanesa Mutual #nsurance Co. insurance protects residents and dependents under #1% e7c!usion c!ause not to cover crimina! acts b" the insured% son sets fire to house o /s the insurer2s indemnification ob!igation (oint or severa!8 o /f interest is (oint% there is no recover"% vise:versa o Ma-orit+: ording of contract is c!ear and unambiguous% ob!igation is (oint. o Mhen the ording of a N is unambiguous% the courts shou!d not give it a meaning different from that hich is e7pressed b" its c!ear terms% un!ess the N is unreasonab!e or has an effect contrar" to the intention of the parties. "u,lic *olic+ shou!d not a!!o one to benefit from their crimina! actions o 00Minorit+ Astrong dissentB: s'ould loo& to intention of *arties ('en t'e+ entered t'e O' ob!igation is severa!% Scott2s took out insurance to protect their house% not their son2s possessions' reasona,le *erson7s inter*retation of *arties7 intent and pub!ic po!ic" reasons 0den"ing recover" punishes victims more so than deterring crimina!s1 Syncrude Canada Ltd. v Hunter )n"ineerin" Co. emp!o"ees of 6unter 0-S1 fraudu!ent!" pose as agents of 6unter 0+anada1 to get N / S"ncrude o idea of fundamenta! breach no !onger ho!ds in +anada to avoid the operation of an e7c!usion c!ause o courts shou!d not disturb the bargain the parties have struck% and / am inc!ined to rep!ace the doctrine of fundamenta! breach ith a rule t'at 'olds t'e *arties to t'e terms of t'eir agreement! *ro.ided t'e agreement is not unconsciona,le [or unfair or contrar+ to *u,lic *olic+. eg8 C"A #IA#B % misre*s are unfair o 47c!usion c!auses shou!d be interpreted ith contra proferentem% on!" c!ear and unambiguous c!auses shou!d stand - Q"R SS AND IM"HI D 5ARRANTI So licensing agreement permission to do something hich ou!d other ise be trespassing/theft% for a stated period of time' not o nership o t"pica!!"% arrant" from manufacturer on2t be usefu! to consumer because his N is ith the midd!eman' statutes have dea!t ith this% or manufacturer2s guarantee ASSI?NM NT ## % DATAMA?IC &udder v Microsoft Cor+ !a students a!!ege )icrosoft breached member agreement' forum se!ection c!ause inc!uded% p!aintiffs sa" the" didn2t see it so shou!dn2t app!" o 4ine *rint argument re-ected! terms (ere a.aila,le ,+ scrolling do(nC electronic agreement 'as same rules as a (ritten agreement o Near uni.ersal rule t'at a *art+ to a contract 'as a dut+ to read its terms% c!aiming that "ou didn2t see certain terms on2t inva!idate them Carlill v Car!olic Smo'e!all Co. compan"2s ad promises 1??! re ard for an"one ho uses product and sti!! gets f!u 0uni!atera! offer1 im*lied (arrant+ o /nconvenience sustained b" one part" at the re3uest of another is enough to create consideration' a!so% benefits conferred on offeror b" ta!king about product / friends' as a resu!t

11/7/13 o Offeree need not communicate acce*tance of offer ,efore *erforming t'e condition 0 ith uni!atera! offers hich e7press/imp!" as much1

