TABLE OF CONTENTS

General Policy Arguments.............................................................................................................................................................................................................................................. 1

Contract Interpretation.................................................................................................................................................................................................................................................. 1

Standard Form, Signed and Unsigned............................................................................................................................................................................................................................. 5

Exclusion Clauses............................................................................................................................................................................................................................................................ 4

Getting Out of Contracts................................................................................................................................................................................................................................................ 5

Mistake........................................................................................................................................................................................................................................................................... 5

Frustration...................................................................................................................................................................................................................................................................... 7

Economic Durress........................................................................................................................................................................................................................................................... 9

Undue Influence............................................................................................................................................................................................................................................................. 9

Unconscionability......................................................................................................................................................................................................................................................... 10

Illegality........................................................................................................................................................................................................................................................................ 12

Good Faith.................................................................................................................................................................................................................................................................... 13

Consumer Protection.................................................................................................................................................................................................................................................... 14

Remedies ..................................................................................................................................................................................................................................................................... 15

Contract Drafting......................................................................................................................................................................................................................................................... 19

READ THE QUESTION!!!!!CASE P RATIO/MAIN ISSUE

GENERAL POLICY ARGUMENTS

Policy: Applying to all aspect of contracts-> BALANCING REASONABLE EXPECTATIONS of P AND UNFAIR SURPRISE of D1) Unjust enrichment: want to enforce promises that decrease unjust enrichment and vice versa2) Reliance (Certainty): we don’t want people to rely on promises and do injurious things cuz of it -> this is why we enforce promissory estoppel

Expertise -> addresses assymtric information3) Deliberation: shows if there was intent4) Evidence: ex. made under seal or in writing5) Social Utility and utility of exchange -> promotes market!: we enforce commercial relationships -> because it allows for predictability and efficiency in the market -> but in

personal relationships we are less likely to enforce Market Efficiency -> Economic Institutional Approach

IS THERE A CONTRACT?

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General Rules of contract interpretation Objective Person: interpret in way that lead to the true intent of the parties at the time of entry into the contract ( Consolidated-Bathurst)

- MOST RECENT: must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. ( Sattava Capital Corp 2014)

Ambiguity: the more reasonable one, that which produces a fair result, should be the interpretation which would promote the intention of the parties (Consolidated-Bathurst)- Contra Proferentem (La Forest Dissent in Scott): Provisions of contracts that suffer from ambiguity are to be construed against the interest of the person who drafted or proferred the ambiguous provision.

No Ambiguity: if there is no ambiguity in wording of the document-> you no longer need to interpret looking for a “fair result” or a “sensible commercial result” (Eli Lilly & Co)- Where there is no ambiguity in the written agreement there is no need for extrinsic evidence. ( KPMG Inc.)Exception: When contract is unambiguous -> the court should give clear meaning unless contract is:

a) unreasonable; or (Scott)b) has an effect contrary to intention of parties(Scott)

Redundancy: No provision of an agreement should be interpreted to be redundant. (BG Checo International Ltd. )- Where there are apparent inconsistencies between different terms of a contract, the court should attempt to find an interpretation which can reasonably give meaning to each of the terms in question. (BG Checo International Ltd. )

Factors to look at: Context/Circumstance: In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes

knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating. (Reardon Smith Line Ltd.) Subsequent Conduct: “may be admitted and taken to have legal relevance if that additional evidence will help to determine which of the two reasonable interpretations is the

correct one”. Re CNR and CP (1978), 95 D.L.R. (3d) 242 (B.C.C.A.). Prior Negotiation: evidence of prior negotiations is generally inadmissible, it may be admitted “where it is relevant either to show the aim and genesis of the transaction

(Newcombe) Meaning of words: Words are to be given their natural or ordinary meaning. Evidence may be admitted to prove that the word has a special or technical meaning.

(Newcombe) Conflict b/w the original provisions and provisions of the latter document -> court will give weight to the latter

Scott v. Wawanesa Mutual Insurance Co [1989] 1 S.C.R.-> Issue: was son an "insured"-> Facts: son burns down house willfully -> insurance

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Unambiguous (SF Contract): Courts should not interfere with the plain meaning of contracts and imply terms if the contract is clear. -> When contract is unambiguous -> the court should give clear meaning unless contract is:

a) unreasonable; orb) has an effect contrary to intention of parties

WAS IT STANDARD FORM? WAS IT SIGNED OR UNSIGNED?

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Was it Standard form? -> Generally Business to Consumer First step: With All Contract breachs -> first step -> does the clause in the contract fit what has happened?

Was the contract unsigned?General Rule: Reasonable Notice Doctrine

1) Mellish rule (Evidence of assent) (reasonable Notice Doctrine for Unsigned Contracts): Where written document contains conditions but document is not signed and party did not know of the conditions, evidence is required to show assent to terms. (Parker)

- Evidence may be: (i) actual knowledge that document contains conditions; or(ii) reasonable steps taken to provide notice that the document contains conditions.

2) Reasonable Notice for Onerous Exclusion Clauses: Daconian/Onerous exclusion clauses need to be given reasonable reasonable notice (Thorton)- Reasonable notice isn’t just for exemption/exclusion clauses- > it applies to ANY onerous clause or clauses that are outside reasonable business practices (Interfoto)

Was the contract signed?General Rule (Common Law): Party signing a written contract is bound by its terms regardless of whether read or aware of terms (L’Estrange, Eng. CA, 1934).

1) It is NOT a general principle of contract law that a party must draw attention to an exclusion of liability clause. (Karrol)2) Burden is on claimant to show fraud or misrepresentation, or that the defendant knew or had reason to know that P was mistaken as to terms of the document. (Karrol)

a) Exceptions:- Reasonable Notice Rule applied to Signed Contract: If a term of the contract is onerous, the party looking to enforce that term must prove the other party was aware of the term through either their reading of the specific term or through direct notification of the specific term. (Tilden)- In the consumer sphere, sufficiency of notice and unreasonability of the conditions in the contract trump the L'Estrange notion that a signature alone is binding. (Tilden)- Tilden limited to specific situations/circumstances -> increases the threshold for Tilden: (Karrol)

• Hasty• Informal• Clause inconsistent with rest of contract• Absence of opportunity to read• Length and amount of small print

-Karrol Shifrts Burden onto P to prove that reasonable notice was required- To find if there is a duty to draw attention, one must look at: (Karrol)

a) the effect of the clause in relation to the nature of the contract;b) the length and format of the contract; andc) the time available for reading the contract.

b) Negligence: to exclude liablity for negligence -> there must be explicit terms (Canada Steamships)- BC court have upheld liability clauses - >w/ regards to negligence -> this is because they usually don't fail unconcionability test of Tercon (Cougar - ziplinging cases)- simply saying "negligence" broadly is covered in exclusion of liability is not enough, you have to say specifically what type of negligence is covered (Ochoa)

Policy for all standard form consumer contracts - terms are imposed by the stronger party – “take it our leave it” -> important to use contract law to protect the consumer protection - fairness of terms - exclusion of liability -> is important for risk allocation and reliance by the contract maker

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- knowledge of terms -> is important for reliance

Parker v. South Eastern Railway (Eng. CA, 1877) Facts: baggage lost -> Ticket limited damages to £10. Issue: was there reasonable notice

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1. Unsigned: There Was Reasonable Notice - Hx Case!!Melish RuleEvidence of assent to notice may be:

(i) actual knowledge that document contains conditions; or(ii) reasonable steps taken to provide notice that the document contains conditions

Thornton v. Shoe Lane Parking Ltd. Facts: parking -> got ticket from machine 3

Unsigned: There WAS NOT reasoanble Notice: The acceptor is bound by conditions that are shown to him before acceptance -> Not after! in cases with automatic ticket dispensers, the contract is formed when the plaintiff inserts money into the

machine and receives the ticket There can’t just be knowledge of general conditions -> there needs to be a knowledge of the specific condition

that is at issue! unreasonable and draconian term requires explicit notice

Interfoto v. Stilleto Photo Company -> sending out pictures -> never

sent back -> fee for holding onto pictures4

Unsigned: There was NOT Reasonable Notice: Thornton rule isn’t just for exemption/exclusion clauses- > it applies to ANY onerous clause Thornton applies to any “particularly onerous clause in a printed set of conditions which would not be

generally known to the other party.”

