CONTRACTS FALL 2012
PROFESSOR MARY ANNE WALDRON, Q.C.
Table of Contents
Legal remedies for breach of contract .................................................................................................................................... 4
Damages.............................................................................................................................................................................. 4
Wertheim v. Chicoutimi Pulp CB 27 ................................................................................................................................ 4
Hawkins v. McGee CB 36 “I promise a 100% good hand!” ............................................................................................. 4
What issues might complicate damage awards? ................................................................................................................ 4
Damages in Contract v. Damages in Tort ........................................................................................................................ 4
Specific Performance .......................................................................................................................................................... 5
Falcke v. Gray CB 121 “I want those ugly china vases you promised me!” .................................................................... 5
Warner Bros. v. Nelson CB 135 “Betty Davis doesn’t want to act for you anymore!” ................................................... 5
Offer ........................................................................................................................................................................................ 6
What Is An Offer?................................................................................................................................................................ 6
Denton v. Great Northern Railway CB 174 “You advertised a train, there is NO train!” ................................................ 6
Johnston Bros v. Rogers CB 177 “You could buy some flour from us” ........................................................................... 6
Lefkowitz v. Great Minneapolis Surplus Store CB 181 “Fur coats are only for ladies” ................................................... 6
Pharmaceutical Society v. Boots CB 183 “Do you have to keep medicine behind a counter?” ..................................... 6
Dickinson v. Dodds CB 192 “Rumor has it, you’re going to sell that land to Allan now!” .............................................. 7
Acceptance .............................................................................................................................................................................. 8
How Acceptance Happens .................................................................................................................................................. 8
Manchester Diocesan Council CB 189 “Judge is frustrated with the assumption of time limits” .................................. 8
Larkin v. Gardiner CB 191 “But I told my agent! That should count, right?” .................................................................. 8
Eliason v. Henshaw CB 199 “Sent acceptance for flour to wrong place via wrong mode” ............................................ 8
Acceptance or Counter-Offer? ............................................................................................................................................ 8
Notes CB 200 ................................................................................................................................................................... 8
Butler Machine Tool Co. V. Ex-Cell-O Corp. CB 201 “Battle of Forms” ........................................................................... 8
Tenders ............................................................................................................................................................................... 9
Tendering Process ........................................................................................................................................................... 9
MJB Enterprises v. Defence Construction CB 209 “but they didn’t give you a fixed price!” .......................................... 9
Formalization and Certainty.................................................................................................................................................. 10
Cassidy Thomson Fall 2012
Filling in the Gaps .............................................................................................................................................................. 10
May and Butcher Limited v. The King CB 219 “You can buy this tentage” ................................................................... 10
Hillas v. Arcos CB 222 “Buying some Russian Trees” .................................................................................................... 10
Foley v. Classique Coaches CB 223 “I’ll sell you this land if you buy your gas from me” ............................................. 10
Empress Towers v. Bank of Nova Scotia CB 230 “I want $15,000” or you are kicked out!” ......................................... 11
Correspondence .................................................................................................................................................................... 12
Acceptance ........................................................................................................................................................................ 12
Henthorn v. Fraser CB 240 “Mailed acceptance before received withdrawal” ............................................................ 12
Withdrawal of Offer .......................................................................................................................................................... 12
Byrne v. Leon Van Tienhoven CB 242 “doing business overseas before telephones… ugh” ........................................ 12
Note from Pollock and Restatement excerpt CB 244 ................................................................................................... 12
Exceptions ......................................................................................................................................................................... 12
Howell Securities v. Hughes CB 244 “the letter that never arrived” ............................................................................ 12
Electronic Communication ................................................................................................................................................ 13
Eastern Power v. Azienda CB 248 ................................................................................................................................. 13
Electronic Commerce Act CB 251.................................................................................................................................. 13
Consideration ........................................................................................................................................................................ 14
