contracts semester 1 - amazon simple storage service17-18/45+-+contrac… · contracts semester 1...

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CONTRACTSSemester1

EXCHANGEANDBARGAINS/CONSIDERATION..............................................................................................................3DalhousieCollegevArthurBoutilier[1934]SCR642(GratuitousPromise)...................................................................3BrantfordGeneralHospitalvMarquisEstate[2003]Ont.SCJ(Requestedbenefit)......................................................3WoodvLucyLadyDuff-Gordon1917(USNY)(Contractinstinctwithobligation)........................................................4

PASTCONSIDERATION.............................................................................................................................................................4EastwoodvKenyon(1840)(QB)....................................................................................................................................5LampleighvBrathwait(1615)KB[Exceptiontopastconsideration].............................................................................6

CONSIDERATIONMUSTBEOFVALUEINTHEEYESOFTHELAW.......................................................................................................6ThomasvThomas(1842)2QB851(UnitedKingdom)..................................................................................................6

BONAFIDECOMPROMISESOFDISPUTEDCLAIMS(FORBEARANCE)..............................................................................7B(DC)vArkin[1996]Man.QB.......................................................................................................................................7

PRE-EXISTINGLEGALDUTY...........................................................................................................................................8PUBLICDUTY–(MAJORPUBLICPOLICYARGUMENT).....................................................................................................................8DUTYOWEDTOATHIRDPARTY................................................................................................................................................8

ShadwellvShadwell(1860)...........................................................................................................................................8PaoOnvLauYiuLong[1980](PC)(p.180)...................................................................................................................8

DUTYOWEDTOTHEPROMISOR–PROMISESTOPAYMORE..........................................................................................................9StilkvMyrick(1809)(EnglandKing’sBench)(Gratuitouspromise)...............................................................................9GilbertSteelLtdvUniversityConst.LTD(1976)12OR(2d)19(CA)..............................................................................9WilliamsvRoffeyBros.&Nicholls(Contractors)Ltd.[1990]1AllER512(CA)(practicalbenefits)............................10GreaterFrederictonAirportAuthorityvNavCanada[2008]NBJNo.108..................................................................11

DUTYOWEDTOTHEPROMISOR–PROMISESTOACCEPTLESS...................................................................................12FoakesvBeer(1884)9App.Cas.605(HL)..................................................................................................................13ReSelectmoveLtd.[1995]2AllER531(CA)[Hardtousepracticalbenefitsforconsideration].................................13FootvRawlings[1963]SCR197[Paymentbyadifferentmode]................................................................................13JudicatureAct(RSA2000)............................................................................................................................................14

OFFERANDINVITATIONTOTREAT.............................................................................................................................15CanadianDyersAssociationLtdvBurton(1920),47CLR259(HC)–whenwasthecontractmade...........................15PharmaceuticalSocietyofGreatBritainvBootsCashChemists(SouthernLtd.)[1953]QB401(CA).........................16

UNILATERALCONTRACT.........................................................................................................................................................17CarlillvCarbolicSmokeBallCo.[1893]1QB256(CA)................................................................................................17GoldthorpevLogan[1943]OWN215(CA)..................................................................................................................18

TENDERS.............................................................................................................................................................................18RvRonEngineering&Construction(Eastern)Ltd.[1981]1SCR111(ContractA–unilateral).................................19MJBEnterprisesLtd.vDefenseConstruction(1951)Ltd.(1999)1SCR619................................................................20

COMMUNICATIONOFOFFER......................................................................................................................................20BlairvWesternMutualBenefitAssn.[1972]4WWR284(BCCA)...............................................................................21WilliamsvCarwardine(1833)4B&Ad621(KB)(linkbetweenofferandacceptance)..............................................21RvClarke(1927)40,CLR227(AustHC)......................................................................................................................22

ACCEPTANCE..............................................................................................................................................................22LivingstonevEvans[1925]3WWR453.......................................................................................................................22BattleoftheForms......................................................................................................................................................23ButlerMachineToolvEx-Cell-OCorp[1979]1WLR401[English](lastformsent).....................................................23TywoodIndustriesvSt.Anne-NackawicPulp&PaperCoLtd.(1979)(Ont.HC).........................................................24ProCDvMatthewZeidenbergandSilkenMountainWebServices,Inc.(USCA7thCir.,1996)....................................24DawsonvHelicopterExplorationCo.[1955]SCR868..................................................................................................25

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FelthousevBindley(1862)11CB(NS)(Ex.Ch.)(noacceptanceuntilcommunicated).................................................26SaintJohnTugBoatvIrvingRefineryLtd.[1964]SCR614(silence+conductcanbeacceptance).............................27UnjustEnrichment...........................................................................................................Error!Bookmarknotdefined.EliasonvHenshaw(1819)4Wheaton225,4US(L.Ed.)556(acceptancecompliantw/methodspecified)..............28

COMMUNICATIONOFACCEPTANCE...........................................................................................................................29A)MAILEDACCEPTANCES......................................................................................................................................................29

HouseholdFire&CarriageAccidentInsuranceCovGrant(1879)4Ex.D.216(CA)[THEPOSTALACCEPTANCERULE**].......................................................................................................................................................................29HolwellSecuritiesvHughes[1974]1WLR155,[1974]1AllER161(CA)[Thepostalrulecanbeexcludedbytermsoftheoffer**].............................................................................................................................................................29

B)INSTANTANEOUSMETHODOFCOMMUNICATION...................................................................................................................30BrinkibonLtd.vStahagStahlUnd[1983]2AC34[1982][Instantaneousmethodsofcommunication–contractcompletewhenacceptanceisreceivedbyofferor**]................................................................................................30RuddervMicrosoftCorp.(1999)2CPR(4th)474,40CPC(4th)394(Ont.SCJ)[*Nothavingalltermsdisplayedonscreenatthesametimedoesnot=fineprint]..........................................................................................................31

TERMINATIONOFOFFER............................................................................................................................................31A)REVOCATION...................................................................................................................................................................31

DickinsonvDodds(1876)2ChD463(CA)[Oncethepersontheofferwasmadetofindsouttheofferormadeacontractw/someoneelse–theopenoffertosellterminates].................................................................................32ByrnevVanTienhoven(1880)5CPD344[Anoffercannotberevokedafterithasbeenaccepted;aletterofrevocationcanonlyapplyoncecommunicatedtotheofferee**]............................................................................32BarrickvClark[Anofferexpiresafterareasonableamountoftime].......................................................................33

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ExchangeandBargains/Consideration• Considerationisthecrucialelementinenforcingalegallybindingcontractincommonlaw• Inanexchangeforapromise,somethingofeconomicvaluehastobeexchanged• Beforeapromisecanbeenforced,theremustbeabenefittothedonor/promisor(ex.Nameonaplaque)oradetrimentto

thepromisee/receiverattherequestofthepromisor(somethingtheyotherwisewouldnothavedone–ex.spendmoneyonthebuilding)

o Relianceisnotafactorinthecommonlawofconsideration–itcouldbethesametodetriment,butitwouldhavetoberequested

• Peppercorntheory:considerationneedstobesufficient(anythingofvalue),doesnothavetobeadequate

DalhousieCollegevArthurBoutilier[1934]SCR642(GratuitousPromise)Facts:

• ArthurpromisedtopayasumofmoneytotheCollege.HedidnotpayandafterhisdeaththeCollegesuestheestateofArthur(deceased)forthepromisedsum,accusingArthurofgivingconsiderationforhispromise

• ThecollegesaidArthurwastheirdebtorbecausehecontractedtopay$5000andthereforeshouldbecompensatedbeforethebeneficiariesgetpaid

o Debtsagainstaperson/corporationsurvivetheirdemise–estateisliabletopaytheseIssue:

• WasthereconsiderationinArthur’spromise?Ormerelyagratuitouspromise?Decision:

• Noconsiderationinhispromise;noexchangeforArthur’spromiseo Inthedoctrineofmutualpromises,eachpromiseisconsiderationfortheother

Analysis:(Crocket)• These3promisesaremoralethicprinciples;theymaybereasonswhypromisesareenforceablebuttheyarenot

enforceableincommonlawo 1.ThecourtwasawareArthurwasseriouslyintendedhispromiseo 2.Dalhousiesaidhemadeaseriouspromisewhichtheyreliedonbyspendingthemoneyo 3.Dalhousiereliedonthepromisetotheirdetriment–wouldnothavespentthemoneywithouthispromise

• Thepromisehereisempty(wasanakedpromise)àtheydonotpromisetoexchangeandtheydonotpromisetoimproveefficiencyoftheirteaching

• Thepromiseofthe$5000didnotobligatetheUniversitytodosomethingtheywerenotalreadygoingtodoRatio:

• Gratuitouspromisesarethosenotsupportedbyconsideration,thereforearenotenforceable• Inorderfortheretobeconsideration,theremustbeabenefittoArthur,oradetrimenttotheCollegeattherequestofthe

promisorNote:

• 3rdpartyconsiderationisnotconsideration–itmustflowfromthepromisor

BrantfordGeneralHospitalvMarquisEstate[2003]Ont.SCJ(Requestedbenefit)Facts:

• Mrs.MarquispledgedtogivethehospitalamilliondollarsovertheperiodoffiveyearscommencinginDecember1999,shemadeherfirstinstallmentof$200000onApril14,2000.ThenshediedonMay16,2000.Herestaterefusedtopaythebalance.

• TheHospitalbelievestherewasconsiderationinthepromisebecausetheyofferedtonametheunitafterherIssue:

• WhetherMrs.Marquis’pledgewasalegalbindingcontractenforceableinlawDecision:

• Theycannotenforcetheagreementasthereisnoconsideration,actionisdismissedAnalysis:

• AccordingtowitnessesandMrs.Marquis’nature,shewasnotinterestedinmakingthepledgeinordertohavethenewunitnamedafterher;itwasalsonotstatedinthepledgedocumentthatitwouldbenamedafterher,andtheformalapprovalbytheboardofdirectorswasstillrequired

• Namingtheunitafterherwasmostlikelyabenefit,howeveritwasnotabenefitsherequestedanditwasnotthepriceofherpromisethattheunitbenamedafterher

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Ratio:• Fortheretobeconsiderationabenefitmusthavebeenrequested

*ThisisastraightforwardapplicationofDalhousieWoodvLucyLadyDuff-Gordon1917(USNY)(Contractinstinctwithobligation)*Persuasive,notbinding(UScase)Facts:

• WoodwasgivenanexclusiverighttoplaceLucy’sendorsementsonthedesignsofothersandtoplaceherowndesignsonsaleandinreturnshewastohalfone-halfonallprofitsandrevenuesthathemightmake.Lucyplacedherendorsementsonotherproductswithouthisknowledgeandwithheldtheprofits.SheclaimsthatWooddidnotdoanythingtomakeprofits/undertaketodoanything,thereforetherewasnoconsideration

Issue:• WoodsuedLucyfordamagesandthecasecomesondemurrer;determinewhethercontractlacksmutuality

Decision:• Judgmentofappellatecourtreversed,damagesforWood

Analysis:(Cardozo)• Lucygaveanexclusiveprivilege,andtheacceptanceofthisexclusiveagencywasanassumptionofhisduties.Unlesshe

gavehisefforts,shecouldnotreceiveanything.Thereisanimplicitobligation/agreementhere–forWoodtousehisbestefforts,andaslongasheisusinghisbesteffortstheotheragreementarises

• Here,itisnecessarytoimplythattermforbusinessefficacy(soitmakessenseandisworkable)andalsomustrepresenttheimpliedintentionoftheparties(althoughthiswasnotintheagreement,thepartiesmusthaveintendedittobeapartoftheagreement)

• Duffsaidtherewasnocorrespondingrequesttoherpromise[shedidnotrequestanything,thereforenoconsideration],howeverCardozosaidWood’spromisetorenderaccountsandkeephalftheprofitsimpliedhewouldusereasonableeffortstoimplementtheagreement

Ratio:• Apromisemaybelacking,andyetthewholewritingmaybe‘instinctwithobligation’andifthatissothenthereisa

contract–instinctwithobligationmaybeimpliedwithcircumstancessurroundingthecontractDefinitions

• EntireContractClause:thisrepresentstheentirecontractbetweenthepartiesandtherearenootherpromisesoragreementsotherthanwhatitisthedocument–basedonconsent;consenttoagreerepresentstheagreement(designedtostopthecourtsfrommakingimplicitassumptions)

• OfficiousBystanderTest:atermusedtodeterminewhetheranunstatedconditionwasoriginallyimpliedatthetimeofwritingthecontract.Whatwouldhavebeenthereplyofthecontractingpartiesifaby-standeraskediftheyintendedtoincludetermXintothecontract,andiftheysaid‘yes’thenitisanimpliedterm

• Breachofcontract:stillboundbyacontractunlessthebreachisofaveryseriousnature;notexemptfromyourobligations

simplybytheotherpartybreachingthecontract

• Contractunderseal:acontractundersealdoesnotneedconsiderationtobevalidinlaw

PastConsideration• Anactperformedpriortoapromisebeingmade–nomutuality• Pastconsiderationisforthemostpartnotseenasgoodconsideration• Ifapromiseismadefollowingabargain,itisnotpartofthecontractandnotbinding• Anexpressedpromisemadecaninsomecircumstancesreviveconsiderationfromthepast• However,whencanthishappen?–onlywhentheoriginalconsiderationcouldbeenforcedhadinnotbeensuspendedby

somepositiveruleoflawo Ex.Bankruptcy–notliablefordebtsincurredatthattimeo Ex.Infantpaidwhencomeageofmajority

• Takethesecasesasrarecases–wherethecontractwasalwaysenforceablebutsuspendedbysomepositiveruleoflaw• Thesecaseswereseenasstrangeexceptions

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EastwoodvKenyon(1840)(QB)Facts:

• SutcliffediedandlefthisestatetohisinfantdaughterSarah.EastwoodactedasSarah’sguardianandborrowedmoney(100pounds)topayforSarah’seducation.ShepromisedshewouldpayEastwoodforthiswhensheturned21,andshesubsequentlypaidoff1yearofinterestpayments.Thedefendant(Sarah’shusband)alsopromisedhewouldpaytheamount,howeverhedidnot

Issue:• Isthispromisesufficientenoughtoformacontract?Isthehusbandboundbyhispromisetopayofftheloanthat

EastwoodtookouttofundSarah’seducation?Decision:

• NocontractwasfoundtohaveexistedAnalysis:(LordMansfield)

• FoundthattherewasnothingmorethanabenefitvoluntarilyconferredbyEastwoodandanexpresspromisebyKenyontopaythemoney;therewasnobenefittoKenyon

• Tobeconsiderationtheremustbeabenefittothepromisororadetrimenttothepromisee(herethereisadetrimenttoKenyon)

• Whenthemoneywasexpended,Kenyonwasnotconnectedwiththepropertyortheplaintiff• TheborrowingofthemoneywasnotdoneatSarah’shusbandsrequestnormotivatedbyhim,thereforeconsideration

hadwhollypassed;therewasneveracontractbetweenEastwoodandKenyon• Kenyon’spromisewasnotenforceablebecauseofpastconsideration–cannotmakeapromiseaboutsomethingdoneand

completedinthepastRatio:

• Promisesarenotsufficientenoughtoformacontract;pastconsiderationisnoconsiderationatall.Considerationcannotbeenforcedonpastbenefitsordetriments[providesnolinkbetweentheallegedconsideration+thepromisemade]

Note:• WouldhehavesucceededifhesuedSarah?–aminorisnotliableforcontractstheymayenter(unlessitisfornecessary

goodsandservices,requiredattheminor’srequest,andtheyagreetopayitwhenofage–onlyliableforacontractofnecessities)àhowever,Sarahdidreaffirmthecontractaftershebecameanadult

Executorycontract:(acontractnotyetperformed)ifaminoragreestopaysomethingbutithasnotyetbeenpaidfor,thenthecontractisnotenforceable,howeveriftheyhavealreadypaidforsomethingthenthecontractiscomplete

• Ifenteracontractasachild,thenratifyitaftertheageofmajority,thenboundbyit• Iftheminoragreestopayafterwardswhenageofmajority,thecontractisthenbinding

Infantcontract:ifunder18,thenhavelimitedcapacityandthelawprotectsthem–Generalruleisinfantsarenotobligatedtothecontractstheymake;onlybindsifratifiedoradoptedasanadult

Contractsofnecessities• Ifenterintoanagreementfornecessitiesasaminorattheminor’srequest,andtheminoragreestopayitwhenreachthe

ageofmajoritythenitisacontract• Contracts–fornecessitieswhileaminor,thenagreestopayatageofmajoritythenitisacontract• Sarahagreedtopaybackthepromissorynote(notforthenecessities)• WaswhatSarah’sguardianusedthemoneyfornecessities?• Complicated–needtoknowtheywerenecessities+requiredatherrequest• Ifitwereenforceableitwouldbeanexceptiontothelawofpastconsideration

o (Usuallypromisesarenotenforceablebecauseofapositiveruleoflaw–ex.Infancyorbankruptcy)• (Ifthegoodsboughtwerenotnecessities,andthecontractwasSarah’sagainstherguardianshewouldneedtoratifythe

contractonceshewasageofmajorityinorderforhertobeboundbythecontract)

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LampleighvBrathwait(1615)KB[Exceptiontopastconsideration]

Acontract/actioninquantummeruit:• Therewasalwaysanexpectationthatserviceswouldbepaidfor;thelawinfersthepromisetopayareasonableamountfor

labor/materialsevenintheabsenceofaspecificlegallyenforceableagreementbetweentheparties• Ex.Hiringaplumber–thereisanexpectationthattheserviceswillbepaidforatthebeginning;itneedstobeareasonable

valueoftheservices• Notpastconsiderationsincetherewasalwaysanexpectationofbeingpaidforservices• InLampleighB’sdefencethatLdidnotactuallygethimthepardoniswarrantedbecausethepromiseofLwasthathe

wouldmakereasonableeffortstoobtainthepardon;andsinceheofferedthepaymentafterwardshemusthavebeensomewhatsatisfiedwiththeresults

ExceptiontoPastConsideration:1) Promiseewasclearlyaskedtoperformtheact;2)theyperformedit;3)therewasareasonableexpectationofpayment;

and4)Ifthepromisehadbeenmadepriortotheact,acontractwouldhavebeenformed• Lampleighreferredtothis+sodidPaoOn[obiter]

ConsiderationMustbeofValueintheEyesoftheLawThomasvThomas(1842)2QB851(UnitedKingdom)Facts:

• ‘Whereas’clausesofagreement• JohnThomasorallyexpressedtohiswifethatshewastohavethehometheyresidedin(alongwiththepossessionsin

it)or100pounds,alongwiththerestshewasentitledtoinhiswill,aslongasshewasaliveandawidow.AcontractwasdrawnbetweenMrs.Thomasandtheexecutors(hisbrothers)thataslongasshehadthehomeshewouldpaythemrent(1pound/year)andkeepitingoodrepair.Afteroneoftheexecutorsdied,theotheronerefusedtoexecutetheconveyanceandbroughtanevictiontoturnMrs.Thomasoutofpossession

Issue:• WasthereconsiderationinthecontractforMrs.Thomastokeepherhouse,orwasthisavoluntarygift?