Tilden v. Clendenning (Ont. CA, 1978) Facts: Car rental -> not allowed to drink -> but does -

> insurance goes away! Decision: No reasonable notice -> therefore contract

not binding

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Signed: Reasonable Notice Applied to Signed Contracs: In the consumer sphere, sufficiency of notice and unreasonability of the conditions in the contract trump the

L'Estrange notion that a signature alone is binding. If a term of the contract is particularly onerous, the party looking to enforce that term must prove the other

party was aware of the term through either their reading of the specific term or through direct notification of the specific term.

Newcombe: you’re taking the view of thorton and Interfoto and applying to signed contracts

Karroll v. Silver Star Mountain Resorts Ltd. (SCC) (1988) Skiier -> injured in competition -> had not read the

realease of liabilty form that she signed Decision: P WAS given reasonable notice

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Signed: Limits Reasonable Notice Rule:1) It is not a general principle of contract law that a party must draw attention to an exclusion of liability clause.2) To find if there is a duty to draw attention, one must look at:

a) the effect of the clause in relation to the nature of the contract;b) the length and format of the contract; andc) the time available for reading the contract.

3) Burden is on claimant/plaintiff to show fraud or misrepresentation, or that the defendant knew or had reason to know that P was mistaken as to terms of the document.

4) Tilden is a limited principle, only applicable in special circumstances: where person knew or had reason to know of other’s mistake as to its terms. -> circumstances: 1) Hasty, 2) Informal, 3) Clause inconsistent with rest of contract, 4) Absence of opportunity to read, 5) Length and amount of small print

WAS THERE AN EXCLUSION CLAUSE?

Modern General Rule in Canada: (Tercon)

1) Modern Analytic Framework: 3 Step test -> each step must be met (TERCON)a) Application to situation: As a matter of interpretation, does the exclusion clause apply? -> if yes go to next step (u might want to apply some contract

interpretation rules to thisb) Unconcionability: was the exclusion clause unconscionable at the time the contract was made (looked at for the beggingin of contract)? -> if No, go to C

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c) Public Policy: Should the court refuse enforcement based on public policy (the onus of proof lying with the party seeking to avoid enforcement)?- ex. criminality, fraud, abusive conduct -> there has to be something especially egregious (Ex. Plas-tex) for public policy to come up (Tercon & Lloydchuck)

2) Onus is on party seeking to not use the clause

Old Common Law Rule: a party cannot rely on an exclusion clause where there has a been a fundamental breach of the contract (a breach that goes to the root of the contract) (Wallis)

Exceptions to CL Rule: FB is a rule of interpretation NOT a rule of law (Photo Production) (Canadian Case: Hunter Engineering)

Karsales (Harrow) Ltd. v. Wallis Car Purchase -> car damaged -> D claims FB 7 Was a Fundamental Breach: -> OLD RULE!!

If a breach goes to the root of the contract (a fundamental breach), the exempting clause takes no effect.Photo Production (HL, 1980) Secuirity guide hired by P to look after premises ->

causes fire -> exemption clause is void cuz of FB7 Was a Fundamental Breach:

FB is a rule of interpretation NOT a rule of law

Hunter Engineering Co. Inc v. Syncrude Canada Ltd. (SCC, 1989) 7

No fundamental Breach -> Exclusion Clause upheld:a) This is not a rule of law -> we are meant to interpret/construct the exclusion clause!b) Unconsionability is assessed by looking at the formation of the contrtact!

Plas-Tex Canada Ltd. v. Dow Chemical of Canada Ltd.adfgadfg -> Should this case be in Breach Section?!?!

1) Unconscionable actions will make limitation clauses void2) Certain Factors -> Intention and agregious act -> to look at for unconcionability is having a undesclosed and

known defect that you use exclusion clause to protect urself from!

Tercon Contractors Ltd. v. British Columbia (2010) SCC BC breached provision of Request for Proposal w/

Tercon

Provision breached -> and limitation clause does not protect1) We should put doctrine of Fundamental breach to rest!2) 3 Step test -> look at steps in order -> and only move on to the next step once the first has been met:

a) Application to situation: As a matter of interpretation, does the exclusion clause apply? -> if yes go to next stepb) Unconcionability: was the exclusion clause unconscionable at the time the contract was made? -> if No, go to C

- Use the uncoinsionabiltiy that we've now learned: improvident bargain + in equal bargaining powerc) Police: Should the court refuse enforcement based on public policy (the onus of proof lying with the party seeking to avoid enforcement)? -> ex. criminality, fraud, abusive conduct

CAN A PARTY GET OUT OF THEIR CONTRACT?WAS THERE A MISTAKE?General Rules: Was it Mistake of Terms? (Was it internal to contract?) (THINK ABOUT CONTRACT FORMATION DOCTRINES)

1) Mutual Mistake (ship X vs. Ship y): resolved by objective assessment of contract -> what a reasonable third party would conclude from the contract -> from looking at the words and conduct of the parties who entered into it (Staiman Steel) (Smith v Hughes) -> Contract= Offer + acceptance + consideration +certainty of terms!2) Unilateral Mistake (One party knows Ship X and knows the other party thinks ship Y): VOID -> unless it wasn't a fundamental term (in which case it would be a mistake of fact)

- Snapping up offers: where the offeree knows that the offeror has made a mistake in their offer -> and the offeree acts on that knowledge to their benefit -> might be void by court (Hartog v. Colin & Shields).

3) Cases for mistake of terms will tend to be when there are 2 different things (ex. pearless 1 and Pearless 2 OR regular steal and building steal)

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Was it Mistake of Assumption? - (Was it EXTERNAL to contract?) when mutual/common mistake, the mistake must be fundamental and a K is void when: (Bell v. Lever) (this category tend to be people arguing over the character of one thing) Exception: You CAN NOT rely on mistake doctrine when u created the mistake (McRae)

1) Mistake of individual -> you want to contract with a specific person -> contract is void! (Nemo Dat) (Shogun)- Exception: if it didn't matter who you were contracting with contract will be less likely to be void (Newcombe)- Fraud: if the identity didn't matter -> but there was fraud -> the contract is voidable -> but if it gets sold to the BFP before it gets void -> then BFP keeps it- K is less likely to be void if the contract is face-to-face VS. written -> a strong presumption that face to face interactions show intention to contract with that person (Shogun)

2) Mistake as to existence of subject matter - Before or at the time of contracting if the subject matter of the K is destroyed or doesn’t exist contract will be void3) Mistake as to quality – only if the subject matter is essentially different from what they thought they were contracting for

Was it a Misake in Recording? (Rectification): when there is a typographical or transciption error in recording agreement -> court will rectify contract to correct error (Shafron) If Requirements are met: (Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd. (SCC, 2002))

(1) the P must prove existence and content of the prior oral agreement(2) There must be "convincing proof" of the oral agreement (beyond a balance of probabilites but less than reasonable doubt)(3) P must provide percise wording of the rectification(4) P must show that D knew or ought to have known of the mistake in written document

Policy Issues Here: Certainty/Reliance: Limiting what contracts to void -> to promote certainty and predictability (caveat emptor) Unjust enrichment: still need to void some contracts to avoid unjust enrichment Power relations differential: higher position party more capable of bearing the cost because of their higher resources and the fact that they made the contract (ex. Bell v Lever) Bearing the risk: Who should bear the loss as between the mistaken party and the innocent third party?

