Power Pint 2
Remedies
Restitution / note 22/ is the law’s remedial answer to circumstances in
which a benefit moves from the plaintiff to the defendant, and the
defendant is compelled to restore that benefit. Further, restitution
stands in contrast to another measure of relief, disgorgement, which
refers to awards that are calculated exclusively by reference to the
defendant’s wrongful gain, irrespective of whether it corresponds to
Atlantic Lottery Corp. Inc. v. Babstock
Restitution is often awarded for breach of
fiduciary duty.
Can be awarded through “disgorgement of
profits” whereby the breacher must
return any profits earned through the
breach.
damage suffered by the plaintiff and, indeed, irrespective of whether
the plaintiff suffered damage at all
Reliance Measure (restorative Justice): Intended to protect the
reliance interest of the plaintiff where the plaintiff reasonably relied
Anglia Television v. Reed
on the contract to their detriment(loss).
In this case: Actor, Reed, breaches contract to star in movie;
Relience in not a good remedy because it
expectation damages speculative (how much would the movie have
is backward lookin, it tends to under-
made?); studio can claim wasted expenditures made in preparation
compenstae, it can be difficult and cstly to
for making the movie. ( they paid those expencess and they had
prove. / Note page 17 and 19/
releidn on the actor’s performance)
Certainty, Causation, and Remoteness play a role in claims based on
the plaintiff’s reliance interest: /note 35/ power pint 3 cases/
This case clarifies when the reliance measure should be used instead
of expectancy damages.
McRae v Commonwealth Disposals Comm
In a situation whereby loss or profit cannot be proven because the oil
tanker cannot be valued since it does not exist. Thus, the solution is to
The McRae Test: “For reliance remedy”
put the plaintiff back into the situation he would have been in before
/note: page 20/
engaging in the contract.
TEST: Reliance can apply only when the following three circumstances
in terms of a reliance claim, the plaintiff
exist:
has to prove, with a ‘reasonable degree of
1. Expectancy is impossible to prove.
certainty’, that there were other
2. The plaintiff incurred expenses and the burden shifts to the
alternative and open profit-making
defendant to show that these expenses would have been lost
opportunities that they would have opted
in any case, even if the contract had never been entered into,
for were it not for the contract agreed
and the defendant is unable to do so.
upon.
1
3. The impossibility of proof results from the nature of the
defendant’s breach.
We cannot put the plaintiff in a better position than he would have
been in, had the contract been performed.
Bowlay Logging Ltd. v Domtar Ltd
The court does not compensate for bad bargains.
***Basic Rule: You cannot choose to
In this case, the loss has not occurred as a result of breach; it would
pursue reliance damages just because it is
have occurred even had the contract been fulfilled because of the
more profitable than the expectation
plaintiff’s business practices and inefficiencies.
measure
/Note page 21/
Expectation Measure (distributive Justice)/ Forward looking:
objective of putting the plaintiff they would have been if the contract
Wertheim v. Chicoutimi Pulp Company
had been fully performed. Expectation damages typically yield greater
amounts than claims under reliance or restitution damages.
***Basic Rule: Expectation damages are
Why is the expectation measure the default measure of damages?
the default damages.
Fuller and Purdue explains this in page 17 of the note (easier to apply,
enables the plaintiff to recover,…)
Trial court awarded expectancy damages+ reliance= this is wrong
You cannot “mix and match” expectancy and reliance damages.
Sunshine Vacation Villas
Reliance damages are an alternative to expectation damages.
If McRae test can be met then reliance measure us appropriate.
Because expectancy is possible to prove ($0), reliance damages cannot
A.G. v Blake
be awarded (McRae). Therefore, restitution is the desired remedy
/note 23/
Expectency damages: is a presumptive measure. Limited by remoteness, and also by responsibility of the Plf. to
mitigate own losses. How far we go to calculate expectancy damages: loss of chance: Chaplin and Hicks
Calculation: Measured on the basis of the Plf.’s expected beneft (prrofit). Can reflect either the cost of
performance (remedying the defect) {Wunder} or the difference in market value between the defective good
and the promised good(market value).
Limit: No person can recover greater damages for breach than would have gained by full performance thereof.
Cost of compeltionand and difference in value are also expectancy award.
2
Power Point 3
Remedies, Damages, the bounderies of recovery
Loss of Cahnce:
Loss of chance: this is a kind of expectancy damage. Loss of chance is
‫شرکت در مسابقه زیبایی با فرستادن عکس‬
compensable; the difficulty in measuring damages is no
justification for not rewarding damages whatsoever.
Chaplin v Hicks
How to calculate: the amount which would have been
realized, modified by the chance that it would have been realized;
therefore, if one has lost a 20% chance to pro"t $100, then one is due
This case demonstrates that courts are not
$20.
thwarted(upset) from awarding
Even if she could not prove she would have won, she has the right to
expectancy damages just due to the fact
be compensated for the loss of the opportunity to win, provided this
that there is an aspect of
opportunity was not a result of the defendant’s breach.
speculation(suspect ‫ )گمان‬and
“the fact that damages cannot be assessed with certainty does not
hypothesizing(‫ )فرضیه سازی‬involved.
relieve the wrong-doer of the necessity of paying damages for his
breach of contract”.
In a case that profit or loss cannot be proven , Mcrae case suggest the
plaintiff gets reliance damages. However based on Chaplin, the
Multi-Malls Inc v. Tex-Mall Properties Ltd
plaintiff can ask for 20% of expected profits. Nontheless, Chaplin
would not apply in the event that purchaser has downside risk (i.e.
It was not awarded in this case
bad developer with 90% chance of loss of profit).
Cost of performance: /note 26/
Rational for cost of performance: page 28
Groves v John Wunder Co
Cost of performance makes the defendant pay for his bad faith breach.
‫وقتی هزینه کار بیشتر از ارزش کار در ملک‬
It also gives the plaintiff what is promised.
‫ با زهم مدافع باید هزینه را پرداخت کند چون‬: ‫میشود‬
The appropriate mesure of damages is cost of performance.
. ‫این چیزی است که خواست متقاضی بوده است‬
‫ هزار‬12 ‫ ارزش زمین بعد از برداشتن سنگها‬. ‫ هزار میوشد‬60 ‫هزینه برداشتن سنگها‬
‫ هزار رای داد‬60 ‫میشود ک دادگاه به‬
3
‫ دادکاه‬. ‫تا باال رفته‬300 ‫ هزار بوده اماارزش زمین فقط‬60 ‫در این مورد هزینه انجام کار‬
.‫ تا حکم داد‬300 ‫به‬
Peevyhouse v Garland Coal Mining Co
Reasonable cost of performance is the norm, but where the economic
benefit which would result is grossly disproportionate to the cost of
performance, damages are limited to diminution of value.
‫ نوت دالیلشان بیان شده‬28 ‫ موافقین و مخالفینی هستند که در صفحه‬: ‫با در نظر گرفتن دو کیس باال‬
If the plaintiff who is victim to the breach acts reasonably in the
adoption of alternative measures to complete the work, the plaintiff
Nu-West v Thunderbird
will be able to recover the full cost of performance.
Demolish baseemnt
Damages for Mental Distress:

only available for “peace of mind” contracts
Are punitive and aggravated damages available for mental distress?
Ratio: “Aggravated damages can be awarded when the object of the
contract was to secure a psychological benefit that brings mental
distress upon breach that is within the reasonable contemplation of
the parties” and the degree and level of suffering was adequate so as
to be deserving of compensation. •
Punitive damages should only
be awarded in exceptional cases and in cases of clear bad faith.
Thsis case held that there are two types of aggravated damages:
1. “True” aggravated damages

Requires a separate actionable wrong, such as defamation,
oppression, or fraud

A breach of the contractual duty of good faith may suffice
2. Mental distress damages

Arises from the breach of the contract itself, and are based
on the expectations of the parties at the time of contract
formation

Requires that a benefit from the contract was for peace of
mind, and that the degree of suffering was sufficient for a
monetary payment (see Hadley v Baxendale)
4
Fidler v Sun Life Assurance Co
Damages for distress and disappointment are now recognized.
the statements in the brochure were representations or warranties.
Jarvis v Swans Tours
The breaches of them give Mr. Jarvis a right to damages.
The right measure of damages is to compensate him for the loss of
Vacation package
entertainment and enjoyment which he was promised, and which he
did not get. He should get the full amount.
Aggravated and Punitive Damages
Punitive and aggravated damages can be awarded but only in certain
circumstances. Those circumstances weren’t present here.
Aggravated damages are compensatory in nature.

Vorvis v. Insurance Corp. of British
There must exist an independent actionable wrong that
Columbia
aggravated the effects of the dismissal.