Decision• HoldingforMrs.Thomasstands–therewasacontract

Analysis:• Thereare2sourcesofconsiderationbecausetherewasanagreementwhereMrs.Tpayrent,thiswasmorethanagiftand

hadsufficientconsideration;thestipulationforthegroundrentwasnotaconditionbutanexpressagreement,andkeeping

Facts:• BraithwaitkilledamanandrequestedLampleightoseekapardonfromtheking.Afterheattemptedtoobtainthepardon,

BpromisedL100poundsinreturn.Bisarguingpastconsideration–thatapromisemadeaftersomethingisalreadydoneisnotvalidconsideration

Issue:• Causeofaction–assumpsit:apromise/engagementwhereonepersonassumesorundertakestodosomeactorpay

somethingtoanothero Startingtorecognizecontractsnotunderdeeds,thereforesaidtheactionwasanassumpsit

• WhetherthereisconsiderationforB’spromisetoLeventhoughthepromisetopaywasmadeaftertherequesthadbeenfulfilled

Decision:• Abindingcontractwasfound,rewardof100poundsforLampleigh

Analysis:• TherewasareasonableexpectationherethatLwouldbepaidforhisservices;mostlikelynotdoingthisasavoluntary

courtesy• Avoluntaryactwillnothaveconsideration,howeverifitismotivatedbyarequestoftheparty,thenthelaterpromise

couplesitselfwiththeact,thepromiseisthennotanudumpactum(nakedpromise)butabindingcontract• Thisisnotpastconsiderationbecausetherewasalwaysareasonableexpectationtheserviceswouldbepaidfor

Ratio:• Apromisecoupledwithapriorrequestcanbegoodconsiderationgivenitisnotexpectedtobeavoluntaryact

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itingoodrepairwasadistinctagreement(sheisundertakingasignificantfinancialobligation,andrelievingtheexecutorsofthisobligation)

• Motivehereisirrelevant(keepingthewishesofherdeceasedhusbandisnotacontract)–thiswasamoralobligationofthewishesofthedeceased.Also,anoralpromisecanneverchangeawill–thewillwasnotamended

• Motiveisirrelevantinconsideringthewishesofdeceased• Wasitpartoftheconsiderationthatsheremainsawidow?

o Ifthiscouldbeconsideredadetrimenttoher,thenthiscouldmeantherewasconsiderationinthisconditionaswell

o Nowhere,intheagreement,doeswidowThomasagreetoremainunmarriedo Remainingunmarriedcouldbeconsiderationhoweverinthiscaseitisnot,asitisnotaskedforbytheestateandit

isnotaskedforbywidowThomas§ Therearetworeferencestoremainingunmarried–thedeceasedaskedthatsheshouldhavethehouse

foraslongassheremainsthewidow• Ifshedoeschoosetoremarry,shedoesnotgettokeepthehouse• Theexecutorssaytheywouldallowhertokeepherhouseaslongassheremainsawidowand

fortheremainderofherlife§ Therearetwo‘timeagreements’attachedtothis(itisatimelimitandnotactiveconsideration)

• Sheremarriesorshedies–howthebindingcontractcanexpireo Theestateneveraskedforhertoremainawindowaspartoftheagreement

Ratio:• Motivationisirrelevantandisnotthesameasconsideration;asconsiderationneedstobesufficient,notadequate• Ifdonotrequesttheactfromsomeoneitisnotgoodconsideration

Note• Ifshewouldhavesuedforthe100poundsshewouldnothavesucceededbecausetherewouldhavebeennobenefittothe

estateandnodetrimenttoMrs.Thomas• Remainingunmarriedisnotconsiderationhere,becauseitwasnotaskedforbytheestatenorbyMrs.Thomas

o Estate:shewasallowedtokeepthehouseuntilshediesaslongassheremainsawidowo 2‘timeagreements’here–itisatimelimitandnotactiveconsideration(howthebindingcontractcanexpire)=

conditionsubsequent

BonaFideCompromisesofDisputedClaims(Forbearance)• Compromisesarevalidunlesssomeoneispursuingaclaimknowntobeinvalidorthattheybelieveisinvalid• Thesecompromisesarevalidunlesssomeoneispursuingaclaimknowntobeinvalidorthattheybelieveisinvalid–abad

faithconsiderationcanconcernthepossibilityofblackmail• Considerationhereisreflectingothervaluesinsociety–tofilteroutcontractsthatshouldnotbeenforcedanddistinguish

themfromcontractsthatshouldbeenforced• Ifamanbonafidebelieveshehasafairchanceofsuccess,hehasreasonablegrounds[orapossibilityofavalidclaim]for

suing,andhisforbearancetosuewillconstitutegoodconsideration

B(DC)vArkin[1996]Man.QBFacts:

• Plaintiff’s14-yearoldsonstoleitemsfromZeller’samountingto$59.95.LatershereceivedaletterfromZeller’scounselstatingshewastopayrestitutioncostsanddamages($225)otherwisewouldbetakentocourt.Shethereforepaidtheamount

Issue:• Cantheplaintiffbereimbursedonthebasisofthisbeinganinvalidclaim?Doestheclaimconstitutevalidforbearance?

Decision:• Appealallowed;plaintiff’sclaimallowedwithinterestandcosts

Analysis:• Thedefendant’sclaimwasnotonlydoubtfulbutinvalid–thereisnorulethatparentsareliableforthetortsoftheir

childrenbybeingtheirguardians(wouldbeliableiftheywerenegligent/involvedintheact)• Thelawyersknewthemotherdidnothaveanobligationtopaythemoney,andsheonlypaidbecauseshethought

otherwiseshewouldgetsuedRatio:

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• Forbearancetosueisgoodconsiderationandmoneypaidinexchangeforapromisenottosueisavalidandenforceablelegalcontract;however,apromiseisnotvalidiftheonlyconsiderationforitisaforbearancetoenforce(orapromisetoforbearfromenforcing)aclaimwhichisinvalidorisknownbythepartyforbearingtobeinvalidornotbelievedtobevalid(ifmerelydoubtfulthenforbearanceisstillgoodconsideration)

Pre-ExistingLegalDuty1. Adutyimposedbylaw–apublicdutyyouarerequiredtoperform2. Adutyyouarealreadyobligedtoperformunderacontractwithathirdparty3. Youarepaidmoneytodosomethingyouarealreadyobliged(contractuallybound)todo

PublicDuty–(majorpublicpolicyargument)• Example:GlasbrookBrosLtd.vGlamorganCountyCouncil(1924)

o Paytoprovidepoliceofficerstoguardtheirbuilding;whattheygotinexchangewassomethingextra/morethanwouldhaveotherwisebeenprovided-thisisnotathreatofcorruption

• Example:WardvByham(1956)o Englishlaw–whenachildbornoutofwedlock,onlymotherhadobligationtolookafter.Thefatherwaspayingthe

mothertoperformadutythatwasalreadyanexistinglegaldutythereforebelievedtherewasnoconsideration.However,therewassomethingmore–shepromisedtomakesurethechildwashappy/well-maintained

o Anexampleofthe‘Huntandpeck’tofindconsideration

DutyOwedtoaThirdParty• Generally,dutyowedtoathirdpartyisseenasgoodconsideration–esp.inthefamilycontext• Breachofpromisetomarry–ifapersonwasengagedandbrokeoffthecontract,couldbesuedforbreachofpromise(still

existsinAlberta)

ShadwellvShadwell(1860)• Unclepromisedtopaynephew150poundsayearoncehewasmarrieduntilhisincomereachedacertainlevel,thiswas

stillconsideredgoodconsiderationeventhoughhehadalegalobligationtomarryhisfiancé;becausethecontractualdutywasowedtoEllen,andhedidnotoweanydutytohisuncle

• Promisetopayifbreaklegskiing–notenforceableasacontract–nothopinghebreaksaleg;promisetopayifhemarriesEllen–heishopefulhisnephewwilldothisaction

• Hadapre-existingdutytomarryhoweverfulfillmentofapre-exitingdutycanbegoodconsiderationifitflowsfromathirdpartyànephewspre-existingdutywaswithhisfiancé

PaoOnvLauYiuLong[1980](PC)(p.180)Facts

• Plaintiff’s(PaoOn)arethesoleshareholdersofShingOn;ShingOnownsthepropertythatthedefendant(YiuLong)wanttobuy;FuChipisthecompany,andthedefendants(YiuLong)areshareholdersofthecompany

• ThemainagreementwasthattheplaintiffagreedtoselltoFuChipalloftheirsharesinShingOninexchangefor4.2millionsharesinFuChip

o Sincetherewasastrongchancetheplaintiffscouldartificiallydepressthevalueoftheshares(bysellingallshares,andthepricewouldgodown),therewasanagreementtheywouldholdonto2.5millionsharesforoneyear

• Thesubsidiaryagreementwasthatthedefendantswouldbuybackthesharesat$2.5/share• PaoOnrealizedifthevalueofthesharesraisedtomorethan$2.5,theywouldnotcapitalizeonthemthereforemadea

signedindemnityagreementthatifthesharesfellbelow$2.5thedefendantwouldpaythedifference.Thedefendantsagreedaslongastheyperformedtheoriginalcontract(saleofallshares)withFuChip;thisagreementwasmadewiththedefendantshareholders(YiuLong)thereforethereisanewcontract.Theoriginalagreementiscancelled.

• Thepriceofthesharesfellto$0.36andthedefendantshareholdersrefusedtofulfilltheirguaranteesinceitwaspastconsideration

Issue• Wastheconsiderationinthepast?Wasthereduressinsigningtheagreement?Isthesubsidiaryagreementenforceable?

Decision• Findingfortheplaintiff;therealconsiderationwasthepromisetoperformoftheperformanceofthepre-existing

contractualobligationtothedefendant;bythedefendant’sgivingindemnitytheybecamecontractuallyboundAnalysis

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• ThedefendantshareholdersdidnotwanttopaythedifferencetheyowedtotheplaintiffbecausetheysaidtheyaremerelyperformingadutytheyalreadyowedtoFuChip,thereforenoconsideration

• ThenewindemnityagreementbetweentheplaintiffandthedefendantshareholdersislegallyenforceablebecausetheplaintiffsareunderacontractualobligationtoboththeshareholdersandFuChip(andcouldbesuedbyeither)thereforethereisgoodconsideration;inexchangeforthebenefitprovidedbythedefendantshareholders,theyincuranewobligation–thepromisetoperform/theperformanceofapre-existingcontractualdutytoathirdpartycanbevalidconsideration

• Pastconsiderationargument–arguedthatwhentheoriginaldealwastorn,theoriginalprotectionwastakenaway.Theoriginalprotectionwasalwaysthere(itwasalwaysintendedtheywouldhavethisprotection)

• Absenceofeconomicduress–1)thedefendant’shadanalternateremedy(couldgetthecompanytosue);2)theotherpartyhadtimetoconsidertheissue;3)hadtimetoobtainlegaladvice

• Wherebusinessmenarenegotiatingatarm’slengthitisunnecessaryfortheachievementofjustice,andunhelpfulinthedevelopmentoflaw.

• Commercialpressuredoesnotequaleconomicduress–willenforceinabsenceofeconomicduress–o 1)thedefendant’shadanalternateremedyo 2)theotherpartyhadtimetoconsidertheissue(didnotprotest)o 3)hadtimetoobtainindependentlegaladvice

Ratio:• Anagreementtodoanactwhichthepromisorisunderanexistingobligationtoathirdpartytodo,maywellamountto

validconsideration.ThepromiseeobtainsthebenefitofadirectobligationNote:

• ThisdiffersfromStilkvMyrickinthattheyhadapre-existingdutywiththecaptaintosailtheship;inPaotheoriginaldutywaswithathirdparty(notthepartywhopromisedtopaytheextramoney)–allthecaptaingotforhismoneywaswhatthesailorswerealreadycontractualobligedtodo.

DutyOwedtothePromisor–PromisestoPayMoreStilkvMyrick(1809)(EnglandKing’sBench)(Gratuitouspromise)Facts:

• Beforethecommencementofavoyage,theplaintiffwastobepaid5pounds/month;duringthevoyage2seamenleftandsothecaptainenteredintoanagreementwiththecrewthattheyshouldhavethewagesofthe2mensplitequallyifhewasnotabletofindreplacementsforthem

Issue:• Wastheresufficientconsiderationinthepromisetoallowtheplaintiffthehigherwage?

Decision:• Noconsideration;plaintiffcanonlyrecovertheinitial5pounds/month

Analysis:• Thisagreementwasvoidofallconsideration–theseamenhadapre-existingcontractualdutytosailtheship;allthe

captainwouldhavegottenforhisextramoneypaidtothemwaswhatthesailorswerealreadyobligedtodo–intheoriginalcontracttheyweretobringtheshipinsafelyuponallemergencies(desertionofthecrew=emergency;notthesameasifthecaptaindismissedthem)

• *Thetwodifferentreportersmentionedthiscasetobedecidedon1)Campbell(consideration),and2)Espinasse(publicpolicy)–thefirstreporter(consideration)washeldtobemorereliable

• Publicpolicyargumentwasthatitwascontrarytopublicpolicyandwouldbeadangertothepublicifweallowedsailorstoenforcetheseagreements

Ratio:• Theperformanceofapre-existingobligationdoesnotqualifyasfreshconsideration,thereforeanagreementtovaryan

existingcontractremainsunenforceable

PortPhilipCase[promisetopaymore]• 36members,17desertedleaving19tobringback

o Captainagreedtopayextraifshipgotbacko Notordinarycontractualduty–membersgaveextraàpromisefoundtobeenforceable

GilbertSteelLtdvUniversityConst.LTD(1976)12OR(2d)19(CA)Facts:

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• Plaintiffenteredintoawrittencontracttodelivertothedefendantfabricatedsteelforapartmentbuildingsfor3differentsites.Thepriceagreeuponwas$153pertonfor‘HardGrade’and$159for‘Grade60000’.Thiswaspaidasagreed.Twomorebuildingsneededfabricatedsteelhowevertheownersofthesteelmillannouncedanincreaseintheprice(withawarningofevenfurtherincreasestocome)

• [Contractmadeduringatimeofeconomicstability,butperformedoveratimewheninflationwasincreasing]• Plaintiff+defendantcreatedanewwrittencontractfor$156and$165perton(thispricedidnotreflectthefullamountof

theinitialincrease).Whilethebuildingwasstillunderconstruction,theownersannouncedanotherincrease,thentherewasaverbalagreementthedefendantwouldpay$166and$178.GilbertSteelsubmittedawrittencontractwiththenewpriceswhichUniversityConstructiondidnotsign.Thedefendantmadepaymentsthatwereroundeddown,andendeduptotallingthepriceoftheoriginalcontract

Issues:• Whethertheoralagreementwasbindingorifitfailedforwantofconsideration

Decision:• Noconsideration;agreementnotbinding

Ratio:• Apriordutyowedtoapromisorisnotlegallysufficientconsideration.Inamendingacontract,bothsidesneedtoprovide

freshconsideration.[ex.getthejobdonefaster]Analysis:

• InStilkvMyrick,thesubsequentagreementwasheldtobemerelyavariationoftheearlieroneandaccordinglyfailedforconsideration

• Considerationisnotfoundinamutualagreementtoabandontheearlierwrittencontractandassumeobligationsundertheoralnewone;here,theywerepromisingtopayextraforsomethingtheywerealreadyentitledtoget

Note:• Thisisanexamplewhereanamendmenttothecontractonlybenefitsoneside,andsincethereisnoconsiderationitisnot

legallyenforceable• Theyneededtopromisesomethingextrainreturnforthepromisetopaymore;ifGilbertSteelwouldhavepromisedto

deliverthesteeloneweekearlythiswouldhavebeensufficienttoenforcethecontract

WilliamsvRoffeyBros.&Nicholls(Contractors)Ltd.[1990]1AllER512(CA)(practicalbenefits)Facts:• Thedefendantcontractorsenteredintoacontractwiththeownerstorenovate2flats.Thedefendantcontractorshiredthe

plaintiffasasubcontractortocarryoutthecarpentryworkfor20000pounds.Duringthecourseoftheworktheplaintiffencounteredfinancialdifficulties(theagreedpricewastoolowandhadproblemsofsupervisionintheplaintiff’sworkforce).

