Contracts
Contract Formation
Strict Liability Torts
Torts
Intentional Torts
Unintentional Torts
Negligence (4 part test)
• Professional Negligence
Defences to Negligence
• Contributory Negligence
• Voluntary Assumption of Risk
The Role of Insurance for unintentional torts
Torts
3 types of damages
Other types of Torts:
• Product Liability
• Occupier’s liability
• Breach of Fiduciary Duty
• Negligent Misrepresentation
• Inducing Breach of Contract
• Unlawful interference with economic relations
• Product Defamation
• Passing-Off
Other concepts applicable
to torts
Vicarious liability
Burden of Proof
Circumstantial Evidence
Pure economic loss
Today’s class: Contract Formation
7 elements
necessary for
the formation
of a contract
• Offer
3 elements to
• Acceptance
create a contract.
• Consideration
• Intention to Create legal Relations
• Capacity
• Legality
• Certainty of Terms
Other things
court may
consider in
determining
whether a
contract was
formed and/or if
the contract
should be
enforced
What is a Contract?
• A promise, or set of promises,
that the law will enforce
• How is this different from a
promise? What about a gift?
7 elements
necessary for
the formation
of a contract
• Offer
3 elements to
• Acceptance
create a contract.
• Consideration
• Intention to Create legal Relations
• Capacity
• Legality
• Certainty of Terms
Other things
court may
consider in
determining
whether a
contract was
formed and/or if
the contract
should be
enforced
Offer
• A tentative promise made by one party, subject to a condition or containing a request to
the other party;
• Must be definite and certain;
• Must be communicated to the intended recipient
• It is intended to be binding on both of the parties as soon as it is accepted.
Offer vs. Invitation to Treat
• Invitation to treat: invitation for
people to create an offer.
• Which of the following are an offer vs.
invitation to treat?
Standard
Form Contract
(form of an
offer)
• Also called a “contract of adhesion”, and is a
“Take it or leave it” offer.
• No room for negotiation over terms of the
contract.
• Advantages:
• Highly efficient (fast / easy)
• Disadvantages:
• Inequality of bargaining power
• Little or no room to negotiate terms.
• Therefore, Contra Proferentum
Standard Form Contracts
• Tilden Rent-A-Car Co. v. Clendenning (1978), 18 O.R. (2d) 601
“In modern commercial practice, many standard form printed
documents are signed without being read or understood. In
many cases the parties seeking to rely upon the terms of the
contract know or ought to know that the signature of a party to
the contract does not represent the true intention of the signer,
and that the party signing is unaware of the stringent and
onerous provisions which the standard form contains. Under
such circumstances, I am of the opinion that the party seeking
to rely on such terms should not be able to do so in the absence
of first having taken reasonable measures to draw such terms
to the attention of the other party, and, in the absence of such
reasonable measures, it is not necessary for the party denying
knowledge of such terms to prove either fraud,
misrepresentation or non est factum.”
Counter-Offer
• Amending the offer in order to “accept” the
contract does not equal acceptance.
• Instead, a counter-offer is a rejection of the
original offer and a new offer is formed that can
be accepted or rejected by the counter-party.
Acceptance
• Final unqualified consent to the terms of the
offer;
• Must be communicated to the offeror either by
word or by conduct.
• Unilateral contracts (can only be accepted by
performance).
Timing of Acceptance
• Revoking an offer: Offeror can revoke the offer at any time
prior to its acceptance.
• Exceptions:
• (a) Where an offeree has paid money to keep an
offer open;
• (b) Where the offer was made under seal;
• Lapse – where the offer stipulates a time by which the offer
must be accepted and that time passes, then the offer is
deemed revoked.
Communication of Acceptance
• Method of acceptance should be reasonable in the circumstances.
• Ordinarily offeror must receive acceptance for it to form a contract
• Postal Rule Exception: contracts made by mail or telegram.
Acceptance occurs when acceptance is put in the mail box, not
when it is received. (Adams v. Lindsell [1818]) (this is a default
rule, offeror can override in the terms he lays out for acceptance)
• Even if Lost or Delayed: Binding contract formed at time of
mailing, even if acceptance delayed or lost in mail provided
there is proof of mailing (offeree can establish mailed with
correct address) (Household Fire Insurance v. Grant [1879])
• Applies to telegrams but NOT faxes, phone, or other
means of instantaneous communication.
Jurisdiction
• General rule: The place where a contract is formed is determined by when it is formed, and
presumptively the courts of the place where it is formed have jurisdiction over disputes.
• Note: choice of law is different than Jurisdiction of courts.
Consumer protection Act, s. 7(2) and 8: Ontario consumer cannot waive right to seek relief in
Ontario courts.