1&

Sail La!rador v. 6avimar Cor+ chartered vesse! for F "ears% c!ause inc!uded that said the" cou!d then b" it sub(ect to fu!! performance' one pa"ment had been !ate% o ner used this as grounds to refuse sa!e. o 1time is of t'e essence2 not e7p!icit!" stated nor imp!ied from ording of N o rule of su,stantial non-*erformance specifies that breach must be at the root or essence of the N and c!ear!" intended b" the parties% in order for rescinding
)lectronic Commerce 0ct2 ,??? !ega! re3uirement that documents be provided in riting is satisfied if documents are provided e!ectronica!!" and are avai!ab!e to the other part" for subse3uent reference Sale of %oods 0ct2 9::?2 s. 9/ . )mplied conditions as to 7ualit; or fitness -46 Subject to this Act and any statute in that behalf, there is no implied warranty or condition as to the "uality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows8 %& 0here the bu;er, expressly or by implication, ma<es <nown to the seller the particular purpose for which the 1oods are re7uired so as to show that the bu;er relies on the seller=s s<ill or jud1ment, and 1oods are of a description that it is in the course of the seller=s business to suppl; $whether the seller is the manufacturer or not&, there is an implied condition that goods will be reasonably fit for such purpose, but in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose. #1 8here 1oods are bou1ht b; description from a seller who deals in 1oods of that description $whether the seller is the manufacturer or not>, there is an implied condition that the 1oods will be of merchantable 7ualit;, but if the buyer has examined the goods, there is no implied condition as regards defects that such examination ought to have revealed. (& An implied warranty or condition may be annexed by the usage of trade. ?> n e9press warrant; or condition does not ne1ative a warrant; or condition implied b; this ct unless inconsistent therewith6

- CONDITIONS and 5ARRANTI So Condition "recedent a condition that triggers re3uirement of other part" 0can trigger performance% coming into e7istence of contract1' hat must be done before N o /n +anada% if +< is for "our benefit "ou can aive it 0a!though h" ou!d "ou1 o True Condition "recedent dependent on i!! of a third part" and some future uncertain event' neither part" to the N has inf!uence over 3rd part"' an e7terna! condition upon hich the e7istence of the ob!igation depends eg. propert" i!! be bui!t providing cit" reEones area' a" around this is to draft around condition% ie. sa"ing the above is not a true condition precedent and is so!e!" to the benefit of O o Jeither part" can aive a true condition precedent' if it doesn2t occur than !osses fa!! here the" fa!! and N doesn2t come into e7istence o Turney v Zhil'a contract doesn2t come into e7istence unti! Streetsvi!!e 0the 3rd part"1 agrees% e)am*le of SCC7s true condition *recedent o Condition Su,se6uent % both parties have performed% but if this condition occurs than N doesn2t need to be enforced 0c!ause that i!! cut and terminate N1 o Concurrent Conditions % both parties undertake to perform concurrent!" 0ie. bu"er:

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1F

se!!er1' mutua! ob!igations o De*endent "romises AconditionB t"pica!!" seen as e7press/imp!ied conditions' eg. time is of the essence o +onsideration for one promise is the other promise% and vise versa o Pai!ure b" A to perform e7press condition re!ieves * of its ob!igation to perform Pai!ure goes to the ho!e of the consideration o Remed+ for ,reac' of condition is the right to rescind as e!! as damages o Inde*endent "romises A(arrant+B % each part" can enforce other part"2s promises even though the" have not performed their o n' breach of arrant" means other part" must sti!! perform and sue for e7pectation damages !ater o eg. tenant2s covenant to pa" rent% !and!ord covenant to repair' !and!ord cannot refuse to repair mere!" because tenant is in arrears / rent o if a representation induces other part" to contract% it becomes a uni!atera! contract that is co!!atera! to the main contract 0it is a promise e7changed for an act% the act being the signing of the main contract1 see &eilbut, 'ymons, #ic$ "entley o remed+ for ,reac' of (arrant+ is fu!fi!!ment of that hich as breached% but cannot rescind entire N% can sue for damages 0e7pectations1 !ater Hon" 3on" (ir Shi++in" v 3awasa'i term in N that ship ou!d be sea orth" o Innominate term !abe! b" courts for unc!ear term' from there assess hat it shou!d have been depending on hat it meant to the N as a ho!e o Jecessar" to e7amine conse3uence of particu!ar breach in issue and determine hether in !ight of those circumstances the part" not at fau!t shou!d be entit!ed to rescind the N 0if its vie ed as a condition1 or% rather% be !eft to a damages c!aim o /n this case% eas" remed"% court sa"s term as (ust a arrant"% damages issued o [ ith innominate terms% part" that rescinds N can actua!!" be he!d !iab!e for other part"2s damages if court decides that the innominate term as more of a arrant"C o deve!opment after this is 'ail (abrador Sum+ter v Hed"es bui!der 3uits after bui!ding on!" 1 of # houses% !ump sum N so o ner doesn2t pa" o 1entire contract agreement 0an e7ception to substantia! fai!ure/non:performance1 o argument for compensation b/c of 6uantum meruit>un-ust enric'ment re(ected o Su,stantial "erformance Rule Adi.isi,le contractB distinguish bet een ork substantia!!" comp!eted but defective and incomp!ete ork' ru!e app!ies to the former disappointed part"% hi!e ho!ding !ump sum% sti!! got substantia!!" hat it bargained for and so must pa" 0can sue in damages% but sti!! must pa";1 mitigates against harshness of !ump sum Ns and un(ust enrichment' an e7ception to an e7ception o Rescission 0remed"1 undo rather than enforce' can invo!ve innocent part" refusing to perform their o n promise 0ie. either refusing to pa"/refusing to accept further performance1 or returning entire transaction o arises from Re*udiator+ AConditionalB Mreac'>Su,stantial 4ailure>Non"erformance% 0can a!so arise from unconsciona,le agreements or misreps.%