It must also arise from the dismissal itself, not from some
/note 32/
conduct prior to or after the dismissal.
Lawyer was slow at work, dismissed.
Punitive damages are meant to punish. Test:


where the conduct was so reprehensible (shameful, wrong) as
to merit punishment.( Reprehensible conduct is high-handed,
SCC: only awarded lost pays. Punitive and
malicious, arbitrary, depart from ordinary standards of
aggravated damages can be awarded but
behaviour to a marked degree)
only in certain circumstances. Those
There must also be a separate actionable wrong, a tort where
circumstances weren’t present here.
punitive damages are recoverable.

the sum of punitive damages should be proportionate to the
*punitive damages are rare
degree of misconduct.
Concerned with the possibility of double-compensation or doublepunishment. Trial court : increased the notice period + punitive
Honda Canada v Keays
damages.
SCC: Punitive damages should not have been awarded. Punitive
Dismissal
damages are restricted to advertent wrongful acts that are so
About employment, read also next case.
malicious and outrageous that they are deserving of punishment on
their own. The facts of this case demonstrate no such conduct. Courts
If the manner of dismissal caused mental
should only resort to punitive damages in exceptional cases and the
distress; punitive damages coudlbe
employer’s conduct here was not sufficiently egregious or outrageous
awarded.
5
to warrant such damages. Damages for mental distress may be
awarded, if the employee can prove that the manner of dismissal
caused mental distress was in the contemplation of the parties at the
time of dismissal.
In circumstances where the manner of dismissal has caused mental
distress but falls short of an independent actionable wrong, the trial
Wallace v United Grain Growers Ltd.
judge has discretion to extend the period of reasonable notice to
which an employee is entitled.
He was dismissed / psychiatric assisstance
⯍ Extension of the notice is known as Wallace bump.
damages for lost profits:
RBC Dominion Securities Inc. v Merrill
When asking whether damages for lost profits would have been
Lynch Canada Inc.
within the reasonable contemplation of the parties to a contract when
they put their minds to a potential breach of the contract, it is
Employee should give employee notice
appropriate to ask whether the consequences, i.e. the lost profits
when wants to leave.
from the breach were foreseeable, not whether the breach itself was
foreseeable.
=Damages should be foreseeable not the
/note 35/
breach of the contract.
Certainty
[causation and remoteness, all three play a role in claims based on the plaintiff’s reliance
interest].Also mitigation has to be taken into account
In terms of a reliance claim, the plaintiff has to prove, with a
‘reasonable degree of certainty’, that there were other
McRae v Commonwealth
alternative and open profit-making opportunities that they
would have opted for were it not for the contract agreed upon.
About certainty / note 36/
The plaintiffs’ inability to establish, on a balance of probabilities,
that the contracts in question were money- making ones led to
the making of a reliance-based claim rather than an
expectation-based claim.
Causation: / note 37/
The plaintiff must prove that the loss or damage suffered was
caused (causal link) by the breach of the defendant.
Remotness: in regards to loss of profit
6
Hodgkinson v Simms:
The plaintiff has to prove that he was adequately within the gamut of the defendant’s consideration at the
time he entered into the contract. Defendant is relieved from liability for losses that are too remote.
TEST for remotness:
Rule 1: The amount of damages you can claim for the breach is related
to what is in the reasonable contemplation of both parties (high
Hadley v Baxendale
treshhsold, actual knowlegr) (the damages are a probable result of the
breach); ( this treshold is modified by Victoria case)and
Mill business , shaft
Rule 2: If there are special circumstances that lead to increased losses,
the defendant is only liable if they knew of the special
circumstances.[Loss must be foreseeable within contemplation at time
/note 38/
of contract formation (reasonable contemplation of parties - critical
test)].
Damages for loss of profit
Application to this case:

It was not in reasonable contemplation of the defendant that
£300 in profits would be lost.

The plaintiff’s special circumstances (they were relying on this
particular shaft for business) were never communicated to the
defendant.

So, the loss of profits is not a consequence of the breach that
the defendant would have reasonably contemplated.

