Law Exam
Requirements for voiding a contract
§ Not capable of rational decision making § Other party was aware of this condition § Must promptly act once gaining capacity to repudiate · Hesitation to repudiate makes contract binding · Can accept no further benefits under the contract upon regaining capacity · Necessary evidence may be adduced from surrounding circumstances
"in common"
§ Partnership is a consensual and contractual relationship § Normally it is a written agreement, however can still exist even if not written or oral § It is inferred from the conduct of the parties (ie. that they are acting in common) · Courts will look to the "substance" of the relationship to determine if acting in common
Canada Student Loans Act
§ S 19.1 provides that a student loan to a student is recoverable by a bank from the borrower as though the infant were an adult at the time the agreement was entered into
"With a view to profit"
§ Sharing of profits is essential § Must have a profit motive even if no profit is made § Sharing of gross receipts alone will not create a partnership (ie. royalty contracts etc.) · Has to have something more, usually the person receiving the profits has contributed property or money to the business - and usually capital contribution has some correlation with profit-sharing § So excludes charitable and not-for-profit endeavours
Writing for land. What 3 things make contract enforceable?
§ Signed by the party against who the contract is to be enforced § Document must contain an explanation of what land is involved, important details such as the persons, the property, and the price § May also be enforceable where other party has acted in a way consistent with the existence of a contract = part performance · Usually paying a deposit, submitting an offer not "part performance"
Down payment
§ Sum paid, usually as ap atrial payment § Returned where there is a breach, upon which vendor can then sue for damages
What is novation?
§ The parties agree to terminate the contract and substitute a new contract § Can substitute new agreement or change the parties § All parties must consent to the novation
Difference between Accord & Satisfaction and Material Alteration of the terms
§ The purpose of the arrangement § In material alteration, the parties are primarily concerned with creating a new arrangement - the discharge of the old contract is incidental § In accord & Satisfaction, the parties are seeking a way to end their existing arrangement - the new arrangement is only for that very purpose
Allegation of fact requirement
§ The statement that forms the basis of the misrepresentation must be an allegation of fact · A statement of opinion does not amount to a misrepresentation § When an expert in the area covered by the contract gives an opinion on the matter, and the other party relies on this special knowledge, the opinion will be taken as an allegation of fact and will be a misrepresentation (expert's opinion = statement of fact)
Conditions for equitable estoppel to apply
§ There must be a current legal relationship between the parties § A promise to relax strict legal obligations is made, even by implication. § The existing contract is modified/varied by the promise made § Promise relied upon causes some detriment or hardship is promise not lived up to § Equitable estoppel can only be used as a shield (defence) not as a sword (cause of action)
"carrying on business"
§ Will not include societies or other associations where there is a charitable purpose or non-commercial purpose § "business" may not necessarily be carried on with a view to profit § Isolated business transactions where parties are acting with a shared interest are not necessarily partnerships
Corporations - as a 'person'
- Company is a legal "person" o Separate and distinct from its members o Can sue and be sued - It is an entity recognized by the legal system as having rights and duties under the legal system separate form its members - It has the capacity to enter into contracts, can sue and be sued
Are damages compensatory or punitive
- Compensatory, not punitive
How can a contract provide for its own dissolution?
- Condition precedent - Condition subsequent - Option to terminate
The Charter of Rights & Freedoms - what constitution act - what legislation - Applies to public or private matters? - Purpose
- Constitution Act of 1982 - Affects both federal and provincial legislation - Applies only to public matters - government agencies and bodies providing they are exercising statutory authority - prevents government from creating laws or taking action that would be contrary to the rights guaranteed in the Charter - no level of government can bring in legislation contrary to charter
Unconscionable Contracts - equitable doctrine
- Contracts where there is unequal bargaining power between the parties and the powerful party gets an extremely advantageous deal - Equitable doctrine that permits contract to be set aside where one party has been taken advantage of because of power imbalance due to desperation caused by poverty, intellectual impairment (but NOT lacking capacity)
Defences (3)
- Contributory negligence - Mitigation - Volneti non fit injuria/voluntary assumption of the risk
Will courts generally enforce exemption clauses?
- Courts will generally enforce exemption clauses because the object of contract law is to carry out whatever parties have bargained to do
Remedies available for Breach (3) and what are they subject to
- Damages - Equitable Remedies - Quantum Meruit: "as much as he deserved" - Subject to: - Mitigation: minimize the effects - Remoteness or foreseeability of damages
Purpose of damages
- Damages are awarded to place the injured party in the position it would have been in had the contract been performed
Westcoast Transmission v Cullen - Cullen supplied motors to Westcoast for generators - Generator had a faulty part and broke - Westcoast had to rent replacement generators - Can they sue for rental costs?
- Damages have to arise naturally from the breach itself - Foreseeability depends on the knowledge which a reasonable person in the position of the party at fault should have possessed at a time of contracting
Class problem Finding
- Defendant was negligent. A duty of care was owed to the plaintiff, and that duty was breached. The damages were foreseeable and not too remote. No contributory negligence. - "A manufacturer, knowing of a product's hazardous nature, has a duty to specify the attendant dangers, which it must be taken to appreciate in a detail not known to the ordinary consumer or user. A general warning, as for example, that the product is inflammable, will not suffice where the likelihood of fire may be increased according to the surroundings in which it may reasonably be expected that the product will be used. The required explicitness of the warning will, of course, vary with the danger likely to be encountered in the ordinary use of the product." - NOTE: After a finding of negligence against the defendant, the defendant raised the 3 defences we have discussed, as you would do when looking at a problem in negligence: 1. Contributory negligence 2. Mitigation 3. Volenti - Some courts do not consider volenti as a separate defence, rather, it is considered that the plaintiff has been contributorily negligent. Volenti is used mainly in sporting events, or events such as bungee jumping.
Factors to determine if there is undue influence
- Degree of domination - Extent of advantage (unfairness of the bargain) - Stronger party must prove that transaction was beneficial to the weaker party
Actions that make the performance of the contract impossible
- Deliberate or negligent act that makes performance impossible = repudiation - May take place before or during performance - Ex: not returning from vacation in time to perform the contract obligations
Discharge of contracts - what does discharge mean?
- Discharge = the contract has come to an end = all obligations are extinguished
Causation - Who is it up to? (plaintiff or defendant) - Must it be fundamental? - What test is used
- Is a question of reliance on the professional advice - Up to the plaintiff to prove that the misrepresentation caused the loss - Need not prove it was the fundamental factor that caused the loss, as long as it was a contributing factor - Test used: did the plaintiff reasonably rely and act upon the statement or advice form the professional
Statute law
- Parliamentary enactments are referred to as statute - Statutes take precedence over judge-made law (whether based on common law or equity) - Statutes can o Codify the common law o Create new law o Make changes to existing common law - Statutes are published - If there is a statute on a particular point, the statute overrides any existing common law on the same point - Judges are called upon to interpret statutes if the law is not clearly set out
Exemption Clauses - Purpose - Used frequently in.... - Used to...
- Parties to a contract may have an exemption clause which can exclude the contractor from liability and transfers the risk of harm to the contractee - Used frequently in... o Standard form contracts o Back-of-ticket contracts - Used to o Limit the risk, or o Transfer the risk to the purchasers
- Partners are not liable for debts, liabilities or obligations of partnership or any negligent acts of _______________
- Partners are not liable for debts, liabilities or obligations of partnership or any negligent acts of other partners - Partners remain liable for own negligent acts or omissions and for those under their direct supervision or control
Partnership agreement - purpose
- Partnership comes into existence through agreement (express or implied) - Purpose of agreement is to set out the entre terms of the relationship
Partnerships - what is it
- Partnership is the relationship which exists between persons carrying on business in common with a view to profit - Can be two or more persons (a corporation considered is a person)
Fraudulent misrepresentation
- Party makes an untrue statement of fact (not an opinion) - The statement is made § Knowing it to be false § Without belief in its truth § Recklessly, careless as to whether it is true or false
Professional Liability - define professional - Injury or harm from reliance on advice can be a wrong in ______ or in ______ or a breach of __________
- Scope of the professional duty of care o Professional = people with specialized knowledge and skills which are relied on by others o Usually belong to licensed body o Injury or harm from reliance on advice can be a wrong in tort or in contract or a breach of fiduciary duty
What is Undue Influence?
- The domination of one party over the mind of another to such a degree as to deprive the weaker party of the ability to make an independent decision - The improper use of power or trust in a way that deprives another person of free will and substitutes another's objective - Where contracting party feels so dominated by the power or influence of another party that the decision to make the contract is not his/her own - Pressure makes it impossible to bargain freely
Lapse
- The effect of a lapsed offer is that it no longer exists - An offer can lapse: § When the offeree fails to accept within a time specified in the offer § When the offeree fails to accept within a reasonable time § When a counter-offer is made § When either party dies or becomes insane prior to acceptance § The offer is rejected § The offer is revoked
3 criteria of frustration
- The event must have occurred after the contract was entered into It must bake the contract impossible to perform It must not be self-induced
Adequacy of consideration
- The exchange does not need to be an exchange of equivalents - Courts will not unwind bad bargains - Adequacy of consideration is not an issue for the courts unless there is evidence of § Fraud § Undue influence § Duress § Unconscionability
Discharge by performance
- The expected result - Each party satisfactorily performs or completes its part of the bargain
Hadley v Baxendale learnings
- The extent of damages will extend to: o Damages which arise naturally (in the usual course); or o As may reasonable be contemplated by both parties at time contract was made - Damages may extend further if: o Special circumstances were made known to the party breaching the contract - Rules o Must prove that damages § Flow directly and naturally from the breach · Parties must have known at the time of formation of the contract that this particular loss was likely to occur if contract breached · Exclude the parties from liability for losses resulting from unusual circumstances as a result of the breach § If the parties are aware (they have communicated) of the unusual/special circumstances, then those damages are recoverable
Most fiduciary relationships are found where:
- The fiduciary has the scope for the exercise of some discretion or power on the beneficiary's behalf - The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal or practical interests - The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion of power
How to avoid risk of undue influence?
- the stronger party must always inform the weaker party that he/she is entitled to seek independent advice before making an agreement - Having independent legal advice can rebut the presumption of undue influence
Consequential damages
- usual type of damages such as due to delays from defective goods - Must be reasonably foreseeable at time of contract execution
punitive damages
- where bad faith or malicious behaviour involved - Awarded only in exceptional circumstances for malicious, oppressive, and high-handed misconduct that offends the court's sense of decency
Name of firm must end with:
"Limited Parntershp"
Categories of persons who lack capacity
- Categories of persons who lack capacity: o Minors (anyone below age of majority) o Mental incompetent persons (temporarily or permanently)
Terms in a contract of sale (3)
- Caveat Emptor - Condition - Warranty
Agency - when does an agency relationship exist? Dependent/independent
- An agency relationship exists where one person (the agent) is authorized by another (the principal) to bind the latter to contractual obligations - Usually is a legal (contractual) relationship - Can be dependent (where agent works exclusively for a single principal) or independent (where agent works for many principals or clients)
Joint Ventures - What are they - Fiduciary duties? - Contractual relationship?
- An agreement between two or more parties (usually corporations) to collaborate on a specific project and to contribute their assets and split the profits - Not for continuing activities - No fiduciary duties - Must be careful not to inadvertently constitute a partnership - No liability as a 'partner" - No contractual relationship o Can be incorporated (an "equity joint venture") or unincorporated
Human Rights Codes - 1960 Canadian Bill o fRights
o Applied to the federal governments o Covered basic rights - Right to life, freedom of speech, equality
Tender of performance and refusal to accept
- An attempt by one of the parties to perform according to the terms of the contract, whether accepted or rejected by the other party § Ie. hired to paint rooms in a house but then denied access to the premises
Vicarious Liability
- An employer is liable for torts committed by an employee if the tort is "within the scope of their employment" - The employer has the right to sue the employee after having been held liable for the employee's negligence - No training, screening, supervision, or contract allows an employed to escape vicarious liability as the object is to provide compensation to a victim and the employer usually has more money - Can use a principled exception clause to avoid vicarious liability for the acts of employees - Employers can use an exemption clause to protect their business from liability for its own breach of contract, negligence, plus any vicarious liability for the torts of employees, agents - Clause however must o Be intended for their benefit, and o The damage occurred in the course of their employment
Condition precedent
- An event or requirement that must be satisfied (must happen) before either party to the contract is required to do anything - Contract itself has binding force form outset but when the condition precedent is not satisfied there is no contractual obligation on either party
Counter-offer
- Any change of terms, including any alteration or modification of the offer - A counter-offer has the effect of terminating the original offer - If the counter-offer is rejected, negotiations are over - the original offer is not revived - When an offeree is merely requesting information, the offer remains - Until a specific offer is made by one party and accepted without change by the other party, there is no contract
Standard Form Contracts
- An offer presented in a printed document or notice, the terms of which cannot be changed by the offeree, but must be accepted as is, or rejected - Done where large numbers of people are involved, for efficiency - Courts presume that an unqualified acceptance of an offer is an acceptance of every term of that offer - Special or unusual terms usually need to be brought to the attention of the offeree - Ticket cases always turn on their individual facts and it is difficult to set down any firm guidelines for what is sufficient notice - Example: parking lot terms mean that they're not responsible § If you park there, you have agreed to accept the terms § Except when there are unusual, unreasonable terms that you wouldn't expect
Kobelt Manufacturing Co. v Pacific Rim Engineered Products (PREP) - Facts o PREP ordered Brakes from Kobelt o Brakes were leaking o PREP: Brakes not fit for intended purpose and liable under S. 18 of the SGA - Issues o Was there implied condition or warranty of fitness for particular purpose for which PREP intended to use brakes pursuant to s. 18 of SGA? Or is warranty not applicable because sale was under the trade name OR because warranty is excluded by exclusion caluse? o Was PREP demonstrated breach of the implied warranty of fitness for purpose? o If there was breach of contract and damages are not limited by contractual warranty and exclusion clause, what amount is PREP entitled to?
- 3 part test for section 18 o Contract was in the course of seller's business o Seller has knowledge of the purpose of goods o Buyer relied on seller's skill and judgement - S. 18 does not apply o Kobelt was never told that the brakes were going to be used in draw works and PREP did not rely on Kobelt's expertise o It was not generally understood in the industry that PREP's use of bake would be common o Exclusion clause does not exclude the statutory application: no evidence that terms were brought to the attention of other party and were not in application at the time contract was concluded ( and in any case language only excludes warranties, NOT conditions) o No statutorily implied warranty of fitness
Contract Law - Writing - when does a contract need to be in writing?
- A contract does not need to be in writing to be enforceable in the courts of BC, unless it is a contract, as set out in the Law and Equity Act, RSBC o For certain land transactions o For a guarantee or indemnity o For a contract not to be enforced by either party within a year o Wills and Powers of Attorney must also be in writing
Contract Law
- A contract is a promise that the law will enforce - "an agreement between 2 or more parties creating obligations that are enforceable or otherwise recognizable at law" - Contracts allow for certainty in commercial dealings - Contract law imposes enforceable legal obligations
What is express repudiation?
- A declaration by one contracting party to the other that it does not intend to perform as promised - Can then treat the contract at an end and sue for damages or insist on performance - If all/substantially all of the contract has been performed, contract is then discharged and the harmed party can sue for damages - If before the required performance = an "anticipatory breach"
Disadvantages of ADR
- Cannot ensure full disclosure - Power imbalance - May not be as predictable o Don't need to follow precedents - Typically only award available is monetary damages - Can be used as a stall tactic by one party - May depend on the good faith of the parties
Misrepresentation - What is it?
