1. Formality: the Writing Requirement 3

IV. CONTENT OF THE CONTRACT 3

1. Formality: The Writing Requirement 3

Bauer v. Bank of Montreal (1980 SCC) – parol evidence rule 3

Gallen v. Butterley (1984 BCCA) – oral evidence may be admissible 3

2. Misrepresentation and Rescission: Representation and Terms 4

2.1 Misrepresentation and Rescission 4

Redgrave v. Hurd (1881 Eng CA) – K can be rescinded for misrepresentation 4

Smith v. Land & House Property Corp. (1884 Eng CA) – opinion as misrepresentation 4

Kupchak v. Dayson Holdings (1965 BCCA) – equity may grant rescission 4

Redican v. Nesbitt (1924 SCC) – cannot rescind for innocent misrep in executed K 5

Esso Petroleum v. Mardon (1976 Eng CA) – negligent misrep actionable in tort and K 5

Sodd Corp. v. N. Tessis (1877 Eng) – special relationship creates duty of care 5

BG Checo Int'l Ltd. v. BC Hydro & Power Authority (1993 SCC) – can sue concurrently unless K indicates otherwise 5

V.K. Mason Construction Ltd. v. The Bank of Nova Scotia (1985 SCC) – negligent misrepresentation test 6

S-244 Holdings Ltd. v. Seymour Building Systems Ltd. (1994 BCCA) – equitable rescission 6

2.2 Representation and Terms 6

Heilbut, Symons & Co. v. Buckleton (1913 Eng HL) – warranty vs. innocent misrep 6

Leaf v. International Galleries (1950) 2 K.B. 86; (1950 Eng CA) – warranty vs. condition 7

3. Parol Evidence Rule 7

4. Classification of Terms 7

Hong Kong Fir v. Kawasaki Kisen Kaisha Ltd. (1962 Eng CA) – intermediate terms 7

Krawchuk v. Ulraychova (1996 AB Prov. Ct.) – applies test from HK Fir 7

Wickman v. Schuler (1974 Eng HL) – breach of condition must be material and reasonable 7

5. Discharge by Performance or Breach 8

Fairbanks v. Sheppard (1953 CC) – can recover for substantial completion 8

Sumpter v. Hedges (1898 Eng CA) – can recover for your contribution (quantum meruit) 8

Howe v. Smith (1884 Eng CA) – deposit made as guarantee of performance not recoverable 8

Markland Associates Ltd. v. Lohnes (1973 Eng NSSC) – defective work is not a breach 9

Stevenson v. Colonial Homes Ltd. (1961 Eng CA) – can recover part payment, not deposit 9

6. Standard Form Contracts and Exclusion Clauses 9

Machtinger v. Hoj Industries Ltd. (1992 SCC) 9

6.1 Unsigned Documents 9

Parker v. South Eastern R.Y. Co. (1877 Eng CA) – reasonable notice req for unsigned K 9

Thornton v. Shoe Lane Parking (1971 Eng QB) – wide exclusion clauses req explicit notice 10

McCutcheon v. David MacBrayene (1964 Eng HL) – previous dealings must prove knowl 10

6.2 Signed Documents 10

Tilden Rent-A-Car Co. v. Clendenning (1978 Eng CA) – signature may not be adequate 11

Delaney v. Cascade River Holidays (1983 BCCA.) – waiver's language in circumstances 11

Schuster v. Blackcomb Skiing Enterprises (1995 BCSC) – application of Delaney 11

6.3 Standard E-contracts 12

Zhu v. Merrill Lynch (2002 BC Prov. Ct.) – online disclaimers cannot be too broad 12

Dell Computer Corp v. Union des consommateurs (2007 SCC) – e-K must be accessible 12

6.4 Fundamental Breach 12

Karsales v. Wallis (1956 Eng CA) – Denning's formulation of fundamental breach 12

Photo Production v. Securicor Transport Ltd. (1980 Eng HL) – overturns Denning 12

Hunter Engineering v. Syncrude Canada Ltd. (1989 SCC) – complicates Photo Production; freedom of K generally upheld w/ exceptions 13

Fraser Jewellers Ltd. v. Dominion Electric Protection Co. (1982 ONCA) – reconciles Hunter 13

Sale of Goods Act, s. 20 13

Solway v. Davis Moving & Storage Inc. (2002 ONCA) – applies Hunter 13

V. EXCUSES FOR NON-PERFORMANCE OF CONTRACT 14

1. Duress 14

Pao On v. Lau Yiu Long (1980 Eng JCPC) – establishes economic duress 14

Gordon v. Roebuck (1992 CA) – claimant must prove econ duress unjustifiable 14

2. Undue Influence 14

Geffen v. Goodman Estate (1991 SCC) – establishing presumption of UI; rebuttal 14

Royal Bank of Scotland Plc. v. Etridge (2001) – duty of stronger in non-commercial rel 14

3. Unconscionability 15

Morrison v. Coast Finance Ltd. (1965 BCCA) – establishing presumption of UC; rebuttal 15