• Thecontractorswereworriedtheworkwouldnotbedoneontime(andmightbeliabletoownersunderanagreeddamageclause)sotheyagreedtopaytheplaintiff’sanextra10300pounds(575foreachflat).Theyhadmadeinterimpaymentsfor16000andaftertheagreementmadeonepaymentof1500andfailedtomakeanyfurtherpayments.Theplaintiffstoppedtheworkafterfinishing8moreflatsandclaimedover10000indamages

Issues:• Istherevalidconsiderationinthesecondpromisetopaymore?Decision:• Considerationexisted;appealdismissedAnalysis:(Glidwell)

• Decidedthatsince8furtherflatswerefinished,theplaintiffwasentitledtoreceivethe575foreachflatandtheremaining2200initiallypromisedintheoriginalcontract

• Believedtherewasconsiderationinthesecondpromiseàiftheoriginalsub-contractpriceistoolowandthepartiessubsequentlyagreethatadditionalmoneyshallbepaidtothesub-contractorthisagreementisintheinterestsofbothparties

• Thebenefitsforthedefendant’sinthissituationwerethat:o Seekingtoensuretheplaintiffwouldcontinuework,avoidingpenaltyfordelay,andavoidingtrouble/expenseof

hiringanewsubcontractortofinishthiswork• Presentstateoflaw:

o I)ifAhasenteredintoacontractwithBtodoworkfor(supplygoods/servicesto)B,inreturnforpaymentfromBandII)atsomestagebeforeAhascompletelyperformedhisobligationsunderthecontractBhasreasontodoubtwhetherAwillcompletehisside,andIII)BthenpromisesAanadditionalpaymentinreturnforA’spromisetoperformcontractualobligationsontime,andIV)asaresultofgivinghispromiseBobtainsinpracticeabenefit(or

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avoidsadisbenefit),andV)B’spromiseisnotgivenasaresultofeconomicduress/fraudonthepartofA,thenVI)thebenefittoBiscapableofbeingconsiderationforB’spromise,soitwillbelegallybinding

• Notdealingwiththecreationofacontract–dealingwiththevariationofanexistingcontracto Partiesmodifyexistingarrangementsallofthetimeo Whenitcomestovaryinganexistingarrangement,thatiswhentheyshouldnotbetooquicktotripupwhatthe

partiescando/themodificationsRussell

• Considerationremainsafundamentalrequirementbeforeacontractistobeenforced,howeverthepolicyoflawinitssearchtodojusticehasdevelopedsinceStilkv.Myrick

• StilkvMyrick• Glidwell–wherethepromisorconfersnopracticalbenefitthepromiseisunenforceable• Russell*–remainsunderStilkvMyrickisthatameregratuitouspromiseremainsunenforceablebutinthis

casetheygainedanadvantagebycontinuingarelationshipwiththepromisee(lessexpensivetocontinuethepromisethentoenditandstartanewonewithdifferentsubcontractors)ànowifpromisor(topaymore)confersapracticalbenefit,thengoodconsideration

• Believesconsiderationisnolongerasrigid–needtodeterminetheintentionofthepartieswhenthebargainingpowerisnotequalandwherethefindingsofconsiderationreflectthetrueintentionsoftheparties

• Courtsshouldnotbetooeasytofindacontractunenforceable,whentheintentionofbothpartiesandtheirbargainingpowerisequalandwherethefindingsofconsiderationreflectthetrueintentionsoftheparties

• Noduressbecausetheplaintiffinitiatedtheagreement• Agratuitouspromiseremainsunenforceableunlessunderseal–howeverasinthiscasewhereapartyundertakesto

makeapaymentbecausebydoingsoitwillgainanadvantageoutofthecontinuingrelationship,therewillbeconsideration

Ratio• Wheretherearebenefitsderivedbyeachpartytoacontractofvariationeventhoughonepartydidnotsufferadetriment

therecanstillbesufficientconsideration• Itisgoodconsiderationinthevariationofacontractif1)thepartypromisingtoincreasethepaymentconfersapractical

benefit(oravoidsadis-benefit)and2)thereisnoeconomicduressorfraudonthepartyofthepromise

GreaterFrederictonAirportAuthorityvNavCanada[2008]NBCANo.108Facts:

• In2001TheGreaterFrederictonAirportAuthoritywascreatedandthedutiesandrightspreviouslyheldbyASFweregrantedtoitincludingtherightsunderthepreviousagreementbetweenASFandNavCanadawhereNavCanadaassumedresponsibilitiesforairnavigationsystems(includingupdating/payingfortheequipment).

• AspartofarunwayextensionprojectAArequestedNavtorelocatetheinstrumentlandingsystem(ILS)totherunwaybeingextended.NavdecideditwouldmakebettereconomicsensetoreplaceaportionoftheexistingILSwithnewdistancemeasuringequipment(DME)ratherthanrelocatetheentiresystem.

• TherewasadisputeonwhoshouldpayfortheDMEandsoNavrefusedtorelocatetheILSunlessAAagreedtopayforit.AApromisedbywayofletter(underprotest-wantedthatrecorded)topayandthereforeNavacquiredandinstalledtheequipment.AAthenrefusedtopayonthegroundsthattheirpaymentwasunenforceable.ThiswastakentoarbitrationwhereitwasheldthatNavwasentitledtoclaimreimbursement,AAappealedtoQBwhichoverturnedthearbitrator’sruling.

• [Importantfindingoffact:undertheoriginalcontractNavCanadawasresponsibleforpayingfortheDME]Issues:

• WhetherthepartiesenteredintoanenforceableagreementwhenAApromisedtopayfortheDME• Whetherthiscaseshouldbedecidedonfailureofconsideration

Decision:• Appealdismissed;findingforAA.Foundtheretobeeconomicduress.

Analysis:(JTRobertsonJA)• Hallmarkofeverybilateralcontract–Mustdeterminewhetherthepartywhowantstoenforcethepost-contractual

modification(NavCanada)agreedtodomorethanoriginallypromised(intheASFagreement)inreturnfortheagreementtomodifythecontract

• Courtsshouldrecognizethatwhilesomegratuitouspromisesarenotbargainssupportedbyconsideration,theymaybeenforceableforothervalidpolicyreasonswithoutconsideration

• SimilarapproachtoWilliamsvRoffeyBrothers: o Haveacasedealingwiththemodification/variationofanexistingcontractualrelationship

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o Thetroublewithconsiderationisthatitisnotrightthatthosethatrelyonapromisearesubjecttovagranciesonwhetherthecourtcanfindtheretobeconsideration–findsomethingextra(‘huntandpeck’notion)-Itisunpredictablewhetherthissomethingextrawouldbefound

o Oldfashionlaw(StilkvMyrick)islessimportantnowthatthecourtsdeterminecasesbasedoneconomicduress• Courtsaysinitiallywefindthissubsequentagreement(thevariationtotheoriginalcontract)tobebinding–therewas

considerationforito However,itisnotfoundtobebindingastherewasanelementofeconomicduress

• UndertheoriginalcontractNavwasresponsibleforpayingfortheDME• Initiallythevariationoftheoriginalcontractwasfoundtobebinding(therewasconsiderationforit),howevernotbinding

becauseofeconomicduressRatio:

• Therearevalidpolicyreasonsforrefiningtheconsiderationdoctrinetotheextentthatthelawwillrecognizethatavariationtoanexistingcontract,notsupportedbyconsideration,isenforceableifnotprocuredundereconomicduress

• 1)Promisemadeunderpressure,2)pressuredpartyhadnooptionbuttoagreeàthen1)wasapromisesupportedbyconsideration,2)waspromisemadeunderprotest,3)werereasonablestepstakentodisaffirmthepromise

Note:• Takingaturnnow–considerationinvariationstopre-existingcontractsisnolongerasrigid• Doesthismakethelawmorespecificnow–havetheymadeprogressinthisarea?

o Astheyarenolonger‘huntingandpecking’tofindsomethingextrainordertodeterminethereisconsiderationinthepromise

o NO,nowtheyare‘huntingandpecking’foreconomicduress• NowonlyhaveanEnglishcase(persuasive)andaNBCAcase(althoughwell-reasoned,stillonlyacourtofappealcase)–

wherethelawisinflux,cannotmakeadefinitedecisionaboutitSimilarapproachtoWilliamsvRoffeyBrothers:

• Dealingwiththemodificationofanexistingcontractualrelationship.Thetroublewithconsiderationisthatitisnotrightforthosethatrelyonapromisearesubjecttovagranciesonwhetherthecourtcanfindconsideration–findsomethingextra(‘huntandpeck’notion)-Itisunpredictablewhetherthissomethingextrawouldbefound.Oldfashionlaw(StilkvMyrick)islessimportantnowthatthecourtsdeterminecasesbasedoneconomicduress–nowtheyare‘huntingandpecking’foreconomicdistress

DutyOwedtothePromisor–PromisestoAcceptLess• Apromisetopaylessisneverconsideration,howeverapromisetopaylesswithahawk,ahorse,orarobeis

consideration–thisissomethingdifferentthantheoriginaldutyandisabenefittothem• Example:Owe$100toX,sayshewillaccept$75paidonSaturday,onSaturdayrequeststhefullamount–hehasalegal

righttothefull$100o HOWEVER,ifpaythe$75ontheWednesdaybeforethisisabenefittoXbeyondwhatheislegallyentitled,

thereforeitisconsideration• Example:OweX$100inCalgaryonSaturday,Xagreestoaccept$75inEdmontontoday

o Paymentinadifferentplacecanbeabenefit(donothavetotravel)–thismustberequestedo Forapaymentinadifferentplacetocountasconsideration–needtounderstandwhatconsiderationis(a

benefittoyouoradetrimenttomeincurredatyourrequest)o Cannotbepurelyincidental–apaymentontherightdayintherightplaceisnotbinding–needtofind

somethingextra• Theconsiderationcannotbeincidental–paymentontherightdayintherightplaceisnotbinding(needsomethingextra)• Ifonepartyhasfullyperformed(executed)theagreement,an‘accordandsatisfaction’isnormallyrequiredtoreleasethe

otherpartywhollyorpartiallyfromtheobligations• Accordandsatisfaction:thepurchaseofareleasefromanobligationwhetherarisingundercontractortortbymeansof

anyvaluableconsideration,notbeingtheactualperformanceoftheobligationitself.Theaccordistheagreementbywhichtheobligationisdischarged.Thesatisfactionistheconsiderationwhichmakestheagreementoperative.

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FoakesvBeer(1884)9App.Cas.605(HL)

Ratio:• Anagreementtopaylessthanowedisonlyvalidifaccompaniedbysomefreshconsideration

ReSelectmoveLtd.[1995]2AllER531(CA)[Hardtousepracticalbenefitsforconsideration]

• Iftherewasanagreement,itwasunenforceableforwantofconsideration

• Eveninacasewheretheremaybeapracticalbenefittoacceptingalesseramountinpaymentofadebt,thisisnotsufficientconsiderationtofindabindingcontract.Selectmove’sattempttousethenotioninWilliamsvRoffeyBros[1990]failedasitwasheldthatitwasonlyapplicableonlywheretheexistingobligationwhichispre-promisedistosupplyonewithgoodsorservices,notwhereitisanobligationtopaymoney

• Paymentofalessersumcannotserveassatisfactionforalargeramount*InCanadathesituationiscomplicatedsincemostprovinceshavepassedlegislationfocusingonpastpaymentofadebt;thelegislationisdifferentineachprovinceanddoesnotcovereveryaspectofFoakesvBeer

FootvRawlings[1963]SCR197[Paymentbyadifferentmode]Facts:

Facts:• FoakesowedMrs.Beer2090pounds.Heagreedtoinitiallypayher500,then150incrementallyuntilthesumwaspaid

off.Foakespaideverythingoff,howeverMrs.Beerclaimedinterest.FoakesclaimedtherewasacontractwithnoreferencetointerestwhichMrs.Bclaimedtobeinvalidforlackofconsideration

• FoakeswasajudgmentdebtorofBeer(shecouldcollectthemoneyheowedheratanytime)o Inajudgmentoneisowedtheamount+theinterestaccruedfromthedebt

Issues:• IsthispartialpaymentofadebtsufficientconsiderationfortheoriginalcontractbetweenFandB?

Decision:• Appealdismissedwithcosts;interesttobepaid

Analysis:• Notclearwhethersheistoforgotheinterest–however,evenifMrs.Beerhadforgonetheinterestshestillwouldhave

beenentitledtowinbecauseofPinnel’sCase(1602):‘Thatpaymentforalessersumonthedayinsatisfactionofagreater,cannotbeanysatisfactionforthewhole,becauseitappearstotheJudges,thatbynopossibilityalessersumcanbeasatisfactiontotheplaintiffforagreatersum’

Facts:• SelectmovefailedtopaytheCrowntherequireddeductionsfromemployeepayments.InJulyacollectoroftaxesmetthe

managingdirectorofthecompanytodiscussthesituationandthecompanysaiditwouldmakeallofthecurrentpaymentsandpaythearrears(moneyowedthatshouldhavebeenpaid)at1000poundsamonth.Thetaxcollectorsaidhewouldseekapprovalandgetbacktothemifitwasnotokay.InOctober,theCrowndemandedpaymentofallarrears(24650).ThenextSeptember,theCrownbroughtawindinguppetitionandsoughtcompulsoryliquidationandpaymentofthearrears.

• Itwasacceptedthatthecourtwoulddismissthewindinguppetitionifthecompanydisputeditsdebtingoodfaithandonsubstantialgrounds,wheretheyclaimedtheCrownhadacceptedtheirearlieroffer

Issue:• IfCrownhadacceptedtheJulyagreement,wasitsupportedbyconsideration?