- A false statement of a material fact that induces a party to enter into a contract and is not made a term of the final contract - A statement made during the bargaining process that persuades or induces a person to agree to a contract o If the statement is not included in the contract and proves to eb false, it is a misrepresentation - Contract may be rescinded because of a misrepresentation even though the contract would otherwise be valid, that is, contains all required elements - A misrepresentation does not render a contract void, but the contract is voidable at the option of the harmed party - If false statement is included in the contract as a term, it would then be a breach of contract not a misrepresentation
Innocent misrepresentation
- A false statement which the person who made it honestly believes to be true - The maker of the statement is unaware that it is not true - If a maker of an innocent misrepresentation later becomes aware of it begin a misrepresentation, failure to inform/correct the misrepresentation causes it to become a fraudulent misrepresentation
Contract Law - capacity
- Capacity = competence (the ability) to bind oneself legally to a contract - Parties must be capable of understanding what the effect of the contract is - Contract may be set aside if a party did not have the capacity to contract
Fiduciary duty
- A legal duty where on person, called the fiduciary, has to act in the best interests of another person, known as the beneficiary, in all matters within the scope of their relationship - The beneficiary trusts that the fiduciary will act on their behalf in good faith - Where there is a "special" relationship with a professional, law imposes a fiduciary duty on that professional
Limited Partnership - what is it
- A partnership in which at least one partner has unlimited liability while others have limited liability - Allows partnership to carry on without exposing limited partners to personal liability so long as: the general partner has unlimited liability while e a limited partner has liability limited to the amount paid by them as a capital contribution - Used to limit certain partners liability - liability limited to the amount of capital they have agreed to contribute
S19: Sale by sample
- (1) A contract of sale or lease is a contract for sale or lease by sample if there is a term in the contract, express or implied, to that effect - (2) In a contract for sale or lease by sample a) there is an implied condition that the bulk must correspond with the sample in quality b) there is an implied condition that the buyer or lessee must have a reasonable opportunity of comparing the bulk with the sample, and c) there is an implied condition that the goods must be free form any defect rendering them unmerchantable that would not be apparent on reasonable examination of the sample - Buyer deemed to be aware of defects which would be apparent on a reasonable examination - no implied condition as regards defects which such examination ought to have revealed
s1 of charter
- -Reasonable limits clause - justify limitation on charter rights. Charter rights can be infringed if courts determine that the infringement is reasonably justified. - allows for laws "demonstrably justified in a free & democratic society" - Rights are subject "to such reasonable limited prescribed by law as can be demonstrably justified in a free& democratic society" - ie. extradition, prison, search & seizure - Extradition as long as penalty in - other country is not worse than law in other
3 duties
- 1. Contractual duty o Either expressly or impliedly promised that services will be provided with due care o Only parties to the contract can sue for breach of contract - 2. Fiduciary duty o Special relationship of trust o May arise even if no negligence - 3. Duty in tort o Application of general principles of negligence but with specific factors
Class Example - Dan had a thriving business selling roses to vendors which they in turn sold in beer parlors and street corners on Valentine's day. His cost per dozen was $6, with vendors then selling the roses for $1 each. Luka had 75 dozen roses ordered, and needed delivery by February 12th. - It was a very cold February, and because he generator in Dan's greenhouse was working overtime it overheated and quit. All the roses he planned to provide to Luka froze and were useless. - Dan is blaming the loss on frustration, given that the cold weather was beyond his control. Luka is saying it is not frustration and that Dan is liable for the loss he suffered. - Considering the law, who is liable?
- 3 criteria required to claim frustration o 1. The event must have occurred after the contract was entered into o 2. It must make the contract impossible to perform o 3. It must not be self-induced - Criteria 1 and 3 have been met - Criteria 2 not met: Dan could have sourced the roses from somewhere else, perhaps at a higher cost - Conclusion: it is not a frustrating event; Dan is liable for the loss
The rule of law in Canada
- All persons are treated equally under the law and the government is bound by the laws it has created - Our government is not 'above the law'
Frustrated Contracts Act
- Allows the court to apportion the loss equitably - Done by providing for the recovery of deposits/advances and retention of part of the funds to cover expenses, where a party has partly performed the contract at the time of the frustrating event
Class Problem: - Sasha Fierce was wrapping up one last dance rehearsal before starting out on her worldwide concert tour when her calf muscle seized up. She called the Rainbow Smile Vitality Spa (Rainbow's) hoping that she could get a massage to make her calf muscle more flexible. Sasha spoke to Rainbow's employee, Lola. Sasha emphasized to Lola that she needed her calf muscle to be flexible in order to perform her signature dance moves as she was about to leave on a worldwide concert tour. Lola was so excited to have Sasha, her favourite celebrity, in the spa that she assured her that she could massage her calf muscle back to 100% healthy. However, Lola knew full well that Rainbow's services were limited and did not include massages. In fact, - Lola was not trained to give massages and had never given a massage in her life. Lola provided Sasha with a massage and immediately following the massage, Sasha's calf pain tripled and she was consequently unable to walk. As a result, Sasha had to cancel the first concert on her world tour. Sasha lost profits to her of 1 million dollars. Thankfully, Sasha was able to later see a specialist who was able to treat her calf muscle properly and her world tour continued. - Assume that Rainbow's is liable to Sasha. If Rainbow's is a general partnership between Donald and Melania Tramp, would Donald and Melania be personally liable to Sasha for the damages she suffered? Explain. - Are Donald and Melania personally liable to Sasha?
- A partnership is not a separate legal entity. The partners in a general partnership face personal unlimited liability. This means that if the assets of Rainbow's are insufficient to satisfy Sasha's judgment, she can claim the personal assets of Donald and Melania. - Partners are jointly liable for debts of the firm. Sasha could sue either Donald or Melania or both for the damages she suffered and they would be personally liable to her.
Lanz v Lanz Facts: - Bob Lanz worked with father Lanz in trucking business operating as "F Lanz Trucking" - After a falling out and Bob claims it is a partnership and now wants funds that would be owed if it were a partnership - Parties never formalized business as a partnership - Bob never had responsibility for debts and no discussion ever of asset ownership - It was always his father who acquired and disposed of the assets and who arranged for financing
- A partnership is one where there are persons carrying on business in common with a view to profit - Application and Conclusion: - Bob had no liability for debts, no role in management or operation, he was just a truck diver in return for 40% of profits, did not carry on business in common = not a partnership
Arbitration
- A process through which a neutral party makes a decision (usually binding) that resolves a dispute - Arbitration is more formal - Arbitrator makes a binding decision after hearing the parties - Both parties agree on who the arbitration(s) will be
Gratuitous Promise
- A promise made without consideration being given in exchange for the other party's promise - A promise made without bargaining for, or accepting, anything in return - Not enforceable in law - Donations are only binding if § Made under seal § Or charity does something in response to the donor's promise
- For the SGA to apply, there must be
- A sale § Where property transfers for a money consideration - Of goods § Tangible personal property (not real estate) § Does not include Barters, bailments or leases, consignments, non-contractual transfers of property of goods, land or intangible property, the supply of services - Does not apply to services § On the balance is it a contract of sale, or a contract of labour and materials? - Ownership must pass to the buyer
The use of a Seal
- A seal replaces only consideration - An alternative way to make a promise binding - Must be affixed at the time the party signs the contract and the party signing must be aware of its legal significance = "I intend to be bound"
Torts - What is a tort - What is the role of tort law
- A tort is a civil wrong for which the victim may claim compensation from the wrongdoer for the harm suffered - The role of tort law is to compensate the victim, rather than punish the offender (criminal law)
The postal acceptance rule
- Acceptance by mail § Where the offer stipulates acceptance by mail or the offer has been made by mail and there is no stipulation how acceptance should be made - Acceptance is complete when the envelope is placed in mailbox, not when offeror receives the letter - If the offeror invites acceptance by mail, the contract is formed at the time acceptance is dropped in the mailbox and the contract is formed at the place where the mailbox is located - The offeror can alter this rule by saying that acceptance will only be effective when received
When is acceptance effective?
- Acceptance is effective when communicated to the offeror - General rule is that a contract is formed when and where acceptance becomes effective
Manner of acceptance
- Acceptance must be made in the manner requested or implied by the offeror - If the offer is silent, must accept in same mode offer was made or by faster method - Acceptance must be made in a positive form, whether in words or conduct - an offeree cannot stipulate silence as a mode of acceptance as the offeree would be forced to act in order to reject the offer - Silence is acceptable only if the parties have habitually used this method to communicate agreement or where they have agreed in advance that silence will be sufficient - Offers can be accepted by performing an act
What is Duress?
- Actual or threatened violence or imprisonment as a means of coercing a party to accept a contract - When forced or pressured to enter into a contract against their will by threats of violence or imprisonment - Traditional definition has been expanded to include threats of criminal prosecution and threats to disclose embarrassing or scandalous information and economic duress
Necessity
- Agent enters into a contract for the benefit of the principal but without authority - Allowed in a few circumstances o Salvage o Perishable goods o Where agent has restricted authority but must exceed authority to protect the principals' property - Must be able to show couldn't communicate with the principal and the action taken was reasonable in the circumstances
Apparent Authority
- Agent has no real authority but... o The circumstances (the principal) conveys the impression to third parties that the agent has some authority by conduct, representation (cards, title, car), acquiescence o Third party is lead to believe agent has some authority o Induced into contract based on that "impression" o Is not aware of any restrictions on the agent's authority - Then... o Then the principal is estopped from denying that the agent had authority o A reasonable person could assume the agent had actual authority
Duke's Cookies vs AMS - Facts: AMS leased space to Duke's Cookies, Duke's Cookies wanted to increase their space so had discussions for 8 months with the AMS. Duke's Cookies did not give the required 6 months notice for renewal of original space during ongoing discussions as it appeared that larger space would be available. Larger space did not become available. AMS denied extension of the lease for the smaller space. - Issue: Is the AMS estopped from denying extension of the lease?
- Application: AMS "promised Duke's a space if it were available. - Duke's relied on this reasonably, to their detriment and did not provide the notice required by the lease - AMS cannot now revert to the strict notice requirement - Held: AMS is estopped from requiring notice
In Class Question - HACK has been incorporated under the name HACK Ltd. HACK has issued a total of 100 shares. Herb, Ana, Conrad, and Kim each own 25 shares in HACK, and all of them are also directors of HACK. HACK expanded and bought $100,000 worth of equipment from Trucks, Inc. It made a cash payment of $20,000, but HACK still owed $80,000 to trucks. HACK's business has collapsed and it is unable to pay Trucks. - What share of this debt will Her, Ana, Conrad, and Kim each bear?
- As a corporation, HACK Ltd. Is a legal entity separate from its shareholders and directors. Shareholders enjoy the benefit of limited liability, and are not responsible for the debts of the corporation beyond the value of their contributed share capital. Directors are also not generally liable for obligations incurred by the corporation. Herb, Ana, Conrad, and Kim would have no personal liability for the debts of HACK.
Who is a duty of care owed to?
- As a result of Hedley Byrne, experts find themselves responsible not only to their immediate clients, but to others who suffer loss because of their careless statements - However, this duty is only owed to those who are in a "special relationship" = those persons (not necessarily identified to them in person) whom they know will have a specific use for the audited information (Range case)
Termination of agency agreement - how can it be terminated? (7)
- At time specified - At completion of a particular project - Upon notice of either party - Upon death or insanity of either party - Bankruptcy of principal - Upon an event that makes performance of the agency agreement impossible - Can be discharged by frustration
Collins vs. Dodge City East
- Auto person should have checked AC, even though he believed it had AC - Collins purchased care partially based on fact that it had AC
"Full Shield Model".... but
- B.C. has a "full shield model" - "a partner in a limited liability partnership is not liable...for the debts, liabilities or obligations of the partnership or any partner arising from the negligent acts or omissions that another partner or an employee, agent or representative of the partnership commits in the course of the partnership business while the partnership is a limited liability partnership" (p.387) - But partners remain liable for their own negligence or the negligent or wrongful acts or omissions of another partner or an employee of the partnership if the partner knew of the act or omission and did not take the actions that a reasonable person would take to prevent it
Negligence & Occupier's Liability
- BC has the Occupiers Liability Act, which has eliminated the differing standards of care based on being an invitee, a licensee, a trespasser or a child S 3(1) states: o An occupier of premises owes a duty to take that care that in all the circumstances of the case is reasonable to see that a person, and the person's property, on the premises, and property on the premises of a person, whether or not that person personally enters on the premise, will be reasonably safe in using the premises o The duty owed is basically to ensure a person is safe when using the premises o An occupier must not go out of their way to injure a trespasser, and if warned of hazards regarding the property, a visitor enters, they will be considered to have voluntarily assumed the risk and resulting damages
Discharge by operation of law
- Bankruptcy & insolvency Act operates to discharge a bankrupt debtor from certain contractual liabilities after the processes of bankruptcy have been completed o Need certificate of bankruptcy o Cannot be caused by misconduct on the part of the debtor - Debts can be statute-barred, for example certain debts can no longer be recovered 6 years after last confirmation of the obligation under the Limitation Act
3 levels of codes of conduct
- Binding: where the governing body or trade association sets the rules o Ie. law society - Voluntary: Industry codes with strong persuasive effect o Ie. real estate advertising regulation - Self-imposed codes: adopted to affect employment relationships within the work place, such as no peanut products, no perfumed items
What is Law?
- Body of rules which can be enforced by the courts or other government agencies - Set out basic standards that are enforced by government to protect people, give power to government to act and to regulate individuals - Law influence behaviour and the consequences of inappropriate behavior can lead to liability
Contract Law - Intention
- Both parties must intend to create a legally enforceable agreement - it must be a mutual meeting of the minds - The law presumes that parties in arms-length transactions intend to be legally bound, especially when they are strangers in commerce - The presumption is less clear for close friends or family members o The presumption is that there is no intent - Test for intent: would a reasonable person looking at the outward conduct of the parities say that they showed a serious intent to make a contract? - The seriousness of intention is assessed based upon the objective standard of what a reasonable person would believe
Warranty
- Breach of a non-essential term, contract must continue but can sue for damages suffered
What if there's ambiguity?
- But any ambiguity, then the narrow or restrictive meaning will be used - Ex: "not responsible for lost or stolen clothing" o Narrow interpretation will not make contractor liable for damage, nor liable for a lost briefcase
How a breach may occur (3)
- By expressly repudiating the contract - By acting in a way that makes performance impossible - By either party failing to perform or to substantially perform
If the anticipatory breach is a breach of a condition, what 2 choices does the innocent party have?
- Can accept the breach and sue for damages immediately or allow the contract to continue until expressly breached and then sue for damages - A minor term, if repudiated will not be sufficient to declare the contract as discharged
Invitations to do business
- Distinction between a true offer and an invitation to do business is whether the person making the offer intends to be bound if the offeree accepts the terms - Advertisements are generally presumed to be mere invitations to the public to visit the advertiser's place of business to make an offer § a display of goods is not an offer § When you take the goods to the cashier, you are offering to purchase the goods and the cashier can accept/reject your offer § Exception! An advertisement to sell a fixed number of items at a fixed price to a set number of people may be a valid offer · "10 coffee makers at 10 am for the first 10 people in line for $10"
Private companies? - Freely tradeable shares? - Reporting? - Disclosure/transparency
- Do not have freely tradeable shares - restrictions placed on the transfer of shares - Are not reporting - Over 90% of Canada are private, generally small and medium sized businesses - Reduced disclosure and transparency obligation s - Owners are usually the managers as well o Management and ownership are substantially identical - Used where shareholders seek advantages of incorporation along with advantages of a partnership - Allows shareholders to choose their business associates like partners can - Shares are usually held by a few members - Shares are not traded in the market
Maloney v Dockside
- Dockside knew that the used boat had problems, but priced the boat low - Maloney bought boat with standard form contract with exclusion clause, did not read the contract - Problems with boat, so Maloney had another dealer install a new cooling system, but still problems with boat - Exclusion clause applies to the circumstances but unconscionable o express knowledge of problems and complaints but did not disclose o and had knowledge and expertise - Note: Mercury did work on boat in between problems, so Maloney will have to show that Mercury's work was not cause of problem
Issues - Does the charter apply to the decision not to appoint Liebmann? - Were liebamn's equality rights under s. 15 of the Charter infringed? - Could the infringement be justified under S1 of the charter?
- Does the charter apply to the decision not to appoint Liebmann? § Yes, the charter applies § Decision made under authority delegated under the National defence Act, therefore under statutory authority - Were liebamn's equality rights under s. 15 of the Charter infringed? § Yes, he was treated differently from others based on personal characteristics of the type in S15 § There was discrimination in a consituttional sense in that his dignity was demeaned - Could the infringement be justified under S1 of the charter? § No § Respondents did not show that it was reasonable to discriminate against Liebmann because he was Jewish - Note o National Defence tried to argue the constitutionality of CFAO-20-53, which wasn't in effect when decision to not appoint liebmann was made o One of the deciding officers later admitted he was unaware of the politics of the Persian Gulf war and whether being Jewish as relevant
Other notes - Duty of Care vs Standard of care
- Duty of care merely looks at the existence of a relationship of proximity that could sustain a claim of negligence. For example, courts recognize a duty of care between a manufacturer and a consumer. - Standard of care deals with the exact conduct required of the defendant. We would say they acted "negligently" if they fall below this requisite level of care (though this doesn't mean negligence is proven yet). Standard of care is much more considered about the specific conduct and actions required and taken by the defendant, rather than the defendant's relationship with the plaintiff.