Equitable Mistake: (Last ditch claim to make in contracts -> after normal mistake doctrine)1) Questions to consider: -> u don't have to meet all these 4 things!! -> these are just 4 things to consider!

a) is it unfair/unconscientous to party to seek enforcement of contract?b) Is the mistake sufficiently fundamental? (Solle)c) is either party at fault? -> No? (Solle)d) is one party taking advantage of other?e) If the contract allocated the risk of the relevant mistake, then mistaken party bears risk.

2) Law in Canada right now is Solle V. Butcher -> done through Miller3) Remedy: Contracts are voidable -> AS OPPOSED TO VOID4) Unilateral, Mutual and Common Mistake are voidable under Equitable Mistake5) Threshold NOT as high as Common Law Mistake -> but it's still tough to succeed w/ equitable mistake6) You can maybe use Great Peace as potential counterargument for Solle -> saying that Solle is NO longer used in Britian (look at impossibility of performance)

- u cud say that solle v. butcher type equitable mistake is too flexible -> and need to be reigned in

Non Est Factum (Not My Deed):o General rule: In order for the defense of non-est factum to succeed, the person must show that the transaction which he signed was essentially different in substance or in kind

from the one which he purported to sign. -> applies to mistakes of content AND mistakes of identity > leads to void contract! (Saunders)o Plea of non est factum is available to person who, for permanent or temporary reasons, is not capable of reading and sufficiently understanding the document signed. (notes)

Exceptions

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1) Negligence: Not available where the P was careless! (Saunders)- failing to take precautions which person ought to have taken; negligence in this context simply means carelessness; not a special or technical meaning

2) the actual document was not fundamentally different from the document as the signer believed it to be. (ex. Saunders)- Mistaken person must prove that he or she took all reasonable precautions in the circumstances. Generally insufficient to say “I relied on a trusted friend/advisor”.

3) A person of full age and understanding, who can read and write, is bound by their signature on a legal document (Newcombe Notes)

Contextual Factors to Consider for Mistakeo Price: Price may be relevant in determining the reasonable expectations of the party.o Knowledge and skill of the parties: The court is less likely to protect a mistake made by a person who possesses, or should possess, substantial knowledge or skill.o Ease of Avoidance: Who is in best position to avoid the mistake – who can avoid it the cheapest?o Common usage of the trade: The common usage of the trade may be another way in which the court can get a sense of what the parties probably expected. Also, trade usage

indicates normal allocation of risko Knowledge of ambiguity - snapping up: If one party is aware of the ambiguity they should presumably be bound to clear up the ambiguity. Often times expressed as the

“snapping up” point: taking an advantage that leads to inequitable results.

Raffles v Wichelhaus (1864) 2 ships passing in the night 9 Mutual Mistkae of Terms- > shows what a mutual mistake is!

no consensus ad idem

Staiman Steel Ltd. v. Commercial & Home Builders Ltd. (1976) (HC) P thought they were allowed to take all the steel -> D

said P can't take the building steel -> P wins

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Mutual Mistake of Terms: No Mistake -> Contract Enforcable Mutual Mistakes -> by objective assessment of contract -> what a reasonable third party would conclude from

the contract -> from looking at the words and conduct of the parties who entered into it Policy (Newcombe): Whose risk? Seller’s auction. It takes the risk – and it could have made it clearer – it could

have avoided the misunderstanding the easiest and at the least cost.

Smith v. Hughes Old Oats/New Oats -> Buyer backs out -> seller

(Smith) sues9

Unilateral Mistake: Holding -> Contract not void -> Caveat Emptor (and Re-trial) If Mistake of Fact: contract NOT void -> (Caveat Emptor) -> unless there was fraud/deciet by D

- A Party is not under a general obligation to disabuse the other party of a factual mistake, provided there is no fraud or deceit and the mistake is not induced by the contracting party.

If Mistake of Terms: no contract, unless court can apply objective formation principle and find that a reasonable person would have found that there was certainty as to the terms.

Bell v. Lever Brothers Ltd (1932) (House of Lords) undeserved severance fee -> when terminanting

employee19

Mutual Mistake Assumption about Essential Quality: Decision -> Contract NOT voidwhen mutual or common mistake, the mistake must be fundamental and a K is void when:

1) Mistake of individual -> intention is to contract with a specific person only -> contract is void!2) Mistake as to subject matter - Before or at the time of contracting if the subject matter of the K is destroyed or doesn’t exist, or you already own it3) Mistake as to quality – Mistake of both parties -> only if the subject matter is essential different from what they thought they were contracting for

McRae v. Commonwealth Disposals Commision (1951) (Aust High Court) -> contract for the ship that didn't exist

10 Mistake as to Existence of Subject: Decision -> Contract NOT Void1) Vendor cannot rely on mistake where it is responsible for the mistake

Morley Shafron v. KRG Insurance Brokers (Western) Ltd. (SCC 2009)-> restrictive employment K-> can't work w/in "METRO VANCOUVER" -> Employer argues rectification

10 Mistake in Recording - Rectification: Requirements for rectification NOT MET -> D (Morley Wins)1) Prior oral or written agreement is required to use rectification -> here there was no prior agreement

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Solle v. Butcher -> GOOD LAW IN CANADA Mistake as to apartments being rent controlled ->

plaintiff over payed -> defendant wins

Equitable Mistake - It was Mistake -> Contract Voidable1) You can set a mutual mistake aside in equity if it is fundamental – TEST: is the mistake sufficiently fundamental?2) CASE OVERTURNED BY Great Peace Shipping in Britain!

Great Peace Shipping v. Tsavliris Salvage (2002) D trying to find ship for P -> distance of where the

ship was -> was unclear Overturns Solle and Follows Lever Brothers NOT GOOD LAW IN CANADA

Equitable Mistake - contract is NOT Voidable -> contract was possible to perform!1) Impossibility test: In considering whether performance of the K is impossible, it is necessary to identify what it

is that the parties agreed would be performed. Look at express terms as well as implication arising out of surrounding circumstance

Miller Paving Ltd v. B. Gottardo Construction (2007) (Ontario CA) P thought it had been fully paid but was mitaken

Equitable Mistake in Canada- contract is NOT Voidable -> because P was at fault- Reaffirms Solle v. Butcher For Canada -> Equitable mistake is still good law in Canada

Shotgun Finance Ltd. v Hudson (2003) (UK HL) fraudster buys car from P sells it to innocent buyer

(H)

Mistaken Identity - contract was void -> Nemo Dat -> H has to give car back1) Mistake as to who is party to the contract- > will void the contract (this is a unilateral mistake)2) Was it face to face or by written document?

Saunders v. Anglia Building Society (HL) (1970) old lady gives transfer agreement of her house to

nephew's friend, when she wants to give it to nephew

Non Est Factum - contract NOT void1) For Non Est Factum defense: the person must show that the transaction which he signed was essentially different

in substance or in kind from the one which he purported to sign.2) Non est factum is not available where the P was careless!