Marshall v. Can. Permanent Trust Co. (1968 ABSC) – UC doesn't require knowledge 15

Harry v. Kreutziger (1978 Eng CA) – Lambert introduces community std test 15

Business Practices and Consumer Protection Act, ss. 4-10 15

4. Illegality 15

J.G. Collins Insurance v. Elsley (1978 SCC) – restraint of trade weighed with other concerns 16

Still v. Minister of National Revenue (1998 Eng CA) 16

VI. REMEDIES 17

1. Damages 17

1.1 The Interests Protected 18

1.2 The Expectation, Reliance and Restitution Measures 18

McRae v. Commonwealth Disposals Commission (1951 Aust. H.C.) – reliance damages 18

Sunshine Vacation Villas Ltd. v. Hudson Bay Co. (1984 BCCA) – either expectation OR reliance damages 18

Attorney General v. Blake (2001 Eng HL) – restitution rare but possible 18

2. Quantification 18

Chaplin v. Hinks (1911 Eng CA) – damages for lost opportunity 18

Groves v. John Wunder (1939 Minn. C.A.) – economic feasibility of K does not reduce damage amount 18

Jarvis v. Swans Tours (1973 Eng CA) – mental distress, loss of enjoyment recoverable in K 18

Ruxley Electronics and Construction Ltd. v Forsyth (1996 Eng HL) – imperfect result is not total failure 19

3. Certainty, Causation and Remoteness 19

Hadley v. Baxendale (1854 Eng) – test for remoteness: arising naturally? special circumstances? 19

Victoria Laundry v. Newman (1949 Eng) – foreseeability is enough; redefines Hadley test 19

Koufos v. Czarnikow (The Heron II) (1969 Eng) – adds probability to Victoria Laundry test 19

Whiten v. Pilot Assurance (2002 SCC) – applies test from Vorvis for punitive damages 20

Fidler v. Sun Life Assurance (2006 SCC) 20

5. Mitigation 21

White and Carter (Councils) v. MacGregor (1962 Eng HL) 21

6. Time of Measurement of Damages 21

Semelhago v. Paramadevan (1996 SCC) – damages in lieu of specific performance; calc date of trial 21

7. Liquidated Damages, Deposits and Forfeitures 21

Shatilla v. Feinstein (1923 SK) (1923 Sask. Prov. Ct.) – penalties and liquidated damages 21

H.F. Clarke Ltd. v. Thermadaire Corporation Ltd. (1976 SCC) – judicial appraisal of reasoonableness 22

J.G. Collins Insurance Agencies Ltd. v. Elsley (1978 SCC) – penalty clause and freedom of K 22

Stockloser v. Johnson (1954 Eng CA) 22

8. Equitable Remedies (Specific Performance and Injunctions) 22

John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2003 Eng CA) – what is "unique" property? 22

Warner Bros. v. Nelson (1937 Engl KB) 23

Zipper Transportation v. Korstrom (1997 Eng QB) 23

Zipper Transportation v. Korstrom (1998 Eng CA) 23

IV. CONTENT OF THE CONTRACT

1. Formality: The Writing Requirement

General (B & P pp. 271-277; 294-295)

·  Promise under seal can be unsupported by consideration

·  Some legislation exists around writing requirement

o  Statute of Frauds (1677) – writing requirement in K for land (s. 4), goods, wares and merchandise valued at over $10 BP (s. 17)

o  Sale of Goods Act, R.S.A. 2000 c. S-2 – slightly more flexible: s. 6: goods over $50, s. 8: written w/ or w/o seal, or orally, or combination, or implied by conduct

·  Overall, statues have writing requirements for

o  Land K (i.e. lending, purchase)

o  Indemnity (to be responsible for another's debts, e.g. insurance)

o  Guarantee (only if person defaults)

·  No particular form unless specifically stipulated but essential terms required unless can be reasonably inferred or are established w/ parol evidence

·  Some movement away from policy of requiring contracts to be in writing

·  Non-compliance with statutes renders K unenforceable but not invalid; distinction important b/c allows K, equitable remedy of part performance, act as consideration for new K

Arguments for abolition of writing requirement

·  No justification for particular list supplied

·  Not in accord with social practices

·  Places unjustifiable hardship on litigant who loses otherwise good claim on purely technical defence

Arguments for writing requirement

·  Evidentiary function for essential terms, level of details is useful

·  Possibly leads parties to take K more seriously

Bauer v. Bank of Montreal (1980 SCC) – parol evidence rule

F P was shareholder who gave personal guarantee believing that he would be given book debts. Bank did not register book properly so P was fully liable for all debts. P claimed K should be interpreted contra proferentum (ambiguous term construed against interests of the party that imposed its inclusion in the K; ct will favour innocent party); exclusionary and LLC was unconscionable; induced to enter K by representation of agent of bank e.g. assurances, misrepresentation

I Should bank's oral assurances be interpreted as an oral collateral agreement? NO

Parol evidence rule: oral evidence which varies or contradicts the main written K is inadmissible