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1G

CP0 s. 9B=9>1 #IA#B misreps are unfair% #KA#B unconscionab!e is unfair Rule of non-*erformance % breach must go to root of agreement 0substantia!!" deprive other part" of hat the" bargained for1 for other part" to be ab!e to rescind' breach goes to ho!e of the consideration on both sides. )ce*tion: if the breaching part" as re!"ing on some 0mis1rep./ aiver o if part" demands other part" do things not in the terms of the N% that is considered repudiation of the N' ho ever% simp!" re3uesting for ne terms to be added is not o if innocent part" decides to rescind 0disaffirm the N1% must communicate ith the breaching part" 0need not communicate h" evidence of the repudiator" breach can be brought in !ater1 o Sale of %oods 0ct2 9,=9>C bu"er ma" treat se!!er2s breach of condition as a breach of arrant" and not as ground for treating the contract as repudiated 0so N can be carried out and damages sti!! sought1 : !ike ho part" can aive condition prec. 9,=,> a stipu!ation ma" be a condition% though ca!!ed a arrant" in the contract 0depends on each case and the construction of the N1 seeking rescission ma" !ead to more favourab!e outcome 0since tria!s take !ong% invo!ves assessing probabi!it" of receiving damages1 o Antici*ator+ Mreac' if there is c!ear and une3uivoca! statement from the other side that the" i!! not perform 0e7press or imp!ied through conduct1% other side ma" rescind% mitigate its !osses 0find a substitute1 and sue for damages o Hisputes about interpretation of N are not enough to (ustif" an anticipator" breach o Hochester v $e la Tour =9B/D> va!et isn2t gonna sho % other part" rescinds% gets another va!et% and sues Antici*ator+ ,reac' % re(ection of argument that innocent part" must be read" at appointed hour Test: ou!d the conse3uences of the refusa! to perform deprive the other part" of substantia!!" the ho!e benefit of the contract8' need to be sure "ou i!! not be getting the ho!e of hat "ou bargained for' need c!ear and une3uivoca! statement An anticipator" breach is essentia!!" the same as a repudiator" breach -INT R"R TATION: "AROH @ID NC RUH Restatement ASecondB of Contracts ; $P= Integrated Agreements - Mritten fina! e7pression of an agreement or term0s1 of an agreement. ; $#P Com*letel+ and "artiall+ Integrated Agreements /ntegrated D comp!ete and e7c!usive. <artia!!" integrated D not comp!ete. ; $#< ffect of Integrated Agreement on "rior Agreements A"arol .idence RuleB A binding integrated agreement ki!!s prior dea!ings to the e7tent that it is inconsistent ith them. ; $#I .idence of "rior Contem*oraneous Agreements and Negotiations admissib!e as evidence to estab!ish if riting is or is not integrated% partia!!" integrated% etc% or to estab!ish i!!ega!it"% fraud% duress% !ack of consideration% or other inva!idating cause ; $#F Consistent Additional Terms 4vidence of a consistent additiona! term is admissib!e to supp!ement an integrated agreement un!ess the court finds that the agreement as comp!ete!" integrated ; $#9 Integrated Agreement Su,-ect to Oral Re6uirement of a Condition Mhen the parties agree ora!!" that performance of the agreement is sub(ect to the occurrence of a stated condition% the agreement is not integrated ith respect to the ora! condition.

