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Introduction and Expectations

P. Atiyah, “The Classical Law of Contract”

A. Put contract in its context (class notes):

economic - in our case capitalist, not premodern, feudal etc.
social - North America, who is involved
moral - values we want to protect e.g. contracting to kill people, surrogate parents
philosophical - the values that we as a society promote
political - important for state to intervene or not, e.g. cost of pharmaceuticals

B. 2 major aspects of contracts (class notes):

1) Substantive rules of contract law.
2) How contracts are made.

C. 5 models of critical thinking (class notes):

1) voluntarism - voluntary/free agreement, eg. want to buy gum, person wants to sell
2) economic analysis - maximize wealth, facilitate individual efficiency
3) state interventionism - regulate exchange relations, maximize wealth of the community
4) regulation of greed - regulate greedy people
5) ideology - reflect normative values, contested terrain of political struggle, social persp.

D. The Classical Law of Contract

•dealing with Britain, originator of common law, late 18th cent.
2 major ideals:
1) philosophical idea of natural law - natural rights to do what one wants
2) economic idea of laissez faire - hands-off role of state

•led to devpt. of 2 founding principles

1) freedom of contract
2) sanctity of contract

Defns:
classical model - that of 18th and 19th centuries, as society changed, law changed
equity - contract could be annulled if people contracting hadn’t been treated properly
based on paternalism
paternalism - some people know better than others

Freedom of contract based on 2 principles:

1) mutual agreement - voluntarism
-not a meeting of minds, lead reasonable people to assume they agreed, so judge makes
decision
-classical model hits a hurdle
2) free choice - unhampered by external control such as govt. or legis. interference

Emphasis on agreement and intention so great, 2 devpts:

1) reluctance to impose involuntary obligations
2) obligations were treated as contractual
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-judges attempted to find ‘implied assent’, court teases out a contract where parties
wanted a contract

2 types of obligations:
1) voluntary - contracts, freely chosen, now role decreasing
2) involuntary - torts, societally imposed, now role increasing

Elements of freedom of choice:

1) whether you want to contract - enter into contract
-innkeeper and common carrier only exceptions, but don’t have to give charity
-common carrier transported goods, societal needs trumped private rights
2) with whom?
3) for what?
-courts could declare contract ineffective because contrary to public policy
e.g. Truck Act - people paid in cash, to avoid company town probs.
Gaming Act - bets not enforced as contract
N.B. Gaming public harm in 1800’s but public good now that profits go to govt.

Problems with mutual assent:

1) was there really agreement?
2) laws became v. complex- became false that rules based on parties’ intentions
e.g. frustration - contract terminated if unable to fulfill due to some extraordinary circ.
-wasn’t clear that they were giving effect to parties’ intentions
3) standardization of the law-real intention less imp., efficiency tool, standard clauses
e.g. leases and Sale of Goods Act

Weaknesses with freedom of choice doctrine:

1) little account of socioeconomic pressures - force person into contract
e.g. monopolies on water and gas, no choice, no competition
2) little attention to inequalities bet. contracting parties
e.g. employer and employee, small businessman and railway

Sanctity of Contract: (religious experience)

•limits on sanctity if contract entered into under fraud, duress, or if contracts violated
crim. law
•violations of sanctity such as Truck Acts and Gaming Acts
•contracts respected morally and strictly enforced legally in 19th cent.

Historical Overview I

F. Kessler, G. Gilmore, A. Kronman, “Contract as a Principle of Order”

A. Introduction
•performs a normative analysis of underlying political ideas in U.S. (no such analysis for Canada)
3 laws of nature for preservation of society:
1) stability of possession
2) transference of consent
3) performance of promises
•contracts reflects value system of culture embedded in
•tension between indiv. freedom and social control
<-------------------------------------------------------------------------------------------------------------------------->
transactions based on free bargain and genuine agreement compulsory adhesive contracts
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indiv. freedom social control

•moving towards greater social control, legal machinery required by ec. system

Features/Assumptions about contracts:

1) individual is rational wealth maximizer
2) state plays a minimal role
3) contract law is facilitative, people live up to obligations
•division of labour led to expectations of certain products, needed to ensure promises
kept

•generates efficiency, certainty, predictability

•freedom of contract as to form and content
•contractual liability is based on volition, consent freely given
•f.o.c. not just rooted in expediency + efficiency, reflected deep-seated political commitments
•trickle-down theory, person serving own interests was also serving the community
•monopolies, people too greedy others move in, provide goods at lower price

F.o.c. and role in devpt. of free-market capitalism:

1) hands-off attitude led to release of human energy
2) opposition to compulsory contracts
3) theory of obligation
4) rejection of equitable approaches to consideration and contract damages
5) caveat emptor, buyer beware, could avoid bad contracts by shopping around
6) idea that courts don’t make contracts for the parties

•self-interest, commutative (exchange) not distributive (distribution) justice, courts don’t strike
down bad deals
•contract law always maintained a degree of indep. from market relns., judges + lawyers did little
to slow the devpt. of market and antifraternal ethic

Why complete f.o.c. was a myth:

1) strike down contracts to commit crimes or torts etc., public rights trumped contractual rights
2) strike down contracts in restraint of trade, rights of consumer trump
3) increased resp. of seller for quality of goods (warranties)
4) law of equity
5) consideration (principle of equity) for social control, looks at fairness of bargain, what given in
exchange

Doubts about f.o.c.:

1) unequal p. distribution leads to f.o.c. as a one-sided privilege
2) f.o.c. enables authoritarian legislation, but looks egalitarian, e.g. You’re free to choose MacJobs

Attempts to limit f.o.c. challenged and deemed socially dangerous:

1) Antitrust laws - prevent monopolies, reinterpreted to help them
2) State statutes to protect weaker contracting party, e.g. minimum wages, max working hours

Pitney J. supporting f.o.c.:

•always inequalities in contracts, need to uphold since are result of f.o.c.
•don’t interfere in fund. h.r. of liberty to contract and property (14th amendment)
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Justice Holmes dissenting (should be max hours for work in bakeries):

•liberty to do as one likes without interfering with the liberty of others
•saying that if don’t legislate against tyranny and injustice then actually impinging on
people’s liberty to contract

Notion that freedom must be limited for its own preservation

•1934, free market led to monopolies and political strengthening of monopolies
•threatened collapse hence state had to intervene to limit freedoms
•political democracy has to be supplemented by ec. and social democracy

Social control of contract resulted in:

1) contract evolved into branches of specialized law
e.g. labor, securities, public utilities, consumer legislation
2) contracts viewed as flexible commitments
3) law of contracts covers small portion of actual contracts

Contracts evolving into new areas of study:

1) anachronistic concept, should be merged with obligations law
2) attend to diffs. between discrete (transactional) relns and continuing ones
3) more trusting, interfering contractual relns.

Still have shadows of classical contract law, f.o.c. growing in new areas:
1) bargain in good faith
2) disclosure statutes mandate few terms
3) faith in market forces
4) not much progress w/consumer regn.
5) self reliance still seen as imp.
6) planning element of contract has increased esp. in areas like marriage

Contract is still important:

•premises of contract reconstructed to deal w/stubborn realities
•contracts lends legitimacy to rules and relns.
•contract preserves integrity of parties and upholds authority derived from consent

Historical Overview II

Hugh Collins, “Two Ideals of Justice” The Law of Contract, 1986 or values
are important

A. Two ideals of justice:

•just market order encompassed in rigid set of rules called classical law of contract
•the governing ideal was not ‘freedom of contract’ but the ‘justice of exchange’ (j.o.e.)

Theory of legal resp. encompassed by j.o.e.:

a) individual responsibility - don’t see indiv. as rights but resp.
b) restrictive defn. of role of state -don’t examine fairness or social utility of contract

J.o.e. had 3 main principles:

1) liberty-deep faith in justice of wealth and power established by exchange relns.
2) equality instead of hierarchy
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3) reciprocity instead of exploitation -give sthing of value get sthing in return, reduce domination

Justice of j.o.e.:
•justice of market apparent because did not assign resources based on social status
•depends on success in trading e.g. job where wages earned vs. no remuneration, reciprocity

Now j.o.e. has lost moral force and explanatory power

•ideals of liberty, equality and reciprocity have disappeared replaced by communitarian ideals
1. Welfare state, loss of faith in j.o.e. (assuming no equality)
2. doesn’t describe reality, welfare state changed the rules of classical contract too much

Impact of devpt of communitarian ideals:

•devpt. of communitarian ideals was response to change in types of market reln.
•interdependent parties who deal over long period of time
e.g. buying car from dealer, dealer gets from manu. and arranges financing through
financial institution, dealer has no ec. exchange reln. w/either
•protection for people who rely on others, spider’s web
•no exchange of values, no explicit agreement, liability extends out in web
•reconstituted contract law, duty of care to prevent harm to others
•state acts to prevent indiv. from undue interference in rights and liberties
•notion of justice as fairness through fair market dealings

Minimal role assigned to state:

1) prevention of harm
2) compensation for damage
3) state doesn’t prescribe fair market relns., becoming more interventionist,

3 major criticisms of j.o.e. help explain justice as fairness:

1. oppressive nature of power relns. permitted
•ownership + knowledge become oppressive dominators
•can’t always convince people to bind themselves through contracts, but can use market
as inducement in form of wages + profits
e.g. people in Cape Breton work in mines because need income, dangerous

F.o.c. ideologically legitimized order of power in 2 ways:

a. f.o.c. implies absence of coercion, side-effect rights to domination were accepted
e.g. employer can mandate mandatory drug testing, surveillance cameras at work
b. suppresses questions about ownership of capital, so that can create oppressive bargain
for one side, can convert property into power thru contracts, no embarrassing questions
-eg. IBM or Ford can use threat of pulling out of contract for huge bargaining
leverage, subordinates the interests of the other companies

Use doctrines to prevent relns. of domination from developing

1) test of resp., fair conditions of trading
2) impose duties on stronger parties
3) regulatory bodies, like CRTC

2. unfairness of reciprocity
• trust people less to fend for themselves
•belief in fairness of dist. of wealth out of respect for people’s dignity
-e.g. minimum wage laws, state provides for minimum level of employment, paternalism
1) invalidation of unfair contracts
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2) remedies for breach of contract

3. estranged social relns.

•we created social and ec. relns. between antagonistic indivs. at expense of more imp. bonds
of solidarity
•new values of cooperation and accommodation, require concern for interests of others

justice of exchange justice as fairness

1) liberty paternalism
2) equality fairness
3) reciprocity cooperation

Modern law/quiet revolution:

•j.a.f., patterns of responsibility, indiv. dignity related to being able to satisfy wants in market (not
right to f.o.c.)
•market controlled to prevent abuses of power and take account of citizen’s interests, equality

A. A. Leff, Vicious intellectual parodies: Why values are important

Formalism
•unquestionable premises, leading to indisputable conclusions
•legal commentators + treatise writers found common threads + pulled them together into neat bag
•law as science, rule -> facts -> answer
•avoids normative questions, hands are tied

Realism
•look to way law actually functioned in society
•not consistency, but existential reality, operational logic, become empiricist, learn social facts
•no deductive system, have to look at premises, non-given starting points
•good premises lead to good effects, fall into good + evil
•can argue law, take resp. for decisions

Contemporary Perspectives
Realist analyses of contract law based on 4 perspectives
1) Law and economics
2) critical, good + evil
3) feminist
4) racial

Definitions of perspectives on contracts:

subjective - meeting of minds, value maximizing exchange
objective - words or conducts that satisfy impartial observer, prevent people from misleading
others

1) Posner: The economics of contract law (right wing)

Values:
1) people are rational wealth maximizers
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2) allocation of good or service + resources gravitate to most valuable uses

3) state should no t intervene to limit free choice

2 types of contracts:
1) instantaneous - e.g. buying a newspaper
2) ongoing-when time is long, contracts and contract law become important
-e.g. A promises to build house for B, contractual rights to minimize costs of production

3 Basic ec. functions of contract law:

1) sanction against reneging, expectation interest, fairness, reciprocity
-e.g. A can pocket B’s money w/out building the house
2) enforce parties’ agreed upon allocation of risk, standard provisions, increases efficiency,
certainty
3) standard set of allocation terms, reduce costs of exchange process, guard against recklessness
in marketplace, impose costs on careless behaviors in contracting process
-e.g. A promises B boat if he stops smoking, then A denies it. May want to enforce so
that A isn’t careless about maybe creating a contract that isn’t fulfilled

Does contract law actually reflect the 3 values (or is value ec. efficiency)?
1) competitive mech., contractors get around inefficient terms, only efficient terms survive
2) willingness of courts to accept the parties’ designations of laws to be used, competition bet.
jurisdictions, parties gravitate to where interests served best, e.g. Delaware
3) right to submit to private arbitrator-cts w inefficient rules lose out to tribunals w/ efficient
rules, parties decide who resolves

2) Feinman, “Critical approaches to common law” (left wing)

3 views of role of common law of contracts:

1) instrumentalist: big stick in hands of capitalists to beat workers
•contracts is way dominant class imposes + perpetuates capitalist ec on society
•as ec. needs of capitalist class changes, lackeys of capitalists change the rules
e.g. in 19th century hindered executory, speculative transaction
but mass economy required standardized transactions

2) functionalist: useful to the capitalists to solve their problems

• designed to resolve tensions amongst capitalist class, for their benefit, rejects pluralism
eg. contract law facilitates comm exchange, contracts as salvage operation, low cost debt
collection
•critically, contracts is how powerful parties discipline weak ones

3) legitimating ideology, f.o.c., caveat emptor

•conceal reality of ec. injustice, people believe in ideas, induce acceptance of values + institutions
that support s.q., “just the way it is, I surrender”
•think that inequality is because of individual stupidity, more accept ideology, more accept place
in world order

Why contract is not just a legitimating ideology:

1) this view assumes contract law has coherent principles
•but contracts lacks coherence, tons of contradictions
2) penetration, people don’t understand the basic principles of contracts
•but contract not product of conscious manip. by dom. group, not known to everyone
3) powerful fn. of contract law is to affirm legitimacy of existing order while denying its nature
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•law by judges restating basic facts of concrete social experience, byproduct of ec. norms
•privileged, don’t believe in conspiracy, legitimates unjust social relns.
•judges have ec. vision of world, are reproducing vision in own language

Note: Posner and Feinmann represent opposite ends of the spectrum, but they both believe contracts is
influenced by ec., and that ec. drives law
Compared to next two articles, their opinions are pessimistic and materialistic.

3) Wiegers, A Feminist Critique Public vs. private notions

Ec. exchanges privately determined in 2 ways:

1) free of state intervention
2) not a matter of 3rd party concern,

•private domain was sexuality, procreation, domestic labour of women

•unequal relns. of power between men + women, hunter gatherer, believed to be efficient, only
really efficient for men

Capitalism supposedly gives women more responsibility, but not a one way street:
1) expectation that woman must be a superwoman, creates a double burden
2) capitalists got benefits from sexual division of labour according to Marxists,
a) reprod. of labour at low cost
b) cheap reserve labour e.g. call centres, nannies
c) divided working class
d) created a dependence of women on male wage

Traditionally:
•family has never been free of state intervention, women submitted to male authority
•privacy takes advantage of women (subordinates them), shielded women from exploitation but
also from protection from abuse

Now:
•women no longer excluded based on sex, no longer depdt. on men
•new roles offer autonomy and new forms of exploitation

4 criticisms of laissez-faire assumption of private and free market:

1) contract w/the employer, free choice, individualizes the woman’s social status
-e.g. nannies from Phillipines, claims indiv. choice but really isn’t, misrepresents women’s reality
2) need state to intervene to redistribute power
•more excited about giving women welfare than addressing regulatory means in
workplace
•gender equality, affirmative action, daycare, pay equity
•basic response is that this makes the govt. the employer, Canada can’t afford, produces -ve gains,
makes women less attractive to hire
•Wieger argues this theory is politically conservative and not backed up by fact

3) -market sees people as unrelated, isolated indiv. doesn’t inspire any collective action
•devalue shared interests by classifying wants as private and subjective, passivizing,
individualizing
- 4) values of market not those of women (masculinist)
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4) N. Williams: Offer, Acceptance, and Improper Considerations: A

Common-Law Model for the Prohibition of Racial Discrimination in the
Contracting Process:
•has been asserted that contracts incompatible with prohibition of racial discrimination
•but prohibition of racial discrim. would be perfectly consistent with its natural orderly evolution

I - in society there is a strong concensus against racial discrim., law could make the
world better for minorities
•can make contracts with whomever for whatever reason, no implied norm of non-discrim.
Harm: 1) means society not fair and just, bad for indivs. harm ec. + psych.
2) as a nation of minorities, need to promote social cohesion, racism bad for comm.
e.g. slavery, Af. Americans have less ec. power now, persistent patterns
3)internalization of laws moral message causes people to act properly, law moral
medium

II - contracts imposes community standards of decency and fairness

..........•DUTY TO SERVE DOCTRINE (INNKEEPER), UNCONSCIONABILITY DOCTRINE AND
DUTY OF GOOD FAITH

III - mechanics to prohibit racial discrim.

•such as lawful performance doctrine, duty of good faith and fair dealing

IV - state law should prevent discrim.

• need HRA in c/l, no particular reason to separate anti-discrim. into public law

V - new section in restatement of torts to prohibit racial discrim. in contracts

process

Note: Wiegers and Williams are idealist articles, law makes society better, optimistic.