Gallen v. Butterley (1984 BCCA) – oral evidence may be admissible

F Farmers purchased crop upon oral assurances. Crop failed, farmers sued successfully for breach of warranty; appealed

I Should trial judge have admitted oral assurances? YES

Oral and written evidence should be interpreted harmoniously to avoid inconsistency and contradiction

Oral statement may be relevant and may be admitted if

·  Written agreement is not whole K (but should not assume oral assurances form collateral K)

·  Statements support K (but collateral K will not be established if inconsistent/contradicts)

·  Correct mistake or error in K

·  Show misrepresentation

NB: Individually negotiated document is stronger than standard printed form

2. Misrepresentation and Rescission: Representation and Terms

·  Important terms:

o  Parol evidence rule; contra proferentum (see above)

o  Entire agreement clause – written K to be taken as entire agreement, oral agreements and negotiations should not be considered

Misrepresentation

·  Elements

o  More than opinion

o  False statement of past or present fact; cannot be an opinion or future fact

o  Reliance on statement induces person to enter agreement

o  CL does consider intent, knowledge, duty (i.e. innocent, fraudulent, negligent misrepresentation)

·  Effect

o  Makes K voidable (can continue or step out)

·  Remedies

o  Rescission (equitable remedy, restitutio integrum), also damages (depends on type of misrep)

o  To claim rescission, must act in timely manner

·  Burden of proof

o  Is there a duty to investigate (caveat emptore)? No!

2.1 Misrepresentation and Rescission

Redgrave v. Hurd (1881 Eng CA) – K can be rescinded for misrepresentation

F D entered K to purchaser P's house and share in P's business. P claimed business was profitable, offered paperwork that D did not examine. D discovered business was worthless, refused to complete transaction

I Can D recover? YES, K rescinded, deposit returned.

Establishes principles of misrepresentation (= material false representation):

·  Does not require intent or knowledge of offeror

·  Cannot fail for negligence of offeree

·  Must induce offeree to enter the K

·  Defence: offeree has knowledge of falsity or does not rely on representation

·  Remedy: rescission ("A man is not allowed to get a benefit from a statement which he now admits to be false")

Smith v. Land & House Property Corp. (1884 Eng CA) – opinion as misrepresentation

F D purchased hotel from P on statement that lessee was "a most desirable tenant." Tenant had history of late rent payments to P, eventually went bankrupt. D refused to complete

I Can P defend itself because it expressed an opinion, not a fact? NO

When facts are not equally well known to both sides, a misleading opinion functions like a misleading fact

Kupchak v. Dayson Holdings (1965 BCCA) – equity may grant rescission

F P swapped its property for shares in D's hotel. D misrepresented hotel earnings, P refused to continue mortgage payments. D had built apartment on ½ of P's property

I Can P rescind? YES, awarded rescission, compensation for value of property, interest

General rule: no rescission for misrepresentation if:

·  3rd party has acquired rights

·  Restitutio in integrum is impossible

·  Action to rescind is not taken in reasonable time ("doctrine of laches")

·  K is executed (exception: fraud)

·  Injured party affirms K

Equity does what is just, though it cannot always restore parties precisely to the state they were in before the K

·  Ct has discretionary powers; extends reach of equity in this case

·  Treats compensation as a form of equitable relief

·  Because D acquired P's property fraudulently, ct ought not to bar rescission

Redican v. Nesbitt (1924 SCC) – cannot rescind for innocent misrep in executed K

F D purchased leasehold interest in P's house without prior inspection. Keys and cheque exchanged, but D ordered stop-payment on cheque upon seeing property for first time

I Can D rescind? NO, K was executed, parties received full consideration

Rescission not allowed for innocent misrepresentation if K is executed unless benefit provided differs in substance from that promised

If fraudulent misrepresentation, rescission may be granted even if K is executed

Impossibility of restitution will prevent rescission unless that impossibility has been caused by the guilty party

Esso Petroleum v. Mardon (1976 Eng CA) – negligent misrep actionable in tort and K

F Esso leased gas station to Mardon. Because of location, sales much lower than Esso's representation. Esso cut off supplies, claimed possession and overdue rent. Mardon counterclaimed for breach of warranty and negligent misrepresentation

I Is there a contractual warranty? YES; factual statement by party claiming to have special skill/knowledge, made w/ intention and success of inducing party to enter K. Esso liable for Mardon's capital losses: $$ put into business and lost, overdraft, loss of earnings, interest

Negligent misrepresentation inducing K gives rise to action in tort (negligence) and contract (breach of collateral warranty)

A party has duty to use reasonable care in their representation if they claim special knowledge/skill and act to induce another to enter a K (Hedley Byrne)

Breach of a collateral warranty gives the right to damages

NB: Usually warranties pertain to present or past facts. In this case, breach of warranty found regarding future facts

Sodd Corp. v. N. Tessis (1877 Eng) – special relationship creates duty of care

F D (professional accountant + trustee in bankruptcy) misrepresented the value of inventory of a furniture store he was trying to sell. P relied on those statements