Decision:

Analysis:• 1)Didtheyacceptthedealàitappearstheymaynothave• Ifsaytheagreementwasbinding:• InWilliamsvRoffeyBrothersitwasdecidedthatpracticalbenefitscanmakeapromisebinding,heretheCrownconferreda

practicalbenefitinthattheygotsomeoftheoverduepaymentsalongwiththecurrentpayments• CourtsaidthattheycouldnottakethisapproachbecauseitwouldoverruleFoakesvBeerwhichisafundamentalruleof

law–couldnottakeaflexibleviewofconsiderationhere[ifthiscaseisdecidedbyWilliams,thenFoakeswillhavenoroomtooperate]

• TheuseofWilliamsfailedbecausethatcanonlybeusedwheretheobligationisgoods/servicesnotanobligationtopaymoney

Ratio

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• Theappellantowedtherespondentalargesumofmoneyunderaseriesofpromissorynotes,datingfromFebruary1952toMay1958.ThepartiesmadeanagreementforthepaymentofthedebtinalettersentbytherespondentinMay1958.Theletterstatedtherespondentcouldpayhim$300/month,6-months-worthofpost-datedchequesatatime,atareducedinterestrateof5%(insteadof8%)untilthedebtwaspaidoff.Bothcompliedwiththeagreement,untilNovember1960whentherespondentsuedtheappellantforthebalanceofthedebt

Issue:• Whethertherewasconsiderationinthe1958agreements;whethertheactionwaspremature

Decision:• Therewasconsideration;appealallowedwithcosts• Paymentbychequewastakenasbeing‘paymentinadifferentkind’thereforeitwasbinding

Ratio:• Lesserpaymentbyadifferentmodecanbeseenassufficientconsideration(termsthatbenefitthecreditorforconvenience

canamounttoconsideration)• Anagreementforgoodconsiderationsuspendingarightofactionsolongasthedebtorcontinuestoperformthe

obligationswhichhehasundertakenthereforeisbindingAnalysis:

• ThisisnotastraightFoakesvBeerapplication–thesettingupofthemethodofpayment(aseriesofpost-datedchequesatatime)wasseenasconsiderationanditwasclearlyrequestedbythecreditor[seenasadifferentkindofpayment]

• Hasalwaysbeenlawthatconsiderationinadifferentmannercanbeprovidedbypaymentinadifferentmanner–herepaymentbychequesitdeemedasbeingpaymentinadifferentkind,thereitisconsideration

• SayingchequesisdifferentthangivingcashàLikethehawk,horse,robe–butitisinapromissorynoteinsteadofcash• Aslongastheappellantcontinuedtoperformhisobligationtherespondent’srighttosuewassuspendedthereforehis

actiontosuewasprematureDissent:

• Therewasnoconsideration;doubtsastowhethertheappellanthadpromisedtodeliverchequesandcausethemtobepaid

JudicatureAct(RSA2000)1 Partperformanceofanobligationeitherbeforeorafterabreachthereofshallbeheldtoextinguishtheobligation

a. Whenexpresslyacceptedbyacreditorinsatisfaction,orb. Whenrenderedpursuanttoanagreementforthatpurposethoughwithoutanynewconsideration

- Ontarioin1988–toundothemischiefoftheFoakesvBeerdecision- Amorespecificstatementthanthegeneralprincipleofconsideration

• Thisisaveryspecificrule–statedbylegislature,notthecourts• Courtscanreversetheirowndecisions,butarenotfreetoreverselegislation

- HelpsinFoakesvBeerbecausehehadmadeallofthepayments,andthenBeerwasrequiringtheinterestafterwards–thereforehedidcompletehispartperformance

- Courtsbeganinterpretingthisactalmostimmediately–thebulkoftheinterpretationoftheactisreflectinginthe1888case(3onp.207)

BankofCommercevJenkins(1888)Ont.CA[InterpretationofJA]- Ifacreditorofferstoacceptpartialpaymentfromthedebtorinexchangeforextinguishingthedebt,isthecreditorableto

revokethisofferbeforetherequiredpartialpaymenthasbeentendered?- Togiveeffecttothelatterpartofthesection–anagreementonceenteredintotoacceptpartperformanceofanobligationis

notrevocable,otherwiseacreditormightmaketheagreementandanytimeafterwardswhenthedebtortenderedthepartperformancethecreditormightrefusetoaccept+theprovisionwouldbeineffectual

- Suggesttheagreementisbindingsolongasthedebtorispayinginaccordancetoit- Debtorisfavoredinthisexample

- However,understrictstatutoryinterpretationofthisAct–doesnotseemtoprotectthedebtorwhileheismakingthe

payments• GenerallyconsistentinterpretationsacrossthecountryhaveexpandedandbolsteredthisAct

- TheManitobaequivalentofs.13(1)iss.6oftheMercantileLawAmendmentAct• 6(4)Acreditormayrevokeanagreementunderclause6(1)(b)

§ Whenthedebtorhasnotcommencedperformance§ Orwhenhehascommencedperformancebutfailstocontinueperformance

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• Doesnotsaythisagreementisbinding,saystherearetwocircumstanceswhereacreditormayrevokeanagreement-meaningthereareothercircumstancesthecreditorcanrevoketheagreement

OfferandInvitationtoTreatCanadianDyersAssociationLtdvBurton(1920),47CLR259(HC)–whenwasthecontractmade

DetermininganOffer(CanadianDyersAssociation)1) Havethepartiesenteredintoanagreement(noteveryagreementisanoffer)2) Hasonesidemadeanofferandtheotherside(withoutreservation)acceptedthatoffer3) Whatisthelegaltesttodeterminewhetheritwasanoffer?

o Statementofkeytermsincludingmoney,time,paymenttermso Wasitintendedtobeanoffer?o Whojudgesthatintention?–wouldanobjective,reasonablepersoninterpretasanoffer[courtdoesnotcare

aboutsubjectiveintention–wouldareboundbyourwords]

Facts:• InMay1918theplaintiffswrotethedefendant‘withreferencetopurchasingyourpropertykindlystateyourlowest

price.Wewillthengivethesameourbestconsideration’OnJune6,thedefendantwrote‘thelowestpriceIwouldcaretosellatforcashwouldbe$1650,asanythinglesswouldnotbringmeinasgoodareturnonmymoneyasmypresentrental.Iwouldhavesoldbeforebutbeingadirectorofthecompanythen,Ididnot,forobviousreasons.Thisisthelastlinkbetweenmeandmyoldassociations.’

• OnOctober16,1919theplaintiffswrote‘Wewouldbepleasedtohaveyourverylowestprice.Perhapswecouldgetclosertogetherthanthelastfiguregiventous’–Anotherinquiry,noofferyet

• October21stthedefendantwrote‘Ibegtoacknowledgereceiptofyourfavorofthe16thinstant,andinreplywouldsaythatthelastpriceIgaveyouisthelowestIampreparedtoaccept.Infact,IfeelthatunderpresentconditionsthatthisisexceptionallylowandifitweretoanyotherpartyIwouldaskmore.’–treatedasanoffer

• Thiswastreatedasanofferandonthe27stachequefor$500wassentandthedefendantwasaskedtohaveadeedofconveyanceprepared.Notroubleoccurreduntilthe5thofNovemberwhenthesolicitorforthedefendantsaidtherewasnocontractandsentbackthechequefor$500

Issues:• Whetheracontracthasbeenmadeout

Decision:• Acontracthasbeenmade

Ratio:• Objectivetest–wouldareasonablepersoninanalyzingthewordsandactionsoftheparties,concludeonabalanceof

probabilitiesthatacontractwasmadeoutandanintentiontobeboundbythetermsoftheoffer• Offer=awillingnesstosell+subsequentconduct• Theelementaryprincipleisthatthereisnocontractofsaleunlesstherecanbefoundanoffertosellandanacceptanceof

thatoffero Amerequotationofpricedoesnotconstituteanoffertosell

§ Shouldtherenotalsobequestionsastowhentheywillsellandhowwillitbepaid?o Anofferturnedintoabindingagreementbyacceptancecanbedeterminedbythelanguageusedandthe

circumstancesofthecaseAnalysis:

• Indeterminingabindingcontract:‘Wequoteyou__’isnotanoffertosellbutaninvitationtomakeapurchase,whereas‘Shallbehappytohaveanorderfromyou,towhichwewillgivepromptattention’washeldtobeanoffer

• Here,therewasfarmorethanaquotationofprice–‘ifitweretoanyotherpartyIwouldaskmore’isconsideredtobeanoffer;theexchangeofmessagesalsoconstitutesmorethanaquotation;alsosubmitsadeed,suggestsanimmediatesearchofhistitle,andnamesanearlydateforclosing–andretainsthechequesent’;Ifhehadnotmadeanoffer,thenhewouldhavetoldthemthatthiswasnotanoffer

• Doubtsastowhetherthisisanoffer–doesnotincludethekeytermsandsuggestanunwillingnesstosell• Mightbemoresatisfactorytosaythatonthe23rdtheplaintiffmadeacounterofferandthenbythedefendantsconducthe

acceptedtheoffer• **Thiscasesuggeststhetestofintentionisnotcutanddry

o Easy to come up with a case that this was not an offer

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o ‘LowestIampreparedtoaccept’seemstoindicateawillingnesstogoahead• Courtslookattwothingwhendetermininganofferà• 1)awillingnesstoselland2)thesubsequentconduct–regardedasveryrelevanthere(inanEnglishcourtwouldhavesaid

itwasuptohowtheletterwasintendedatthetime;Canadiancourtsaremorewillingtolookatunderlying/subsequentconduct)

• CanadianDyersAssociationsuggeststhetestofintentionisnotcutanddry(here,thereisdoubtsastowhetheritwasanactualoffer;easytocomeupwithacasethatthiswasnotanoffer)

HarveyvFacey(p.18)• Somethingthatfallsshortofanofferislegallycalled‘aninvitationtotreat’(telegramcouldnotbeacontract–therewas

nooffertobeaccepted).Dependsonhowitwasintended-languageused–todetermineanoffer.Amerequotationofpricemaynotbeanoffer–aquotationofpricecanstillbeanofferdependantonhowitwasobjectivelyintended(howareasonablepersonwouldassumethedocumenttobeintended)

HongKongBankofCanada(p.20)• Onusofproofliesonthepersonwhomadethedeal,thereforeliesontheHongKongBank.Mustestablishthecontractof

thebalanceofprobabilities,notbeyondareasonabledoubt.(Establishthatitwas‘morelikelythannot’)

PharmaceuticalSocietyofGreatBritainvBootsCashChemists(SouthernLtd.)[1953]QB401(CA)Facts:• Boots(thedefendant)operatedaself-servicepharmacywithacertainsectionthe‘chemistsdept.’(soldproprietary

medicinewithanindicationofthepriceofeach,andinonesectionisthisdepartmentwasdevotedexclusivelytodrugslistedunders.17(1)ofthePharmacyandPoisonsAct).Thechemistsdept.wasunderpersonalcontroloftheregisteredpharmacistwhocarriedoutallhisdutiessubjecttothedirectionsofasuperintendentinaccordancewiththeprovisionsunders.9oftheAct.Thepharmacistsupervisedeverytransactionwhichtookplaceatthecashdeskandcouldpreventatthatstageofthetransactionanycustomerfromremovingadrugfromthepremise.Twocustomerspurchasedabottlecontainingmedicinewhichcontained0.01%W/Vstrychnineandabottlecontainingmedicinecontaining0.23%W.Vcodeine,bothareonthePoisonsList

Issues:• Wasthesaleofthemedicineunderthesupervisionofthepharmacist?Whenwasthesalecompleted?

Decision:• TherewassupervisionasrequiredbytheAct;acceptanceoftheofferdoesnotoccuruntilsomepointbetweenputting

itemsonbeltandpayingAnalysis:• Argumentbyplaintiffsàthereisacontractoncethecustomerplacesthearticleintothereceptacle–drugontheshelfis

anoffer,puttingitinthereceptacleistheacceptance.Iftheplaintiffsarecorrectthenonceapersonputsanitemintotheirreceptacle,thenthatpersonisboundandwouldhavenorighttosubstituteforadifferentitem.

• Argumentcourtsusedàifthedisplayisaninvitationtotreat,thentheycannotrejectanyofferandwouldhavetoallowanyonetobuythegoods;ifadisplayofgoodsisanoffer,thenputtingthegoodsinthebasketisanacceptanceandthecustomercannotchangehermindHere(self-servicearrangement)thedisplayofgoodsisamereinvitationtotreat(canputback/substitute),whenthecustomerbringsthegoodstothetillthisisanoffertobuythegoods.Thestore(pharmacist)canacceptorrejectthisoffer

• Judgessay-Biggestflawisthatputtingtheitemsinthebasketisanacceptance• Continuationofwhathasalwaysgoneoninold-fashionshops

o Thedisplayisamereinvitationtotreat,thereisnoacceptanceofofferbyputtinganiteminone’sbasketo Untilthecustomergaveanofferthentheshopkeeperacceptedit

• Acceptance:Unequivocalmanifestationofyourassento Puttingitemsintobasketisnotacceptance–havetheabilitytochangemindo Itiscommonpracticetosubstituteitemso Takingtheitemsoutofthebasketmightbe,butprobablynot–canstillchangemindupuntilthepointthatsee

thebill§ Nodefiniteanswerastowhatacceptancehereis–somewherebetweenplacingitemsonthebeltand

paying• Offer:wasitintendedtobeanofferandfromthestanceofareasonableperson

Ratio:

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• Adisplayofgoodsisnotanofferbutmerelyaninvitationtotreat.Theofferisnotmadeuntilthegoodsarebroughttothetillandacceptanceoccurssomepointbetweenputtingthegoodsonthebeltandpaying

• Display=aninvitationtotreatOffer:wasitintendedtobeanofferandfromthestanceofareasonableperson(awillingnesstobeboundoncertainterms)

• Thedisplayisamereinvitationtotreat,thereisnoacceptanceofofferbyputtinganiteminone’sbasket.Untilthecustomergaveanofferthentheshopkeeperacceptedit

Acceptance:Unequivocalmanifestationofyourassent• Puttingitemsintobasketisnotacceptance–havetheabilitytochangemind(itiscommonpracticetosubstituteitems)• Takingtheitemsoutofthebasketmightbeacceptance,butprobablynot–canstillchangemindupuntilthepointthatsee

thebill.Nodefiniteanswerastowhatacceptancehereis–somewherebetweenplacingitemsonthebeltandpayingTwoSchoolsofThoughtWhenaContractisMadeinaStore(bothvalid)

• Classical(Boots):displayisaninvitationtotreat,customermakesanoffer,shopacceptsoffer• Modern:theofferiswhenthecustomergoestopurchase,acceptanceisthetakingofthemoney

Humanrightslegislationnowaddressesthetensionbetweenfreedomofcontractandfreedomfromdiscrimination–thisappliestoprivateaction;cannotusetheCharterinthissituation–notagovernmentaction

Unilateralcontract• Onlyonesidehasanylegalobligationsundertheagreement,unlesstheothersideperforms–noobligationtoperformthe

acthoweveronceitisperformedthisisacceptanceandabindingcontractisperformed(canrevokeatanytimepriortoacceptance(theperformance))

• Classicexample:‘Iwillpayyou$500ifyouwalktoCalgary’–thereisnolegalobligationofthepromisee,thereisadetrimenttothepromisee,andnobenefittothepromisor

• Manyunilateralcontractsareapromisemadeinexchangeforanact• Inaunilateralcontractanact=theconsideration+acceptance• 1)promiseforanact;2)performanceoftheact=acceptance=contractmadeout

CarlillvCarbolicSmokeBallCo.[1893]1QB256(CA)Facts:

• AnadvertisementfortheCarbolicSmokeBallheldthatifapersonusedthisball3timesadayasdirectedfor2weeks,andcontractsinfluenza,colds,oranydiseasecausedbytakingcold,a100-poundrewardwouldbepaidtothatperson.Theplaintiff,onthefaithoftheadvertisement,boughtaballanduseditasdirected3timesadayfromNovember20andonJanuary17,shecaughtinfluenza.(Offerwasthead,andtheacceptancewasdoingtheactsrequested)

Issue:• Didthisadvertisementconstituteasanoffer?

Decision:• Heldtheadvertisementwasanoffer

Ratio:• Ifthepersonmakingtheoffer,expresslyorimpliedlyintimatesinhisofferthatitwillbesufficienttoactontheproposal

withoutcommunicatingacceptanceofittohimself,performanceoftheconditionisasufficientacceptancewithoutnotification

• MustreadtheadvertisementinplainmeaningasthepublicwouldunderstanditAnalysis:

• Offer–lookattheintention/readtheadvertisementinitsplainmeaningasthepublicwouldunderstandit–anordinarypersonwouldprobablyunderstandthistomeanifapersonusedtheball3timesadayfor2weeksandcaughtinfluenzatheywouldbecompensated(objectivepersontest)

• Considerationhere=inconveniencesustainedbyonepartyattherequestofanother+promotesale(benefit)• Showstherewasintentionbecauseitstatedtherewas1000poundsbeingheldinthebank,thereforeitisnotamere‘puff’

(invitationtotreat).• Offerofaunilateralcontract–heretheofferwasmadetoanyone;however,acontractisonlymadewiththosewho

performtherequiredactofacceptance(theconditions)–inaunilateralcontractonlyonesidehaslegalobligations(Mrs.Carlislehasnolegalobligationsunderthisagreement

• Thereisstillconsiderationinthistypeofcontract–therewasadetrimenttoMrs.Carlisleintakingtheball3timesaday(courtalsoincidentallysaidtherewasabenefitinthatitpromotedthesmokeball

Dissent:• Nocontractbecauseacceptancehadnotbeencommunicated

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o Thisofferisacontinuingofferanditwasneverrevokedo Inacaselikethisthepersonwhomakestheoffershowsbyhislanguageandfromthenatureofthetransaction

thathedoesnotexpectanddoesnotrequirenoticeoftheacceptanceapartfromnoticeoftheperformanceNote:

• IfMrs.CarlillboughtthesmokeballanduseditasdirectedfromNovember20th.OnDecember10thedefendantrevokedtheoffer.OnDecember11thshecaughttheflu.Ifshecansaysheacceptedbeforetherevocation,thenthereisacontract.Sheusedthesmokeball3xadayfor2weeks(thiswasaskedfor).Theymayrevoketheofferforotherpeoplewhomaynothaveperformedtheactofacceptance;butcannotrevokeanofferforpeoplewhohaveperformedtherequiredactofacceptance.Catchingthefluistheconditionthathastobesatisfiedtoclaimthemoney.Thesmokeballcompanyneveraskedhertocatchtheflu–thiswasnotarequestedact.

• Act=considerationinaunilateralcontract.ShehadacceptedtheofferbyDecember10,thereforetheycouldnotrevokewhatisnowacompletedcontract–thereforetheymustpayiftheconditionwasmet(ifshecaughttheflu)

GoldthorpevLogan[1943]OWN215(CA)Facts:

• Mrs.Goldthorpehadhairsonherfaceshewantedremoved.Loganhadplacedadvertisementsinanewspaperstatinghairscouldberemovedsafelyandpermanently,soGwenttoLandconsultedwithFitzgerland(L’snurse/employee),whotoldGherfacecouldbecleared,thehairscouldberemoved,andtheresultwasguaranteed.Shethensubmittedtotheelectrolysistreatmentbuttheresultswerenotsatisfactory.Gclaimednegligenceandthatthedefendantswereunderacontracttoremovesafelyandpermanentlysuperfluoushairsinexistencewhenthetreatmentwasgiven,andguaranteedsatisfactoryresults,andfailedtocarryoutthecontract.G’shusbandalsoclaimeddamagesforloss/expense

Issue:• Wasthereacontractanddiditgetbreached?