Consideration Provides: ................................................................................................................................................ 14
Gifts ............................................................................................................................................................................... 14
Contract of Agency ........................................................................................................................................................ 14
Rescission: ..................................................................................................................................................................... 14
What is consideration? ..................................................................................................................................................... 15
White v. Bluett CB 255 “You don’t have to pay me back if you shut up, son” ............................................................. 15
Hamer v. Sidway CB 257 “Nephew, stop those shenanigans and I’ll give you $5000”................................................. 15
Thomas v. Thomas CB 258 “Oh I forgot to give my wife something in the will…” ....................................................... 15
Explicit vs. Implicit Consideration ..................................................................................................................................... 15
Tobias v. Dick CB 263 “I have exclusive right to sell your Dick Crusher” ...................................................................... 15
Wood v. Lucy, Lady Duff-Gordon CB 264 “Brand some fashion in my name”.............................................................. 15
Pre-Existing Legal Duties ................................................................................................................................................... 16
Harris v. Watson CB 266 “The ship is in danger! Please do this extra work to save it, I’ll pay!” .................................. 16
Stilk v. Myrick CB 266 “I will give you the deserters wages if you keep working” ........................................................ 16
New Zealand Shipping ................................................................................................................................................... 16
Gilbert Steel v. University Construction CB 271 “The price of steel went up! Sure we’ll pay that… not” .................... 16
Williams v. Roffey CB 274 ENGLAND 1991 “Oops, I didn’t charge enough for this job, now I can’t finish”................. 17
Cassidy Thomson Fall 2012
Greater Fredericton Airport Authority v. NAV CB 283 “We aren’t paying for your new equipment” ......................... 17
River Wind Ventures Ltd. v. British Columbia CB 282 ................................................................................................... 17
Money as consideration for Money .................................................................................................................................. 17
Foakes v. Beer CB 283 “Mrs. Beer has legal judgement against Dr. Foakes, but she lets him pay less at first” .......... 17
Mercantile Law Amendment Act CB 287 (see also, Law and Equity Act, RSBC 1996, c. 253, s. 46) ............................. 17
Legal compromise as Consideration ................................................................................................................................. 18
Fairgrief v. Ellis CB 291 “Come live with me and I’ll give you my house… oh wait, my bitch wife is back” .................. 18
Pledges and Donations...................................................................................................................................................... 18
Dalhousie College v. Boutilier Estate CB 292 “But he promised us $5000!” ................................................................ 18
Intention................................................................................................................................................................................ 18
Contracts between family relations .................................................................................................................................. 18
Jones v. Padavatton CB 301 “Hey daughter, leave Washington and study for the bar in England, I’ll pay” ................ 18
Contracts between business relations .............................................................................................................................. 18
Rose v. J.R. Crompton CB 304 “Let’s put this into our K that it isn’t actually a K in any court” ................................... 18
Cassidy Thomson Fall 2012
Legal remedies for breach of contract
Damages
Two broad classes
1) minor—timing slightly off or inconviences—remedy is always DAMAGES.
2) Major—cancelling early or broken in a serious way—remedy is usually damages, an unusual remedy is for specific
performance of the contract to be order, very rarely recission is ordered which means to put the parties back in original
positions if the K never existed.
Wertheim v. Chicoutimi Pulp CB 27
Issue
Ratio
How to determine the amount of The plaintiff should be
damages to award?
compensated so that they are in
the same position as if the
contract had been performed
Hawkins v. McGee CB 36 “I promise a 100% good hand!”
Issue
Ratio
How to determine the amount of The plaintiff should be
Damages
compensated so that they are in
the same position as if the
contract had been performed
Notes
Notes
Losses incurred because of the
breach of K not considered: i.e.
pain and suffering b/c of hurt
hand—JUST put them in the
position had the K been
performed, not extra damages
What issues might complicate damage awards?
Limiting Factors: Plaintiff needs to attempt to mitigate their loses if it is possible to do so. Remoteness: things not
reasonably anticipated ex. The loss of a kingdom b/c the shoe fell off a horse is not a ‘fair’ circumstance in which to
attribute damages to the horse shoe contract breaker.
Intangible Damages: Normally psychological pain and suffering not considered, UNLESS the K has an element of
psychological benefit to it, then you might be able to recover for emotional distress.
Punitive Damages: If there is no economic loss, or in addition to damages for economic loss, rarely the court will place
punitive damages to punish the K breaker
Damages in Contract v. Damages in Tort
Damages in Contract are all about remedying economic loss. Torts will give out remedies for pain and suffering, but not
contract damages
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Specific Performance
Originates in the court of equity and was historically reserved for transactions involving land. In order to sue for specific
performance you have to be able to show that money can’t reasonably compensate you. Discretionary remedy, which
means the plaintiff MUST 1) act promptly 2) Not be guilty of sharp practices or bad dealing
Falcke v. Gray CB 121 “I want those ugly china vases you promised me!”
