Contract Law
34. Anticipatory breach
If the repudiation occurs before the date of performance, it is an anticipatory breach. Again, the repudiation must be clear, unambiguous, and explicit.
28. Waivers
Mutual release of both panties of a contract where they both agree. Relinquish the rights of a party. i.e. waive my right to sue you. Both must perform his or her obligations if not it lacks consideration because one party gains nothing from it. There should be other consideration in writing and under seal.
31. Parole evidence rule
The parol evidence rule, which states that if the contract is in writing and the language of the written agreement is clear and unambiguous, then no other oral or written evidence can be used to interpret, vary, or contradict the terms of the written agreement. The court interprets the agreement by looking only at its written terms, and does not consider other evidence because it is not relevant to determining what the contract means. Where a court finds that the language of a contract is unclear or ambiguous and applies the parol evidence rule, it has to consider whether there is evidence outside the written agreement that is relevant to interpreting the agreement. As a result of considering this outside evidence, the courts have developed several exceptions to the parol evidence rule where outside evidence may be deemed to be relevant and admissible in interpreting a written contract. Exceptions to the Parol Evidence Rule: Ambiguous contract language If a term is unclear or uncertain, external evidence can be used to interpret it Essential collateral agreement Where a contract separate from the one being considered affects how the contract being considered should be interpreted, that separate contract (called an essential collateral agreement) can be considered as evidence of meaning/construction Essential implied term Where a contract that by custom or convention contains a term that has been inadvertently left out, a party may produce outside evidence of custom or convention to show that a term has been omitted by mistake Condition precedent existing outside the contract If the parties agree that there is a condition precedent to the performance of the contract, then a party may introduce external evidence of the condition precedent, where it is not specifically referred to in the contract Rectification Where a term agreed to in negotiations is inadvertently omitted from the written document, a party may ask to have that term included by way of rectification or correction of the document, provided: • a mistake has been made in recording the intention of the parties • there is evidence of a common intention • there is clear and cogent evidence of the mistake
6. Contract features
Agreements that the law recognized as contract have certain features in common, those features are: • Offer and acceptance of the offer; • Intention to create legally binding relations; • Exchange of valuable consideration; • Legal capacity to contract; • Compliance with legal requirements; and Capacity
1. Contract Definition
An agreement between private parties or between a private party and the state.
15. Quantum merit - Understand what it is and what conditions have to exist for the courts to enforce them.
An equitable doctrine that states that no one should unjustly benefit from the labour and material of another; under those circumstances the law dictates that there should be a reasonable price paid, as much as deserved. (Generally accepted rate for the performance of the services-if not specified).
22. Innocent and negligent misrepresentations
Innocent means they didn't intend to do it and negligent means they did not take the step necessary to prevent or ensure otherwise.
23. Duress - What do you need to prove duress?
Innocent means they didn't intend to do it and negligent means they did not take the step necessary to prevent or ensure otherwise.
30. Representations, conditions, and terms
Is a statement to induce someone into a contract. It is the negotiation but not a term yet. Terms are conditions and warranties and the elements of the contract. The difference is the rank of importance.