Thus, damages for loss of profit are too remote and cannot be
awarded
Victoria Laundry modifies Rule 1 of Hadley ( it makes th elwoer
Victoria Laundry v Newman
treshhold) by adding a consideration of the level of knowledge
Late delivery, defendant did not know
assumed to be known by the defendant depending on its spot on the
about the contract.
spectrum. What is reasonably foreseeable is dependent upon the
knowledge the parties possessed at the time the contract was made
The defendant claimed that no loss was
recoverable because of remoteness.
Damages for loss of profit
Court decision : It does not matter how much information the plaintiff
gives the defendant about the special circumstances; giving them any
7
Scyrup v Economy Tractor Parts
information is enough to put them on notice of the special
‫قطعه ماشین فراهم شده خراب بود و خواهان‬
circumstances and consequences of breach (loss of profits).
. ‫نتواسنت قرارداد با مشتری دیگری را انجام دهد‬
!!!‫ دالر بدهد‬8000 ‫ دالری باید‬400 ‫بخاطر قطعه‬
Diseent: Proportionality has to be considered as well: Rationale: If we
make the leasing company liable for damages for loss of profits, we
are essentially making them the guarantor of the work which is wrong
and disproportionate.
This case sets the “not unlikely” standard. This test is more stringent
than Victoria but more relaxed than Hadley.In justifying damages for
The Heron II
loss of profit, Lord Reid states that it was not unlikely that the sugar
would be sold and that if the delivery was late, the price could go
down resulting in a loss of profit.
*This case is the balance of victoria nd
Hadly
Mitigation: A plaintiff will not be able to recover to the extent that she has
failed to act reasonably to limit or
reduce her loss caused by the defendant’s breach. Onus on the defendant to establish that there was a duty to
mitigate the losses incurred by the plaintiff. Befor the breach there was an opportunity and capacity to mitigate
the brech. Plaintiff would need to demonstrate they did not have the capacity to take the necessary action to
mitigate the breach.
8
Power point 4
Offer
A mere quotation of price is not an offer to be accepted
Harvey v Facey
Did the defendant’s second price quotation constitute an offer?
A mere quotation of the lowest price is not an offer unless the party
Canadian Dyers Association Ltd. v Burton
quoting the price shows a specific willingness to sell to the other
party. The language which was used and the circumstances of the
Second quotation was an offer(langusge of it
case are important.
shows)
whether the displayed item with a price is an offer?
Pharmaceutical Society v Boots Cash
Displayed items with prices at a store are only an invitation to treat.
Chemists .
When the customer approaches the cash register to check out, they
are making an offer to purchase the items
Displayed items are an invitation to treat.
store employee can then accept.
The advertisement was an offer because:
•
specific instructions were provided
•
stated they had deposited money with the bank to show
their seriousness.
Carlill v Carbolic Smoke Ball
In this case, performance of the condition (using the smoke ball) is
Advertisment/ Catalogue
adequate acceptance.
***As a General rule acceptance must be communicate to the
The offer was made by the company to the
offeror. In this case the court held if the offer expressly or impliedly
public; unilateral
suggests that notification does not need to be communicated,
Unilateral contract .
notification of acceptance is not necessary.
Goldthorpe v Logan
Goldthorpe accepted the offer by her conduct.
Hair removal
Unilater offer to the public
Invitation for Tenders: /note 48/
There are two contracts:
R. v. Ron Engineering & Construction
Contract A is a promise on the part of the owner to review the bids
Error in clauclation
in accordance with the terms and conditions. It is complete and not
revokable.
9
Contract B is the contract for the engineering work (the contract
they’re all bidding for). Thus, the call for tenders is an offer to
potential tenders.
Issue 1: The privilege clause does not allow the owner to accept a
M.J.B. Enterprises Ltd. v Defence
non-compliant bid.
Construction
•
Because the owner could just select a non-compliant bid
without tender process\!
privilege clause
Issue 2: The privilege clause does allow the owner to accept any
compliant bid, not just the lowest bid.
•
/note 50/
The owner breached contract A by selecting a non-
compliant bid.
Communication of Offer
Offer has to be communicated but there is no particular way, unless specific way is required by the offeree
Considerations of motivations in contract in not relevant.
Williams v Carwardine
Conviction of the husband for murder.
There cannot be acceptance without knowledge of the offer; and
ignorance of the offer is the same thing whether it is due to never
hearing of it or to forgetting it after hearing…
10
R v Clarke:
Power point 5
Acceptance
Acceptance
Counter offer.
once an offer has been refused, it is thus ended and as such, cannot
Livingstone v Evans
later on be accepted without the consent or agreement of the person
who made it.
Reply of "Cannot reduce price" constituted a renewal of the original
offer which Livingstone later accepted.
When there is a ‘battle of forms’ there is a contract as soon as the last
of the forms is sent and received without objection being taken to it.
Butler Machine Tool Co. v. Ex-Cell-O Corp
Counter-offer kills the original offer’
If there is a discrepancy in terms of conditions upon which the contract
was formed, then you must look to the essence and thrust of the
Tywood Industries v St. Anne-Nackawic
contract.
Pulp & Paper:
One cannot sneak terms or conditions into a contract without proper
notification to the other party. You have to analyze the actual conduct
of business.
The case is about complimentary action.
Both parties agreed on mutual duties and obligations. Dawson failed to
satisfy his obligations; however, his failure was no fault of his own; as
Dawson v Helicopter Exploration Co
such, the obligation of a 10% share still stood. We can deduct from this
case that the Courts tend to implicate bilateral over unilateral
Explore mining in BC
contracts where possible.
In bilateral offer, acceptance must be communicated clearly and
Felthouse v. Bindley [1862]
cannot be imposed due to silence of one of the parties.
Uncle/horse
Acceptance has no effect (is not complete) until it is communicated to
the offeror. This is to protect the offeror so that he knows that he is in a
contract. It is also to protect the offeree so that they do not have to
reject every offer received.
11
Essentially, an offeror cannot impose the obligation upon an offeree
to reject the offer.
Silence can constitute acceptance when combined with conduct.
If a party allows another party to work for them under such
Saint John Tug Boat Co. v. Irving Refinery
circumstances that no reasonable person would suppose that the work
Ltd
was being done for nothing, then the first party will be liable to pay for
it
For valid and binding acceptance to occur, the offeree must follow the
terms specified by the offeror (i.e. time, place, manner) for acceptance. Eliason v. Henshaw
An offeree must adhere to the terms and conditions of the offeror.
Send your acceptance by wagon
Communication of Acceptance: /note 60/
‘the postal rule’: A contract becomes binding the moment that the
acceptance is placed in the mail, as long as the parties have
Household Fire & Carriage Accident
contemplated the mail as a viable and suitable method (means) of
Insurance Co. v. Grant
communication in their dealings.
The postal rule is not applicable in circumstances wherein a notification
Holwell Securities Ltd. v. Hughes
of acceptance has been specific. The acceptance had to arrive and be
seen by the offeror.
Where is the contract formed? Place of contract
Brinkibon Ltd. v Stahag Stahl
The contract is made at the location (place) where the acceptance is
(Austria or England)
received. /instantaneous communication.
Also the intention of the parties and the circumstances of the case must
be taken into account.
Termination of offer: Revocation, Lapse (Barrick v Clark)
An offeror is free to withdraw their offer AT ANY POINT UNTIL the
offeree has accepted it. A mere promise to hold an offer open for a
period of time is not binding and an offeror is free to withdraw the
offer. It should have a consideration to be binding.
12
Dickinson v Dodds
Revocation has to be communicated to the offeree so that the offeree
is aware of the revocation and mere posting of revocation will not be
Byrne v Van Tienhoven
enough. The postal rule does not apply when it comes to revocation
(i.e., offer is made as soon as it is dropped in the mail). Revocation is
not effective until it was received by the offeree.
If the offer is being accepted before receiving the letter of revocation,
the contract is valid.
The father’s promise was a unilateral contract—a promise of the house
in return for their act of paying the instalments. It could not be revoked
by him once the couple entered on performance of the act, but it would
Errington v Errington and Woods
cease to bind him if they left it incomplete and unperformed, which
they have not done.
(Mortgage, son and his wife, property)
Reasonable time to accept an offer can be established from the actions
and conduct and language (words) of the two parties, the nature of the
goods and other reasonable signs and indications. (shares or perishable
items)
13
Barrick v. Clark
Power point 6
Certainty of terms
An agreement is not a binding contract if it lacks certainty, either because it is too vague or because it is obviously
incomplete. Although the parties may have reached agreement in the sense that the requirements of offer and
acceptance have been complied with, there may yet be no contract because the terms of the agreement are
uncertain or because the agreement is qualified by reference to the need for a future agreement between them.
Vagueness:
Contract terms must define the parties’ obligations with certainty / consensus ad idem
The contract would be NO good if it is so vague, ambiguous and
uncertain as to be unenforceable, or if it is incomplete. In this case the
R v CAE Industries Ltd
contract does not leave anything unsettled that was necessary to be
settled between the parties. It is in itself an entire contract capable of
standing on its own feet. The terms of the contract are not vague.
Vagueness or Ambiguity
We should look at the term sof the contract to see if the parties
intendet it to be enforceable: the part- performance of the contract by
Best effort is too vague.
parties indicated they wante dit to be binding.
Incomplete Terms
An agreement to agree is NOT a contract.
May & Butcher Ltd. v R
The court cannot read terms into a contract that is not complete.
(Price was not indicated)
Important points was mentioned in the agreement. There was presence
British American Timber v. Elk River
of consensus ad idem. The terms were sufficient to create a legally
Timber
binding contract.
There are valid conceptual and policy justifications for deciding that
parties to an agreement who have done nothing more than simply
Hillas & Co v Arcos Ltd.
agree to agree in the future on core and essential elements of a
Vague words or phrases can be
transaction(price,…) have NOT accepted mutual obligations to execute
interpreted in light of what is reasonable.
or perform on ascertainable terms and consequently, have failed to
form a contract.
agreement to agree is NOT a contract
14
This case is distinguished from May & Butcher because the arbitration
clause referred to the subject matter or construction of this agreement
Foley v Classique Coaches Ltd
” and not this agreement and could therefore be used to fix the price.
Court found that the terms of the hire-purchase agreement were too
vague and a precise meaning could not be determined. The parties had
Scammel v. Ouston
not had prior business dealings, therefore the Court could not draw
inferences as to what was intended. Contract is not formed.
Agreements to Negotiate : /note 74/
Empress stands for the authority that agreements merely to agree are
Empress Towers Ltd. v Bank of Nova
not capable of enforcement. Moreover, the court will attempt,
Scotia
whenever possible, to give the proper legal effect to any term or clause
the parties comprehended and understood and intended to have legal
effect.
In the case of Mannpar Enterprises Ltd. v. Canada (1999), 173 D.L.R.
(4th) 243 (B.C. C.A.), the verdict reached contradicts that of Empress,
Ben-Ishai emphasize the case of Bhasin v.
which is that there is no common law duty or obligation to negotiate in
Hrynew 2014 SCC 71. In this case, the
good faith. It has to be in the contract, whether it be explicit or implicit.
Court held that the common law in
Ben-Ishai: courts in common law Canada have generally held that an
Canada regarding good faith performance
agreement to negotiate is not a contract, even if the agreement
of contracts is unresolved and unclear.
includes a term requiring the parties to negotiate in good faith…The
decisions in Empress Towers Ltd. v. Bank of Nova Scotia and Mannpar
Enterprises Canada Ltd. v. Canada represent a slightly broader view.
Taken together, they suggest that an agreement to negotiate in good
faith is contractually enforceable if it refers to an objective standard
guiding the conduct of negotiations, but not otherwise.
Negotiation in good faith
There is no common law duty or obligation to negotiate in good faith.
(Negotiating in good faith)
Negotiating parties are rightly unconstrained in their ability to take
positions that suit their interests – regardless of how unreasonable
they may be
15
Mannpar Enterprises Ltd. v Canada:
(the verdict contradicts that of Empress)
Arguments against a duty of good faith:
1- The duty is unworkable in the absence of an objective standard
In this case the language of the contract
What behavior or conduct meets the standard of good faith,
gave the Crown greater deal of latitude.
and what falls short?
Also the renewal clause was void for
2- Negotiating parties are rightly unconstrained in their ability to
uncertainty.
take positions that suit their interests – regardless of how
unreasonable they may be
Principle of goof faith:
•
Parties must act honestly, and reasonably; not capriciously or arbitrarily
•
Parties may put their own self-interest before the interests of the other party, but must have a degree of
regard for the interests of others that is appropriate in the circumstances
What is the appropriate way to quantify damages? Courts have suggested:
•
Expectation principle, TimberWest
•
Injunction, Molson Canada 2005 v. Miller Brewing Co.
•
Reliance losses
Anticipation of formalization (Oral preliminary agreements): /note 78/
Is an oral agreement made in contemplation of a formal contract enforceable? If al lteram and conditions
discussed, yes, if not no.
Bawitko Investments Ltd. v Kernels Popcorn Ltd: Although the parties had agreed n the certain terms of the contract,
the remaining terms had yet to be settled. There was no meeting of the minds. An oral agreement in contemplation
of a formal written agreement, when lacking essential terms, is not enforceable due to lack of certainty; it is a
contract to form a contract.
16
Power point 7
The enforcement of promises
The enforcement of promises:
By way of consideration, seal (signed, sealed and delivered), by way for estoppel
Theories of Liability:
Formality, Seriously Intended Promises, Reliance, Bargain Theory, Consideration, Peppercorn Theory
Past consideration:
/book46/
consideration must be something that is to be received at the instant the
promise is mde (present consideration) or at later date (future consideration) it cannot be something that the
person received before the promise was made.
Past consideration is not valid consideration. This is not the case when
the act is done first and the promise is made later. (unless there was
Eastwood v. Kenyon
an implied request by the party receiving the past consideration for
This case also says a moral duty or
the past consideration to be performed= in this case the court did not
obligation does not form or constitute
find this situation).
consideration.
Note:84
Past consideration :
The court held that the contract was enforceable.
Lampleigh v Brathwait
Past consideration is not valid consideration unless:
1.
There is an implied request by the party receiving the past
consideration for the past consideration to be performed; and
In this case the court made a rule for past
2.
consideration to be valid
There is an expectation of compensation from the party
performing the past consideration.
Note:85
Value or adequacy of consideration: /book45/
“adequacy of the consideration is for the parties to consider at the
Bolton v. Madden, peppercorn theory
time of making the agreement, not for the Court when it is sought to
be enforced.” This follows the “peppercorn theory”. This is a general
/book:45/note: 81
rule in contract law, except when one party can prove that the
*Adequacy of consideration is a matter of
consideration in the contract was grossly inadequate, AND, can
personal judgment. As long as
prove the existence of some form of fraud, undue influence, duress =
consideration is present, the
the court may hold the contract unenforceable.
requirement is satisfied.
Consideration must flow between both parties, must be identifiable and of value:
17
In order for a contract for a charitable donation to be enforceable as a
contract by law, consideration must flow between both parties. The
Dalhousie College v Boutilier
consideration must be specifically identifiable and must fit into the
legal definition of consideration.