Legal Structure and Legal Reasoning I

Paul, “A Bedtime story”

1. manipulation, prior babysitting decisions (precedent)
2. authoritative text, parental note (statutes)
3. facts of scenario, what’s happening at school, in contracts look a conduct of participants
4. how do we approach written texts, literal v. purposive (the note)
5. institutional factors, activist or constructionist, proactive or say hands are tied (babysitter)
6. do diff. rules apply to exceptions, allow people to walk from contracts

Gall, The doctrines of precedent and stare decisis:

Role of judge: (reality lies in between)

1. quasi-legislative, activist role, deliver judgments in context
• judicial decisions should respond to changing times
•use and develop precendent, danger that judges might enforce own moral vision

2. interpretative, strict constructionist

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•apply law to facts, predictable, anachronistic approach

Overall dictates of certainty, predictability, consistency, legislative resp., justice, fairness

Definitions: (artificial to consider precedent and stare decisis separately)

precedent - requires judge to follow decision in previous case if same fact sitn.
stare decisis - previous decision of highest crt in that prov. juris. to resolve conflicting judgments

Stare Decisis: (degree of persuasiveness of other crt determined by factors)

1. nature of other juris (Canadian, which province?)
2. level of crt, decision of highest crt most persuasive
3. date of the precedential case, more recent, more reliable
4. Judge’s reputation
e.g. Hate propaganda, Alberta CA struck down rule, On CA didn’t, S.C.C. final arbiter

Distinguishing (how to avoid stare decisis and precedent):

1. distinguishes based on material facts that are absent in one and present in another
2. obiter dicta, ratio decidendi can be interpreted as obiter dicta
ratio decidendi - part of the case which has the rule upon which case founded
obiter dictum - a statement of rule of law, but not on what the case is based
3. per incuriam, can decide that precedent case judged inadvertently
4. previous case wrongly decided and choose to ignore it
5. just pick a judge’s reason, e.g. if there are 3 judges with 3 reasons, choose one that like

Legal Structure and Legal Reasoning II

Twining and Meirs, “Interpreting Cases:

Cases as precedents:
•builds on human frailties and needs
•habit, laziness, routine, prop for inexperience and instability, social use of predictability

Basis of c/l treatment of precedent:

1.obligation, judges have obligation to treat like cases alike, dictates to future decisions
2.expectation interest, base conduct on expectation that future cases will be similarly decided
3. rational devpt. of general policies, gradual interstitial growth
4. indiv. decisions have weight as expressions of public policy + principle, chain novel

Precedent: Previous decision is authoritative if:

1. previous decision is authority if analogous to a present dispute
2. crt which has status to make authoritative decisions
3. decision hasn’t been overridden by a statute

How to deal with precedent:

1. If crt higher then must follow precedent
2. if precedent one of its own decisions then it should follow it
3. if decision that of crt inferior to it then not bound to follow precedent

The practice of precedent:

•no formula for determining ratio decidendi,
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•difference bet. theory and practice, precedent is manipulable

•Karl Llewellyn found 64 techniques of following and avoiding precedent

Primary technique: precedent wrongly decided or of weak authority:

(AVOIDANCE)
1. the precedent involved faulty interp. of prior cases
2. precedent was decision given per incuriam, in ignorance of binding statutory authority
3. the precedent subsequently overruled or doubted by other judges
4. the precedent is irreconcilable with prior or subsequent decisions

Secondary techniques to weaken precedential value: (ENFEEBLEMENT)

1. the deciding crt was of low authority
2. the scope of the decision unclear
3. reasoning weak
4. deciding crt particularly influenced by special considerations
5. social condtns have changed
6. report unreliable
7. criticized by academic writers

Class notes:

Contracts are end result of these processes, elements of contract:

1. formation
2. performance
3. breach
4. remedies

Formation of a contract:
1. offer - promise of by party A to do or abstain from doing something provided party B will
accept and that B will pay price for offer
a. intimation of willingness to be bound
b. statement of price
c. offer must be communicated
•doesn’t need to be in writing, look at words and actions, outward manifestation of assent
•not everything is offer, can be invitation to treat (like advertising in some cases)
2. acceptance
3. consideration
4. intention to create legal relns

Promises are not a contract (no agreement, and are unidirectional)

Pizza example:
flyer -> check off options -> phone -> specify -> price -> how long?-> preparation -> doorbell -> payment

Offer I

Case-note on Canadian-Dyers Association Ltd. v. Burton, (1920) H.C., Middleton

Keywords: offer, quotation, words and actions
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Facts:
May 1918 -C.D.A. wrote B. and asked lowest price for house
June 6 1918 -B. answered saying $1650 ‘last price lowest willing to accept’
Oct 16 1919 -wrote B again asking the price
Oct 21 1919 -B. responded saying the previous price ‘lowest I am prepared to accept’
-treated as offer and accepted by CDA.
Oct 23 1919 -cheque for $500 sent by CDA
Oct 27 1919 -B’s solicitor sent draft deed, names date for closing and suggests search of his title.
Nov 5 1919 -B.’s solicitor wrote said no contract and returned $500.
Issues: Did the words and actions of the defendant constitute an offer? (general)
How does one distinguish between offer and invitation? (specific)
Held: For CDA, that there was an offer capable of being accepted because of B’s words and actions.
Reasons:
Words: letter was more than mere quotation of price but a statement of the price at which willing to
sell constitutes an offer, readiness to sell
Actions:B’s conduct suggests a contract has been made, didn’t send out letter denying sale, but wrote
up deed, did title search and suggests closing date.
Ratio: Apply an objective test of the words and actions of the parties involved to determine if offer or
invitation.

Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd.,

C.A.[1953] 1 Q.B. 401, [1953] 1 All E.R. 482, Sommervell, L.J., Birkett, L.J.
Keywords: offer, poison, self-serve, invitation to treat
Facts: -April 13 1951 two customers took poison from shelf in pharmacy, put in basket and paid at exit.
-Pharmacist near poisons section, but sale unsupervised by pharmacist
-Pharma. Society resp. for enforcing provisions of the Acts (Pharmacy and Poisons Act 1933)
Issues: At what stage of a purchase in a self-serve store is there an acceptance of offer?
Is the customer bound to a purchase once they place an item in their basket?
Are Boots liable for selling poisons w/out a pharmacist’s supervision?
Held: Appeal dismissed, no breach of the Pharmacy and Poisons Act.
Why:
Contentions
Pharma society Self-serve store(ruling) Non-self serve store
display offer invitation invitation
in basket acceptance offer (ask for goods) offer
pay for goods x acceptance acceptance
Sommervell:
1. -analogy to bookseller still browsing when place things in basket, no acceptance
2. -the shopkeeper’s display can’t be an offer, must be invitation
-extending law to respond to newly emergent self-service, determines supervision of pharmacist
3. -logical outcome of P’s args is that once put things in the basket have committed to the purchase,
would not allow for substitution
Birkett:-refers to Goddard’s decision, known as a good chief justice (lower cts influence higher crts)
Ratio: Distinguishes between invitation and offer. Goods on a display are invitation not an offer.
The customer makes an offer when takes goods to register.
The cashier is under the shopkeeper’s authority to make acceptance, hence the contract has not
been made until the cashier accepts the purchase.
Comments: -really fight between small (cornerstore pharmacies) + big business, new set of market relns

Fred Christie and the York Corporation, [1940] S.C.C. Rinfret

Keywords: race, freedom of contract, tort of humiliation
Facts: -C. entered a tavern and asked to be served beer. He was refused because he was black.
Issues: Can one use f.o.c. to exclude commerce with people based on race?
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Held: Yes, freedom of commerce can be used to exclude people based on their race.
Why: -only exception to f.o.c. would be adoption of rule contrary to good morals or public order
-no need to question the seller’s motives or reasons, invitation to treat (existence of bar)
-offer to buy (C.), refusal (allowed by precedent, see Comments)
Ratio: Freedom of contract license to discriminate based on race so long as the vendor isn’t engaged in a
monopoly. Justified through wealth maximization.
Shows use of precedent; no need to reach this decision since no other ct had ruled on it.
Comments:-precedents show that f.o.c. trumps in cases, imp. of free choice, all decisions lower than S.C.,
Feature of precedent - fossilizes the law, only retrospective, diff. if want law to change

F.o.c. more imp. than fundamental h.r. (contracts trumps torts)

C. v, York has 4 imp. principles:
1. final discretion is to sellers not buyers (f.o.c.)
2. protecting business interests (privacy)
3. maximize wealth, ec. gain (capitalism)
4. racism

R. v. Dawood, [1976] 1 W.W.R. 262, 31 C.R.N.S. 382, Alta. C.A., McDermid J.A.
Keywords: theft, fraud, criminal law, authority, property law
Facts: -D. rearranged outfit to indicate price was $5.77, should have been $9.66
-D. took this outfit to the counter and cashier accepted $5.77 for it.
Issues: Did the cashier have the requisite authority to form a contract w D?
If so, is this theft or buying under false pretenses?
Held: Yes, the cashier did have the authority.
No it is not theft.
Why: Theft - if p. passed to D. then isn’t theft, whether p. passed is determined by contract
McDermid: (hands are tied, FORMALIST)
•vendor agreed to transfer of possn hence transfer of p. in blouse, cashier had authority
•goods on shelf are invitation, offer money, acceptance by store, have contract (Boots)
•formation of contract means D. has p., not theft, should be contract under false pretenses
Dissenting judge (Clement J.A., REALIST)
•role of cashier is to receive good and ascertain price, no authority of shopkeeper, doesn’t offer
•displayed goods not just invitation but offer that can only be accepted at marked price by
customer
•disagrees w Boots (display is not an offer to sell), deflates precedent, self serve store
•if display just offer to treat no sale would be concluded until had dealt w shopkeeper
•no p. or possn transferred, acceptance was not on offer made by store on price tag so no contract
Ratio: •Agrees with Boots. Goods displayed on shelf are invitation.
•Note dissenting point that goods displayed in a self-serve establishment constitute an offer.

Offer II

Carlill v. Carbolic Smoke Ball Co. , [1893] 1 Q.B. 256, C.A., Bowen, L.J.
Keywords: advertisement, influenza, conditions, acceptance, offer, unilateral contract
Facts: -C. bought the Carbolic Smoke Ball from ad in paper.
-She used it 3 times a day from Nov. 20 to January 17 when she caught influenza.
-The ad claimed that 100l reward will be paid to anyone who contracts anything 2 wks after taking
ball 3 times daily, ‘1000l is deposited with the Alliance Bank, shewing our sincerity in the matter’
Issues: 1. Can one make a contract with the whole world?
2. Interpretation of vague terms - (a) scope, with whom? (b) temporal, how long?
3. Was the ad a mere puff?
4. Does performance of the conditions advertised in the paper constitute acceptance of an offer?
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5. Consideration?
Held: It isn’t a contract with the whole world, but rather with people who fulfill the stipulated
conditions.
The scope is with anyone who fulfills the conditions, lasts as long as one is taking the ball.
No it isn’t just a puff, stated 1000l in bank.
Why:
1. •becomes contract with anyone who fulfills conditions (further negtn = invitation to treat, not
offer)
2.(a) •plain meaning, entitled to reward (contract) if used ball for two weeks, 3 times a day and got flu
•not everyone who got flu, no reliance interest if one used ball before the ad promised reward
2.(b) •interpret purposively, protection while smoke ball is in use after the ad came out, not forever
• perspective of reasonable consumer, not reasonable businessperson
•hence the terms are not too vague
3. •ad was offer not mere puff - stated that had 1000l in bank
•couldn’t check use of the smoke ball, but if make such extravagant promises, you are responsible
4. •offeror can decide how acceptance of offer will be made, performance of condition sufficient
acceptance -e.g. if lose dog, and people find it
•extract from contract notification not reqd. (if performs condition) imply from words and actions.
5. •inconvenience of one party was consideration, she bought the ball, used it, was inconvenienced
Lindley:•notification of acceptance need not precede performance, in this case acceptance
contemporaneous w performance
•offeror shows by words and nature of transaction that he didn’t require notice of acceptance
Ratio: •An ad in a newspaper can constitute a unilateral contract, which can be accepted by fulfilling the
conditions of the contract. No formal acceptance required.
•The determination of a serious offer will be determined from the words and actions.
•The terms of the contract (if vague) will be interpreted purposively from the contract.
•Offeror can determine how acceptance of offer will be made.
Comments: •trying to protect weak woman from the ravages of the fee market, like Goldthorpe
•Posner, deals with careless representations in marketplace
•who should bear risk? party that makes the promise

Goldthorpe v. Logan, [1943] O.W.N. 215, [1943] 2 D.L.R. 519, C.A., Laidlaw, J.A.
Keywords: electrolysis, advertisement, torts, negligence, offer, acceptance, guarantee
Facts: -G. responded to L’s newspaper ad L’s claimed ‘Results Guaranteed’ to remove hair
-Was met with by a nurse who told her face could be ‘definitely cleared’ (no physical exam)
-The hair started growing back.
Issues: 1. Was there a contract (invitation, offer, acceptance, consideration) bet. L. and G.?
2. What should result be if there was a breach of contract?
Held: 1. Yes there was a contract and it was breached.
2. L. has to pay $13.25 for the cost of treatment and $100 for loss of expectation.
Why: •intepret whether contract made through words and actions:
•words, ad claimed ‘results guaranteed’
•actions, further assurance at business that hairs would be ‘successfully and permanently’
removed, unqualified offer
•L. vendor seeking purchaser, creates offer to every person willing to accept terms of offer
•extravagant promise, not thoroughly researched, promise lightly given, is enforceable
•acceptance of the offer communicated by G’s conduct, accepted terms
•consideration was that G. paid cash and had the electrodes in her face
Ratio: •Look to words and actions to determine if contract made
•An ad made in a newspaper constitutes an offer that can be accepted on the terms it proffered.
•Offeror bears risk of extravagant promises.
Comments:
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•refers to Carlill v. Carbolic Smoke Ball Co. that advertisers that seek to take advantage of the
weaker segments of the popn. shouldn’t be surprised if their offers are accepted and pursued.
•policy statement of consumer protectionism, same rationale as Carlill, prob. of false advertising

R. v. Ron Engineering & Construction (Eastern) Ltd., [1981] S.C.C., Estey

Keywords: tender, unilateral, deposit
Facts: -forfeiture clause 13: lose deposit if withdraw after the close of tenders at 3 pm
-Ron submitted tender that was $750 000 lower than it should have been + $150 000 deposit
-at 4:12pm Ron sent a telex that requested to withdraw the tender.
-Ron then said had not withdrawn tender but that tender incapable of being accepted.
-Ron wants its deposit claiming tendering process just invitation to treat, acceptance when
choose bid
Issues: 1. Is there a contract completed during the tendering process?
2. When is this contract completed?
3. What are the conditions of this contract?
Held: 1. Yes there is a unilateral contract completed.
2. Completed when the tender is submitted.
3. The conditions of the contract are the terms and conditions of the call for tenders.
Why: •Estey reconfigures, when submit bid are accepting terms of offer
•Ron could only get out if had withdrawn or submitted a new tender prior to closing time.
•Ron didn’t so assumed had entered into contract A governed by terms of tender
•terms and conditions of the tender are 1) irrevocability of bid, 2) obligation to enter into contract
B, 3) owner accepts lowest tender, 4) contract A governed by rules in call for tenders
•moment of contracting moved forward in time, deposit ensures people are careful
Ratio: •A tender constitutes a unilateral contract completed when the tender is submitted.
•The conditions of the tender contract are the rules and conditions of the tender.

R. v. Canamerican Auto Lease & Rental Ltd., (1987) C.A., Heald

Keywords: car rental, bid, domestic, breach of contract
Facts: -Tilden Canadian, Hertz American.
-T.C. asks for bids for a rental counter in an airport, in open and domestic categories.
-if Tilden were allocated to an open category Hertz might not get counter.
-Hertz asked TC what would happen if Tilden bid higher in open than in domestic, responded that
bid in higher category would be accepted.
-Tilden bid higher in open than in domestic but TC accepted lower bid in domestic (contrary)
-exemption clause - ‘The Dept. will not necessarily accept the highest offer, nor will it be bound to
accept any tender submitted’
Issues: 1. Was the invitation of tenders an offer or invitation to treat?
2. Did the exemption clause exempt TC from contractual obligations?
3. Were the statements of Transport Canada policy statements or binding specifications?
Held: 1. The invitation for tenders was an offer.
2. The exemption clause didn’t exempt TC from following through with specific policy statement.
3. The statements by Transport Canada were binding specifications.
Why:
1. •invitation for tenders offer because of a) specific terms and conditions, b) non-refundable deposit
•tendering creates contract (Ron), claims to be following Ron but isn’t since contract B is formed
by acceptance of choice of their tender by car companies (as opposed to the choice of bid by govt)
2. • exemption clause
a. would make choices between tenderers arbitrary/irrelevant/ad hoc, purposive analysis
b. as between clauses, one general and 1 specific, specific trumps the general clause
3. •get real, putting out the specifications was to encourage competitive process, not just mere policy
Ratio: •The moment of contracting has changed again. Offer is the choice of bid and acceptance is the
acceptance by the chosen company.
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•Look to the parties intentions when determining mere policy or binding specification.
•As between clauses, one general and 1 specific, specific trumps the general clause
•To determine whether an exeption cluase is binding, engage in purposive analysis to determine its
effect.
Comments: 1. the moment of contracting has been moved forward.
2. the non-refundable deposit makes a diff. bet. the old English cases and Ron/Canam
3. the development of the common law-property of self-rectification, develops over time

The contract situation (comparisons of the diff. precedents for contract)

Tenders:
England Reality Ron CanAm
invitation call for tenders offer offer
offer submissions of bid acceptance* (unilateral, contract A) acceptance
offer
acceptance* choice of bid acceptance* (bilateral, contract B) offer (by govt)
acceptance (before
performance)

*point at which contract formed

Communication of offer

The rewards cases

Knowledge Subjective test Objective test Motive Contract
Williams Yes x No, irrelevant Yes
Gibbons No x No Yes
Carlill Yes x Yes Yes
Clarke No (?) ? Yes No
Blair No, not as x Yes No
offeree
1395 Civil C. No No Yes

Williams v. Cawardine, (1833), K.B., Denman, Curwood, Littledale, Parke, Patteson

Keywords: motive, reward, recovery
Facts: -Walter Cawardine murdered April 12, 1831, was with Anne Williams (pff), she was questioned
-Brother (def) posted handbill for “info. as should lead to the discovery of the murder...should
receive a reward of 20l”
-Pff. thought she was going to die made a statement which led to conviction of Willliam Williams
-at trial judge said since Mary not induced by the reward no contract
Issues: Has pff. formed a contract with def. in spite of the fact that she did not intend to fulfill the contract
when she gave the info.?
Held: Yes she has formed a contract, her intention was not important to her right to recover the award.
Why: •she knew about the reward since it was posted all over.
Denman - Yes, she has come within the terms of the ad.
Littledale - Handbill promised to give money for info. Mary gave that info.
Parke - Contract w any person who performed the condition.
Patteson - Can’t look at the plaintiff’s motives.
Ratio: •The motive of an informer in accepting the contract offered has nothing to do with his right to
recover under the contract.
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•Neither mutual consent nor communication of assent is important in case of reward.

R. v. Clarke, (1927) Aust. H.C., Higgins

Keywords: expectation, reliance interest, conditions, reward, ignorance
Facts: -murders of 2 people committed end of April 1926, reward was issued May 21
-one of the murderers Treffene was arrested on June 6 with Clarke, Clarke gave false info
-Coulter was arrested June 10, Coulter and Treffene were indicted and convicted
-Clarke wants reward, he had seen the reward, up to June 10th had no intention to earn the reward.
-’first decided to claim the award a few days after the appeal had been dealt with’
-’I gave no consideration and no intention with regard to the reward’
Issues: 1. Was there a contract between C. and the Crown and how would one determine this contract?
2. Where the conditions of the contract fulfilled?
Held: 1. No there was no contract between C and the crown because
a. C. couldn’t accept an offer he didn’t know about (Fitch v. Snedaker), forgetting as
good as ignorance
b. C. had no expectation interest when he gave info. to fulfill conditions of contract.
2. No, C. didn’t fulfill the conditions of the contract.
Why:
1. •No contract because of ignorance and lack of expectation interest
a. Ignorance (didn’t know about award, per incuriam):
•distinguishes (Williams)on facts, applies Fitch v. Snedaker, how can one consent to a contract
have never heard of, ignorance is the same as forgetting about the contract, same as if never heard
Gibbons v. Proctor • policeman sent info to superintendent w/out knowing about the reward, was
entitled to recover award
•hence can accept offered contract before knowing that there is an offer
•decides this case decided wrongly!
•ct superimposes notion that C. forgot about reward in his own danger, no meeting of minds

b. Expectation interest (there was none):

•did act in reliance on the reward, not motivated by ad (not like Carlill had expectation interest)
2. •Didn’t fulfill conditions of contract:
a. gave info. after T. arrest, the reward had stated ‘as shall lead to the arrest’, didn’t lead to arrest
b. info didn’t lead to conviction of person for both murders, just for one of the murders
Ratio: •One cannot accept an offer one doesn’t know exists, or that one has forgotten exists.
•One needs an expectation or reliance interest in the reward in order for that reward to be
recoverable, i.e. for the contract to be fulfilled.
Comments: -clear contradiction bet. Clarke (motive everything) and Williams (motive irrelevant)

Blair v. Western Mutual Benefit Assn., [1972] B.C.C.A., Bull, McFarlane, Robertson
Keywords: communication of offer, reward
Facts: -Blair (B) was a stenographer and secretary employed by Western (W)
-she retired in June 1969 and claimed $8000, equivalent to 2 years salary, from receivers
-she was not at a meeting where a specific resolution passed, but the president or director dictated
her minutes of the meeting which stated ‘if Miss Blair decided to relinquish her position...she be
given a grant of at least two year’s salary, as retirement pay’ resolution passed
-she transcribed the minutes and delivered them to the president
-the offer was never communicated to her as an offer or a promise or an act
-no evidence that she resigned because of the existence of the resolution
Issues: 1. B. contends that resolution was offer to pay on retirement, actual retirement was acceptance,
which created a contract (unilateral refer to Carlill, Goldthorpe)
2. B. contends that in equity, expected her to act on representation, can’t be said not to be bound
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3. Was the company bound to pay B. the retirement salary?