WAS THE CONTRACT FRUSTRATED? Frustration: assumptions or terms with regards to future events -> mistake arises in the future

General Rule: For Frustration -> requirements (KBK No. 138) -> APPLY KBK!!!

1) Basic Underlying Assumption: The element of the contract, or circumstance that is disrupted by the frustrating event, must be fundamental/foundational, such that it would be tacitly assumed by the parties to be a pre-condition to performance, for example:

- the continued existence of the goods or of the subject matter of the contract (Taylor v. Caldwell – music hall)- the continuation of certain conditions or the happening of an event (Krell v. Henry – coronation)

2) Must occur after formation.3) No Fault: must not be self-induced -> beyond control of either part4) Unanticipated: must not have been foreseeable5) Risk: Risk must not have been allocated (explicitly or implicitly)6) Substantial Hardship

- major impact on economics of transaction- must be more than mere increase in expense that makes the contract less profitable- change is permanent- must deprive one of the parties of the substantial intended benefit of the transaction- National Carriers Ltd. held that the change must be so significant that it would be “unjust to hold [the party] to the literal sense of its stipulation in the new circumstances”

a) Destruction of Commercial Purpose: (Krell) -> u can maybe use Krell as a factual example!

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b) Destruction of Commercial Value: contract becomes voidable if -> The unexpected event must be so far beyond the range of risks that the contract allocates that it constitutes a fundamental change in the bargain: (KBK No. 138)o “a radical change in circumstances”o “significantly changes the nature of the contract"o renders the obligation “radically different”, a “different thing”o Foundation of contract (Krell)o KBK:

- must be more than mere inconvenience – must make contract fruitless- must be radical change in contract (completely affects nature, meaning, purpose, effect and consequences of contract)- change must be permanent

Policy: Who should bear the risk of the unforeseen event?

Outcome: Contract Voidable (aka open to being rescinded by court)

Remedies: Common Law: restitutionary remedies are available (Fibrosa Spolka Akeyna v. Fairbairn Lawson (1943, H.L.)) Statutory: Reliance damages are also availabe even where there was NO pre-payment (s.5 Frustrated Contracts Act of BC)

- Apportioned EquallyTaylor v. Caldwell (1863) -> Historical Case! contract for concert dates -> but the theatre burns

down11

Impossibility - Desctruction of object: parties are discharged from performance of contract A party’s duty, under a contract is discharged if performance of the contact involves particular goods, which

without fault of either party are destroyed, rendering performance impossible.

Krell v. Henry (1903) Corronation ceremony -> hotel room -> ceremony

cancelled12

Desctruction of Commercial Purpose: parties are discharged from performance of contract Test for frustration:

1) What is the foundation of the contract, having regard to all of the circumstances?2) Was performance of the contract prevented?3) Was the event that prevented the performance of the contract of such a character that it cannot reasonably

be said to have been in the contemplation of the parties at the date of the contract?

KBK No. 138 Ventures Ltd. v. Canada Safeway Ltd. (BCCA, 2000) Bought commercial land -> it got rezoned ->

frustrated purpose of the land purchase

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Desctruction of Commercial VAlue: contract was frustrated -> performance no longer required Risk: Frustration argument will NOT be allowed if there was an allocation of risk No Fault: the argument only works if the event was not self-induced and was beyond the control of both parties Event must occur after the formation Unanticipated -> risk was NOT reasonably foreseeable mere knowledge of development intention is not a sufficient ground for frustration in case of subsequent rezoning

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WAS THERE ECONOMIC DURESS?General rules:

Modern Test: Universe Tankships Inc. of Monrovia v. International Transport Workers Federation (1982, JCPC)(1) Was there a threat/Compulsion?: Pressure amounting to compulsion of the will of the victim.Relevant factors include:

- whether the coerced party protested;- the availability of alternative courses of action;- the existence of independent legal advice; and- whether the coerced party took steps to avoid the contract

(2) Was there Illigitemacy?: The illegitimacy of the pressure exerted in light of the nature of the pressure (i.e. was there a threat of unlawful action?) and the nature of the demand (what was being demanded). -> doesn't necceserily mean that it has to be something illegal for there to be illegitemacy(3) Was there Approbabtion by P?: If a victim expressly or implicitly approbated (approved) the contract after the pressure ceased to exist, the victim will be denied relief.

Exceptions: Contract Modifications: For Contract modifications apply Nav Canada

Outcome: contract is voidable

Greater Fredericton Airport Authority Inc. v. Nav Canada (2008) (New Brunswick CA)

Nav was to provide aviation services -> Nav says it won't pay for equipment GFAA says it'll pay "under protest" -> but never does -> Nav sues -> GFAA wins!

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Contract Modification: there was Duress! Commercial pressure may amount to actionable duress To establish economic duress, three conditions must be met:

1) the promise but be made under pressure (demand/threat);2) the pressured party must have no option but agreeing.3) If these conditions are met, three factors must be analyzed:

a) was the promise supported by consideration?b) was the promise made "under protest"?c) were reasonable steps taken to disaffirm the promise?

ILA is not enough to overcome finding that party had no legal aternative If the contract variation is asked for by the promisor (the victim) -> the promisor cannot argue

coercion/duress

UNDUE INFLUENCE

Undue Influence: The unconscientious use by one person of power possessed over another in order to induce the other to enter a transaction

General rules: 2 ways to prove undue influence1) Actual Undue Influence: Claimant must prove the wrongdoer exerted undue influence.

relationship of trust/confidence is NOT required -> NO CASES ON THIS!

2) Persumed Undue Influence: to show a relationship of persuasive influece must be: Show relationship of dependence/dominance (Royal Bank of Scotland) Show suspicious/inexplicable dealing (Royal Bank of Scotland)

a) De Jure: previously recognized categories (list is NOT exhaustive) -> you Have to also show suspicious/inecplicable dealing!

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Fiduciary relationships Trustee/beneficiary parent/child Solicitor/client Doctor/patient Priest/worshipper

b) De Facto: Show relationship of dependence/dominance -> must show relationship of trust/confidence -> trust/confidence helps to prove dependance/dominane

3) No Manifest Disadvantage required for Non-commercial relationships -> DO commercial ones require it? -> for our purposes NO -> La Forest says NO (Geffen)4) Burden of Proof: is on the claimants5) Once Undue Influnce is proved: Onus then shifts – “influencer” must show that the transaction was entered into as a result of “full, free and informed thought”.

show no actual influence was deployed in the transaction

Outcome: contract is voidable when the claimant wants -> court DOES NOT immediately terminate the contract

When to Use this doctrine: Catches some situations that fall short of duress

Geffen v Goodman Estate (SCC, 1991) family dispute over the estate -> was supposed to go

to children but it changed!20

No Undue Influence For there to be a finding of undue influence:

1) nature of the relationship - there must be dominance, manipulation, and coercive abuse of power; No manifest disadvantage required

Royal Bank of Scotland Plc v. Etridge (No. 2) (2001) (HL) husband using loan for their businesses that was

given w/ house as collateral -> so wife was garuntor -> businesses had failed -> so house was being repossesed -> wife said no -> my share of the the home was taken under Undue influence -> the UI claimed was b/w husband and wife

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There was Undue Influence - 3rd parties to the Undue Influence Proving Prima Facie UI requires:

1) P place trust and confidence in D w/ regards to managing financial affairs2) There was a transaction which call for an explanation

WHENEVER banks see a garuntor for a loan THAT is a non-commercial partner -> they should be put on inquiry -> and must take steps to explain the risks of being a garuntor to the garuntor!

Burden of proof is on the claimants Wife and Husband is NOT a de jure category of dependance -> but it is a de facto

WAS THERE UNCONCIONABLITY?