29. Scenario-analysis - Based on Chapter 6
Is a statement to induce someone into a contract. It is the negotiation but not a term yet. Terms are conditions and warranties and the elements of the contract. Difference is the rank of importance
18. Public policy
Not necessarily illegal, but frowned on by public it is deemed immoral of unacceptable
27. Discharge of a contract
Once a contact has been discharged, the obligations under that contract are cancelled and the contract itself is null and void. May be discharged by: Performance Agreement As of right By operation of law By frustration Breach
19. Restrictive covenants
Pg 63 Mostly commercial in nature, ie employment contracts. Reason covered is because they are redeemed to be to restrictive and a restraint of trade. A provision in a contract that prohibits certain activities or uses of property
20. Ontario statue of frauds - what does it do and what does it cover? **Pay attention to the chart on Page 67 of the Textbook
Sets out certain requirements that have to be in certain contracts 1) Executor of state 2) Debt guarantor 3) Sale of land 4) Age of majority Contracts involving third party
4. Minors and persons with mental disabilities
Some people, by their status are not presumed not to have the ability to enter into contracts or have limited rights to contract. The purpose here is to protect the weaker party from the stronger and more able party. Not everyone is legally entitled to enter into contracts. Some persons, by their status, are presumed not to have the ability to enter into contracts or have limited rights to contract. The purpose here is to protect the weaker party from the stronger and more able party. This class of persons who lack or have limited capacity to contract includes minors and persons under mental disability. The general rule is that contracts with minors are not enforceable against the minor. At common law, a minor is an individual who is under 21 years of age. The common-law definition of age has been replaced by statutory definitions in most provinces and territories, where, as in Ontario, the age of majority is now 18 for the purposes of entering into contracts.14 Because minors are presumed to be naive, inexperienced, and easily taken advantage of, some protection is required. While the general rule is that contracts with minors are not enforceable against minors, contracts for "necessaries of life" made by a minor are enforceable, butother contracts are not if the minor repudiates them. The reason for enforcing contracts for necessaries is that some minors may have to meet some of their basic needs themselves. If a seller could not enforce a contract against a minor in these circumstances, the seller would have a disincentive to contract with minors, a situation that might hinder a minor's ability to purchase food or shelter. A minor contracting for things that are not necessaries is another matter. When a minor makes a contract for something that is not a necessity, the law classifies the contract into one of two types: • contracts that are void ab initio, or • contracts that are voidable at the option of the minor. Because minors may be taken advantage of, the law creates various opportunities for them to treat contracts for non-necessaries that provide some benefit as voidable by allowing minors to repudiate them, in some cases even after the age of majority has been reached. However, if the contract is prejudicial or of no benefit, it may be treated by the courts as void ab initio, which means that the court will treat the contract as invalid from the beginning and of no force or effect. No rights can ever arise under such a contract, and the minor gets no choice as to whether it is enforceable against him or her. If the contract is voidable, the minor may enforce it if he or she chooses, or repudiate it and recover money paid under it, or the minor may use it as a defence to enforcement by the other party. However, until the minor does what is required to treat the contract as voidable, unless the contract is void ab initio, it is presumed to be valid and enforceable. Enforceable Contracts: Purchases of Necessaries As in most provinces, the Ontario Sale of Goods Act15 provides that a minor is liable to pay a reasonable price for goods that are necessaries that have been sold and delivered to the minor. Section 3(2) states that "necessaries" are "goods suitable to the conditions in life of the minor . . . at the time of the sale and delivery." As to what goods are actually necessaries, the case law indicates that the context determines what is suitable given the minor's "conditions in life" or social and economic class. The necessaries for a minor from a wealthy family may be luxuries for a minor from a less wealthy family. How goods are used may also determine whether they are necessaries. If a minor buys clothes so that he or she will be "cool," they may be seen as non-necessaries, but if the minor buys clothes, even expensive ones, to be properly dressed at work, they may be classed as necessaries because they are used in connection with earning a living. Even where a contract is binding because it is for necessaries, the law will not make the minor pay more than a reasonable price. Thus, a merchant suing a minor on a contract for necessaries may find recovery of the purchase price limited to what the court thinks is a reasonable price. It is also clear that contracts for necessary services are binding on a minor. Medical and dental services and, in some cases, contracts for training for employment have been classed as necessaries. When a minor has entered into a contract for non-necessaries, the contract is always enforceable by the minor, but the minor may be able to avoid enforcement of the contract against him or her in some circumstances. If the contract is not fully executed, the minor may avoid the contract. If the minor as a buyer repudiates the contract, he or she must return the goods, whatever state they are in. He or she will not be liable for the wear and tear to the goods but may be liable for damage to them that goes beyond reasonable wear and tear. If the minor is the seller, he or she must be able to return the money if the minor wishes to repudiate and have the goods returned to him or her. If the contract for non-necessaries has been fully executed so that goods and money have changed hands, the contract cannot be set aside. However, the court may order a refund to the minor of the difference between the price actually paid and a court-determined price, as would be the case for necessaries. Where a contract is for necessaries, the liability continues. However, if the contract is for non-necessaries and has not been repudiated by the minor during his or her minority, the contract has to be classified as to type. For this purpose there are two types: 1. Contracts for non-necessaries that are valid unless the minor repudiates them. These are contracts that confer ongoing or continuous benefits that are made while an individual is a minor and which carry on after the age of majority has been reached. The contract will continue to bind the individual unless he or she, before or shortly after reaching the age of majority, does something that constitutes repudiation of the agreement. 