Occupier's Liability
- Duty owed: to take care to prevent injuries from hazards of which the occupier is aware and also those of which a reasonable person ought to be aware - Occupier's liability act (BC) o S. 4(1) any exclusion of liability must be brought to the attention of the plaintiff
Liability of partners - Each partner is the _________ and _________ of the other
- Each partner is the principal and agent of the other o Unless outside apparent authority or third party aware of limits - Unless the authority of a partner has been restricted by the partnership agreement and a third party dealing with the partner knows this, any act done by the partner within their apparent authority (relied on by the third party) will bind all partners - Partners have joint and several liability - each partner is individually as well as collectively responsible
Signed contracts - when is the exemption clause effective and ineffective - when does Contra Proferentum apply - When may it be unenforceable
- Effective when bargaining power and knowledge of law are equal - Ineffective if consumer protection law such as SGA applies - Where exemption does not precisely cover the event, Contra Proferentum applies and it will be construed against the party who suggested it - If consumer is misled as to the effect of a clause it may be unenforceable, particularly where the effect of a clause is improperly stated or explained
Examples of agency contracts (4)
- Examples of agency contracts - Employment (where employee is an agent of the employer) - Corporation, where officers and directors enter in to contracts on its' behalf - Partnerships, where each partner is an agent of the other partners - Commission agents: insurance brokers, stockbroker, auctioneers - Note: an agent like real estate "agent" is NOT an agent because they do not have authority to enter into contracts on behalf of others
Types of damages (6)
- Expectation damages - consequential damages - reliance damages - nominal damages - punitive damages - liquidated damages
Expectation damages
- Expectation damages: expected benefit of performance (ex. Expected profits)
Liebmann v Canada
- Facts o Liebmann was denied position as executive assistance to Commanding Officer iN persian Gulf o Despite being recommended o When staff became aware he was Jewish o Liebmann challenged the decision under S 15 of the Charter
SPC Holdings v Gabriel
- Facts: Deficient roof worked done so Gabriel got a judgment and costs against SPC. SPC was "judgment proof" so action was brought to life the corporate veil. (c) the company is a sham-that is, a mere agent, or façade, or alter ego, of a controlling corporation - Held: "Once SPC face potential liability as a result of the litigation,the directors formed a new company, SPC Roofing & Waterproofing and effectively emptied the assets of SPC into the new company to avoid paying the judgment of Gabriel.
SGA rules - Rule 5
- Sale of unascertained or future goods by description - Title passes when the goods are unconditionally appropriated to the contract by the seller with the assent of the buyer or the seller delivers the goods to a carrier pursuant to a contract and does not reserve a right of disposal
Canadian sports Specialists Inc. v Philippon
- Facts: Plaintiff corporation suing Philippon, a director, for the 20% mark-up he had paid himself on computer equipment he had bought and for the 100% increase in per diem rate he had claimed for his installation of a computer system. Philippon had been the sole signing authority of the plaintiff. - Held: for CSS. The defendant was in a fiduciary capacity as a director. His act ions in taking and concealing the mark-up on the computer equipment was deceitful. The person he says he had the increased salary agreement with denied this, and in any event, such a private arrangement would have been improper and illegal.
Werle v Sask Energy
- False credentials - News bulletin revealed it and still he did not act
Duties of directors and officers (2)
- Fiduciary Duty - Duty of care, diligence, skill - Duties are owed to the corporation first
Advantages of ADR
- Flexibility - Not bound by rules of court (ie. zoom attendance) - Can be held anywhere - Less expensive - Speed & finality - Lots of delays to get to court - Confidentiality - In court, anyone can watch - Choice of Decision-maker - Can be an expert - Certainty and enforceability - Relationship preservation - Mediators and arbitrators can get the parties talking, rather than hostile environment in court room
Limited Liability Partnerships - Formed expressly or implied? - Registration? - Used for what purposes?
- Formed expressly, must be registered - Must have written agreement that designates the partnership as LLP - LLP at end of name - Used only for specific purposes, such as formation of professional partnership
2 specific torts
- Fraudulent misrepresentation - Negligent misrepresentation
Fundamental breach
- Fundamental breach: a breach so serious that it amounts to a non-performance of the contract o Courts look at the entire contract as well as the exemption clause and imply from the terms whether the parties intended the clause to cover a fundamental breach o Called the construction approach o Judges now take the view that parties can draft an exemption clause that excludes all liability
Exemption clauses - general rule
- General rule: courts presume that acceptance of an offer is acceptance of All the terms of the offer (Rudder)
Incorporation - methods of incorporation (3)
- Generally incorporated either federally under CBCA or provincially under provincial act o In BC the Business Corporations Act - Crown corporations are "creatures of statue" as are banks, trust and loan companies - Various methods of incorporation o Memorandum of association o Articles of incorporation system o Letters patent - System used depends on province chosen - End result is the same = articles of incorporation
Class problem - In order to keep her large dog on her own property, Nathalie erected an electrified barrier around the front of her property. The barrier was almost invisible from the street. A sign at the front of the property advising that there was an electric fence in place to keep the dog on the property. If the dog attempted to leave the property, a small shock would be triggered which deterred the dog from leaving. Since she had erected this fence, the dog had not left Natalie's property without her permission. - Natalie was in her front garden with her dog. Natalie was gardening and the dog was sniffing about when Hannah came down the street on her bicycle. The dog started barking and lunged toward the electrified barrier, but was stopped and did not proceed off Natalie's property - Hannah was startled, did not know there was a barricade, and swerved her bike into the path of an oncoming van. The van was driven by Todd who was driving at 60 km/hr, 10 km/hr over the speed limit. Todd was delivering organic produce for Wholesome eating Inc. - Wholesome Eating's van was damaged, Hannah's bike was destroyed, and Hannah was seriously injured. - Hanna is seeking compensation for her damages - Who would Hannah likely sue? Assess her chances for success explaining the relevant law
- Hannah would likely sue Natalie and Todd for negligence, and Wholesome On the basis of vicarious liability - Negligence framework: a plaintiff suing in tort law for negligence must show that the defendant owed her a duty of care, that there was a breach of a reasonable standard, that the breach caused the harm, and that the damages were reasonably foreseeable - Natalie: o As a property owner with a dog, it would be reasonably foreseeable to Nathalie to forsee that her actions would affect cyclists on the street outside her property o Did she breach a reasonable standard? o She would have a duty to keep her dog under control, but she would say that in having the electrified fence, she lived up to that standard. She also had a sign in place to warn people that the dog could not leave the property. In spite of the fence, should she have done more to ensure that her dog could not scare people on the street? Debatable, but argue that she should have done more and that not all people would be able to read the sign o Her breach caused the harm and the type of damage is reasonably foreseeable. o Natalie will be liable to Hannah - Todd: o As a driver, Todd would owe a duty of care to cyclists on the road o Did he observe a reasonable standard? § It may be that there was little he could have done to avoid the accident. If Hannah swerved right in front, it may not matter that he was traveling slightly over the speed limit - he would have hit her regardless. If that is the case, he will not be liable. If travelling over the speed limit caused the accident, then he could be liable - If both Natalie and Todd are found liable, the court will apportion liability between them according to contributory negligence and damages will be apportioned accordingly. Hannah could collect the full amount from either one as long as Hannah is not contributorily negligent - Hannah: o Contributory negligence o Hannah does owe a duty of care to motorists o Swerving in front of the van caused it to collide with her, but her action would probably be found to be natural and not unreasonable in the circumstances o Don't think Hannah would be found to be contributorily negligent in the circumstances - Wholesome: o Vicarious liability o An employer is jointly liable with the employee for torts committed int eh scope of employment. o If Todd is found liable to Hannah, Wholesome will be vicariously liable
In Class Question
- Happy, having just aced the 399 exam, you decide to celebrate by asking your high school sweetheart to marry you. You rush into 10th Avenue, cheque book in hand, to buy what you will need for the perfect evening. - First stop, Van Yperan Jewelers. You choose a modest but pretty diamond and garnet ring. Rob, the jeweler, shines it up and puts it into the box. Recognizing that you will be rushing about, and don't want to lose the ring, you ask if you can leave the ring at the store until you are finished shopping. o Rule 1: Title has passed to you - Next stop, Michael McBride Menswear. You haven't been able to get to your wash for weeks, what with studying, so you decide to buy a new pair of jeans so you will look decent for the big event. You try the jeans on and the clerk measures the length for hemming them. Explaining you need the jeans within the hour, the clerk promises they will be ready, as she takes your cheque. Off to the next shop. o Rule 2: Title not yet passed to you until they notify you it is finished - Flowers - a nice touch. Ford's has some gorgeous roses which will help camouflage the grime of your basement suite. You choose a dozen red roses and hand them to the clerk, asking if she can wrap them in nice paper and you'll be back in half an hour to pick them up. She says she will need to determine if they are long-stemmed or short-stemmed, as the price varies, depending on the type. No problem, just figure it out for the 12 roses you have chosen, you say. o Rule 3: owned by them - Music. Good music for the occasion. Something different from the Bug House Five. Adagio Music has what appears to be the perfect CD. Nice romantic sounding singers and songs. Being totally unfamiliar with the artists, you ask if you can listen to the CD, and are told that in fact you can take the CD home and play it and bring it back if you don't like it. You explain your situation, and the clerk wishes you all the best and says he hopes the disc meets your needs. o Rule 4: Owned by them - Last, food. Not having time to wash up any dishes, you decide on a delivered meal from the Varsity Grill. You go down to the Grill and place your order, specifying to Bing that you would like the food delivered at 8:00 p.m. o Rule 5? Owned by them? - Finished your purchases, and feeling very elated, you go back to pick up the ring, the pants and the flowers. - There are police cars up and down the 4400 block west 10th. Van Yperan has been robbed, through no fault of their own. Your ring, which was at the front counter, is gone, and due to the chaos, they are unable to even discuss with you another ring. - You go across the street to get your pants. You try them on, and it looks like you've been caught in a flood. The clerk shortened them 6 inches rather than 6 centimetres. So no new pants. - The flowers can't be a problem you think. However, the clerk greets you very sheepishly. She had left the flowers in the vase, and the other clerk on duty had happily made them into a corsage for a wedding that night. Will you ever get married? - You rush home, having told your girlfriend to hurry over after work because you had a great surprise waiting. You put on the CD, and just as she is about to come through the door Julio starts singing "To all the girls I've loved before, who've travelled in and out my door.." Quickly off comes the disc and you decide to take it back on Monday. (you forget to do this and end up having the CD for five days before you take it back) - The phone rings. It is the Varsity GrilL The cook slipped while carrying your order over to the delivery shelf and your dinner is in shambles. The cook has hurt himself so they cannot cook another meal for you. - Your evening and future seem in jeopardy. Your only hope is to ruin the surprise by showing your girlfriend your sales bills to prove your good intentions, and then impress her with your brilliance by displaying your knowledge of the Sale of Goods Act. - For each of the five purchases, decide which rule under the Sale of Goods Act applies, and who owned title to the goods at the time of the loss
Provincial Court of Appeal
- Hears appeals based on mistakes of law, not fact - No witnesses appear · Appeal takes place through written "factums" which set out the legal arguments - Is the final court of appeal within a province
Federal Court System
- Hears federal matters such as trademarks, patents, tax matters - Has a trial division, and appeal division, and then appeals to the Supreme Court of Canada - Supreme court of Canada o Leave to appeal must be granted for private law matters o Can sit with a "bench" of up to 9 judges o In Ottawa o Only hears matters of national importance o Final/top decision-making court in Canada o Sets precedents for all lower courts in Canada
Hedley Byrne v Heller
- Hedley Bryne was an ad agency wanting to extend credit to Easipower - Asked their own bank if Easipower was "good for" credit - Hedley Bryne's bank confirmed with Easipower's bank that Easipower was good for the debt - Easipower became insolvent - Hedley Byrne sued Easipower's bank for negligent misrepresentation - Court found duty of care owed to Hedley Byrne DESPITE no direct dealings between parties - all information was processed through Hedley Bryne's bank - Hedley Byrne should have foreseen that the info was going to be used and therefore had a duty of care - HOWEVER, Easipower's bank had included a disclaimer or responsibility so Hedley Byrne could NOT rely on the information - Hedley Byrne case extended the duty of care owed by professionals to a wider group of potential claimants - duty now owed not only to those in a contractual relationship but also to those relying on the information - Court said : it was possible to award compensation to the victim of a negligent misstatement even if there had been no contract, no fiduciary duty and no fraud.
Hercules Management vs Ernst & Young
- Hercules was shareholder in real estate lending company - EY was auditor for company - Company went bankrupt and investors brought action against EY that audits were negligent: claimed that they were using audits to monitor investments and would have pulled money if they saw bankruptcy was impending - No contract between auditor and shareholder - The purpose of the reports was to collectively assist shareholders in overseeing management - The reports were NOT prepared to assist in making personal investment decisions or for ANY purpose other than the standard statutory purpose under the Business Corporations Act (to oversee management)
Waldick v Malcom
- Invitees (persons permitted to enter for business purposes) and Licensees ( persons with express or implied permission) and trespassers - must take care to prevent injuries from hazards of which occupier is aware, and which a reasonable person ought to be aware - 3(1) Occupier's Liability Act o occupier owes a duty to take such care as in all the circumstances of the case is reasonable to see that persons entering on the premises and the property brought on the premises by those persons are reasonably safe while on the premises
Hodgkinson v Simms & Waldman
- Hodgkinson is 30 year old stockbroker with limited investment experience - Simms was a CA - Hodgkinson sought advice re tax shelter and accounting - he chose Simms because was not part of "high risk" world of promoters and could be independent - wanted stable and long term investments - Simms advised MURBs (development of apartment buildings where builders could deduct costs from personal incomes) - real estate market crashed in 1981 and Hodgkinson took huge losses - Simms failed to disclose fee arrangement with developers where he was collecting fees - Hodgkinson sued for breach of fiduciary duty and breach of contract - at trial was awarded 350K (the amount that was lost on the MURBs), also found there was a fiduciary duty (because there was vulnerability in this case) - on appeal - found NO fiduciary duty because degree of vulnerability had not been proved (Hodgkinson knew the risk) and the collapse of the real estate market (which was unforeseeable) was the real reason why Hodgkinson took the loss, not the failed duty to disclose - "Vulnerability" may be common to breach of fiduciary duty, undue influence, unconscionability and negligent misrepresentation - BUT unequal bargaining powers is not NECESSARY for fiduciary duty to exist - instead the question is: - "whether given all the surrounding circumstances one party could reasonably have expected that the other party would act in the former's best interests" - Test was clarified in Galambos v Perez (2009 SCC)(see Case 5.3 page 104 of text): o 1) the existence of a discretionary power on the part of the fiduciary to affect the vulnerable party's legal or practical interests that the fiduciary can exercise unilaterally; and o (2) an express or implied undertaking by the fiduciary itself that it will exercise this discretionary power in the vulnerable party's best interests
Albrechtsen v Panaich
- House sale did not complete. Market softened - Loss of 300,340.35 allowed o Difference in new sale price o Consequential damages - carrying costs, property taxes, hydro, Fortis BC, Telus, hot tub maintenance, property taxes, insurance - Award minus deposit of 60,000
When should you write a term as a condition in the contract?