Decision:• Therewasanagreementenforceableinlawandthisagreementwasbreached;repaycostoftreatmentsand$100for

theloss/damageshesustained.G’shusband’sclaimdismissed–hadnocontractwithanyone(thirdpartiescannottakebenefitofacontract)

Analysis• Offer–lookattheadvertisementandtheintentionbehindit–readinitsplainmeaning,asthepublicwouldunderstandit.

Inlawthestatementismeanttobeanofferandacceptedbyanyonewillingtoaccepttheterms/conditions.Thenurseguaranteedresultsforasecondtime.Theofferwasclearlymadetothepublicintheadvertisement–shewasavendorseekingapurchaser

• Acceptance–G’sacceptancewascommunicatedbyherconduct;thepartieshadacommonintention,shepaidforthetreatmentandsubmittedherselftotheinconvenienceofit

Notes:• Generally,newspaperadsdonotconstituteanoffer(InCarlillthemoneywasputintoabankmeaningtheywereserious

abouttheoffer).Inordertosayitisaunilateralcontractmustsayitcanbeacceptedbyanyoneintheworld.Here,Loganmustsurelyhavebeenabletochoosewhoshewantedtotreat,therewerealsostilldetailsneededtobeworkedout(course/durationoftreatment,etc.)

• ThisseemstobelessliketheCarlilladvertisement–doesnotappeartomanifesttheintentionofaunilateralcontract.• Couldhoweverbeconsideredasabilateralcontract–ad(invitationtotreat);goingintotheclinicanddiscusseddetails

(offer);treatmentpaidforandattended(acceptance)–thereareclearlydutiesonbothsides

Tenders• ‘OptionContract’–ifwanttobindsomeonetotheoffer,cangiveadeposit/somethingsimilartokeepthecontractopen• UntilRonEngineering,aninvitationtotenderwastreatedasaninvitationtotreat–nocontractuntilacceptanceofthe

tendero Invitationtotender,submissionoftender(offer),acceptanceofonetender–nowacontract

• RvRonEngineeringchangedtenders:o Invitationtotenderisnowtreatedastheoffer,thecontractoracceptstheofferbythesubmissionofthetender

(creatingContractA)–bothsidesmustfulfilltheconditionsofContractA(includingcannotwithdrawtenderforfixedamountoftime,iftenderisselectedmustperformforfixedperiodoftimeorforfeitsecuritydeposit)

• Whentheownerselectsthetender,ContactBiscreated–theconstructioncontract

Note3–p.35(ZutphenBrothers1994,AfterRonEngineering)

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• AninvitationtotendertobuildaconcretebridgeinCapeBreton.Alternativebids(materialotherthanconcrete)notconsideredunlessshowasubstantialsavingincostoveroriginaldesign.Allbidderssubmitbidsforconcretebridge;except1biddingtobuildasteelbridge(costsalotmoretobuildthisthantheconcrete).SteelplantinSydneybarelysurviving–nobusiness,thereforetokeepitaliveacceptalternatebidtobuildsteel

• Lowestconcretecontractor’slegalargument–acceptedthebidwiththehighestprice–thesteelbridgewasalotmoreexpensive(breachingcontractAthattheychosethesteelbridgeeventhoughitwasnotasubstantialsavingincost)

o Werealizethisisabilateralcontract–obligationsonbothsides(includingtreatingbiddersfairlyandnotenteringintoContractBwithanon-compliantbid)

• ContractA(supposedtobetheretoprotectowners)nowmakestheirsituationworse

RvRonEngineering&Construction(Eastern)Ltd.[1981]1SCR111(ContractA–unilateral)Facts:

• Thecontractorsubmittedatendertobuildaprojectforapriceof$2748000.InaccordancewiththeInformationforTenderers,thecontractoralsosubmittedasatenderdepositacertifiedchequeintheamountof$150,000(bidsecurity).Thecontractor’semployeewhofiledthetenderlearnedthatitstenderwas$632,000lowerthanthenextlowesttender(actuallydidnotincludeanalysisforownprovisions).Therepresentativecontactedthepresidentofthecompanyimmediately(tendersclosedat3:00pm)andat4:12pmthecontractorsentatelexsayingtheyforgottoadd$750058.00,andthattheywantedtowithdrawtheirtender.Insubsequentcorrespondencethecontractormaintainedtheyhadnotstatedtheywantedtowithdrawitstender(inordernottolosethedeposit)butthatitcouldnotbeacceptedbytheinvitingpartybecausetheownersknewitwasmistaken.However,theownerofferedthemtheconstructionagreementwhichwasnotexecutedbythecontractorwithinthe7-dayperiod(requiredbytheInformationforTenderersthatthiswouldmeanaforfeitureofthedeposit)

Issues:• Whetherthecontractorwouldhavebeenentitledtowithdrawtenderandrecoverdeposit

Decision:• Dismissalforreturnofdepositconfirmed;contractornotentitledtoreceivedeposit;appealallowed

Ratio:• Invitationtotender(isanoffer)–becomesabindingcontractonceatender(bid)isfiledinconformitywiththetermsand

conditionsofthecallfortenders(thisistheacceptanceandformationofcontractA)o TheprincipletermofcontractAistheirrevocability(cannotberepealed)ofthebido ThecorollarytermistheobligationforbothpartiestoenterintocontractBupontheacceptance(bythe

owner/inviter)ofthetender• UndertheprovisionsoftheInvitationtoTendertheownercanimposeobligations

o Thedepositwasrequiredtoensuretheperformanceofthecontractor’sobligationsundercontractAAnalysis:• ContractAistheinitialcontract–acontractismade,upontheinvitationtotender(offer),submissionofatender

(acceptanceoftheoffer),betweenthecontractorandtheownerwherebythecontractorcouldnotwithdrawthetender/depositfor60daysafterthedateofopeningthetenders.ContractAcameintobeingoncethesubmissionofthetenderwasmade

o Theprincipleterm–irrevocabilityofthebid;corollaryterm–obligationofbothpartiestoenterinContractB(constructioncontract)

• Thedepositwasrequiredtoensuretheperformancebythecontractorofitsobligations.Thedepositwasrecoverableundercertainconditions(noneofwhichweremet)

ReasoninginRonEngineeringseemsbizarre:• ContractA–unilateral

o ReasoningbyEstey:‘I’llpayyouadollarifyoucutmylawn’–thiscasehoweverisnotsimilartothatunlesswegetcreativewithwhatthedollarishere(whatistheconsideration)–couldpotentiallybe‘ifyoubidinthisofferIwillselectyourofferbasedonaselectgroup’

• Itconstructsacontractwhichseemstohaveproblemsof1)characterization(isittrulyunilateral)andproblemswith2)considerationaswell(whatistheconsideration)

• HOWEVER,ifcouldrevokethetenderthentheentiresystemoftenderingwouldbecomemeaningless• Anotherexamplewhereconsiderationisfoundinordertopreventpeoplefromgoingbackontheirpromises• Thecontractordidnotarguetowithdrawthetender(didnotwanttolosethebid);insteadsaidtherewasanerrorthatthe

ownerswereawareofbeforeaccepted(contractortoldthem),andcomparedtotheothertenders(hugedifferenceinpricing).Givencontextofsurroundings–apersoncannotacceptanofferwhichtheyknowismistaken

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• Judgment–therewasnomistakeknowntoanyoneatthetimecontractAwasformed;andsincecontractAcreatestheobligationtodothejobatthetenderedpriceortoforfeittheobligation

- SubsequentcaseshaveusuallyfoundthatcontractAisabilateralcontractinvolvingimmediatecontractualobligationson

boththebidderandtheowner–bythismechanism,rulessetoutintheInvitationtoTendercanalsobecomecontractualobligationswhichbindtheowner

- Virtuallyallinvitationstotendercontaina‘privilegeclause’whichstatesthattheownermaynotacceptthelowesttenderreceivedandneednotacceptanytenderfortheproject

MJBEnterprisesLtd.vDefenseConstruction(1951)Ltd.(1999)1SCR619Facts:

• Therespondentinvitedtendersforconstructionandissueddirectionsalongwitha‘privilegeclause’whichstatedthattheywerenotobligatedtoacceptthelowestoranytender.Therewere2amendmentstotheoriginalspecifications(originallythetenderersweretosubmitbidsonabasiswhichwouldmakethefinalcostcontingentupontheamountofthedifferentfillsrequired–gravel;nativebackfill;concrete)butintheamendmentsthiswasdeletedandtheeffectwastorequirethetendererstosubmitonlyonepriceperlinealmeterforthesystemregardlessofthetypeoffill.ThetendersubmittedbySorochanincludedthecostsascontingentuponthetypeofmaterialused(thisisaqualification).TheownerschoseSorochan’sbid(thelowesttenderer)andtheworkwascarriedout.Theappellant,andothertenderersbelievedthistobeaninvalidtenderhowevertherespondentacceptedthebid

• Theappellantbroughtanactionforbreachofcontract,claimingtheirbidshouldhavebeenacceptedaslowestvalidbid–thatthereisanimpliedtermtoonlyacceptvalidtenders

Issues:• DidcontractAarise?Wasthereabreachofcontract?

Decision:• Therewasabreachofcontract;thegeneraldamagesforabreachareexpectationdamages(theprofittheywouldhave

madehadtheybeenawardedthecontract/putinpositiontheywouldhavebeeninhadtheotherpartyperformedtheirsideofthecontractproperly)o HowmuchmoneyisMJBseeking?Theprofittheywouldhavemadehadtheybeenawardedthecontract

• Onthebalanceofprobabilities,therecordsupportstheappellant’scontentionthatitwouldhavebeenawardedcontractBhadtheSorochanbidbeendisqualifiedthereforeawardeddamagesof$398,121.27

• AppealallowedRatio:

• Animpliedtermissomethingsoobviousitisnotstated;butitisimpliedbybothparties• LookatintentionsofbothpartiesAnalysis:

• ContractAarise:respondentofferedtoconsiderbidsbyinvitingtenders;theappellantacceptedtheofferbysubmittingitstender;thesubmissionwasofgoodconsiderationbecausethetenderwasofbenefittotherespondentasitwaspreparedatanotinsignificantcost

• Contractualobligations:(forimpliedcontractualterm–CanadianPacificHotelsLtd.)o 1)Basedoncustom/usage;2)asthelegalincidentsofaparticularclass/kindofcontract;3)basedonthe

presumedintentionswheretheimpliedtermmustmeetthe‘officiousbystandertest’• 1)Ifwanttomakeamendmentsmustmakeitknowntopublic;2)mustlookatexpresstermsofthecontracttoseeif

theimpliedtermfits–onTenderFormtherewasnoroomfornegotiationsobythisitwasclearthattheownerdidnotcontemplatetendersincludingqualifications–reasonabletoinferthatonlyacompliantbidwouldbeaccepted

• Therespondentwasnotunderanobligationtoawardthecontracttothelowesttender(privilegeclause),howeverwereundercontracttochooseacomplianttender(clausedidnotimplyanon-compliantbidwouldbeaccepted)

• Onthebalanceofprobabilities,therecordsupportstheappellant’scontentionthatitwouldhavebeenawardedcontractBhadtheSorochanbidbeendisqualified–1)theywouldnothaveawardedcontracttoSorochan;2)wouldhaveawardedcontracttous;3)wewouldhavemadeouranticipatedprofit

CommunicationofOffer• Anoffermustbeproperlycommunicatedfortheretobeanofferàitcannotbeeffectiveuntilitiscommunicatedtothe

offeree,thereforeoffereecannotacceptanofferhe/shedoesnotknowabout• Theremustbeknowledgeoftheofferbeingaccepted• Theremustbea‘meetingoftheminds’oracommonunderstandingthatacontracthasbeenformed

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BlairvWesternMutualBenefitAssn.[1972]4WWR284(BCCA)Facts:• AresolutionoftheboardofdirectorsoftherespondentonMarch8,1969whereMr.Fedykstatedthathewouldliketo

makeasuggestionifMissBlairdecidedtorelinquishherpositionwiththeAssociationinviewofthefactshehadgivenherlifetotheAssociationforalmost30years,thatshebegrantedatleast2years’salaryasretirementpay.Althoughshewasnotpresentatthetimeoftheresolution,whenthemeetingwasoverthepresidentoranotherdirectordictatedtheminutesofthemeetingtoher,whereshethentranscribedthemanddeliveredthemtothepresidentwhosignedthem.MissBlairretiredinJune1969andinduecoursesheclaimedthe$8000(approximately2yearspay)pursuanttotheresolution

Issues:• IsMissBlairentitledtotheretirementpay?

Decision:• Thesubmissionmustfail;appealdismissed–therewasnocommunication/offer

Analysis:• 1)Nopromisehadbeenmade/acceptedforvalidconsideration;2)therewasnochangeintheexistingrelationship

betweentheparties;3)noevidencetochangethoserelationshipstocreatelegalobligations• Abareresolutiontoindicatetheintentionexpressedintheresolutionwouldbecarriedoutcannotbeconsideredto

indicateanintentiontocreatealegalobligationcapableofacceptance–wasnocommunicationoftheoffer.Therespondentshowednointentiontocommunicatethisoffer.

• ThereisalsonoevidencethatMissBlairacceptedtheoffer–didnotmentiontheresolutionwastheinducingfactortoretiring,itwasanacceptance‘somehowmotivatedbytheoffer’

Ratio:• Withoutcommunicationofanoffer,abindingobligationcannotbecreated.• Evenifanofferhadbeenmadetheremustbearelationshipbetweentheofferandtheacceptance

o Shedidnotrelyontheoffer

WilliamsvCarwardine(1833)4B&Ad621(KB)(linkbetweenofferandacceptance)Facts:

• WalterCarwardine,thebrotherofthedefendant,wasseenatapublic-houseonMarch24andwasnotheardofagainuntilhisbodywasfoundintheriveronApril12.MaryAnneWilliams(plaintiff)wasatthehousewithWalteronthenighthewassupposedtohavebeenmurdered,shewasexaminedbeforethemagistratesbutdidnotgiveanyinformationwhichledtotheapprehensionoftherealoffender.OnApril25thedefendantcausedahandbill(anofferofreward)tobepublishedstatingthat‘whoeverwouldgivesuchinformationtoleadtothediscoveryofthemurdererwould,uponconviction,bepaid20pounds’WilliamWilliamswasapparentlyawareMaryWilliamswitnessedhimcommitthemurder,andsoshemadeavoluntarystatementbelievingshehadnotlongtolive

Issues:• WhetherMaryWilliamswasentitledtothereward?

Decision:• Mrs.Williamsisentitledtothepayment

Ratio:- Thisisaunilateralcontract–CarwardinemadeanofferandWilliamsfulfilledtheconditionsoftheoffer(bygivingthe

information)andwasthereforeentitledtothepayment• Mutualconsenttothetermsisnotnecessary

- Motivationisirrelevantiftheactisdone(andknewaboutreward)Analysis:• Thelearnedjudgebelievedthattheplaintiffhadperformedtheconditiononwhichtherewardwastobepayableand

thereforewasentitledtorecoverit;hedirectedthejurytofindaverdictfortheplaintiffbutdesiredthemtofindspeciallywhethershewasinducedtogivetheinformationbytheofferofthepromisedreward.Thejuryfoundshewasnotinducedbytheofferofreward,butbyothermotives(notlongtolive/wantedtoeaseherconscience)

• (Shemusthaveknownofthereward–itwaspostedeverywhereinthetownshelivedin)• Thisisaunilateralcontract–CarwardinemadeanofferandWilliamsfulfilledtheconditionsoftheoffer(bygivingthe

information)andwasthereforeentitledtothepayment• Thecourthintsthatinaunilateralcontracttheremustbesomerelationship/linkbetweentheofferandtheacceptance–

theremustbeatleastsomeknowledgeoftheoffer

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RvClarke(1927)40,CLR227(AustHC)Facts:

• TheCrownofferedarewardforinformationthat‘shallleadtothearrestandconvictionofthepersonorpersonswhocommittedthemurders’

• ClarkegaveevidencewhichwasofthegreatestvaluetotheCrownintheprosecutionofCoulterandTreffene–ClarkecannotsucceedunlesshecanestablishacontractbetweenhimselfandtheCrown

Issues:• IsClarkeentitledtoclaimthereward?