Held: 1. Was not a contract.
2. Equity arg. that will be dealt with later.
3. No because no offer had been made, communicated (B’s role as stenographer), and accepted.
B. didn’t retire because of the knowledge of this contract.
Why:
Bull:
1. •no promise made (through the passing of the resolution) and accepted for valid consideration
•she did not have knowledge as offeree but as secretary, subjective analysis
2. •no change in existing reln. bet. parties, no comm. of minutes, typing can’t convert into offer
3. •no evidence of intention to change those relns. to create legal relns. (acceptance?)
•B. didn’t retire because of promise, no representation on which she was expected to act or acted
McFarlane - focusses on motive, didn’t retire based on the promised package
Robertson -agrees with Bull, received offer as stenographer not as authorized communication
•Wilson v. Belfast,-found that unauthorized publication in Press didn’t constitute communication
•comm of resolution through dictation was no more a comm of offer than publishing in the paper.
Ratio: •Simply communicating a resolution through some sort of unauthorized medium does not
constitute an offer which can create binding legal relns.
•Courts can look to reliance/expectation interest to determine if a contract binding.
Comments - note idea that woman automaton who heard about resolution and then not motivated by it.

Acceptance
1. Until moment of acceptance, revocable offer, no one bound
2. After moment of acceptance have a contract
3. To determine acceptance
a. offeree, intimation of willingness to be bound
b. offeror, intimation of willingness to be bound
c. look at words and actions, giving sthing in return
d. creation of a promise or the performance of an act (unilateral), exchange of mutual promises
(bilateral)
4. Correspondence between the acceptance and offer: unequivocal, unqualified, absolute, unconditional

Counter-offer
•kills the original offer
•not every equivocation is a counter-offer but can be a mere inquiry

Livingstone v. Evans, [1925] Alta. S.C., Walsh

Keywords: acceptance, counter-offer, rejection
Facts: -E. wrote to L. propose to sell him land for $1800. (offer) (A)
-L. sent proposal for $1600 cash ‘Send lowest cash price. Will give $1600 cash. Wire” (could be
counter-offer, mere inquiry, rejection) (B)
-E. responded with “Cannot reduce price” (could be rejection or renewal) (C)
-L. then wrote to accept the offer of $1800 that maybe no longer exists. (D)
-E. no longer wants to sell to L. sells to 3rd person, L. seeks specific performance
Issues: Was the 1st telegram (B) from L. a counter offer?
If so, did this counter-offer constitute a rejection of E’s offer and free E. from it?
Held: Yes the telegram was a counter-offer.
Counter-offer was a rejection but E’s letter “cannot reduce price” indicates a renewal of offer.
Why:
Precedent-Hyde v. Wrench, counter offer constitutes a rejection, v. firmly est.
-Stevenson v. MacLean, a letter can be a mere inquiry not a counter-offer
•L’s telegram (B) a counter-offer + inquiry, although both, counter-offer kills original
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• E’s ”cannot reduce price” (C) renewal of offer

•Cowan & Boyd, landlord and tenant, renew lease, tenant said wanted early reply, landlord said
would call bet. two dates, tenant wrote accepting original offer, landlord left open original offer
•thinks landlord’s letter much more unconvincing evidence of open offer than telegram here
Ratio: •An offer can be renewed after a counter-offer through ambiguous language.
•Hyde v. Wrench, counter-offer constitutes a rejection
Comments: -the task of a lawyers is to characterize a sitn. w legal relations

OLRC, Report on Sale of Goods: The Battle of the Forms, (1979)

•standard form promotes efficiency
•buyer’s and seller’s terms may differ
•inject oral communications etc.
•discover disparity only when conflict arises
•using the rules of classical contracts would have no mutual agreement so no contract
•if actually followed this logic market would fall apart
•solution is to a. reconcile terms
b. pick one side over another

Butler Machine Tool Co. v. Ex-Cell-O Corp., [1979] C.A., Lord Denning
B- seller E -buyer
Keywords: forms, terms, buyer, seller
Facts:
May 23 -in response to E’s request, B quoted price and 10 mths for delivery (offer, a great deal of detail)
-B’s offer had terms and conditions which
a. “prevailed over and terms and conditions in the buyer’s order”
b. said B could charge price of machine at delivery
May 27 -E. placed order with B. (counter-offer or rejection)
-order said they were subject to various terms and conditions none of which dealt with a
change in price, tear off slip
June 5 -B returned E’s form which said accepted E’s terms and price was that of May 23rd
-machine delivered, B. claimed $2892 more, E. said their order prevailed, fixed price contract
-B. said their term prevailed for an increase in price.
Issues: Whose terms prevailed, E’s or B’s?
Held: E’s terms prevailed. (last shot)
Why:
surface •quotation of price was offer subject to terms and conditions
•order by E constituted a counter-offer, diff. terms and conditions, B. accepted counter-offer
Trollope & Colls v. Atomic Power Constructions - ‘counter offer kills the original offer’
purposive•Brogden v.Metropolitan Railway Co., consensus gleaned from letters or other docs
•British Road Services v. Arthur V. Crutchley & Co., generally last shot wins (in this case E)
•could also be won by first blow or shots from both sides (no examples given)
•differences irreconcilable, conflicting terms may have to be scrapped, reasonable implication
•Denning says that’s nice, look at docs. as a whole + conclusive doc. is 5th June, on E’s terms
Ratio: •In a battle of forms generally the last shot wins, but open to other interpretations.
•Look at the documents as a whole to determine whose terms prevail.
Comments:-classical contracts no contract, keep machine at price, but large machine, don’t do this

Tywood Industries Ltd. v. St. Anne-Nackawic Pulp and Paper Co. Ltd., (1979) Ont.
H.C., Grange
S. - buyer T - seller
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Keywords: forms, conflict, arbitration

Facts:
Sept. 19 -S. invitation to treat
- listed goods required
- on reverse side 13 ‘Terms and Conditions’, none of which dealt with arbitration
Sept. 26 -T. responded offer
-quotation in letter
-12 Terms and Conditions of Sale
-no reference to arbitration
-Condtn. 12 stated wouldn’t be modified by receipt of purchase order w diff condtns.
Nov 7 -T submits revised proposal, same 12 condtns., new offer
Jan, July-Two purchase orders from S., rejection
- 19 ‘Terms and Conditions’
-Condtn. 19, according to laws of N.B., any controversy will be settled in arbitration
-purchase order neither signed by T. nor returned to S.
-T. delivers goods, S. doesn’t pay, T. sues for price, S. claims have to go to arbitration
Issues: Whose terms prevail (do they have to go to arbitration)?
Held: T’s rules govern (no arbitration).
Why:
Classical model -S wins, buyer’s contract holds.
First shot -S. wins, got first shot in (if just invitation to treat then not imp.)
Last shot -S. wins, but diff. terms for 1st and last shot
Grange -T. imposed non-arbitrable condtn. when quoted initial price, never acknowledged S’s terms
•S. tried to smuggle in arbitration terms and didn’t complain when purchase orders not returned
•conduct indicates both parties interested only in specs and price, sense that don’t read contracts
Ratio: •The person who is most innocent terms will prevail. Can’t sneak terms into contracts without
proper notification.
•Look to actual conduct of business (do people really read the terms?)

Shift away from voluntarism/free choice to judicial intervention to obtain consensus.

Rules of contracts to this point:

•offer
•offer distinct from invitation to treat
•offer must be communicated
•offer revocable until time of acceptance
•acceptance
•offeree needs knowledge of offer before acceptance possible
•acceptance must be mirror image of offer
•if not, is a counter offer
•not every equivocation by an offeree is a counter offer, it can be a mere inquiry
•but if it is an offer then acceptance is on the terms of the counter-offer

Vulnerability of offeror reduced by:

1. offeror can revoke his/her offer up to the moment of acceptance by offeree
2. offeror can dictate time, place and manner of acceptance
-telegram, respond by letter, this is not good since one is much slower
-telegram, respond by fax, equally fast, has to be same sort of medium
3. acceptance must be communicated from offeree and received by offeror.
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Eliason v. Henshaw, (1819), 4 U.S. (L.Ed.) 556, Washington

Keywords: time, place, manner, acceptance
Facts:
Feb 10 -letter from def. to pff. proposing to buy flour at Georgetown
-say “Please write by return of wagon whether you accept our offer”
-flour will be delivered to Georgetown
-please reply to Harper’s ferry
-sent from Harper’s Ferry to Mill Creek
14 Feb -letter delivered to pff
-wagoner explicitly informs them he isn’t returning to Harper’s Ferry
15 Feb -answer written by pff
19 Feb -letter sent 1) by mail 2) to Georgetown
-pff accepts offer and says will send flour
25 Feb -defs send letter acknowledging receipt, but said response too late because not by wagon
-sellers (pff) suing buyers (def) for non-performance
Issues: Was the offer accepted in the right time, place and manner (was acceptance valid)?
Held: No.
Why:
1. •not accepted within the proper time (w wagon reply date 18th, letter not received until after 19th)
2. •not accepted in the right place (should’ve sent back to Harper’s Ferry, was sent to Georgetown)
3. •not accepted by the correct manner (should’ve been sent by wagon (faster), sent by mail (slower))
Ratio: The offeree must follow the terms of the offeror (time, place and manner of acceptance) for an
acceptance to be valid and binding.

Jen-Den Investments Ltd. (buyer) v. Northwest Farms Ltd. (seller), [1978] Man CA,
O’Sullivan
Keywords: implicit, revoke, agent, oral
Facts:
Jan 25 1973 -3 offers signed by pff. proposing to buy land sent by TP to def. (offer)
- $23 520
-proposed purchase to be paid 1/2 cash and 1/2 mortgage
Feb 2 1973 -def revised terms on which he accepted (counter-offer)
-full amt paid on possession date
-delivered to TP who is W.
Feb. 3 1973 -that evening W. orally communicated counter-offer to pff.
-pff orally accepted and agreed to initial on the Monday
Feb. 4 1973 -before oral acceptance communicated, def had 2nd thoughts orally asked W. to revoke
counter offers
Feb. 5 1973 -W. took counter-offers and had them signed by pff. despite contrary orders
-oral acceptance by pff. Sat night, written acceptance by pff. Monday
Issues: Which came first, the revocation of the counter-offer or the acceptance by the buyer?
Held: The revocation of the counter-offer was before the buyer’s acceptance.
Why: •objective test to determine whether oral acceptance should suffice
1. •nature of exchange -agent, offers to purchase on form with form of acceptance, dealing w land
so writing necessary, all assumed sthing in writing necessary
2. •relevant legis.- Real Estate brokers Act, if broker used, acceptance must be written before
communicated to offeror
3. •Customary practise in Manitoba - offer in writing should be accepted in writing
Ratio: •Use an objective test to determine if acceptance valid.
•Look at nature of exchange, relevant legislation, customary practise.
•Offeror can revoke up to any pt prior to acceptance.
Comments - implicit rather than explicit determination, risk transferred to offeree
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Felthouse v. Bindley, (1862) Ex Ch, Willes

Keywords: objective test, silence, outward manifestation
Facts:
Jan 2 -uncle wrote to nephew that wanted horse, if doesn’t hear anymore ‘considers horse his’, no reply
Feb 25 -auction, auctioneer (def) ordered not to sell horse, forgot, horse sold for 33 pounds
Feb 27 -nephew writes uncle to say that horse sold, def also wrote saying forgot and sold horse
-pff. claims conversion of the horse, def. claimed pff didn’t have p. in the horse
Issues: Can an offeror say that silence dictates an acceptance?
Held: No.
Why: •letter from uncle was an open offer, bargain not complete
1. subjective intentions not enough, need objective demonstration, outward manifestation
2. there has to be communication from offeree to offeror (nephew to uncle)
•letter from nephew on Feb 27 is an acceptance (too late), protect innocent TP, who’s more
innocent, prevent carelessness in marketplace
Ratio: •Silence is not enough to determine acceptance of an offer.
•Subjective intentions not enough to communicate acceptance, need outward manifestation.
•Crt wants to protect innocents and prevent carelessness in marketplace.

St.John Tug Boat Co. v. Irving Refinery Ltd., [1964] SCC Ritchie
Keywords: silence, deceit, acceptance
Facts:
March 27-letter from pff. to def. saying make available ‘Rockswift’ at $450/day whether working or not
-def. verbal arrangement to rent starting June 13 on terms of March 27, extended twice for 2
weeks
July 1961-def. stopped paying pff’s invoices
Aug 15 -official agreement to renew services ended
Aug 1961-president of def. company (Irving) succeeded by Forsythe from Henning
-no formal extension but Rockswift employed until Feb. 1962, accounts given to def. each month
Feb 1962- notification in change of arrangements for tug
-pff. denies having to pay for tug since Aug. 1961, silence can’t constitute acceptance (Felthouse)
-at trial found def liable for payments
Generally, basic rule: mere receipt of services or goods w/out protest is insufficient to create liability.
Issues: Was def’s silence and conduct a continued acceptance of the offer of tug services?
Held: Yes.
Why:
Precedents:
-Anson, objective test, if wouldn’t suppose B meant to do work for nothing, A liable to pay
-Smith v. Hughes, conduct just as good as acceptance
-Williston, services to be paid for at fair value, silence is deceptive
-Falcke v. Scottish Imperial Ins. Co., liabilities can’t be forced behind people’s back

•Irving being sneaky, shouldn’t be deceptive, under +ve obligation to act fairly
•knew Rockswift standing by, knew expected to pay, accepting terms in letter, contract formed
•Smith’s leading cases, can imply terms of acceptance into contract when:
1. there is a benefit being received
2. the party receiving benefit is aware of this
3. there is a knowledge that there is an expectation to pay from the other side
•implies Irving’s acceptance 1. benefit to Irving, 2. Irving knew that this service was being
provided
3. Knew expected to pay because of monthly order.
Ratio: •Silence can constitute an acceptance, especially if it appears to be sneaky.
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•Contractors are under a positive obligation to act fairly.

•Can imply terms of acceptance into a contract (in this case 3 conditions).

Rules of contract as they now stand:

1. nothing inherently acceptance
2. no particular formalities reqd for acceptance
3. offeror can dictate time, place and manner
4. all circs to determine words and conduct
5. silence alone is not acceptance, but not indicative
-i.e. omissions if deceptive can be acceptance
6. cts can imply terms into contracts
-sense of fairness

Dawson v. Helicopter Exploration Co., [1955] S.C.C., Rand, Estey

Facts:
1931 -pff. staked a claim in BC, filed claims which lapsed
Jan 1951 - received letter from def.
-finance pff. in staking claims
-10% interest in claims
-pff. replied ‘fair’ deal
Feb 1951 -pff. sent overseas and could obtain leave to show p.
March 5 1951 - def wrote, repeats original terms and
-August, last half of July or Sept good time
-keep advised as to when could get away
April 12 1951 -pff. writes and says
-Aug. or Sept good
-would like to know ASAP if can’t get pilot for copter
June 1951 -def. writes
-McQuillan thinks couldn’t get to stakings
-has pilot but doubts whether will have time to visit showings
-says to make other arrangements to go
Aug 1 1951 -def’s exploration party investigated area, became known to pff in 1952
1953 -def. entered agreement to develop claim
Issues: Was there a contract bet. the two parties?
Held: Yes there was a contract.
Why:
Estey:
1. •there was a contract, March 5 letter an offer, April 12 acceptance mirror image and unqualified
•contract had two conditions a. def could get a pilot b. the claim was worth staking
•contracts allowed to have condtns. subsequent to terminate contract, contingencies (see Anson)
2. •there was enough certainty in the contract, look at contents of all docs.
3. •no mutual abandonment of contract, look at circs a. pff. was geographically far away, 2. pff’s
actions (contacting minig recorder and revisiting sites) don’t indicate a repudiation
•def. explored in July after repudiation of June 7, would appear that def. had concluded could
continue w.out pff. and wrote letter of repudiation
• pff. didn’t accept letter of repudiation, contract remained, def in breach of contract
Rand •false analogy to reward case where offeror remains passive, in this cases def. has to participate
•in a bilateral contract as soon as parties exchange mutual promises, 1 party can’t revoke
•in a unilateral contract, offer can be revoked up to before complete performance
•Rand decides better to be bilateral, don’t look at every exact word, instinct with obligation
-pff. bound to attempt leave of absence
-impliedly agreed wouldn’t prevent complementary performance of each other
 24

-implied promise to cooperate (ct implies terms)

•def. violated engagement and ended contract
Ratio: •The formation of a contract is ‘instinct with an obligation’.
•Can imply obligations on parties to cooperate.
•Contracts is about responsibility as much as indiv. rts.
•In a unilateral contract offer can be revoked before full performance.
Obiter: •Can look at docs. surrounding contract to see if there is a contract.
•Conditions subsequent don’t remove power to contract.
Comments:Wood v. Lady Duff Gordon, promise may be lacking but writing may be instinct with obligation

Communication of Acceptance

A. Mailed Acceptances: Who should bear the risk of loss in non-

instantaneous communication?

Household Fire and Carriage Accident Insurance Co. v. Grant, (1879), 4 Ex. D. 216,
C.A., Thesiger, Bramwell
Keywords:acceptance, mail
Facts:
Sept 30 1874 -def. applied for shares in pff. company (offer) (stated paid deposit, agreed to pay more)
Oct 20 1874 -pff company made out letter of allottment, sent to def., never reached def. (acceptance?)
-dividends credited to his account, didn’t pay deposit, company goes bankrupt
Dec 7 1877 -liquidator applied for funds from def., def. won’t pay because says he’s not shareholder
Issues: At what point is an acceptance effective when acceptance is communicated through mail?
Held: The communication was completed when the letter was placed in the post.
Why:
Thesiger-acceptance requires mutual assent, achieved through communication from offeree to offeror
•the PO is agent, give answer to agent are communicating to offeror, otherwise fraud potential
•offeror stuck with risk but could build into contract condtns. or inquire if receives nothing
•justifies p.a.r. 1. offeror dictates time, place, manner,
2. certainty and efficiency in marketplace, who can best bear risk
Bramwell (dissent):
• needs to be communication of acceptance to offeror, depart from rule when
1. special agreement bet. parties (no, not in this sitn)
2. a general rule that overrides (no, no gen principle in this sitn)
•this ruling makes law arbitrary, offeror bound w/out knowing bound, implications
Ratio: An acceptance is concluded once the letter of acceptance is dropped in the mailbox (POSTAL
ACCEPTANCE RULE). Offerors risk can be mitigated through condtns or inquiry.
Communication of acceptance can be overruled when there is a special agreement between parties
or there is some overriding general rule.