- If a term of the contract is so important that you want it fulfilled or else the contract should be discharged, write this term as a condition in the contract
S18b: merchantability
- If goods are bought by description from a seller or lessor who deals in goods of that description, whether the seller or lessor is the manufacturer or not, there is an implied condition that the goods are of merchantable quality; but if the buyer or lessee has examined the goods, there is no implied condition as regards defects that the examination ought to have revealed - Implied condition that goods can be used for at least one of the purposes for which goods of that description would normally be used
Electronic Transactions Act RSBC
- If info or record is capable of being retrieved and process by an addressee, the information is deemed to be received by addressee - So if in an email inbox, but not opened, it's deemed received
Licensing
- If licenses required by professions to protect public from unqualified or unethical work, then contract will not be enforced if a party lacks proper licensing - Unlicensed person being sued cannot claim own misconduct as a defence to an action - Courts have flexible attitude when violations occur with regards to administrative licensing due to the variation in degree of acceptability of violations · Possible contract will still be enforced, not necessarily illegal · Administrative vs required for public safety
S 16
- Implied condition as to right to title - Implied warranty as to be free from charges or encumbrances - 16a: a seller has the right to sell the goods - 16b: goods will be free from any charge or encumbrance in favour of any third party, not declared or known to the buyer when the contract is made
S17
- Implied condition that goods will correspond to the description - Minor misrepresentation regarding secondary characteristics may be treated as breach of a warranty - Description applies to a generic characteristics, not words of praise - 17(1) In a contract for the sale or lease of goods by description, there is an implied condition that the goods must correspond with the description o If goods are sold by description, they have to meet that description - 17(2) if the sale of lease is by sample, as well as by description, it is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond with the description o If goods are sold by sample AND description, they still have to meet the description
Bevo Farms Ltd v. Veg Gro Inc
- In a sale of unascertainable goods, title passes to buyer when goods are in deliverable state and are unconditionally appropriated to the contract - Here, they were unconditionally appropriated to the contract when Bevo contracted with the carrier company for delivery (when they were loaded onto the truck)
Agency by estoppel vs ratification
- In both agency by estoppel and agency by ratification, the agent has no authority to do what he/she does - What distinguishes the two doctrines is whether the principal has conducted himself in a misleading way - Agency by estoppel forces the principal to be bound by the unauthorized contract because the principal has represented someone as his agent and must live with the consequences when that agent purports to act on his behalf - Under agency by ratification, the agent is perhaps equally out of line, but not due to any fault of or misrepresentation by the principal o For this reason, the law does not force the principal to adopt the contract bur rather permits him to make the decision for himself, according to his own best interests
Implied terms
- In general, implied terms are not expressly included by the parties, but as reasonable people, they would have included it had they thought about it - They are terms codified in statute - May be implied only if necessary to make the contract effective - if "obviously necessary" to accomplish purpose of contract - If parties have shown an exhaustive or comprehensive approach, court will not impose implied terms - Example: Safeway was anchor tenant in mall and intentionally kept the space vacant. This was contrary to the intentions of the parties, where it was an implied term that the space would be continuously used as a supermarket
7 elements of a contract
- Intention - Offer - Acceptance - Consideration - Capacity - Legality - Writing if required
Illegal by common law or public policy
- immoral or contrary to public interest - Illegal by common law or public policy o Common law: contract for indemnification for own intentional wrongful act (fraud, arson, libel, slander) o Public interest: perverting justice, paying off a witness
Blackcomb Skiing v Shneider
- Is deposit clause a penalty clause? o Was there a breach with failure to discharge title? - Whether sum is a penalty or liquidated damages (a genuine pre-estimate of damages) will depend on facts and circumstances when the contract was made - ^Factors considered o Genuine pre-estimate of damages o Parties were sophisticated and no objection to amount of deposit o Parties have discretion re amount of liquidated damages o Even if seller suffers no loss, if deposit is guarantee of performance, it is forfeited o 10% deposit is half of normal amount required for comparable o If party is NOT willing to complete, should not be able to recover deposit
Legality of Restrictive covenants regarding future employment
- Is restrictive covenant reasonable with respect to the public interest? · Is it a restraint on competition looking at the nature of the business and the location? · Would enforcement of covenant deprive the public of the employee's special service? - Is the restrictive covenant reasonable and necessary to protect the parties to the contract? · Is there a proprietary interest to protect? (goodwill, client base, secrets) · Is the size of the restricted geographical area reasonable? · Is the length of time reasonable given the nature and location of the business? · Is the scope of the restriction reasonable? - If illegal, it's void
Constitution Act of 1867
- It divides powers federally and provincially and each level of government controls subjects or areas assigned to it · Set out in sections 91 and 92 - Federal: banking, currency, postal services, tax, criminal law -- Cell phones, internet etc. because created after 1867 - Provincial: hospitals, education, property & Civil rights, administration of the courts, marriage, incorporation of companies
What makes a law a law? (3 things)
- It has to be made by the proper authorities: government, administrative tribunals, the courts - It has to be enforceable by the proper authorities - police, courts, tribunals - There has to be sanctions - fines, penalties, imprisonment
In Class Question - One of Jake's employees, Larry, cut his hand on a peeling volleyball and as a result has sued Jake for the resulting injury. Jake originally operated his volleyball camps without any corporate structure, but had recently completed registrations as Beach Bashers Ltd., a limited company. As fees for summers camps had not yet been submitted by registrants, Jake was still paying employees with cheques drawn on his personal account. Assuming Larry is successful, who will be liable for his damages - Jake or Beach Bashers Ltd? - Who is liable? Jake or Wildbeach Sales Ltd.?
- Jake will argue that Wildbeach Sales Ltd. is a corporation and a separate legal entity and therefore Jake, the sole shareholder, will have limited liability; the most he can lose financially to creditors is his capital contribution. - However, we learned from the Data Business Forms case that the name of the corporation must be properly displayed otherwise Jake gives the impression that he is carrying on business as a sole proprietorship. As there was no indication in the store or on the receipt Larry was given that he was doing business with a corporation, Larry is entitled to treat Wildbeach as a sole proprietorship. The sole proprietor, Jake, faces personal unlimited liability to Larry.
Registration - who is required to register - When must declarations be filed
- LPs and LLPs are required to register - Even general partnerships have to file declaration with basic partnership info, ie. name and address of each partner and name of partnership o In BC, only for partnerships engaged in trading, manufacturing, or mining - Declarations must be filed when change in membership or when firm is dissolved - If do not register, partnership still exists, just required to give creditors and the public information about the partnerships
BKDK Holdings Ltd. V 692831 BC LTD - Issue: Does the adjustment clause only become operational in the precise events it sets out? - In interpreting the clause, a court will...
- Law: in interpreting the clause a court will: 1. Search for an interpretation that promotes or advances the true intent of the parties at the time of entry into the contract 2. Literal interpretation: What can the words reasonably bear? 3. If step 2 was unable to provide resolution, then look to liberal or purposive interpretation: what was the true intent of the parties at the time of concluding the contract? 4. If applicable, contra proferentem - against author - Adjustment clause is interpreted as being trigged on any loss not just on loss by being an unsuccessful bidder - Court interpreted this case in accordance with sound commercial principles and good business sense
Liability is limited to:
- Liability is limited to o Not only must there be a special relationship (Rangen), but o Liability only extends to the purpose for which the information was prepared (Hercules vs EY) - Eligible plaintiffs must not only be "foreseeable" in a general sense, but also more specifically "foreseen" in relation to a contemplated transaction
Inferior trial courts
- Limited geographically and by subject matter - Ex: small claims court has financial limit of $35 000 in BC
Professional Corporations
- Many professionals are allowed to incorporate as "professional corporations" so long as PC appears in the name of their corporation, but remains responsible for their own negligence of misconduct to clients
Unsigned contracts - Onus is on.... - What does the defendant have to do
- Onus is on the Defendant to prove that the plaintiff is adequately informed - If the contract would not normally be considered to contain an exemption clause, the fact that there is such a clause must be specifically brought to the attention of the offeree at the time the contract is made or before - A person may not be bound by a clause that is so unexpected and unfair that a reasonable signer would not think the contract contained such a term
Legal Systems - Civil Law
- Originated in Roman Law, Napoleonic Code - A written code (legislation) is used to determine whether a law has been followed - The code is a written statute specifying legal rights and obligations - Civil law judges are not expected to look at past cases - Precedents are not followed
Undue influence vs Unconscionability
- Overlap between the principle of undue influence and unconscionability - Unconscionability usually occurs in circumstances of a particular contract rather than in an on-going relationship, whereas for undue influence, the parties are usually known to each other for some time
nominal damages
- loss is minimal, done as a matter of principle ("token" award)
Class Problem - Krispee Cream apologized and said it would send you another 18 dozen donuts via their new independent delivery service called Freddie's Fast Food Delivery - Unfortunately, when Frank, the driver, was on his way to deliver the donuts to you, he was so enticed by the smell of the fresh donuts, that he reached back over his seat to get one of the donuts out of the box - Because Frank wasn't watching where he was going, he caused a serious vehicle accident - As a result of Frank's negligence, serious harm has resulted to another motorist - Frank has been found by a court to be 100% responsible for the accident and liable for all of the resulting damages - His boss, Fred, is very worried because he had plans to invest all of the profits of his delivery business into expansion and is worried about being liable for Frank's negligence since insurance will not cover all of the loss - Fred contacted a lawyer named Mike Mistake, and Mike advised Fred that he didn't have to worry at all as Frank caused the accident and so Frank will be liable alone. Is Mike correct? Advise Fred as to whether he could be liable for Frank's negligence
- Mike gave Fred advice that was incorrect. Can Fred claim damages for negligent misstatement? - Fred suffered a loss - Did Mike owe Fred a duty of care? Was he in a special relationship, and was he using the information for the purpose prepared for? - Did Mike breach the standard of care? That is, was his advice that of a competent member of his profession, and did he put in the time and skill appropriate to the task? - Was there reliance on the information so that it caused a loss? - Fred was in a special relationship and Mike gave him the information to use for the purpose it was prepared for, or given for. Mike breached the standard of care, as no competent member of the accounting profession would not recognize that Fred would be vicariously liable for Frank's actions as they were within the scope of his employment. We can assume by the error that he may not have spent the appropriate amount of time considering the task. - And Fred relied on the information and as a result will suffer a loss.
Grounds upon which a contract can be set aside - 5 reasons
- Misrepresentation - Undue Influence - Duress - Unconscionable Contracts
Limited partnership registration
- Must be registered, expressly formed (requires a written agreement)
Writing - for land - who must it be signed by? - What 3 essential terms must be included
- Must be signed by the party to be charged (defendant = party denying the existence of a contract) - May be a series of written notes or documents that are sufficiently linked, or one document - Essential terms must be included § Identity of the parties § Subject matter § Consideration
Ratification - conditiosn
- Must be the whole contract and within a reasonable time - Can only ratify if principal was named or easily identified and principal must have had the capacity to create the contract at the time the agent entered into it and at the time of ratification - If party holds themselves out as an agent, and a principal does not ratify a contract made, the "agent" may be personally liable to third parties and can be sued for breach of warranty of authority - But must first question if there was reliance and estoppel so principal is is bound without ratification as there would then be apparent authority - May be expressed or implied, for example by accepting a benefit under a contract
Contract Law - Acceptance
- Must be unconditional - Mirror Image
What must you have for discharge by agreement?
- Must have consensus and consideration - necessary to support a new agreement to discharge or modify the original contract
Alternate Dispute Resolution (options)
- Negotiation - Mediation - Arbitration
tort law vs. contract law
- No privity of contract is required (Donaghue v Stevenson 1932) - In contract law, the contractual relationship makes a violation of the terms unacceptable. In Tort law, there is wrong conduct which falls below a socially acceptable standard - Contributory negligence is allowed in tort, but not in contract
When will it not be binding (5)
- Not reasonable steps taken to notify that there is a clause - If wording dos NOT cover the event - Gross or criminal negligence (ordinary negligence can be excluded) or fraud - Unconscionable for seller to rely on exclusion (Maloney) - For sale of goods under s.20 of the Sale of Goods Act § New goods § By dealer § To ordinary customer
Silence - is silence misrepresentation?
- Not usually a misrepresentation except for § Contracts which require utmost good faith § Disclosure of latent defects in real estate § Misleading "half-truths"
What is an anticipatory breach?
- Notifies the other party in advance that it will not be able to perform its obligations - A breach occurring in advance of the time agreed on for performance of the contract
Duties of an agent (4)
- Obedience & Diligence - Competence (Duty of care) - even gratuitous - Personal performance - cannot delegate unless implied - Fiduciary duty
Ratification
- Occurs when a person represents himself/herself as another's agent even though her is not, and then the purported principal then adopts the acts of the agent - Principal may ratify/adopt contract made by agent who exceeded their authority or who acted with no authority - Ratification Is retroactive
Misrepresentation by omission
- Occurs where a material fact is withheld by one party from the other during negotiations and that omission induces the other party to make a contract - A vendor of real estate must disclose latent defects in real state = defects you are aware of but not obvious - Patent defects = caveat emptor
Sole Proprietorships - best suited for....
- Oldest and simplest form of doing business - Best suited for carrying on business alone or with a few employees
Liability
- Only principal is liable if agent acting within scope of actual authority and discloses they are agent - Only principal is liable if agent acting within scope of apparent authority and discloses they are agent - Only agent is liable if he/she holds out he is the principal - Only agent is liable if agent has no authority and principal does not ratify - action of Breach of Warranty of Authority where agent acts without authority and contracts with an outside so is liable for breach of warranty of authority - Vicarious liability for acts within the scope of the agent's authority
A statute is presumed valid
- Onus is on person trying to prove it is invalid
SGA rules - Rule 2
- Sale of specific goods where seller bound to do something to put them in a deliverable state - Title passes when the thing is done and the buyer receives notice
Past Consideration - Is consideration after service performed binding?
- Past consideration must be agreed upon before a contract can be formed - Consideration given after the product/service is received is not consideration - A promise to reward for an act done previously gratuitously not binding - A sense of gratitude or moral duty is not binding in law - Past consideration is no consideration since there is no benefit being performed in return for the promise - Example: if someone paints your stairs and then you say you'll give them 100, that's not binding. There was no bargain or agreement; promise made after the job not binding
4 ways to discharge a contract
- Performance - Agreement - Frustration - Operation of law
- Circumstances constituting frustration include
- Performance of a contract becomes impossible because the subject matter of the agreement is destroyed or is otherwise unusable if unique or specific goods § Ex. performer in hospital - An event that forms the basis of a contract fails to take place § Ex. Olympics cancelled - Acts of the government affect performance § Ex. Drug declared illegal, land expropriated before sale concluded
2 distinct contracts in the usual agency relationship
- Principal & Agent - referred to as the Agency Contract - Principal & Third Party - referred to as the 3rd party contract
Legal issues with foreign trade & investment
- Private law issues: which country's laws apply? - Public law issues: every country has laws which govern within that country - International laws: treaties, agreements o Governments have bilateral agreements like Canada-US Free Trade Agreement
What will courts consider?
- Professional code of conduct or guidelines o Ie. GAAP in accounting - Legislation - Testimony of other practitioners as to proper standard - Doesn't have to be the "best" practice possible, just a well-recognized practice - Sometimes complying with normal professional standards is NOT a defence - in cases where established standards don't take into account that a professional is undertaking a task beyond the usual skills of their profession
Existing legal duty - what if you promise to pay something extra for what is already required under an existing contract?
- Promise to pay something extra for what is already required under an existing contract is not binding - A new bargain requires new consideration - In order to get an increased price, there has to be either new consideration or the promise to pay this amount would have to be under seal - The consideration that the promise agrees to provide must not be something that he/she is already bound to do by the contract - If the promisor is getting nothing new in return for the promise, there is no good consideration
British Columbia International Arbitration Centre
- Provides expertise, neutrality, objectivity, stability to disputants - Not restricted to international commercial disputes - can eb used for domestic disputes - Has experienced arbitrators - INCOTERMS to determine meaning of terms
Human Rights Codes - provincial governments
- Provincial governments have adopted various Human Rights Codes o However - These are not entrenched, so easily repealed - They only apply within the jurisdiction that has adopted the code
Legislation holds certain classes of defendants liable
- Provincial legislation creates statutory cause of action for misrepresentation for: o Real estate agents o Securities legislation (duty on directors, officers, layers) for misrepresentation in financial documentation and disclosure documents, where plaintiff is "anyone completed a trade while misrepresentation remind uncorrected"
Public vs Private
- Public: companies that issue shares directly to the public (and are freely transferable) and are reporting - Private: companies that do not issue shares to the public and have some restriction on trade
Duties of a principal (2)
- Renumeration - Costs
Corporate Social Responsibility
- Require businesses to consider ethical issues as well as economic and legal issues - Codes of conducts used to promote/enforce ethical behaviour - Codes often observe a higher ethical standard than set out in the law
Liability for torts
- Responsible for torts of partners while acting within apparent authority of the business of the firm - Firm and partners are liable for any wrongful act or omission of any partner acting in the ordinary course of the business of the firm (ie. defamation or negligence on the part of a lawyer)
Kovacs v Holtom
- Rule 2 SGA: Risk and title pass when the work is done and the buyer notified - Fire occurred and goods destroyed prior to risk and title passing - Conclusion: seller liable for cost of the car
Dawe v Cypress
- S. 4(1) of Occupier's liability act - Where if the occupier (Cypress) wants to extend, restrict, modify or exclude their duty of care to any person, they have to take reasonable steps to bring that exclusion to the attention of that person - Plaintiff signed the release, was under no pressure to sign - Was aware of the conditions on the hill since he was an experienced skier - Terms were brought to his attention, were not unconscionable - Conclusion: Where the terms of the release are clear, where they have been reasonable brought tot the attention of the plaintiff, there is not pressure on the plaintiff to sign the release and the release contains no unconscionable terms, then the party signing will be bound by the terms
BC Sale of Goods Act - S16 - S17 - S18 - S19
- S16: Implied Condition as to title - S17: Implied Condition that goods will correspond to the description - S18: Implied condition as to quality - Fitness for purpose - Merchantability - S19: Implied Condition that goods will correspond with the sample
Pemberton Benchlands Housing Corp v Sabre Transport Ltd.