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17

"arol .idence Rule: /f a riting is partia!!" or comp!ete!" integrated% prior contradictor" or inconsistent terms and even consistent terms i!! J=$ be part of the contract Sub(ect to certain e7ceptions% the parties to an agreement have set do n a!! its terms in a document. 47trinsic evidence is not admissib!e to add to% subtract from% var" or contradict those terms. : contract is confined to the four corners of the document. QC "TIONS to t'e "arol .idence Rule: Pormation issues 0fraud% misre*resentation% mistake% !ack of consideration% !ack of contracting intention1' +onte7t: evidence that 'el*s e)*lain t'e meaning of the riting 0i.e. ambiguities% factua! matri71' Mriting error: a c!aim for rectification' 4vidence to estab!ish a condition *recedent' 4vidence that estab!ishes a collateral contract Ae7cept in &awrish and "auer1' 4vidence that sho s that the document isn7t com*letel+ integrated.
Consumer Protection 0ct2 s. 9B=9> An" agreement% hether ritten% ora! or imp!ied% entered into b" a consumer after or hi!e a person has engaged in an unfair practice 0eg. fa!se/mis!eading representations% unconscionabi!it"1 ma" be rescinded b" the consumer and the consumer is entit!ed to an" remed" that is avai!ab!e in !a % inc!uding damages.

?uarantees % Noint and Se.eral: bank can go after an" one of the signed peop!e for fu!! amount' Noint bank can on!" go after the peop!e co!!ective!" o Auarantees governed b" 'tatute of )rauds% must be in riting o ?uarantee .s8 Indemnit+ / guarantee% t o contracts% N# on!" kicks in once N1 has fai!ed' ith /ndemnit"% on!" one N% bet een creditor and t o debtors Mill of Hading 3 e!ements: receipt issued b" carrier for goods received% N of carriage% document of tit!e

ASSI?NM NT #$ % 3UM"3R G7S MONUS "oung !a "er bai!s out of (ob to go to different firm% ants the prorated bonus even though he didn2t !eave b/c of sick mother Hawrish v Ban' of Montreal 6a rish signs guarantee ith bank for co. he had interest in% given ora! assurance that it as on!" for e7isting debts and bank ou!d !et him off once the" get (oint guarantee from directors' compan" goes do n% bank after 6a rish' guarantee actua!!" said present and future debts% is binding no matter hat% etc. o "arol .idence Rule: a co!!atera! agreement% hether ora! or in riting% is va!id provided it ma" consistent!" stand together ith the main N so that provisions of main agreement remain in fu!! force o /n this case% ora! agreement as direct contradiction to ritten guarantee o R: an ora! representation that contradicts a ritten bank guarantee cannot be inc!uded as part of the ritten guarantee Bauer v. Ban' of Montreal bank ora!!" assures *auer the"2!! go after compan"2s

