Law 108A | Contracts
Midterm OUtline – Short | 2013 | Newcombe
SandRa Town
Starting point – K formation through OFFER, ACCEPTANCE and CONSIDERATION
Was there an offer?Do the details indicate an intent to be bound? / Ad as invitation to treat b/c still room to negotiate / Johnson
Was it specific and comprehensive? / Ad as invitation to treat b/c so many details still left to figure out / Lefkowitz (was an offer)
- Wrt to stores
Offer is picking up the item
Acceptance is cashier taking the money / Boots
- Wrt to trains
POLICY – crts likely to uphold offer truth in advertising; crts look at reliance placed on “offer” by Pl.; responsibility to public for offers put out there
Can an offer be withdrawn/revoked
- Yes, IF no acceptance
- Clear communication to Offeree
NOTE enforcement about balancing reasonable expectations of parties against avoiding unfair surprise
Was there acceptance?Was it within a reasonable amount of time? / If too long, the offer is seen as withdrawn or refused
- Can’t accept if offer expired too
Was it communicated? / Silence is not acceptance, you have to communicate acceptance / Larkin
How can you accept? / Method can be dictated by Offeror
- Verbal
- Action
Generally
Acceptance must be communicated AND received before there’s a K
Postal Acceptance Rule (letters, telegraph)
Acceptance at time the letter is POSTED
- Must be contemplated method of communication
Revocation has to be received BEFORE posting letter for it to count / Byrne & Co.
Can stipulate in offer that K doesn’t form on instant of mailing must be received (remember PAR is an EXCEPTION) / Holwell Securities
Where does the K form? / Generally – under jurisdiction of place it was received / Eastern Power
PAR – under jurisdiction of place it was sent
Was it actually a counter-offer? / C-O is rejection of original offer c/ significant differences to original offer / Bulter
- Wrt to counter-offer
What’s going on with tenders?
2 K policy – to keep all offers on the table and not be bound to all of them / K1 – offer is call for tenders, acceptance is submission, consideration is promise to treat all bids fairly
K2 – deals c/ actual provision of goods/services / MJB Enterprises
Can you accept non-compliant bid?
(content, submission) / No – privilege clause doesn’t include this right (breaches pple of treating bids fairly – has to meet criteria you set out) / MJB Enterprises
Formalizing the K creating certainty (part of both O and A)
Price Mechanism – way for crt to find/reasonably infer the price
History
Course of dealings
Market Value / Was it an agreement to agree? / Crt will not enforce vague K missing essential terms / May & Butcher
But did you act upon that agreement? / On-going K require flexibility b/c market conditions change
Business efficacy you intended the K to hold / Hillas (Russian tree sales)
Crt may look at your past actions to “fill in the gaps” / Foley
Did you act in good faith / Obligation not to withhold info, bargain c/out intent to form a K, reneging on a promise made in negotiations, force a decision / Empress Towers
Consideration – what’s flowing from each party (and it has to flow from BOTH SIDES)
What counts as consideration? / Giving up something you have a legal right toPOLICY – risk of exploitation / White
Can benefit the promisor OR be detriment to promisee at request of promisor
Restriction of freedom of action works / Hamer
Consideration doesn’t have to be adequate / It has to have value in the eyes of the law, but amount it irrelevant
PS. Motive behind the offer is irrelevant too / Thomas
Was it mutual? / Wrt to exclusive right to sell, there has to be a stipulation as to amount of sales to be good consideration / Tobias
It can be implied ”reasonable efforts” / Lady D-G
Did it happen in relation to the promise / Past consideration is not good consideration – it’s a GRATUITOUS GIFT (moral, rather than legal obligation)
- Also applies to claims of quality (eg. horse - Roscorla
EXCEPTION: if you request a service then promise to pay is binding the service was not a gift / Lampleight
K Modification
Can’t change consideration for pre-existing K / Agreeing to do what you’ve already agreed to do not good consideration / Harris
Stilk
Can you enforce K variations
(GTAs) / Need fresh consideration to make K modification enforceable (Cnd leading law)
- “mere” change in price may be viewed as variation BUT weigh against fact that some business K that’s all you can vary
Other views on K modification not yet accepted in SCC decision yet
Consideration expanded to include practical benefit / Def. offered to pay more to obtain benefit for self – no concern of duress / Williams
Don’t need consideration at all for modification / Was consideration at the beginning and as long as there’s NO DURESS then why not enforce it? / NAV Cnda
Intent to be bound / If there’s evidence of reliance, the K modification should hold / River Wind
Other types of consideration situations
Debt settlement / Payment of a lesser sum for a greater one is not good consideration / Foakes
Legal Compromise / Forbearance on right to sue/make a claim is good consideration even if you’re not likely to succeed with the initial claim / Fairgrief