- Sabre claimed that the contract was oral and that the CCDC2 was never signed by an authorized signatory - Court found that no representations were made that Paterson had authority to sign as an agent, therefore no apparent authority to sign = no contract
SGA rules - Rule 4
- Sale of goods on approval - Title passes when the buyer signifies approval or after a specified or reasonable length of time
SGA rules - Rule 3
- Sale of specific goods in a deliverable state but the seller is bound to weigh, measure, test, etc. to set the price - Title passes when the thing is done and the buyer receives notice
express agreement - should define: - How agent should sign - Example
- Should clearly define limits of the agent's authority o Agent's obligations o Principal's obligation o Limits on agent's authority - what an agent can and cannot do - Agent should sign in a way that it is obvious that they are an agent (per, by, for, on behalf of) - A power of Attorney is an example of an express agency agreement o Usually under seal (since if not under seal, agent can't sign documents under seal on behalf of principal) o A power of attorney is written authorization to represent or act on the marker's behalf in private affairs, business, or legal matters
4 types of business organizations
- Sole Proprietorships - Partnerships - Corporations - Joing Ventures
Some fiduciary duties are enshrined in _________
- Some fiduciary duties are enshrined in statute o Ie. trustees and corporate directors (BC BCA) o 142 (1) A director or officer of a company, when exercising the powers and performing the functions of a director or officer of the company, as the case may be, must § a) act honestly and in good faith with a view to the best interests of the company § b) exercise the care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances
Equitable remedies (3)
- Specific performance: court order to fulfill contractual obligations - Injunction: court order to end or prevent an action - Recission: the unmaking of a contract
Public companies - limit on number of shareholders? - restriction on right to transfer shares? - Permitted to make public offerings of shares?
- Still governed under incorporating statute but with extra rules (proxy solicitation, number of directors, audit committee) - Also regulated under securities legislation - as a "distributing corporation" is subject to regulation under provincial securities acts - No limit on number of shareholders - No restriction on the right to transfer shares - Permitted to make public offerings of shares - Generally means that company has shares listed for trading on a stock exchange
Thin Skull Rule
- Take your victim as you find them - If a person experiences greater injury from our conduct than would be expected because of a unique physical condition, there is none the less a responsibility to compensate for all consequences of the injury
Condition subsequent
- Terms are included in a contract that bring the obligations to an end upon some event or condition taking place
The offeror controls the contract and sets out:
- Terms of contract - How long offer is open for - How acceptance should be made
Option to terminate
- Terms that gives either party the option of bringing a contract to an end before performance completed, by giving notice · Ex: Mortgage, employment
Hollis v Dow Corning
- Test: would a reasobable person have foreseen this conduct causing harm to this plaintiff or someone in the plaintiff's position? o Plaintiff must establish that a duty of care was owed to them by the defendant o Must be a reasonable foreseeable victim, a "neighbour" o Public policy may justify removing or reducing that duty = values of society as a whole, interests of Canada, etc.
Duty of care test
- Test: would a reasonable person have foreseen this conduct causing harm to this plaintiff or someone in the plaintiff's position?
Causation - test
- Test: would the plaintiff have suffered damage "but for" the defendant's negligence? - Must be a causal link between the act of the defendant and the loss of the plaintiff - There must be damage or loss suffered by the plaintiff o Can be physical or mental injury to persons or damage to property o Pure economic loss now compensable - Liable if type of injury foreseeable regardless of whether extent was
3 levels of courts in Canada
- The Supreme Court of Canada - The Intermediate provincial Courts of Appeal - The Courts of First Instance
Unconscionable contracts - must be shown that (3)
- The bargaining positions of the parties were unequal - One party dominated and took advantage of the other - The consideration involved was grossly unfair
Contract Law - Consideration
- The benefit, essential to the existence of a contract - Something of "value" that is exchanged for the promise of the other party - All parties must receive some benefit - Consideration is not restricted to payment of money o It is the mutual gains and losses o But must have some material value (love and affection are not sufficient consideration)
Negligence
- The careless causing of injury to another - Negligent behaviour that causes no harm is not actionable - No privity of contract is required - Must prove o A loss o Defendant owed plaintiff a duty of care o Defendant breach the standard of care o The breached caused the loss and damages are reasonably foreseeable
Can the charter be repealed?
- The charter is entrenched in the constitution - cannot be repealed by ordinary legislation
Sources of law (3)
- The constitution - Legislation: known as statutes - passed by federal and provincial governments according to powers set out in the Constitution - Court decisions: Case law from the decisions of the Canadian Courts
- Equitable or Promissory Estoppel
- The court's exercise of its equitable jurisdiction to estop a promisor form claiming that the was not bound by her gratuitous promise where reliance on that promise called injury - When a person makes a gratuitous promise and another relies on that promise in good faith to his detriment, the maker of the promise will be estopped (prevented) from later denying that he made the promise
Payment
- The courts interpret the time set for payment as a warranty unless the parties have expressed themselves otherwise - Consequently, a seller is not entitled to rescind the contract of sale and have the goods back simply because payment is not made on time. He must be content with an action for the price of the goods
The Law of Equity
- The courts of chancery or Equity decided cases on their merits or what was morally fair or just, ignoring the rule of precedence as long as the victim came with "clean hands" - Equity will prevail where applicable, integrated into common law system - Equitable principles, remedies, unconscionability still prevail
Frustration - timeline, impossible vs. difficult
- The frustrating event must take place after the making of the contract - Frustration event must make the contract impossible to perform, not just more difficult/expensive - Events must not be self-induced - Unless specific/unique goods are called for, if destroyed it is NOT frustration - Hardship is not a sufficient excuse for failing to perform - The mere fact that contractual obligations prove to be more onerous than anticipated will not, by itself, discharge a contract by frustration - Less convenient, more expensive does not equal frustration
Interpretation of express terms - strict/literal or plain meaning
- The literal or dictionary interpretation of the word, the ordinary meaning of the word
Contract Law - Offer
- The offer is a description of the promise of the offeror, a proposal of some sort with the intent to be bound should the offer be accepted - Without intent, the proposal is merely an "invitation to do business" - A contract cannot come into existence unless there is an offer and that offer is accepted - Must contain all terms clearly & unambiguously or not an enforceable agreement - Court may look at local customs and trade usage to find meaning which makes contract enforceable by the courts - An agreement which leave out any of the essential terms to be determine by the parties at a future time is usually unenforceable
Corporate governance
- The organization and management of the business and affairs of a company in order to meet internal objective and external responsibilities
Mediation
- The process through which parties dispute endeavour to reach a resolution with the assistance of a neutral person - Neutral third party agreed to by the parties works with disputants to help them negotiate effectively - Mediator facilitates - Mediator has no power to make a binding decision - Defuses hostility, suggests a "middle ground", keeps parties focused on the issues - If mediation is not successful, the parties can go to arbitration or trial - Good for alimony and visitation rights
Sale of Goods Act
- The sale of goods act simply "codified" a number of important implied terms for the sale of consumer goods - It provides a set of terms that are implied into contracts for the sale of goods - Consumers buying from retail dealers have the protection of certain implied terms that the contract cannot modify
Standard of care
- The standard of care exists when the circumstances of time, place and person would make a reasonable person aware of a probability of that type of harm resulting from that activity - Will vary according to the activity and profession, but has been defined as being negligent when the defendant did not act as a reasonable person in the circumstances, with some activities being held to a higher standard of care - Examines the likelihood of harm vs. the social utility of the activity and feasibility of eliminating the risk
2 types of torts
- There are intentional and unintentional torts - Intentional torts to person include assault, battery, defamation - Intentional torts to property include trespass, nuisance - Intentional torts unique to business include inducing breach of contract, passing off, invasion of privacy, infliction of mental suffering - Unintentional torts = negligence
S18c: Durability
- There is an implied condition that the goods will be durable for a reasonable period of time having regard to the use to which they would normally be put and to all the surrounding circumstances of the sale or lease § Cover items like tires, batteries
Policy concerns
- There may be policy reasons to limit a duty of care, which can include an increase in legal actions or where the matter is better covered by a statute or by a government's policy
Fiduciary duty ______ contract law and tort
- This supersedes contract law and tort: can exist even when there is no contract in place and even when there is no negligence (ie. Hodgkinson v Sims)
SGA rules - Rule 1
- Unconditional contract for sale of specific goods in a deliverable state - Title passes when the contract is made (delivery and Payment irrelevant)
Grevan v Blackcomb
- Under Occupier's Liability Act, must use reasonable steps to bring exclusion to attention of plaintiff - Blackcomb not entitled to rely on exclusion clauses - Different than Dawes because: o Greeven was stranger to Canada (maybe unaware of the classic back of ticket exemption) o Lack of evidence as to location of notices and nothing about the tickets which would draw "to the attention of a reasonably alert person without prior knowledge that they contain writing other than the advertising and definition of the period for which they are issued"
Failure of performance
- Usually becomes apparent during course of performance - Must be determined if it is a breach of a condition or a warranty - Could be liable for wrongful repudiation if it was only a minor breach, which entitled the harmed party to damages only - To avoid liability, should determine o Is there a good reason to think future performance will be equally defective? o Is the expected or actual deficiency important to the whole performance promised?
A contract must not be (3)
- Void by statute - Contrary to public policy - Illegal by statute
Bal v Infinite Entertainment Sound & Lighting Inc.
- Wasn't frustration - For a contract to be frustrated, it must be truly impossible to continue to perform the terms of the contract, not just inconvenient, undesirable, or uncomfortable - Held: the restriction on the size of the wedding did not amount to frustration as the agreement was not based on the requirement for any minimum attendance
Unsolicited Intervention
- We cannot be required to pay for work done without our consent § Business Practices & Consumer Protection Act · Not required to reject unsolicited goods or services · Unsolicited goods of services are NOT deemed a communicated offer with acceptance on default - You need to respond to offer in order to accept reward (ex. Someone offering a reward for returning item. You don't see the notice of reward, but you return the item. You are not entitled to reward)
How are LLPs different than LPs
- no general partner requirement (with unlimited liability), CAN participate in management (unlike LP), ONLY available in certain profession
Class Problem - Brenda and Juan have contract to supply 100 dozen roses at 8/dozen - Juan delivers the roses 4 days late - Brenda says that as a result of the late delivery, most of the roses were useless to her and that she was unable to fill orders from customers on Valentine's day - She calculates her lost profits at 15 000 - Would Juan be liable to compensate Brenda for her lost profits?
- What are her damages? o According to the Westcoast Transmission case, the damages recoverable upon breach are those that are reasonable foreseeable to the parties at the time of the contract as a likely consequence of the breach (or those that flow naturally and directly from the breach_ § Brenda has a duty to do what is reasonable to mitigate her losses o It would be reasonable to foresee that roses that were not deliver in time for Valentine's day might be useless and that Brenda would suffer lost profits from cancelled orders o She probably could not have reasonably mitigated her losses - it was too late o Juan will be liable to Brenda for her lost profits of 15 000
Interpretation of express terms - liberal or purposive meaning
- What the parties intend - Look at relevant circumstances surrounding the contract, knowledge of parties and trade usage (how the terms are normally used in that particular trade or industry) § Looks at factual matrix - the surrounding circumstances or context in which the particular contract arose
Question - On Monday, Rita offered to sell Edith her car at a price of $5,000. Rita promised to keep the offer open until Friday. On Wednesday, Melanie offered to buy Rita's car for $5,200 and Rita accepted Melanie's offer. On Thursday, Rita phoned Edith and said she was revoking the offer she made to Edith on Monday. Edith replied that she would not agree to revocation of the offer, and was accepting the offer Rita made to her. - Assess any legal obligations Rita has to Edith and Melanie in this situation
- When an offer and acceptance are present, a contract will result § Since Melanie offered to buy the car and Rita accepted, there is a contract between Melanie and Rita - Rita Revoked before Edith accepted so there is no contract between Rita and Edith - Rita was not bound by her promise to keep the offer open § There was no consideration for that promise and it was not under seal - However, Rita should have revoked Edith's offer before accepting Melanie's because Edith could have accepted upon picking up the phone and then two people would have accepted
Discharge by Frustration
- When circumstance, beyond the control of the parties, have made performance impossible, pointless or radically different from that contemplated by the parties at the time the agreement was made
Sale of Goods act and void contract
- Where a contract involves the SGA, the SGA in BC provides that destruction of specific goods (through no fault of either of the parties) before the title of the goods passes, will void the contract
Self-induced frustration
- Where a party willfully disables itself from performing a contract in order to claim the contract has been frustrated - Treated as a breach of contract § Ex: where a party does not submit plans on time for them to be ok'd, so cannot start project
Interpretation - what is the goal of courts? - contingent on 3 things
- Where possible, interpret so as to keep contract alive BUT contingent on o What the words will bear (literal approach) o Context and purpose of the words (liberal/purposive approach) o Sound and reasonable commercial practice and avoiding absurd result - Courts will try to sort out terms and determine what words mean
Superior trial courts
- Wider geographical jurisdiction - Handle all types of cases - BC Supreme Court · Unlimited jurisdiction in civil and criminal actions, no monetary limit · Serves as an appeal court from convictions made by Provincial court judges and Small Claims court decisions · All serious criminal cases are decided here, such as murder, rape, treason · Hears all matters relating to divorce and bankruptcy
S20: exclusion of implied terms
- With the exception of retail sales (new goods sold by a dealer to an ordinary individual for personal use), parties can expressly exclude implied terms - For example, CAN exclude for § Sales to a business § Used goods § Someone who does NOT ordinarily sell those goods (craiglist) - Must be clearly worded and specifically name the type of liability (ie. warranties v conditions) - Cannot contract out of liability for the ENTIRE bargain (render contract void of meaning) - Dealer is bound by SGA if he sells "new" goods to an ordinary consumer even if the contract contains an exemption clause - May contract out of s. 17,18,19 if private sale, used goods, business use, trustees in bankruptcy, but never s.16 (Title) - So all consumer sales in BC come with non-excludable statutorily implied conditions & Warranties
Contracts can be (3)
- Written - Oral - Made by conduct
Morsi v Fermar Paving
- York owed Morsi a statutory duty to keep Major Mackenzie Drive in a reasonable state of repair in all the circumstances - Fermar had a common law duty of care to Morsi to carry out its responsibilities under contract in a manner that did not create an increased risk of harm to the public - Held: No contributory negligence : If Morsi had driven even modestly above speed limit no harm would have occurred
What is a condition?
- a fundamental, essential term o Leads to the option to discharge the contract and claim damages unless the doctrine of substantial performance applies o Injured party must choose to treat the contract as discharged and communicated this to the other party
A contract does not come into existence until...
- an offer has been made by the offeror and accepted by the offeree
Deposits
- are a form of liquidated damages, advanced at outset of contract § Retained if purchaser fails to perform § Must be an honest attempt to estimate damages that would be suffered due to breach and not a penalty
Limitations of separate legal existence
- associated companies - income tax act deems income from associated companies, whose shareholders are closely related, to be income from just one of the companies - 500 000 lower tax rate - personal guarantees - shareholders may be required to give personal guarantees or other security - Improper distribution of corporate assets/funds - shareholders who have received a dividend in situation where corporation has made no profits may bey liable for corporation debts to the extent of their payment - Bankruptcy and insolvency act requires repayment of improperly received assets
What is a warranty
- breach of a non-essential term o Does not discharge the contract o Can only claim damages
When is undue influence presumed?
- where there is a "special relationship" including between spouses (where there is a marked lack of independent decision making) - Usually a relationship where one party has special skill or knowledge or is in a position where the other party has to place confidence and trust in them - usually a long-term relationship of the parties - Presumption of undue influence is present in certain relationships such as solicitor/client, doctor/patient, minister/parishioner - Undue influence can also occur where one person is temporarily in dire straits
Order of application when courts are interpreting words or terms (3 steps)
1. Apply the literal or strict meaning 2. If unresolved, look to liberal or purposive approach, including circumstances surrounding negotiations, knowledge of the parties and other relevant facts 3. Contra proferentem (against the offeror)
The Trial Process (in BC)
1. Cause of Action arises = a civil wrong either tort or contract 2. Commencing the Action and Pleadings = Notice of Civil Claim (plaintiff) & Response (defendant) 3. Discovery = under oath - Examine other parties under oath, get all the information you can, recorded 4. Trial 5. Judgement = liable, not liable, partially liable, awarding of costs
3-part test to see if exemption is enforceable (Maloney v Dockside)
1. Does the exemption clause apply to the facts? 2. Is the clause unconscionable (there is an inequality in the process of creating the clause, and an unfair outcome) 3. Is the clause contrary to public policy?