General rules: Two Requirements of Traditional Approach:1) Improvident Bargain2) Inequality in position (unequal bargaining power)

- Contextual factors: economic resources, knowledge (Harry), need, disability that falls short of legal incapacity, etc.- Common categories: there are no express categories of relationship BUT often involve pre-existing relationships where there is potential for inequality of bargaining power

a - familial relationships (Lloyds Bank)

Presumption of Unconcionbility is established one the 2 requriements are met (Morrison) Person who asserts the K is unconscionable must prove it is so on a balance of probabilities (Amicus)

Once presumption is established burden is on other party to rebut the presumption (Morrison) It is addressed/analyzed at the time contract formation

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3) BC does the traditional approach

Wider View of Unconcionability: (Loydd) (Harry) U can look at general factors of unfairness -> bring in more factors-> like age or other things -> loo

Lloydd : adds two other requirements:1) Undue pressure or influence -> not neccesarily conciously -> (ex. we've been friends for many years ect.)2) No independent legal advice

Commnity Standards Approach: Is the transaction, seen as a whole, sufficiently divergent from community standards of commercial morality? (Harry)

BPCPA (s. 8-10): has statutory version of unconsionability -> and it's NOT just at the formation of the contract- >it includes things that came after the contract was made!

- s. 8 Substance for BPCPA is same as common law -> applies only to CONSUMER TRANSACTIONS

s. 8(1) An unconscionable act or practice by a supplier may occur before, during or after the consumer transaction.

s. 8(3) Without limiting subsection (2), the circumstances that the court must consider include the following:(a) Undue Pressure: "that the supplier subjected the consumer or guarantor to undue pressure to enter into the consumer transaction;"(b) Advantage: "supplier took advantage of the consumer or guarantor's inability or incapacity to reasonably protect his or her own interest because of the consumer or guarantor's physical or mental infirmity, ignorance, illiteracy, age or inability to understand the character, nature or language of the consumer transaction, or any other matter related to the transaction;"(c) at time K was entered into, total price grossly exceeded the total price at which similar subjects of similar K's were readily obtainable by similar consumers;(d) that, at the time the K was entered into, there was no reasonable probability of full payment of the total price by the consumer;(e) that the terms or conditions of the K were so harsh or adverse to the consumer as to be inequitable;

- s. 9(2) -> once claimaint claims -> burden is on defendants -> burden is different from common law

Outcome: contract is voidable

Morrison v. Coast Finance Ltd. Old lady takes out loan on her house to give to two

young dudes you unconcionably persuaded her11

There was Unconcionability Presumption of Unconcionability: An unfair deal with inequal power between the parties gives rise to a

presumption of unconscionability Once this is raised the stronger party must rebut the presumption

Lloyds Bank v. Bundy (1975) (UK CA) dad got loan off of mortage -> to give son money ->

to run his business -> business failed22

There was Unconcionability A contract is voidable for unconscionability if:

1) the terms were very unfair or consideration inadequate;2) bargaining power was impaired by necessity, ignorance or infirmity;3) undue pressure or influence was used, not necessarily consciously; and4) There was an absence of independent advice.

Harry v. Kreutziger (1978) BCCA uneducated indidan with fishing liscence -> sells it

for cheap23

There was Unconcionability -> on both tests! applies Morrison Approach AND, Community Standards approach: Is the transaction, seen as a whole, sufficiently divergent from community

standards of commercial morality such that it should be rescinded?

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WAS THERE ILLEGALITY BY D?

General rules: Classic Rule: a K will not be recognized if it's purpose is contrary to public policy -> not enforce -> void ab initio a P cannot bring an action if the intent of the K is illegal and the Court also will not aid a D

Categories:1) Was there a breach of common law? or public policy? - Categories Contrary to CL/Public Poilicy: (Holman v. Johnson (1775, Eng.)

(i) Contracts injurious to the state ( Holman)(ii) Contracts injurious to the administration of justice (Holman)(iii) Contracts involving immorality (Holman)(iv) Contracts affecting marriage (restricting right to whom you can marry) (Holman)(v) Contracts to benefit from a crime (Holman)(vi) Contracts to commit a tort/common law wrong (Holman)(vii) Restrictive Covenants (Nordenfelt Test): are prima Facie Unenforcable -> unless it is show to be reasonable w/ regards to the parties interest and public interest (Shafron)

- 3 factors that contribute to reasonableness of restrictive covenants are: geographic, temporal and activity

2) Was there a breach of Statute? Modern Rule:

o Court will no longer automatically hold a contract void simply because the contract is prohibited by statute -> if not enforcing the contract will go against purpose/object of the statute -> court may grant relief by exceptions to illegality rule and hold the contract not illegal and thereby enforces it (Still)

o Factors: look at:1) consequences of invalidating the contract2) Policy: the social policy reasons for the prohibition of the staute3) Class of person: who was supposed to be benefited under the statute

Contrary to statute when:- is expressly or impliedly prohibited by statute;- is entered into with the object of committing an act prohibited by statute;- requires performance contrary to statute; and- confers benefits in violation of a statute

Remedies - Two types: Notional: the provision is read down -> to be more reasonable

- Shud not be done w/ employment contracts -> (Shafron) Blue Pencil: removing a line or part of the provisions -> striking it out

- is appropriate for restrictive covenants

Outcome: contract void

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KRG Insurance Brokers (Western) Inc. v. Shafron restrictive employment contract -> can not work w/in

"METRO VANCOUVER" -> was ambigious -> ambiguity not resolved -> so unenforcable -> Shafron Wins

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Public Policy/Common Law - Resctrictive Covenants: are prima facie unenforcable -> here it WAS unenforcable A restrictive covenant is prima facie unenforceable unless it is shown to be reasonable with respect to the parties

and reasonable with respect to the interests of the public (Nordenfelt test). An ambiguous restrictive covenant can only be enforced if the ambiguity can be resolved. Buyer/seller contracts can be more restrictive than employment contracts

Holman v. Johnson (1775, Eng.) 24

Common Law Illegality: No court will lend its aid to a man who found his cause upon an immoral or illegal act. Categories that are unenforcable: (i) Contracts injurious to the state, (ii) Contracts injurious to the administration

of justice, (iii) Contracts involving immorality, (iv) Contracts affecting marriage (restricting right to whom you can marry), (v) Contracts to benefit from a crime, (vi) Contracts to commit a tort/common law wrong

Still v. Minister of National Revenue (federal Court) (CA) Immigrant -> filing for permanent residence ->

started working before she was allowed -> wants unemployment insurance

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Statutory - Modern Approach: The Contract is Enforced -> Not illegal because of policy Court will no longer automatically hold a contract void simply because the contract is prohibited by statute -> if

not enforcing the contract will go against purpose/object of the statute -> court may grant relief by exceptions to illegality rule and hold the contract not illegal and thereby enforces it

Factorsn to look at:1) consequences of invalidating the contract2 Policy: the social policy reasons for the prohibition3) Class of person: the determination of the class of persons for whom the prohibition was enacted.