Issue
Ratio
Notes
Can specific performance be
If an article in a K is of unique
Must be impossible to find
sought for the sale of chattels,
character the court can order SP elsewhere
rather than the historic realto enforce the K to sell it.
-Court will not prejudice
property?
innocent 3rd parties (i.e. if
already sold to someone else=No
SP)
-SP not ordered in this case b/c
already sold to 3rd party
Warner Bros. v. Nelson CB 135 “Betty Davis doesn’t want to act for you anymore!”
Issue
Ratio
Notes
Can the court enforce specific
The court will not enforce a
Negative covenants cannot be
performance for personal service positive covenant for personal
enforced if doing so leaves the
(i.e. make you do a thing you
service b/c it is tantamount to
individual with nothing else to
said you would do in a K)
indentured servitude, it is too
do but starve or perform the
difficult to enforce, and is too
personal service.
detailed requiring too much
supervision.
Negative covenants can be
enforced
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Offer
Offer: What constitutes an offer? An important factor to consider is how the ptf relied upon the disputed offer. Would a
reasonable person assume that this was de facto an offer? An offer must contain all the terms necessary for the contract
to be performed. Certain terms can be implied if there is a usual industry standard for something like quantity etc. An
offer can be withdrawn or changed any time prior to acceptance but this must be communicated to the other party.
What Is An Offer?
Denton v. Great Northern Railway CB 174 “You advertised a train, there is NO train!”
Issue
Ratio
Notes
Does a train timetable constitute A train time table constitutes an -The degree of certainty by Ptf
a contract?
offer which is accepted when a
important, how much they relied
person arrives to take the train.
upon the “offer”
-Policy issue: wanted railways to
be responsible to the public
Johnston Bros v. Rogers CB 177 “You could buy some flour from us”
Issue
Ratio
Notes
Is a price quote an offer or an
A price quote is merely an
The amount of reliance placed
invitation to treat? What is the
invitation to treat because there on a disputed ‘offer’ is
difference btwn an offer and an
are still many details of the K to
important: what would the
invitation to treat?
determine, such as quantity and reasonable expectation be. Also
timing.
the wording of the disputed
“offer”—is it clear that it is
invitation to treat by wording?
Lefkowitz v. Great Minneapolis Surplus Store CB 181 “Fur coats are only for ladies”
Issue
Ratio
Notes
What is an offer versus an
An offer must contain all the
-Anytime prior to acceptance the
invitation to treat?
terms necessary for the contract offer can be changed or
Specific: Can an advertisement
to be performed to be
withdrawn
be an offer?
considered an offer. If it doesn’t, - Unusual situation in which
then it is just an invitation to
court held ad was offer- b/c it
treat
was so specific.
-Legislation provides consumer
protection for ads now.
Pharmaceutical Society v. Boots CB 183 “Do you have to keep medicine behind a counter?”
Issue
Ratio
Notes
When does the contract of sale
Displaying items on a shelf is
Illustrates that the courts care
in a self-serve store take place?
merely an invitation to treat. The about the consequences of
I.e. what is the offer?
offer occurs when the customer
declaring something a contract.
takes the item to the till for
They look at the practicalities
purchase and acceptance is the
that result from declaring
cashier/clerk ringing the item
something an offer.
through the till and taking the $.
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Dickinson v. Dodds CB 192 “Rumor has it, you’re going to sell that land to Allan now!”
Issue
Ratio
Notes
Can an offer be withdrawn?
A firm offer is not enforceable,
- You can enforce a firm offer it
until acceptance the offeror is as is placed under seal (from the
free as the offeree to change
old writ of covenant)
their mind and withdraw or alter
the offer.
The offeror must communicate a
change in the offer or a
withdrawal to the offeree
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Acceptance
How Acceptance Happens
Manchester Diocesan Council CB 189 “Judge is frustrated with the assumption of time limits”
Issue
Ratio
Notes
Why does the law impose time
If acceptance exceeds a
The judge preferred option b b/c
limits on acceptance when not
reasonable amount of time the K that seemed more easy to
imposed in the offer?
is not valid b/c a)the offer is
determine objectively and be fair
considered withdrawn or b) the
to both parties
offer is seen as refused
Larkin v. Gardiner CB 191 “But I told my agent! That should count, right?”