In cases of insurance - 3 steps
1. Follow the rules of contra proferentem = against the offeror 2. Construe the coverage broadly 3. Interpret the exclusion narrowly - All while avoiding an absurd result and deferring to sound and reasonable commercial practice § Whoever holds the pen creates the ambiguity and must live with the consequences
Basis for liability in Canada (3)
1. Strict liability: no defence, at fault even if you took steps to prevent harm. as long as harm is caused, blame is attached a. Under statute in Canada, such as transporting hazardous goods 2. Fault: intentionally or carelessly disregard the interests of others and cause harm to their person, property or reputation 3. Vicarious liability: liable for acts of employees if "within the scope of their employment"
3 things required to prove negligent misrepresentation
1. The advice must be used by the client to trigger the loss a. Did the client reasonably rely and act upon the advice of the professional? b. Would the client have acted that way if he had not received that advice? 2. AND the reliance must be reasonable a. Should the information be used in the way that it was? b. Were there other more appropriate sources available for use? 3. AND the reliance must have resulted in damages a. Ie. there is detrimental reliance - the worsening of ones' situation after relying on the false information - If you devote the appropriate amount of skill and care to meet the required standard of care, you are not liable, even if your advice turns out to be wrong - Easier to tell if there is a misstatement of fact, but harder to tell if an opinion or value judgement is wrong - Must: o Be considered at the time it was made and o Inaccuracies must result from failure of professional to meet required standard of care - Must show that it resulted form lack of skill, competence, or diligence on the part of the preparer
The general requirements for a successful claim of negligent misrepresentation are
1. There must be a duty of care based on a "special relationship" between the representor and the representee; 2. The representor must not have acted like a competent member of their profession or have not used the time and skill appropriate for the task in making the representation a. The representation must be untrue, inaccurate, or misleading; 3. The representee must have relied, in a reasonable manner, on the representation; and 4. The reliance must have been detrimental to the representee in the sense that damages resulted
Writing for land - not required for leases/agreements to lease under___ years duration
3 years
Caveat Emptor
= "Let the buyer beware" - Has been severely qualified by the SGA - it only applies where goods are chosen after inspection so that buyer has exercised their own judgement in choosing the goods
Agency by express agreement - What type of authority
= Any definite arrangement between a principal and agent - May be oral or written - Creates actual/real authority
Unilateral contract
A promise in exchange for an act - The offeror is only bound to perform the promise once the offeree has done the required act = most reward situations
o Fraudulent Misrepresentation compared to Negligent Misrepresentation
§ Fraudulent misrepresentation or deceit is different than negligence which does not require knowledge of the false information, just a duty of care paired with a breach of the standard of care
ABCD
A: A Loss B: Breach of the duty C: Causation D: Duty of care owed
Class Problem: FACTS - The plaintiff, a mechanical engineer, purchased 2 cans of "Supreme W-200", a lacquer sealer, to seal the parquet floor in his basement rec room, which was next to the laundry room which had a gas furnace and hot water heater, both with pilot lights. No door was between the rooms. - The plaintiff had the basement clean and well-ventilated - he opened the doors and windows. He turned down the thermostat but did not extinguish the pilot light. He read 2 out of the 3 labels, which warned to "keep product away from open flame." When he had almost completed the job he saw a line of flame advancing from across the rec room. He dropped the roller and ran up the stairs but the line of flame reached the remaining can of lacquer sealer (still ½ full) and there was an explosion. The plaintiff sued the manufacturer for damage to person and to property. ISSUE: - Is the manufacturer liable in tort to a user of a product, who aware of certain caution notices on the label of the containers, is injured as a result of a fire and explosion which occurred during the use of the product? Was the manufacturer (defendant) negligent?
ANALYSIS: - Did the defendant owe the plaintiff a duty of care? o Would a reasonable manufacturer have foreseen this conduct causing harm to the plaintiff? Should the defendant have foreseen that harm could be caused to users of the product? o Manufacturers owe a duty to consumers of their products to see that there are no defects in manufacture which are likely to give rise to injury in the ordinary course of use - What standard of care was owed? o What would the reasonable manufacturer foresee as being dangerous having regard to the probability of harm and seriousness of the harm? o Here there was a great probability of harm, and potentially serious harm. It was easy to eliminate the risk - just attach a more explicit warning like a competitor did - Did the defendant breach that duty of care? o Yes o The court looked at a competitor's label and found that one competitor had a very explicit warning label that cautioned specifically against pilot lights - Did the defendant's conduct cause the plaintiff's injury? o "But for" test o Yes - Was this damage too remote? o What type of damage was foreseeable? (extent not an issue when type is foreseeable) o Burns, explosion, damage to person and property - Was the plaintiff contributorily negligent? o Court of Appeal thought so o He was an engineer who knew about flammability of sealers and he read the labels o Supreme Court of Canada - No, unless it can be shown that there was an appreciation of the risk and a voluntary assumption of it = Volenti non fit injuria
What is a guarantee?
Guarantee: a conditional promise to pay only if debtor defaults on payment
How can agency agreement be created? (3)
Agreement Implied Ratification
Class Problem: - Mr. and Mrs. Orca wanted to sell their property on Whale Island so they listed it for sale with Teresa Eagle, a loca real estate agent. On oct. 10th, Mr. Brea was introduced to the property by Teresa, and later that day Bear offered to purchase it for 295 000 with completion of the contract to occur Nov 15th. Bear put up a deposit of 15 000. The Orca's accepted Bear's offer on Oct. 10th. The term in the contract which related to Bear's deposit said the following o Time is of the essence in this contract. If the purchaser does not complete on the date specified, the parties agree that at the option of the vendors, the contract will be cancelled and the purchaser's deposit will be forfeited to the vendors as liquidated damages - A week later, Bear wondered whether he had made the right decision in agreeing to purchase Whale Island and began to look for other properties. He located another property which he regarded as being suitable and contracted to buy it. On Oct 21, he notified the Orcas that he would not be purchasing their property. The Orcas replied the same day and told Bear that they considered the contract over and that they would be keeping his deposit - The Orcas re-listed Whale Island with Teresa and agreed to pay her a commission of 10,000 should she effect a sale at 295 000 or higher. At this time, Teresa did not tell the Orca's that she anticipated a surge in the market for this type of property and that she had already decided to buy it herself. She made an offer to buy the orcas' property for 295 000, in the name of Optimum Prospects Inc., a company that Teresa was the sole shareholder of. Teresa did not tell the Orcas of her involvement with Optimum Prospects Inc. - The sale to Optimum Prospects Inc. completed on Dec. 12th. On Behalf of Optimum Prospects Inc., Teresa then sold the property on Whale Island to Barry Otter on Feb. 11th at a price of 245 000, a profit of 50 000 - The Orcas have learned through former neighbors the fate of the property on Whale island and Teresa's role in the sale. They threaten legal action against Teresa. Teresa's response is that the Orcas have nothing to complain about; they got a fair price for the property. - Assess the rights and remedies the Orcas may have against Teresa and explain your reasoning fully
Answer - Did Teresa breach her fiduciary duty to the Orcas? o A fiduciary duty is created where one party places trust and confidence in another; there is an expectation that this person act in the former's best interest, using discretion on behalf of the other. Teresa, the agent of the Orcas would have the discretion to unilaterally affect the Orcas' legal and economic interests and they would be vulnerable to her. Thus Teresa is a fiduciary of the orcas o Where this duty exists, Teresa would owe the Orcas the duty of absolute honestly and disclosure of all material facts, scrupulous good faith, and undivided loyalty. o The remedy for breach of fiduciary duty is that the fiduciary is liable for the beneficiary's economic losses, consequential damages, and must disgorge any profit they earned from the transaction o In making the offer for the Orcas' property through her holding company without disclosing her interest and at a price she knew was too low, considering the improving market conditions, Teresa breached her fiduciary duty to the Orcas. Teresa did not act in their best interest, she did not disclose the true identity of the buyer as herself, and she put herself in a position of conflict of interest o The remedy available to the Orcas is that Teresa must return the commission she earned on the sale to them. She will also be liable to disgorge to the Orcas the 50 000 profit she earned on the sale of the property. Teresa will also be liable for any legal and accounting fees and costs of the legal action
Class Problem - Jan 1: Brenda (florist) contracted with Juan (flower wholesaler) for a shipment of 1000 dozen roses to be delivered to her on Feb 14 at a price of 8 per dozen. - On feb 1, Juan contacted Brenda to say that a worldwide shortage of roses had caused the price of roses to increase - Juan's supplier in Malaysia had cancelled his contract and juan could no longer supply the roses - Brenda said she would have to look elsewhere and found an alternate supplier, Saul, to supply the roses at 16 per dozen - Brenda says that Juan owes her 8000 (the difference between price she had contracted to pay Juan and the price she had to pay Saul). - Juan says the worldwide shortage of roses made it impossible to complete his contract with Brenda and thus he is not liable to her at all
Answer - Juan has committed an anticipatory breach of condition - he notified Brenda in advance of the date for performance that he was going to breach a condition of the contract. This is an unequivocal intention to repudiate the contract - It is also a breach of condition because it is a total failure to perform. Breach of condition discharges the contract meaning that all of the obligations of the parties to each other are extinguished - In this case of an anticipatory breach of condition, Brenda would be entitled to either treat the contract as discharged on Feb 1, wait until the date set for performance (feb 14) to see if the contract will be performed, or provide an extension o Brenda chose to treat the contract as discharged and claim damages. She notified Juan that this is what she elected to do by saying that she would have to look elsewhere for the roses - According to the Westcoast Transmission case, the damages recoverable are those that are reasonable foreseeable to the parties at the time of the contract as a likely consequence of the breach (or those that flow naturally and directly from the breach_. Brenda has a duty to do what is reasonable to mitigate her losses - According to the Westcoast Transmission and Albrechtsen cases, the damages that are reasonably foreseeable to the parties at the time of the rbeach would be the difference between the original contract price and the 16 per dozen. Brenda did what was reasonable to mitigate her damages by arranging to purchase the roses from another supplier, albeit at twice the price. The Albrechtsen case says that the mitigation must be reasonable, it doesn't have to be perfect. IN this case, because of the worldwide shortage of roses before Valentine's day, it would be reasonable for Brenda to pay twice the market rate in order to secure some roses - Juan's defence to this is that the contract was discharged by frustration o If this argument is successful, Juan will not be liable for damages to Brenda - The Saturley v Lund case states that in order to prove that a contract was frustrated, the defendant must shoe o There was a completely unforeseeable event, beyond the control of the parties and without fault by either party, o That happened after the contract was made but prior to completion (a critical, supervening event) o That made the contract impossible to perform or radically different than the parties intended o The event must be directly related to the contract and not an extraneous event - Here, the worldwide shortage is likely an unforeseeable event, beyond the control of the parties and without fault by either party - The event happened after the contract was made but prior to performance - The event was directly related to the contract o The contract was for the purchase and sale of roses and the price of roses went up due to a shortage of them - Unfortunately for Juan, the worldwide shortage of roses simply caused his prices to go up - it didn't prevent him from supplying the roses to Brenda - We know that roses were available elsewhere because Brenda was able to purchase them from Saul therefore, the contract was not impossible to perform, simply more difficult - These circumstances do not meet the test for frustration and therefore the contract is breached and Juan will be liable to Brenda for damages
Class Problem: - Mike was acting as a real estate agent for two dude ranch owners, who wished to sell their ranch. The property, in the lovely Fraser Valley, was for sale at 10.5 million, well below a current appraisal - One day while still trying to find a buyer for the property, Mike met his girlfriend for lunch, at Krooner's in Langley. After more than a few drinks, he told her about one of the owners, and this owner's worldwide in horses, and more, and who the property has to be sold due to this owner being in debt for alimony and maintenance payments. Unknown to Mike, the waitress at Krooner's was the best friend of this owner's present girlfriend, who soon found about the owner's (her boyfriend's) private past. As well, as they left in the car, Mike revealed his plans to continue on out to the Fraser Valley and view the property, as he had worked a deal for his brother-in-law to buy the property and hold it form him, in his name, for a couple of months, so that Mike could leave the real estate firm, then take ownership, and start his life as a cowboy. He further tells his girlfriend that he has convinced the owners that a luckier number for sale is 8,888,888, and that despite there being good value in the current price, they should be willing toreview all offers just in case there is a downturn in the market. Mike's boss, on hearing of the lunchtime conversation from the owner, who now has no current girlfriend, is furious. But Mike says he has a buyer for the property and that is all that matters
Answer - Mike has breached his fiduciary duty, to act in good faith in the best interests of his client. - A fiduciary relationship exists where: o The fiduciary has the scope for the exercise of some discretion or power on the beneficiary's behalf o The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal or practical interests o The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power - A fiduciary duty requires the party not to engage in a conflict of interest without full disclosure and consent - Mike has revealed confidential information improperly in relation to the purchase price, and he is obtaining a secret advantage in buying the property for himself at a lesser price - He is not rendering a true account to his client - The Strother case states that his duty continues for at least a year after he leaves his position - here it is only four months and he is in breach anyway due to his actions - He will have to disgorge any profit he has made and his client may also seek damages (Hodgkinson v. Simms)
"persons"
can be individuals, corporations
Voidable contracts:
contracts that have legal effect until declared invalid
Contributory negligence
courts will apportion damages according to percentages of contributory negligence of defendant and others
S20
exclusion of implied terms
Creation of a partnership can be _______ or ________
express; implied
Duties of an agent may be ________ or _________
express; implied
Negligence
The careless causing of injury to another
Reliance damages
for expenditures and wasted effort due to cancelled contract
Must be within __________ based on actual knowledge of parties
foreseeable limits
Prima Facie
Based on the first impression; accepted as correct until proven otherwise
3 categories of restraint of trade
Between 2 or more businesses that are contrary to competition act Between vendor and purchaser of a business Between employee and employee which restricts rights of employee to compete
Condition
Breach of an essential term which relieves the injured party from any further duty to perform the contract and may sue for damages
Public law
involves government as a party - constitutional, tax, property, family law, trusts
Private law
involves private citizens as parties - contracts, torts, property, family law, trusts
- The main disadvantage in a general partnership
is the liability it imposes upon the partners
Must be _________
mitigated mitigation: duty of harmed party to minimize the loss suffered. Can only recover for losses not reasonably avoidable.
Mitigation
must act reasonably and quickly to minimize the extent of the damage suffered
Losses must flow ______ from breach
naturally
If negligent behaviour causes no harm, is it actionable?
no
is privity of contract required?
no privity of contract is required
Does breach automatically lead to termination of the contract?
no. - The breach must be sufficiently serious (must be of the whole contract or of an essential term, a condition) - The injured party must choose to terminate
Does a partnership have a separate legal identity from the partners?
no. Partners are the partnership and are personally liable for the debts and actions of the partnership
S.33 of the charter
notwithstanding clause - allows governments to suspend rights permits legislation to override certain charter sections
What 4 things must prove?
o A loss o Defendant owed plaintiff a duty of care, and are there policy concerns to justify limiting this dusty or the consequential damages o Defendant breached the standard of care o The breached caused the loss and damages are reasonable foreseeable
What is a substituted agreement?
o Accord & Satisfaction § Where one party is unable to completely perform the original obligation, so the parties may agree that it should be replaced with by new obligation § A compromise between contracting parties to substitute a new contractual obligation if the original obligation cannot be carried out § The new arrangement is made to allow the parties to discharge the contract
Fiduciary relationships can arise in most professional relationships like...
o Accountant/client o Lawyer/client o Doctor/patient o Trustee/beneficiary o Between partners in a partnership o Between directors of a company and the company
Duty of care 3 elements
o Plaintiff must establish that a duty of care was owed to them by the defendant o Must be a reasonable foreseeable victim, a "neighbour" o Public policy may justify removing or reducing that duty = values of society as a whole, interests of Canada, etc.
- A fiduciary duty is a special relationship of trust, loyalty and confidentiality, requiring some of the following obligations: A fiduciary must... (7)
o Act honestly o Act in good faith for the beneficiary o Act in the beneficiary's best interest o Not place himself in a conflict of interest with the beneficiary (without beneficiary's consent) o Keep the beneficiary informed of any relevant information o Not earn a secret profit in the course of acting for the beneficiary or compete with the beneficiary o Exercise discretion and confidentiality with respect to the beneficiary's affairs
Actual authority can be:
o Actual authority: any definite arrangement between principal & agent o Can be § Express (in writing) § Implied (by commercial usage or conduct, where the position carries with it authority) · Ie. is part of agent's duties or understood as part of the agent's role
Contracts with minors
o Age of majority determined by provincial legislation (Infacts Act) o A contract with a minor is "voidable" at his/her option but is enforceable by the minor against the adult o (Except in BC) Infants are bound by contracts for the acquisition of necessities (things required to function) and beneficial contracts of service o Courts have the power to grant a minor legal capacity to form a binding contract if the court finds that the contract is beneficial to the minor § For settling an insurance claim, using a minor in a movie
Indemnify
Compensate
Conditions and Warranty
Condition and warranty - Terms condition and warranty distinguish essential from non-essential terms in a contract
Corporations vs partnerships - Ownership
Corporations vs partnerships - Liability
If assets of partnership are exhausted...