GOOD FAITHGeneral Rules: Good Faith is an organizing principle -> NOT a hard rule (Bhasin) The organizing principle is circumstance specific (Bhasin) There are some existing Common Law Duties for Good Faith -> list is NOT exhaustive (shown in Bhasin)

Cooperate: where the parties must cooperate in order to achieve objects of the contract (ex.->vendor duty to take all reasonable steps to complete sale -> Dynamic Transport) Use Discretion Wisely: where one party exercises a discretionary power under the contract -> the discretion must be exercised reasonably, honestly and in light of purposes for

which contract was conffered (McKinlay Motors Ltd. v. Honda Canada (Nfld, 1989)) Not allow party to evade their K duties: 'where one party seeks to evade contractual duties. -> Good faith disallows party trying to avoid contractual duties -> Example:

Avoiding a restrictive covenant or right of first refusal by incorporating related corporate entities. MDS Health Group Ltd. v. King Street Medical Arts Centre Ltd. (Ont., 1994) New duty -> Honest Performance: requires the parties to be honest with each other in relation to the performance of their contractual obligations. (Bhasin)

Policy: transperancy in the market place (good for reliance in the market), social utilitiy -> honesty is important, Negative policy: good faith is nebulous -> it's too broad of a concept

Remedy: damages won't neccesarily make contract void or make contract voidable -> but u can try and use it to repudiate contract You can't use good faith on it's own to get out of a contract -> UNLESS IF GOOD FAITH was a condition

Bhasin v. Hrynew (SCC, 2014) P and D had a a franchise/franchisee type

relationship -> D had misled/been dishonest to P w/ regards to his obligations

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Duty of Honest Performance: duty was NOT met -> P wins Duty Honest Performance: duty of honest performance requires the parties to be honest with each other in

relation to the performance of their contractual obligations. You can't contract out of it

Good Faith is an organizing principle -> NOT a hard rule The organizing principle is circumstance specific

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CONSUMER PROTECTIONGeneral rule: you can't CONTRACT out of these statutory rights

Main Mechanisms:1) Sale of Goods Act: Purpose: Provides implied conditions with respect to description (s. 17), quality and fitness (s. 18), and samples (s. 19). (the idea is to help consumers make more informed choices) Application:

applies specifically to goods NOT services DOES NOT apply to business to business transactions (including individuals who want to use the goods for business purposes) -> JUST to consumer/business transactions Consumers and suppliers CANNOT contract out of these rights -> (ex. CANT contract to get out of including the s. 17-19 requirements in your transaction or contract)

2) Business Practices and Consumer Protection Act (BPCPA): Purpose: punishes/prevents deceptive acts (s. 5) and unconscionable acts (S. 8-10) by supplier Burden of proof: generally once something is alleged -> it is on the supplier to show that they were not acting deceptively Remedy: if there was unconcionable or deceptive act transaction is NOT binding on the consumer or garuntor -> also may get:

(a) Declaration: that an act or practice engaged in or about to be engaged in by a supplier in respect of a consumer transaction contravenes this Act or the regulations;(b) Injunction: an interim or permanent injunction restraining a supplier from contravening this Act or the regulations.

Application: Applies to BOTH goods AND services -> but only to consumers! applies to deception before the contract is made (s. 4(2)) applies to suppliers from outside of BC -> that are supplying to inside of BC and people who are advertising/soliciting into BC applies regardless of whether there's contract privity -> you can be a 3rd party you can’t waive the rights that u have under this act applies to unconcionablity before, after or during the contract

3) Common Law: of Unconsionability Application: Only applies to unconcionabliy at the beginning of the contract

Purpose/Policy: Consumer protection policies address market failure and disparities between manufacturers/sellers and consumers in knowledge, bargaining power and resources.o Information Assymetry: deal with information gap b/w consumer and vendor

Rushak v. Henneken (1991, BCCA) german car -> damage of car was contemplated by

the vendor but never stated ->supplier had said it was a "a very nice car" and "a good vehichle"

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Caveat Venditor: there was deception thereby breaching Trades and Practices Act ->supplier liable A vendor/supplier CAN NOT give unqualified opinion about quality of product -> when they have factual

knowledge indicating that their opinion might be wrong “Puffery” cannot, excuse this act

Vendors/suppliers should NOT make any potentially misleading statement including honestly-held opinions the supplier knows that giving the opinion without appropriate qualification may mislead

Loydchuck v. Cougar two people on zipline collieded -> because of

employees negligence -> there was negligence waiver30

Waiver of Liability: supplier not liable -> contract enforced Liability releases/waiver (recreational waivers) are not against public policy and generally not unconscionable there was NO deception or unconciounability in the waiver

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WHAT REMEDY DO WE GIVE? When to address remedidies? -> Once you've established that a contract, that it's been breached and there's NO excuse for that breach

LAY OUT ANSWER WITH SPECIFIC HEADS OF DAMAGES -> EXPECATION, RELIANCE and RESTUTUTION!!! Types:

Common Law -> Damages: 3 types -> expecation, reliance and restitution Equitable Remedies: Specific Performance and Injunction

Damages: General rule: Expecatation Damages -> Measure: expected benefits for Plaintiff

PECUINARYo How should expectation damages be measured?:

1) Cost of Performance: the cost of buying substitute performance from another including the cost of undoing any defective performance (Groves)2) Difference in Value: the difference between the market value of the property that the contract breaker was supposed to give you MINUS the market value that he/she actually gave you. (Hawkins v. McGee (1929, US)) (Peevyhouse)

- Economic Waste: Damages should be limited those that do not cause economic waste or to those damages where the costs involved are not disproportional to the end obtained. (Peevyhouse)

3) Middle Ground b/w the first two - compensation for consumer surplus: P gets the personal/subjective value that they placed on something over and above market value. (Ruxley Electronics (1996, House of Lords)4) Policy: Unjust enrichment -> Giving Cost of performance vs. Difference of value may unjustly enrich plaintiff

o Was there a Loss of a Chance?: The loss of a right to belong to certain class of competitors is of a pecuniary/financial value and should be awarded damages (Chaplin) When you have a chance at a certain amount of money (or a job) -> u can get damages w/o proving that you would have been successful at interview (Chaplin) Courts are NOT prevented from awarding expectancy damages simply because there is an element of guesswork in the assessment (Chaplin) 3 Requirements to prove loss of chance damages: (Folland v. Reardon (Ont, CA, 2005))

1) the plaintiff must show that it lost a chance due to the defendant’s conduct;2) the chance must be sufficiently real and significant to rise above mere speculation;

- The numbers are NOT clear -> the courts have gone as low as 20% chance before3) the outcome did not depend on the plaintiff’s own conduct;4) the loss of the chance must have some practical value (includes Non-monetary things)

NON-PECUINARYo Was there loss of enjoyment or mental distress? (Fidler)

To give damages for mental distress coming from breach court must be satisfied that (Fidler):(i) An object (doesn’t have to be THE object) of the contract was to secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties; and(ii) The degree of mental suffering caused by the breach was of a degree sufficient to warrant compensation.

Psychological Benefit DOES NOT have to be the MAIN purpose of the contract (Fidler) Includes damages for physical inconvenience and discomfort caused by a sensory experience (Wharton -> bought Caddilac -> and car kept making a buzzing noise!) Include loss or death of pets (Newell)

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PECUNIARY AND NON-PECUINIARYo Should there be punitive damages? (Whiten -> upheld by SCC in Keays v. Honda Canada Inc. )

The court held that there are two basic requirements for an award of punitive damages:A) Exceptional: First, the misconduct must be found to be highly reprehensible.

- misconduct that can be characterized as “high-handed, malicious, arbitrary or highly reprehensible … that departs to a marked degree from ordinary standards of decent behavior.”