Issue
Ratio
Notes
What constitutes acceptance?
When the power of acceptance
OR
is given to a person, that person
Does acceptance need to be
has a duty to communicate their
communicated to the offeror?
acceptance to the offeror. Until
communication happens, no
acceptance is made.
Eliason v. Henshaw CB 199 “Sent acceptance for flour to wrong place via wrong mode”
Issue
Ratio
Notes
How Can the offeree accept?
It is in the power of the offeror
-Term of acceptance can’t be
to dictate the terms of
SILENCE. But, offeree can do an
acceptance, if they are not met
action to show they accept
there is no K
despite the faulty terms, there
can still be a K.
-Statute: unsolicited goods can
be used or kept. They can’t make
you pay.
Acceptance or Counter-Offer?
Notes CB 200
 Not always easy to tell if counter-offer has been made b/c the terms might not be significantly different. If they
aren’t different, the 1st offer dictates the terms—“material difference” required to be called counter-offer
Butler Machine Tool Co. V. Ex-Cell-O Corp. CB 201 “Battle of Forms”
Issue
Ratio
Notes
What is a counter offer and what A counter-offer is essentially a
Use classical analysis of offer and
is merely attempting to add
rejection of the original offer, so acceptance to determine what
conditions?
must have a significant
the K is. K is bound by terms of
Can you have a clause that says
difference between it and offer.
offer. Can’t just do what the
counter offers don’t count?
Valid counter offer contains the
court thinks the party’s meant.
NEW terms that the agreement
is bound by and original offer
terms are thrown out.
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Tenders
UCC and notes CB 204
Tendering Process
 Can’t be subject to normal rules of offer and acceptance, b/c offerors who are calling for tenders need the
bidders to keep their acceptance on the table and take contract if chosen
 To remedy problem Courts construct a K out of the call for tenders (becomes offer) and the bids(becomes
acceptance)
 The bidders agree to keep bids on table and to accept K if awarded
 The consideration given in exchange by the offeror is to promise to treat all bids fairly.
 This contract is reffered to as contract A, while the contract that is awarded for the actual project (i.e. building a
school) is referred to as contract B
 This leads many people to sue for breach of K A when they are not awarded K B
 Leads to more expenses which could be lessened by legislation but there isn’t any
MJB Enterprises v. Defence Construction CB 209 “but they didn’t give you a fixed price!”
Issue
Ratio
Notes
Can a call for tenders choose a
A privilege clause cannot extend You could negate terms of K A in
non-compliant bid to award K B
to cover non-compliant bids b/c
order to choose a non-compliant
to?
this is a breach of K A—isn’t
bid if you stated that intention
treating bids fairly to choose a
from the outset, but then no K A
non-compliant one
would be formed at all b/c there
The only way to have a firm
would be no consideration and
offer is to construct a contract
bidders wouldn’t have to leave
out of the offer and agreement
bids on table.
to negotiate itself
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Formalization and Certainty





Many details including price need to be determined for a K to be formed
Few K can cover all the details, many are verbal etc.
Bad public policy to declare all K with any amount of uncertainty void b/c then there would never be any Ks.
Courts have a whole range of tools to attempt to fill in gaps of Ks if it appears parties meant to enter into a K.
It is difficult to determine where to draw the line btwn being able to fill in gaps and the court simply writing a K
which they will not do. The line btwn enforceability and void for uncertainty is tricky
Filling in the Gaps
May and Butcher Limited v. The King CB 219 “You can buy this tentage”
Issue
Ratio
Notes
Is an agreement to agree a
The court will not create a K
-Couldn’t rely on arbitration
contract? NO
between the parties. Must be
clause b/c K didn’t give the
enough material to work with in arbitrator the power to decide
the original K in order for the
the price, just was a method of
court to “fill gaps”
resolving a disagreement
-B/c disagreement couldn’t be
resolved, impossible to have a K
b/c only way price could be
decided was by agreement
Hillas v. Arcos CB 222 “Buying some Russian Trees”
Issue
Ratio
Is an agreement to agree a
Ongoing relationships/contracts
contract? YES
require a certain amount of
flexibility for them to work,
therefore a court should use
tools such as examining history
of past details or industry
standards to fills in gaps when a
disagreement about an
uncertain detail arises
Notes
-Court wanted to limit the rule
from May and Butcher.