Charitable donation
Consideration from Dalhousi collge was not benefit/value to
/Note: 81/
Mr. Boutilier

The consideration is too vague to be enforced; more
specificity is required
Despite the fact that consideration has to move from the Promisee, it
Royal Bank Of Canada v. Kiska
does not need to move to the Promisor, it can flow between a third
party.
Lack of consideration:
No consideration from the hospital to the woman existed and, thus,
Brantford General Hospital v Marquis
there was no enforceable contract.
Estate
Donating 1 M. naming the unit. /Note:83/
50 % of the profit as consideration is too vague and broad. It does not
Wood v Lucy, Lady Duff-Gordon
fall within the meaning of consideration. “A promise may be lacking,
/BI: page 170/
and yet the whole writing may be ‘instinct with an obligation,’
imperfectly expressed…If that is so, there is a contract”.
Nominal consideration: No case
Often used as a drafting technique in real estate (i.e. the sale of land for $1).
The amount of $$ makes no difference; it just creates the appearance of a contract that the courts will enforce. In
these cases, the contract is binding even where nominal consideration is a mere formality.
Formality:
a signature and written “seal” constitutes consideration.
The purpose of a signature is to authenticate a document.
Royal Bank v. Kiska
Moral consideratio: / note 84/
a moral duty or obligation does not form or constitute consideration. Promises are NOT sufficient to found or
formulate a contract.
Pat consideration:
Eastwood v Kenyon; Past consideration is not valid consideration unless there was an implied request by the party
receiving the past consideration for the past consideration to be performed.
18
Lampleigh v Brathwait: this case addes another urle to the past consideration: Past consideration is not valid
consideration unless:
1.
There is an implied request by the party receiving the past consideration for the past consideration to be
performed; and
2.
There is an expectation of compensation from the party performing the past consideration.
Nominal Consideration: it is mere formality
Often used as a drafting technique in real estate (i.e. the sale of land for $1).
The amount of $$ makes no difference; it just creates the appearance of a contract that the courts will enforce. In
these cases, the contract is binding even where nominal consideration is a mere formality.
Consideration Must Be of Value in the Eyes of the Law:
Consideration of some value must be flowing in both directions.
However, the court is not concerned with the actual value of the
Thomas v. Thomas
consideration, just that the consideration has some nominal value.
$1 rent per year is not merely a voluntary gift and was sufficient
Note:86, $1 is peppercorn
consideration.
consideration
Argument against: the £1 of consideration is grossly disproportionate
to the consideration of the house. The wife argues that
proportionality does not matter, as long as consideration of value
exists.
Bona Fide Compromises of Disputed Claims
Forbearance to sue is valid consideration for a contract only when
that the forbearer has a valid claim against the other party. In this
case they could not rely on it; because the store did not have valid
B. (D.C.) v Arkin
claim against parent. Their son commited shoplifting.
Note: if the person has a resoanable ground for suing, his
forbearance to sue will be considered as a good consideration
Pre-existing legal duty: /book47/
1- duty owed to the public,
2- duty owed to the third party,
3- duty owed to the promisor
The traditional view is that if, in exchange for a promise, the promise agrees to perform a public duty,
there is no consideration. However, if if the person goes above and beyond the public duty, then consideration
19
will be found. If an existing contract obligates one party to performe a certin act for another party, the same act
canot form the consideration for another contract. There must be a fresh consideration for a new promise. But
Nav case says that a contract between two parties in which consideration is the performance of a pre-existing
legal duty is binding as long as no economic duress took place.
1- Duty owed to the public:
Facts: The father promises to give the mother of their child £1 per
week in exchange for caring for their illegitimate child and for giving
the child the option to live with her when the child is older.
Ward v Byham
Held: The mother’s consideration is not valid, as caring for one’s child
Public duty: A duty that can be imposed
is a public duty. BUT, the court rules that the contract is enforceable
by jurisprudence, statute, professional
because the performance of a public duty PLUS something additional
codes of conduct, etc.
(giving the child the option of living with her) is valid consideration.
NOTE :A promise to perform a pre-existing public duty is not good
contract is enforceable
consideration. But, Once an individual goes (the father in this case)
beyond their public duty, they have provided sufficient
consideration is valid
consideration. The contract becomes enforceable and the promisor
must uphold their contractual obligations.
2- Duty Owed to a Third Party: Performance owed to a third party has been viewed as good consideration
Uncle agreed to pay his nephew £150/year upon his marriage after
hearing about his engagement. The promise was legally binding,
Shadwell v Shadwell
despite the fact that the nephew already owed a legal obligation to
his fiancée
Absent economic duress, the performance of a pre-existing
Pao On v Lau Yiu Long:
contractual obligation to a third party can be valid consideration.
3- (Prior)Duty owed to the promisor:
A promise to perform a pre-existing legal duty between two parties is
Stilk v Myrick:
not valid consideration.
Facts: Gilbert Steel contracts with University Construction to provide
steel for three jobs. Two jobs are completed. For the third job, the
Gilbert Steel Ltd. v. University Const. Ltd.
price of steel increases. An oral agreement is reached for University
/BI: page 89/
Construction to pay a higher price for the steel.
20
A prior duty owed to the promissor is not legally sufficient
NAV Canada in the next page was held
consideration. In amending a contract, both sides must provide fresh
differently.
consideration.
Parties should make better initial contracts to account for things such
as price fluctuations.
The requirement of fresh consideration could be more relaxed to
make enforceable a gratuitous promise (one made without fresh
Williams v. Roffey Brothers & Nicholls
consideration)to pay more so long as:
(Contractors)
(1) the promisor obtains some benefit or advantage from the
new arrangement, and
(2) the promise was not made under duress. /book 47/
3.1 Agreement to accept less than you are owed: /book 46/
An agreement to accept less than you are owed is not binding unless
there is some consideration. The requirement of fresh consideration
Foakes v Beer
makes the agreement to accept the lesser amount unenforceable.
Because the person is already obliged to pay that sum of money (and
more). Payment of a lesser sum in satisfaction of a larger amount does
not constitute consideration. (it can only be accepted if the contract is
The legislative response to Foakes v. Beer
under seal, promissory note, if the debt is paid before the date the
Judicature Act,2000, s. 13(1)
creditor is supposed to be paid)
This case is distinguished from Foakes:
Facts: The promise at issue was a promise to accept less in return for
Foot v Rawlings
the consideration of getting payment more quickly and the receipt of
(promise to pay less)
post-dated cheques.
Court held: Generally a promise to pay less is not valid when there is
In this case, receiving less than owed is
no further consideration, but negotiable instruments (i.e. post-dated
enforceable because the chques is
cheques) are given as consideration. Consideration is valid in this case: considered as a consideration.
cheques.
A contract between two parties in which consideration is the
performance of a pre-existing legal duty is binding as long as no
21
NAV Canada
economic duress took place. . In order to establish economic duress,
two elements must be satisfied:
This case is against Gilbert case on the
1. The promise has to be made under pressure, that is a demand
last page
or threat
2. The pressured party must have no option but to concur
In this case, economic duress was present.
The legitimate expectations of the parties in the case of a
Rosas v Toca
modification to an going transaction should be protected .Variation
modification to a going transaction.
should be enforceable without new consideration as long as there
About the relationship between friends
has not been duress, unconscionability, or other public policy
and past consideration.
concerns. “…a lack of fresh consideration will no longer be
determinative.
22
Power point 8
The enforcement of promises
Promissory estoppel / book44, note99/ BI:214/
Promissory estoppel originated from the courts of equity. It is applied in a discretionary fashion.
Five elements must be present to constitute promissory estoppel:
1. There must be an existing legal relationship between the parties at the time the statement on which the
estoppel is founded was made.
2. There must be a clear promise or representation made by the party against whom the estoppel is
raised, establishing his intent to be bound by what he has said.
3. There must have been reliance, by the party raising the estoppel, on the statement or conduct of the
party against whom the estoppel is raised.(An action by the representee on the basis of the
representation)
4. The party to whom the representation was made must have acted on it to his or her detriment.‫ضرر‬
5. The promisee must have acted equitably
The defendants depended (relied) on this promise; thus, it would be
Hughes v Metropolitan Railway Co
unjust to make them culpable in this case.
**This case is the origin for the doctrine
of promissory estoppel
When the conditions that led to the estoppel cease to exist, the
representation is no longer valid and the representor can act on their
Central London Property Trust Ltd v High
original right.
Trees House Ltd
In this case war stopped . (the landloaer can ncollect money based on
the pre-war agreement).
Pay the rent before the war and after the
war
For a promise to be able of being relied upon and for the defence of
John Burrows Ltd. v. Subsurface Surveys
estoppel to be available, it must be a promise or assurance INTENDED
Ltd.
to alter the legal relations between the parties. A friendly gesture is
NOT a binding agreement and if it is depended upon, the defence of
Case is about the nature of
estoppel will not be available.
representation (promise)
At common law, substitute contracts are not allowed unless there is
consideration provided. Without consideration,there can be no
substitute agreement that is accepted at common law. However,
23
The Equities:
substitute agreemnts that satistys accord it can be valid in equity,
D. & C. Builders Ltd. v. Rees
even if there is no consideration, if it would be inequitable to permit
the creditor to sue for the money from the original contract. To meet
Come to court with clean hands
this condition, an agreement has to have been made, the debtor must
have relied upon it, and it must be unjust or unfair to permit the
Undue pressure
creditor to claim or ask for more money.
But in this case the person who is raising estopple, imposed undue
pressure to the other party to accept less than the original agreement.
No estopple her.