7 elements
necessary for
the formation
of a contract
• Offer
3 elements to
• Acceptance
create a contract.
• Consideration
• Intention to Create legal Relations
• Capacity
• Legality
• Certainty of Terms
Other things
court may
consider in
determining
whether a
contract was
formed and/or if
the contract
should be
enforced
Consideration
The price paid for the
contract
Usually $, but does not
have to be
Price can be
performance
Price could be
services/goods in trade
Gratuitous Promise
No consideration = no contract
Adequacy of
Consideration
It does not matter what the value of the
consideration is.
Past
Consideration
• Past consideration = no consideration
• Similarly, performing an existing legal duty = no
new consideration, so no new contract.
Roscorla v. Thomas [1842]
Debtor/Creditor
Rule
• A new contract is not formed
when a debtor promises to
reduce their debt.
• Exceptions to avoid unfair results
• Foakes v. Beer
• Mercantile Law Amendment
Act, R.S.O. 1990 c. M.10, s. 16
• When creditor accepts part
performance (i.e. a lesser
some of money) in
settlement of a debt, and
the debtor actually pays the
reduced amount, the entire
debt is extinguished.
• Court will exercise its “equitable” jurisdiction to
prevent a party from denying his or her promise,
despite no consideration
• Can only be used as a shield, not a sword.
Equitable
Estoppel
• Requirements:
• (1) Some for of legal relationship already exists;
• (2) One of the parties promises (perhaps by
implication only) to release the other from some
or all of the other’s legal duties to him; and
• (3) The other party, in reliance on that promise,
acts in a way that alters his position and would
make it a real hardship if the promisor reneges
on his promise.
Frito-Lay Canada Ltd. v. Milk & Bread Drivers, [1976] O.J. No. 7
Consideration
Alternative - seals
• A promise made property
under the seal of the promisor
does not require consideration
to make it binding.
7 elements
necessary for
the formation
of a contract
• Offer
3 elements to
• Acceptance
create a contract.
• Consideration
• Intention to Create legal Relations
• Capacity
• Legality
• Certainty of Terms
Other things
court may
consider in
determining
whether a
contract was
formed and/or if
the contract
should be
enforced
Intention to Create legal
Relations
• Reasonable bystander test: did
the outward conduct of the
parties lack serious intention to
create legal obligations?
7 elements
necessary for
the formation
of a contract
• Offer
3 elements to
• Acceptance
create a contract.
• Consideration
• Intention to Create legal Relations
• Capacity
• Legality
• Certainty of Terms
Other things
court may
consider in
determining
whether a
contract was
formed and/or if
the contract
should be
enforced
Capacity
Capacity
cont’d
Capacity
cont’d
7 elements
necessary for
the formation
of a contract
• Offer
3 elements to
• Acceptance
create a contract.
• Consideration
• Intention to Create legal Relations
• Capacity
• Legality
• Certainty of Terms
Other things
court may
consider in
determining
whether a
contract was
formed and/or if
the contract
should be
enforced
Legality
The object of the contract cannot be
illegal
When is a contract illegal?
• If it is a violation of an Act:
• Criminal Code – court will not enforce a contract that’s a crime
• Income Tax Act – court will not enforce a contract meant to avoid taxes
• Competitions Act – restraint on trade.
• Law Society Act
• Violation of Common Law or Public Policy
• Indemnity for committing torts is not allowed (Insurance excepted)
• Contracts considered to be immoral, a perversion of justice, or prejudicial to
the interests of the Canadian public
19:15 – 23:26
https://www.nytimes.com/2019/09/19/podcasts/thedaily/harvey-weinstein-gloria-allred.html
http://www.manitobalawreform.ca/pubs/pdf/145-full_report.pdf
https://www.cbc.ca/news/canada/british-columbia/lawyersacross-canada-approve-groundbreaking-resolution-to-helpprevent-abuse-of-non-disclosure-agreements-1.6741976
https://globalnews.ca/news/9231410/ontario-to-ban-ndas-insexual-misconduct-cases-by-staff-at-colleges-universities/
7 elements
necessary for
the formation
of a contract
• Offer
3 elements to
• Acceptance
create a contract.
• Consideration
• Intention to Create legal Relations
• Capacity
• Legality
• Certainty of Terms
Other things
court may
consider in
determining
whether a
contract was
formed and/or if
the contract
should be
enforced
Certainty of Terms
• Void for uncertainty: vague or
incomplete agreements can be
deemed “void” by a court,
therefore no contract was ever
formed.
• Vague terms:
• “fair value”, as opposed to
explaining how $$ should be
determined;
• Incomplete contracts: i.e.
missing essential terms such
as price or what goods are to
be purchased.