11/7/13

1K

accounts receivab!e first% goes after *auer instead o A co!!atera! ora! agreement that direct!" contradicts a specific term of a ritten agreement cannot stand in the face of the ritten document o Note: no distinction bet een "auer and &awrish% both i!!ustrate traditiona! approach 7. )vans 5 Son v. MerEario 4vans is shipper% )erEario is carrier' s itch from crates to containers% 4vans sa"s the" must be under deck' containers !eft on deck% fa!! in sea% )erEario said it asn2t in N to be under deck% said there as !imitation c!ause o Qudge sa"s ora! agreement asn2t a co!!atera! contract% but as rather part of overa!! agreement 0sa"s it as part ora!% part ritten% and part b" conduct e7amp!e of not integrated1 since co!!atera! N ou!dn2t be a!!o ed as paro! evidence o >Henning points #ic$ "entley' misrepresentation inducing other part" into NC o R: ora! promise can be considered part of a N if it part ora!% riting% and b" conduct o here ora! promise induced part" into N% it can override e7emption c!ause 0representations of fact% as in Hick *ent!e"% same as promises about future1 %allen v. Butterley 0MCCA/B farmers ora!!" assured b" grain dea!er there2d be no eeds if the" bought seeds' eeds' N had c!ause sa"ing no arrant" as to productiveness o part" seeking to use ora! evidence must sho ritten doc is not ho!e agreement o an ora! representation that is found to be a arrant" and induces a part" to sign N i!! prevai!% even if the" contradict' ambiguous ritten disc!aimer tends to fai! against specific ora! representation entire agreement c!ause he!ps strengthen argument against ora! evidence o Modern A**roac': <aro! evidence ru!e on!" stands if it can be proven that parties reduced their agreement to riting% and that the riting is the e7c!usive source of agreement if evidence suggests that the parties intended that the agreement be part!" in riting% part!" ora!% effect is given to the ora! terms /n order to ascertain hether the riting does form the entire agreement% a!! ora! and ritten communication is a!!o ed in as evidence if the ritten document appears comp!ete on its face% then there is a strong presumption that it is the e7c!usive source for the agreement bet een the parties 3a(ris'>Mauer li&el+ to (in! ,ut can use ?allen to ma&e argument -T3IRD "ARTG M N 4ICIARI S and DOCTRIN O4 "RI@ITGo doctrine of *ri.it+ - =n!" a person ho is part" to a contract can sue on it o 4O+4<$/=JS: Agenc" 0gets around third part" beneficiar" scenario1 Assignment ie. creditor can a! a"s assign rights as the" ish $rust 4mp!o"ment o agenc+ % principa! and agent are more or !ess the same' cannot be agent for non: e7istent principa! ASSI?NM NT #< % A MAN7S 5ORD >schoo! has construction N ith A+' as

11/7/13 re3uired b" the N% performance bond secured bet een schoo! and insurance co.' A+ defau!ted and !eft S+s unpaid% ho no are suing the insurance compan"C o *erformance ,ond covers fau!t of A+% a N b/ an insurance compan" and the part" ho ca!!ed for tenders% hereb" insurance compan" pa"s out specific sum in event that A+ cannot comp!ete task 0sum decreases as construction comp!eteness increases1' represents due di!igence on part of part" ca!!ing for tenders o schoo! shou!d have ca!!ed for a *a+ment ,ond hich makes sure ever"one gets paid% as then the S+s ma" have finished the construction 0rather than suing1 o ith bonds !ike these% the S+ are the third part" beneficiar"

