CONTRACTS CAN
CONTRACTS BASICS
Intro to Contract Law & Enforceable Promises
Functions & Sources of Contract Law
Remedies (Damages)
Promises Enforced as Deeds
CONSIDERATION
Consideration as Basis for Enforcement
Hamer v Sidway (1891, USA)
Dalhousie College v Arthur Boutilier
Past Consideration
Mills v Wyman (1825, USA)
Eastwood v Kenyon (1840, UK)
Lampleigh v Brathwait (1616, UK)
Exceptions to Past Consideration (valid)
1.
2.
3.
4.
Adult promises to re-pay debt incurred as child (Eastwood)
Promising to re-pay debt that was previously enforceable
after limitation date (Mills v Wyman)
Promising to re-pay debt previously discharged from
bankruptcy (Mills v Wyman)
When past promise is given (at promisor’s request) which
implied agreement that there would be future exchange
(Lamleigh & Pao On)
Functions that Consideration Serves (Fuller)
a) Evidentiary b) Cautionary c) Channeling
Consideration Must have Value but not Adequacy
Thomas v Thomas (1842, UK) “peppercorn”
Forbearance from Suing as Consideration
B(DC) v Arkin (1996, Man)
Illusory Promises (Invalid C | Req. of Bargain)
Strong v Sheffield (1895, USA)
Wood v Lucy Lady Duff Gordon (1917, USA)
PRE-EXISTING LEGAL DUTY (Consideration)
Public Duty
Ward v Byham (1956, UK)
Pre-Existing Contractual Legal Duty
Promises to Accept More
Stilk v Myrick (1809, UK)
Gilbert Steel v University Construction (1976, UK)
Williams v Roffey Bros & Nicholls (1990)
Pre-Existing Legal Duty (Accept More) & Reforms
Greater Fredericton Airport v NAC Canada (2008, NB)
Rosas v Toca
Promises to Accept Less (Accord & Satisfaction? Judicature Act?)
Foakes v Beer
Foot v Rawlings
Pre-Existing Duty Owed to a Third Party
Pao On v Yiu Long (1980)
PROMISSORY ESTOPPEL & WAIVER
General PE & Waiver Concepts
Hughes v Metropolitan Railway (1877, UK)
Central London Property Ltd v High Trees (1947)
John Burrows v Subsurface Surveys
Combe v Combe
Continued….
Continued….
Different Versions of Promissory Estoppel
Narrowest: pre-existing relations + agree to accept less (Gilbert)
Middle: pre-existing relations only (Dunn v Vicars)
Broadest: just reliance on promise (High Trees | Walton Stores)
5 Key Aspects for Promissory Estoppel in Canada
BC Law & Equity Act (statutory rules)
Walton Stores v Maher (1988, OZ)
M(N) v A(AT) (2003, BC)
MUTUAL ASSENT
A) Offer
General Principles of Offers & Mutual Assent
Offer and Invitations to Treat
Canadian Dryers Ltd v Burton (1920, Ont)
Pharmaceutical Great Britain v Boots Chemists (1953, UK)
Advertisements
Carlill v Carbolic Smoke Co (1893, UK)
Goldthorpe v Logan (1943, Ont)
Communication of Offer & Rewards
Williams v Carwardine (1833, UK)
R v Clarke (1927, OZ)
B) Acceptance
General Principles of Acceptance & Mutual Assent
Livingston v Evans (1925, AB)
Communication of Acceptance (& Silence)
Felthouse v Bindley (1862, UK)
Dawson v Helicopter Exploration Co (1955, SCC)
Postal Acceptance Rule
Household Fire & Carriage v Grant (1870, UK)
Howell Securities v Hughes (1974, UK)
Instant Communications
Brinkibon Ltd v Stahag (1983)
C) Revocation/Termination of Offer
General Principles for Termination & Lapse of Offer
Dickinson v Dodds (1876, UK)
Byrne v Van Tienhoven (1880, UK)
Errington v Errington & Woods (1952)
Barrick v Clark (1951, SCC)
D) Certainty
General Concepts of Certainty & Incomplete Terms
May v Butcher (1943, UK)
Hillas & Co v Acros (1923, UK)
Foley v Classique Coaches (1934)
Agreements to Negotiate
Empress Towers Ltd v Bank of NS (1991, BC)
Mannpar Enterprises Ltd v Canada (1999, BC)
INTENTION TO CREATE LEGAL RELATIONS
General Principles of Intent Requirement
Balfour v Balfour (1919)
Rose & Frank Co v JR Crompton (1923)
BC Law & Equity Act (s.59)
FORMALITY: WRITING REQUIREMENT
Basic Principles of Written v Oral Contracts
Statute of Frauds
Sale of Goods Act
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The Basics: Functions, Sources, & Remedies
INTRODUCTION TO CONTRACT LAW
Hawkins v McGhee (1929 New Hampshire)
F: P had burned hand | D guaranteed to graft and make hand 100% perfect/good hand | surgery resulted in hand being
worse and hairy after
I : was the statement of making 100% good hand a legally binding contractual term?
A: clear words meant to be taken at face value (language = binding promise) and statement used as inducement to
make father agree therefore thanks to both factors is binding
FUNCTIONS OF CONTRACT LAW
1.
2.
3.
4.