Holwell Securities v. Hughes, [1974] C.A., Lawton

Keywords: acceptance, communication, mail
Facts: -pff. offered to sell land, exercisable by sending letter to def. within 6 mths ‘notice’
-pff’s acceptance of purchase was mailed to the def’s, def. never received
Issues: Was there a contract? or at what stage was the acceptance communicated to the offeror from the
offeree?
Held: No contract. The result can be found the short way or the long way.
Why:
Short route-by defn of word notice, had agreement to exclude the operation of p.a.r. (see Bramwell above)
 25

Long route-def. argued p.a.r., many precedents: Henthorn, Bruner and Household Fire Insurance
•exception to p.a.r. when a. expressed in terms of offer that acceptance must reach offeror
b. leads to inconvenience and absurdity (Bramwell in British &
American Telegraph Co. v. Colson)
•(b) demonstrates principle that rule doesn’t apply if there is no way that the parties would have
intended no binding agreement until the acceptance communicated
• larger and wider rule that is so large it guts the p.a.r., stupid rule
Russell -counters absurd arg., can’t give notice in writing by writing sthing, phoning + reading it to another
Ratio: •Discomfort w postal acceptance rule, make exceptions if:
a. expressed in terms of offer that acceptance must reach offeror (look at actual words)
b. leads to inconvenience or absurdity (introduces wide priciple that invalidates p.a.r.)
•Offeree should bear risk of loss.

Instantaneous Methods of Communication

Brinkibon Ltd. v. Stahag Stahl, [1983] H.L., Lord Wilberforce

Keywords: telex, instantaneous communication, postal acceptance rule
Facts: -two possible fact combinations, buyers (pff) want to sue sellers (def)
May 3 1979 -telex from def in Vienna (counter-offer)
May 4 1979 -telex from pff’s in London to sellers in Vienna (acceptance)
or
May 3 1979 -telex from def in Vienna (counter-offer)
-action, by opening of letter of credit, acceptance by conduct
-pff’s want English law, where contract made, depdt on when contract made, depdt on
when was acceptance, depdt on when acceptance communicated from offeror to offeree
Issues: When was acceptance communicated from offeror to offeree?
Held: Acceptance was communicated when telex received in Vienna.
Why: •conflict bet p.a.r. (London-sent) + classical rule (Vienna-received)
•ct. says it was instantaneous communication, contract made in Vienna
•refers to Entores Ltd. v. Miles Far East Corp., telex instantaneous, this ruling works in market
•in making ruling 1. refers to intentions of parties
2. business practices
3. risk allocation
•opening of letter in credit wasn’t sufficient conduct to say acceptance
Lord Fraser of Tullybelton:
•treat acceptance by telex as effective of receipt
1. the person owning telex should be resp. for messages to be delivered to him
2.person sending telex knows if not sent, but person receiving won’t know hasn’t
received
Ratio: •The telex is a mode of instantaneous communication, where acceptance of a contract is made on
receipt.
•The postal acceptance rule doesn’t apply to instantaneous communication.

Termination of Offer I:
Risk is transferred from offeror to offeree in 3 manners:
1. offeror can revoke offer up to the moment of acceptance: 4 manners:
1. death
-contracts are in personum, no one to contract with (see Dickinson v. Dodds)
-e.g. offer made Nov 1, offeror dies Nov. 2, offeree accepts Nov. 3, no knowledge of
death, who bears the risk?
-if allocating risk offeree should get the contract, revocation not communicated
2. rejection
 26

-Livingstone v. Evans, an offer can be renewed after a counter-offer through ambiguous

language
-Hyde v. Wrench, counter offer constitutes a rejection, v. firmly est.
-Stevenson v. MacLean, a letter can be a mere inquiry not a counter-offer
3. revocation: 3 major questions:
a. must offeree have knowledge of revocation? (Dickinson v. Dodds)
b. what is the reln. bet. revocation and p.a.r.? (Byrne v. van Tienhoven)
c. what is reln. bet. revocation and unilateral contracts? (Errington v. Errington +Wood)
4. lapse: 3 ways:
a. offeror expresses particular time after which offer will lapse
b. lapse might occur on occurrence of some condition other that the passing of time
-e.g. in Hull, selling houses to bureaucrats, offer would lapse if ‘yes’ vote
c. lapse can occur after lapse of reasonable time (Barrick v. Clark)
2. offeror can dictate time, place and manner of acceptance
3. acceptance must be communicated from offeree and received by offeror.

Revocation

Dickinson v. Dodds, (876), 2 Ch. D. 463, C.A., Mellish

Keywords: revocation, knowledge of offeree, death
Facts:
June 10 -def. gives pff. document, agrees to sell property, offer held until Friday at 9 am, June 12
(promise)
June 11 -(afternoon) def. had signed formal contract to sell to third party
-pff. informed that def. wanted to sell to third party
-(evening) went to mother in law of def. and gave her acceptance of doc. of June 10
-she claims she forgot to give this doc. to def
June 12 -7 a.m., agent of pff. then pff. himself give def. acceptance and def. says too late
Issues: Was the offeror allowed to revoke the offer?
Held: Yes, offeror entitled to revoke offer.
Why:
1. •def not obliged to hold offer open til 9 a.m., just bare promise, no reliance interest, buyer beware
2. •pff. knows p. sold to TP, can’t then propose a binding contract knowing no meeting of minds
•analogous sitn. of death, if offeror dies then performance of offer impossible
3. •the knowledge of sale to a third party doesn’t have to be directly communicated, but can be
through an agent (indirect communication)
Ratio: •An offeree must have knowledge of a revocation but secondhand knowledge is adequate.
•Parties to a contract shouldn’t rely on a bare promise.
Comments -compare to Dawson, party trying to get out of contract, but contract already existed
-this case is in a precontractual phase

Byrne v. van Tienhoven, (1880), 5 C.P.D. 344, Lindley

Keywords: revocation, postal acceptance rule
Facts:
Oct 1 -def. (offeror) mailed proposal to sell 1000 boxes of tin plates to pff. (offeree)
Oct 8 -def. mailed revocation of offer
Oct 11 -offer received by pffs, pffs accepted by telegram
Oct 15 -pff. accepted by mail, assuming had bought plates had sold them to 3rd party
Oct 20 -revocation received by pffs
Issues: Must the offeree have knowledge of a revocation?
What is the relation bet. the postal acceptance rule and revocation?
Held: Yes, the withdrawal should be communicated to the offeree.
Postal acceptance rule does not apply to revocation.
 27

Why:
1. •refers to Dickinson, but Pothier states no contract if offer withdrawn before accepted regardless
of commmunication to offeror (no meeting of minds), rejects him as irrelevant
•uncommunicated state of mind irrelevant, too subjective, communication objective
2. •def argues revocation complete once posted (Household) by p.a.r., post office as agent
•inapplicable to withdrawal of offer cases since pffs. (offeree) have not used or implied p/o as
agent
•no clause that stated that a withdrawal could be communicated by letter
•otherwise great injustice, offerees would have to wait to be certain, impractical for commerce
Ratio: •Revocation must be communicated to the offeree so that the offeree has knowledge of the
revocation.
•Mere posting of a revocation is not sufficient communication, p.a.r. does not apply to revocation.
Comments: -generally the p.a.r. puts the risk on the offeror, in this case it places the risk on the
offeree

Errington v. Errington and Woods, [1952] K.B. C.A., Denning

Keywords: revocation,
Facts:
1930 -father bought house for son and daughter-in-law in own name
-told daughter-in-law that the down-payment was a gift, but they were expected to pay mortgage
-stated ’house will be your p. when mortgage paid’, when he retired would put house in their name
-couple have been paying mortgage and still have more to pay
-widow wants the house back
Issues: Can a unilateral contract be revoked after the death of the offeror?
Held: No.
Why: •no express promise by son and daughter to pay, ct can’t imply terms (even though ct did in
Dawson, implied promise to cooperate)
•characterize father’s promise as unilateral contract (like Carlill) performative act paying
mortgage to ultimately get house, only revocable if couple didn’t pay mortgage
•continues after father’s death (contrast to Dickinson)
•once performance starts the offeror can’t revoke the offer (contradicts Dawson)
•father’s implied intention to keep house in their possn. if pay mortgage, trumps the Dawson rule
•Denning says can’t imply terms but then superimposes implied term of father’s promise
Ratio: Can only revoke unilateral contract if didn’t live up to the offeree’s side of the contract. (see
Dawson)
There can be a reliance on promises in contracts. (contrast with Dickinson)
The crt can’t imply terms into contracts (see Dawson). (is this a valid result?)

Daulia v. Four Millbank Nominees, [1978] C.A., Goff

Keywords: revocation
Facts:
Dec 21 1976 -terms of sale concluded partly orally and partly in writing
-Osgoodby (agent of defs), promised pff. def would conclude contract for sale of land if:
1. pff. got Bankers Draft for deposit
2. got to def’s offices before 10am next morning
3. tendered to defs pff’s part of contract and Bankers Draft
-pffs completed these conditions, def. refused to complete contract
Issues: Was there a concluded unilateral contract by defs to enter into 2nd contract?
Held: Yes, there was a unilateral contract to enter into a 2nd contract.
Why: •in unilateral contract no contract until the offeree starts to perform (Errington)
•full performance of condtns, if partial performance offeror can still revoke (contrast w Errington)
 28

•implied term by offeror that subject to imp. qual. that offeror not trying to prevent condtn. from
being satisfied, duty to cooperate
•once offeree embarks on performance offeror can’t revoke
Ratio: •In a situation of partial performance of a unilateral contract, the offeror can revoke (contrast w
Errington, accords with Dawson).
•There is a duty to cooperate in contracts, ct can imply terms (contrast w Errington)
•In a sitn of full performance or start performance of a unilateral contract the offeror can’t revoke.
Comments - Dickinson, caveat emptor is imp., Daulia saying caveat emptor isn’t

Termination of Offer II

Lapse

Barrick v. Clark, [1951] S.C.C., Estey, Kellock

Keywords: lapse, reasonable time
Facts:
Oct 30 1947 -C. offered to purchase land (offer)
-for $14,500
-w possn date bet Jan 1st and Marsh 1st 1948
-asked B. to respond by telegram
Nov. 15 1947 -B. replied by mail, (counter-offer)
-for $15,000
-if this price good, deposit of $2000
Nov 20 1947 -letter delivered to Sask, but C. was absent on hunting trip
-Mrs C. opened letter from B. and responded to him that her husband would be back in
10 days and requested that B. ‘hold the deal’
Nov 30 1947 -TP inquired about land, B. offered TP land for $15,000
Dec 3 1947 -TP accepted B’s offer
Dec 10 1947 -C. returns, writes letter (acceptance)
-encloses cheque for $2000
-kindly acknowledge receipt of letter by mail
Dec 11 1947 -C. sends B. telegram saying has heard rumors about his sale to TP
Dec 12 1947 -B. writes back and explains sitn and says he has sold to TP and will return deposit
-C. sought specific performance but this was dismissed, judgment reversed in C.A.
- trial judge found reasonable time had elapsed
-C.A. judge found acceptance on Dec 10 was within a reasonable time
Issues: Had the offer by B. lapsed? (what was a reasonable time for C’s response?)
Held: Yes, the offer by B. had lapsed; C. didn’t respond in a reasonable time.
Why:
Estey
•reasonable time based on 4 standards: 1. nature and character of business
2. normal course of business
3. circs. of offer
4. conduct of parties
•B.’s counter-offer didn’t stipulate a reasonable time for acceptance
1. • farm lands don’t fluctuate wildly in price, not perishable, expands the reasonable time
2. •C. asks for decision ‘as fast as possible’, counter-offer received by C. on Nov. 20, C. had made
up mind on Oct. 30 as to selling price of land, contracts time
3. •C.’s wife requested an extension of the reasonable time, irrelevant factor since B. didn’t respond
4. •Possn not till March 1st, farming couldn’t start until spring condtns, expands reasonable time,
•other demands for the land (hot market) this contracts the time
 29

5. •B. wanted C. to reply by wire on Nov. 15, hoped offer could be ‘closed immediately’, response
from C. ‘As soon as possible’, contracts the reasonable time
Kellock:
3 indications that Dec. 10 letter too late
1. transaction should be immediately closed, no delay (language)
2. C. asked to give response A.S.A.P.
3. if formal agreement executed by Jan 1 1948, not enough time for paperwork
Ratio: The reasonable time to accept an offer can be determined from the conduct and language of the
two parties, the nature of the goods and other reasonable indications.

Manchester Diocesan Council of Education v. Commercial and General Investments

Ltd., [1970] Ch. D., Buckley
Keywords: lapse
Facts: -p. belongs to pff’s (formerly a school), Endowed Schools Act
-authorized to sell land subject to approval of purchase price by minister of education
Feb 1963- negotiation opened up bet. pff. and def.
Oct 1963-pff. decided to sell p. by tender
1. tenders to be sent to pff’s surveyor by Aug 27 1964
2. sale subject to approval of Secretary of State for Education
3. (condition 4) if tender accepted, tenderer becomes purchaser and acceptance of tender
will be communicated through post, effective moment letter in mailbox, writing p.a.r. in
Aug 25 64-offer from defs to buy the p.
-for 28,500 pounds
-will adhere to the tendering conditions
-no day named as the day on or before any offer should be accepted
-give Berkeley St. address
Aug 27 -tender received by pff.
Sept 1 -pff. surveyor informed def’s surveyor that bid was highest, said will write as received formal inst.
Sept 14 -def wrote back ‘look forward to receiving formal acceptance in due course’
Sept 15 -letter written by pff. saying that are contacting the minister of ed, but sale approved (acceptance)
Nov 18 -Secretary of State approved the Sale
Dec 23 -pff. solicitors wrote to def. solicitors to conclude that contract binding on both parties, ask for
confirmation
Jan 5 65 -def’s write back saying can’t confirm there’s a contract
Jan 6 -pff’s express surprise and want to hear reasons for this response
Jan 7 - wrote to def’s company giving formal notice of acceptance of tender, def wrote saying didn’t
want to proceed because condtn. 4 violated
-def. argues that because of time that lapsed bet. Aug 25 and Jan 7 the offer in tender lapsed, and
that letter of Sept. 15 not an acceptance because not sent to Berkeley St. address
-pff. claims that either letter of Sept. 15 or Jan. 7 constitutes acceptance
Issues: Did the unilateral contract created through the tender lapse? (or was there acceptance on Sept 15
or Jan 7?)
Held: No the contract didn’t lapse, and there was acceptance on Sept. 15.
Why:
Letter of Sept. 15 was acceptance of tendered offer:
1. •condtn 4 didn’t clearly state that p.a.r. the sole means of acceptance (equally effective would do)
•Tinn v. Hoffman & Co., means not later than those specified
2. •condtn 4 designed by pff., could be seen as to protect themselves
•acceptance communicated on Sept. 15, even though not consistent w procedure of condtn. 4
•offeree (pff.) could waive terms in condtn. 4 if def. not adversely affected
3. • lack of ministerial approval doesn’t invalidates the contract, condtn subsequent (see Dawson)
•still have power to contract
Offer was accepted in reasonable time:
 30

1. •offer made on terms that if not accepted in r.t. treat as withdrawn (subjective test)
•would test this by asking what does one think offeror was planning/thinking at time the
offer made? uncertainty and subjectivity, subsequent conduct of parties is irrelevant
2. •if offeree doesn’t accept offer in r.t., offeree must be treated as having refused (objective test)
•look at conduct of offeree, what did he do?, subsequent conduct imp. likes this
•finds contract made in tendering process due to subsequent behaviour of letter on Sept. 15
Ratio: •Mode of acceptance in a tender can be altered by the offeree so long as it is equally effective.
•If a term is included in the contract to protect one party it should not be allowed to be altered to
hurt that party.
•A condition subsequent doesn’t affect the power to contract. (see also Dawson)
•The acceptance of an offer should be tested through an objective test: if offer not accepted in
reasonable time offeree will be treated as having refused.

Ideally:
Rules -> Facts-> Answers

Practically: (factors in deciding facts of a case)

judge’s attitudes
intentions of parties
actions of parties
common practices
social norms
allocation of risk

(UN)CERTAINTY I

Hands-off versus interventionist role of decision makers.

Uncertainty is due to
a) parties’ intentions
b) in relation to language used by parties

Uncertainty arises in 3 ways:

a) ambiguity
b) vagueness
c) missing terms

What have courts done in cases of uncertainty:

1. In cases of ambiguity cts will draw implications to get a reasonable result

e.g. Raffles v. Wichelhaus (1864)
•pff. tried to ship goods on the ship Peerless,
•2 ships, same name one left in Oct. and other in Dec., wanted one in Oct.
•ct decided ‘Peerless’ ambiguous, using objective test unreasonable, unenforceable

2. How cts deal with vague terms:

(a) e.g. Scammell v. Outston (1941)
 31

•agreement for sale of van, ‘subject to hire-purchase terms being available’

•cts decide phrase uncertain, too much varn. in types of hire-purchase available
•hands off approach
(b) e.g. Carlill v. Carbolic Smoke Ball
•questions as to which people would be covered (scope) and for how long (temporal)
•use the reasonable person test, more interventionist
(c) e.g. Nicolene v. Simmonds, (1953)

Vague terms

Nicolene v. Simmonds, [1953] Q.B. C.A., Denning

Facts: -pffs ordered steel from def. at fixed price, asked for written confirmation of acceptance of order
-def. confirmed receipt of order, couldn’t confirm on regular printed form
-’would have the usual force majeure and war clauses’
-’we are in agreement that the usual conditions of acceptance apply’
-def. failed to make delivery, pff. claimed damages for breach of contract
Issues: Was there a concluded contract between the two parties?
Held: Yes there was a contract.
Why: Two ways to characterize a vague clause:
1. clause that can be ignored (meaningless clause), means that there still is a contract
2. clause yet to be determined (may mean no contract, no agreement on essential terms)
•severs clause from the rest of the contract
•concerned about the problem of the free rider who inserts purposely vague phrases into contract,
creates uncertainty in the marketplace
Ratio: •When trying to decide how to characterize a vague clause look to whether the essential elements
of the contract have been decided.
•Where a clause is meaningless it can be extracted from the contract and ignored.