1L

Scruttons Ltd. v. Midland Silicones Ltd. bi!! of !ading provision !imiting !iabi!it" of carriers to 5F??/package in event of !oss/damage/de!a"' appe!!ant stevedores neg!igent!" damage goods% argue the" are entit!ed to !imited !iabi!it" provisions in bi!! of !ading o D: no dice% appea! dismissed : stevedores essentia!!" subcontractors hired b" the carrier% o ner of goods kne nothing of their re!ation o R: =n!" a person ho is part" to a contract can benefit from it 0doctrine of *ri.it+B 4ande+itte v Preferred 0ccident #nsurance Co of 6F appe!!ant in(ured in car accident' can2t get damages from driver so goes after its insurance compan"' driver of other car 0Qean *err"1 as not its o ner% but rather the o ner2s daughter o I: /f Qean *err" is found to have been part of insurance N 0either direct!" or as a third part" beneficiar" hom her father intended to e7tend the insurer2s indemnit" to1% then respondent insurance compan" is !iab!e to the appe!!ant no evidence in case that father intended to e7tend benefits to daughter as a trust o Ratio: no one can sue on a contract e7cept those ho are contracting parties from and bet een hom consideration proceeds' t'ird *art+ ,eneficiaries to a O must ,e clearl+ construed% not eas" to suggest that a third part" as imp!ied as a beneficiar" 6ew Zealand Shi++in" Co v 0M Satterthwaite 5 Co. stevedore acted as agents for the carrier' stevedore2s neg!igence damages goods' *o. states no servant/agent of carrier i!! be !iab!e for an" !oss/damage resu!ting from neg!ect or fau!t o *o. as described as being a uni!atera! offer from shipper of goods to the stevedore% and made b" the carrier ho acted as an agent' became a fu!! and mutua! contract hen stevedore performed services 0discharging the goods1% performance of this service as for the benefit of the shipper and thereb" as consideration for the agreement that the stevedore shou!d have benefits of the !imitations on !iabi!it" contained in the *o. o Jote: carrier is stipu!ated in *o. as being the agent for the stevedore' stevedore is princip!e and has N ith carrier' carrier% as agent for stevedore% makes agreement ith shipper and thereb" that agreement2s benefits are e7tended to stevedore o Himalaya Clause c!ause inc!uded in *o. that stevedores can benefit from 0basica!!" an agenc+ c!ause1 o Ratio: if a commercia! N c!ear!" intends for its benefits to be e7tended to a 3rd part"% den"ing such benefits ou!d have effect of encouraging actions against servants% agents/independent contractors% hich ou!d then be ref!ected in increases in rates of freight 0po!ic" concerns1' e7amp!e of courts using agenc+ to get around privit"

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London $ru"s v 3uehne 5 6a"el storage of transformer N inc!uded !imitation of !iabi!it" c!ause' respondents are t o emp!o"ees of Neuhne ho damaged the transformer o I: e7tent to hich emp!o"ees can benefit from emp!o"er2s !imited !iabi!it" o Anal+sis appe!!ant e7c!usive!" re!ies on doctrine of privit" o 9espondents argued that Ho< shou!d be re!a7ed% is radica!!" out of touch ith commercia! rea!it"% court agrees' Ho< fai!s to appreciate specia! considerations hich arise from re!ationships of emp!o"er:emp!o"ee% identit+ of interest' upho!ding doctrine in this case ou!d a!!o appe!!ant to escape the !imitation of !iabi!it" c!ause hich it had e7press!" consented to o Ratio: 4mp!o"ees can benefit from emp!o"er2s !imited !iabi!it" c!ause hen: 11 !imitation of !iabi!it" c!ause must% either e7press!" or imp!ied!"% e7tend its benefit to the emp!o"ee0s1 seeking to re!" on it 0determined b" parties2 intentions ie8 minorit+ o*inion in Scott v Wawanesa1% andB #1 emp!o"ee0s1 seeking benefit must have been acting in the course of their emp!o"ment and must have been performing ver" services provided for in the N o 0e7ception to Ho< to be app!ied as a shie!d in actions brought against emp!o"ees1 (raser &iver Ltd. v Can$ive Services Ltd. N b/ Praser 0barge o ner1 and insurer aived right to subrogation against additiona! insureds' !oss resu!ting from +anHive2s 0charterer1 neg!igence' Praser made dea! ith insurer to pursue action against +anHive o D: appea! dismissed o Anal+sis (ondon #rugs t o stage testB o 11 e7press reference in the aiver of subrogation c!ause made to charterers' indicates that parties intended charterers to be third part" beneficiaries o #1 at the time% +anHive as indeed carr"ing out activities hich the c!ause had stipu!ated ere to be protected 0chartering the boat1 o Ratio: test from (ondon #rugs no !onger !imited to (ust emp!o"ees% e7tended o 1*rinci*led e)ce*tion2 0to privit" doctrine1 11 estab!ish that 3rd part" as intended b" the parties to the initia! N to be protected/benefit from the contractua! provision in 3uestion #1 activities performed ere the ver" ones contemp!ated as coming ithin the scope of the contract in genera! o Rcan be used as a c!aim or as a defense -DAMA? S and R M DI So )*ectation>Com*ensator+ Damages 0c!assic remed"1 o +ompensation for !oss of bargain' put c!aimant in position as though N had been performed' attempt to give p!aintiff fu!! va!ue of their bargain' deterrence factor o Mhen an essentia! condition has been breached o <art" seeking e7pectation damages must be ab!e to prove ith reasonab!e certaint" hat the" are% other ise must sett!e for on!" re!iance damages +an be difficu!t to measure !oss of bargain o )*ectation Damages 4ormula @a!ue of Aains <revented b" *reach 0e7pected additions to p!aintiff2s ea!th1'