Identifying criteria for determining the enforceability of promises (determining which promises are legally binding)
Serves a gap-filling function with default/background rules
Defining which rules should be treated as default rules and which should be mandatory (a question of policy)
 Default rules: exist unless parties have specifically modified them
 Mandatory rules: parties cannot contract around them (ex employment law rules)
Providing rules for determining the meaning of the promises the parties have made to each other (interpretation of
vagueness/ambiguousness)
SOURCES OF CONTRACT LAW
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Main source = common law
Sale of Goods Act = main statute, very important and influential
o Trumps the common law, but the common law can supplement if Act lacking
Consumer protection legislation = government intervention in contracts
Treaties and law review articles (only persuasive, not binding)
International sources (again not binding)
REMEDIES
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Punitive damages (including monetary): very rare in contracts
Agreed damages: when parties had agreed within a contract what the damages for breach were
Compensatory
o Injunctive: can be specific performance, which compels a party to complete their promise; or an injunction
which tells party they cannot do a bargain elsewhere
o Substitutional: much more common, generally monetary damages
Expectation damages  give party the ‘benefit of the bargain’ **GOLDEN STANDARD FOR CONTRACTS**
Reliance damages  put in position before the contract (more common in tort)
Restitution damages  comes often from cases of unjust enrichment and takes away what was gained unfairly by
breaching party from the breach
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PROMISES ENFORCED AS DEEDS
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Do not need consideration when a contract is made under seal
Often used when there is uncertainty about the value of consideration
The formalities/ritual meant to ensure the parties know what they are entering into
Must have a physical seal and must have statement “signed sealed and delivered”
CONSIDERATION
Hamer v Sidway [1891 NY]
F: Uncle promises nephew would pay $5000 if nephew didn’t drink, smoke, swear, or gamble until age 21 | nephew
consented and refrained, but uncle died to now someone who has the interest (Hamer) suing executory of uncle’s estate
(Sidway)
I: Is there valid consideration in forbearance of a legal right | is this a unilateral or bilateral contract
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A: not drinking/smoking/gambling is a giving up of a legal right which is enough of a detriment to the nephew to constitute
valid consideration (uncle doesn’t need to benefit) | unilateral because uncle had no way to do anything if nephew
‘breached’; legal obligation only happened once nephew has completed his side
R: act of giving up lawful freedom is valid consideration in a promise | ex of unilateral contract
Shadwell v Shadwell [within Hamer]
F: uncle pay 150 pounds a year to assist with marriage
A: valid consideration and thus binding because is quid pro quo: will pay 150 pounds a year in return for you getting
married/continuing with the marriage
Lakota v Newton [within Hamer]
F: promise to pay $100 if stop drinking for a year
A: valid consideration as a forbearance of a legal right
The Governors of Dalhousie College at Halifax v. the Estate of Arthur Boutilier, Deceased [1934 SCC]
F: Bout pledged $5000 to College in a signed subscription which noted money would be used generally for ‘improvements
of College’ | Bout never paid but said he intended to eventually | college made improvements counting on the money| Bout
died without paying
A: too broadly worded to be considered a request by Bout for improvements  donation not made for a specific purpose,
not a clear exchange, no inducement | facts here do not support consideration on grounds of inducing others to donate (uni
using promise to induce others is not consideration, if he had said ‘if you donate I will too then maybe’) | College shouldn’t
have relied on this gratuitous promise  reliance by itself not valid consideration
R: promise of money for various improvements does not have valid consideration because there is a lack of
inducement and the donation is not made for a specific purpose
PAST CONSIDERATION
Mills v Wyman [1825 Massachusetts]
F: Wyman was 25 and not part of father’s family when got sick | Mills took care and gave board and nursing but Wyman
died | Wyman’s father informed after death of all expenses and at that time wrote that he would pay Mills back | now
doesn’t want to pay
I: is the promise to pay expenses supported by consideration?
A: no mutual inducement at the time benefit given to son | no request for care made, father only offered after all benefit
was given thus is a case of past consideration |past consideration here is not valid consideration
Eastwood v Kenyon [1840 QB]
F: Infant Sarah had P as guardian and P spent money on her for education and improving assets etc | P borrowed money to
do so | Sarah when came of age promised P would pay debt (paid some of the interest only) | Sarah married D who also
promised would pay debt but didn’t
I: is there valid consideration in the promise made by D to pay P
A: consideration for promise was past and executed long ago | no request by D to spend the money on P (impossible
with timing) | policy fear of people to start conferring benefits and then demanding they are obligated to repay | no valid
contract
Lampleigh v Brathwait [1615 KB]
F: D had killed someone, asked P to go get him a pardon for it | P rode around country trying to get a pardon, worked very
hard and succeeded | afterwards, D was grateful and promised to give P 100 pounds, but did not
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A: normally would fall under rule of past consideration being invalid but this is another exception | riding around was
done at the explicit request of D and thus valid consideration even though happened in past | implied agreement when
service asked for that would get paid for it
R: past consideration completed at direct request of other party is valid
EXCEPTIONS TO THE PAST CONSIDERATION DOCTRINE
1.
2.
3.
4.
If adult re-promises to pay debt that he/she incurred as a child this is valid (Discussed in
Mills v Wyman /
Eastwood v Kenyon)
If someone re-promises to pay a debt that was previously enforceable after limitation date (Discussed in Mills v
Wyman)
If someone re-promises to pay a debt after it was previously discharged from bankruptcy (Discussed in Mills v
Wyman)
Past promise given at promisor’s request with implied agreement that there would be eventual exchange (used in
Lampleigh v Brathwait)
Three aspects necessary for this exception outlined in Pao On v Lau Yiu Long
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Original act done at promisor’s request
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Parties must have understood act was going to be remunerated somehow
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Payment/benefit must have been legally enforceable if had been promised in advance
What Functions of Form does Consideration Serve (Lon Fuller Article) ?
1. Evidentiary f’n: provides evidence of the terms of agreement if there is controversy
2. Cautionary f’n: cautions parties they are entering into an agreement that is legally binding
3. Channeling f’n: gives instrument that tells parties what to do to make a legally binding contract
Note: that the seal (which replaces consideration) also fulfills these three functions
CONSIDERATION MUST HAVE VALUE BUT COURTS DO NOT INQUIRE INTO ADEQUACY
Thomas v Thomas [1842 QB]
F: D was brother of P’s late husband, drew up agreement that P (widow) could keep husband’s house until she died or got
remarried (following wishes of late husband on his death bed) | in return she would pay 1 pound a year for rent and keep
premises in good repair | D ejected her after a little bit
A: motive (requesting wishes of husband) is not valid consideration  courts do not care about motive just care about if they
have objectively bargained for something | consideration is something that has value in the eyes of the law | even though
consideration nominal (peppercorn) is still valid b/c courts do not inquire into adequacy | evidentiary and cautionary
functions fulfilled
R: consideration must have value in the eyes of the law, courts don’t inquire into the adequacy of consideration
FORBEARANCE FROM SUING AS CONSIDERATION
B. (D.C.) v Arkin [1996 Man QB]
F: P’s son was 14 and stole from Zellers | Zellers lawyer said were going to claim from mother because was legally
responsible and had right to claim against her in civil court | offered to accept $225 to settle out of court which P accepted
and paid them | P then sought legal advice and realized Zellers never had a valid claim
A: a forbearance to sue is generally good consideration but for this to be so forbearer must act in good faith, must have
seriously intended to pursue the claim (even if claim was invalid but they didn’t know that), and cannot have deliberately
concealed facts from the promisor | here claim was completely invalid and Zellers lawyers competent thus would have