Promissory estoppel can apply to promises to accept less,
subject to equity/duress
In this case there is no consideration; therefore the agreement will
not stand in common law but might be allowed in equity. However, he
states that the pressure placed on D. & C. by Rees forced them to
accept an agreement that was unsatisfactory. Therefore it would not
be inequitable to allow the creditor to claim the rest of the
Detrimental reliance is NOT mandated or required for promissory
estoppel to be applicable. Promissory estoppel necessitates that the
The reliance:
claimant party depend or rely on the actions of the other party and
alter their position as a consequence.
W.J. Alan & Co. v. El Nasr
Detrimental Reliance: Debtor has governed their affairs accordingly.
/note:101/
There must be action taken on the representation by the representer
The reliance:
but no detriment to the representee is needed.
Societe Italo-Belge Pour Le Commerce Et
Estoppel is only a defence for the defendant.
L’Industrie S.A. v. Palm and Vegetable Oils
Estoppel can only be used as a defence and not as a cause of action
where one did not exist before.
Sword or Shield?
Estoppel cannot be used as a cause of action, but only as a defence
Combe v Combe
when someone is trying to claim that a promise they made did not
have consideration and is therefore not binding; estoppel is a "shield",
not a "sword".
Estoppel CAN be used as a cause of action.
Robichaud v. Caisse Populaire de
Having estoppel only as defence is contrary to the equitable principle
Pokemouche Ltee
of estoppel.
24
Promissory estoppel could not apply because the estoppel was made
at a time when the legal relationship between the parties ceased to
Petridis v Shabinsky
exist.
Wavier exists where: (1) a party has the right to rescind or repudiate
No estoppel/ because no legal
upon the other party’s failure to do something, (2) he may by word or
relationship
deed waive or suspend that right, and (3) if he does then equity will
sometime snot permit him or will control him in the strict
Court applied doctrine of wavier
enforcement of those suspended or waived rights.
There is no consideration for the man to pay off the mortgage: love
and affection are not valid consideration.
M(N) v A (AT)
There is no existing legal relationship, so promissory estoppel cannot
apply. So, Ms. A argues that they have an anticipated legal
Man pay mortgage in England, woman
relationship in the future. What does the court say about this
moved to Canada to leave with him.
argument? Romantic relationships are inherently unpredictable
Broke up, woman claimed the paymenys
things; thus, the court cannot rule that a future legal relationship
to be continued.
(marriage) was anticipated.
Anticipated legal relationship
Proprietary Estoppel: / note 108/
Enforcement of a right not previously in existence where the Defendant has encouraged the Plaintiff in the belief
that it will be granted and has acquiesced in action taken by the Plaintiff on that belief. Can be used as a cause of
action (sword). The doctrine of proprietary estoppel can be used to enforce estoppel in cases where a present
legal relationship does not exist but a future legal relationship is anticipated.
This doctrine is not vey much used in candida. Instead the court prefers to use the doctrine of constructive trust
Proprietary estoppel is a legal claim, especially connected to English
Adey v. Caccamo
land law, which may arise in relation to rights to use the property of
the owner, and may even be effective in connection with disputed
transfers of ownership.
25
/note 110/
Intention to creat legal relationship
Mutual promises between spouses are not enforceable contracts
because they are not intended to be. “The consideration that really
Balfour v Balfour:
obtains for them is the natural love and affection which counts for so
little in these cold Courts.
Intentions to create legal relations is a distinct aspect of Contract Law.
Family Arrangements in contract law
For arrangements made between husbands and wives (or families in
general) there is a presumption that they are not generally contracts
as the parties do not intend to be legally bound by the agreements.
There is a presumption in business matters for an intention to create
legal relations, but this may be rebutted through evidence to the
Rose and Frank v J.R. Crompton
contrary.
Commercial Arrangements
Comfort letters do not provide legally binding security unless
specifically drafted to do so. “Letters of comfort…are not guarantees
TD Bank v Leigh Instruments
or formal security…they are gentlemen’s agreements and moral
obligations.
Letter of comfort is no binding
Note: A comfort letter is a business document that is intended to assure the
recipient that a financial or contractual obligation with another party can and
will be met.
Proprietary estoppel is a legal claim, especially connected to English
Adey v. Caccamo
land law, which may arise in relation to rights to use the property of
the owner, and may even be effective in connection with disputed
transfers of ownership.
26
proprietary estoppel
Power point 9
The enforcement of promises:
 Formality: promises under seal
 Formality: the requirement of writing
Formality: Promises Under Seal:
The contract had all of the requirements of a contract under seal
except that where the seal was supposed to be affixed, it read .
Royal Bank v Kiska
The majority held that consideration existed; thus, the seal issue
was not relevant.
/BI: 254
However, one judge dissented, making the seal issue relevant. He
held that the writing “(seal)” did not suffice; the seal needed to be
affixed.
Formlity: the requirement of writing: /BI: 257/
Why do certain kinds of contracts have to be reduced to writing or evidenced by writing? There used
be a lot of fraud in a Plaintiff claiming a contract but there not being one. The purpose of the
Statute of Frauds in 1677, Canada was to prevent fraudulent litigants from enforcing promises that had never
been made. Relevant sections are sections 4 and 17. Certain kinds of contracts had to be evidenced in writing to
be enforceable such as sale of goods, wares and merchandise for a price of 10 pounds or more. Modern form like
the Sale of Goods Act , R.S.A. 2000 says that a contract for the sale of any goods of the value of $50 or upwards is
not enforceable by action unless some note or memorandum in writing of the contract is made and signed by the
party to be charged or his agent in that behalf. Statute of Frauds covers five categories of contracts: /note: 113/
The Requirement of Signature:
Mere initialling has been held to be sufficient
Balderston v Faul
Signature may be printed
Schneider v Norris
Part performance: Part performance is a doctrine used to circumvent the strict application of the Statute of
Frauds. Equity courts decided to enforce contracts for sale of interest in land notwithstanding the absence of a
sufficient note or me morandum. /note119/
you provide something to someone else and now you want it back
because the contract was not performed.The respondent is entitled
Deglman v Guaranty Trust Co.
to recover for his services what the deceased would have had to
Unjust enrichment
27
pay for them on a purely business basis to any other person. This
goes to Unjust enrichment
Issue: Was there sufficient acts of part performance to take the
case out of s. 4 of the Statute of Frauds? YES
Thompson v Guaranty Trust Co
Despite the absence of a written document, the court ruled that
the land should be transferred to the labourer because of the
Labour worked in the frm for 50 years/ the
circumstances, the evidence and that the actions of the labourer
owner said I leave the frm in my will for
were referable to, and indicative of, a contract dealing with the
you/ dies / did not will so.
farm.
Courtsaid the land shoule be transfered
If the acts relied upon are “unequivocally(clearly) referable in their
own nature to some dealing with the land” the contract is valid. “It
Lensen v Lensen
is now settled law in Canada that the acts of both parties to an
This case confirms Thompson
alleged oral agreement may be considered when a court is called
on to determine if sufficient acts of part performance take an
TEST for partial performance
alleged agreement outside the operation of the Statute of Frauds
Part performance is an exeption to the statute of Frauds reagding lands. When the court enforces oral
agreement between the parties.
28
Power point 10
Privity of Contract / note 122/
Doctrine of privity applies to prevent two types of persons from enforcing a contract:
1. A person who is a complete stranger to the contract has no legal right to enforce the promise of any
party to that contract.
o
Uncontroversial aspect of the doctrine of privity.
2. The third party beneficiary, the person identified and intended by the promisor and promisee to
receive all or part of the benefit of the agreed upon performance.
o
Controversial aspect of the doctrine of privity.
The “party to whom the benefit of a promise accrews may bring his
action.
Provender v. Wood
Note: but the Tweddle case in below reversed this finding.
Third parties to a contract DO NOT derive any rights or entitlements
from that agreement nor are they subject to any liabilities or
Tweddle v. Atkinson
burdens imposed by it. Moreover, natural love and affection is not
adequate consideration in law.
Note: it would br problematic if an individual would be able to sue
for a contract but not be able to be sued under it.
Only parties to a contract can sue for a breach of contract. The only
exception to the privity rule is if a party named in the contract was
Dunlop Pneumatic Tyre v Selfridge
acting as an agent of another party; in this case, the unnamed party
can be sued.
Only parties to a contract can sue for a breach of contract.
Greenwood Shopping Plaza Ltd. v.
Beattie et al
Ways in Which a Third Party May Acquire the Benefit:
1. Statute
2. Specific Performance
3. Trust
4. Agency
5. Employment
29
6. Subrogation
Acquisition by Statute: /BI: 291/Two sections of the Insurance Act provide exceptions to the doctrine of privity:
Section 195 applies to life insurance. Section 258 applies to automobile insurance.
Acquisition by specific performance:
Third parties cannot sue for breach of contract where they were
not a party to the contract, EVEN IF they were named as a
Beswick v. Beswick
beneficiary of the contract.
Executors of wills, nonetheless, can sue for specific performance of
Specific performance:
promises made in contracts with the deceased.
The third party isn’t suing—the promisee
In this case: the wife could only sue in her capacity as administrator
or his estate is—so the privity rule isn’t
of her husband’s estate. The woman could not sue in her own
offended
personal capacity as she was not a party to the original agreement.
Aency relationship
Acquisition by Trust: /note 126/
If the third party can prove the existence of a relationship of some kind, such as a trust relationship (or agency
relationship), there would be a legal relationship between the promisor and the third party.
There has to be a clear intention to create a trust for a trust
Vandepitte v Preferred Accident
relationship to be established.
Insurance Co.
In this case ther is no trust relationship between the insurance
comanya nd the minor son who was driving his dad car.
Acquisition by Agency:
If the “promisee” is actually contracting as an agent for a third party, the doctrine of privity has no application.
In this case, the promisor and third party are the contracting parties and are in a direct contractual relationship.
Test for agency:
1.
The agent brought the parties together; and
2.
The parties recognize that an agency relationship has been created, even where there has been no
formal designation as such.
Agency existed and, thus, privity of contract existed, such that the
dealers could enforce the contracts as between each other. In this
McCannell v Mabee McLaren Motors
case: Contract contains a clause limiting a dealer’s ability to sell
Ltd
outside of their given territory
30
The Court set out a test for agency: (1) if the party is meant to be
New Zealand Shipping v A.M.
covered by provisions; (2) if the promisor is clearly acting as agent
Satterthwaite
for the party; and (3) if the promisor has authority to do this, THEN
consideration moves from party through agent to promisee.
Acquisition by Employment/Subrogation:
Employee cannot be a paty to the contract that employer is
entering unless they meetteh below test.
London Drugs v Kuehne & Nag
The test for employees being party (privy) to a contract made by
their employer was set out:
Issue: in what circumstances should
a. The limitation of the clause has to, either explicitly or
implicitly, extend the benefit to the employee(s); and
b. The employees must have been acting in the course of their
employees be entitled to benefit from a
limitation of liability clause found in a
contract between their employer and the
employment performing the services provided for in the
plaintiff (customer)? employees may
contract when the loss happened.
obtain such a benefit if the test is satisfied.
There are policy reasons to allow the exclusion particularly that
employees do not expect to be found liable when there are clauses
Acquisition by Employment
that specifically state that they are excluded.
In Fraser River the court clarifies that the test in London Drugs is
/Note: 130/
not ONLY applicable to employees, but also to any third party who
Fraser River Pile & Dredge Ltd. v Can-
meets the requirements. The Court comments that the evidence in
Dive Services Ltd
favor of relaxing the privity doctrine is even more compelling in
Acquisition by Subrogation1
Fraser than it was in London Drugs because it was expressly
declared that charterers were to be excluded in the contract.
1
Subrogation means that insurance companies generally have the right to step into the shoes of the party whom they want to
compensate (Fraser River) and sue any party whom the compensated party could have sued (Can Drive). In this case, the insurance
contact with Fraser contained a waiver of subrogation clause but later got the permission of Fraser to sue Can--Dive.
31
Power point 11
Representations and Terms
Misrepresentation: Reliance rule
(Recission or damages is the remedy for misrepresentation)
A contract can be rescinded for innocent misrepresentation,
Redgrave v Hurd:
even where the representee also had the chance to verify the
false statement. This is because where a party to a contract
[Innocent misrepresentation]
makes a misrepresentation which a reasonable person would
[knowledge of the misrepresentation]
rely on when deciding to contract, or which is intended to
induce the contract, the courts will assume that the defendant
To rebut the rule of reliance:
relied on the misrepresentation. This is known as a ‘material’
the party must show that the defendant
representation.
actually knew of facts which made the
Showing that a party had the means and opportunity to learn
statement untrue, or that his words or
the truth, but failed to, does not prove that there was no
conduct made clear that he did not rely on
reliance for the purposes of misrepresentation. This is true
the statement.
whether or not the misrepresentation is ‘material’. In innocent
First remdy is recisssion , if not possible,
misrepresentations you can only ask for damages if you cannot
damage
rescind the contract.
This case established that a statement of opinion, from a
knowledgeable party to one who is not, is a representation. If
Smith v Land and House Property Corp
false, it is actionable and will be a misrepresentation. Innocent
misrepresentation allows for recission.
Reliance on the opinion of a knowlegable
The reasonableness of your reliance on a statement is irrelevant
party
for recission, but it is relevant for recovery of damages in tort.
Misrepresentation by Omission or Silence:
Misrepresentation by omission is not actionable, nor can it be the basis of a defence. However, an exception to
this rule is where a fiduciary duty to disclose material. The case that deals with this is Bank of BC.
This case established that failures or omissions can qualify as a
Bank of British Columbia v Wren
misrepresentation especially if there is an active concealment of
Developments
the truth. Negligent misrepresentation permits rescission.
Silent , Omission or not disclosing will be
misrepresentation
32