2. Contracts for non-necessaries that are invalid unless ratified by the minor. These are contracts that confer a one-time benefit, for example, where goods are ordered while the individual is a minor but are not to be delivered to complete contract performance until the minor has reached the age of majority. These contracts must be ratified in writing by the minor during his or her minority or shortly thereafter. If the minor does not ratify the contract, the seller must return the deposit These two types of contracts are discussed below. Some types of mental disability may be sufficient to allow a person to repudiate a contract in certain circumstances. Generally, the law is concerned with the lack of capacity arising from mental disability. For example, people who have schizophrenia may have delusions, but if they can manage their own daily and business affairs and look after their personal finances, they may have the capacity to enter into some contracts. The mentally disabled persons that the law protects are those who are unable to manage their own affairs or are unable to appreciate the nature and consequences of their actions. The law deals in the following ways with those who are unable to manage their own affairs: • Provincial legislation provides that a person can be declared unable to manage his or her affairs. If there has been such a judicial finding, contracts made thereafter are void on the ground that there is a lack of capacity to consent to the provisions of a contract. Contracts made prior to the finding may be voidable, as noted below. • If a person lacks capacity because he or she is unable to handle his or her affairs, but there has been no judicial finding, the contracts made are voidable at the option of the person who is mentally disabled. If the contracts are not repudiated, they are presumed to be enforceable. As is the case with drunkenness, for repudiation to succeed where no judicial finding of incapacity has been made, the other party must know of the mental disability. There need not be actual knowledge if there is wilful disregard of the surrounding circumstances from which the mental state could be presumed. Thus, if the non-disabled party suspects from the other's conduct that the other might lack capacity due to mental disability, that may be sufficient knowledge. The fairness of the contract is also important because there must be evidence that the contract is fair to the mentally disabled party. Some cases go on to require that the contract be unconscionable to be voidable, although that view has been rejected in Canada and England. It follows that if the contract is fair, or the other party is unaware of a mental disability that affects capacity, then the contract is enforceable and not voidable by the person who is mentally disabled. As with minors, persons with a mental disability are liable to pay a reasonable price for necessaries, and contracts for necessaries cannot be repudiated. In most instances, contracts for non-necessaries may not be enforced against minors. If the minor accepts the contract and does not repudiate it during his or her minority, the minor may be able to repudiate the contract on reaching the age of majority. In some cases, the contract must be positively ratified or affirmed by the minor on reaching the age of majority. In the case of those who have a mental disability, a person found by a court to lack mental capacity is unable to enter into valid contracts except for necessaries; contracts for non-necessaries are void. When the person suffers from a mental disability but has not been so declared by a court, and if the other party to the contract knew or ought to have known of the disability, the mentally disabled party may be able to avoid the contract. Minors are not liable for contracts regarding the necessities, such as food, lodging, etc.
7. Intent - How do the courts determine whether there was intent?
The courts look to evidence, such as the conduct of the parties at the time the promise was made, the circumstances surrounding the making of the promise, the statements made by the parties, and the relationship between the parties. The test to be applied is: would a reasonable person hearing the promise assume that the promise intended to be bound?
2. Ad idem
When there has been an acceptance by the offeree of an offer, the parties have reached an agreement on terms, and they have an intention to be bound by those terms; Meeting of the Minds.
16. Scenario-analysis - Based on Chapter 3 - Understand all the elements of a formation of a contract.
1)Intention: Each of the parties must have the intent to create an agreement that is legally binding. 2) offer: An offer, or promise made by the offeror and communicated to the offeree. 3) Acceptance: The offoree must communicate his or her unequivocal acceptance. 4)Consideration: an exchange of something of value between the parties.
8. Frustrated contracts - What does this mean, and what factors can ultimately frustrate a contract?
A contract may become impossible to perform though no fault of their own of either party. The court may invoke the doctrine of frustration of contract declaring the contract has been frustrated and the parties to it should be relieved of their obligations under it. Factors affecting frustration of contracts: Act of third party Force majeure No prevention from any parties Death of physical injury Subject matter failed to exist "Frustration" includes situations where performance is physically or legally possible, but the results would be very different from the purpose of the contract that the parties had contemplated. Today, cases that deal with contract frustration have gone beyond the narrower concept of impossibility to include contracts that, while technically possible to perform, are in practical and commercial terms frustrated because the original contract purpose disappeared.
