contracts sem1 devlin cans

8/8/2019 Contracts Sem1 Devlin Cans

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-judges attempted to find implied assent, court teases out a contract where partieswanted a contract

2 types of obligations:

1) voluntary - contracts, freely chosen, now role decreasing2) involuntary - torts, societally imposed, now role increasing

Elements of freedom of choice:

1) whether you want to contract - enter into contract-innkeeper and common carrier only exceptions, but dont have to give charity-common carrier transported goods, societal needs trumped private rights2) with whom?3) for what?-courts could declare contract ineffective because contrary to public policye.g. Truck Act - people paid in cash, to avoid company town probs.

Gaming Act - bets not enforced as contractN.B. Gaming public harm in 1800s but public good now that profits go to govt.

Problems with mutual assent:

1) was there really agreement?

2) laws became v. complex- became false that rules based on parties intentionse.g. frustration - contract terminated if unable to fulfill due to some extraordinary circ.

-wasnt clear that they were giving effect to parties intentions3) standardization of the law-real intention less imp., efficiency tool, standard clauses

e.g. leases and Sale of Goods Act

Weaknesses with freedom of choice doctrine:

1) little account ofsocioeconomic pressures - force person into contracte.g. monopolies on water and gas, no choice, no competition

2) little attention to inequalitiesbet. contracting partiese.g. employer and employee, small businessman and railway

Sanctity of Contract: (religious experience)

limits on sanctity if contract entered into under fraud, duress, or if contracts violatedcrim. law

violations of sanctity such as Truck Acts and Gaming Acts

contracts respected morally and strictly enforced legally in 19th cent.

Historical Overview I

F. Kessler, G. Gilmore, A. Kronman, Contract as a Principle of Order

A. Introduction

performs a normative analysis of underlying political ideas in U.S. (no such analysis for Canada)3 laws of nature for preservation of society:

1) stability of possession2) transference of consent3) performance of promises

contracts reflects value system of culture embedded in

tension between indiv. freedom and social controltransactions based on free bargain and genuine agreement compulsory adhesive contracts

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indiv. freedom social control

moving towards greater social control, legal machinery required by ec. system

Features/Assumptions about contracts:

1) individual is rational wealth maximizer2) state plays a minimal role3) contract law is facilitative, people live up to obligations

division of labour led to expectations of certain products, needed to ensure promiseskept

generates efficiency, certainty, predictability

freedom of contract as to form and content

contractual liability is based on volition, consent freely given

f.o.c. not just rooted in expediency + efficiency, reflected deep-seated political commitments

trickle-down theory, person serving own interests was also serving the community

monopolies, people too greedy others move in, provide goods at lower price

F.o.c. and role in devpt. of free-market capitalism:

1) hands-off attitude led to release ofhuman energy2) opposition to compulsory contracts3) theory ofobligation4) rejection ofequitable approaches to consideration and contract damages5) caveat emptor, buyer beware, could avoid bad contracts by shopping around6) idea that courts dont make contracts for the parties

self-interest, commutative (exchange) not distributive (distribution) justice, courts dont strikedown bad deals

contract law always maintained a degree of indep. from market relns., judges + lawyers did littleto slow the devpt. of market and antifraternal ethic

Why complete f.o.c. was a myth:

1) strike down contracts to commit crimes or torts etc., public rights trumped contractual rights2) strike down contracts in restraint of trade, rights of consumer trump3) increased resp. of seller forquality of goods (warranties)4) law ofequity5) consideration (principle of equity) for social control, looks at fairness of bargain, what given inexchange

Doubts about f.o.c.:

1) unequal p. distribution leads to f.o.c. as a one-sided privilege2) f.o.c. enables authoritarian legislation, but looks egalitarian, e.g. Youre free to choose MacJobs

Attempts to limit f.o.c. challenged and deemed socially dangerous:

1) Antitrust laws - prevent monopolies, reinterpreted to help them2) State statutes to protect weaker contracting party, e.g. minimum wages, max working hours

Pitney J. supporting f.o.c.:

always inequalities in contracts, need to uphold since are result of f.o.c.

dont interfere in fund. h.r. of liberty to contract and property (14th amendment)

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Justice Holmes dissenting (should be max hours for work in bakeries):

liberty to do as one likes without interfering with the liberty of others

saying that if dont legislate against tyranny and injustice then actually impinging onpeoples liberty to contract

Notion that freedom must be limited for its own preservation

1934, free market led to monopolies and political strengthening of monopolies

threatened collapse hence state had to intervene to limit freedoms

political democracy has to be supplemented by ec. and social democracy

Social control of contract resulted in:

1) contract evolved into branches ofspecialized lawe.g. labor, securities, public utilities, consumer legislation

2) contracts viewed as flexible commitments3) law of contracts covers small portion of actual contracts

Contracts evolving into new areas of study:

1) anachronistic concept, should be merged with obligations law

2) attend to diffs. between discrete (transactional) relns and continuing ones3) more trusting, interfering contractual relns.