-Distinguished b/c parties had
operated with the uncertain
contract for 1 year before
disagreement occurred.
Foley v. Classique Coaches CB 223 “I’ll sell you this land if you buy your gas from me”
Issue
Ratio
Notes
Is an agreement to agree a
The courts may use past
-Distinguished from May and
contract? YES
practices to ‘fill gaps’ in
Butcher b/c parties had operated
contracts to make them work
K for 3 years w no problem,
rather than voiding them.
which means party couldn’t legit
believe there was no K
-Also this K was a condition of a
larger K to sell some land, so
couldn’t just void this K w/o
voiding the larger K
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Empress Towers v. Bank of Nova Scotia CB 230 “I want $15,000” or you are kicked out!”
Issue
Ratio
Notes
Where is the line between gap
Courts may imply terms into a K
2 Tests for when courts will
filling and no contract for lack of to resolve internal
imply terms
detail?
inconsistanccy OR to make the K 1) Efficious Bystander- what
work
would an objective third party
say about the intention of the K
2) Business Efficacy- Did parties
act as if legal relationship was
intended-imply terms to make
legal relationship work
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Correspondence
Acceptance
Henthorn v. Fraser CB 240 “Mailed acceptance before received withdrawal”
Issue
Ratio
Notes
Is acceptance complete when it
Acceptance is complete as soon
-b/c risk of acceptance by mail is
is posted or when it is received? as it is posted if both parties
born by offeror, b/c they have
would reasonably expect the
power to set terms of
mail to be used to give
acceptance and could say no
acceptance
mail if they wanted.
-Reasonably expect mail to be
used: live far away, no other
options, offer sent by mail etc.
Withdrawal of Offer
Byrne v. Leon Van Tienhoven CB 242 “doing business overseas before telephones… ugh”
Issue
Ratio
Notes
Is withdrawal of an offer official
Withdrawal of an offer by mail is
when it has been posted, or
not considered withdrawn until
when it has been received?
the offeree receives it
Note from Pollock and Restatement excerpt CB 244
 Can only consider offer revoked if it is communicated to other party
 Unfair otherwise b/c offeree may act on the basis that they have a K
Exceptions
Howell Securities v. Hughes CB 244 “the letter that never arrived”
 An “option K” is when an offer is open for a fixed period of time. Because this is a great benefit to the person
who has power of acceptance, the courts interpret option clauses very strictly.
Issue
Is there still a K if the letter never
arrives, b/c it was formed when
it was mailed?
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Ratio
Rule of acceptance upon posting
does NOT apply if express terms
of offer specify acceptance must
reach the offeror.
Notes
This is the 2nd qualification for
post box rule:
1. Mail must be mode
2. Can’t if terms indicate
otherwise
Electronic Communication
Eastern Power v. Azienda CB 248
Issue
Ratio
Who has jurisdiction? Was the K Normally where acceptance is
formed where acceptance
received is the jurisdiction of the
received or where sent?
K. However, this is opposite for
letters that are mailed, where it
is where the acceptance is sent.
Should acceptance by fax fall
The post box rule is not applied
under the post box rule?
to instantaneous forms of
communication.
Notes
Electronic Commerce Act CB 251
 Received when capable of being retrieved (if addressee uses that system for that type of communication, if
they DON’T then it’s when the addressee becomes aware of it)
 Acceptance  It’s ok to click on an icon to accept
 Errors with online agents Escape clause if there is a mistake with an automated agent
 Sent  considered ‘sent’ when it leaves your system
 Further clarification of location of things sent/received.
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Consideration








Legal requirement of a K
Something given in exchange
Promisor = person doing the thing you want to enforce Promisee= recipient of the thing you want to enforce
Consideration must move from the promisee to the promisor
Wholly executory K  there are just promises given in consideration, no one has acted
Executed K  when something has been carried out in consideration (whole or part)
Promise for a promise counts as consideration, although this is theoretically tricky. For policy reasons that we
want people to be able to rely on those promises.
Generally: consideration is a detriment to the promisee (at the request of the promisor) OR is a benefit to the
promisor.
Consideration Provides:
1. Evidence that a K was made
2. Evidence that the parties intended a legal relationship
3. Distinguishes transaction as a K rather than a gift
4. Protects Reliance (even for wholly executory Ks)
**See if the contested consideration fulfills any of these functions to determine if it is consideration***
Gifts
 A promise to make a gift is NOT enforceable. A gift must actually be transferred, completed, to be consider
giftee the owner of the gift.