3. (contd) Where parties enter into contracts with missing terms:

Classical - cts won’t fill in the gaps
Modern - check 7 elements to see if key terms missing:
1. intention of parties
2. look at language of contract
3. business efficacy
4. relevant statute law
5. custom of the trade
6. fairness or reasonableness
7. allocation of risk

Missing terms:

Agreements to agree

May and Butcher Ltd. v. R., [1934] H.L., Lord Buckmaster (decided 1929)
Keywords:
Facts: -pffs. wanted to buy tentage from the Disposals Board (DB)
-June 1921 def. defined terms of agreement and gave deposit of 1000 pounds
1. agree to sell (and pff agree to purchase) all old tents
3. the price and dates on which payment will be made shall be agreed on by the parties to
the agreement as the tents become available
 32

10. all disputes will be submitted to arbitration

-January 7, 1922, referred to extension of agreement and confirmed sale of the tentage which
would be available up to March 31, 1923., control of Board changed at this time
Earlier course of business- received specs and given to would-be purchaser, who checked goods
Present course of business - don’t deliver specs, allow inspection in case specs don’t match
goods
-proposals made by pffs unacceptable, def. rejected it, DB no longer considered bound by contract
Issues: Were the terms of the contract sufficiently defined to constitute a legal binding contract bet. the
parties?
Held: No the contract wasn’t defined enough.
Why:
Pff’s claim that there was an enforceable contract:
1. The price would have been a reasonable price even if it wasn’t agreed to. (Sale of Goods, s.8)
2. Even if price not specified, arbitration clause should deal with this.
3. Even if two don’t hold were entitled to enter into future agreements for goods because deposit.
Buckmaster:
words •no contract since part of contract undetermined (contrast w Nicolene ‘may mean there is not a
contract’), the price being essential element
•b.o.p. lies on person who claims contract on balance of probs, agreement to enter into agreement,
1. •ss. 8 and 9 contradict one another because s.9 TP can determine price, thinks that fixing price in
future (s.8) and getting TP to do this (s.9) are the same
2. •arbitration can’t make contract if no agreement
3. •deposit was for security of seller, the clause specifically states this, not for the buyer
Ratio: •A term yet to be determined means that there is no contract if it is an essential term, it is just
an agreement to agree and is not enforceable.
•The ct cannot read terms into an incomplete contract.
Comments-buyer beware!, didn’t look at all at context, would never be able to go to arbitration by his logic

Hillas and Co. Ltd. v. Arcos Ltd., (1932) C.A., Scrutton

Facts: -pff. used to buy lumber as part of a cartel (Russian Softwood Importers Ltd.)
1930 -cartel didn’t buy Russian timber, pff. left cartel, received v. good terms
Feb 15 -were to receive reduction from official price list and benefit of any price reduction made to others
May 21 -agreement signed where pff. agreed to buy
1. 22,0000 standards of Russian timber over season
2. at fair specification
3. at agreed prices and discounts
4. over the year 1930
5. cl. 9 a. ‘whatever the conditions are’
b.’Buyers have option to enter into contract for purchase of 100 000 standards in
1931... a reduction of 5% on the real value of the official price list’
Nov 20 -sold to cartel ‘entire production for shipment... season 1931. min 500000, max 600000 standards’
-pff. suing def. for breach of contract to provide 100,000 stands of Russian timber
Issues: Was clause 9 an effective contract for 1931?
Held: No clause 9 was not an agreement.
Why:
Scrutton:
1. •text of agreement, previous contract v specific, current contract deeply indeterminate
•cl. 9 doesn’t say precisely what goods would be bought, meaning of ‘fair specification’?
•if don’t know the what will be sold then how can calculate damages?
2. •current business practice, mass of negotiations would occur which would result in determination
of kinds, sizes, quantities, ports and manner of shipment
•none currently specified, not enough detail, agreement to enter agreement, unenforceable
VonHatzefeldt-Wildenburg v. Alexander, ‘an agreement to make an agreement’ isn’t enforceable agreement
 33

•bound by May and Butcher, states contracts stuck in 19th cent., modern world needs flexibility
Greer: •intention and context, cl. 9 not freestanding but part of consideration for 1930 agreement
•essential element of contract law, just way it is, legn. would have to allow cts to intervene
•role of contracts not to enforce trustworthiness, nothing wrong w the law, humans imperfect
Ratio: •The role of the courts is not to intervene and create a contract where agreements exist.
•Mass of negotiations means can’t find a contract.
Comments-Scrutton/Greer non-interventionists, see Feinmann for notion of essental elt of contract law

Hillas and Co. Ltd.v. Arcos Ltd., (1932), 147 L.T. 503, H.L., Lord Wright
Held: Found that clause 9 did constitute a binding agreement. (reversed C.A.)
Why:
Wright:
1. •His reflections on the judicial role, legal realist, deal w business people in the real world
•‘words are to be interpreted so that subject matter is preserved not destroyed’, contractual
intentions of parties, enforce fair meaning, look to nature of marketplace and reqmt of flexibility
•‘that is certain which can be made certain’, reasonable implications of undertain terms, judge
fills in gaps
2. •Status of clause 9 - two interpretations of ‘fair specification’
1. if formed a contract (de prasenti) and were to enter into second contract is enforceable
2. if meant to negotiate towards a future contract then there is no contract
•believes it is #2, contract to negotiate which is enforceable, but remedies ltd. (contradicts
Scrutton in previous decision)
3. •Terms of clause 9 - based on a fair reading of the words
Price •contract clear on price specifications, 5% less than official list
Goods •100 000 standards, take in context, apply same fair specifications of cl. 7 to cl. 9
•apply fair spec of previous years, if disagreement get decision in ct by expert witnesses
Shipping dates a. find shipping dates in context of cl. 6
b. Sale of Goods Act - goods delivered in a reasonable time
Ratio: •A contract to negotiate is enforceable.
•The cts should intervene to determine the terms of an agreement through context and legn.
Comments-realist, enforcing notion of trust, mutual respect, cooperation, adapt law to changing market
need

Foley v. Classique Coaches Ltd., [1934] K.B., C.A., Scrutton (note contrast to his
earlier judgment in Hillas C.A.)
Facts: -defs operate motor coaches, agree to purchase land from pffs. who operate a service station
-sale of land subject to defs entering supplemental agreement to buy all petrol from pffs
-’at a price to be agreed by the parties in writing and from time to time’
-cl 8, Arbitration Act, agree to go to arbitrators if there is any dispute
-3 yrs defs obtained gas from pffs until decided could get a better price for it elsewhere
-defs tried to repudiate agreement, pffs seek injunction to buying gas, say agreement binding
Issues: Is the supplemental clause binding?
Held: Yes the supplemental clause is binding.
Why: •conflicting precedent: Hillas and Co. Ltd. v. Arcos, May and Butcher v. R..
• most similar to May (preexisting relns, arbitration clause, contract determined from time to time)
•decided each case on facts of docs, parties clearly believed they had a contract, def. dishonest
1. acted for three years on the contract
2. arbitration clause, applies to failure to agree as to price
•instructs them to go to arbitration (opposite from May and Butcher) distinguishes
May - disputes w reference to or arising out of agreement
Foley - arbitration for the subject matter or construction of agreement
•says look at words but be realistic, but Hillas didn’t overrule May, both good law
 34

•questions appellant’s honesty, want to keep land but not gas, gas was consideration for land
Ratio: •questions appellant’s honesty, want to keep land but not gas, gas was consideration for land
•Look to the conditions of each particular agreement (reliance interest).
Comments - Scrutton much more willing to intervene now than before. Wright opened up the path.

Sale of Goods Act

C.C.S.M., c. S10, ss. 10, 11, 31(2)

Ascertainment of price: •price may be fixed by contract

•can be fixed in agreed manner or be determined by course of dealing bet.
parties

Reasonable price: •if price not determined by provisions buyer will pay a reasonable price
•reasonable price a question of fact in each case

Agreement to sell at valuation: •price to be set by valuation of TP

•if TP cannot or doesn’t make valuation the agreement is avoided
•if goods or any part thereof have been delivered to and appropriated he shall pay reasonable price

Valuation prevented by seller or buyer - the party not involved can claim damages

If no time for delivering goods, then the seller is bound to send them within a reasonable time

Sudbrook Trading Estate v. Eggleton, [1983] 1 A.C. 444, [1982] 3 All E.R. 1, H.L.,
Scarman, Russell
Facts: -lessees granted an option to buy reversion in fee simple at not less than $12000
-two valuers one nominated by lessor one by lessee, in default decision made by umpire apptd by
valuers, lessors refused to appoint a valuer, C.A. claimed couldn’t appoint a valuer
-couldn’t determine price of land, hence option unenforceable
Issues: Was the contract unenforceable since the price couldn’t be determined?
Held: No the contract was enforceable.
Why:
Scarman -essence of the contract fair and reasonable price or the means of finding this price?
•unembarassed by authority, parties wanted a fair and reasonable price, the valuation was a means
to an end, where the end was imp., injustice to be too formalistic, wants a fair and reasonable
result
Russell: 1. There is value to precedent, decisions made over the 150 years.
2. Why should we think that the two parties would agree on a fair price? Naturally greedy.
3. If agree to calculate price through machinery which doesn’t work, then the party that takes
advantage of this shouldn’t be punished
Ratio: The agreement of a fair and reasonable price is more important than the machinery to get there.
Comments: if referred to the Sale of Goods Act - lessors have waived rt to a valuer so the price will
be determined through expert witness.

Courtney and Fairbairn Ltd. v. Tolaini Brothers (Hotels) Ltd., [1975] C.A., Denning
Facts: -T. wanted to develop a p., contacted C. because he was building contractor w connections
-had a meeting where agreed C. find financing, T would hire C.’s company for the construction
April 10 69 - C. wrote to T., wants to be Building Contractor
-if discussions lead to financing for T. then will instruct Quantity Surveyor to negotiate
fair and reasonable sums in terms of each of the 3 projects
 35

-estimates of price would be based upon agreed estimates of cost of work and general
overheads, w profit margin of 5% (see Hillas H.L.)
April 28 69 - T wrote letter where agreed to terms of letter of April 10
-C. found financing of 200 000 pounds, T. didn’t end up employ C. but used financing
Issues: Was there an enforceable agreement bet. the pff. and def.?
Held: No, there wasn’t an enforceable agreement.
Why: Finds no agreement on price or how building contract was to be calculated
1. •agreement to negotiate fair and reasonable sums (looks at language)
2. •whole mass of detail yet to be determined (see Hillas C.A.), looks at the norms of the trade
large sums of money were involved, but there was no agreement in the fund. matter of price
3. •contract to negotiate? Hillas (H.L.) no bargain except to negotiate, was enforceable
•rejects (C.A.), law doesn’t recognize contract to enter into contract then shouldn’t
recognize contract to negotiate, nature of negotiation that might never reach a conclusion
Ratio: A contract to negotiate is unenforceable; nature of negotiation is that might never reach an
agreement.
Comments: note 4 - Goff (in a lower ct) overrides Dennings decision in this case

Variables to determine if uncertainty or openness:

A. Factual:
1. intention of parties
-Tolaini
-Hillas (H.L.)
2. language of parties
-Courtney (negotiate)
-Sudbrook (fair value)
-May and Butcher (arbitration)
-Nicolene and Simmonds
-Foley (arbitration)
3. Business efficacy
-Courtney (building contracts, people look after themselves, need clear specs to make
market work)
-Hillas (real world, people aren’t technical, live up to norms)
4. Statute law
-May and Butcher (contradict s.8)
-Hillas H.L. (reasonable time)
5. Customs of trade
-Courtney (mass of detail_
-Hillas C.A. (many details, don’t need to spell everything out)
-Sudbrook (valuers create process)
6. Fariness/reasonableness:
-Sudbrook (fair price of pff. - Scarman)
-Hillas H.L. (sleazy commies, get better deal w new cartel)
-Foley (took all benefits, none of burdens)
-Russell (doesn’t think we should pursue fairness, people more resilient)
7. Allocation of risk
-Courtney (look after yourself, each party should look after itself)

B. Institutional variables:
1. Classical - non interventionist
2. Modernist - intervene to create greater efficiency

Canadian cases chronologically: (as progress create more of a duty to negotiate in good faith)
De Laval
 36

Cae
Empress
Meyer
Knowlton

Two major patterns:

1. classical approach -if terms vague or uncertain the cts take a hands-off approach
2. modern approach -frequently people leave aspects of contracts, cts will intervene to fill in the gaps
-the question becomes now not is the contract certain, but in what circs will cts
intervene?

Two major sets of variables which determine when cts intervene (see previous notes):
1. FACTUAL
2. INSTITUTIONAL

De Laval Co. v. Bloomfield, [1938] O.R. 294, [1938] 3 D.L.R. 405, C.A., Masten
Keywords: agreements to agree
Facts: -pff. sold def. some machinery, signed contract, pay $200 on Nov. 1st 1937, ‘bal. to be arranged’
-pff’s claim is for $200 for first installment, def. won’t pay up, claim contract void for uncertainty
Issues: Is the contract too vague to be enforced?
Held: No.
Why: • interventionist response, ct won’t let them get out of obligation
•Valpy v. Gibson, omission of mode of payment doesn’t invalidate contract of sale
•look to parties’ intentions, mode of payment determined by what reasonable
obiter - if no price specified would be determined by reasonable price
Ratio: Leaving the mode of payment uncertain doesn’t invalidate a contract if two parties obviously
intended to contract.

R. v. Cae Industries Ltd., [1986] 1 F.C. 129, C.A., Stone

Keywords: vagueness, best efforts
Facts: -negotiations bet. R. and C. about C. taking over and running an aircraft maintenance base no
longer needed by Air Canada
March 69 -letter written from R. to C. to ‘provide the following assurances in this matter’, imp. term
c-DDP ‘can guarantee’ no more that 40000 to 50000 direct labour man-hours...as “set-
aside” repair and overhaul work
-will employ its ‘best efforts’ to guarantee the 700 000 man-hours of labour
-C. then arranged for purchase of base by subsidiary
1971 -workload to the maintenance base had diminished, C. sued R. for breach of contract
Issues: 1. Was a contract intended?
2. Is the contract vague and uncertain or incomplete?
Held: 1. Yes there was a contract intended.
2. Reads in information to supplement the vagueness.
Why:
1. -doesn’t think letter was a purely political arrangement (i.e. just promises of jobs in Winnipeg)
Lindsey v. Heron & Co., infer intention to enter into contract from context,
(a) words - govt. eager to find buyer in private sector, sought out C.
(b) actions, outward expressions - parties partly performed parts of contract
(c) treated as contract,
•R. hasn’t discharged onus to show no contract, high standard since brought case
•normally, burden of proof (bop) is to prove contract, person has to prove the elements, May v. Butcher
SHIFTS
 37

•in commercial context, presumes there is a contract in terms of intention, bop is to show there isn’t a
contract
2. i. Role of courts
•May (hands off), Hillas (interventionist), both are available, both are good law, follows Hillas
•even though agreement cast in unusual form, ct ought to give effect to intentions in contract
ii. Actual contract
•Marquest, ‘a deed shall never be void where words may be applied to any extent to make it good’
•look at substance not just form, difficulties interpreting clause don’t exclude it, cts must infer
anything necessary
•this contract is salvageable, doesn’t leave anything unsettled that needed to be settled
iii. Reads meaning into vague language
a. ‘assurances’ - became binding commitments, in para c even refer to as commitment
b. ‘can guarantee’ - commitment to set-aside 40000 hrs of work
c. ‘set-aside’ - two processes 1. work w/out competition at full overhead rates
2. work w/out competition w/out overhead
-agree that meant (1), guarantee w/no strings attached
d. ‘best efforts’ - at trial stated equivalent to ‘best endeavors’ and Sheffield, ‘leave no stone
unturned’
• in context, look at parties and purpose of contract, best efforts were required
Ratio: •There is an obligation to negotiate (demonstrate good faith efforts)
•Cts can find intention
•‘Best efforts’ can create legal relations - remedy could be specific performance
Comments - this is more of a symbolic rather than substantive victory, agreements to agree damages
nominal

Empress Towers Ltd. v. Bank of Nova Scotia, [1991] 1 W.W.R. 537, C.A., Lambert
Keywords: good faith negotiations
Facts:
72 -first lease made bet. parties, expired in 1984
84 -new lease, contained the clause
-can renew for 2 successive periods, w 3 mths written notice
-rental for renewal periods which will be the market rental at the start of the renewal term
-‘as mutually agreed bet. Landlord and Tenant’
-parties can walk away if there is no agreement
May 25 89-bank exercised option to renew for further 5 yrs from Sept. 1 1989
June 23 89-bank proposed rate of $5400 a month over $3097.92, no written reply from pffs
Aug 31 89-pff’s made response (day that lease due to expire!)
-would allow to stay if made payment of $15000 before Sept. 15 1989
-(e’ee had had $15 000 stolen in Bank of Nova Scotia building)
-rent of $5400 to be paid thereafter
-wanted tenancy to be terminable on 90 days notice
Issues: Was the clause void either because of uncertainty or because it was an agreement to agree?
If the clause is not void, what does it mean?
Held: No the clause is not void.
See below.
Why: Two courses of action: (chooses 2, like Wright in Hillas)
1. May v. Butcher, if there are things to be agreed upon no contract
2.Griffin (see Hillas), cts shouldn’t set aside clause that’s imprecise, should strive to find meaning,

3 categories of options for determining rent: (Brown v. Gould)

1. rent to be agreed - can’t be enforced
2. rent to be est. by formula, but no machinery - cts generally supply machinery
3. formula given but is defective - ct cures the defect
 38

•if parties had wanted renewal at rate set by landlord or market, ct could easily do this by
valuation
•but clause says must be agreed by landlord and tenant, interprets to mean that
1. the landlord can’t be compelled to enter into a market rental value - each side has veto
2. implied term that landlord will neg. in good faith (‘best efforts’)
3. agreement on market rate won’t be unreasonably withheld (‘best efforts’)
•these terms to be implied under reasonable person and business efficacy standards
• landlord hasn’t negotiated in good faith by adding $15 000, Empress trying to reallocate risk
Ratio: There is an obligation to negotiate in good faith.
Comments - note 3 - Ackner agrees w Russell that people vicious, negotiating in good faith repugnant to
adversarial positions, maximize self-interest in marketplace

Anticipation of formalization

3 ways to perceive:
1. subject to contract, basic consensus, has to be subjected to formal legal documentation
2. letters of intent
3. interim agreements subject to final agreement

2 major questions:
1. Does a binding contract come into being immediately? or
2. Is it a tentative agreement that is preparatory to agreement and unenforceable?

Meyer v. Davies, (1989), 45 B.L.R. 92, B.C.S.C., Wong

Keywords: anticipation of formalization
Facts: -pff. looking for new partnership, def owns firm
Aug 17 -pff. wrote to def. set out 19 terms, include $15 000 for def’s ongoing services as associate counsel
-pff. says whether exchange of correspondence or formal agreement up to def., def claims pff.
wanted a formal agreement
Aug 30 -def responds to pff’s letter, asks $2500 deposit, agree to cover matters in letters, changes proposal
Sept 1 -TP made offer to buy firm for $30 000, conditioned on financing so def. not happy
Sept 3 -pff. called def., offered to deliver deposit and signed agreement and def. said ‘don’t worry I’m too
darn busy’, when left on vacation had no firm idea as to purchaser
Oct. 20 -def. contacted pff. because of printer, def said would make up mind by Oct. 21
Oct 21 -accepted TP’s offer, wrote to pff. saying he wasn’t accepting his offer
-pff. didn’t deliver deposit or formal agreement, but def. didn’t get in touch with pff. when got
back
Issues: Was the communication of Sept 3:
1. Dealing with conditions, a preliminary agreement, but not a binding contract? or
2. Dealing with procedural matters (deposit, formal agreement) for a contract already made?
Held: Decides the contract was the second.
Why:
Precedent-Calvan, informal agreement to be followed by formal agreement
•Von-Hatzfeld, contemplation of a future contract or was there an expression of the desire that an
already agreed upon agreement will go through, latter is binding
This case-Sept. 3, pff. accepted def’s counter offer
•judge thinks that the deposit and formal agreement were essential and crucial to the contract, but
the def. has waived them so the pff. is not bound by them
•shift of risk by waiver, risk on buyer initially, but statement of Sept 3 transferred risk to seller
•if def. conveys erroneous impressions it’s his fault
 39

Ratio: Normally in a transaction the buyer bears the risk but if the seller intervenes, then risk shifts back
to the seller.