Decision:• Heldheisnotentitledtoclaimthereward

Analysis:• Clarkewasanaccessorytothemurdersandgaveupinformationforprotectionagainstafalsechargeofmurder–he

didnotsayhewasinducedbytherewardtogivetheinformation.Couldpotentiallythinkhewasmotivatedbytherewardasidefromhis‘candidconfession’thathewasnot

• WhenClarkegavetheinformationhewasnotintendingtoaccepttheofferoftheCrown,anddidnotgiveinformationonthefaithof,orrelyingontheproclamation;therecanbenocommunicationofassentuntilthereisassent.Althoughhehadseentheofferitwasnotpresentinhismindwhenhegaveuptheinformation

• Alsodidnotleadtothearrestandconviction,onlytheconvictionforonemurder(didnotfulfilltheconditions)Ratio:

• Therecannotbeassent(agreement)withoutknowledgeoftheoffer;andignoranceoftheofferisthesamething–whetheritisduetoneverhearingitorforgettingit

• Mustactonthegoodfaithoftheofferorintherelianceofit.Neednotbemotivatedbyit–shouldbeawareofitp.52(#3)–Rewardforfindingdog;manfindsdogbutdidnotseetheoffer

• FromWilliams/Clarke–hewouldmostlikelynotbeentitledtogetthereward• HOWEVER,inGibbonsvProctor–policeofficerwasgiventherewardwithouteverhavingseenthehandbill• Thepolicybehindrewardswillbeunderminedifthisstands–peoplewillnotbeinducedtoproperlygiveinformationif

theyarenotgivenrewardsforissuessuchasthese.Policysuggeststhesetypesofrewardsshouldbebinding• CivilCodeofQuebecprovidesthattheofferofareward,whentheactisperformed,isdeemedtobeacceptedandis

bindingwhenperformed,evenifthepersondoesnotknowoftheofferPrinciple:Mustgiveequalnotorietytotheretractionasyoudidtotheoffer,eventhoughtheindividualmaynothaveseentheretraction

AcceptanceLivingstonevEvans[1925]3WWR453Facts:

• EvansofferedtoselllandtoLivingstonefor$1800.Lrespondedwith‘sendlowestcashprice.Willgive$1600cash.’Evansrespondedwith‘cannotreduceprice’(thisisanofferfollowedbyacounter-offerthenarenewaloforiginal)

Issues:• WhetherEvan’sresponsethatthepricecannotbereducedwasarejectionoftheplaintiff’scounter-offerorarenewalof

theoriginaloffer?Decision:

• Thiswasarenewaloftheoriginaloffer;therefore,therewasabindingcontractforthesaleofthelandtotheplaintiffandheisentitledtospecificperformance

Ratio:• Ifapurportedacceptancevariesthetermsofanyofferinanyrespect,itwillbetreatedasaproposalofnewtermsand

classifiedasacounter-offer.• However,ifthereisanindicationthattheyarestillwillingtotreat,thenthiswouldbearenewaloftheoriginaloffer

insteadofarejectionofthecounter-offerAnalysis:

• HydevWrenchestablishedthatthemakingofacounter-offisarejectionoftheoriginaloffer• Here,theplaintiff’stelegramwasclearlyacounter-offer+mustdeterminewhether‘cannotreduceprice’wasarenewalof

theoriginal,orarejectionofthecounter-offero Believeitwasarenewaloftheoriginaloffer,oranindicationhewasstillwillingtotreato Hisstatementshowedhewasstillstandingbyhisofferandthereforestillopentoacceptit

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• Sellerrevivedtheoriginalofferbysaying‘cannotreduceprice’thereforeifthebuyersays‘yes’thenacontractisformedCounter-offer:arejectionoftheoriginaloffer,followedbyanewofferondifferentterms–itseffectistokilltheoriginaloffer

• Ifrespondwithaquestion(‘wouldyoutakelessforcash?’)–thenwouldnotbeacounter-offer,butinsteadamereinquiryandthereforetheballisbackinthecourtofthewould-beseller

StevensonvMcLean(1880)(p.53)[mereinquiry]• Sellerwants$80cash.Buyerasksifhewouldacceptpaymentsfor$80overtwomonths,andifnotthelowestlimityou’d

give.Courtsayshereitisamereinquiryaskingthesellerifhewouldgivesometimetopay.• Ifthesellerwouldhavesaid‘yes’thenthiswouldhavebeenconsideredacounter-offer• Askingaquestionabouttheofferispermissiblewithoutkillingtheoffer• ‘Doestheresponseeffectivelyrefuse/rejecttheoriginaloffer’–ifsoitisacounter-offer

o Leavesroomforinterpretation–commonsenseinterpretationofthewords• Itcouldhavebeeninterpretedhereasacounter-offer

BattleoftheForms• Thetraditionalapproachisthateachsuccessiveformisacounter-offerandperhapsnoconsensusiseverreachedifonly

formshavebeenexchanged• Lastshotrule:ifthelastformutilizedisfollowedbytheothersidewhichamountstoacceptance,thereisacontractand

thetermsareonthelastform.Thepartywho‘fires’thelastdocumentbeforeperformanceprevails.Inthetypicalcaseofasaleofgoodsbasedonconflictingforms,performanceofthecontracteitherbydeliveryofthegoodsorbytheacceptanceofdeliveryofgoodsmaybeconsideredtoconstitutetheconductamountingtoacceptance.

• Firstblow:Partywhoofferstermsfirstprevailsunlesstheothersidedrawsmaterialchangesintheirtermstotheattentionofthatfirstparty

• Shotsfrombothsides:‘Thetermsandconditionsofbothpartiesaretobeconstruedtogether.Iftheycanbereconciledsoastogiveaharmoniousresult,alliswellandgood.Ifthedifferencesareirreconcilable,sothattheyaremutuallycontradictory,thentheconflictingtermsmayhavetobescrappedandreplacedbyareasonableimplications’(Butler)àthisapproachhasnotbeenfollowedinCanada

ButlerMachineToolvEx-Cell-OCorp[1979]1WLR401[English](lastformsent)Facts:

• OnMay23,inresponsetoaninquirywiththebuyers,thesellersquotedapriceforamachinetoolwithanumberofterms/conditionswhichsaidthey‘weretoprevailoveranytermsandconditionsofthebuyers’order’[oneconditionallowedthesellertochargethebuyersthepriceforthemachineprevailingatthetimeofdelivery];OnMay27,thebuyersrepliedwithapurchaseorderforthemachinew/astipulationthattheorderwassubjecttoanumberoftermsdifferentfromthoseofthesellerwhichmadenoprovisiontoanincreaseinprice

• OnJune5,thesellerscompletedthebuyers’orderformwithaletterstatingthebuyers’orderwasbeingenteredinaccordancewiththesellers’quotationofMay23.Whenthesellersdeliveredthemachine,theyclaimedanadditional2892poundsunderthepriceoftheoriginaloffer(listpriceonthedateofdelivery);thebuyerstookthepositionthattheirorderprevailed+therewasafixedpricecontract

Issue:• Onwhichofthetermswasthecontractconcluded?

Decision:• HelditwastheacknowledgementoftheJune5thwasthedecisivedocument,thereforethecontractwasonthebuyers’

terms;judgmentforthebuyersRatio:

• Inmostcaseswhenthereisa‘battleoftheforms’thereisanofferoncethelastoftheformsissentandthereisnoobjectiontothatoffer.Aslongasthedocumentisdecisiveandclearthatitwasonthebuyer’stermsandnottheseller’s.

Analysis:(LordDenning)• QuotationofMay23wasanofferbythesellerstothebuyerscontainingtheterms+conditionsontheback;theorderof

theMay27wasanacceptanceofthatofferbutitcontainedadditionssuchasthecostofinstallment,deliverydate,etc.àwasarejectionoftheoffer+constitutedacounter-offer

• TheletterofthesellersofJune5thwasanacceptanceofthecounter-offer,thereforethecontractwasonthebuyer’stermsandthereferencetothe‘orderbeingenteredinaccordancewithMay23’referredonlytotheprice+identityofthemachine(onlytothespecificationsofthemachinetools)[literalapproach]

• Inmostcasesthereisanofferafterthelastformissentandtherearenoobjectionstothatoffer

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• Counter-offerruledifficulty:wherepartieshavecommunicatedinaseriesofcommunications(‘thebattleoftheforms’)onceaformissentitmightbeaquotation/inquiry;thenthereisaresponsebytheotherparty

• Custommachine–inatimeofinflationà‘reservetherighttochargeforthemachine,thepriceprevailingatthetime’• Thebuyerismakingacounter-offer(theyaredoingbusinessonadifferentsetofterms)• Otherpossibilityàlookatalldocumentsandterms/conditionsandseeiftheyhavereachedanagreementonallofthe

materialpoints,evenifsometerms+conditionsmaybedifferent[bothsides]Notes:P.58;Q.1

• (Conventionininternationalsaleofgoods–dealswithCanada+foreignbuyer–notcommonlaw)• Thisconventiononlyappliestoacontractinvolvingtwodifferentstates,howeversetsoutagoodrule• 1)Areplytoanofferwhichseemstobeanacceptancebutcontainsadditions,limitations,modifications,isarejectionof

theofferandconstitutesacounter-offer• 2)Areplytoanofferwhichseemstobeacceptancebutcontainsadditionalordifferenttermswhichdonotmateriallyalter

thetermsoftheofferconstitutesacceptance;unlesstheofferorobjectsorallytothediscrepancy• 3)Additionaltermsrelatingtotheprice,payment,qualityandquantityofgoods,placeandtimeofdelivery,extentofone

party’sliabilitytotheotherorthesettlementofdisputesareconsideredtoalterthetermsmaterially• “Theremaybeminordifferencesonthebackoftheformandaslongastheyarenotmaterial,itisstillanacceptanceand

doesnotconstituteasacounter-offer]–thisputstheonusontheseller• Changesinmaterialterms=counter-offer• Troublewithcommonlaw–requiresanunequivocalacceptance• AllCanadianjurisdictionsnowhavelegislationaddressinge-commercecontractissues

o Includingthatofferandacceptancearepermittedthroughelectronicmeans

TywoodIndustriesvSt.Anne-NackawicPulp&PaperCoLtd.(1979)(Ont.HC)Facts:

• Thedefendant’sinvitationtotendersetforththegoodsrequiredandsetforththe13‘termsandconditions’noneofwhichdealtw/arbitration;theplaintiffrespondedwithaquotationinaletterformwhichalsoincluded12terms+conditions(noneofwhichmadereferencetoarbitration);however,oneoftheconditionsstatedthat‘nomodificationsoftheaboveconditionsshallbeeffectedbyacknowledgementofapurchaseordercontainingadditional/differentconditions

• InJan,2purchaseorderscamefromthedefendantwhichcontained19newterms+conditions;onestatingthatissueswiththecontractshouldbesettledbyarbitration;theplaintiffneversignednorreturnedthis(technicallythe‘lastshotfired’)inthebattleoftheforms

• Theplaintiff’sactionisforthepriceofgoodssold;thedefendanthasmovedtostaytheactionunders.7oftheArbitrationsActuponthegroundthattheagreementofthesalecontainedaclauseforsubmissiontoarbitration

Issues:• Whetherthepartiesagreedonarbitration–whethertheclausewaspartofthecontract

Decision:• Defendant’sapplicationforthestayofproceedingsdismissed

Ratio:• Termscannotbeaddedafteranagreementhasbeenreached;canuseconductofthepartiestodeterminewhattheyhave

agreeduponAnalysis:(GrangeJ)

• Atnotimedidtheplaintiffacknowledgethesupremacyofthedefendant’sterms;thedefendantdrewnoparticularattentiontothetermwiththearbitrationclause;andalsodidnotcomplainwhentheplaintifffailedtoreturnthepurchaseorderwithanacknowledgementofthenewterms

• Here,neitherpartyconsideredanytermsotherthanthosefoundonthefaceofthedocumentsimportant• Argumentforthedefendant–thelastoffermadewasnotrejected;selleracceptedbyfulfillingthecontractonthebuyer’s

terms.HOWEVER,theybehavedontheconductofthepreviousagreement–arbitrationclausewasanambush;neitherpartyconsideredthisclause

ProCDvMatthewZeidenbergandSilkenMountainWebServices,Inc.(USCA7thCir.,1996)Facts:

• ProCD(plaintiff)hascompiledinformationformorethan3000telephonedirectoriesintoacomputerdatabase,itsellsaversionofthedatabase,calledSelectPhoneonCD-ROMdiscs.ProCDdecidedtosellitsdatabasetothegeneralpublicforpersonaluseatalowerpricewhilesellinginformationtothetradeforahigherprice.Everyboxcontainingtheconsumerproductdeclaresthatthesoftwarecomewithrestrictionsstatedinanenclosedlicensewhichlimitstheuseoftheprogram

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tonon-commercialpurposes(encodedontheCD,printedinthemanual,andappearonthescreeneverytimethesoftwareruns)

• Z(defendant)boughtaconsumerpackage,ignoredthelicense,andformedhisownservicestoselltheinformationintheselectphonedatabase

• ProCDfiledasuitseekinganinjunctionagainstfurtherdisseminationthatexceedstherightsspecifiedinthelicenses;thedistrictcourtheldthelicenseswereineffectualbecausethepurchasercannotbeboundbytermsthatweresecretatthetimeofpurchase

Issues:• Arepurchaserswhobuycomputersoftwarewithshrinkwraplicensesboundbytheterms?

Decision:• Shrinkwraplicensesareenforceableunlesstheirtermsareobjectionableongroundsapplicabletocontractsingeneral;

becausenoonearguedthetermsofthelicenseatissueweretroublesome,judgmentisenteredfortheplaintiffRatio:

• Shrinkwraplicensesaretreatedasordinarycontractsaccompanyingthesaleofproductssubjecttoterms+conditions,thereforetheyareenforceableunlesstheirtermsareobjectionableongroundsapplicabletocontractsingeneral.Ifdonotagreetothemafterwards,canreturnforfullprice

• Abuyeracceptsthegoodswhenafteranopportunitytoinspect,hefailstomakeaneffectiverejection(UniformCommercialCode)

Analysis:• FirstcontractwasmadebetweentheretailerandZ(theactualCDproductsubjecttolimits);thesecondwasbetweenthe

manufacturerandZ(limitingcommercialuse)• Here,shrinkwraplicensesaretreatedasordinarycontractsaccompanyingthesaleofproductsandthereforearegoverned

bythecommonlawofcontracts• Acontractonlyincludestermsthatpartieshaveagreedtoandonecannotagreetohiddenterms,howeveroneofthe

termsZagreedtowasthatthetransactionwassubjecttoalicense–thoseterms+conditionsaretechnicallybinding[Zcouldhaverejectedthetermsandconditionsandreturnedthesoftwareifdidnotwanttobeboundbythem]

• Transactionswheretheexchangeofmoneyprecedesthecommunicationofdetailedtermsarecommon[insurance;concerttickets]àinthesetransactionsweknowconditionsarepresentbutnotavailableatthetimeenteredintothecontract–thereisanabilitytoleavethecontractifdonotagreewiththeterms

• Acontractforasaleofgoodsmaybemadeinanymannersufficienttoshowagreement,includingconductbybothpartieswhichrecognizestheexistenceofsuchcontract

• Here,thelicensewasenforcedbecauseitwouldnotletZproceedunlessheindicatedacceptanceofthelicense

DawsonvHelicopterExplorationCo.[1955]SCR868Facts:

• In1931DhaddiscoveredandstakedamineraldepositinaremoteareainBC.In1951,receivedaproposalfromMr.SpringeroftherespondentMiningCompanyinJanuary1931,sayinghewasinterestedinthelandandwouldpayD10%forthemtostaketheclaims.Drespondedthatproposalseemedfairandhewouldliketomeetwithhim[todiscussdetail–likelynotanofferyet]

• OnMarch5therespondentwrotethatitwouldbebestifDshowedthemthepropertyandthiswoulddependonwhetherRcouldgetapilot;also,thatifDtakeshimandtheclaimsareworthstakinghewouldgivehimanon-assessableinterest(offer);OnApril12DrespondedthatRshouldinformhimwhenhefindsapilotsohecanimmediatelytakealeavefromwork(acceptance)

o [Acceptanceneednotbeinexpresstermsandmaybefoundinthelanguageandconductoftheacceptor]• NothingwasexchangeduntilJune7,1951whentherespondentwrotethatsomeonehadflownoverD’sshowingsandthat

itwouldbeimpossibletooperatethere+theyhadworklinedup/pilottroublesotheydidnotthinktheywouldhavetimetovisittheshowings;Dneverrespondedtothis+onAugust1,anexplorationpartyforRinvestigatedtheareaandlocatedtheshowingsreportedbyDawson–Ddidnotbecomeawareofthisuntillater

• RsaidthisisaunilateralcontractdependantonDactuallyshowingthemthemineraldepositIssues:

• Wasthereacontractandifso,wasitbreached?Decision:

• Therewasacontract,anditwasbreached–Dwasentitledtothe10%Ratio:

• Courtscanregardacontractasbilateralinordertoprotecttheoffereependingcompleteperformance

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• Acontractmaycontainwithinitselfelementsofitsowndischargeintheformofprovisions(eitherexpressorimplied)foritsdeterminationincircumstances

Analysis:• Promissoryconstruction:eventhoughthecontractwaswordedinawaytomakeitunilateral,andRhadthechoicenotthe

performitsend,thecourtinferredabilateralpromisebecauseRhadagreedtopayDifitwastostakethelandfollowingD’sshowingittothem.