12. Counteroffers and Inquires - The difference between the 2.
A counteroffer is a response by the offeree that does not unconditionally accept the terms of the offer but proposes to add to or modify the terms of the offer. By making a counteroffer, the offeree rejects the original offer and puts a new offer on the table. Note that by rejecting the original offer by making a counteroffer, the offeree cannot then go back and accept the original offer unless the offeror makes the original offer again. An inquiry by the offeree as to whether the offeror will consider other terms or is willing to modify the terms of the offer does not constitute a counteroffer and will not result in rejection of the original offer. In this case, the offeree can still accept the original offer.
25. Novation and assignment - Understand principles of both.
A third party may replace one of the parties to a contract by forming a new contract. The result of novation is the termination of the old contract and the substitution of the new contract. The new party has the benefits and liabilities of the contract, and the old party no longer has any rights or obligations. There is no difficulty with privity of contract with novation, because the third party becomes a contracting party. The requirements of novation are as follows: • The new party must assume complete liability. • The other party must accept the new party in substitution for the old party, not in addition to the old party. • The other party must accept the new contract in substitution for the old contract. • The other party must accept that the new contract terminates the old contract. • The new contract must be made with the consent of the old party. Assignment differs from novation because no new contract is formed, and the consent of the party to be charged is not required.
11. Acceptance (3 parts) - Understand how to accept an offer, and when an offer is deemed to have been accepted.
Acceptance of an offer may be made verbally or in writing, or it may be inferred from the conduct of the parties. However, certain rules must be complied with before acceptance of an offer is valid. First, acceptance must be communicated by the offeree to the offeror in the manner requested by or implied in the offer. Second, the acceptance must be clear, unequivocal, and unconditional. Communication of the acceptance is simple if the offer states the method of acceptance. An offer might state that the offer may be accepted only in writing or in person. In that case, the acceptance must be communicated in the stated manner. However, the offer may not contain such a precise stipulation. The courts look at a number of variables to determine what may constitute a valid form of communication of an acceptance. For example, they look at the form in which the offer was made, the usual and ordinary way of doing business in a particular industry, and the history of dealings between the parties to determine whether the method of communication was valid. Although the form of acceptance must generally be positive in nature, even silence can be a valid form of acceptance if the parties have agreed in advance that silence is sufficient or the parties have habitually used this method in previous transactions. If a person's conduct, though silent, leads the offeror to believe that the offeree has accepted the offer, especially where the person receives some benefit from the offeror, and knows that the offeror expects to be compensated for the services or goods supplied, the courts may find that a contract has been formed. If acceptance is to be made verbally, acceptance takes place when the words are spoken, either by telephone or in person. If acceptance may be made in writing, the "postal acceptance rule" applies. Using the mail to make and accept offers has been so common that the courts have established a rule that states that when acceptance of an offer may be validly made by mail, acceptance takes place when the properly addressed and stamped letter of acceptance is placed in the mailbox. The contract is formed at the time of mailing, even though the offeror may not be aware of the acceptance until several days later. Even if the letter is then lost or is delivered late, the contract is valid. The reasoning is that offerees who use the mail to accept an offer have done everything they must do at that point. While it can be argued that it may be harsh to expect offerors to be bound by contracts if they have no knowledge of the acceptance, an offeror who invited acceptance by mail must be prepared to accept the risk that the acceptance may be delivered late or go astray. However, an offeror may stipulate in the offer that acceptance by mail is acceptable but will be binding only when the letter is actually received by the offeror. Such a specific term in the offer overrides the postal acceptance rule.