Knowlton Realty Ltd. v. Wyder, [1972] B.C.S.C., MacDonald

Keywords: anticipation of formalization
Facts:
69 -pff. is Bennett (B.), approached by W. who wanted B. to secure a lease in a building owned by Z
-Z. and W. had agreement ‘subject to execution of lease docs’
-W. ran into financial difficulties, no final lease was executed
Feb 28 69-pff. claims commission based on letter sent on this date
-states ‘We understand that, if we are successful in negotiating a lease on your behalf on
terms acceptable to you, we will be entitled to a commission’
-why should they have to bear risk of W.’s loss?
-W. claiming contract bet. Z. + W. was interim agreement (agreement to enter into lease)
Issues: Was there a lease negotiated bet. Zurich and Wyder? (to enable B. to get commission)
Held: No there was no lease.
Why: •was statement bet. Z. + W.
1. an execution of the lease as condition or term? or
2. an expression of desire of parties as to manner in which agreement already agreed to
will go through?
•judge decides the first, condition, parties should look after themselves
Supporting precedent:
•Rossdale, all cases except two ‘subject to’ meant condition or term (wrongly decided 1
exception)
•Brixham, agreement to be prepared would contain details not included in the agreement, no
enforceable agreement
•K. bears risks of W.’s financial woes, K sophisticated company, should have drafted better terms
Ratio: •There is no obligation to negotiate in good faith.
•Crt won’t enforce an agreement to agree.
Comments: -limits to the interventionism of the cts

Distinction between gratuitous promises:

a. mutual agreement
b. certainty of terms
c. intention
d. consideration

Intention to create legal relations:

1. objective test
e.g. Carlill, language(reward) and conduct(money in bank), how intended it to be
understood (legit. reliance on contract)
-Goldthorpe, language (guarantee) and conduct (consultation) (legit reliance)
-Cae, argued policy or intention, looked at language, conduct (partial completion, govt
approached) (legit reliance on govt’s promise)

2. Two presumptions that kick in

•presumptions but rebuttable on facts of case, burden on person trying to rebut the presumptions
•burden of proof, Cae, heavy one, probably on balance of probabilities
a. business sphere, assume that parties do intend to create legal relations
 40

b. private sphere, assume no intention to create legal relations

e.g. Blair v. Western:

•no intention to create legal relations, is intention really imp. or is there a better way to
see if parties have relied
•with intention it is difficult to get into a person’s head
•intention doesn’t ask ‘should there be a contract’

3. Public private dichotomy, see Wanda Wiegers and the impact on law

Private arrangements:

Balfour v. Balfour, [1919] 2 K.B. 571, C.A., Atkin

Keywords: intention, legal relations
Facts: -husband went back to Ceylon, leaving her in England because she had a health condition
-decided to separate, he then refused to pay her a monthly allowance
-she succeeded in getting an order of alimony
Issues: Was there a contract binding the husband to pay his wife a monthly allowance of 30 pounds?
Held: At trial:
Yes there was a contract a. intention to create legal relations
b. consideration given by wife
At C.A.:
No contract, no intention to create legal relations.
Why:
1. •no intention to create legal relations bet. husband and wife, like taking a walk or dinner invitation
•not enforceable in private sphere, natural state (see Sudbrooke and natural greedy people)
2. •there is consideration, but no contract because parties didn’t intend legal relations.
3. •if allowed this action, would open floodgates, people would sue like crazy
4. •real consideration is natural love and affection, domestic code, shouldn’t regulate warm area
5. •claims reason why not enforcing, if she became really ill would not get more than 30 pounds
•in reality, appears that judge doesn’t like her doubling up, doesn’t have a legit reliance interest
Ratio: The law of contracts should not interfere in the private domain.

Jones v. Padavatton (England, 1969)

Keywords: intention to create legal relations, private
Facts: -mother had a daughter in U.S. who also had a child
-mother wanted daughter to go to law school, daughter quit job and went to U.K. on understanding
mother would pay, mother reneged
Issues: Was there a binding contract between the two?
Held: No.
Why/ratio: 1. consideration - yes, gave up her job
2. intention - no, private family arrangement (see Balfour)

Errington v. Errington, was a private relation, how could justify intervention to say there was a contract?
-reliance interest on part of son and daughter

Merritt v. Merritt, existing separation agreement, no amity present so clearly intending to make contract

Notes (page 152-5)

4- separation agreements recognized by statute, parties will have agreed to contract
 41

5- marriage contracts must be in writing, signed by both spouses and witnessed

- prenuptial agreement, amity not an issue
6(b) - contractualized cohabitation, inverted Atkin, nothing inevitable or necessary in private
sphere
- private relns highly contractual, contractualization of heterosexuality

Commercial arrangements:

Rose and Frank Co. v. J.R. Crompton and Bros. Ltd., [1923] K.B. C.A., Scrutton
Keywords: commercial, intention to create legal relations
Facts: -agents worried about insecurity of deal, signed on 2 new clauses
-#1 (notice clause) “for greater security, relations are to continue for a 3 year term, to be
renewable, unless terminated with 6 months notice by either of the parties”
-#2 (honourable pledge) “agreement is not entered into...as a formal or legal agreement, and shall
not be subject to legal jurisdiction”
-principal became dissatisfied w agent’s performance, selling at too high price, decided to dump
-agent made orders before dumped, suing for performance of those orders
-principal acknowledged receipt of order, but then terminated agreement and didn’t deliver goods
Issues: Is agent still entitled to make 6 months worth of orders?
At a minimum, are they entitled to the goods they have already ordered?
Held: At trial: -Yes to both, finds the honourable pledge repugnant, but claims clause is clear
C.A.: -No to both.
H.L. -No, honourable pledge trumps this clause, no legit reliance interest.
-Yes, legit. reliance interest in orders sent in.
Why:
Scrutton - fine to express intent not to have legal relns., agrees clause clear, absolutely trumped
Atkin - liable for specific orders but not for rest of orders, #2 plays second fiddle, specific contract for
goods give best attention (sepcific over general, Canamerican)
Ratio: A clause which exempts parties from legal relations can be binding but is voided if there is a
legitimate reliance interest on the part of one of the parties.
Comments:
Cae - legit. reliance interest present
Canamerican - Hertz had a legit reliance interest on what govt said, not just policy statement

AGBC v. Esquimault and Nanaimo Ry (B.C., 1949)

Facts: -company wanted to build ry in B.C., govt. gave them tax concession
-after several years govt. said no longer entitled to tax concession
Issues: -Was the govt in breach of contract by removing the tax concession?
Held: No
Why/Ratio: No intention to create legal relns. in perpetuity.
•company can’t legitimately expect to have concession forever, tying the govt’s hands too much.

Grant v. N.B.
Facts: -govt. agrees to buy surplus potatoes and pay subsidy
-destroy all potatoes and then don’t pay up
Issues: Was there a breach of contract?
Held: Yes.
Why/Ratio: There was intent to create legal relns., specific potatoes, tighter legitimate expectation, actual
potatoes destroyed, could have been used elsewhere.
 42

Appleson c. Littlewoods (1939)

Facts: -betting regime, A. won the pools
-L. wouldn’t pay up, small letters on contract say no bound by any legal relations
Issues: Was L. bound by contract?
Held: No.
Why/Ratio: No intention to create legal relations, gambling not a legit activity, morality intervenes.

Consideration
1. Contracts and promises
2. Definitions of consideration
3. Consideration must move from promisee but need not be for benefit of promisor
4. Adequacy and sufficiency of consideration
5. Forbearance
6. Past consideration
7. Pre-existing legal duty.

1. Contracts and Promises

•have established promises insufficient to form a contract (e.g. Dickinson, Balfour)
•consideration normally used to distinguish bet. promises and contracts
•why promises are not acted on:
1. cts would multiply - efficiency argument
2. hard to determine intentions to contract, hard to prove
3. contract law isn’t to enforce morality, is to facilitate bargaining (exchange +
reciprocity)
•consideration not universally well-received (e.g. Scottish law doesn’t recognize, English Law
Commission, irreconcilable loop-hole)

History - controversial origins (Lord Mansfield), contracts should enforce promises based on reliance
interests, moral obligations

Eastwood:
Facts: -pff. was the guardian of the def.’s wife, loans her money for education and estate
-def. promised to pay back the money, then refuses to do this
Issues: Is a promise sufficient to form a contract?
Held: No, not sufficient to form a contract/
Why: •pff argues def. promised to pay the money (Mansfield), promises should be enforced
1. •will annihilate necessity for consideration, fn. of contract law not to enforce morality
2. a. the floodgates will open, everyone will be going to ct
b. if mere promises constitute contracts would have sitns where guardians would be doing many
things for their charges
Ratio: Promises not sufficient to found a contract (rejection of promissory basis for contracts).

Comments:
If a contract if done under seal then no consideration is required (shows seriousness of intent).
•seals not used very much currently, still serve purpose of enforceability.

OLRC: •seal should be deemed of legal effect in contracts

a. witness signed writing replaces seal.
b. writing executed by party to be bound in front of witnesses and signed in presence of
executing party.
 43

2. Definition of promises
•there are at least four definitions of consideration
1. Pollock - act of forbearance and reciprocity (traditional view)
2. American Restatement •must be bargained for, facilitate bargaining or exchange
•not unidirectional, but exchange of acts or promises
3. Currie v. Misa (seeBalfour) more contextual
•some right, interest or prfit to promissor
•forbearance and/or loss to promisee
4. Consideration somehow detrimental to promisee, enforcement of promises where there was
reliance, moving towards promissory model disguised as reliance

3. Consideration must move from promisee but need not be for benefit of
promisor
A promises B $200 is she fixes A’s car.
A then refuses to pay $200.
B can sue A, because B has furnished consideration which moves from promisee.

A promises B $200 to fix C’s car.

A. then refuses to pay the $200.
B can sue A, because considerations must move from promisee but need not be for benefit of
promisor.

A promises C $200 is B fixes A’s car.

A then refuses to pay the $200.
C can’t sue, since C is the promisee but hasn’t furnished consideration. The consideration must
move from the promisee. C did nothing.

4. Adequacy and sufficiency of consideration

adequacy •quantitative, amount of price paid (e.g. pay $200 for plane ticket)
•cts don’t look to adequacy for consideration
sufficiency •qualitative, law considers whether technically appropriate

a. Adequacy
•something has to be given in exchange, but don’t care about quantum
•following classical model, one should look out for oneself
•Whitney v. Stern, a trivial peppercorn would constitute consideration
•also Thomas v. Thomas (don’t care only $1 a year)
•Bank of N.S. v. MacLellan, husband and wife joint debtors, husband absconds, wife helps bank
find him, bank tries to sue her, her help is sufficient consideration
However:
1 •when there is a clear disparity, the cts will find undue influence, duress, or unfair bargaining
•hence cts do look to the adequcy of consideration
2. •statutes ask cts to consider adequacy
e.g. Sale of Goods Act, merchantibility, compare price to quality
e.g. Landlord and Tenants Act, can appeal if think rent too high, Board assesses adequacy
e.g. Consumer Protection, excessive interest rates on loans, assessing adequacy
•statutes get-around non-nterventionists, paternalism, looking after interests of weaker parties
 44

b. Sufficiency
•even though doesn’t need to be adequate must be sufficient
•natural love and affection, past consideration, pre-existing legal duty and motive are insufficient
consideration
•paying $1, forebearance, are sufficient consideration

Sufficiency: Thomas v. Thomas

Facts: -executors not present when husband made final wish, drafted agreement
Terms -she could stay in house until she remarried or died
-she would keep house in good repair and pay $1 a year
-one executor dies, the other one kicks her out, she claims contract, def claims no consideration
Issues: Is respecting the wishes of her dead husband (motive) sufficient consideration?
Does the house constitute a voluntary gift (hence she has no rights)?
Held: No, motive is insufficient consideration.
No, she has furnished consideration.
Why:
1. •motive not the same as consideration, she has offered no consideration
•sthing of value in the eyes of the law (respect for wishes of dead man) not moving from
promissee (woman) to promissor (executor) but rather from the TP (dead man) to the promissor
(executor).
2. paying the $1 and the repairs is sufficient consideration (no discussion of adequacy)
Ratio: •Motive insufficient consideration.
•Respect for testator’s wishes is insufficient consideration. (natural love insufficient, Balfour)
•Payment of rent and promise to do repairs adequate consideration.

Can there be consideration for the human body? Yes, slavery

•legally sufficient consideration for human body, commodity
•hierarchy of value based on sex, age etc.
•consideration context specific, slavery natural at that time
•indentured servants as immigration policy (1940’s-50’s), consideration in human bodies
•Now, Phillipino nannies, what about also body parts, blood, kidney, sex, DNA, sperm, eggs
•commodification depends on own set of values (Wiegers)

Sufficiency: Scivoletto v. De Dona:

Facts: -family paid the way for a woman to come from Italy to marry their son
-potential husband and wife didn’t get along and she marries def.
-pff. secures promise from def. to pay him $500 which def. then backs out of
Issues: Has there been sufficient consideration for a binding contract?
Held: Yes, by performing a subjective test.
Why: •objectively, the pff. had no rt to send the woman back to Italy
•subjectively this rt existed, bona fide belief that entitled to return her.
•the pff. forbore on sending her back in the belief that he wouldget money from def.
Ratio: Forebearance is a valid form of consideration.
There doesn’t have to be forebearance of an actual legal rt but of a subjective legal rt.
Comments: -judge looks at both adequacy and sufficiency, forebearance is about adequacy not sufficiency

Sufficiency: Stott v. Merit (1988, Ont. C.A.)

Facts: -S. securities trader, sold out a client’s (G.’s) account, D. intervened to repurchase
-G left owing a large sum of money that wouldn’t have happened w/out the intervention
Jan 30/80-S. signed contract for K., agreed to shoulder debt and pay it back out of commissions
 45

-K. said ‘this doc. wont hold up in crt’, sums deducted from S.’s commission,
July 30/82-S. resigned from Merit after 2.5 years of paying off this debt to G.
-Merit suing to recover balance owing, S. suing to recover amount paid
Issues:

Held:

Why: •make sure to ask the right question not “Did Merit have contractual rights against S.?” but “Did
Merit believe it had contractual rights against S.?”
•forebearance of a non-existing claim isn’t forebearance, but not the case here
•case law suggests 1. look from perspective of reasonable businessperson,
•2. if there’s good faith, and a reasonable and fivolous belief in existence of a legal action even
though there is no actual legal claim, then there is forbearance
•S. believed he was liable, agreement was signed on behalf of both parties, sufficient consideration
•pff. argues they never explicitly agreed to forebear
•respond that have to look at how a reasonable businessperson would see it, can have explicit or
implicit forebearance, implied from 1. surrounding circumstances
2. forebearance extended for reasonable time
•could conclude forebearance since M. didn’t go after S. for $30 000 but forebore
•consideration was 1. guaranteed bank loan, 2. S. kept gjob, 3 incentive bonuses, 4 trading account
•there was both active (above) and passive (forebearance) consideration
Blair
1. •S. scapegoat for D’s shortfalls, S. has no ongoing liability for G’s account because D. intervened
•doesnt’ have to be actual rt but good faith belief in the rt. (passive consideration)
•there is no good faith forcing him to take fall for D., not acting bona fide so no forebearance
2. •no active consideration given by the 4 factors above, all incident to employment, symptoms of
S’s oppression
Ratio: •Forebearance is sufficient consideration. Can be both explicit and implicit.
•Who should bear the risk for loss is the real focus of this case.

Past consideration: Legally sufficient for a contract.

Basic rule: Past consideration is not legally sufficient to find a contract
e.g. A is drowning, B saves A from drowning. A then promises B a reward.
A refuses to pay B the reward.B cannot sue for the reward.
•there was consideration prior to the promise, hence no enforceable contract
•foundational case of Eastwood v. Kenyon stated past consideratioon not good consideration
•cts have invented a new doctrine which is exception to this rule (Lampleigh, Pao-On)

Lampleigh v. Braithwait (1615) K.B.. Hobart

Facts: -def. kills someone, asks the pff. to secure a pardon from the King
-the pff. secures this pardon, and then the def. promises him 100 pounds for doing this, doesn’t
pay
-pff. suing the def. for the money
Issues: Is there an enforceable contract?
Held: Yes.
Why: •a mere involuntary promise is not sufficient consideration
•however, judge decides really have only 2 actions 1. request and promise 2. action.
•the request was not free standing, there was a prior request and then promise
Comments:
Example: Rake leaves for neighbour on Nov. 14, Nov. 15 promise to pay $15 -can’t sue
but Earlier request to rake leaves. Neighbour promises money later -can sue
 46

Past consideration: Pao On v. Lau Yiu Long, (1980) P.C., Scarman

Facts: -3 major agreement (main-subsidiary-guarantee)
Main: agree to sell bldg
P. -----------------------------> L. (major shareholder in company Fu-Chip)
<-----------------------------
4.2 million shares
-exchange bldg. for shares, L. concerned P. would sell 4.2 million shares and would depress the
market for the shares
-L. asked P. not to sell 2.5 million shares for 1 year to guad against devaluation
Subsidiary
P. - in a weak position because of unsellable shares (promissee)
L. - agrees to buy back shares at $2.50 a share 1 year later (promissor)
-this protects P. is the shares fall below $2.50, but if increase in value then lose share w/out profit
Guarantee:
-P. won’t go through with main agreement is subsidiary agreement still exists
-new guarantee, if the shares drop below $2.50 no change, if above $2.50 then L. gets no profit
-shares drop to $0.36, P. wants to enforce the guarantee, L. refuses, claims no enforceable
agreement because no consideration
Issues: Was there past consideration (insufficient consideration)?
Was there economic duress on the part of P?
Held:
Why:Scarman (counters 3 levels of argument made by def.)
1. •past consideration not sufficient consideration but
•the pff. got nothing new from the guarantee, 3 condtns for past consideration
1. acts must be done at the promissor’s request (yes)
•L. requested that P. not sell shares for 1 yr
2. parties must have understood that act be remunerated (yes)
•act of P’s non-selling to be remunerated by L.
3. remuneration must have been legally enforceable had it been promised in advance (no)
•if cancel the subsidiary agreement then P. left totally unprotected
•invoke Lampleigh, antecedent request (didn’t sell), promise (guarantee)
•not truly past consideration, guarantee not free-standing, hence gurantee is enforceable
2. •already pre-contractually bound to Fu Chip (third party) (deal with later)
3. •economic duress (on the part of P.)
•L. arguing duress, that P. in a dominant position, ordered them that if don’t dump subsidiary then
will break off the deal. There would be a massive market loss of confidence in Fu Chip
•ct sees no real inequality, nature of market, not keen on ec. duress.
Ratio: Revised concept of past consideration that is sufficient consideration (past request + promise).
Economic duress is not very popular with the cts.

Preexisting legal duty: Legally sufficient consideration?