• Becausethetermsinvolvesuchcomplementaryaction/obligationsonbothparties–theinterpretationofthecorrespondencefollowsthetendencyofcourtstotreatoffersascallingforbilateralratherthanunilateralactionwhenthelanguagecanbesoconstrued,inorderthatthetransactionhas‘businessefficacyasbothpartiesmusthaveintendedthatalleventsitshouldhave’;InthiscasetheitwasimpliedthatDmakereasonableeffortstoparticipateinhisownerproposal(businessefficacy)

• Suchanoffercontemplatesactstobeperformedbythepersononlytowhomitismadeandinrespectofwhichtheofferorremainspassive–itwasnecessarilyimpliedthatDawsonwouldparticipateinhisownproposal;Dawson’sresponseonApril12wassimilarlyanunqualifiedpromissoryacceptance

• IfweretrulyunilateralitwouldonlyrequireanactbyDawsontocreatethecontract–however,actsbySpringerwerealsorequired

o Inabilateralcontract–bothpartiesareobligedtodosomethingo Ifthisisacontractatallitcreatesobligationsontheminingparty

• Bothofthemhad‘conditionssubsequent’–aprovisionthatthefulfillmentofaconditionortheoccurrenceofaneventshalldischargeeitheroneofthemorbothfromfurtherliabilitiesunderthecontract

o 1)Rnotbeingabletogetapilot–wasacondition+ifnotabletofindapilot=contractisoff[impliedthathewouldtakereasonablestepstoobtainapilot]

o 2)Dnotbeingabletogetleavefromwork–anotherconditionifnotperformed=contractoff• Therefore,thiswasacontract[Mar.5=offer;Apr.12=unqualifiedpromissoryacceptance;w/2conditionssubsequent]• Whatiseffectuatedistherealintentionofbothpartiestocloseabusinessbargainonthestrengthofwhichtheymayplan

theircourses–‘apromisemaybelackingandyetthewholewritingmaybe‘instinctwithobligation’–thisappliestobothoffer+acceptance

• RpromisingDawsonthatthecompanywouldcooperate,heimpliedlyagreedthatthecompanywouldnotpreventthecomplementaryperformancebyDawson.Bydoingthisthecompanyviolateditsengagementandalsobroughttoanendthesubjectmatterofthecontract

• Theirlaterletter(June7)isthemtryingtorejecttheoffer–howevertheofferhasalreadybeenmade–breachfortimeofperformance:

o Eitherarepudiationofthecontract–whenthetimecomes,theydonotperformo Or,ananticipatorybreach–thetimeofperformanceisnotyetthere,butwhenitistheywillnotdoit.Whenone

sidesaystheywillnotperformàdonothavetowaituntilthetimepasses,anactioncanbestartedrightaway.[evenbeforeitisbreached]

Notes:• Example:Bilateralcontractscanoftenlooklikeunilateralcontractsonpaper

o ‘Iwillpayyou__tobuildmeagarage’–looksasthoughthereareonlyobligationsonthepartofthebuilderso Therearemostdefinitelyobligationsforthebuyer–accesstothegarage;considerationstobemade;permitsto

besignedbytheowner;cooperatetoanswerissuesthatariseetc.o Ifunilateralthenthebuyerhasnoobligationsexcepttopayforthegaragewhenitisfinished

• Contractsthatarepossibleunilateral(lookunilateral)–isitreallyjustapromiseforanactwithabsolutelynoobligationsonthepartofthepromisor

o Ifthereareanyobligationsarebothside,thenitcannotbeunilateral–andbothsideshaveobligationsthatcanbebreached

• Incasesofdoubt,tendtobeconstruedasabilateralcontractàinaunilateralcontractthepromisorcanrevokepromiseatanytimebeforetheactisactuallycompleted/finished–mostlikelythepartiesdonotagreetothis

FelthousevBindley(1862)11CB(NS)(Ex.Ch.)(noacceptanceuntilcommunicated)Facts:

• Theplaintiff,PaulFelthouse,haddiscussedwithhisnephewJohnFelthouse,thepurchaseofahorsebelongingtothenephew

• Therewasamisunderstandingandtheplaintiffthoughthepurchasedthehorsefor30pounds,whereasthenephewthoughtthepricewas30guineas[wasworthslightlymore],sotheuncleofferedtosplitthedifferenceandwrotetohimon

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Jan2‘youcansendhimatyourconvenience,betweennowandthe25thofMarch.IfIhearnomoreabouthim,Iconsiderthehorsemineat30poundsand15shillings’Thenephewdidnotrespond.

• OnFebruary25anauctionsalewasheldandBindley(theauctioneer)wasinstructedtoreservethehorsefromthesalehoweverheforgotandthehorsewassoldfor33pounds.OnFebruary27thenephewwrotetheunclethatthehorseissold;theauctioneeralsowrotetheuncleexplainingthatheforgotispromisetoreservethehorse.

• Theunclebroughtanactionagainsttheauctioneerforconversion;attrialaverdictwasfoundfortheunclewithdamagessetat33pounds.Forhimtoprovethehorsewasinhispossessionhehadtoshowthattherewasacontractbetweenhimandthenephew.

Issues:• Wasthereacontractbetweenthenephew+uncle?Didthenephewaccepttheoffer?

Decision:• Nocommunicatedacceptance;therefore,nocontract.Unclecannotrecoverdamages

Ratio:• Acceptanceisnotcompleteuntilitiscommunicatedtotheofferor:toensuretheofferorknowsheisinacontract.Also

ensuresanoffereedoesnothavetorejecteveryofferreceived• Acceptancemustbecommunicatedclearlyandnotbeimposedduetosilencebyoneoftheparties

Analysis:(WillesJ)• ItisclearthattherewasnocompletebargainonJanuary2andtheunclealsohadnorighttoimposethepriceonhis

nephew–atthispointitstoodanopenofferthereforeeverythingremainedasisuntilFeb25• Thenephewdidtellthedefendantnottosellthehorse–thereforethenephewmostlikelyintendedtheuncletohavethe

horseforhissaidpricebuthehadnotyetcommunicatedthisordoneanythingtobindhimself• TheletterbythenephewonFeb27maybetreatedasanacceptanceforthefirsttimebyhim–ifso,theunclecannot

recover• However,hadtheletterbeenamemoofthebargainbeingcompleteandnotabargainconcludedforthefirsttimethenit

wouldbecontrarytotheStockholddecisionwhichheldthatacceptancehadrelationbacktothepreviousoffersoastobindthirdpersonsinrespectofadealingwithpropertybythemintheinterim

Notes:• Foisting:forcingacontractontosomeonewhomaywishnottohaveit–silenceisnotacceptance

o Acceptancerequiresavoluntaryacttocreateacontractàsomeonecannotimposeacontractontoapersonsayingtheycannotavoidthecontract

• HERE–therewasnotactuallysilence–nephewtoldtheauctioneernottosellthehorsebecauseitisalreadysold• Ifweexaminethissituationwherenephewsuesuncle–takeshorsetounclewithbill+unclesaysthereisnocontract

o (Didnotformallyretracthisoffer–offerorcanrevokeofferatanytimebeforeacceptance)o 8weekslater–ifnephewsuesuncleforfailingtotakethehorse;thenephewmustlose–becauseifthereisno

contractonewaytherecanbenocontracttheotherwayo Nephewwouldarguetherewasnosilence–itwasnotcommunicatedtotheuncle;however,therewasnodoubt

thatheaccepted

SaintJohnTugBoatvIrvingRefineryLtd.[1964]SCR614(silence+conductcanbeacceptance)Facts:

• Sincetheearly1960stherespondent(Irving)hasoperatedanoilrefineryborderingontheharborofSt.JohnNBandasanincidentofthisoperationitissuppliedwithcrudeoilbroughtbylargetankerswhichareownedandcharteredbytheCaliforniaShippingCompanywhichwasrepresentedinSt.JohnbyKentLinesLimited

• Itwasimportanttotherespondentthattugsshouldbeavailablewhenrequiredtoguidetheincomingtankersintotheharbor–couldnotusethetugsbyKentLinesthereforeitwasnecessarytoemploytheservicesoftheappellant’stugboatswhichweretheonlyotherboatsavailableintheharbor

• OnMarch24,1961nofirmarrangementshadbeenmaderegardingtheemploymentofthetugsbytherespondentthereforetheappellantswrotetoKentLinesstatingthattheywouldonlyhave2tugboatsandiftheydidnothearbacktheywouldassumetheyaremakingarrangementselsewhere.AlsowrotetoIrving(chairmanofrespondentcompanyandpresidentofKentLines)sayingthatiftheyweretoneedmorethantwotugboatstoadvisethemnowandtheycouldseeiftheycouldarrangesomethingwithagreeduponspecialrates

• Therespondentsuseoneofthespecialrateboatsafterreceivinganemailwhichstipulatedthepriceandconditionsofitincludinga10%deductionforhandlingcharges–thisdealexpiredonAugust15,howevertheyuseditfromJuneuntilFebruary,andalloftheappellant’sinvoicesfortheservicesremainedunpaidandtherespondentdeniesliabilityforallchargespassedthemiddleofAugust

Issues:

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• Whetherornottherespondentscourseofconductduringthemonthsinquestionconstitutedacontinuingacceptanceoftheseoffers?

Decision:• Yes,therespondentwasacceptingthespecialchargesonthetermsproposed–appellantentitledtorecoverthesumofthe

chargesRatio:

• Silencecanbeanacceptancewhencombinedwithconduct–whentheoffereehastakenthebenefitoftheofferedperformancewhichhehashadreasonableopportunitytoreject.Plaintiffmustshowthat1)thecircumstancesshowthattheofferorexpectedtobepaid,2)theoffereetookthebenefitofanofferedperformance,and3)theoffereehadreasonableopportunitytorejectthebenefit

• AnobligationexistsnottoremainsilentifyoudonotwishtobeboundAnalysis:(RitchieJ)

• Thestand-byserviceofthetug(afterAug.15)wasmakinganewofferandtheinvoicesmakeitclearthatitwasanofferforthesameservices/samerate–Rwasnotboundbythisoffer[untilheusedtheboat]

• Thetestofwhetherconduct,unaccompaniedbyverbalorwrittenundertaking,canconstituteanacceptanceofanoffersoastobindtheacceptortofulfillthecontract:àisanobjectivenotasubjectiveone–theintentiontowhichthelawwillattributetoaman–notthatwhichwaspresentinhisownmind

• Merefailuretodisownresponsibilitytopaycompensationforservicesrenderedisnotofitselfenoughtobindthepersonwhohashadthebenefitofthoseservices–thecircumstancesmustgiverisetoaninferencethattheallegedacceptorhasconsentedtotheworkbeingdoneonthetermsuponwhichitwasofferedbeforeabindingcontractwillbeimplied

• Ifapersonknowsthattheconsiderationisbeingrenderedforhisbenefitwithanexpectationthathewillpayforit,andheallowsittobedone,takingthebenefit,hewillbetakentohaverequesteditbeingdoneandthatwillimportapromisetopayforit

• Therespondentmusthaveknownthattheboatwasbeingkeptfor‘stand-byuse’untiltheendofFebruaryandthattheappellantexpectedtobepaidforthisserviceattheratespecifiedinthemonthlyinvoices

EliasonvHenshaw(1819)4Wheaton225,4US(L.Ed.)556(acceptancecompliantw/methodspecified)Facts:

• Anactionbroughtbythedefendanttorecoverdamagesforthenon-performanceofanagreement,allegedtohavebeenenteredintobytheplaintiffsforthepurchaseofflourataspecifiedprice

• Theevidenceforthecontractisaletterfromtheplaintifftothedefendant(Feb10,1813)statingthattheywouldbuyflourfromthedefendantsandtowritebyreturnofwagonwhethertheyaccepttheoffer

• Thedefendantrespondedinaletterdatedthenextdaythathewouldaccepttheofferfor300barrelsofflourat$9.50abarrelandwouldsendtheflourbythefirstboatsthatpassdown;mailedtheletter+wassenttoGeorgetown(5-daygapbetweenreceivingletter+wentitwasmailed)

• Theplaintiffsrespondedthattheyrequestedananswerthenextdayandnotreceivingonetheyboughtflourelsewhere–thewagonerdidnotreturntoHarper’sFerry

• TheflourwassentandthedeliveryofitwasrefusedIssues:

• Wasacontractformed?Decision

• Nocontractconcludedbetweentheparties–wrongplace,toolateRatio:

• Anacceptancecommunicatedatadifferentplacefromthatpointedoutbytheofferorandformingpartoftheirproposalimposesnobindingobligationupontheofferor

• Acceptancemustbecompliantwithanymandatorymethodofacceptancespecifiedàhowever,an‘equallyeffective’methodofacceptancewouldsuffice

Analysis:(WashingtonJ)• Untilthetermsoftheagreementhavereceivedtheassentofbothparties,thenegotiationisopenandimposesno

obligationuponeither• Therewasnouncertaintytotheplacewhichtheanswerwastobereceived,theplacetheanswerwassentconstitutedan

essentialpartoftheoffer–noanswerwassenttotheplaintiffsatHarper’sFerry• Theirofferwasacceptedbythetermsofaletteraddressed‘Georgetown’andreceivedbytheplaintiffsatthatplace;butan

acceptancecommunicatedatadifferentplacefromthatpointedoutbytheplaintiff’sandformingapartoftheirproposalimposednoobligationbindinguponthem,unlesstheyhadaccepteddoingitwhichtheydidnot–theplaceconstitutedanessentialpartoftheoffer

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• Theplaintiffshadtherighttodictatethetermsuponwhichtheyweretopurchaseflourandunlessthosewerecompliedwiththeywerenotboundbythem

• Toaccept–therightplace+withinthetimestipulated

CommunicationofAcceptanceAcceptance(universal):acontractisformedwhen+whereacceptanceisreceivedàonlyexceptionismailedacceptance Itistheacceptorsjobtoensureacceptanceiscommunicated

A)MailedAcceptancesHouseholdFire&CarriageAccidentInsuranceCovGrant(1879)4Ex.D.216(CA)[THEPOSTALACCEPTANCERULE**]Facts:

• DhadnegotiatedtopurchasesharesinP.Hisapplicationwasacceptedandhisnamewasaddedtothelistofregisteredshareholders.ThesecretaryforPmadeouttheletterofallotmentinfavorofDwhichwasaddressedtotheplaintiffathisresidence–thisletterofallotmentneverreachedthedefendant

• Thedefendantneverpaidthe5poundsmentionedinhisapplicationbuttheplaintiff’scompanycreditedthedefendant’saccountfor5pounds;thencontinuedtocredithisaccountfortheshares.

• ThecompanywentintoliquidationandonDecember7,1877theofficialliquidatorappliedforthesumsuedforfromthedefendant;hedeclinedtopayonthegroundthathewasnotashareholder

Issues:• WastheletterofallotmentofOctober20infactposted?Wastheletterofallotmentreceivedbythedefendant?

Decision:• Consideredabindingcontract–thedefendantwasaliableshareholder

Ratio:• Acontractbecomesbindingtheinstantthattheacceptanceisputintothemail,solongasthepartieshavecontemplated

themailasaviablemeansofcommunicationfortheirdealings[rationale–fraud/commercialdelay]• Iftrustthepostformeansofcommunicationandnoanswerisreceived,thenthatpersoncanbelievethatpersonhad

receivedthemailAnalysis:(ThesignerLJ)

• Dmadeanapplicationforsharesintheplaintiff’scompanyundercircumstancesfromwhichwemustimplythatheauthorizedthecompanythatintheeventoftheirallottingtohimthesharesappliedfor,tosendthenoticeofallotmentbypost

• Inordertotheeffectingofavalidandbindingcontract,themindsofthepartiesshouldbebroughttogetheratoneandthesamemoment;themindsofthetwopartiesmustbebroughttogetherbymutualcommunication–anacceptancewhichhasnotbylegalimplicationcommunicatedtotheofferorisnotbindingacceptance

• Forcontractsformedbymailà[Postalofficeisanagent]assoonastheletterofacceptanceisdeliveredtothepostoffice,thecontractmadecompleteandfinalandbindingasiftheacceptorhadputhisletterintothehandsofamessengersentbytheofferorhimself

• Anofferor,ifhechooses,canchoosetomakethecontractbindingbystipulatingitwillbeonlyonhisreceiptofnotificationoftheacceptance;andifhetruststhepostthenhetrustsameansofcommunicationwhichdoesnotfailandifnoanswerisreceivedtohisofferthenthedoorwouldbeopentofraud–theacceptorwouldneverbeentirelysafeinactinguponhisacceptanceuntilhehadreceivednoticehisletterofacceptancereacheditsdestination

• Uponbalancing–toconsiderthecontractcompleteandbindingonthetransmissionofthenoticeofallotmentthroughthepost;insteadofpostponingitscompletionuntilnoticehadbeenreceivedbythedefendant

Dissent:(BramwellLJ)• Whereapropositionismadetoenterandacceptedtoenterintoacontractitisnecessarytoconstitutethecontractthat

thereshouldbeacommunicationofthatacceptancetotheproposer• Ifthedefendantistobebound,hemustbeboundbysomegeneralrulewhichmakesadifferencewhenthepostofficeis

employedasthemeansofcommunication.Thisissimplyarbitrary–ifamansentaletterbyhandthatwasnotaccepteditwouldnotbeconsideredbinding

HolwellSecuritiesvHughes[1974]1WLR155,[1974]1AllER161(CA)[Thepostalrulecanbeexcludedbytermsoftheoffer**]Facts:

• Theplaintiffssentaletterstatingtheywishedtopurchasethedefendantsproperty–theyacceptedtheoptiontobuyintendingvendor’sland,howevertheintendingvendorneverreceivedtheletter

• Whatwasrequiredtomakethecontractwasthenoticeinwriting–wasonlyreceivedbythesolicitors

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Issues:• Didtheplaintiffsexerciseanoptiontopurchasethepremisesbypostingalettertothedefendantwhichheneverreceived?