B) Second, the misconduct must be an independent actionable wrong aside from the main cause of action. (a separate private law cause of action)C) Policy: Must be Exceptional, rational (purpose of denunciation), and Proportional

- Proportionality with regards to: blameworthiness of the D’s conduct, vulnerability of the P, harm directed at the P, need for deterrence, other penalties that have already been assessed for the same misconduct of D and to the advantage wrongfully gained by the misconduct

o Remotness (RF): Were the damages too remote? The damages to which a non-breaching party is entitled are those arising naturally from the breach itself or those that are in the reasonable contemplation of the parties at the time of contracting. (Hadley) Communication of Special Circumstances: Were damages in the reasonable contemplation of the parties—either because they should have been in the usual

course or because of the communication of the special circumstances? (Hadley -> upheld by Scyrup in Canada)) fact of communication plus particulars: clarity, specificity and timing. (Differnce outcome of Scyrup and Victoria Laundry) Was there an assumption of responsibility? (Cornwall Gravel, page 890, note 5). It will not be conclusive - but may be an important factor

Other Factors to look at: (Newcombe)1) Expertise/Knowledge of D (Victoria Laundry)

Is there an established relationship between the parties? -> then defendant’s knowledge of plaintiff’s business is likely to be greater.2) Nature of Defendant’s business - (ex. Courrier vs. Seller -> Hadley vs. Vic Laundry)3) Nature of the product or service – second hand or the top of the line4) Sophistication of Parties - generally the more sophisticated/knowledgeable the parties, the more likely the damages in question will be foreseeable.5) Ordinary allocation of risk - understandings or expectations in the marketplace (custom of the trade).

Contractual liability should be based on legitimate understandings of parties – fair and reasonable risk allocation.6) Proportionality: comparison of contract price and nature of the service with risk (ultimate loss claimed).

Exceptions:o Reliance: Plaintiff gets back what they had before the contract -> Measure: what P. has lost

Were the expectation damages calculable?: P will get reliance damages when it is impossible/unrealistic to come up with a value of what their expectation damages were! (McRae) (Anglia)o Burden of Proof: once prima facie reliance costs have been shown (the costs incurred) -> onus is on D to prove that those costs weren't real reliance costso Damages prior to contract formation: D will be liable for “expenditures incurred before the contract, provided that it was such as would reasonably be in

the contemplation of the parties as likely to be wasted if the contract was broken” (Anglia) No double Recovery: if both expectation and reliance are appropriate possible remedies -> you can't get both (Sunshine Vacation Villas Ltd) Expectation damages are a ceiling: u can’t get reliance damages that are more than ur expectation damages (Sunshine Vacation Villas Ltd) Once expectation damages are shown to be incalculable -> it is on the D to prove that P would have lost money (Sunshine Vacation Villas Ltd)

o Was there an oppurtunity for mitigation?: the plaintiff cannot recover for losses that could reasonably have been avoided. Reasonable steps: What is reasonable for claimant to do and the time within the claimant must do it are questions of fact dependent on the circumstances of the

case. -> Based on an Objective (reasonable person) test -> standard on the P is relatively low! -> since P is responding to an unexpected event! Assessment of damages is made at time of the breach You may have to continue to deal w/ the person who breached your contract -> in order to meet ur duty to mitigate (Payzu) ->Except for Person service contracts

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Additional Costs: P may recover costs reasonably incurred in taking steps to avoid a loss –> these costs are recoverable even if attempt to avoid the loss is fruitless. Exception: The “date of breach” rule is not a literal one; courts will usually only require that plaintiffs mitigate within a reasonable time of breach. (Asamera) Courts have the discretion to take into account any special circumstances that indicate it is unreasonable to require the plaintiff to mitigate immediately.

(Asamera) Some Special Circumstances: if the good contracted for is unusual or unique, if the plaintiff is exposed to risk from mitigating, if the plaintiff has inadequate

funds or if the nature of the good means it cannot be resold instantly. One common alternative is to award damages calculated at the time of trial. Policy: Unfair Surprise: avoid hardship and unfairness -> unfair surprise for D Risk: fair allocation of risk -> usually at time of breach -> P is best suited to mitigate the risk Promote Efficiency: avoid economic waste/promote economic efficiency -> keep cost of the breach low

o No Damages: court will not give damages for losses, if P would have lost money anyways (Bowlay). D shouldn't have to put P in a better position than P would've been

o Restitution: Plaintiff gets back what they had before the contract Almost never comes up in damages Measure: what Defendant has benefited remedy for when there WAS NO CONTRACT!!

Policy for having Expectation as Default:o Easier to calculateo Most effective measureo Promotes market ordering: by promoting reliance, promoting planning for the future and allocating risko Allows for option contracts

General Policy Concern: balancing reasonable expecations of one party w/ the lack of unfair surprise for the other party

McRae v Commonwealth Disposals Comm. (1951, Aust. H.C.) non-existent boat -> in a non-existent reef 43

Reliance Damages: impossible to calculate P will get reliance damages when it is impossible/unrealistic to calculate what their expectation damages were! Burden Shift: The fact that the expense was wasted flowed prima-facie from the fact that there was no tanker; The

burden is now thrown on the Commission of establishing that, if there had been a tanker, the expense incurred would equally have been wasted

Anglia Television v Reed (1972, Eng. CA) Reed agrees to star in movie -> later backs out -> not

clear how much money the movie would had made 43Reliance Damages: impossible to calculate - damages prior to contract formation

D will be liable for “expenditures incurred before the contract, provided that it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken”

Sunshine Vacations v. Hudson’s Bay (BCCA, 1984) D was supposed to open up spots in there stores for

P's store to come in -> they didn't -> P lost profit and incurred expenses -> which one to pic?

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Reliance Damages: impossible/difficult to calculate -> expectation damages weren't clear! You can only get one of the two (reliance or expectation -> NOT both) Expectation damages are a ceiling! -> u can’t get reliance damages that are more than ur expectation damages lost profits must be clear in order to get expecation

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Bowlay Logging v Domtar (1978, BCSC) timber contract -> P need D to provide trucks -> D

doesn't provide the trucks -> this was a bad deal so D is actually losing money -> he can't claim lost profit

44No Damages: because P would have not made profits either way

court will not give damages for losses -> if P would have lost money anyways Expecation damages are the ceiling

Chaplin v Hicks (1911, Eng. CA) beauty conest -> contestant wasn't informed she

was in top 50 -> lost oppurtunity to win45

Expecation Damages: Loss of a Chance -> P got reliance damages! The fact that damages CANNOT be assessed with certainty DOES NOT mean that D can get out of paying damages

for a breach of contract The loss of a right to belong to certain class of competitors is of a financial value and should be awarded damages When you have a chance at a certain amount of money (or a job) -> u can get damages w/o proving that you

would have been successful at interview.

Groves v. John Wunder Co (Minnesota Supreme Court) D got into contract to remove dirt and gravel -> D

payed for the dirt/gravel -> D had a duty to make sure the site was clean when they left -> D WILLFULLY didn't leave it clean -> P sues

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Expecation Damages: Cost of Performance Measure The proper measure of damages is the reasonable cost of performing the part of the contract that the defendant

failed to complete For contracts where value is increasing as opposed to being damaged -> damages equal the cost of performing

the contract, not the difference between the value Difference in Value measurement only applies to where there has been damage to the land -> not a lack of benefit

Peevyhouse v Garland Coal and Mining Company (Oklahoma Supreme Court) contract for mining on P's farmland -> D promises to

fill in the holes -> but never does -> cost to fill in the holes would be way more than the actual value of the land or the decrease in the value of the land

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Expecation Damages: Difference in Value Measure Damages should be limited those that do not cause economic waste or to those damages where the costs

involved are not disproportional to the end obtained. Plaintiffs may not gain more in damages for a breach of contract than actual performance is worth.