a remedy of rescission is founded in equity and its
Kupchak v Dayson Holdings Ltd
employment is discretionary

Monetary remedies may be allowed under rescission in
the event it is not possible, or it is not equitable to
misrepresentation cannot be rescission
return/restore the original property

In some situations the remedy for
In this case it was established that in situations where
the misrepresentee is not entitled to claim recission
include:
1.When the rights of a third party intervene
2.When there is election or affirmation
3.When there is laches or delay
4.When rescission would cause radical injustice to
misrepresentor
5.When there is innocent misrepresentation and the
contract has been exectuted
Misrepresentation and terms

Parties are not liable for damages arising from their own
Heilbut, Symons & Co v Buckleton
innocent misrepresentations.

Damages are only awarded for fraudulent or reckless
misrepresentations, or misrepresentations that refer to
a material issue that fundamentally change the contract.

Not liable for innocent
misrepresentation
Innocent representations are only referred to as
warranties if they have clearly been intended to be
warranties by the parties
If a representation is made in the course of dealings for a
Dick Bentley Productions v Harold Smith:
contract for the very purpose of inducing the other party to act
Whether or nor the representation was
on it, and it actually induces him to act on it by entering into the
innocent?
contract, that is prima facie ground for inferring that the
Warranty: a term whichis not essential
representation was intended as a warranty.
to the contract and is collateral to the
In this case, the Court of Appeal agrees with the trial judge that
main purpose of the contrac
the representation was not fraudulent; despite that, it was a
33
warranty in the contract for the sale of the car. Therefore,
Milage of the car
breach of it gave rise to a cause of action for damages.
The length of time between buying the picture and the action
Leaf v International Galleries
for rescission bars a claim for rescission.
Oil painting- after 5 year wanted to rescine :
The right to rescind must be exercised within a reasonable time
NO too much time has lapsed
upon discovering the falsity of the statement.
Concurrent liability in contract and Tort (it is possible)
Tort liability could arise where a relationship of sufficient proximity to create a duty of care in tort is
established by the contract and where the resulting tort duty is co-extensive with an obligation also imposed
by the contract itself. RULE: The only real exception to concurrent liability is where there is a valid exclusion
clause in the contract excluding liability in tort
the duty in tort and in contract are two entirely separate duties
Central & Eastern Trust Co. v. Rafuse
and can be held concurrently by a defendant.
Tessis was liable both in contract and in tort. He held that the
relationship of Tessis to Sodd as an accountant was adequate to
Sodd Corp. v N. Tessis
establish a special relationship: he had a professional
responsibility and thus, a duty of care. Therefore, the valuation
Miscalculation by a chartered accountant
was a negligent misrepresentation intended to be acted upon
(this creates liability in contract and in tort).
The Court considered three situations where a party can sue in
BG Checo International Ltd. V B.C. Hydro &
tort and contract.
Power Authority
1. INCREASE IN STANDARD OF CARE "where the contract
stipulates a more strigent obligation than the general law of tort
BG is able to sue both in contract and tort
would impose. In that case, the parties are hardly likely to sue in
tort, since they could not recover in tort for the higher
contractual duty." Though the right to sue in tort still exists, it is
generally not practical.
This case falls under the third category
2. CONTRACT LOWERS THE DUTY "where the contract stipulates
a lower duty than that which would be presumed by the law of
tort in similar circumstances."This does not necessarily
extinguish the right to sue in tort unless it is explicit in the
contract.
34
3. "where the duty in contract and the common law duty in tort
are co extensive." In such cases, "the plaintiff may seek to sue
concurrently or alternatively in tort to secure some advantage
peculiar to the law of tort, such as a more generous limitation
period."
35
Power point 12
Representation & terms: Classifications & consequences
• The parole evidence rule: Prohibits outside evidence of classification of a contract, when that contract
is to be considered the sole source. If the contract is in writing and the language of the written agreement
is clear and unambiguous, then no other oral or written evidence can be used to interpret , vary or
contradict the terms of the written agreement. The purpose of the parol evidence rule is primarily to
achieve finality and certainty in contractual obligations, and secondarily to hamper a party’s ability to use
fabricated or unreliable evidence to attack a written contract.
•
Classification of terms
•
Discharge by performance or breach
Parol evidence
Note 147
Zell v American Seating Co
Parol evidence of the oral agreement is inadmissible.
Hawrish v Bank of Montreal
Oral agreement was different from the written agrement
Extrinsic evidence, such as an oral agreement, cannot stand in the face
Bauer v Bank of Montreal
of a clear, unambiguous written agreement.
The contract was partly orally, partly in writing:
J. Evans & Son (Portsmouth) Ltd. v
The court is entitled to look at and should look at all the evidence
Merzario (Andrea) Ltd.:
from start to finish in order to see what the bargain was that was
struck between the parties.”
Exception to Bauer
Parol evidence can be used to determine if there was a
misrepresentation that induced one party to enter into the contract.
Gallen v Allstate Grain Co
Evidence of oral representation could be admitted under either one-
Farmer, seed
contract theory or two-contract theory:
Oral assurance warranty

Oral representation may add to the agreement (one-contract
theory); or

Oral representation may be itself another agreement (twocontract theory).
In law, the effects of both are the same:

If an oral representation contradicts the written agreement,
the written agreement must stand.
36
•
If a written agreement was induced by the oral representation
that is inconsistent with the written contract, the written agreement
cannot stand.
Statutory Modification of the Parol Evidence Rule:
section 29 of B.C.’s Trade Practice Act
Classification of Terms of a contract / note 151/
Condition: Creating a right to repudiate contract no matter the actual effects of the breach
Innominate clause: if some, but not all breaches may deprive an innocent party of a substantial portion of the
whole benefit of the contract. The innocent party will have the right to repudiate the contract when the factual
result is the deprivation of a substantial portion of the whole benefit of the contract.
Warranty: It is a warranty if the breach never deprives the innocent party of a substantial portion of the whole
benefit of the contract.
This case defines conditions and warranties, and introduces the
innominate term.
The correct test to determine if a breach should lead to repudiation is
Hong Kong Fir Shipping v Kawasaki
to look at the events which have occurred as a result of the breach and
to decide if these events deprived the party attemptingto repudiate of
the benefits that it expected to receive from the contract (the breach
must lead to the party not being able to obtain all or a substantial
proportion of the benefits that they intended to receive by entering
into the contract)-if they do, then repudiation is in order, else only
damages can be awarded.
Issue: Does calling the provision in the contract a “condition” mean
Wickman Machine Tool Sales Ltd. v L.
that its breach leads to a right of rescission?
Schuler A.G
Merely calling a provision a "condition" does not necessarily mean
that its breach results in a right of rescission. The condition should be
reasonably intended .
Duty to perform in good faith /note 153/
In this case the Supreme Court of Canada recognized good faith in
contractual performance to be a ‘general organizing principle’ of the
common law of contract.
37
Bhasin v Hrynew

The organizing principle of good faith is that parties generally
must perform their contractual duties honestly and reasonably
and not capriciously or arbitrarily

The development of the principle of good faith should not be
used as a pretext for scrutinizing the motives of contracting
Good faith performance
parties

The new duty of honesty does not impose a duty of fiduciary
loyalty, or of disclosure, or require a party to forego
advantages flowing from the contract

The duty of honesty should be thought of as a general doctrine
of contract law that operates irrespective of the intentions of
the parties, analogous to the doctrine of unconscionability;
and

The precise content and scope of honest performance will vary
with context, however, parties are not free to exclude the duty
of honest performance, and any modification of the duty must
be in express terms
Situations where a duty of good faith is implied by law:
•
Employment context, Keays v Honda Canada
•
An insurer in investigating an insured’s claim, Fidler v Sun Life
•
Implied in fair dealing in a tendering contract
Remedies of the Parties in Default /note 155/

Enforcing the contract

If not abel to enforce the contract may have some other remedy which will enable him or her to recover
the value of benefits conferred on the other party through partial performance of the agreement
the primary issue was what is mandated of an “entire obligation”? It
was found that where there is a contract to execute work for a lump
sum, recovery is not available until the work is finished (entire
obligation).
38
Fairbanks Soap Co. v Sheppard
o
Nonetheless, the notion of “completed” or finished may
equate to “substantially completed”. In the case at bar, the Court held
that on the evidence, too much work was remaining and as such, it
was NOT substantially completed. The idea of “substantial completion”
is to be assessed on a case-by-case basis.
Doctrine of Substantial Completion2: /book: 176/
In cases where the work has been completed, albeit with defects (not completely), the doctrine of substantial
performance will apply.
a builder had not strictly completed the work, the court applied the
doctrine in the builder’s favour as the complaints concerning the work
Markland Associates Ltd. v. Lohnes
were “based more on the fact of work badly done than on work not
entirely done.
The plaintiff can only recover on a quantum meruit from the
Sumpter v Hedges
defendant’s benefit of the work completed if the defendant had the
option to take the benefit or not.
quantum meruit
What is the meaning of “a deposit and in part payment of the
purchase-money”?
Howe v Smith
“…relates to the two alternatives, and declares that in the event of the
purchaser making default the money is to be forfeited, and that in the
Deposit
event of the purchase being completed the sum is to be taken in part
‫ و د رماه‬. ‫ تا بیعانه پرداخت که خاه را بخیرد‬500
payment.”
.‫ اما د رماه بعد پول را نداد‬. ‫بعد بقیه پول را بدهد‬
Thus, the purchaser cannot recover the £500 deposit.
. ‫مالک خانه را به شخص دیگری فروخت‬
The court held that the purchaser, by failing to pay the balance on
time, lost his right to specific performance.
The position with regard to real estate deposits is that they are nonrefundable except in situations where the deposit is so large that it is
unconscionabl
the court will determine if a payment is a deposit, part payment or
both having regards to the language of the contract, the circumstances
of the case, intention of the parties, the money put down and what
Stevenson v Colonial Homes Ltd
was said. Deposits are generally a small fraction of the purchase price.
2
Performance of contractual obligation that does not entirely meet the terms of the contract but nevertheless confirms a benefit
to a party.
39
If a contract is neutral, the general rule is that the law confers on the
purchaser the right to recover his money.
Money paid before delivery is one of three things: A deposit, a part
payment, or both (deposit until deliver then part payment). If it is a
deposit or both, then the buyer has no right to recover it if he or she
defaults. However, if it is a part payment, then a buyer has the right to
recover no matter what. The presumption is that the buyer can
recover, but it is rebuttable if something in the contract points to a
deposit or a deposit and part payment
40
Power point 13
Standard form contracts and Exclusion clause / book 145/
Incorporation of Unsigned Documents
Acceptance takes place when the customer puts his money into
Thornton v Shoe Lane Parking Ltd.
the slot .
Customer is bound by those terms as long as they are sufficiently
brought to his notice before-hand.
Where the clause is referred to on the contract but posted
elsewhere, this may be insufficient to constitute proper notice of
the clause
Test for incorporation of a waiver in a standard form contract:
Apps v. Grouse Mountain Resorts Ltd.
The more onerous the exclusion clause, the more explicit
[2020]
the terms must be as confirmed by the Court.
could not rely on this waiver to be exempt
In this case the notice was not sufficient to grab the
from liability due to a lack of a timely and
reasonable notice
customers attention.
The clause had to be brought to the attention of the
Interfoto Picture Library Ltd. v Stiletto
defendant. Court did not enforce the clause but orderd
Visual Programmes Ltd.
according to quantum meruit
Knowledge of terms is subjectively tested; therefore, prior
relations and dealings are not sufficient unless there was actual
subjective knowledge of the condition.
McCutcheon v David MacBrayne Ltd
In this case there had been no consistent course of dealing;
sometimes he was asked to sign and sometimes not. And,
They had oral agreement.
moreover, he did not know what the conditions were. This time
he was offered an oral contract without any reference to
Knowledge of terms is subjectively tested
conditions, and he accepted the offer in good faith
Rule in Signed Contract Cases:
For unsigned document, it is necessary to prove that an alleged
party was aware.
L’Estrange v. Graucob
this case is modified by Tilden
41
When a document containing contractual terms is signed, then,
in the absence of fraud, or, I will add, misrepresentation, the
party signing it is bound, and it is wholly immaterial whether he
has read the document or not
The clause was too onerous and too broad.
Tilden Rent-a-Car Co. v Clendenning
In the consumer realm, adequacy of notice and proportionality
Modified the signature Rule in
trump the L’Estrange idea that a signature by itself is binding. If a
L’Estrange v. Graucob
contractual term is specifically onerous, the party seeking to
Only signature is not adequate: the term
enforce that term has to demonstrate the other was
sshoudl be brought to the attention of the
knowledgeable and aware of the term either via their reading of
party who is signing the document.
the particular term or via direct notification of it.
Factors to consider in determining if reasonable steps must be
taken by the party proffering for a signature:
Karroll v Silver Star Mountain Resorts
⯍ The effect of the clause in relation to the nature of the
Ltd
contract;
⯍ The length and format of the contract; and
⯍ The time available for reading and understanding the contract.
Choice of Law Clause:
Clause that determines the law that governs a contract or sets the law that will be used to interpret
the contract. Can substantially impact the remedies available to an injured party
Ruder v. Microsoft Corp
The Court focused on Step 2 of the Tercon approach,
Uber Technologies Inc. v. Heller
unconscionability.
This case expande the doctrine of unconscionability, which
attracted many critics
Principles of Contractual Interpretation: Contractual interpretation involves issues of mixed fact and
law, SCC in Creston Moly Corp v Sattva Capital Corp
1- Implied terms
2- Ambiguity
3- Cotext: Evidence of prior negotiations is generally inadmissible as an interpretive aid, Prenn v
Simmonds
42
4- Strict construction: When a contract has been constructed by one of the parties, any
vagueness is likely to be construed against the party (contra proferentem) and in favour of the
other (Mobil Oil Canada Ltd. v. Beta Well Service Ltd. Very transparent and unambiguous
language must be used for one party to safeguard itself from liability for negligence.
1- Implied terms: found by law, custom and usage
where the law has for many years imposed a legal duty on
Machtinger v Hoj Industries
contracting parties…the duty has clearly been found to be
“necessary”…that duty may only be displaced by an express
contrary agreement.
Employemnt notice is abrm implied by
law
It’s an implied clause in a contract that an employee be given
reasonable notice of the termination of their employment.
2- Ambiguity
The language of the contract must be interpreted through its
Scott v Wawanesa Mutual Insurance
ordinary meaning.
Co.
when the language and wording of a contract is explicit, the
Courts should not give it a meaning distinct from that conveyed
by its transparent terms, unless the contract was not reasonable
or had an impact contrary to the intention of the parties. Courts
should not interject or interfere in the plain meaning of contracts
and implicate terms if the contract is clear and obvious.
Ambiguis clasue should be interpreted
against the party who drafted it. With
ambiguous language, consider the
reasonable expectations of the parties
3- Context
Evidence of previous negotiations tends to be inadmissible as an
aid or a form of assistance in terms of interpretation, at least in
the absenteeism of uncertainty.
When negotiations are challenging, the status and positions of the
parties, with each passing correspondence, are altering and until
the final agreement, albeit uniting, still divergent (opposite).
“it is only the final document which records a consensus”
The current position is Canada is more adaptable and prefers the
admitting of such evidence, however, balancing it carefully, in
circumstances where other reasonable interpretations exist.
43
Prenn v Simmonds
if the language and wording of the insurance policy is not
Ledcor Construction v Northbridge
ambiguous or vague, then, like any contract, a court will enforce
its transparent and clear wording in order to interpret its meaning
and specifically, to establish what is covered, omitted from that
Interpretation of a standard form
contract is an exception
coverage and the exceptions to those exclusions.
Interpretation of a standard form contract is an exception, and
the general rule of thumb is that contract interpretation is subject
to deference from an appeal court.
4- Strict Construction
where the exemption clause relates only to a small part of
Miida Electronics Inc. v Mitsui O.S.K.
the full, agreed performance, such a general rule is not
Lines Ltd:
necessarily applicable
Doctrine of fundamenta breach: / note 175/
This doctrine’s impact was such that a party could not depend on an exclusion clause, regardless of
how expansively expressed, where it had committed a fundamental violation of the contract.
Most provinces have adopted consumer protection legislation..
The doctrine was finally abandoned in Tercon
When assessing enforceability of exclusion clauses, the
Tercon Contractors Ltd. v British
courts must apply a three-part test:
Columbia
As a matter of interpretation, does the clause apply to the
circumstances established?
Was it unconscionable at the time the contract was made?
Should the court refuse to enforce the valid exclusion clause
based on public policy?
In this case
Loychuck v. Cougar Mountain

the releases were not unconscionable.