known that so didn’t intend to pursue, misleading letter = not good faith, concealed info so here this forbearance is not valid
consideration | got her money back
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R: forbearance to sue is good consideration under three conditions: 1  forbearer acting in good faith; 2
forbearer must have seriously intended to pursue the claim; 3  forbearer cannot deliberately concealed facts from
promisor | money in exchange for (valid) forbearance to sue (settlement) is okay
ILLUSORY PROMISES (INVALID CONSIDERATION)
Strong v Sheffield [1895 NY CA]
F: P sold business to D’s husband on credit | embodied in promissory note which D endorsed bc P promised he wouldn’t sell
the note to someone else or collect until ‘he wanted his money’ | ended up demanding payment over 2 years later
A: Generally forbearance to collect in exchange for endorsement is valid consideration but in this case the period of
forbearance was completely at discretion of P (‘when I want my money’) and thus no valid consideration | doesn’t matter
that did actually wait two years because the time period was not bargained for
R: PROMISE IS ILLUSORY (purely at one party’s discretion) = NO CONSIDERATION
Wood v Lucy, Lady Duff-Gordon [1917 NY]
F: P and D entered into contract that P had exclusive right to place D’s endorsement on other people’s designs (then more
valuable) and exclusive right to put her own designs on sales or license others to market them and in return D got 50%
profits from contracts that P made | D placed endorsements on others designs without P’s knowledge and kept profits only
for herself
A: this promise is not illusory because there is an implied promise that P must use reasonable efforts to bring profits
and revenues into existence (in exchange for exclusive agency given to him) and thus contract is binding b/c has valid
consideration | D’s actions were thus breach of the exclusive agency contract
Pre-Existing Legal Duty
PUBLIC DUTY
- Traditional view is that promise to perform/performance of a public duty is not valid consideration (but if there is
something beyond requirements of duty given then is valid)
Ward v Byham [UK CA 1956]
F: father promised to pay mother of illegitimate child so mother would make sure child well looked after and happy (also had
to prove this) and let child have choice to live with mom or not | mother statutorily obligated to maintain illegitimate child
A: goes against traditional view that there is no consideration because mother already statutorily obligated | is
consideration because went over and above duty  child happy and well looked after/ proof/ choice where to live (Lord
Morris) OR is consideration because still benefits the father knowing child happy and well looked after (Lord Denning)
PRE-EXISTING CONTRACTUAL LEGAL DUTY
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Traditional principle is that there is no fresh (valid) consideration in promising to do something you are already
contractually/legally obligated to do
However is necessary to balance policy of protecting against economic duress vs allowing parties to alter terms of
contracts for economic improvements
PROMISES TO ACCEPT MORE
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Stilk v Myrick [1809 KB]
F: D was sailor and had agreement to be paid 5 pounds a month for the voyage | 2 men deserted and when at a port captain
attempted to find more people but couldn’t so promised rest of sailors to divide two wages between all of them | voyage
completed but captain didn’t pay the extra
A: sailors had already agreed to do whatever they could to ensure safe voyage and thus gave no fresh consideration for the
extra pay | D only gets 5 pounds as per original contract
R: an agreement to pay more in exchange for other party completing same duties as before is not valid because
there is no fresh consideration
NOTE: this case was dependent on specific mutiny-related scenarios  when one side has unfair negotiating powers
(similar to duress idea)
Gilbert Steel Ltd v University Construction Ltd [1976 UK CA]
F: P and D had agreement for P to deliver steel for 3 sites, fixed prices | before third site delivery done, P announced
increases in steel prices and new (written) contract entered into for building 1 on site 3 w/ higher prices | first building still
not completed P announced second price increase and oral contract entered into for higher prices | D doesn’t want to pay
higher prices
I: Is the oral agreement (and prices) legally binding?
L: Morris v Baron & Co : held that a subsequent agreement where parties mutually agreed to eliminate/tear up the former
one and replace it with a new (modified) agreement is a way to get around pre-existing duty rule
A: no evidence that either party wanted to get rid of old contract and replace with new one as in Morris (in NOCC said was
amended; D never signed new contract only oral) | oral agreement was agreement to vary previous conditions only thus not
valid consideration
R: a promise to pay more for a good without additional consideration from the seller will not be enforceable if there
is no evidence that the parties intended to rescind the original contract and replace it with a new (modified) one
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990]
F: P was hired by D to do carpentry on 27 flats but had money problems b/c price too low | D approached P and said would
pay extra for completion
A: refining and limiting application of Stilk v Myrick (still good law but less persuasive) | practical benefit given to D thus
valid consideration from a modification (here, was penalty to D from the people who hired them if carpentry not completed)
| no economic duress b/c D is the one who approached P with higher payment amount
R: In the absence of duress, the presence of a practical benefit to the promisee can be considered valid consideration
when a contract is modified (doctrine of practical benefit)
Greater Fredericton Airport Authority Inc v NAV Canada [2008 NB CA]
F: gov’t had agreement with D where D had responsibility for air navigation services | P was given gov’t duties and rights
over airport | D was supposed to move some equipment as part of contract but refused to do so unless P helped pay for
upgrades (not part of contract) | P agreed to pay for improvements under protest but now do not want to pay
A: refined/ modernized consideration doctrine from Stilk | economic duress present here and thus modification not
supported by valid consideration
R: fresh consideration can exist in a modification that has some kind of practical benefit attached to it as long as there is
no economic duress (focus on duress not consideration)
NOTE: this is the current Canadian doctrine for the pre-existing legal duty rule
Techform Products Ltd v Wolda [2001 Ont]
F: employment contract, employee asked to do more (adding a patent clause)
A: consideration held to be an implied clause of employer not firing employee for ‘a reasonable time’
NOTE: this principle usually applies for adding a non-compete clause
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PROMISES TO ACCEPT LESS
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Presents same issue as promises to give more
Courts have tended to stick more rigidly to traditional position of no valid consideration
o Exception: can be valid if parties intended to rescind original promise and substitute the new one
Duty to perform may in some cases be discharged by accord and satisfaction
o Accord = agreement; Satisfaction = consideration
o Accord is a contract under which oblige promises to accept substituted performance in future satisfaction of
obligor’s duty
Foakes v Beer
F: P owed money to D | signed agreement to pay in intervals instead of lump sum | paid all intervals but D suing for lost
interest
A: doctrine of accord and satisfaction doesn’t create exception to normal doctrine of consideration and here promising to
give less is not valid consideration | ignores fact that creditor gets money (likely none if lump sum) and saves on enforcing
payment
R: a promise to accept less than was already promised in same form of payment is invalid for lack of consideration |
creditor promising to waive residue of liquidated debt in exchange for party payment by accord and satisfaction is void for
lack of consideration
Foot v Rawlings
F: parties made agreement for payment of D’s debt at lower i rate than previously decided | would give post-dated cheques
to be cashed on 16th of month, if didn’t bounce wouldn’t sue | didn’t bounce but P sued anyway before completion of
payments
A: giving of a financial instrument (post-dated cheque) is valid consideration in exchange for forbearance to sue |
distinguished from Foakes b/c of different form of payment
R: a valid accord and satisfaction may be constituted by partial payment of a debt, so long as the mode of payment is
changed to be by cheque or another negotiable instrument (anything that is worth money is okay but money itself is
not)
Statutory Rules

BC Law and Equity Act s. 43: Part performance of an obligation either before or after a breach of it, when expressly
accepted by the creditor in satisfaction or rendered under an agreement for that purpose, though without any new
consideration, must be held to extinguish the obligation.