Radford v. De Froberville (England, 1977) P sells part of his land to D -> part of contract is for D

to build a fence b/w two pieces of land -> D does'nt48 Expectation Damages: Cost of PErformance -> similar situation as Peevyhouse but opposite judgement

Ruxley Electronics (1996, House of Lords) swimming pool installed -> wasn't deep enough ->

didn't affect property value -> and would be too expensive to re-install -> but some value was taken away in the eyes of the P -> (comfort value ect.)

48Expectation Damages: compensation for consumer surplus

Measure: personal/subjective value a person places on something over and above market value. ends up being in between difference in value and cost of performance

Hadley v. Baxendale (1854) -> KEY CASE!! Shaft for steam engince -> D is the courier for the

part (not seller) -> P doesn't tell D how important it is -> Decision: D could not have RF that this would lead operations to shut down

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Remoteness: too remote -> NO damages The damages to which a non-breaching party is entitled are those arising naturally from the breach itself or

those that are in the reasonable contemplation of the parties at the time of contracting. Entitled to damages if:

(i) Natural: arising naturally (i.e. in the usual course of things); or(ii) Special: in reasonable contemplation of the parties (as a result of the notification of special

circumstances)Victoria Laundry (Windsor) Ltd v Newman Industries Ltd P (laundry) needed iron for everyday business -> also

needed it for a new lucrative contract

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Remotness: Decision -> damages from everyday business were RF but the lucrative contract was not RF It’s enough if D ought to have reasonably foreseen the loss rising from a contract breach Expertise of the D matters

Scyrup v. Economy Tractor Parts Ltd (Manitoba CA)P buys dozer parts & tells D why it's important 50

Remotness in Canada: damages NOT remote -> because of communication of circumstances Uphold Hadley v. Baxendale in Canada

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Koufos v. Czarnikow (C.) (The Heron II) D shipping sugar to P -> takes too long -> sugar

price drops-> P hadn’t told D that he wanted to sell immediately -> P loses profits

52Remoteness: NOT too remote -> D should have RF that prices can fluctuate

Causation is NOT enough for remedy -> likelihood of that something happening must be sufficiently likely

Fidler v. Sun Life Assurance Denial of long term disability benefits KEY CASE ON LOSS OF ENJOYMENT

Loss of Enjoyment: there should damages for metal distress To give damages for mental distress coming from breach court must be satisfied that:

(i) An object (doesn’t have to be THE object) of the contract was to secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties; and(ii) The degree of mental suffering caused by the breach was of a degree sufficient to warrant compensation.

Psychological Benefit DOES NOT have to be the MAIN purpose of the contract

Jarvis v Swans Tours Ltd brochure said trip would be amazing -> but it

sucked

Loss of Enjoyment: there should damages for metal distress/loss of enjoyment1) You are entitled to get damages for mental distress in a breach of a contract when you rely on an expectation – when contract itself was for enjoyment and pleasure2) Any contract that deals with “peace of mind” for enjoyment and entertainment contains an intangible component that need be remedied through damages

Whiten v. Pilot house fire -> insurance company being assholes

Punitive Damages: there should damages for metal distress/loss of enjoyment• The court held that there are two basic requirements for an award of punitive damages:

A) Exceptional: First, the misconduct must be found to be highly reprehensible.- misconduct that can be characterized as “high-handed, malicious, arbitrary or highly reprehensible … that departs to a marked degree from ordinary standards of decent behavior.”

B) Second, the misconduct must be an independent actionable wrong aside from the main cause of action.C) Policy: Must be Exceptional, rational (purpose of punishment, deterrence, and denunciation), & Proportional

• Punitive Damags are rarePayzu Limited v. Saunders (1919, ENG CA) Discount sale of silk

Mitigation: P should have taken further steps to mitigateYou may have to continue to deal w/ the person who breached your contract -> in order to meet ur duty to mitigate

Asamera Oil Corp v. Sea Oil P lent his shares of company to D -> but d wouldn't

give it back -> P not required to buy from someone else immediately cuz market was to violatile

Mitigation: P was not required to look for other buyer immediatelyCourts have the discretion to take into account any special circumstances that indicate it is unreasonable to require the

plaintiff to mitigate immediately. (AsameraSome Special Circumstances: if the good contracted for is unusual or unique, if the plaintiff is exposed to risk from

mitigating, if the plaintiff has inadequate funds or if the nature of the good means it cannot be resold instantly. One common alternative is to award damages calculated at the time of trial.

CONTRACT DRAFTING AND LAWYERS FUNCTIONSHow to Draft Consider:

1) Generally what's the purpose of this contract? What are my client's obligations? What is the other parties? What does my client want? What does other side want? What are the risks?

2) Specific: what are the market conditions? -> is it buyers or sellers market -> this will show you how much leeway you have

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Key Terms to think about (look at) in an agreement: Rent, What it’s being used for, Improvements and who is going to pay for those improvements.

Drafting the Contract:1) General Rule: you want to decrease ambiguity -> (sometimes the word "reasonable" in a contract is not enough -> you want to make standards objcective

Exceptions: you might want to create vagueness ->when dealing with the obligations of your client -> this allows for wiggle room later (litigation ect.) (Ex. client is tenant)

2) 5 C's1) Clear: plain language -> short sentences2) Concise: No redundancies, no repetition3) Comprehensive: everything important is expressed, legal requirements are met4) Consistent: defined terms are used properly formatting is internally consistent5) Connected: logical order

3) Things to Avoid: Overuse of Precedent -> especially when it doesn't properly apply to the new context

4) Things that are required:1) Legally Required

a) Execution: Signature Blocks?, Original Signature? -> it sorta dependsb) There are things that contracts don't NECCESARILY need -> but u might want to put in.

- DON't NEED original signatures -> but u can maybe get evidence from other things (email being sent to you ect.)- DON'T need to be notarized -> but u might wanna do it- DON'T need witnesses -> but maybe it’d be beneficial to have that

2) Statute:a) Sale of Goods Act Requirementsb) BPCPA: Consumer Protection act requirements -> s. 19

Mistakes to Look for:1) General Rule: you want to decrease ambiguity -> (sometimes the word "reasonable" in a contract is not enough -> you want to make standards objcective2) Sources of ambiguity: (From Readings)

1) Crappy pronouns -> ex. “it”!2) Lack of time references: Be clear about the timeframe or deadline for obligations to performed

- Crappy time references: Using words like “promptly” or “in a reasonable time”- Not making clear distinction b/w business days and non-business days

3) Legalese is A GOOD THING!!: for contract drafting don’t be worried about using legalese -> as long as u’re not using unnecessary words!3) BE CONSISTENT: if u create a definition stick to it and don't use the same word in different contexts or different words for the same meaning

ex. using will/shall/agrees interchangibly also don't make the definition too complex!

4) Lack of simplicity: make sure every provision can be interpreted easily -> take out unnneseceary words5) Passive Clauses: "they payment shall be done" -> u need to say who is doing what6) Cross References: issue is that when u change the thing be referenced it'll change the other provision as well. Also becarefull how you number provisiosn -> if u add a new

provision in the corssrefeerence number will change

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7) Preamble: does the preamble impose obligations? -> they're not supposed to8) Exlcusion Clauses that are not broad/inclusive enough -> ex. only says: "no liability for physical damage", u'd wanna add ALL DAMAGES (loss of enjoyment, mental damage ect.)

Dealing with Clients your job is to point out the risks to your client Depends on clients Knowledge (ex. If your client has entered this type of contract before it's gonna be easier -> but you still need to point out risks to them) Understand the needs of a client Make sure client send copy of the contract to their insurance broker Expectations: Give the client a realistic sense of the timeline

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