Donations / Pledge to donate not good consideration gift rather than K (lack of consideration – what’s coming back to you)
POLICY – crt reluctant to give pledge to donate same weight as debts / Dalhousie
Intention
Objective test to determine that parties had intent to be bound – conduct, words, actionsPresumption / Promises bt/ family members not binding / Jones
Promises bt/ businesses can explicitly state the K is not legally binding / Rose
Alternative Routes to enforce a Promise (When O/A/C falls through due to lack of C)
SealForm of agreement makes it enforceable signed, sealed, delivered AND understood seals are binding
Estoppel
5 Elements /
- Legal relationship exists
- Clear promise exists
- Promise made c/ intention to be relied on
- A party relied on the promise
- No reason to excuse (eg. duress, coercion)
You can’t go back on your word if the other party relies/acts upon it
- POLICY – not enforcing promise is unconscionable/unfair
Can bind you to K modification (c/out consideration) intent to create legal relations, acted upon it, and now held to it / Central London
Can only be used defensively (SHIELD)
- Eg. you can’t sue me for going back on my word, but if I go back on my word you can defend your actions through PE
Intent means the Promisor is giving up his strict legal rights indulgence doesn’t count / Burrows
Intent can be implied through course of conduct / Owen Sound
Coercion negates PE as safeguard / Rees
Unilateral K – acceptance through action (exception from starting point of Bilateral K)
RewardsEntitled so long as you fulfilled terms of K / Motivation is irrelevant / Williams
Must be aware that K and reward exist / Can’t claim it after the fact if fulfilled terms by happy accident / Clarke
Can be offered to general public (“anyone”) / Enforceable offer can be made to “stranger” so long as the fulfill the K
- Wasn’t invitation to treat b/c put $ in bank
Revocation
When does acceptance happen? / When performance is complete
POLICY – can manipulate situation and revoke after most (but not all) performance occurs crts try to stop this, bad faith / Dale
Interpretation of O/A is reasonable person / Wording is really important
- Can make mention of performance completion here
Protect ongoing performance through
Implied 2K approach K1 implies promise not to revoke K2 (eg. staying in the house while paying
- Forbearance of right to c/draw is consideration for beginning performance
Finding a bilateral K through exchange of mutual promises / Dawson
3rd Party Beneficiaries
Privity of K denies 3rd party access to K / No consideration from 3rd party, not technically a part of it- Having another “in” will give you access (eg. executor of estate)
Beswick
Extends from ER to EE under certain circumstances relax privity / Did the K intend to extend to sm/o else (3rd party/EE)
- Express or implied
POLICY – EE those who actually perform the K action / London Drugs
Extends beyond ER/EE relationship relax to include any commercial situation / Did the K intend benefit to 3rd party?
Was the activity performed by 3rd party required under the K?
POLICY – why shouldn’t a bargain entered into by 2 sophisticated commercial entities not hold? / Fraser River
Relaxing privity of K doesn’t yet apply to family members / Owner/operator of object is not the same as buyer – buyer entitled to benefits under Sale of Goods Act - / Resch
Mistaken Identity RISK ALLOCATION (who’s best able to bear it?)
Who did you intend to make the K with – the person standing in front of you, or a specific personWas it true mistaken identity / A intends to contract with a specific person NOT the person actually standing in front of them – identity is important to K formation / Phillips
Or was it fraudulent misrepresentation / A intends to contract with the person standing in front of them (anyone) – identity is not important to K formation (fake name doesn’t impact reality of K) / Ingram
Test: presumption that you intend to K with the person standing in front of you unless evidence provided to rebut
- Nemo dat: no rights to transfer – protects A
- POLICY – conflicts c/ protecting innocent purchasers who buy in good faith
Result / Fraudulent Misrepresentation / VOIDABLE – have to prove before the rights are transferred to 3rd party who bought in good faith (rescind before transfer) / Ingram
Mistaken identity / VOID – property goes back to A b/c rogue had no rights to transfer property / Phillips
Non Est Factum – mistaken signature (c/out knowledge of the document’s meaning, but not done carelessly)
Generally / A person of full age and understanding is bound by their signature to a K / SaundersException only if… /
- You were not negligent/careless
- Must prove they took all reasonable precautions – “I relied on a trusted person is not enough”
- The document signed was fundamentally different to what you thought you were signing
- Document must have legal effect
- If no fundamental difference, no reason not to hold signee to K as result would have been the same c/out the mistake
Saunders
Result / If NEF applies / K is VOID from the get go no acceptance/consent
If it fails the test, it’s fraudulent misrepresentation / K is VOIDABLE option to rescind / Sunders
1