9. Lapsing of an offer
An offer can lapse or expire, either because it was time sensitive and the time for acceptance ran out, or undue delay. It can be revoked, the parties die, declares bankruptcy etc. the offeror rejects the offer Once it has been revoked it cannot be validly accepted
33. Penalty clauses
Clauses in a contract that determine in advance the manner and amount of compensation to the injured party in the event of a specific type of breach are called penalty clauses or compensation clauses. The courts interpret these clauses very carefully, reserving the right to ultimately decide on damages to be awarded. Penalty clauses are used in a variety of situations and usually take one of three forms: • A clause that provides a very low amount of compensation for a specific harm done. This may be seen as an exclusion clause rather than one providing a penalty or compensation. • A clause that prohibits the parties from suing for breach of contract to obtain damages and allows instead substitution of other goods or repairs. • A clause that provides for the payment of a specific sum or forfeiture of a performance bond or other security, where the sum is expressed as a pre-assessment of the parties' loss from non-performance. This is sometimes referred to as a liquidated damages clause, where an amount is agreed to that will presumably cover the actual loss that is likely to occur.
5. State law -contract interpretation
It helps fill in the gaps, helps codify certain areas of a contract that should be put into statute, and helps identify key terms and definitions by putting them right at the beginning so you understand what they mean throughout the contract.
21. Minors - What special rights do minors have when it comes to repudiation. What 3 types of contracts can be repudiated.
Minors are not legally bound by assumed unequal bargaining power. Necessary's of life - minor is bound to it, but non necessary's can be repudiated by the minor. i.e. partnership agreement. Classified in two ways: Contracts that are void ab inttio or Contracts that are voidable at the option of the minor
3. Valuable consideration
Most contracts require that there be something of value in return for a promise.
24. Doctrine of privity of contract
Only the parties privy to a contract can benefit from it or incur any liability from it. A third party cannot enforce a contract as it was not a part of it. This is a lack of consideration.
10. Acceptance
Parties agree to offer and are deemed to have agreed on the terms of the contract and there is consensus ad idem. Then a binding contract exists from the time. Must be communicated by the offeree to the offeror in the manner requested by or implied in the offer, then the acceptance must be clear, unequivocal and unconditional.
26. Setoffs
Pay down or reduction of amount owing by overpayment against the damages
36. Scenario-analysis - Based on Chapter 6
Privity of Contract states that only parties to a contract may claim the benefits of the contract or incur any liability. ex of lack of Privity: -Connor and Julian own adjoining properties. -Home owners form a residential association. certain Statutes can impose liability or confer benefits on third parties despite the consideration and certain common law doctrines create exceptions to the principle of Privity: -The law of Partnership -Real Property Law -Beneficiary such as those for a life insurance policy Other means by which a third parties may assert rights under a contract include, Novation, Vicarious Performance, and Trusts. Novation: Termination of the old contract by forming a new contract. The new party has the benefits and liabilities of the contract, and the old party no longer has any rights or obligations. ex: Busy Bees Cleaners - office cleaner business retires, new contract is made with a new cleaning company. Vicarious Performance: There are situations where a party might wish to have a third party do some or all of the work under a contract. Original party is responsible for the work, and it can not be of a personal nature. ex: Saroj takes her car to Maurice for repair.does engine repair, then send car down the street for body work. Trusts: A trust is a result of a contract in which property is transferred from one person to another for the benefit of a third party. The law of trusts allow the beneficiary to enforce the contract against the trustee. Express Trust: A trust that is declared in clear terms, usually in writing. ex: Gwyn creates trust for her son, incase she dies before he is 18. Constructive Trust: Courts determine if contracts true intent was one of a trust, then the courts can impose a trust. The beneficiary of a constructive trust may enforce the terms of the trust. ex: Natasha and Evelyn form a partnership agreement stating that if one dies the profits of that partner goes to that partners spouse. Assignment of a Contract: in a commercial context, a contract is a thing of value that can be treated as an asset. Because income is generated over the term of the lease, the lease is an asset, or a Chose in Action or Thing in Action that the vendor can sell or assign. The vendor, the assignor, assigns his or her rights under the lease to the financing company, the assignee. The assignee collects the moneys owing under the lease from the customer. Equitable Assignments: Allows for assigning contractual rights. can be verbal or in writing. can be partial assignment of the assignors rights or a complete and absolute assignment of all the assignors rights. To allow an assignee to enforce a contract by Equitable Assignment, the following requirements must be met. 1) All the parties must be brought before the court. 2) The court must be satisfied that the intention of all parties is to assign the contractual rights.