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<.-S !osses suffered thereb" 0subtractions from pre:e7isting ea!th1' )/J-S costs hich p!aintiff avoided' )/J-S gains made possib!e b" H2s breach 9e!iance damages have same formu!a (ust ithout gains prevented o 47ceptions: un(ust enrichment p!aintiff% gross!" disproportionate economic aste Restitution Damages o function of returning p!aintiff to position the" occupied before entering the N protection of restitution interest p!aintiff2s interest in recouping benefits conferred on defendant prior to defendant2s breach' a 3uantum meruit c!aim usua!!" on!" avai!ab!e here there is a tota! fai!ure of consideration but p!aintiff has a!read" performed some% to avoid un(ust enrichment of breaching part"' or% hen e7pectation damages are too hard to ca!cu!ate Reliance Damages o compensation for !oss from the reliance interest detriment p!aintiff has incurred b" changing his position in re!iance that defendant ou!d fu!fi!! his end of the bargain 0common ith neg!igent misrepresentations1 o a!so to return p!aintiff to position the" ere in before entering N S*ecific "erformance 0eg. "all and &ardy) o Mhere propert" is considered uni3ue% mone" not a sufficient remed"% often !and o =rder of specific performance compe!s breaching part" to actua!!" perform origina! agreement instead of providing monetar" compensation Recission see pg 1F

ASSI?NM NT #I- ROD RUNN R fishing camp makes order for before Qune 1Fth% order gets mi7ed up and sent to rong !ocation% fishing !odge has to bu" gear from stores instead% sues for compensator" damages Wertheim v. Chicoutimi Pul+ Co. o Ratio: in breach of contract% comp!aining part" shou!d be p!aced in the same position the" ou!d be in had the contract been performed Hadley v. Ba*endale mi!! breaks% send it back to manufacturers and te!! them the" need it back asap' return de!iver" de!a"ed due to neg!igence% p!aintiff !ost severa! orking da"s o I: is de!a" too remote8 D: "es% too remote o Ratio: 9u!e 1: $he damages that the p!aintiff shou!d get are those that ou!d have reasonab!" been contemp!ated b" both parties as having arisen natura!!" from breach 9u!e #: /f specia! circumstances are communicated then the defendant cou!d be responsib!e for them% but if the p!aintiff didn2t te!! the defendant of the specia! circumstances then the defendant can on!" be responsib!e for hat it cou!d have reasonab!" contemp!ated 4ictoria Laundry v 6ewman #ndustries de!iver" of boi!er as #? eeks !ate o I: did defendants kno specia! circumstances such that p!aintiff can recover !ost profits8 o Damages must ,e ,ased on ('at is reasona!ly foreseea!le as lia,le to result from t'e ,reac'C kno !edge is both hat is actua!!" kno n and hat can be inferred

11/7/13 o in this case% defendant cou!d have reasonab!" foreseen the !oss of ordinar" business% but not the !oss of additiona! contracts