PRE-EXISTING DUTY OWED TO A THIRD PARTY
Traditionally viewed as good consideration
Pao On v Lau Yiu Long [1980 PC]
F: P owned all shares in company called Shing On and had agreement with company Fu Chip (D were majority shareholders)
for a share exchange | FC would buy shares from SO and SO would buy shares from FC | SO had to keep 60% of shares for 1
year to not depress the market, had subsidiary agreement that FC would buy back shares at $2.50 each | P decided wouldn’t
complete deal unless replaced subsidiary deal with guarantee that FC shares would retain value | P/SO signed agreement
with D (majority shareholders) to indemnify values of shares| swap proceeded but FC shares dropped in value over the year
they were held and D refused to indemnify them
I: was there valid consideration for the guarantee signed by D?
A: parties both understood the restriction on selling was to be compensated in some way  not a gift or gratuitous promise |
past consideration argument fails b/c FC and D are different legal entities | consideration for protection against losses was
promise between P and D to perform the contract with FC  valid consideration because reinforces obligation by now
owing it to D and FC
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R: a promise to perform/ performance of a pre-existing contractual obligation to a third party can be valid
consideration | note can still consider duress and thus decide differently
MUTUAL ASSENT: OFFER
GENERAL PRINCIPLES
 To have contractual liability parties must have reached an agreement: must have voluntarily assumed obligations, know
contract is serious, and know what obligations they must perform
 Consensus ad idem = moment when the minds of the parties are in exact convergence = meeting of the minds
 Objective approach to mutual assent: rely on the outward manifestation of parties’ intent and thus obligations are based
on what a reasonable person observing would have thought
OFFERS AND INVITATIONS TO TREAT
 US Restatement def’n: an offer is “an act that leads the offeree reasonably to believe that power to create a
contract is conferred upon him"
o
Does the offeree have the power to ‘close the deal’ by accepting?
o
Factors are: specificity of language; offeror’s intention to be bound; location of statement in sequence of
correspondence; surrounding circumstances; whether statement made to one person or multiple
 Generally price quotations are considered as invitations to treat (ITT) NOT offers
o
Johnstone v Rogers: “we quote you…” = ITT
o
Harty v Gooderham: a quote with “shall be happy to have an order from you, to which we will give prompt
attention” = OFFER
Canadian Dyers Association Ltd v Burton [1920 Ont High Court]
F: P wrote to D in May asking what lowest price would be that D would accept for his property | D replied in June saying
lowest $1650 | P wrote next October asking again for lowest price and that hoped to get closer together | D replied saying
$1650 still lowest price prepared to accept and that from any other party would ask for more | P sent cheque and D sent
draft deed to close on Nov 1 | Nov 5 D said no contract and returned cheque
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A: Oct letter more than quotation of price instead was statement of readiness to sell | mentioning that offer specific to P,
having previous negotiations, prepared to accept all language that points towards being an offer | action of having deed
drawn and not objecting to cheque immediately indicates intent to have binding contract (outward manifestation showing
meant to be an offer)
R: whether a statement is an offer or a quotation of price depends on the language used and circumstances/actions of the
potential offeror
Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953 Eng CA]
F: Society has rule that all sales of ‘poisons’ must be supervised by pharmacist | D had pharmacy where customers could
select poisons from shelf and go to cashier to purchase them | pharmacist could stop transaction of drugs at cashier
I: At what point does the sale of the medicines occur – when customers put in basket or when proceed through the checkout?
A: in an ordinary shop like a bookstore contract not completed until cashier accepts customer’s offer to purchase and this
case is no different | would be absurd if transaction occurred when puts item in basket b/c then couldn’t change mind | when
someone comes to the cash register to pay this is the offer and then the store accepts this offer and thus follows rules of
Society
R: a display of goods on a shop window or shelf at a self-service store is an invitation to treat and not an offer
ADVERTISEMENTS
 Generally, advertisements are invitations to treat rather than offers
 However, advertisements for unilateral contracts are generally held to be offers (Carlill v Carbolic Smoke Ball)
Carlill v Carbolic Smoke Ball Co [1893 Eng CA]
F: D had advertisement to pay £100 if anyone used ball as directed and got flu | said put £1000 in bank to show sincerity and
that during last flu season nobody had gotten flu while using ball | P bought ball and used properly but still got the flu
A: advertisement is an offer to the public which is definite enough under a reasonable construction for the time limit (while
using ball) | not a mere puff because of the £1000 put away which outwardly manifests seriousness of offer | only a contract
with those who buy ball and use properly not everyone in the world | in unilateral contracts offeree can waive their need for
notification of acceptance which was done here | was valid consideration b/c benefited D to have people use ball and
inconvenienced P to use it | must be unilateral b/c P could not have breached thus only binding upon full performance |
getting sick is a condition upon which contract is executed on rather than part of acceptance
R: advertisements that seek performance are valid unilateral offers not invitations to treat | an offeror in a unilateral
contract can waive notification of acceptance | must objectively see whether there is intention for something to be an offer as
opposed to puffery
Goldthorpe v Logan [1943 Ont CA]
F: D advertised electrolysis treatments with guaranteed results | P went to get facial hair removed and was again assured
results were guaranteed | treatments done but hair kept growing back
A: advertisement was communication by D to all members of the public with intention to have people get treatment |
advertisement was an offer to anyone who was willing to accept terms to come get treatments and pay in exchange for D to
undertake removal and promise satisfactory result | extravagant offer must be binding nonetheless | P accepted offer by
getting treatment and paying | valid consideration | thus binding contract
R: an advertisement guaranteeing results from a product is an offer to the public and those who complete its terms
and conditions accept the offer, creating a binding contract
REWARDS
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Most typical type of unilateral contracts arise from awards postings
These can only be accepted by doing the performance specified: providing information
Rewards presumed to be offers of unilateral contracts and anyone who is aware of the offer can receive the award