Decision:• No–appealdismissed• Onlyifintendingvendorwouldhavereceivedthenoticeinwritingwithinthe6months

Ratio:• Postalruledoesnotapplyiftermsofthecontractpointtothenecessityofactualcommunication,evenifthepostwasthe

desiredmediumofcommunication• Postalruledoesnotapplywhen1)expresstermsoftheofferspecifythattheacceptancemuchreachtheofferorand2)

[probablydoesnotoperate]ifitsapplicationwouldproducemanifestinconvenience/absurdityAnalysis:(LawtonLJ)

• ‘Whenthepartiescanreasonablycontemplatethatthepostmightbeusedasameansofcommunicatingtheacceptanceofanoffer,theacceptanceiscompleteassoonasitisposted’

• Thisruledoesnotapplyinallcaseso 1)Doesnotapplywhentheexpresstermsoftheofferspecifythattheacceptancemustreachtheofferoro 2)Itprobablydoesnotoperateifitsapplicationwouldproducemanifestinconvenienceandabsurdity

• Havingregardtothecircumstances,thenegotiatingpartiescannothaveintendedthatthereshouldbeabindingagreementuntilthepartyacceptinganofferorexercisinganoptionhadcommunicatedtheacceptanceorexercisetothepartywhorequestedit

• (Obiteràwouldhavebeensufficientifdeliveredtovendor’shouse)

B)InstantaneousMethodofCommunication• Commonlawtreatedthetelegramthesameasmailedacceptanceàuptotheofferor–ifdidnotwantthiscouldmakeit

explicit• Orderforserviceexjuris:touseprocessofthelawofonejurisdictioninanotherjurisdiction–needtoconvincethecourts

thatwhathappenedreallyhappenedintheformerjurisdiction• [RulesàpropertyinAlberta;tortcommittedinAlberta(controversial);contractmadeinAlberta]

BrinkibonLtd.vStahagStahlUnd[1983]2AC34[1982][Instantaneousmethodsofcommunication–contractcompletewhenacceptanceisreceivedbyofferor**]Facts:

• Theappellants(buyers)wanttosuetherespondents(sellers),anAustraliancompany,forbreachofanallegedcontractforthesupplyofsteel.Todosotheymustobtainleavetoservenoticeoftheirwritonthesellersundertheprovisions–onebeingtoshowthatthecontractwasmadewithinthejurisdiction

Issues:• Wherewasthecontractmade?

Decision:• ThisacceptancetookplacewhenthebankinViennanotifiedthesellers–inneithercasecanitbesaidthatthecontractwas

madewithinthejurisdictionthereforetheconditionmustfailRatio:

• Acceptancebytelexistobeassimilatedtoothermethodsofinstantaneouscommunication–thecontractiscompletewhenreceivedbytheofferor

• [IfacceptancehadbeensentbyPost–place/timeofacceptanceiscompletewheninthehandsofthepostoffice]Analysis:(LordWilberforce)

• Theplaceofmakingacontractisusuallyirrelevantasregardstovalidity,orinterpretation,orenforcementàifneedtodeterminewhereiswasmadeitislogicalitwouldbeattheplacetheacceptancewascommunicated

• 1)TherewasatelexdatedMay31979fromthesellersinVienna(acounter-offer)followedbyatelexfromthebuyersinLondontothesellersinViennaonMay4(acceptance)

o DoesthiscauseacontracttobemadeinLondonorinVienna?o AphonecalledwouldhavebeencompletedinViennawhentheofferwasheard;bypostwouldhavebeenin

Londonwhentheacceptancewasmailedo Decidethatatelexistobeassimilatedtoothermethodsofinstantaneouscommunications–likethephonecall

(thenwouldhavebeenMay4inVienna)o Wheretheconditionofsimultaneityismetandwhereitappearstobewithinthemutualintentionoftheparties

thatcontractualexchangeshouldtakeplaceinthisway

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• 2)ThetelexonMay3wasfollowedbyactionbywayofopeningaletterofcreditsaidtohaveamountedtoacceptancebyconduct[acceptancewouldhavebeenMay4intheUK]

o Thiscouldnothaveamountedtoanacceptance–thisconductdoesnot=communicationofacceptancetotheofferor

• Intheeventofdefectivecommunication(p.88),nouniversalrulecancoverallcommunications–intentionsofparties,soundbusinesspractices,andinsomecasesjudgmentsofcourtsofwheretherisksshouldlie

o Mustbeflexibleindealingwiththato Generalrule–mustbecommunicated–howeverthereisnouniversalrule/mustretainflexibility(ajudgement

needstobemadesometimes)• Contrastedto19thcenturycourts–havearuleandeveryanswerdependsonlogicaldeductionfromthatrule

Note:• Approachinganacceptanceproblemà1)lookforthedefaultrulethatapplies,2)askifthereisanyreasontodeviatefrom

theserules[ifanemaildoesnotreachtheofferor(whohastherisk)];courtscanalsolookatwhowasbesttocatchthemiscommunication.Thenlookatwhatisconvenientonthefacts

RuddervMicrosoftCorp.(1999)2CPR(4th)474,40CPC(4th)394(Ont.SCJ)[*Nothavingalltermsdisplayedonscreenatthesametimedoesnot=fineprint]Facts:

• ThisisamotionbyMSN(defendant)forapermanentstayofthisintendedclassproceeding• TheplaintiffsweresubscribersofMSN–theintendedclassisestimatedtoincludeabout89000MSNsubscribers.The

‘contract’isa‘MemberAgreement’whichrequiresmemberstoelectronicallyexecutepriortoreceivingtheservices.Eachcontainsaprovision–(choiceoflawclause)‘thisagreementisgovernedbythelawsoftheStateofWashington…inalldisputesarisingoutoforrelatingtoyouruseofMSNoryourMSNmembership’–alsochosetheforum(CourtsinKingCounty,Washington)

o ThedefendantreliesonthistosupportthattheclassproceedingshouldbestayedIssues:

• Theplaintiffsclaimdamagesforbreachofcontract,amongotherthings;forallegedlychargingmembersofMSNandtakingpaymentfromtheircreditcardsinbreachofcontractandfailingtoprovidereasonable/accurateinformationconcerningaccountsasthetermsofthecontractwere‘fineprint’

Decision:• Actionbroughtbytheplaintiffspermanentlystayed;contracttermswerenotin‘fineprint’

Ratio:• Fineprintclausesincontractsshouldbebroughttheattentionofthepartyacceptingtheterms,howeverrequiringthe

partytoscrollthroughtheterms[similartoflippingpagesofpaper]doesnotconstitute‘fineprint’Analysis:(WinklerJ)

• ForumselectionclausesaregenerallytreatedwithdeferencebyCanadiancourts• Thecourtisnotboundtogiveeffecttoanexclusivejurisdictionclause,howeverthechoiceofthepartiesshouldbe

respectedunlessthereisstrongcausetooverridetheagreement–thisburdenrestsontheplaintiffandthethresholdtobesurpassedisbeyondthemere‘balanceofconvenience’

• Theplaintiffssaytheclauseshouldbetreatedasifitwerethefineprintinacontractandmustbebroughtspecificallytotheattentionofthepartyacceptingtheterms

• Disagreethatbecauseonlyaportionoftheagreementwaspresentedonthescreenatonetime,thetermswhichwerenotonthescreenareessentiallyin‘fineprint’[Aspartofthesign-uproutine,potentialmembersofMSNwererequiredtoacknowledgetheiracceptanceofthetermsbyclicking‘IAgree’atthesametimethetermsoftheMemberAgreementweredisplayed;AllofthetermswerereadilyviewableusingthescrollingfunctionwheretheMAwaspresented]

• Therewerenofineprinttermsorphysicaldifferenceswhichmakesometermsmoredifficulttoreadthanothers–thescrollingrequiredisnodifferentthanhavingtoflippagesinadocument;mustsignifyacceptancetwice,bothtimesthetermsarepresented

• Ruleofelectroniccontractingisoffer+acceptance

TerminationofOfferA)Revocation

32

DickinsonvDodds(1876)2ChD463(CA)[Oncethepersontheofferwasmadetofindsouttheofferormadeacontractw/someoneelse–theopenoffertosellterminates]Facts:

• OnWednesdayJune10,thedefendant(Dodds)gavetheplaintifftheofferthatheagreedtosellDickinsonhiswholedwelling-houses,gardenground,stable,andoutbuildingsfor800pounds;andthattheofferwillbeavailableuntilFridaythe12that9am

• OntheThursdayafternoontheplaintiffwasinformed(byhisagent–Barry)thatDoddshadbeenofferingtosellthepropertytoThomasAllan(theotherdefendant)

o [ThisdoesnotnecessarilymeanhenolongerwantstodealwithDickinson]• ThateveninghewenttoDodd’smother-in-law’shouseandleftwithheraformalacceptanceinwritingoftheoffertosell

theproperty–themotherinlawforgottogiveDoddstheletter.OntheFridaymorningat7amDickson’sagentfoundDoddsandhandedhimaduplicateofthenoticeofacceptance;butDoddssaiditwastoolateandthathe’dalreadysoldtheproperty

• Onthedaybefore(Thursdaythe11th)DoddssignedaformalcontractforthesaleofthepropertytoAllanandreceivedadeposit

Issues:• Ifanofferismadeforthesaleofpropertyandbeforethatofferisacceptedthepersonwhohasmadetheofferentersinto

abindingagreementtosellthepropertytosomeoneelse,andthepersontowhomtheofferwasfirstmadereceivesnoticeinsomeformthatthepropertyhasbeensoldtoanotherperson,canheafterthatmakeabindingcontractbytheacceptanceoftheoffer?

Decision:• No,thereisnobindingcontractbetweenDicksonandDodds

Ratio:• Oncethepersontheofferwasmadetofindsoutthepropertyhasbeensoldtosomeoneelse,itistoolateforhimtoaccept

theoffer• [Communicationneednotcomefromtheofferor]Ifhearfromreliablesourcethatpropertyisalreadysold–cannotaccept

theofferstill• Amerepromisetoholdanofferopenforaperiodoftimeisnotbindingandanofferorisfreetowithdrawtheoffer

Analysis:• Thereisaclearruleoflawthatamereofferdoesnotbindtheofferorandhecanrevokeitatanytimebeforeitisaccepted• EvenifAllanknewabouttheoffertoDickinson,thatwouldnotpreventhimfrommakingamorefavorableofferandat

onceenterintoabindingagreement• Apersonwhohasgiventoanotheracertaintimewithinwhichtoacceptanofferisnotboundbyhispromisetogivethat

time• [Ifamanwhomakesanofferdies,theoffercannotbeacceptedafterheisdeadàsimilarly,oncethepersonwhotheoffer

wasmadetofindsoutthepropertyhasbeensoldtosomeoneelse,itistoolateforhimtoaccepttheoffer• EvenhadtherebeenabindingcontractbetweenD+D,thesaletoAllanwasfirstinpointoftime

ByrnevVanTienhoven(1880)5CPD344[Anoffercannotberevokedafterithasbeenaccepted;aletterofrevocationcanonlyapplyoncecommunicatedtotheofferee**]Facts:

• OnOctober1st,thedefendants(InCardiff)mailedanoffertoselltotheplaintiffs(inNewYork)1000boxesoftinplatesatafixedprice.TheofferwasreceivedonOctober11andtheplaintiffsimmediatelyacceptedbytelegramonthe11thandconfirmedbyletteronthe15th

• HOWEVER,onOctober8,thedefendantmailedarevocationoftheofferwhichwasreceivedonOctober20th–[theplaintiffshadalreadysoldthetintoathirdpartythinkingtheyhadpurchasedtheplates]

Issues:• Whetherawithdrawalofanofferhasanyeffectuntilitiscommunicatedtothepersontowhomtheofferhasbeensent?• Whetherpostingaletterofwithdrawalisacommunicationtothepersontowhomtheletterissent?

Decision:• Thewithdrawaloftheletterwasinoperative;andacompletecontractwasenteredintoonthe11thwhentheplaintiffs

acceptedtheofferofthe1stàtherevocationhadnoimpact;revocationwasonlyeffectiveonceitwascommunicatedtothebuyersinNY(atthispointacceptancehadalreadybeensent)

Ratio:• Aletterofrevocationcanonlyapplyonceitiscommunicatedtotheofferee[postalruledoesnotapplytorevocation]

33

• Canrevokeanofferbycommunicatingrevocationanytimebeforeitisaccepted;andifdonot,thenareboundbytheofferAnalysis:(LindleyJ)

• Thereisnoadoubtanoffercanbewithdrawnbeforeitisacceptedanditisimmaterialwhethertheofferisexpressedtobeopenforacceptanceforagiventimeornot

• Uncommunicatedrevocationisforallpracticalpurposesandinpointoflawnorevocationatall• Whenanofferismadeandacceptedbyletterssentthroughpost,thecontractiscompletedthemomenttheletter

acceptingtheofferissentàhere,canfindnoevidenceofanyauthoritygivenbytheplaintiffstothedefendantstonotifyawithdrawaloftheirofferbymerelypostingaletter

• Beforetheletterofrevocationhadreachedtheplaintiffstheyhadacceptedtheoffer[bothbytelegramandbypost]• Apersonwhohasacceptedanoffernotknowntohimtohavebeenrevoked;shallbeinapositionsafelytoactuponthe

footingofthatofferandacceptanceconstituteacontractbindingonbothparties

BarrickvClark[Anofferexpiresafterareasonableamountoftime]Facts:

• BownedfarmlandthatCwantedtobuy.Theyenteredintonegotiations,whichresultedinCmakinganofferof$14500.Bwrotebackstatingthatthepricewas$15000andifthepricewassatisfactorythedealcouldbeclosedimmediately.AtthistimeCwasawayonahuntingtrip.HiswifereceivedtheletterandrespondedaskingBtoholdtheofferopenuntilherhusbandreturnedinaround10days.Bdidnotreply.13dayslater,Bsoldthepropertytosomeoneelsefor$15000.Cdidnotreturnuntil20daysafterhiswifereceivedtheoffer.CsoughtspecificperformanceoftheallegedcontractbetweenhimandB.Dismissedattrial,foundforConappeal

Issues:• Whatisareasonableamountoftimethattheoffermustbeleftopenfor?

Decision:• Appealallowed.Areasonableamountoftimehadpassed+theofferwasclosed.

Ratio:• Anofferwhichstatesitwillexpireatacertaintimecannotbevalidlyacceptedafterthattime.Ifnotimeconditionprovided

for,theofferisopenforareasonableamountoftime.• Reasonabletimeà1)anoffercontainstheimpliedtermthatitisautomaticallywithdrawnbyofferorafterreasonable

time;2)whenanofferisnotacceptedwithinareasonabletime,ithasimpliedlybeenrejectedbytheoffereeAnalysis:(EsteyJ)

• Thereasonabletimethatthisspecificoffermustbeleftopenforislongerthanforgoodsthatfluctuateinprice(stocks)orforperishablegoods.Here,thelandcouldnotbeuseduntilthespring.However,throughC’sactions+insistenceonreplyingtoB’slettersbywireCindicatedthathedidnothaveaspringdateinmind,butwantedtogetthesaledone[orgoofftopursueotheroptions]

• Further,BdidnotrespondtoMrs.Clark’sletter,sohewasnotboundtoanyparticularperiodofoffer.Leavingtheofferopenfor13dayswasareasonabletime,asChadindicatedthathewantedtoacceptandclosethesaleassoonaspossible

• Here,offerlapsesbecause‘conductleadustobelieve,notgoingtoacceptit’–timefusehadpassedbyDecember10• [Concurring]Indicationsinthetermsoftheofferthat‘speed’wasbeinglookedfor–difficulttogetthedocuments,etc.to

bedoneintimebeforeJanuary1(December10thwastoolate)• [Lookatcasethroughdifferentlens–letterfromwife;reasonforthesilencetonotimplythattheofferwasrejected(was

outoftouchforaprolongedperiodoftime)]Notes:

• 1)Lookatthetermsoftheoffer+seeifthereareindicationsofspeed/howmuchspeed• 2)Didnothearinreasonabletime+assumedthecontractwasrejected–offereesconduct• SCCtakesan‘impliedrevocationtheory’–hasanimpliedterm+ifnotacceptedinthistime,thenthereisarejection• SCA–offerisnotoverwhenitisimpliedlyrejected• P.106note–bettertheoryisimpliedrejection(allowsustotakeintoaccounttheconductofbothpartiesaftertheoffer

wasmade)• Commonlawdealswhenthereare2contractsmadesellingsamelandàremedyisnotdamagesbut‘specific

performance’(mustdowhatsaidyouwoulddo–conveylandtooneoftheparties;personwhofirstmadethecompletedcontractisprobablywhogetstheland;theotherpartygetsexpectationdamages–putinsamepositionwouldhavebeeninhadthecontractwasperformed)–basedontheorythatalllandisunique

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