 Court will protect reliance on K’s over reliance on uncompleted gifts.
Contract of Agency
 Party A contracts party B to do something: i.e. sell property or sign contracts on their behalf
 Party A implicitly receives consideration of party B’s “reasonable efforts”
 Agent doesn’t buy the property, if they fail to sell it is still party As.
Rescission:
 Both parties promise to release the other from the original K (therefore adequate consideration from both—
promise for a promise) which essentially creates a new K ending the original K.
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What is consideration?
White v. Bluett CB 255 “You don’t have to pay me back if you shut up, son”
Issue
Ratio
Notes
Is a promise “not to complain”
‘giving up’ something for
Also policy: don’t want to say
consideration?
consideration is only valid if the
you can annoy someone until
promisee has the legal right to
they agree to pay you $ for you
do that thing.
to stop. Hard to prove if son kept
his bargain anyway.
Son doesn’t have legal right to
complain b/c father not legally
required to treat all his children
the same.
Hamer v. Sidway CB 257 “Nephew, stop those shenanigans and I’ll give you $5000”
Issue
Ratio
Notes
Is a promise to “not smoke,
A promise to refrain from doing
distinguished from white b/c
drink, play cards, swear until 21” something that you have legal
very specific transfer
consideration?
right to do is good consideration. requirements, witnesses,
Detriment to Nephew AT
evidence in writing
REQUEST of the Uncle
Thomas v. Thomas CB 258 “Oh I forgot to give my wife something in the will…”
Issue
Ratio
Notes
Consideration, or burdens
Consideration must flow from
Here the £1 rent was paid to the
incidental to a gift?
promisee to promisor and be
executor not the landlord,
something more or different
therefore wasn’t just an incident
Ex. someone gives you a horse
than they would necessarily have of a gift of the house but rather
and you have to feed it, feeding
to do if the item was a gift.
was consideration.
it is incident to the gift.
Explicit vs. Implicit Consideration
Tobias v. Dick CB 263 “I have exclusive right to sell your Dick Crusher”
Issue
Ratio
Is a contract of exclusive right to sell
If the K does not specify amounts or
void for lack of consideration?
quotas of sale there is no K b/c there
is no consideration. Instead it should
be seen as an “umbrella offer” and
acceptance creates a mini contract
each time the one person buys the
product from the other.
Notes
Not an Agency K because Tobias was
buying the product from Dick,
therefore not acting as his agent and
couldn’t find implicit consideration
that Tobias would “do his best” to sell.
Wood v. Lucy, Lady Duff-Gordon CB 264 “Brand some fashion in my name”
Issue
Ratio
Notes
Can consideration be implicit in a
Consideration can be implicitly
Different than Tobias b/c Wood
contract of exclusive right to sell?
understood as “reasonable effort” if
wasn’t buying, he was providing
the K is an agency K.
detailed accounts, K was quite
detailedlooks like joint enterprise
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Pre-Existing Legal Duties
Harris v. Watson CB 266 “The ship is in danger! Please do this extra work to save it, I’ll pay!”
Issue
Ratio
Notes
Is a variation of consideration
Extra consideration offered for what
Policy decisiondidn’t want to fuck
enforceable because continuing to do the party already had a pre-existing
with sea faring business in England
your contractual obligations adequate duty to do is not enforceable.
consideration?
Stilk v. Myrick CB 266 “I will give you the deserters wages if you keep working”
Issue
Ratio
Notes
Is continuing to do your contractual
It is not adequate consideration to
Decision based on:
obligations adequate consideration in continue to do your pre-existing legal Doctrine of Consideration
return for a variation of original K?
obligations. Consideration must be
something new, something that isn’t
already required.
New Zealand Shipping
Issue
Can a pre-existing duty to party A be
valid consideration to party C?
Ratio
Notes
It is valid consideration to promise to
Exception to Pre-existing duty rule
do a pre-existing legal duty from one K
to a 3rd party, because the 3rd party
receives the consideration of a right of
direct cause to enforce the K that
otherwise they wouldn’t be able to.