through performance (which is acceptance)
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Williams v Carwardine [1833 KB]
F: brother of D killed, D published handbill all around town saying if anyone gave info leading to finding murderer and
murderer convicted gets £20 | P knew who was murderer and was beaten by the murderer | to ease her conscience (thought
would die), P made statement to police of who was murderer
A: P clearly knew of handbill b/c was posted all around town | P completed conditions of offer and intended to receive
award even though motive was not to receive award
R: motives are irrelevant for acceptance of a unilateral offer made to the public as long as the person completing the
performance is aware of the offer
R v Clarke [1927 Australia HC]
F: Clarke took plea deal against other men | there was an offer out for info leading to arrest of men getting an award | Clarke
aware of offer but specifically stated when giving plea testimony that he didn’t intend at that time to claim for offer, that he
only thought it if afterwards
A: distinguish from Williams because here there is evidence that never intended to accept offer when gave info | there can be
no assent if the offer is unknown or ignored/fully forgotten | Clarke never gave assent thus no meeting of the minds | normal
presumption that completion of conditions means induced by offer but here presumption rebutted by his own admission
R: there is a presumption if the conditions of a unilateral contract are completed that there is acceptance (+
inducement = consideration) but this presumption can be rebutted by evidence to the contrary
MUTUAL ASSENT: ACCEPTANCE
BASIC PRINCIPLES
 Offeror is free to revoke at any point before acceptance but once an offeree has accepted the deal is done
 Offeror is the master of the offer: can control the method of acceptance within the offer
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o Generally rules for acceptance are default rules that can be changed by offeror
Motives for acceptance usually irrelevant but must be intention to accept offer
Acceptance = final and unqualified expression of assent to the terms of the offer
ANY VARIATION KILLS ORIGINAL OFFER (rejection or counter offer)
o any variation in terms is a counter offer which kills original offer
 Ordinarily, offeree cannot revive offer and accept it after rejecting it (unless an explicit statement in
the offer says otherwise)
o However, if a reply is an inquiry or an indulgence (ex asking if takes credit instead of cash) this is not a
counter offer as long as it is objectively clear that despite the inquiry offeree still willing to accept original
offer
Livingstone v Evans [1925 AB SC]
F: D wrote offering his land to P for $1800 | P replied asking for lowest cash price saying would pay $1600 cash | D replied
saying cannot reduce price | P replied saying accepted at $1800
A: response by P was a counter offer for $1600 and thus killed original offer | however D saying cannot reduce price was
renewal of original offer (communication showed willingness to still sell at original price) and thus validly accepted by P
R: if the initial offeror signals an interest in continuing negotiations and indicates the original offer is still on table
can be said that original offer is revived after a counter offer
11
COMMUNICATION OF ACCEPTANCE


In bilateral promises the offeree must generally exercise reasonable diligence in communicating acceptance
o Unless the offeror manifests intention that communication not necessary
o Acceptance can occur via conduct (hand shake) but notification of acceptance is important and offeree must
inform offeror of acceptance within a reasonable time
o An offeror cannot make acceptance as silence to protect people from entering into contracts they do not want to
be in (Felthouse v Bindley)
In unilateral offers it is the opposite: presumed do not have to notify of acceptance unless something in the offer says
you must or if there is no way for offeror to otherwise know of acceptance/performance
o Generally waste of time to notify of performance b/c usually will logically know of it already
Felthouse v Bindley [1862 England]
F: P and nephew had discussed buying nephew’s horse | misunderstanding on the actual purchase price of horse | uncle
wrote to nephew saying “If I hear no more about him, I consider the horse mine at 30 pounds and 15 shillings” | nephew did
not reply | horse was auctioned off by Bindley the auctioneer accidentally | uncle suing auctioneer for conversion
A: nephew may have wanted to accept but never communicated this acceptance of counteroffer | inaction/silence cannot
lead to a contract and is not acceptance | offeror cannot request silence as acceptance because that is inequitable and
against public policy
R: an offer cannot be accepted by silence or inaction
Dawson v Helicopter Exploration Co [1955 SCC]
F: P had info about a location of mineral deposit | P communicated with D several times wrt exploitation of minerals saying
that D would pay him for time and give him interest if P showed the location | P was sent overseas but said would get leave
to show property when D found a helicopter pilot | eventually D said they found someone else and wouldn’t need him or pay
him
I: is this a unilateral (acceptance by performance only) or bilateral offer (accepted the offer and thus binding contract to use
P to show the location)?
A: in order to avoid possible inequality and support business efficacy, should interpret as a bilateral contract | acceptance
was implied when said would get a leave if found pilot (finding pilot is condition but doesn’t contradict formation of
contract) | there was implied reasonable effort to find transportation so not illusory
R: whenever a contract can be construed as bilateral or unilateral, courts will generally construe it as bilateral in
order to promote business efficacy/ avoid injustice
THE POSTAL ACCEPTANCE RULE




Exception to the general rule that a contract is not formed before acceptance is received by the offeror
Postal Rule = Offer accepted when an offeree puts notice of acceptance in the mail
Note that parties can contract around it (default rule) by stipulating that acceptance is only valid upon
receipt/notification
Mailbox rule only applies to acceptance
Household Fire & Carriage Accident Insurance Co v Grant [1879 Eng]
F: D wanted to purchase shares in P and offered to do so | letter was mailed accepting his offer but it never arrived |
company went bankrupt and asked for outstanding payment
A: this falls under the mailbox rule exception to the communication of acceptance rule and the acceptance has occurred
upon dispatch of the letter | valid contract
Holwell Securities v Hughes [1974 Eng]
F: D gave P the right to purchase his property anytime within 6 months but had to give notice in writing | P mailed letter
accepting the offer but it never arrived
A: because the terms of the offer specified that must give notice in writing this can be interpreted to mean notification so
offeror contracted out of the mailbox rule | noted that even without alteration, mailbox rule should not be applicable if the
circumstances would produce ‘manifest inconvenience and absurdity’ (people who sell property need notification!)