Basic rule: Performance of a pre-existing legal duty not sufficient consideration
Types of duty: 1. public duty (not legally sufficient)
•exception: more than public duty (Glasbrook, Ward)
2. duty owed to promissor (not legally sufficient) (Gilbert)
•exception Williams
3. promise to pay portion of pre-existing duty, accord and satisfaction (not legally
sufficient)
•exception Sibree v. tripp, Foot, Judicature Act
4. performance of a duty to a third party (legally sufficient)
 47

1. Performance of pre-existing public duty:

e.g. there is a car accident and the cops take notes. they are subpoenaed to come to ct but will only
come to ct if they are paid $100. they come to ct and demand the money. you refuse to pay. This is
not an enforceable agreement since there has been no legally sufficient consideration.
but if party does more than their public duty can be legally sufficient.

Past consideration: Public duty: Glasbrook v. Glamorgan (1925, H.L.)

Facts: -coal strike in Wales, the cops are called in to monitor, protect the colliery from the strikers
-the cops intend a mobile surveillance, the company wants them to post stationary cops at each
mine, company offers them $2000 if they waited at the mine
-when time came to pay, the company reneged saying police performing pre-existing public duty
Issues: Were the police performing a pre-existing public duty?
Held: No.
Why: •there was enough of a change in their legal duty to say that there was sufficient consideration for
the money.
Ratio: If a party does more than their public duty then this can be legally sufficient consideration.

Past consideration: Public duty: Ward v. Byhan (1956, C.A.)

Facts: -non married couple had a child, man kicked woman out, kept child
-would let her have child and 1 pound a week maintenance if she promised to (a) prove the child
well looked after, (b) child happy and (c) the child chooses to live with the mother.
-mother married soon after, suing for the 1 pound a week, has pre-existing duty to look after child
Issues: Is the mother entitled to the 1 pound a week?
Held: Yes.
Why:
Morris: •the man has to pay the support because the additional 3 obligations on the woman overrode her
statutory obligation
Denning •the man has to pay the support because the performance of a pre-existing legal duty is in itself
sufficient consideration
Note: Skepticism about consideration, is it something you really want to use to enforce contracts?

2. Duty owed to a promissor: Stilk v. Myrick (1809, ?)

Facts: -during the Napoleonic wars, 2 sailors deserted from a ship
-captain promised remaining sailors that once they returned he would split the two men’s wages
between the remaining sailors
-once returned refused to do this
Issues: Was there legally sufficient consideration of this agreement to allow the sailors to collect?
Held: No.
Why: •sailors were doing what they were meant to do, no new consideration so the agreement is not
enforceable
Ratio: Performance of a pre-existing duty isn’t legally sufficient consideration.

Duty owed to a promissor: Gilbert Steel Ltd. v. University Const. Ltd.

Facts:
Sept 4/68 -pff. entered into written contract to deliver fabricated steel for 3 separate apartment buildings, at
certain prices, the steel was delivered for 2 of the projects no problem
 48

-steel mill owner increased the price of the steel unilaterally, and the pff. approached the def. and
asked to increase the price of the steel to cover these costs.
March 1/70 -mill owner again increases the prices and the pff. appraoches the def. and claims that there is a
binding oral agreement that the def. agreed to pay theses prices
March 1/70 -def. accepted deliveries of steel against the invoices which reflected revised prices
-it was agreed that thre was an oral agreement, clear intention to pay the money
Issues: Is the agreement to the revised prices binding since there was no consideration?
Held: No there was not legally sufficient considerationm, not entitled to price increase.
Why:
Wilson: 4 arguments for consideration:
1. Pff contends that the promise of a ‘good price’ for the second building consitituted consideration
for price variation
•No, wasn’t sufficient consideration, too avgue, not firm enough, not a binding committment.
2. Pff contends there was mutual abandonment of the 1st contract, entered into second.
•No abandonment, just a variation of price, no diff type or kind of steel.
3. Pff contends that the increased price afforded greater credit to the def., hence was consideration
•ASIDE ct should assess sufficiency, not adequacy, increase in dollar amount is adequacy so the ct
doesn’t have to consider it
•but basically say interesting arg. but doesn’t buy it, nothing new negotiated or exchanged
4. Pff contends def kept accepting invoices, estopped from denying liability
•No, estoppel should be used as sword not shield, no detrimental reliance
Ratio: A prior duty owed to the promissor is not legally sufficient consideration.

Comments:

Duty owed to the promissor: Williams v. Roffey Bros. & Nicholls (Contractors) Ltd.
(1990, Br. C.A.)
Facts: -pff. carpenter employed by a subcontractor, at a price of 20 000 pounds for 27 flats
-contractors concerned work wouldn’t get done because of carpenter’s e’ee probs. and price for
work too low so negotiated w def. for 10 300 or 575 pounds for each flat
-if contractors late have to pay penalty fee to the housing authority
-defs paid pff for 8 flats and then no more, pff. suing for the rest of the money
Trial -judge concluded that pff. entitled to money for the flats he had completed, since the work done on
the flats sufficient consideration
Issues: Was there sufficient consideration of the increase in amount the defs offered to pay?
Held: Yes, there was sufficient consideration.
Why:
Glidewell •main contractor who agrees to too low of a price is acting contrary to own interests (Russell
would disagree)
•fn of contracts is to protect people, pff argues defs. got benefit
1. pff. continued working 2. no penalty for delay 3. avoided prob of getting new person
•defs argue that this not legally sufficient since was a pre-existing duty
•judge ignores consideration and looks to ec duress, 6 main points (3-6 imp)
3. B promises A an additional payment in return for A’s promise to perform his
contractual obligation on time and
4. as a result of giving his promise, B obtains in practise a benefit, or obviates a disbenefit
5. B’s promise is not given as a result of ec duress on A’s part
6. The benefit to B is capable of being consideration for B’s promise, promise binding
•no indication of duress and defs got benefits from the promise
•if strictly applied Stilk pff. would lose, but case is out of date, adapt with principle unscathed
(where B gets no benefit for his promise)
•not focussing on consideration but rather was there fair variation of price, risk allocation
 49

Russell •Stilk should be applied flexibly, look to intent rather than consideration (opposite from Gilbert)
•contractors approached subcontractors to get reasonable price, shouldn’t get hung up on
consideration, advantages accruing to defs in terms of certainty and convenience
Purchas •distinguish on the facts from Stilk, that case occurred during Napoleonic wars where needed a
strong policy to protect masters and owners of ships from being held for ransom
•look to duress not consideration, there was no duress, entitled to sue for extra money
Ratio: A pre-existing duty to the promissor can be legally sufficient consideration.
Comments:
Gilbert: heavily criticized because doesn’t accord with the reality of the market, the sellers not
trying to get extra benefit by passing on the increase in price
-could counter that Gilbert a sophisticated company, should have price variation clause (Butler)

OLRC, Report on the Amendment of the Law of Contract

(1) An agreement in good faith modifying a contract should not require consideration in order to be
binding.
•probs with good faith, doesn’t solve problems, still an uncertain criterion
•Gilbert is not in the spirit of a cgood faith agreement, whereas Williams is, unusual since
Canadian cases more likely to emphasize good faith than British cases

3. Accord and Satisfaction:

e.g. A owes B. $100 to be paid at the end of the month. The end of the month arrives and A pays
$50 instead of $100. Not sufficient consideration.

Pinnel’s Case •partial payment of a loan is not sufficient consideration.

•justify because want people to pay their debts and th emoral justification

Accord and Satisfaction: Foakes v. Beer (1884, H.L.), Selborne

Facts: -Foakes owed Beer money, agreement to pay money every 6 months until had paid off debt
-had to pay 500 pounds immediately, and Beer wouldn’t take action, Foakes pays off entire debt
-Beer suing for interest of 360 pounds, B. claiming entitled to interest because F. didn’t pay off
immediately, F. claiming there was contract, B. saying so what didn’t get anything new/in
exchange
Issues: Is partial payment of a debt sufficient consdieration for the contract made between the two?
Held: No.
Why: •since the agreement wasn’t under seal the def. wasn’t bound, look to consideration
•refer to Pinnel’s, has been criticized but not overruled, should follow it, somewhat hesitant
Ratio: There was no new consideration in the payment of of the loan, hence the def. has to pay the
interest. Clear application of Pinnel’s rule.

Comments:
Advantages: certainty - generate certainty in marketplace
duress - on the part of debtors, will always try to get out of obligations
moral - should pay back one’s debts
Disadvantages Ct is assessing adequacy of consideration
reality - partial payment better than no payment, try and get what you can
 50

Accord and Satisfaction: Foot v. Rawlings (1963, S.C.C.)

Facts: -F. owed R. money, R had loaned in form of promisssory notes
-R. had written up an agreement where had said that F. would pay back on the 16th of every
month $300 in the form of cheques until the debt was paid off at 5% instead of 8% interest
-two years in R. breaks of the agreement and sues for the rest of the money
Issues: Was there sufficient consideration to make this a legally binding agreement?
Held: Yes.
Why: •refer to Pinnel’s case, traditionally wouldn’t be enough consideration but
•Sibree v. Tripp decided that if payment is in a diff. form from the loan then it is legally sufficient
to qualify as consideration
•variation in the mode of payment removes it from the domain of Pinnel’s case
•promise was with promissory notes and payment with cheques, sufficient consideration, the
agreement was legally enforceable
•note there is really no diff., grasping at straws to get away from Pinnel’s case
Ratio: Partial payment of debts is sufficient consideration if the payment is in a different form than the
form in which the loan was made.

Judicature Act
•part performance is good consideration, if expressely accepted by creditor, it extinguishes the
complete agreement if breached
•depends on the province, statutes have intervened
 51

INTRODUCTION AND EXPECTATIONS................................................................................................1

P. ATIYAH, “THE CLASSICAL LAW OF CONTRACT”...................................................................................................1
A. Put contract in its context (class notes):..................................................................................................1
economic..................................................................................................................................................................1
social........................................................................................................................................................................1
moral........................................................................................................................................................................1
philosophical............................................................................................................................................................1
political....................................................................................................................................................................1
B. 2 major aspects of contracts (class notes): .............................................................................................1
C. 5 models of critical thinking (class notes):..............................................................................................1
voluntarism..............................................................................................................................................................1
economic analysis....................................................................................................................................................1
state interventionism................................................................................................................................................1
regulation of greed...................................................................................................................................................1
ideology...................................................................................................................................................................1
D. The Classical Law of Contract................................................................................................................1
philosophical idea of natural law..............................................................................................................................1
economic idea of laissez faire..................................................................................................................................1
Freedom of contract based on 2 principles:..............................................................................................................1
mutual agreement.....................................................................................................................................................1
free choice................................................................................................................................................................1
Elements of freedom of choice:...............................................................................................................................2
Problems with mutual assent:...................................................................................................................................2
Weaknesses with freedom of choice doctrine:.........................................................................................................2
socioeconomic pressures.....................................................................................................................................2
inequalities..........................................................................................................................................................2
HISTORICAL OVERVIEW I.......................................................................................................................2
F. KESSLER, G. GILMORE, A. KRONMAN, “CONTRACT AS A PRINCIPLE OF ORDER”......................................................2
A. Introduction..............................................................................................................................................2
Features/Assumptions about contracts:.......................................................................................................3
F.o.c. and role in devpt. of free-market capitalism:.....................................................................................3
Why complete f.o.c. was a myth:..................................................................................................................3
Doubts about f.o.c.:......................................................................................................................................3
Attempts to limit f.o.c. challenged and deemed socially dangerous:...........................................................3
Notion that freedom must be limited for its own preservation.....................................................................4
Social control of contract resulted in:..........................................................................................................4
Contracts evolving into new areas of study:................................................................................................4
Contract is still important: ..........................................................................................................................4
HISTORICAL OVERVIEW II.....................................................................................................................4
HUGH COLLINS, “TWO IDEALS OF JUSTICE” THE LAW OF CONTRACT, 1986 OR VALUES ARE IMPORTANT.........................4
A. Two ideals of justice:...............................................................................................................................4
Theory of legal resp. encompassed by j.o.e.:...............................................................................................4
individual responsibility...........................................................................................................................................4
restrictive defn. of role of state.................................................................................................................................4
J.o.e. had 3 main principles:........................................................................................................................4
Justice of j.o.e.:.............................................................................................................................................5
Now j.o.e. has lost moral force and explanatory power...............................................................................5
Impact of devpt of communitarian ideals:....................................................................................................5
Minimal role assigned to state:....................................................................................................................5
3 major criticisms of j.o.e. help explain justice as fairness:........................................................................5
1. oppressive nature of power relns. permitted.........................................................................................................5
2. unfairness of reciprocity.......................................................................................................................................5
3. estranged social relns...........................................................................................................................................6
Modern law/quiet revolution:.......................................................................................................................6
A. A. LEFF, VICIOUS INTELLECTUAL PARODIES: WHY VALUES ARE IMPORTANT..............................................................6
 52

Formalism....................................................................................................................................................6
Realism.........................................................................................................................................................6
CONTEMPORARY PERSPECTIVES........................................................................................................6
1) POSNER: THE ECONOMICS OF CONTRACT LAW (RIGHT WING)....................................................................................6
Values:..........................................................................................................................................................6
2 types of contracts:.....................................................................................................................................7
3 Basic ec. functions of contract law:..........................................................................................................7
sanction against reneging.........................................................................................................................................7
enforce parties’ agreed upon allocation of risk.........................................................................................................7
standard set of allocation terms................................................................................................................................7
Does contract law actually reflect the 3 values (or is value ec. efficiency)?...............................................7
2) FEINMAN, “CRITICAL APPROACHES TO COMMON LAW” (LEFT WING)..........................................................................7
3 views of role of common law of contracts:................................................................................................7
instrumentalist..........................................................................................................................................................7
functionalist.............................................................................................................................................................7
legitimating ideology...............................................................................................................................................7
Why contract is not just a legitimating ideology:.........................................................................................7
coherent principles...................................................................................................................................................7
penetration,..............................................................................................................................................................7
affirm legitimacy......................................................................................................................................................7
3) WIEGERS, A FEMINIST CRITIQUE PUBLIC VS. PRIVATE NOTIONS...............................................................................8
Ec. exchanges privately determined in 2 ways:............................................................................................8
Capitalism supposedly gives women more responsibility, but not a one way street:...................................8
4 criticisms of laissez-faire assumption of private and free market:............................................................8
individualizes...........................................................................................................................................................8
state to intervene to redistribute power.....................................................................................................................8
doesn’t inspire any collective action........................................................................................................................8
values of market not those of women.......................................................................................................................8
4) N. WILLIAMS: OFFER, ACCEPTANCE, AND IMPROPER CONSIDERATIONS: A COMMON-LAW MODEL FOR THE PROHIBITION
OF RACIAL DISCRIMINATION IN THE CONTRACTING PROCESS:......................................................................................9
I - in society there is a strong concensus against racial discrim., law could make the world better for
minorities......................................................................................................................................................9
II - contracts imposes community standards of decency and fairness.........................................................9
III - mechanics to prohibit racial discrim....................................................................................................9
IV - state law should prevent discrim...........................................................................................................9
V - new section in restatement of torts to prohibit racial discrim. in contracts process..............................9
LEGAL STRUCTURE AND LEGAL REASONING I..............................................................................9
PAUL, “A BEDTIME STORY”...................................................................................................................................9
GALL, THE DOCTRINES OF PRECEDENT AND STARE DECISIS:..........................................................................................9
Role of judge: (reality lies in between).........................................................................................................9
quasi-legislative, activist..........................................................................................................................................9
interpretative, strict constructionist..........................................................................................................................9
Definitions: (artificial to consider precedent and stare decisis separately)..............................................10
Stare Decisis: (degree of persuasiveness of other crt determined by factors)...........................................10
Distinguishing (how to avoid stare decisis and precedent):......................................................................10
LEGAL STRUCTURE AND LEGAL REASONING II...........................................................................10
TWINING AND MEIRS, “INTERPRETING CASES:.........................................................................................................10
Cases as precedents:..................................................................................................................................10
Basis of c/l treatment of precedent:............................................................................................................10
Precedent: Previous decision is authoritative if:.......................................................................................10
How to deal with precedent:.......................................................................................................................10
The practice of precedent:..........................................................................................................................10
Primary technique: precedent wrongly decided or of weak authority: (AVOIDANCE)............................11
Secondary techniques to weaken precedential value: (ENFEEBLEMENT)..............................................11
 53

CLASS NOTES:.....................................................................................................................................................11
Contracts are end result of these processes, elements of contract:...........................................................11
Formation of a contract:............................................................................................................................11
Promises are not a contract (no agreement, and are unidirectional)........................................................11
Pizza example:............................................................................................................................................11
flyer -> check off options -> phone -> specify -> price -> how long?-> preparation -> doorbell -> payment........11
OFFER I........................................................................................................................................................11
Case-note on Canadian-Dyers Association Ltd. v. Burton, (1920) H.C., Middleton.................................11
Words:........................letter was more than mere quotation of price but a statement of the price at which willing to
...................................................................................................................sell constitutes an offer, readiness to sell
...............................................................................................................................................................................12
Actions:....................B’s conduct suggests a contract has been made, didn’t send out letter denying sale, but wrote
...............................................................................................................................................................................12
up deed, did title search and suggests closing date.................................................................................................12
Ratio:.....Apply an objective test of the words and actions of the parties involved to determine if offer or invitation
...............................................................................................................................................................................12
Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd., C.A.[1953] 1 Q.B.
401, [1953] 1 All E.R. 482, Sommervell, L.J., Birkett, L.J.........................................................................12
Ratio: ............................Distinguishes between invitation and offer. Goods on a display are invitation not an offer.
...............................................................................................................................................................................12
The customer makes an offer when takes goods to register....................................................................................12
The cashier is under the shopkeeper’s authority to make acceptance, hence the contract has not...........................12
been made until the cashier accepts the purchase...................................................................................................12
Fred Christie and the York Corporation, [1940] S.C.C. Rinfret...............................................................12
Ratio:................Freedom of contract license to discriminate based on race so long as the vendor isn’t engaged in a
...............................................................................................................................................................................13
monopoly. Justified through wealth maximization.................................................................................................13
Shows use of precedent; no need to reach this decision since no other ct had ruled on it.......................................13
R. v. Dawood, [1976] 1 W.W.R. 262, 31 C.R.N.S. 382, Alta. C.A., McDermid J.A...................................13
Ratio:..........................................................................(Agrees with Boots. Goods displayed on shelf are invitation.
...............................................................................................................................................................................13
Ratio:...................................................................Goods displayed in a self-serve establishment constitute an offer.
...............................................................................................................................................................................13
OFFER II.......................................................................................................................................................13
Carlill v. Carbolic Smoke Ball Co. , [1893] 1 Q.B. 256, C.A., Bowen, L.J...............................................13
Goldthorpe v. Logan, [1943] O.W.N. 215, [1943] 2 D.L.R. 519, C.A., Laidlaw, J.A...............................14
Ratio:...............................................................................(Look to words and actions to determine if contract made
...............................................................................................................................................................................14
(An ad made in a newspaper constitutes an offer that can be accepted on the terms it proffered............................14
(Offeror bears risk of extravagant promises...........................................................................................................14
R. v. Ron Engineering & Construction (Eastern) Ltd., [1981] S.C.C., Estey............................................15
Ratio:........................................(A tender constitutes a unilateral contract completed when the tender is submitted.
...............................................................................................................................................................................15
(The conditions of the tender contract are the rules and conditions of the tender...................................................15
R. v. Canamerican Auto Lease & Rental Ltd., (1987) C.A., Heald............................................................15
(The moment of contracting has changed again. Offer is the choice of bid and acceptance is the..........................15
acceptance by the chosen company........................................................................................................................15
(Look to the parties intentions when determining mere policy or binding specification.........................................16
(As between clauses, one general and 1 specific, specific trumps the general clause.............................................16
(To determine whether an exeption cluase is binding, engage in purposive analysis to determine its....................16
effect......................................................................................................................................................................16
COMMUNICATION OF OFFER..............................................................................................................16
THE REWARDS CASES...........................................................................................................................................16
Williams v. Cawardine, (1833), K.B., Denman, Curwood, Littledale, Parke, Patteson............................16
(The motive of an informer in accepting the contract offered has nothing to do with his right to...........................16
recover under the contract......................................................................................................................................16
 54