Creditors can look to personal assets of partner
Criminal vs. Civil
Criminal: for serious offences against the government or society Civil: where actions cause harm to a private party Regulatory of quasi-criminal liability imposed for less serious offences against government or society which warrant financial penalties/fines (ie. motor vehicle offences, dog licensing)
Criminal vs. Civil - Decision
Criminal: guilty/not guilty Civil: Liable/partially liable/not liable
Criminal vs. Civil - parties
Criminal: prosecuted by the government (R v. xxx) Civil: parties suing, Plaintiff vs. defendant (ex. Jones v Smith)
Criminal vs. Civil - proof
Criminal: prove guilt beyond a reasonable doubt. Civil: on the balance of probabilities
Criminal vs. Civil - Outcome
Criminal: punishment Civil: Remedy - damages, injunction, specific performance
Waivers signed by parents
§ Have no effect on the rights fo a minor - parents cannot waive an infant's right to sue § Parents can be asked to sign an indemnity agreement: so they must indemnify an establishment for any money paid to the infant for damages or loss suffered
Void by statute
o Agreements contrary to the purpose of legislation = contracts that offend statutes o Ex. WCB - agreement to avoid paying benefits o Bankruptcy & Insolvency - agreement which transfers property to avoid it being included in bankrupt's estate - offends WCB, Bankruptcy & Insolvency Act o Wagering contracts, like betting contracts where ach party has a chance to win/lose o Excludes lotteries etc. allowed under provincial legislation o Courts will refuse to enforce contracts to pay a betting debt
What happens in material alternation of the terms
§ If changes to a contract go "to the root of the contract" then parties can agree to discharge their original contract and replace it with a new one
What is a waiver? - is consideration required?
o An agreement not to proceed with performance of a contract already in existence o There must be consideration for this o If each party has rights and obligations outstanding, these are consideration for the waiver of each party o If only one party has performed, release should be under seal or consideration provided
What is recission?
o An equitable remedy o An 'unmaking' or 'unraveling' of the contract o Must be able to return both parties to the position they were in before contract was made o Must act quickly within a reasonable time and accept no further benefits under the contract or opportunity to repudiate is lost o Can be compensated/indemnified for expense o Rescission not available If it adversely affects a third party § Ie. once title to property is transferred
- CBCA: Articles of incorporation and bylaws
§ Name of company § HW § Share capital (classes and any maximum) § Share rights and restrictions § Restriction on transfer of shares § Number of directors § Any restrictions on the business that can be carried out
Two types of liquidated damages
Deposits and down payment (maybe)
Are the remedies for breach of a condition and warranty the same or different?
Different, so it can be necessary to write up contracts with the remedy in mind.
Is duty of care owed to all who are reasonably foreseeable?
Duty of care is not owed to all who are reasonable foreseeable
Bilateral contract
Each party has an obligation § There are 2 promises that must be executed, one by the offeror, one by the offeree § Usual type of contract relationship
What happens when there are concurrent powers?
Federal legislation is paramount - The courts act as arbiters of any constitutional debate and determine who controls an area of law o They'll look at what a governing body is really trying to do as opposed to what it claims to be doing to determine what level of government has that power
R. V Oakes Test
For legislation to be justified - Object served must be pressing and substantial - The means chosen must be proportionate to the importance of the objective and must impair Charter rights as little as reasonably possible in achieving the objective - The objective must on balance justify the infringement
Constitution Act of 1982
Includes the charter of rights and freedom Both constitution acts limit power of parliament
3 types of misrepresentation
Innocent, Negligent, Fraudulent
What if an act is overlapping or infringing and the courts find it not to be in the government's sphere of power?
It is considered void
- Ex: your parents have paid for your tuition. You are now failing grades so they want the money back. Are you "bound" under contract law to give the money back?
No
Can limited partners take active part in management of partnership?
No. - If they take active part in management, they become a general partner (with the attached liability)
Revocation
o An offer may be revoked any time prior to acceptance o Effective even where the offeror has promised to keep the offer open, unless there is an option contract (right of first refusal) or the offer is stated as irrevocable o To be effective, revocation must be communicated directly to the offeree or through a reliable source o Time and notice of revocation by mail is only effective when the letter is actually received and not when dropped in the mailbox o Actually received means delivery at the offeree's usual address o Non-postal communication = when capable of being received
Discharge by agreement
Occurs when parties agree to discharge the contract - Occurs when - Parties may agree not to perform the contract - They may replace the original contract with another contract - The contract itself may provide that the parties will not have to perform if certain conditions are met or not met
Negligent misrepresentation
Occurs when the broker should have known that a statement about a material fact was false.
Contract law - who holds power?
Offeror holds power and offeree can accept
How can an offer be communicated?
Orally, in writing, or by conduct
Estoppel
Prevent from going back on word
Human Rights Codes apply to _________, whereas the charter only applies to ___________
Private relations; government
Categories of law
Procedural Substantive Public Private
Types of corporations (2)
Public, Private
Remedies for innocent misrepresentation
Recission and indemnity
Remedies for negligent or fraudulent misrepresentation
Recission or damages
The constitution
Rules that define the fundamental structures of a country. Makes Canada a federal country. o In Canada, we have the Constitution Act of 1867 and 1982
An agency only has the _______ capacity as the principal has
Same. And what is done to the agent is done to the principal, and what the agent does is done by the principal\
Using the courts: The civil litigation process
Standing to sue: o Be a party who has a right to enforce o You must sue within the required time frame (limitation period) o You must sue in the right jurisdiction
Once it's been shown that circumstances could lead to undue influence, that is, that the parties were in a special relationship, the burden is on the _______ party to prove there was no undue influence
Stronger party
What must be shown for duress?
That the threat was the main inducement for entering the contract
Substantive laws
The body of law that creates and defines our rights in society - What the law on a topic is
The courts of first instance
The court that first hears a matter Divided into: inferior trial courts and superior trial courts
Problem: Knight v Archer - Knight is the owner of Armour Heights Subdivision. On September 1, he offered in writing to sell Lot#3 in the subdivision to Archer for $15,000; on September 2, Archer accepted the offer in writing and delivered her acceptance in person, by car. - On September 4, Knight telephoned Archer to say that he had just learned that a shopping centre was going to be built in the subdivision near Lot #3 and that he now wanted to have $22,000 for each of the lots, including Lot #3. Archer, equally excited about the news, agreed to change the price stated in the written contract from $15,000 to $22,000 and wrote her initials on the date opposite the change. Later, Archer tendered a cheque for $15,000 "in full settlement of the amount owing for Lot #3 per our agreement of September 2." Knight deposited the cheque and sued Archer for an alleged $7,000 balance owing What is the legal issue(s)?
Whether any consideration has been received for the change in price of the lot
Can the document be written up after contract was formed?
Yes
Can the partnership agreement be oral?
Yes
May they award for non-economic injury?
Yes
Can a partnership be treated as a separate entity?
Yes, May bring an action in the name of a firm without naming all the partners as plaintiffs and an outside party may sue a partnership in the firm name without naming all partners as defendants
- Ex: Your employer has agreed to pay you $550 per month while you're at school as long as you attend classes and receive at least a B average. You now don't attend regularly and have a C average. Is your employer able to quit payments without being in breach of contract?
Yes, there was an agreement
Is undue influence presumed in marriage?
Yes, with marriage, undue influence is presumed is spouse does not usually make independent decisions
Void contract
a contract never formed in law
What is an Indemnity?
a promise by a third party to be primarily liable to pay for the debt
Offers must be communicated before they can be
accepted - important for claiming reward
Restrained of trade is presumed against ________
against public policy. therefore illegal unless party seeking to rely on the clause can prove it is reasonable - More difficult to convince courts to enforce agreements between employer and employee based on being reasonable - Undesirable as competition is desirable
liquidated damages
amount allowed to be claimed for breach predetermined in the contract
Liquidated damages must be a genuine attempt to _________ consequences of breach, not a ______
anticipate; penalty
Any time of term in the agreement is ok as long as...
as long as not illegal or contrary to public policy
Class Problem: - Len was a real estate salesman with hopeful Realty. He obtained a listing for an office building owned by Prime Investment Inc. Hilda, the president of Hopeful Reality, was interested in buying the building of herself, because she thought it was undervalued and could be resold quickly. Hilda did not want Prime Investments to know who was buying the building, and so after discussion with Len, had her son Gunnar make the offer. In return for keeping her identify confidential, Hilda promised to pay Len a fee of 1000 in addition to the commission he would get from Prime Investments if the offer were accepted - Gunnar offered to pay the price that the building was advertised for sale, which was 725 000. Prime Investments accepted the offer. Gunna immediately transferred rights under the contract to Hilda. Two months after the transaction completed and title was transferred to Hilda, Prime Investments learned that the property had been resold to a purchaser at a price of 875 000 - Prime Investments intends to sue Hilda, Hopeful Realty, and Len. Would any or all of them be liable to Prime Investments? What remedy, if any would be appropriate?
o As an agent, Len owed Prime Investments a fiduciary duty - a duty to act in good faith in Prime's best interests and to disclose all relevant details o He breached his duty to Prime when he concealed the identify of the buyer and accepted a secret commission o The remedy for breach of fiduciary is to force Len to disgorge any profit (the commission) and/or to pay damages (the amount that Len could have obtained for the property had he known the facts) o As Len's employer, Hopeful Realty will be vicariously liable for its employee's torts and Hilda will also be liable because she was aware of Len's breach and encouraged him to commit it - Hilda has not paid Len the 1000 she promised him if her offer were accepted. If Len sues her for the 1000, will he be successful? o A contract that involves illegality is not enforceable by a party that knowingly agrees to illegality. Len cannot enforce the contract because it involved illegality
Significance of separate existence - Limited Liability
o Company is solely responsible for payment of its debt o Liability is limited to its assets o Creditors have no claim on the personal assets of shareholders o Shareholders risk is limited to the price of their shares o This separate legal existence is the main benefit of incorporation
Conflicts of interest
o Contracts with corporation o Interception of corporate opportunity o Corporate information
Implied
o Courts will deem a partnership o Look at substance rather than form of relationship o S. 2 med, management role, share profit, contribute to capital o A person who conducts himself as a partner - by sharing in profits, managing the business, or contribution to capital - is a partner in the eyes of the law
Different defences for tort or contract
o Defences may differ § Tort: contributory negligence § Contract: exemption clauses o Remedies may differ
Volenti non fit injuria or voluntary assumption of the risk
o Did the plaintiff understand the risk? o Did the plaintiff consent to the risk? o Often liability is apportioned as being contributorily negligent, however this defence is used for sporting events or things like bungee jumping
Lifting the corporate veil
o Done to prevent abuse of concept of the corporation o Usually shareholders own an interest through the purchase of shares o Unpaid creditors may not look to the shareholders if unpaid o However, court may look to the shareholder - the individual controlling the corporation will be personally liable for the actions/debts of the corporation o Individual must control the corporation, must have used control to commit improper act, such fraud, wrong or breached caused loss
Defences
o Due diligence o Good faith reliance o Corporate indemnity o D&O insurance o Business Judgement Rule: they used an appropriate degree of prudence and diligence while making the decision o NO DEFENCES for strict liability
Corporations vs partnerships - Management
o Each partner able to bind partnership o Board is responsible for management and supervision of company
Corporations vs partnerships - Fiduciary Duty
o Each partner owes duty to other partners o Shareholders owe no duty of good faith to corporation o Directors do owe duty of good faith to corporation
Sole proprietorships advantages
o Ease of formation and termination - as soon as an individual starts doing business, they have a sole proprietorship o Low start-up costs o Simplicity in starting up and terminating business o No legal requirements other than any licenses required to do business and registration of name if required - in BC must register the name if operating under a name other than your own and if doing business in trading, manufacturing or mining o All profits belong to owner o Pay taxes as individual - income is reported as personal income, which can have benefits as can write off business losses directly against personal income and achieve close to an optimal tax position o Own boss, ownership flexibility - only sole proprietor has the ability to bind the business
Intoxication/Insanity
o Except for necessaries, contracts are voidable at his/her option but enforceable against the other contracting party o Only liable for a reasonable price for necessary goods
Standard of care - one must...
o Exercise the same degree of skill and abilities that one would expect an expert or professional in their field of professional expertise to have o Skill & knowledge must be commensurate with the particular task undertaken § Client not required to tolerate ineptitude due to lack of experience
Different types of partnerships (3)
o General partnership o Limited partnership o Limited liability partnership
Legal fees
o Hourly o By Task o Contingency fees: lawyer takes percentage of winnings from trial
Elements of partnership agreement
o Identity of partners o Name of the partnership o Nature of business to carried on o Duration of partnership o Method of terminating partnership o Rules for bringing in new partners o What happens on death or retirement of existing partner o Management and participation in management by partners o Capital contribution of each partner o Partnership interest o Sharing of profits and losses o Dispute resolution process
What if a claim could be for contract, tort, or fiduciary duty?
o If overlap, a court will not award damages under all heads of damage. They will pick one o Statutory limitation periods apply
S18a: fitness for purpose
o Implied condition goods are fit for a particular purpose if: § Buyer communicates expressly/by implication particular purpose for foods § Buyer makes it known he is relying on seller's skill and judgement § Goods are in seller's course of business to supply § Buyer not purchasing by trade name, relying on own skill and judgement o For fitness for purpose to apply, the buyer must: § Make the purpose known to the seller § Rely on the seller's skill/judgement, AND § The seller is in the business of selling the goods § THEN the goods must be reasonably fit for the purpose unless bought under trade name
Relationship between partners according to Partnership act
o Implies terms into partnership agreements when the parties have not addressed the issues in question o Unless specified otherwise, partners are equals § Equal say in management § Equal share of profits and losses § Equal distribution of capital o Partnership agreements only allow partners to vary terms that govern their relationship with each other o May not vary terms that govern responsibility to third parties o Are fiduciaries, must act in good faith o Partnership act § S. 31: partners are bound to render true accounts and full information of all things affecting the partnership § S. 32: a partner must account to the firm for any benefit he/she receives
Corporations vs partnerships - Liability
o In a general partnership, partners liable for obligations and debts of partnership o A corporation is liable for debts NOT shareholders § Shareholders only liable for price paid for shares § This is "limited liability" § Directors and officers still have certain liability
Insurable interest
o Insurable interest: financial benefit from the continued existence of the property or life insured or suffer some financial detriment from its loss or destruction o Every person has an insurable interest in their own life, certain family members and persons in whom they have a financial interest
Clark v Barrick - Issues - Was there a contract? - Did revocation precede acceptance? - Did offer lapse before it was accepted?
o Issues § Was there a contract? · Acceptance effective Dec 10 when Clark mailed letter § Did revocation precede acceptance? · No, acceptance took place before revocation § Did the offer lapse before it was accepted? · Yes I think so
Liability of retiring partners
o Liable for debts incurred while a partner o Concern regarding apparent authority
Remoteness
o Loss must be within the foreseeable boundaries of what the parties would have expected as a likely consequence of a failure to perform, had they thought about it when they drew up their contract o Damages not generally awarded to compensate an injured party for some unusual or unexpected consequence of a breach - they must flow directly from breach A breaching party is only responsible for those damages which, at the time the contract was entered into, seemed a not likely outcome if the contract were breached, so would be responsible for unusual damages for special
Directors - role - power to:
o Manage or supervise the management of the business and affairs of the corporation o Have power to; § Issue shares (subject to the con stating documents) § Declare dividends § Adopt bylaws § Call shareholder meetings delegate responsibilities and appoint officers
Directors - how many - independent? - how are decisions made if more than one? - Must they follow instructions of shareholders? - Must they need to hold shares?
o Must have at least one director if private, if public must have at least three (two of whom are independent and must not be officers or employees of the corporation) o Securities regulation define "independent" as "no direct or indirect material relationship with the corporation" o If more than one director, decisions of the board of directors are made by majority vote o Not obligated to follow instructions of shareholders § They do what they think is in best interests of the company o Must be at least 18, of sound mind and not declared bankruptcy o Under CBCA, 35% must be Canadian, but not if under BCBCA o Don't need to hold shares in company o First directors are appointed on incorporation and hold office until first AGM o Casual vacancies (death or illness of director) is normally filled by remaining directors o Directors are elected by ordinary resolution of shareholders (majority) with usually one vet per share (the votes attach to the shares) o Shareholders can call special meeting to remove directors before the expiry of th term
Corporate Name
o Name approval is strict § Cannot associate with government or professional bodies, can't eb scandalous or obscene, can't eb confused with other existing companies § May not mimic royalty § Ltd, Inc, or Corp has to eb included in the name
Question: Does the Charter apply to Trinity Western University's requirement that students sign a covenant agreeing to an anti-gay and no pre-marital sex covenant?