No power imbalance when a person chooses to engage in
Adventures
a risky activity
zip-lining
44

There was sufficient information on the website and in
the releases that it could be said that the company had
not taken unfair advantage of the plaintiffs
it is not unconscionable for the operator of a recreational-sports
facility to require a person who wishes to engage in activities to
sign a release that bars all claims for negligence against the
operator and its employees. If a person does not want to
participate on that basis, then he or she is free not to engage in
the activity.
Court held for the plaintiff, agreeing that they had satisfied steps
1 and 2 from Tercon. However, regarding step 3 they argued that
Nierdermeyer v. Charlton
it was against public policy to allow the parties to contract out of
Accident when back from zipline
the mandatory and statutory vehicle insurance provisions in B.C
The Court applied the three step test from Tercon, focusing on the
notion of unconscionability arising from the plaintiffs unfamiliarity
Hans v. Volvo Trucks
with the English language and lack of independent legal advice
Exclusion and Limitation of Liability Clauses:
Application to Minors (persons under the age of minority)
Minors are not typically bound by exclusion or limitation of liability clauses that are found on tickets
or in contracts signed by a person under the age of majority.
Exclusion of liability clauses signed by parents or guardians which are under the age of majority are
not enforceable.
Manitoba Law Reform Commission Report stated:
⯍ “Waivers are commonly obtained from minors and their parents.
They may have some practical force in persuading minors (and their parents) that they cannot sue,
but their legal validity is doubtful”
*See Wong v Lok’s Martial Arts Centre Inc., [2009] for an in-depth look at this topic.
45
Power point 14
Protection of weaker party
Duress (common law doctrine)
Two conditions must be satisfied:
1. The promise (the contractual variation) must be extracted
as a result of the exercise of “pressure”, whether
characterized as a “demand” or a “threat”; and
Greater Fredericton Airport Authority
v NAV Canada
2. The exercise of that pressure must have been such that the
coerced party had no practical alternative but to agree to
the coercer’s demand to vary the terms of the underlying
contract.
However, even if those two conditions are satisfied, a finding of
economic duress does not automatically follow. Next, the court
must consider whether the coerced party “consented” to the
variation by considering three factors:

Whether the promise was supported by consideration;

Whether the coerced ‫ مجبور‬party made the promise “under
protest” or “without prejudice”; and

If not, whether the coerced party took reasonable steps to
disaffirm the promise as soon as practicable.
Undu influence (exercised by the courts of equity)
ability to exercise exceptional power in relation to another person’s choices. It is a power of
persuasion that is objectionable usually because it arises out of a confidential or other special
relationship between the parties.
Claim of undue influence can be established in two ways:
1.
Prove actual undue influence, that is, an actual operating influence on the choice that was
made.
2.
Prove a special relationship between the parties. Proof of the required relationship raises the
presumption that undue influence was exercised and this presumption must be rebutted by the
other party. Many relationship give rise to under influence; family, solicitor-client, guardian-ward,
46
doctor-patient, trustee-beneficiary. This category is not limited, it can be extendd nto any other
special relationship such as fiduciary relationship as explained by Geffen v Goodman estate. For unde
influence there must be a disadvantageous bargain before a claim for relief can be advanced; a special
relationship is not enough (Nat. Westminster Bank v Morgan).
two-step test:
Whether the potential for domination inheres in the nature of the
relationship itself.
⯍
Geffen v Goodman estate
This applies to relationships that equity has already
recognized as giving rise to the presumption, as well as other
relationships of dependency which aren’t easily categorized.
1. Having established the requisite type of relationship to
support the presumption, the next step involves an
examination of the nature of the transaction.
⯍
How to rebut the persumtion of
undue influence: independent legal
advice was provided to the plaintif
In commercial transactions, the plaintiff must show that the
contract worked unfair either in the sense that he or she was
unduly disadvantaged by it or that the defendant was unduly
benefited by it.
⯍
In non-commercial relationships (i.e. gifts), “manifest
disadvantage” is not required; the presence of the relationship
itself is enough. Once the presumption has been triggered by the
plaintiff, the onus moves to the defendant to rebut it.
Summary: In order for there to be a finding of undue influence,
there must first be “dominance, manipulation and coercive abuse
of power” in the nature of the relationship and secondly, in terms
of the nature of the transaction, for commercial transactions, there
has to be undue disadvantage or benefit, and for gift or similar
tractions, what is required is only evidence of a dominant
relationship.
The objective of undue influence is to ensure that the
influence of one person over another is not abused. In
everyday life people constantly seek to influence the
47
Royal Bank of Scotland Plc v Etridge
decisions of others. They seek to persuade those with whom
they are dealing to enter into transactions, whether great or
small. The law has set limits to the means properly
employable for this purpose. To this end the common law
developed a principle of duress. Originally this was narrow in
its scope, restricted to the more blatant forms of physical
coercion, such as personal violence.
Independent lagal advice; Proof that
the complainant received advice from
a third party before entering into the
impugned transaction is one of the
Burden of proof and presumptions:
the general principle is that he who asserts a wrong has been
committed must prove it. The burden of proving an allegation
of undue influence rests upon the person who claims to have
been wronged. This is the general rule. The evidence required
matters a court takes into account
when weighing all the evidence.
During the ILA othe options and risks
has to be considered.
to discharge the burden of proof depends on the nature of
the alleged undue influence, the personality of the parties,
their relationship, the extent to which the transaction cannot
If the bank knows abourt the special
readily be accounted for by the ordinary motives of ordinary
relationship: the bank should take
persons in that relationship, and all the circumstances of the
reasonable steps to make sure the
case. Proof that the complainant placed trust and confidence costomer is not under unde influence.
in the other party in relation to the management of the
complainant’s financial affairs, coupled with a transaction
which calls for explanation, will normally be sufficient,
failing satisfactory evidence to the contrary, to discharge the
burden of proof.
Unconscionability: /book 96/
The focus is on the reaosnabelness of the contract itself and the way in which the party whose
conduct is in question behaved during the bargaining process. ( undue influence is about the
relationship of the parties)
For a claim of unconscionability, the requirements are:
48
Morrison v Coast Finance Ltd
1. Proof of inequality in the position of the parties arising
out of the ignorance, need or distress of the weaker,
Traditional doctrine of
unconscionability
which left him in the power of the stronger; and
2. Proof of substantial unfairness of the bargain obtained
by the stronger.
Two criteria to be met to have the contract rescinded:
Marshall v Can. Permanent Trust Co
•
Walsh was incapable of protecting his interests; and
He had stroke . someone aked his
•
It is not material whether Marshall was aware of
land for unfair price
Walsh’s incapacity
The essence of the traditional doctrine of unconscionability is that no person should be allowed to
take advantage of the severe physical or situational disadvantage of another
Five categories of unconscionability:
1. Duress of goods: The owner is in a weak position
because he is in urgent need of goods and the
Lloyds Bank v Bundy
stronger demands of the weaker more than is justly
due.
If the bargaing power is not equal: iti
2. Unconscionable transaction: A man is in need of
snot fair to impose this contract to
special care and protection and his weakness is
the weaker party, particularly is in
exploited by another far stronger than himself so as
disadvantage.
to get his property at a gross undervalue.
3. Undue influence:
The stronger party is guilty of fraud to gain the
advantage of the weaker; or
The stronger has taken advantage of their
relationship with the weaker to gain an
advantage for himself.
4. Undue pressure: The stronger party forces the weaker
to enter into an unfair agreement by threatening
them.
49
5. Salvage agreements: When a vessel is in danger of
sinking and seeks help, the rescuer is in a strong
bargaining position.
Adopts the test in Morrison. The plaintiff must show:
1.
Harry v Kreutziger
Proof of inequality in the position of the parties arising
out of the ignorance, need or distress of the weaker, which
left him in the power of the stronger; and
2.
Proof of substantial unfairness of the bargain obtained
by the stronger.
Here, there was clear inequality with Harry's lack of
education, the difference in class, economic circumstances,
and Harry's physical disability. On the other hand,
Kreutziger's actions demonstrated his power as he was very
aggressive in the negotiations and was able to unilaterally
change the sale price. With respect to the second criteria, the
deal was clearly unfair with the sale price being only a fraction
of the boat and licence’s true value.
Incapacity Due to Mental Incompetence
Hart v O’Connor
50