Presented at:
NCLGMA
Prince George, B.C. April 9, 2014
Presented by:
Michael Hargraves

Contract Law 101
• Contracts in British Columbia and most of Canada largely governed by common law
• Common law has evolved through centuries of judicial decisions
• British Columbia “received” English law as of
November 19, 1858
• Common law can be changed by statute if intention is clear

Contract Law 101
• A contract may be defined as: o A legally enforceable agreement o Between two or more parties o Formed by offer and acceptance o Supported by consideration

Contract Law 101
• Legally enforceable o No duress o No fraud o Legal capacity o Age of majority o Mentally competent

Contract Law 101
• Legally enforceable: o No criminal purpose o Written (in some cases, e.g., sale of land) o Actually agreed by parties (non est factum)

Contract Law 101
• Between two or more parties: o Privity of contract o Statutory exceptions (e.g. Property Law Act ) o Partnerships bound by acts of partners o Corporations o Corporate status/standing o Indoor management rule o “Doing business as”

Contract Law 101
• Formed by offer and acceptance: o Intention of the parties o Invitations to treat o Unequivocal acceptance o Counter-offer o Communication of acceptance o Revocation

Contract Law 101
• Formed by offer and acceptance: o Agreement to agree o Unilateral contracts

Contract Law 101

Contract Law 101
• Supported by consideration: o The “bargain” theory o Recitals and the “imaginary” dollar o Finding consideration in the bargain o Exchange of property or promises o Exception – contracts under seal

Contract Law 101
• Natural person powers o Community Charter Section 8(1): “A municipality has the capacity, rights, powers and privileges of a natural person of full capacity o Corporations are people too o Municipalities always subject to statutory constraints

Contract Law 101
• Natural person powers o Section 12(2): “A council may, in exercising its powers under section 8(1) [ natural person powers ], establish any terms and conditions is considers appropriate o Again, appears broad and is helpful but always subject to statutory constraints, such as expenditure limits for example

Contract Law 101
• Regional districts – no natural person powers
• See Local Government Act section 176 for regional district corporate powers, including power to make agreements respecting services, regulatory enforcement, management of property, and agreements with other public authorities
• Section 176(2) gives boards authority to establish appropriate terms and conditions

Contract Law 101
Typical contract terms:
Recitals
Definitions
Covenants
Positive vs. negative
Mandatory vs. permissive
Representations and warranties
Conditions
Time of the essence

Contract Law 101
Typical contract terms:
Notice
Assignment
Term
Termination
Interpretation
Governing Law

Contract Law 101
• Delegation of board authority
• Section 176(1)(e)
• The corporate powers of a board include the power to “to delegate its powers, duties and functions, including those specifically established by an enactment, to its officers and employees, its committees or its members, or to other bodies established by the board.”

Contract Law 101
• Delegation of board authority
• Exceptions under section 191:
• Power to make bylaw
• Power or duty only exercisable by bylaw
• Power or duty to appoint/suspend/terminate officer
• Power or duty to hear appeal or reconsider
• Power or duty under statute to approve, consent, recommend or accept
• Power to impose remedial action requirement
• No delegation to corporation

Contract Law 101
• Board may establish terms and conditions under section 176(2)
• Additional rules under sections 191 through 194 of the Local Government Act
• Similar provisions for municipalities – see section 154 of the Community Charter

Contract Drafting Tips
10 Drafting Tips
1. Use the active voice, not the passive voice:
• Don’t say, “A storm water management plan will be submitted to the Director of Planning for approval”, say
“The Owner must submit a storm water management plan to the Director of Planning for approval”.
2. Say it once.
• Expressing the same idea in different ways in different places can create uncertainty.
• Saying something only once forces you to think carefully about the nature of the obligation, and to be clear about it.

Contract Drafting Tips
10 Drafting Tips
3. Define key terms.
• If there are more than a handful of definitions, gather them together in a definitions section for easy reference.
• Use them consistently. Don’t use “Land” and “Property” to refer to the same thing. Pick one and stick with it throughout.
• Don’t assume that capitalizing Certain Words will make them defined, or make their meaning obvious. Create a definition!
• “Means” is restrictive and conclusive, while “Includes” is expansive and open-ended.

Contract Drafting Tips
10 Drafting Tips
4. Express one idea at a time.
• Look at how legislation is drafted:
Drafting Legal Documents
1. (1) For the purposes of this section, “drafter” means a person preparing a legal document, including a contract or a bylaw.
(2) A drafter must always strive for clarity in a legal document.
(3) Without limiting subsection (1), a drafter must do the following when drafting or preparing a legal document:
(a) use one sentence to express one idea;
(b) take advantage of format to separate ideas; and
(c) express ideas as succinctly as is possible.

Contract Drafting Tips
10 Drafting Tips
5. Use plain language.
• Avoid antiquated words and legalese whenever possible. For example, say “in this Agreement” or “in this section” rather than “herein”, which could mean either.
• The “Owner” or the “Regional District” is much easier to remember and understand (not to mention read) than the “Party of the First Part” and the “Party of Second
Part”.

Contract Drafting Tips
10 Drafting Tips
6. Use negative and positive language effectively.
• “The Land shall be used for the purpose of…” is positive, and doesn’t necessarily preclude other uses in addition to the one specified.
• “The Land shall not be used for any purpose except for the purpose of…” is negative, and does preclude other uses.
• Think carefully about whether you are requiring something to be done, or prohibiting something from being done, and draft accordingly!

Contract Drafting Tips
10 Drafting Tips
7. Make appropriate use of mandatory vs. permissive
language.
• Decide whether you are requiring something or permitting something.
• If you are requiring something, use mandatory language such as “shall”, “must”, or “will”.
• If you are permitting something, use permissive language such as “may”.
• Avoid using “can”, because the issue is legality, not ability.

Contract Drafting Tips
10 Drafting Tips
8. Remember the four “W’s” (and “H” too).
• Think about how many of the questions each provision of your bylaw or contract needs to answer: “Who, what, where, when, and how?”
• Most often, you will want to address each of the four “W’s” at a minimum, and if it matters, you will want to address the “H” as well.
• The oftneglected, fifth “W” – “Why” – is not typically addressed in the body of legal documents. It can be inferred from the context, or is sometimes explained in the recital clauses.

Contract Drafting Tips
10 Drafting Tips
9. Precedents can be your best friend and your worst
nightmare.
• Read your precedent carefully – one size rarely, if ever fits all.
• Pay attention to details – check all section references, names of parties, dates, etc., as these can easily be missed when “recycling” an old document.
• Context matters – a situation may appear superficially the same as a previous one, but look at every situation and every document on its own terms.

Contract Drafting Tips
10 Drafting Tips
10. Revise, revise, revise!
• Use the first draft to get your ideas onto paper, without worrying about getting the language “just right”
(expecting perfection from the start is a classic recipe for procrastination).
• Always plan for at least one revision.
• Have someone else review and comment, if possible.
• Whenever possible, leave some time between drafting and revision – you’ll be amazed at the things you’ll catch with fresh eyes.

Contract Law 101
• Questions?