(but not the party to be charged) 3)The party to be charge must have notice of the assignment before the assignee can enforce the contract against him or her. Statutory Assignments: Widespread practice of assigning contracts and the inconvenience of having to make the assignor a party to any actions to enforce the contract led to the development of the Statutory Assignment. An assignee to a statutory assignment may enforce a contract without involving the assignor if: 1) the assignment of rights is absolute and unconditional; 2) the assignment is in writing and signed by the assignor ; and 3)express notice of the assignment, in writing, is given to the party to be charged. ex: Midland productions produced some films in Ontario Defences and Assignments All Assignments, either equitable or statutory, are subject to any equities that exist between the original parties to the contract up until the time of notice. these equities might include rights that arise because of fraud, duress, or undue influence. Another example of a defence used in assignments law is Setoff: the debtor owes a debt to the creditor but also claims the creditor owes a debt to him or her, and uses this reasoning to cancel or reduce the debt owed to the creditor. Ex of Equities: Pierre is employed with Auto Leasing Corp- employer owes him 8000 in lost wages, united financing was assigned the lease contract-Pierre can claim Setoff and deduct 8000 from the lease. Assignments by Operation of Law Some assignments occur automatically, ex: Bankruptcy contractual rights assigned to a trustee, death contractual rights are assigned to the estate trustee, mental disability.. etc.. Discharge of Contract: Once a contract has been discharged, the obligations under the contract are cancelled, and the contract itself is Null and Void. Contracts maybe discharged: A) by Performance B)by Agreement C) as of Right D) by Operation of Law E) by Frustration of Law F) by Breach A) Discharge by Performance: The most common way - performing the obligations of the contract. Offering to perform the obligations is called Tender of Performance. If one party Tenders and the other party does not, the refusing party is in breach of contract unless he or she has a valid and lawful reason. ex: Susan and Tanya have a contract to buy tomatoes- Tanya changes her mind, Susan delivers tomatoes, Susan Tendered Performance within the exact terms-Tanya refused to accept, Tanya is in Breach of contract. ex: Fieguth was fired by the defendant Acklands-Court of appeal sided with Acklands stating it did Tender Performance. Tender of Payment- where the performance required of a party is the payment of money tender of performance extends to the tender of money. payment must be tendered in Legal Tender or in the method specified in the contract. to avoid serious inconveniences to payees , the Currency Act establishes some limits to the amount of coins that can be used, as well as the amount tendered is to be the exact amount as a party is not obligated to make change. Ex: Paolo agrees to sell his kayak to Allison for 2500 if he would have showed up with a cheque then Paolo would not be obligated to accept it and could sell it to someone else. Discharge by Agreement: The parties to a contract may agree between themselves not to proceed with the contract. This is called a Waiver, and it Discharges the Contract. EX: Margit agrees to build a garage for Ramesh. they decide not to go ahead with the construction, no work was done. they do so voluntarily. The parties to a contract may voluntarily decide to alter the contract, if it changes the Material Alteration of the contracts terms, then the contract is discharged and a new contract is substituted. EX: Ibrahim orders a camper from Bayshore RV ltd. Ibrham makes changes of size and layout there for making it a Material change discharging the original contract, new contract didn't have a date established for delivery so Bayshore is not in breach of contract when the trailer was delivered two months later then expected. Accord and Satisfaction is a means of discharging a contract whereby the parties agree to accept some for of compromise or settlement instead of performance of the contract. Merger, is a contract that is verbal first then second into written, the first contract is merged into the second, discharging the first contract. Discharge of Right: The terms of a contract can allow one or both parties to cancel the contract . This is an Option to Terminate. Condition Precedent: One or both parties have the right to terminate the contract if some event in the future does or does not occur. Ex: buying a house on the condition of financing. Condition Subsequent: a future event, that if it occurs, terminates or discharges an existing contract. Ex: Ticket price is refundable if the concert is cancelled due to bad weather. Force Majeure -this kind of Condition Subsequent can be written in a contract that in the event of a Natural Disaster, Act of God, strike, lock out, War, or insurrection the contract is Terminated. - must be beyond the control of the parties, and not be avoided through the exercise of Due Diligence Discharge or Termination by Operation of Law: Obligations to pay Child Support and repay Student Loans are exceptions to the rule of bankruptcy and insolvency Act. - The Ontario Limitations Act states that proceeding shall not be commenced in respect to a claim if its been more then 2 years from the date it was discovered. -Doctrine of Laches, time limits imposed by the various limitations statutes are a codification of the common law, which is based on the premise that failure to bring an action with in reasonable time may result in prejudice to the other party. the action will be barred. simply bars the enforcement ,it does not discharge it. however, like the limitation statutes, if the contract is in forcible, it is the same as if it had been discharged.