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R: an offeror can contract out of the mailbox rule by requiring notification of acceptance
INSTANTANEOUS COMMUNICATION OF ACCEPTANCE

Mailbox rule only applies where communication is not instantaneous
Brinkibon Ltd v Stahag Stahl Und Stahlwarenhandelsgesellschaft mbH [1983 HofL]
F: P bought steel from D, sent acceptance to an offer by fax | D company in Austria, P in England | to sue D, contract must
have been made in England
A: telex of May 3 from Vienna is counter offer which accepted by telex in London May 4 = acceptance occurs in location
where notified like a telephone call, which is Vienna | if acceptance was by opening letter of credit this also is acceptance
when bank in Vienna notified so still in Vienna
R: in cases where means of communication of acceptance are virtually instantaneous acceptance must be
communicated to the offeror | but there is no universal rule, rule for acceptance must be resolved by looking at intention
of parties and sound business practices
Rudder v Microsoft Corp [1999 Ont SC]
F: P wants to sue D in Ontario for breach of membership agreement | membership agreement has forum selection clause for
Washington | P admits to not looking through the whole agreement which was online, needed to scroll to find forum
selection clause and then click you agree twice
A: scrolling is the same as turning the page of a document | nothing about the provision like text size makes it fine print |
specifically agreed to be bound even if didn’t read whole agreement (duty to read) | place where clicked ‘I agree’ is not the
location of acceptance because the offer goes against the default rule with a forum selection clause
R: offeror can stipulate the jurisdiction where acceptance occurs and override the default rule
MUTUAL ASSENT: TERMINATION OF OFFER
TERMINATION OF OFFER



As long as offer has not been accepted it can be revoked by the offeror
Once offer is made it generally remains open for a reasonable time so offeree can respond
Offer-terminators
o Lapse of time (either time stipulated or default rule = reasonable time depending on circumstances)
o Revocation
o Death or incapacity of an offeror (but an estate can still be bound to a contract which has already been made)
 Note estate also has to honor valid option contract
o The offeree’s rejection (incl. counter offer)
Dickinson v Dodds [1876 Chancery CA]
F: D gave offer to P stating would sell house for £800 and offer expires June 12 at 9am | On June 11 P informed D had agreed
to sell house to Allan instead | June 12 7a, agent of P gave D an acceptance but D said too late, P himself also tried with same
result
A: two ways to read initial offer: either revocable at all times and lapses 12th at 9am or irrevocable until 12th at 9am (option
contract) | because there was no consideration given to create an option contract and make it irrevocable it was allowed to
be revoked | never a meeting of the minds because P knew that D had agreed to sell to Allan  indirect revocation in that D
took steps inconsistent with selling land to P which is valid revocation (when P learns about it from reliable source which he
did here) | no binding contract between P and D
13
R: indirect revocation coming from a reliable source is valid revocation | in order for an option contract (irrevocable
for a specific time) to be valid it must be supported by consideration
Byrne v Van Tienhoven [1880 England]
F: D mailed offer to sell some tin at a fixed price to P in NYC | offer received Oct 11 and P accepted via telegram on Oct 11 and
confirmed by mail Oct 15 | On Oct 8 D mailed revocation of offer and this was received Oct 20 | P assumed had purchased tin
and had already sold them to a third party before Oct 20
A: uncommunicated revocation is not valid revocation (doesn’t make reasonable sense) | while acceptance is subject to
postal rule revocation is not (protecting reliance of offeree) | letter of Oct 8 communicated when received on Oct 20 and
revocation invalid | binding contract
R: a revocation is considered valid when accepted and is not subject to the postal rule
Errington v Errington and Woods [1952 KB]
F: father bought house for son and DIL to live in | gift of down payment but had to pay weekly instalments themselves | said
house would be their property once mortgage paid off | DIL has paid all instalments but father died and now estate trying to
get DIL out of house
A: couple never bound themselves to pay the instalments (if they didn’t pay cannot sue for breach) and thus this is not a
bilateral contract | unilateral promise that if paid instalments father would give house | promise not allowed to be revoked
by father once started to perform the act but ceased to bind if left unperformed (but they did perform it) | as long as
instalments continue to be paid couple gets the house once mortgage paid because the couple acted on the father’s promise
R: If offeror of a unilateral contract with an ongoing performance dies, the contract can still bind the estate |a unilateral
contract that requires performance creates an option contract when performance is began and thus cannot be
revoked by the offeror once performance has began
NOTE: this principle has been accepted in some cases in Ontario and thus is reasonable to assume will apply in Canada
NOTE 2: preparation for performance does not count as beginning performance
Barrick v Clark [1951 SCC]
F: D was interested in buying P’s farmland and offered to purchase for $14,500 asked for a reply by telegram | P replied by
letter on Nov 15 said would sell for $15000 if could close immediately title would start on Jan 1 | P’s letter arrived Nov 20
when D on hunting trip | D’s wife said would be back in 10 days | On Dec 3 P made agreement to sell to someone else | D
returned on Dec 10 and said would accept | P said he had waited 10 days but then had accepted offer from someone else
A: communication of Nov 15 was the offer and this offer lapses after a reasonable time because no time specified | here
reasonable time had lapsed because parties knew deal was to be closed quickly, land was in high demand, reason for nor
replying was a hunting trip (also considered non-perishable good expanding the length of reasonable time)
R: an offer expires after a reasonable period of time, the period to be determined with regard to the circumstances,
the communications between the parties, the nature of the good involved in the contract, and normal course of
business involved in the contract
MUTUAL ASSENT: CERTAINTY OF TERMS
BASIC CONCEPTS



One of the requirements of contract formation is that the terms of the contract define the parties’ obligations with
certainty and ensure mutual acceptance of the obligations
Some contracts are so uncertain the courts will say it is not a contract at all, others the courts can fill gaps and have a
valid contract
There must be enough certainty of terms so that a court can resolve a breach
14


Courts will not enforce an agreement that has gaps or is missing an essential term because this can impose an
unintended obligation on parties
Categories of uncertainty
o Uncertain commitment to the deal (no intention to be bound)
o Vague terms (what does ‘good’ mean)
o Missing key terms (must cover at minimum parties, subject, and price)
o Terms left for future resolution (usually a mechanism given but what happens if it fails?)
May & Butcher Ltd v R [1934 HofL]
F: P wanted to buy extra tents from D after WWI |agreement entered into to sell all tents which were available, with prices to
be paid and dates to pay to be agreed upon as became available | D later decided didn’t want to sell tents to P anymore
L: Sales of Goods Act
 Section 8 says price in a contract of sale may be fixed by contract, left to be fixed in manner agreed, or determined by
course of dealings; if not determined by any of those then buyer must pay a reasonable price
 Section 9 says that if agreement is to sell goods on terms that third party will set price and third party cannot/does
not do so, then there is no agreement (void)
A: never a valid contract because price is a critical point and was left undetermined | Sales of goods Act s. 8 only imposes a
reasonable price if there is silence in the contract on a mechanism for setting it and here there was a mechanism | here more
analogous to s. 9 situation of two parties not being able to agree on a price thus contract void
R: a contract that has a critical point such as price undetermined is void | courts will not fill in gaps when it appears the
parties have not reached a basic level of meeting of minds | if two parties agree to set a price in the future but cannot agree
there is no valid contract
Hillas & Co v Arcos Ltd [1932 Hof L]
F: P had agreement to purchase timber and this agreement had an option clause 9 which gave option of entering into 1931
contract for purchase of 100,000 standards and that buyer should obtain goods on conditions and prices 5% reduction on
official price list value | D sold all remaining wood to a different company and couldn’t honor option
A: the option clause is one of the reasons why P agreed to the first contract and is therefore a binding offer which P
was entitled to accept as per the terms | courts can import reasonableness to fill gap of shipping details | price as
determined by 5% off will be certain | description of goods can be implied by original goods in contract (using ‘course of
performance’ interpretation)
R: if the fair meaning of parties and fact that they intended to be bound can be extracted from the words and context then a
contract should be held as binding | wherever possible the courts try to find a contract and if gaps are small can fill
them to follow intentions of parties
Distinguishing Hillas from May



In May there has been no previous legal relations and the executory contract is not part of a previous contract
o In Hillas parties had already performed for a year, clearly saw as binding contract (as well, option contract was
part of consideration for original contract)
In May there was no ‘industry’ of buying war supplies so there is no reasonableness for an industry standard
o In Hillas there are industry and customs you can rely on for reasonableness
In Hillas there was a way to determine price and other factors could be implied by the courts, in May too big of gaps to be
filled by the courts
Foley v Classique Coaches Ltd [1934 KB CA]
F: D agreed to buy land from P | one of provisions was a supplemental agreement that D would buy all petrol they needed
from P at price to be agreed by parties from time to time and that any disputes subject to arbitration | for three years after
land purchase bought petrol from P but then thought could do better elsewhere
A: parties obviously believed they had a contract b/c acted on for three years thus clause is valid | contract effective
and enforceable even though no price agreed on for petrol because implied term to be sold at reasonable price and
reasonable quality (which can be determined by arbitration if necessary) | would be unfair to P if D could get out of this
agreement because of the slight incompleteness
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R: partial completion of an agreement or acting as if legally binding contract for some time will make it more likely that a
contract will be enforced even if there is uncertainty in terms | courts cannot void every contract for slight
incompleteness because that will be inequitable
Sudbrook Training Estate Ltd v Eggleton (1982 HofL)
R: when a mechanism to setting a price fails the contract can still be valid because the real object of the agreement is to
reach a reasonable price not to reach a price through a mechanism so such a reasonable price can be implied
AGREEMENTS TO NEGOTIATE
 General rule is that in common law there is no duty to negotiate in good faith prior to the formation of a contract (default



rule)
An agreement to agree is generally not a valid contract
Agreements to negotiate are also not contracts for two reasons
o
Impossible to determine obligations to negotiate
o
No basis upon which to determine damages if there is a breach (maybe negotiations wouldn’t have been successful
anyway!)