Gilbert Steel v. University Construction CB 271 “The price of steel went up! Sure we’ll pay that… not”
Issue
Ratio
Notes
Are contractual variations, which are
Contractual variations fail for want of
Policy problem for doing business,
practical, enforceable?
consideration. Consideration cannot
people don’t check with their lawyers
be vague or merely an incident of the every time they need to change
variation (i.e. natural consequence).
something in a K.
The only way to change the
consideration of one party, is to
mutually rescind the original K and
make a new K with the new (i.e. price)
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Williams v. Roffey CB 274 ENGLAND 1991 “Oops, I didn’t charge enough for this job, now I can’t finish”
Issue
Ratio
Notes
Can the rule of pre-existing duties be
Yes if ALL these conditions are met:
Still developing area, yet to be seen if
relaxed in some circumstances?
1. Pre-existing K for A to do or supply this will be applied in Canada or
something for B
perhaps in altered version.
2. B has significant doubt that A will
or will be able to complete K
3. B offers A more $ (consideration)
to complete on time *Without any
economic duress
4. B receives the practical benefit of
having K done on time, even if this
does not come directly from B.
Then performing the pre-exisiting
duty can be good consideration.
Greater Fredericton Airport Authority v. NAV CB 283 “We aren’t paying for your new equipment”
Issue
Ratio
Notes
Enforceability of contract variation.
“post-contractual modification,
-However misses the part from
Does it apply the Williams v. Roffey
unsupported by consideration my be
William v. Roffey which requires a
test?
enforce able so as it” (is made in a
“practical benefit” so doesn’t really
serious way with intention for legally
apply it correctly even though it
enforceable promise) “is established
purports to.
that the variation was not procured
under economic duress”
River Wind Ventures Ltd. v. British Columbia CB 282
Issue
Ratio
Did greater fredricton airport apply
No, it was missing the “practical
the Williams v. Roffey test?
benefit”. This is required for contract
variation with no consideration
Notes
Money as consideration for Money
Foakes v. Beer CB 283 “Mrs. Beer has legal judgement against Dr. Foakes, but she lets him pay less at first”
Issue
Ratio
Notes
If a debtor makes a promise to receive Payment of a lesser sum cannot be
-Because if I give you 10$ for 20$ what
a lesser payment than they are legally satisfaction for a greater
is actually happening is you are giving
owed, is this promise enforceable?
me a gift of $10.
Where is the consideration?
Mercantile Law Amendment Act CB 287 (see also, Law and Equity Act, RSBC 1996, c. 253, s. 46)
 English law in response to Foakes v. Beer but have similar law in BC
 If creditor says part repayment in a certain way is ok, then doing so extinguishes the whole debt
 However if promise is made and not yet acted upon it is not enforceable
Cassidy Thomson Fall 2012
Legal compromise as Consideration
Fairgrief v. Ellis CB 291 “Come live with me and I’ll give you my house… oh wait, my bitch wife is back”
Issue
Ratio
Notes
Is giving up a right to legal action,
If you have genuine belief that you
No legal claim here b/c contract for
which doesn’t actually exist,
have a legal claim, it is good
sale of land was not in writing—old
consideration?
consideration to promise to give it up. statute of frauds rule.
Pledges and Donations
Dalhousie College v. Boutilier Estate CB 292 “But he promised us $5000!”
Issue
Ratio
Notes
Is a pledge to donate an enforceable
Pledges are gifts and not contracts for UNLESS project embarked upon with
K? Where is the consideration?
lack of consideration on the part of
the donation is at the request of the
the charity
donator or subject to their conditions
(like naming the building after them)
Intention
Contracts between family relations
Presume that agreements between family are not legally binding contracts
Jones v. Padavatton CB 301 “Hey daughter, leave Washington and study for the bar in England, I’ll pay”
Issue
Ratio
Notes
Can the presumption against family
Yes, if intention to the contrary is
Factors: specificity, significan
relation agreements being legally
shown given all the circumstances
detriment in reliance, evidence in
binding be rebutted?
writing, degree of flexibility
Contracts between business relations
Presume that agreements between business relations are meant to be legally binding
Rose v. J.R. Crompton CB 304 “Let’s put this into our K that it isn’t actually a K in any court”
Issue
Ratio
Notes
Can the presumption that business
Yes, if express intention is written into Rare, but particularly used in interagreements are legally binding be
the agreement to the contrary.
institutional agreements (i.e.
rebutted?
universities)
Cassidy Thomson Fall 2012