32. Rectification - What does it do, and what does a party have to show that is should be rectified?
Rectification is an equitable remedy available to alter the terms of a written agreement where a mistake has been made in the document. It is available in circumstances where the common law might not permit altering the written terms. The right to this remedy arises where the parties to the contract have held long negotiations and have reached an agreement that is reduced to a written document where a mistake was made recording the terms. Consequently, the effect of the contract is quite different from what was intended by the parties. Rectification does not alter the intention of the parties. Rather, it ensures that the wording of the written agreement accurately corresponds to what the parties intended. Rectification is a powerful remedy and is used with caution, because the courts watch carefully to ensure that it is not simply a cover for trying to undo a bad bargain. The court's focus is not on interpreting the terms of the contract (as is the case when the parol evidence rule is used) but on whether the terms the parties agreed to, whatever they are or however they are interpreted, are accurately reflected in the written contract. To successfully invoke the remedy of rectification, the party claiming rectification has to show the following with strong and clear evidence: • A mistake in recording the intentions of the parties: The mistake must be clear and unambiguous. It must also be a mutual mistake—that is, both parties are mistaken, and both are mistaken in the same way. • Formation of a common intention: In Canada and England, even if no prior contract has been concluded to show that a mistake has been made, if there is strong and convincing evidence that the parties achieved a position where they had a common intention, that suffices for rectification where the common intention is not reflected in the final contract document. • Clear and cogent evidence of a mistake: There must be clear and convincing proof of a mistake in expressing the parties' intention. The evidence may be written or oral. The standard of proof required appears to be more than the usual civil standard in contract cases of proof on a balance of probabilities. If the case turns on oral evidence, the court is likely to scrutinize this evidence with great care to ensure that a claim for rectification is not an attempt to remake a bad bargain.
35. Breach of condition and breach of a warranty
The nature of the breach is determined primarily on the basis of its seriousness. A term of a contract that is essential or goes to the root of the contract is called a condition. A minor or subsidiary term is called a warranty. The distinction between a breach of warranty and a breach of condition is important in determining what remedies are available for the breach, because a breach of a condition will wholly deprive the innocent party of the benefit he or she expected to receive under the contract, while a breach of warranty will not. This distinction is important when it comes to awarding a remedy for the breach. For instance, in a contract to buy a car, the make and model of the car would be a condition, while the colour of the car might be a warranty. The delivery of a car of the correct make and model, but the incorrect colour, would be a breach of warranty but not a breach of condition. However, in a contract to paint a house, the colour of the paint might be a condition, in which case painting the house the wrong colour would be a breach of condition.
14. Gratuitous promises
There is a difference between this and a contract. This is where one party agrees to do something for free or without reward. In contrast a contract is essentially a bargain in which each party gets something in return for his or her promise to perform the obligations in the contract.
13. Revocation of an offer - What is revocation, and how may you revoke a contract?
To revoke is to annul or make void by recalling or taking back; to cancel or rescind. An offer may be revoked, rendering the offer a nullity and therefor not capable of being accepted. It takes the offer off the table when they are aware of the offer being taken away. The offeror may revoke the offer at any time prior to acceptance. The revocation must be communicated to the offeree before the offeree accepts the offer. Generally, the offeror must communicate the revocation directly to the offeree. For direct communication, the revocation is effective when it is received by the offeree. However, the offer can also be revoked indirectly. If the offeree has actual knowledge (from a reliable source) of the revocation of the offer or of circumstances in which it would be unreasonable for the offeree to expect the offeror to stand by the offer, this knowledge may prevent the offeree from accepting the offer. The onus of proving that the offeree had this knowledge rests on the offeror.
17. Illegal contracts
Two ways in which a contract can be unlawful or illegal are: 1) by violating the provisions of a statute or 2) by being contrary to public policy. An example of an example of a contract that is unlawful because it violates statute law is a contract between and employer and employee through which the employee promises not to exercise his or her rights under the (OWSI) Ontario Workers Safety Insurance.