Generally when negotiations fail the traditional English approach is that agreements to negotiate are not recognizable in
courts (as per Courtney & Fairbairn v Tolaini Brothers)
o But Canada has somewhat gone away from this approach in Empress Towers
Empress Towers Ltd v Bank of Nova Scotia [1991 BCCA]
F: P landlord of D, had rental agreement which had a renewal clause which said all terms and conditions would remain same
except rental price change to market price at time, to be mutually agreed upon by P and D and that if no agreement within 2
months of exercising renewal either party could terminate | D tried to exercise option with market rate offered but P ignored
and then asked unreasonable amount | P wants a writ of possession to evict D from building
A: courts cannot imply a mechanism to get to market price because contract specifies that parties must both agree | mutual
agreement also implies term that landlord must negotiate in good faith | duty to negotiate in good faith is not duty to reach
an agreement (more best effort standard) | court need not decide remedy because just issue of writ of possession | writ not
granted b/c D did not negotiate in good faith
R: when there is an objective standard combined with a subjective standard in an agreement to agree, a court may
imply a term to negotiate in good faith
NOTE: this applies to a specific writ of possession case not a breach of contract case
Mannpar Enterprises Ltd v Canada [1999 BCCA]
F: P had permit with D to remove and sell gravel on reserve | oermit had clause saying could renew and both parties
expected renewal to happen| renewal subject to renegotiation of royalty rate and surface rental (couldn’t be less | P tried to
renew but D wouldn’t negotiate
A: distinguishable from Empress b/c no objective assessment like market rental rate mentioned | negotiation duty
concept unworkable without such objective standard | term can only be implied if both parties likely to agree and without an
objective benchmark harder to say would agree to an implied one | likely D wanted ability to not renew because of situation
with band |no duty to negotiate in good faith
R: a duty to negotiate in good faith is not implied in a renewal clause where there is no objective benchmark to
measure this duty against | a court will imply terms into a contract only if both parties would be likely to agree (officious
bystander test)
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Wellington City Council v Body Corporate 51702 (Wellington) [2002 NZ CA]
F: P lessor of location and D was lessee | P wrote to D saying that officers will negotiate in good faith sale of current leasehold
interest to existing lessees at not less than market value | D entered into negotiations to buy location but no agreement
reached | P didn’t act in good faith
A: good faith too subjective for court to intervene and determine a breach | agreement to negotiate in good faith
unenforceable | note that there are some circumstances where such a contract might be enforceable: if specific procedure for
negotiations specified so can determine obligations or if money changed hands in consideration for the good faith
R: an agreement to negotiate in good faith is not enforceable because a court cannot determine when a breach occurs | there
may be cases where breach can occur if a process contract specifies procedure of negotiations or if money
exchanged for good faith negotiation
Note: This case is good summary of general Canadian law on this matter: generally court will NOT imply a term to
negotiate in good faith or enforce such a term (Empress outlier because had objective standard and not about breach of
contract claim)
INTENTION TO CREATE LEGAL RELATIONS
BASIC PRINCIPLES
 Contractual obligations viewed as voluntary, draws support from requirement of intention to create legal relations



(ICLR)
Can view as a fourth criteria of enforceability
ICLR presumptively satisfied in business relations but presumption in social or domestic arrangements is that there is
not ICLR
The law implies an objective test of intention
Balfour v Balfour [1919 KB CA]
F: husband promised £30 monthly allowance to wife while she remained in England | she thought he would come back but
eventually broke up
A: not an issue of consideration because wife forbearing from her right to be supported by husband | there are agreements
that have consideration that are not legal contracts (want to go on a walk?) |courts not appropriate for discerning what
bargained for here | if binding a woman could get sued for not performing household work properly! | such contracts would
overwhelm the courts | promise not intended to have legal consequences and thus not binding
R: domestic commitments when a family is intact are presumed not to have ICLR and thus not legally binding
contracts
Rose and Frank Co v J.R. Crompton and Bros Ltd [1923 KB CA]
F: there were pre-existing legally binding agreements between the two parties | in 1913 entered agreement that had clause
stating arrangement was not a formal or legal agreement only expression of purpose and intention of parties and honourable
pledge | D refused to fill some orders from P and terminated agreement | trial held honorable pledge clause repugnant to
whole agreement and against public policy so held agreement legally binding
A: it is possible for parties to have an agreement that is not legally binding if do not have ICLR | if clearly express intention
that do not have ICLR no public policy reason why have to be legally bound | not binding contract
R: although in business relationships it is presumed that parties had ICLR, if it is explicitly expressed that they do
not have this intention, the agreement will not be legally binding
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PROMISSORY ESTOPPEL AND WAIVER
- Canadian version of promissory estoppel is very narrow and uncertain, should be the last option to look at after
consideration, seal, and exceptions to consideration
Hughes v Metropolitan Railway Company [1877 HofL]
F: D leased property from P | On Oct 22 D served P notice that had to repair property within 6 months | on Nov 28 D
suggested to sell lease back and wouldn’t start on repairs until had hear back | negotiations began but broke down end of
Dec | On Apr 19 D said now would begin repairs | on Apr 28 P tried to eject | repairs completed in June | P wants to eject
A: principles of equity say that 6 months started when negotiations stopped so cannot eject | D relied on a
presentation/assertion of suspending the 6 months and this reliance was to D’s detriment (changed position for the worse
based on reliance) | there was implied promise by D which is shows by course of negotiations
R: an (implied) promise not supported by consideration can be found to be binding because one party relied on it to
their detriment
Central London Property Trust Ltd v High Trees House Ltd [1947 KB]
F: lease made for D to have tenancy of flats for 99 years at £2500/year | was during WWII so flats not fully occupied, D and P
decided to reduce ground rent to £1250/year which was paid from 1941 to 1944 | by beginning of Sept 1945 all flats rented |
P suing for lost rent
I: Is P precluded in waiver from asking for the full rent retroactively?