(Neither mutual consent nor communication of assent is important in case of reward...........................................17

R. v. Clarke, (1927) Aust. H.C., Higgins....................................................................................................17
Blair v. Western Mutual Benefit Assn., [1972] B.C.C.A., Bull, McFarlane, Robertson............................17
(Simply communicating a resolution through some sort of unauthorized medium does not .........constitute an offer
which can create binding legal relns.......................................................................................................................18
(Courts can look to reliance/expectation interest to determine if a contract binding...............................................18
ACCEPTANCE.............................................................................................................................................18
Livingstone v. Evans, [1925] Alta. S.C., Walsh.........................................................................................18
-Hyde v. Wrench, counter offer constitutes a rejection, v. firmly est.....................................................................18
-Stevenson v. MacLean, a letter can be a mere inquiry not a counter-offer............................................................18
(An offer can be renewed after a counter-offer through ambiguous language........................................................19
(Hyde v. Wrench, counter-offer constitutes a rejection..........................................................................................19
OLRC, Report on Sale of Goods: The Battle of the Forms, (1979)............................................................19
Butler Machine Tool Co. v. Ex-Cell-O Corp., [1979] C.A., Lord Denning...............................................19
(In a battle of forms generally the last shot wins, but open to other interpretations................................................19
(Look at the documents as a whole to determine whose terms prevail...................................................................19
Tywood Industries Ltd. v. St. Anne-Nackawic Pulp and Paper Co. Ltd., (1979) Ont. H.C., Grange........19
The person who is most innocent terms will prevail. Can’t sneak terms into contracts without ..proper notification.
...............................................................................................................................................................................20
Shift away from voluntarism/free choice to judicial intervention to obtain consensus..............................20
Rules of contracts to this point:..................................................................................................................20
Vulnerability of offeror reduced by:...........................................................................................................20
Eliason v. Henshaw, (1819), 4 U.S. (L.Ed.) 556, Washington...................................................................21
The offeree must follow the terms of the offeror (time, place and manner of acceptance) for an...........................21
acceptance to be valid and binding.........................................................................................................................21
Jen-Den Investments Ltd. (buyer) v. Northwest Farms Ltd. (seller), [1978] Man CA, O’Sullivan...........21
Use an objective test to determine if acceptance valid...........................................................................................21
(Offeror can revoke up to any pt prior to acceptance..............................................................................................21
Felthouse v. Bindley, (1862) Ex Ch, Willes................................................................................................22
Silence is not enough to determine acceptance of an offer.....................................................................................22
(Subjective intentions not enough to communicate acceptance, need outward manifestation.................................22
(Crt wants to protect innocents and prevent carelessness in marketplace...............................................................22
St.John Tug Boat Co. v. Irving Refinery Ltd., [1964] SCC Ritchie............................................................22
(Silence can constitute an acceptance, especially if it appears to be sneaky...........................................................22
(Contractors are under a positive obligation to act fairly........................................................................................23
Can imply terms of acceptance into a contract (in this case 3 conditions)..............................................................23
Rules of contract as they now stand:..........................................................................................................23
Dawson v. Helicopter Exploration Co., [1955] S.C.C., Rand, Estey.........................................................23
The formation of a contract is ‘instinct with an obligation’....................................................................................24
(Can imply obligations on parties to cooperate......................................................................................................24
(Contracts is about resp. as much as indiv. rts........................................................................................................24
(In a unilateral contract offer can be revoked before full performance...................................................................24
Obiter:...............................................................(Can look at docs. surrounding contract to see if there is a contract.
...............................................................................................................................................................................24
(Conditions subsequent don’t remove power to contract........................................................................................24
COMMUNICATION OF ACCEPTANCE................................................................................................24
A. MAILED ACCEPTANCES: WHO SHOULD BEAR THE RISK OF LOSS IN NON-INSTANTANEOUS COMMUNICATION?.................24
Household Fire and Carriage Accident Insurance Co. v. Grant, (1879), 4 Ex. D. 216, C.A., Thesiger,
Bramwell....................................................................................................................................................24
An acceptance is concluded once the letter of acceptance is dropped in the mailbox (POSTAL............................24
ACCEPTANCE RULE).........................................................................................................................................24
Communication of acceptance can be overruled when there is a special agreement between parties.....................24
Holwell Securities v. Hughes, [1974] C.A., Lawton..................................................................................24
Discomfort w postal acceptance rule, make exceptions if:.....................................................................................25
a. expressed in terms of offer that acceptance must reach offeror..........................................................................25
b. leads to inconvenience or absurdity (introduces wide priciple that invalidates p.a.r.)........................................25
INSTANTANEOUS METHODS OF COMMUNICATION......................................................................................................25
 55

Brinkibon Ltd. v. Stahag Stahl, [1983] H.L., Lord Wilberforce................................................................25

The telex is a mode of instantaneous communication, where acceptance of a contract is made on........................25
receipt....................................................................................................................................................................25
The postal acceptance rule doesn’t apply...............................................................................................................25
TERMINATION OF OFFER I:..................................................................................................................25
REVOCATION......................................................................................................................................................26
Dickinson v. Dodds, (876), 2 Ch. D. 463, C.A., Mellish............................................................................26
An offeree must have knowledge of a revocation but secondhand knowledge is adequate....................................26
Parties to a contract shouldn’t rely on a bare promise............................................................................................26
Byrne v. van Tienhoven, (1880), 5 C.P.D. 344, Lindley.............................................................................26
Revocation must be communicated to the offeree so that the offeree has knowledge of the..................................27
revocation..............................................................................................................................................................27
Mere posting of a revocation is not sufficient communication, p.a.r. does not apply to revocation........................27
Errington v. Errington and Woods, [1952] K.B. C.A., Denning................................................................27
Can only revoke unilateral contract if didn’t live up to the offeree’s side of the contract. (see..............................27
Dawson).................................................................................................................................................................27
There can be a reliance on promises in contracts. (contrast with Dickinson)..........................................................27
The crt can’t imply terms into contracts (see Dawson). (is this a valid result?)......................................................27
Daulia v. Four Millbank Nominees, [1978] C.A., Goff..............................................................................27
In a situation of partial performance of a unilateral contract, the offeror can revoke (contrast w...........................28
Errington, accords with Dawson)...........................................................................................................................28
There is a duty to cooperate in contracts, ct can imply terms (contrast w Errington).............................................28
In a sitn of full performance or start performance of a unilateral contract the offeror can’t revoke........................28
TERMINATION OF OFFER II..................................................................................................................28
LAPSE................................................................................................................................................................28
Barrick v. Clark, [1951] S.C.C., Estey, Kellock.........................................................................................28
Ratio:............The reasonable time to accept an offer can be determined from the conduct and language of the two
..............................................................................parties, the nature of the goods and other reasonable indications.
...............................................................................................................................................................................29
Manchester Diocesan Council of Education v. Commercial and General Investments Ltd., [1970] Ch.
D., Buckley.................................................................................................................................................29
Ratio:......................(Mode of acceptance in a tender can be altered by the offeree so long as it is equally effective.
...............................................................................................................................................................................30
(If a term is included in the contract to protect one party it should not be allowed to be altered to ....hurt that party.
...............................................................................................................................................................................30
(A condition subsequent doesn’t affect the power to contract. (see also Dawson).................................................30
(The acceptance of an offer should be tested through an objective test: if offer not accepted in .......reasonable time
offeree will be treated as having refused................................................................................................................30
(UN)CERTAINTY I.....................................................................................................................................30
Hands-off versus interventionist role of decision makers..........................................................................30
Uncertainty is due to .................................................................................................................................30
Uncertainty arises in 3 ways:.....................................................................................................................30
What have courts done in cases of uncertainty:.........................................................................................30
1. In cases of ambiguity cts will draw implications to get a reasonable result..........................................30
e.g. Raffles v. Wichelhaus (1864)..........................................................................................................................30
2. How cts deal with vague terms:.............................................................................................................30
(a) e.g. Scammell v. Outston (1941).......................................................................................................................30
(b) e.g. Carlill v. Carbolic Smoke Ball...................................................................................................................31
(c) e.g. Nicolene v. Simmonds, (1953)...................................................................................................................31
VAGUE TERMS....................................................................................................................................................31
Nicolene v. Simmonds, [1953] Q.B. C.A., Denning...................................................................................31
When trying to decide how to characterize a vague clause look to whether the essential elements ....of the contract
have been decided..................................................................................................................................................31
(Where a clause is meaningless it can be extracted from the contract and ignored.................................................31
3. (contd) Where parties enter into contracts with missing terms:............................................................31
MISSING TERMS:.................................................................................................................................................31
 56

AGREEMENTS TO AGREE.......................................................................................................................................31
May and Butcher Ltd. v. R., [1934] H.L., Lord Buckmaster (decided 1929).............................................31
A term yet to be determined means that there is no contract if it is an essential term, it is just ........an agreement to
agree and is not enforceable...................................................................................................................................32
The ct cannot read terms into an incomplete contract.............................................................................................32
Hillas and Co. Ltd. v. Arcos Ltd., (1932) C.A., Scrutton...........................................................................32
VonHatzefeldt-Wildenburg v. Alexander, ‘an agreement to make an agreement’ isn’t enforceable agreement.....32
The role of the courts is not to intervene and create a contract where agreements exist.........................................33
Mass of negotiations means can’t find a contract...................................................................................................33
Hillas and Co. Ltd.v. Arcos Ltd., (1932), 147 L.T. 503, H.L., Lord Wright...............................................33
(A contract to negotiate is enforceable...................................................................................................................33
(The cts should intervene to determine the terms of an agreement through context and legn.................................33
Foley v. Classique Coaches Ltd., [1934] K.B., C.A., Scrutton (note contrast to his earlier judgment in
Hillas C.A.).................................................................................................................................................33
(questions appellant’s honesty, want to keep land but not gas, gas was consideration for land..............................34
Look to the conditions of each particular agreement (reliance interest).................................................................34
Sale of Goods Act.......................................................................................................................................34
Sudbrook Trading Estate v. Eggleton, [1983] 1 A.C. 444, [1982] 3 All E.R. 1, H.L., Scarman, Russell..34
Ratio:....................The agreement of a fair and reasonable price is more important than the machinery to get there.
...............................................................................................................................................................................34
Courtney and Fairbairn Ltd. v. Tolaini Brothers (Hotels) Ltd., [1975] C.A., Denning............................34
A contract to negotiate is unenforceable; nature of negotiation is that might never reach an ....................agreement
...............................................................................................................................................................................35
De Laval Co. v. Bloomfield, [1938] O.R. 294, [1938] 3 D.L.R. 405, C.A., Masten..................................36
Leaving the mode of payment uncertain doesn’t invalidate a contract if two parties obviously intended to contract.
...............................................................................................................................................................................36
R. v. Cae Industries Ltd., [1986] 1 F.C. 129, C.A., Stone..........................................................................36
There is an obligation to negotiate (demonstrate good faith efforts)......................................................................37
Cts can find intention.............................................................................................................................................37
(‘Best efforts’ can create legal relations - remedy could be specific performance..................................................37
Empress Towers Ltd. v. Bank of Nova Scotia, [1991] 1 W.W.R. 537, C.A., Lambert................................37
ANTICIPATION OF FORMALIZATION................................................................................................38
3 ways to perceive:.....................................................................................................................................38
2 major questions:......................................................................................................................................38
Meyer v. Davies, (1989), 45 B.L.R. 92, B.C.S.C., Wong............................................................................38
Ratio:............Normally in a transaction the buyer bears the risk but if the seller intervenes, then risk shifts back to
....................................................................................................................................................................the seller.
...............................................................................................................................................................................39
Knowlton Realty Ltd. v. Wyder, [1972] B.C.S.C., MacDonald..................................................................39
Ratio:............................................................................................(There is no obligation to negotiate in good faith.
...............................................................................................................................................................................39
(Crt won’t enforce an agreement to agree..............................................................................................................39
INTENTION TO CREATE LEGAL RELATIONS:................................................................................39
1. objective test..........................................................................................................................................39
2. Two presumptions that kick in...............................................................................................................39
3. Public private dichotomy, see Wanda Wiegers and the impact on law.................................................40
PRIVATE ARRANGEMENTS:.....................................................................................................................................40
Balfour v. Balfour, [1919] 2 K.B. 571, C.A., Atkin....................................................................................40
The law of contracts should not interfere in the private domain.............................................................................40
Jones v. Padavatton (England, 1969).........................................................................................................40
1. consideration - yes, gave up her job...................................................................................................................40
2. intention - no, private family arrangement (see Balfour.....................................................................................40
Merritt v. Merritt, existing separation agreement, no amity present so clearly intending to make contract............40
COMMERCIAL ARRANGEMENTS:..............................................................................................................................41
Rose and Frank Co. v. J.R. Crompton and Bros. Ltd., [1923] K.B. C.A., Scrutton...................................41
 57

Ratio:.......................A clause which exempts parties from legal relations can be binding but is voided if there is a
......................................................................................legitimate reliance interest on the part of one of the parties.
...............................................................................................................................................................................41
AGBC v. Esquimault and Nanaimo Ry (B.C., 1949)..................................................................................41
Why/Ratio: No intention to create legal relns. in perpetuity...................................................................................41
(company can’t legitimately expect to have concession forever, tying the govt’s hands too much.........................41
Grant v. N.B................................................................................................................................................41
Why/Ratio: There was intent to create legal relns., specific potatoes, tighter legitimate expectation, actual potatoes
destroyed, could have been used elsewhere............................................................................................................41
Appleson c. Littlewoods (1939)..................................................................................................................42
Why/Ratio:........................No intention to create legal relations, gambling not a legit activity, morality intervenes.
...............................................................................................................................................................................42
CONSIDERATION......................................................................................................................................42
1. CONTRACTS AND PROMISES..............................................................................................................................42
Eastwood:...................................................................................................................................................42
Ratio:................................Promises not sufficient to found a contract (rejection of promissory basis for contracts).
...............................................................................................................................................................................42
2. DEFINITION OF PROMISES..................................................................................................................................43
3. CONSIDERATION MUST MOVE FROM PROMISEE BUT NEED NOT BE FOR BENEFIT OF PROMISOR........................................43
4. ADEQUACY AND SUFFICIENCY OF CONSIDERATION.................................................................................................43
adequacy............................................................(quantitative, amount of price paid (e.g. pay $200 for plane ticket)
...............................................................................................................................................................................43
sufficiency .....................................................................(qualitative, law considers whether technically appropriate
...............................................................................................................................................................................43
a. Adequacy................................................................................................................................................43
b. Sufficiency...............................................................................................................................................44
Sufficiency: Thomas v. Thomas..................................................................................................................44
Respect for testator’s wishes is insufficient consideration. (natural love insufficient, Balfour)..............................44
Payment of rent and promise to do repairs adequate consideration........................................................................44
Sufficiency: Scivoletto v. De Dona:............................................................................................................44
Ratio:.................................................................................................Forebearance is a valid form of consideration.
...............................................................................................................................................................................44
There doesn’t have to be forebearance of an actual legal rt but of a subjective legal rt..........................................44
Sufficiency: Stott v. Merit (1988, Ont. C.A.)..............................................................................................44
Ratio:...................................................(Forebearance is sufficient consideration. Can be both explicit and implicit.
...............................................................................................................................................................................45
(Who should bear the risk for loss is the real focus of this case.............................................................................45
Past consideration: Legally sufficient for a contract.................................................................................45
Lampleigh v. Braithwait (1615) K.B.. Hobart............................................................................................45
Why:..............................................................................(a mere involuntary promise is not sufficient consideration
...............................................................................................................................................................................45
(however, judge decides really have only 2 actions 1. request and promise 2. action.............................................45
(the request was not free standing, there was a prior request and then promise......................................................45
Past consideration: Pao On v. Lau Yiu Long, (1980) P.C., Scarman........................................................46
Preexisting legal duty: Legally sufficient consideration?..........................................................................46
Types of duty:..................................................................................................1. public duty (not legally sufficient)
...............................................................................................................................................................................46
(exception: more than public duty (Glasbrook, Ward)...........................................................................................46
2. duty owed to promissor (not legally sufficient) (Gilbert)...................................................................................46
(exception Williams...............................................................................................................................................46
3. promise to pay portion of pre-existing duty, accord and satisfaction (not legally ..................................................
...................................................................................................................................................................................
...................................................................................................................................................................sufficient)
...............................................................................................................................................................................46
(exception Sibree v. tripp, Foot, Judicature Act.....................................................................................................46
4. performance of a duty to a third party (legally sufficient)..................................................................................46
1. Performance of pre-existing public duty:...............................................................................................47
Past consideration: Public duty: Glasbrook v. Glamorgan (1925, H.L.)..................................................47
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Ratio:...........................If a party does more than their public duty then this can be legally sufficient consideration.
...............................................................................................................................................................................47
Past consideration: Public duty: Ward v. Byhan (1956, C.A.)..................................................................47
Morris:................(the man has to pay the support because the additional 3 obligations on the woman overrode her
....................................................................................................................................................statutory obligation
...............................................................................................................................................................................47
Denning (the man has to pay the support because the performance of a pre-existing legal duty is in itself sufficient
consideration..........................................................................................................................................................47
2. Duty owed to a promissor: Stilk v. Myrick (1809, ?).............................................................................47
Ratio: Performance of a pre-existing duty isn’t legally sufficient consideration....................................................47
Duty owed to a promissor: Gilbert Steel Ltd. v. University Const. Ltd.....................................................47
Ratio:......................................................A prior duty owed to the promissor is not legally sufficient consideration.
...............................................................................................................................................................................48
Duty owed to the promissor: Williams v. Roffey Bros. & Nicholls (Contractors) Ltd. (1990, Br. C.A.)...48
Ratio:...................................................A pre-existing duty to the promissor can be legally sufficient consideration.
...............................................................................................................................................................................49
OLRC, Report on the Amendment of the Law of Contract.........................................................................49
3. Accord and Satisfaction:........................................................................................................................49
Accord and Satisfaction: Foakes v. Beer (1884, H.L.), Selborne..............................................................49
Ratio:.........................There was no new consideration in the payment of of the loan, hence the def. has to pay the
................................................................................................................interest. Clear application of Pinnel’s rule.
...............................................................................................................................................................................49
Accord and Satisfaction: Foot v. Rawlings (1963, S.C.C.)........................................................................50
Ratio:..................Partial payment of debts is sufficient consideration if the payment is in a different form than the
..............................................................................................................................form in which the loan was made.
...............................................................................................................................................................................50
Judicature Act.............................................................................................................................................50
(part performance is good consideration, if expressely accepted by creditor, it extinguishes the ................complete
agreement if breached............................................................................................................................................50