Issues in Pharmacy Practice:Contracts

Contract: An agreement between parties consisting of offer, consideration, acceptance

Consideration: The price for which the promise of another is bought

Gratuitous Promise: made without bargaining for or accepting anything else in return

The Offer

• Legal issues

• Caveat emptor

• False promises, fraud, criminal intent or behaviour

• Advertising as free speech, not an offer

Adequacy of Consideration

• Requires personal value judgment

• Not the role of law (usually)

• Motive cannot change a gratuitous promise into a contract

• Assumed equality of parties entering into a contract

Case 1

The SS Myrik hit an iceberg and began to sink. In an effort to stem the desertion of the crew of the ship, the Captain offered to double their pay if they stayed with the ship. The ship eventually sank, and the Captain refused to pay the crew.

Relationship between existing legal duty and consideration

Case 2

Eastwood, Keynon’s guardian, borrowed money to finance Kenyon’s education. On coming of age, Kenyon’s husband promised (in writing) to pay Eastwood back but failed to do so. Eastwood sued Kenyon.

Consideration and moral cause

Case 3

A owes B a large sum of money (principal + interest) but cannot pay. A verbally promises, and B verbally agrees to accept payment of principal only in regular installments. Once A has completely paid back principal, B sues A for the remainder of the interest.

Consideration makes a promise binding

Injurious Reliance(Equitable Estoppel)

• Loss or harm suffered by a promissee who, to his/her detriment, relied reasonably on a gratuitous promise

Case 4

A purchases a business from X in premises owned by B. Upon moving in, A wants to dispose of furnishings. B states the furnishings came with the store and were A’s to do with as A pleased. A disposed of the furnishings. Later, X appears wishing to claim the furnishings back, which rightly belong to her.

Estoppel based on fact

Case 5

Alexei Yashin made a $1 million donation to the NAC. After paying $200K, he withdrew his pledge. It was revealed that AY had made a deal with NAC to have NAC pay AY’s parents to act as translators, in violation of NAC’s rules.

Injurious reliance

Charitable Donation (Promise of a Gift)

Services

Quantum Meruit: the amount a person merits to be paid for goods or services provided to the person requesting them

When one person requests services from another and the other performs these services, the law implies an obligation to pay. Obligation is implied between strangers, friends, and family.

Case 6

A asks B for technical assistance. B assists. Afterwards, A asks B what her fee is. B suggests an amount. A refuses to pay it.

Existing obligations and quantum meruit

Capacity to Contract

Competence required to bind oneself:

• Age of majority

• Capacity

• Corporations

• Enemy Aliens

• First Nations Peoples living on Crown lands

Grounds upon which a contract may be impeached

Case 7

Cecil has land to sell. Cecil refuses Webster’s initial offer of $2000. Later, Cecil writes to Webster mistakenly offering the land for $1250. After the letter is mailed, Cecil realizes his error, and sent a second letter stating the price should be $2250, but the second letter arrives after Webster posts back acceptance.

Mistake about terms/Words used inadvertently

Grounds upon which a contract may be impeached

Case 8

L signs a 5-year lease to rent a shop from Y on a busy street. L misread the bus map and thought a bus route ran close to the shop. Y was unaware of L’s erroneous belief. What if Y was aware of L’s erroneous beliefs but did nothing to correct them?

Mistake in assumptions

Injurious Reliance

Discharge of Contract

• Discharge by Performance

• Discharge by Agreement

• Discharge by Frustration

• Discharge by Self-Induced Frustration

• Discharge by Operation of Law

Case 9

X is a concert producer who signs a contract to rent out Y’s hall. Before the concert, the hall burns down due to a lightening strike. X is forced to cancel the show and refund tickets, and would like to sue Y for his losses. What if Y had been an arsonist and burned down his own hall?

The Effect of Breach

Either party to a contract may break it:

• By expressly repudiating its liabilities

• By acting in a way that makes its promise impossible to perform

• By failing to perform at all

• By tendering a performance that falls short of its promise

Case 10

Y is a pharmacist whose contract contained a clause stating she would not work in competition with her employer X for two years after termination. X dismissed Y without cause. Y recovered back salary for wrongful dismissal, and then began to work in competition with X. Having paid back salary already, X sought an injunction to prevent Y from working.

Case 11

B is a pharmacist hired by A to work as a designated manager. A has had difficulty finding a DM and cannot operate without one. Now with B, A can finally take a long-planned two-month vacation. B finds the job very stressful and decides to quit. In anger, B announces on Friday that he will leave on Monday. What if B announces on Friday he will leave in two weeks?

Doctrine of substantial performance

Case 12

Purolator contracted to deliver Cathcart’s bid to Ontario Hydro. The Contract contained a disclaimer clause related to non-performance. Purolator lost the bid. Purolator acknowledged that, had the bid been delivered, Cathcart would likely have won $37 000 business, but claimed that the disclaimer clause exempted them from liability.

Doctrine of Fundamental Breach

Remedies for Breaches

• Damages

• Equitable remedies (specific performance)

• Quantum Meruit

The Contract of Employment

Employer-Employee:

Relationship established by contract that gives one party (employer) authority to direct/control work of the other party (employee).

***Employer is liable for employee

The Contract of Employment

Employer-Contractor:

Contractor not subject to supervision by employer; contract is to produce specified result by whatever means are selected

**Liabilities undertaken by contractors are entirely their own

Employer-Employee Relationship: Liability

Case 13

Adair is employed by Magnum Computers. While in the course of routine business, he uses a Magnum product that has a bug, resulting in deletion of a customer’s files. What if this were not in the course of routine business?

Principle of Vicarious Liability

Employer-Employee Relationship: Termination

• Reasonable notice period• Wrongful Dismissal• Grounds for dismissal without notice:- Dismissal for cause- Misconduct- Disobedience- Incompetence- Illness- Adverse economic conditions

Case 14

Y is a 4th year student who signs a contract to accept $10 000 from A in exchange for an agreement to work in A’s pharmacy for a minimum of 2 years. 1 year later, Y falls in love and wishes to move away. Y provides 1 months notice to A.

Case 15

X is a 4th year pharmacy student who signs a contract to accept $10 000 from B in exchange for working in one of B’s pharmacies (all of which are currently in the GTA) for two years. Next week, B opens a pharmacy in Yellowknife and wants X to move there. What if X were a pharmacist with several year’s experience?

Case 16

Z is a 4th year pharmacy student who signs a contract to accept $10 000 from C in exchange for working in C’s pharmacy for 2 years. C’s pharmacy is very busy and C refuses to hire a technician. Z complains about the working conditions and threatens to quit. What if Z found out about the working conditions in C’s pharmacy before actually spending the money, and Z then returned it (with interest)?

Case 17

G is a 4th year pharmacy student who verbally accepts a contract of employment from M for a salary of $60K/yr. Two days later, P offers G $75 000/yr to work in P’s pharmacy. What if G had actually signed a contract with M?

Case 18

L is an IPG who contracts to work at V’s pharmacy for $30 000/yr for at least two years, based on V’s statement that this is the going rate for pharmacists. A month later, L’s friend indicates that most pharmacists make twice that amount, and encourages L to quit and work at another pharmacy, despite the fact that L signed a contract with V.