A: law needs to be reconsidered in light of equity | promise understood by both parties only to apply while conditions
prevailed (flats not fully rented) | argument based on waiver that D relied on a statement by P about the reduced rent to P is
estopped from insisting on original price
R: a promise intended to be binding, to be acted on and in fact acted on is binding so far as its terms apply
Note: this case represents the most expansive version of promissory estoppel where any kind of reliance on a promise
that induced detriment is enforceable to prevent injustice
Combe v Combe
F: X promises to support wife | then he stops supporting him | she claims she relied on his promise and tries to bring PE as
cause of action
I: can promissory estoppel be used as an independent COA (“sword”)?
H: no, PE cannot be used as a basis for creating new contractual relations, can only be used in cases of MODIFICATION (or) as
a defense (doesn’t matter if you’re a P or D, cannot be used as sole basis of action)
R: Denning says the only cases in Canada that can use promissory estoppel are those that have pre-existing legal relations, i.e.
modifications are allowed | can establish new obligations but only by varying existing obligations (i.e. narrows application of
PE used in High Trees) | PE is a “shield not a sword”
DIFFERENT VERSIONS OF PROMISSORY ESTOPPEL

Narrowest form of PE: need existing relationship AND an agreement to accept less (agreement to pay more is no good)
Gilbert Steel

Middle ground of PE: you need a pre-existing legal relationship but does not have to be an agreement to accept less 
more accepted version in Canada

Broadest form of PE: only need reliance on a promise no pre-existing relationship High Trees/ Walton Stores
Note: a modification to pay more has generally been dealt with using consideration and idea of practical benefit (NAV
Canada; Roffey Bros) so doctrine of PE is less important in this area
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Dunn v Vicars [2009 BCCA]
F: D and V had agreement to build a house and sell it 50-50 | Plan A was to sell house and split profits | Plan B if house didn’t
sell was for D to pay out V, announce in writing doing Plan B, and become sole owner of house | house didn’t sell, V orally
encouraged D to move into house and D sold existing house and moved in, but never announced Plan B in writing
I: Was V estopped from asserting D couldn’t proceed under Plan B? | Did V waive his rights arising from Plan B
A: waiver by election occurs when there is a contract with multiple options and one party acts in a way/says they are acting
in a way to proceed under one part of contract and thus clearly waives the options to the other rights of the contract | when
waiving an option must have full knowledge of rights and unequivocal and conscious intention to abandon them
(Saskatchewan River Bungalows) (here V did not make it explicitly clear was proceeding under plan B)  criteria for
waiver not met | but PE criteria met: V is estopped from asserting D couldn’t proceed under plan B because D relied on
statements to move in and changed her position based on this
R: established difference between waiver and estoppel | strict reading of contract to determine if rights have been
waived | PE more flexible P only must show that relied on D’s representation that wasn’t going to insist on strict
enforcement of agreement
NOTE: This case is good representation of the current PE doctrine in Canada: promise/representation clear and
unequivocal (okay that it is implied); existing legal relationship; used as shield not sword; reliance on promise and
inducement; inequitable to go back on promise; would have been suspensory if contract had continued
5 ASPECTS OF THE CURRENT DOCTRINE OF PROMISSORY ESTOPPEL IN CANADA
1.
2.
3.
4.
5.
Promise/representation must be clear or unequivocal (but can be implied);
There must be an existing legal relationship and doctrine can only be used as shield not sword;
 Generally safe to use PE for agreements to accept less but questionable whether courts will apply it to agreements to
pay more
There must have been reliance on the promise = inducement (controversy about whether also need detriment) with
connection between promise made and change in position of promise;
It must be inequitable for the promisor to go back on the promise (note promise must have clean hands); and
The doctrine is suspensory in its effect (promisor can move back to previous position by giving reasonable notice)
Waltons Stores (Interstate) Pty Ltd v Maher [1988 Australian HC]
F: P wanted to lease land owned by D | P wanted to demolish and replace a building on the land | was urgency because
wanted to occupy soon and D told P needed to demolish immediately to meet the occupation date | D sent draft lease on
Nov 7 and P said approval forthcoming would send notice otherwise but sent no notice | On Nov 11 D sent release wanting
signature but P never signs | demolition occurred and D began to build, which P knew about | weeks later P said didn’t want
to proceed
A: problem because is no signed contract and thus no existing legal relationship | however there was still reliance on D’s
representation | unconscionable because P knew that D was proceeding thinking had agreement and thus induced D to
follow through to their detriment | unconscionability allows courts to overcome lack of legal relationship | three things
needed to apply doctrine as done here: promisor expected promise to induce action/forbearance of other party; other
party relied on the representation to their detriment; unconscionability/ unjust not to apply PE
R: promissory estoppel doctrine expanded to when the five elements not met (esp there is no pre-existing legal
relationship) but one party allows the other to proceed thinking there is an agreement which allows recovery due to
unconscionability | if unconscionable can use PE as sword to enforce an agreement
NOTE: has not been explicitly accepted in Canada but noted that maybe could be if ‘the right case arrives’
M.(N.) v A. (A. T.) [2003 BCCA]
F: P promised D would pay her mortgage in England if she came to Canada to live with him, were going to maybe get married
| D quit job and moved to Van | P loaned D $100,000 on promissory note which was used for mortgage | 1 week later P
evicted D from his home and D has not been able to find permanent employment since
A: no existing legal relationship and thus PE not met (necessary element of PE is promise expecting/having a legal
relationship) | no unconscionability unlike Waltons | no big movement in Canada towards more generous approach to PE |
no evidence that either party thought promise would be binding rather just risk taking in a relationship (no intention to be
bound b/c familial promise)
R: Canada has not yet adopted Waltons because PE in Canada still requires a pre-existing legal relationship (may be
reconsidered in the future)
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