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Cornwall %ravel Co v. Purolator Courier !ate de!iver" of tender that as to be submitted% tender as re(ected and as orth a !ot of mone" o defendants had sufficient kno !edge/e7perience to kno the specia! circumstances that such !oss shou!d have been reasonab!" foreseen' puro!ator2s terms on!" covered them for !oss b" damage% not de!a"

if a condition of a contract is breached% and the innocent part" is a!!o ed to rescind it% the innocent part" can A.S= tr" to sue for damages. /n dea!ing ith damages that ma" be covered b" an e7c!usion c!ause% the fo!!o ing steps are taken: 11 .ook to see if there are an" ambiguous terms in the e7c!usion c!ause and and interpret them against the part" ho imposed for them to be inc!uded in the contract 0contra proferentem1 #1 /f the terms are the e7c!usion c!ause are S-<49 +.4A9% and that the damages suffered b" the innocent part" are +.4A9., covered b" the e7c!usion c!ause% then a

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construction approach shou!d be app!ied 0photo productions1. 31 $he construction approach !ooks at interpretating the e7c!usion c!ause in a a" that promotes the true intentions of the parties. As per photo productions% if both parties are commercia! bodies% then the parties shou!d be free to apportion and a!!ocate risks as the" see fit. /n a situation !ike this% ,4S% the e7c!usion c!ause ou!d be enforceab!e. $here are t o situations here the courts ma" ho!d that an e7c!usion c!ause is not enforceab!e: 11 Mhere there is unconscionabi!it" 0as per dickson +Q+1 #1 Mhere the circumstances of the breach is such that enforcement of the c!ause ou!d be unfair% un(ust% or unreasonab!e. 0Mi!son Q1 Da(son . 3elico*ter )*loration $o add to PaustinaSs point% the ru!e is that Tcourts i!! prefer to construe agreements as bi!atera! nature instead of a uni!atera! oneT $he prob!em ith a uni!atera! offer% is that it can be revoked at an" time before performance b" the other side and a!so ith notification of the revocation to the other side. .ike Paustina said% if the agreement as construed as a uni!atera! offer% then the defendant ou!d not be bound b" an" agreement% and the p!aintiff cou!d not recover for breach of contract. Mhen assessing the strength of an e7cu!pator" c!ause% courts i!! no !onger app!" the doctrine of fundamenta! breach 0as so!idified in <hotoproductions1. 9ather% courts i!! prefer not to interfere ith the bargain that parties have struck 0especia!!" if the" are commercia! parties1 un!ess the entire agreement is vie ed as unconscionab!e 0Hickson1 or unfair 0Mi!son1. An agreement ma" be vie ed as unconscionab!e% according to the the +<A s. 1F011 if there is ine3ua!it" of bargaining po er% a!so an agreement can be construed as arising from unfair practice if one of the parties as induced into sigining the N because of a misrepresentation 0misreps deemed unfair practice b" the +<A s. 1&011. Assuming though that the agreement is neither unfair nor unconscionab!e% courts i!! interpret the e7cu!pator" c!ause using a construction approach. $his approach entai!s the court2s construction of the parties2 intentions' according to the persuasive minorit" vie in Scott% this shou!d be done b" considering hat a reasonab!e person ou!d infer the parties2 intentions to have been hen the agreement as made. Mhi!e the construction approach strives not to give different meanings to c!ear and unambiguous terms that the parties have agreed on% the ru!e of contra proferentum i!! app!ied to vague and ambiguous c!auses% hich i!! be interpreted against the part" that imposed their inc!usion in the contract. -!timate!"% it i!! be difficu!t to infer that a part" did not intend to be bound b" a certain e7cu!pator" c!ause 0that the" have agreed to in the signing of the N1 if the ording of the c!ause is c!ear and e7p!icit. -3unter ngineering7s re-ection of fundamental ,reac' a**roac' is an e)am*le of courts a,iding ,+ classical li,eral economic *rinci*les ('ic' 'old t'at courts s'ould not interfere (it' t'e ,argain t'at *arties 'a.e struc& Afacilitati.e model % freedom

11/7/13 to contract &e+/B -regulator+ a**roac' see&s more -ust outcomes C"A a**lies to times'are rentals/ A,ut not sale of land generall+B

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