o No Charter does not apply o Human rights not infringed upon
Liability of new partners
o Not liable for partnership debts incurred prior to joining firm
Contracts requiring disclosure
o Obligation to disclose pertinent information ap arty has access to not available to the other party = they are in a superior position of knowledge o Includes contracts of utmost food faith: contracts where there is a special trust relationship § Insurance · Must disclose all relevant information so insurer can properly assess the risk · Otherwise could be in breach of good faith and insurer can frefuse to make payments § Sale of securities § Disclosure related to credit agreements
Insider trading
o Occurs when confidential insider information is used in order to make a profit or avoid a loss o Insider: director, officer, employee, shareholders, or a "tippee"
Costs of legal actions (who pays)
o Only part of the costs are paid for by the government o Costs are awarded by a judge, usually based on costs being given to the winning party, but can be divided between the parties o Costs are determined according to a Tariff in the Supreme Court Rules § Party and party costs § Solicitor-Client or increased costs
Liability of apparent partners
o Partner is only liable for obligations of the partnership while they were a partner o Only way out of that liability is novation (where partners and creditors agree to release from liability) o If a person gives the appearance that they are a partner, they are on the hook for liability as a partner o To make sure a retiring lawyer ceases their liability on retirement, generally firm will: § Publish a notice in the gazette § Send a note to clients and persons dealing with the firm § Take name off letterhead § Take name off firm name
Corporations vs partnerships - Taxation
o Partnership is taxed at partner level o Company is taxed at corporate level (and each shareholder is taxed on any capital gains)
Corporations vs partnerships - Continuity
o Partnership may terminate on death or insolvency of partner o Company will continues following transfer of shares
Officers - responsbile for: - appointed by:
o Responsible for day to day management of corporation § They make most of the business decisions but refer policy matters to the board of Directors o Subject to same duties as directors o Appointed by directors § Directors determine responsibilities of each officer (in the bylaws for CBCA; articles for BC company)
- Bylaws
o Rules which govern the operation of the corporation o Approved or amended by a majority of the shareholders o Deal with terms of directors, powers of directors o Any new or amended by-laws brought into effect by the directors need to be confirmed by a simple majority of shareholders at the next AGM o Detailed operating rules for day-to-day affairs and specific matters that require director approval § Day to day: election of directors, term of office, required meeting notices, AGM meeting procedures, quorum etc. § Specific matters: confirming right of directors to undertake major loan transaction s o Not required to have, but generally useful
- Articles of incorporation
o Set out constitution of company o Basic document governing the existence of the corporation § Name § Place of registered office § Classes and maximum number of shares § Rights of classes of shares § Share transfer restrictions § Number of restrictions § May set out restrictions on business
Illegal by Statute
o Some statutes state specifically that agreements that contravene the statute are illegal § Under the Criminal Code, Competition Act, Customs Act, Income Tax Act o Where the object of a contract is illegal by statute, the contract itself is illegal - contrary to CCC, ITA, Competition Act
Express
o Where 2 or more parties agree either in writing or orally to carry on business as a partnership o May require registration in certain provinces
Class Problem: - Jake bought a dozen beach volleyballs from a store called Wildbeach at a price of $1500. Jake told the salesperson that the balls were to be used in the summer camps he ran as a business. After two weeks of being used by the children at the camps, the layers of the volleyballs were peeling, losing air and could no longer be used. - When Jake took the balls back to Wildbeach he spoke to Larry, the owner of Wildbeach. Larry refused to give Jake his money back. When Jake threatened to sue, Larry just laughed at Jake and told him that the Sale of Goods Act doesn't apply in dealer to business transactions and in any event Wildbeach is a corporation (whose full name is Wildbeach Sales Ltd.) and as the sole shareholder he's not liable to Jake. When Jake looked around the store, he did not see the name Wildbeach Sales Ltd. anywhere on the awning, on the front window, or on the receipt that he was given for the volleyballs. The only name displayed for the business was "Wildbeach". - Is Larry correct that the Sale of Goods Act does not apply in this situation? Explain.
o The SGA applies where there is a sale of new or used goods from a dealer to a buyer for money consideration o In this case, even though the sale of the balls was to a business, the SGA still applies o Section 20 allows the dealer to exclude liability under certain sections of the SGA for new and used goods, however there is no such exclusion clause here. The SGA does apply in this case - Assuming the Sale of Goods Act does apply, would Jake be entitled to the return of the $1500 he paid for the balls? Explain. o Section 18 of SGA States that the goods must be fit for their purpose if § The buyer communicates the purpose for the goods to the seller § So as to show that the buyer is relying on the seller's skill and judgement § And it is in the seller's usual course of the seller's business to supply those goods § And the goods were not purchased using a trade or patent name o Section 19 of SGA states that the goods must be merchantable and durable o The remedy for breach of this section is either rescission or damages o Jake communicated his purpose for the balls to be used at summer camps attended by children o The balls were peeling and losing air after 2 fits o These balls were not fit for Jake's purpose, merchantable or durable o Jake will be entitled to the return of his 15 000
Common Law
o Theory of Precedent/Stare Decisis = let the former decision stand o Kept track of records of trials, judges began basing their decisions off past decisions o Judges must look at past decisions in order to decide new cases with similar facts o They must follow all higher court decisions of the same jurisdiction and all judges must follow the Supreme Court of Canada o Decisions from other jurisdictions are persuasive, but not binding o Judges can distinguish cases on their facts o A common law system provides stability, consistency and predictability, without completely sacrificing flexibility (because they can find differences at the case at hand)
- Barrick offered to Clark, but Clark was away. Clark's wife wrote to say keep the deal open as he'll be home in 10 days. While Clark was away, Hofman became interested in the property and 13 days after Clark's wife letter, Hofman accepted - Clark returns home 10 days after expected and accepts offer
o There was no revocation before acceptance o But offer could have lapsed because Mrs. Clark said after 10 days, but no response
Sole proprietorships disadvantages
o Unlimited persona liability and vicarious liability o Financing limitations - limited access to capital o Lack of continuity o Responsible for payroll deductions for tax, EI, CPP o Only proprietor can write off the losses o Even if you use Ltd, Inc., or company in your name and you are not incorporated, you are still a sole proprietor and are personally liable.
Fiduciary duty of an agent
o Utmost good faith towards principal § Must insure full disclosure § Can only serve one principal in the same transaction § Avoid conflict of interest § No secret profits § Cannot use relationship to secure personal gain
Entire agreement clauses
o With exemption clauses, usually need to prove fraud to avoid the effect of the clause § It restricts rights to the obligations set out in the written agreement o Can use an "entire agreement clause" to protect against claims of misrepresentation but an entire agreement clause cannot override a fraudulent misrepresentation o Example of entire agreement clause: There are no warranties, representations, guarantees, promises or agreements other than those set out herein
Liquidated damages - the term will be enforced if:
o the amount agreed upon in the contract is a genuine pre-estimate of the damages that a court would award (even though the amount agreed upon may bear no relationship to the actual damages suffered on breach) o Where the term in the contract specifies an exorbitant amount out of proportion to probably consequences of the breach = a penalty is unenforceable
Contract law - legality
object or purpose of a contract must be legal for contract to be enforceable
Breach of Contract - occurs when:
one of the parties wrongfully fails to perform its obligations under teh contract
Unconscionable contract - Business Practices & Consumer Protection Act
p 27
Insurance contracts are considered valid if:
party making the contract has an insurable interest in the property or life insured
Substantial performance/trivial failure
performance that does not comply in some minor way with the requirements of the contract - Cannot seize upon a trivial failure of performance when contract has been substantially performed - Example: 999/1000 cases of oranges in good condition, but 1 was not saleable - You are entitled to deduct the value of that one box but cannot claim the entire contract as breached
Class problem about roses
pg. 34
If one of the rights guaranteed by the Charter is infringed, the provision in the statute will be presumed invalid unless:
s. 1 (infringements like extradition) s. 2 freedom of thought, belief, opinion, expression s. 15 (equality, including reverse discrimination)
Procedural laws
the organizational rules of a legal system - The method or steps which must be followed to enforce a claim in law - Ex. limitation dates, jurisdiction
The insurance act waives
the requirements of an insurable interest when the person whose life is insured consents in writing to placing the insurance
Duress - Contract is voidable at the option of _______
the victim
Can writing form be in several documents?
yes, and it doesn't need to be handwritten. can include electronic transactions like emails
Negligent misrepresentation
§ = an incorrect statement made without due care for its accuracy § Four elements · Duty of care · Breach of standard of care · Injury to plaintiff · Causation of damage § (same as usual claim of negligence)
Fraudulent misrepresentation
§ = deceit, made knowingly § Four elements · False representation made by defendant · Some level of knowledge of the falsehood on the part of defendant · False representation caused plaintiff to act · Plaintiff's act resulted in loss
s. 19 of Infants Act
§ A contract made by a person who was an infant at the time the contract was made in unenforceable against him/her unless it is · A contract specified under another enactment to be enforceable against an infant · Affirmed by the infant on his or her reaching the age of majority · Performed or partially performed by the infant within one year after his or her attaining age of majority · Not repudiated by the infant within one year after his or her reaching the age of majority
Fiduciary Duty
§ Act honestly and in good faith with a view to the best interest of the corporation · Loyalty, integrity and trust · Looks at the motives, considerations and factors that influence decision making separately from the decisions themselves · Cannot be in a position where there is a conflict between personal interests and the interest of the corporation
What remedies as available to Wong?
§ Damages or recission and compensation § Damages: Wong will get the difference in purchase price and price for what the car is worth, also damages in amount of expenses incurred to fix car § Recission: Wong will get purchase price of returning the car and maybe compensation for amounts spent repairing the defects
o Duty of care, diligence and skill
§ Exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances · Entitled to rely on information provided by officers (unless suspicious) · Cannot be wilfully blind to issues s
Class Problem - Wong purchased a car from Botswell Motors Ltd. relying on a representation of a sales agent that the car was new except for some minor use as a demonstrator. Botswell Motors Ltd., however, gave no warranty about satisfactory performance of the car for any period. Two days after his purchase Wong took the car to a mechanic, Morris, because of trouble with the gearshift, and learned that the car was not new but had been repainted. In fact, the car had first been sold to a taxi business and Botswell Motors Ltd. had taken it back because of alleged defects. - Three weeks after he bought the car Wong wrote a letter to Botswell Motors Ltd. claiming rescission of the contract and offering to return the car on repayment to him of the payments he had made to date on the price. Botswell Motors Ltd. refused. Wong continued to use the car for a further four months, incurring more expense at Morris' garage because of the gearshift, and continuing to plead with Botswell Motors to take the car back. He then commenced action against Botswell Motors. Issues: does the statement by Botswell constitute a misrepresentation?
§ Yes, fraudulent misrepresentation: § Misrepresentation is a representation of which the material fact about a past or present event is false and did induce party to enter into contract. § Botswell said car had been used only as a demonstrator, but this is false. § Wong relied on this misrepresentation § Botswell knew that the car had been sold and taken back because of alleged defects so it is fraudulent
Between vendor and purchaser of a business
· Agreements which contain restriction on the right of the vendor to carry on business in competition with the purchaser for a certain period of time in a particular location · Protects Goodwill · Prima facie void · Enforceable if party seeking to rely on it can prove it is reasonable in view of the nature of the business being sold = a mutual advantage · Term severed if unreasonable - will not be rewritten or reduced · Demand no more than reasonable so clause will be upheld
Knight v Archer - State the relevant legal rule(s) and apply them to the facts - Conclusion
· Consideration is the mutual gains/losses that the parties exchange through the contract · In their initial bargain, there was consideration. Knight is giving up lot #3, his detriment, for 15 000, his benefit. Archer is receiving Lot #3 for her 15 000 · Valid consideration must have merchantable value - the lot has merchantable value; it is bought and sold in the marketplace · An existing legal duty is something that one is already obliged to do and cannot constitute valid consideration · Knight is already obliged to sell Lot #3 to Archer, thus Archer's late promise to pay an extra 7000 to perform the same obligation is not binding Conclusion: · Knight is bound to sell the lot for 15 000. The failure to do so would be a breach of contract. The fact that Archer agreed to the change and initialed it is irrelevant · The lack of consideration means that a valid contract incorporating the change has not been formed
Between 2 or more businesses that are contrary to competition act - what does contrary to competition act mean?
· Contrary to competition act = agreements that affect competition in the industry (restrict output or fix the selling price of a commodity/service) · S 45: May not conspire, combine, agree, or arrange with another person to lessen competition unduly" · Mergers forbidden if they prevent or lessen competition
Between employer and employee which restricts rights of employee to compete
· In present relationships: promises not to compete with present employer · Restrictions on revealing valuable trade secrets, confidential info to competitors during and after employment · Agreements binding future employment - Non-compete vs. non-solicit clause - a non-compete clause will not be enforced if a non-solicit will suffice
Class problem § Rhodes, a civil engineer, was hired by a firm of engineering consultants located in Park Forest. In her work, Rhodes acquired an expert knowledge of costs for the purpose of submitting tenders on various types of construction projects and the sources of supply of the necessary materials. She worked almost entirely in the offices of the firm: the partners handled most negotiations with the firm's clients. Rhodes contract of employment stated that, for a period of five years after the termination of her employment, she would not "engage in the professional practice of engineering either alone or in association with or as an employee of any persons within Park Forest or two miles thereof." Park Forest is a residential suburban borough in the largest metropolitan area in the province: there are two other firms of engineering consultants in Park Forest and some two hundred firms in the whole metropolitan area. Within a few days of terminating her employment with the firm, Rhodes advised the firm's partners that she considered the restrictive covenant unenforceable and that she intended to open her own office as a professional engineer within Park Forest. The firm then sued Rhodes to obtain an injunction to restrain her from breaking the contract. - Issue: can the restrictive covenant be upheld?
· Initial presumption: Prima Facie (against public policy, but can still be enforced if) · Is restrictive covenant reasonables with respect to public interest? - Yes · Is the restrictive covenant reasonable and necessary to protect the parties? o Is there a proprietary interest to protect? § Not really, she wasn't working with clients - Is the size of the restricted geographical area reasonable? § Yes - Is the length of time reasonable given the nature and location of the business? § Maybe not
Problem: • Car travelling southbound left a stop sign and hit a car travelling westbound • Car travelling southbound claims the car travelling westbound was speeding • Driver of southbound car charged with impaired driving • 2 people in westbound car were injured, (one was the driver),↓both cars damaged • How many court cases could result from this one accident?
• Impaired driving charge (criminal) • Driver - two issues, one claim - Liability for accident (who is at fault) - Injury • Passenger - injury • ICBC - suing impaired driver for what they paid on his behalf to injured parties/damages
Salomon v Salomon (1896)
• Courts will NOT lift the corporate veil if no fraud or intention to deceive • Salomon transferred his sole proprietorship to a company, "Salomon Ltd", he took shares and secured debentures • Salomon Ltd. went bankrupt and Salomon had a better claim to assets than unsecured creditors • The unsecured creditors claimed Salomon and the company were one and the same, which would make Salomon personally liable for the company's debt • case established the complete separation of a company & its shareholders • where there has been no fraud or intention to deceive & the statute has been complied with, the company alone will be responsible for its debts • company can be a separate legal entity even if a 1 person company!
Question • Mike, owner of Amazing Mike's Marketing Services Company, has come to see you. He has been sued in the Small Claims Court of British Columbia by an employee he terminated when he decided to "modernize" his company, and eliminated any employees who were not under age 25, blond, and Christian. He thought doing this would improve his own business image. One of the terminated employees, Grace, has brought a claim, asking for wages and damages in the amount of $75,000, bringing her claim under the Charter of Rights and Freedoms. • Review with Mike any legal issues he may use to defend the claim brought by Grace.
• In BC, action can only be commenced in Small Claims Court if remedy sought is less than 35 000, so Grace cannot go to Small Claims Court asking for damages of 75 000 • She must go to Supreme Court of BC • Charter of Rights and Freedoms applies only to Government and Government action or decision making • Grace/Mike's case involves interpersonal relationship between private employee/employer, so the Charter does not apply • Grace would have to base arguments on sections of Human Rights Code • Mike's defences on these two grounds would be successful • Grace can begin her action in BC Supreme Court for breach of Human Rights Code
Data Business Forms Ltd v Macintosh
• obligation on the party who wants to rely on limited liability of a company to give ample notice to suppliers of the change in status • to be enforceable, the third party actually has to have knowledge of the agency relationship between the agent and the company - here there was no knowledge