Still have shadows of classical contract law, f.o.c. growing in new areas:

1) bargain in good faith2) disclosure statutes mandate few terms3) faith in market forces4) not much progress w/consumer regn.5) self reliance still seen as imp.6) planning element of contract has increased esp. in areas like marriage

Contract is still important:

premises of contract reconstructed to deal w/stubborn realitiescontracts lends legitimacy to rules and relns.

contract preserves integrity of parties and upholds authority derived from consent

Historical Overview II

Hugh Collins, Two Ideals of JusticeThe Law of Contract, 1986 or valuesare important

A. Two ideals of justice:

just market order encompassed in rigid set of rules called classical law of contract

the governing ideal was not freedom of contract but the justice of exchange (j.o.e.)

Theory of legal resp. encompassed by j.o.e.:

a) individual responsibility - dont see indiv. as rights but resp.b) restrictive defn. of role of state -dont examine fairness or social utility of contract

J.o.e. had 3 main principles:

1) liberty-deep faith in justice of wealth and power established by exchange relns.2) equality instead of hierarchy

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3) reciprocity instead of exploitation -give sthing of value get sthing in return, reduce domination

Justice of j.o.e.:

justice of market apparent because did not assign resources based on social status

depends on success in trading e.g. job where wages earned vs. no remuneration, reciprocity

Now j.o.e. has lost moral force and explanatory power

ideals of liberty, equality and reciprocity have disappeared replaced by communitarian ideals1. Welfare state, loss of faith in j.o.e. (assuming no equality)2. doesnt describe reality, welfare state changed the rules of classical contract too much

Impact of devpt of communitarian ideals:

devpt. of communitarian ideals was response to change in types of market reln.

interdependent parties who deal over long period of timee.g. buying car from dealer, dealer gets from manu. and arranges financing throughfinancial institution, dealer has no ec. exchange reln. w/either

protection for people who rely on others, spiders web

no exchange of values, no explicit agreement, liability extends out in web

reconstituted contract law, duty of care to prevent harm to others

state acts to prevent indiv. from undue interference in rights and liberties

notion of justice as fairness through fair market dealings

Minimal role assigned to state:

1) prevention of harm2) compensation for damage3) state doesnt prescribe fair market relns., becoming more interventionist,

3 major criticisms of j.o.e. help explain justice as fairness:

1. oppressive nature of power relns. permitted

ownership + knowledge become oppressive dominators

cant always convince people to bind themselves through contracts, but can use marketas inducement in form of wages + profits

e.g. people in Cape Breton work in mines because need income, dangerous

F.o.c. ideologically legitimized order of power in 2 ways:

a. f.o.c. implies absence of coercion, side-effect rights to domination were acceptede.g. employer can mandate mandatory drug testing, surveillance cameras at work

b. suppresses questions about ownership of capital, so that can create oppressive bargainfor one side, can convert property into power thru contracts, no embarrassing questions

-eg. IBM or Ford can use threat of pulling out of contract for huge bargainingleverage, subordinates the interests of the other companies

Use doctrines to prevent relns. of domination from developing

1) test ofresp., fair conditions of trading2) impose duties on stronger parties3) regulatorybodies, like CRTC

2. unfairness of reciprocity

trust people less to fend for themselves

belief in fairness of dist. of wealth out of respect for peoples dignity-e.g. minimum wage laws, state provides for minimum level of employment, paternalism1) invalidation of unfair contracts

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2) remedies for breach of contract

3. estranged social relns.

we created social and ec. relns. between antagonistic indivs. at expense of more imp. bondsof solidarity

new values of cooperation and accommodation, require concern for interests of others

justice of exchange justice as fairness

1) liberty paternalism2) equality fairness3) reciprocity cooperation

Modern law/quiet revolution:

j.a.f., patterns of responsibility, indiv. dignity related to being able to satisfy wants in market (notright to f.o.c.)

market controlled to prevent abuses of power and take account of citizens interests, equality

A. A. Leff, Vicious intellectual parodies: Why values are important

Formalism

unquestionable premises, leading to indisputable conclusions

legal commentators + treatise writers found common threads + pulled them together into neat bag

law as science, rule -> facts -> answer

avoids normative questions, hands are tied

Realism

look to way law actually functioned in society

not consistency, but existential reality, operational logic, become empiricist, learn social facts

no deductive system, have to look at premises, non-given starting points

good premises lead to good effects, fall into good + evil

can argue law, take resp. for decisions

Contemporary PerspectivesRealist analyses of contract law based on 4 perspectives

1) Law and economics

2) critical, good + evil

3) feminist

4) racial

Definitions of perspectives on contracts:

subjective - meeting of minds, value maximizing exchange

objective - words or conducts that satisfy impartial observer, prevent people from misleadingothers

1) Posner: The economics of contract law (right wing)

Values:

1) people are rational wealth maximizers

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2) allocation of good or service + resources gravitate to most valuable uses3) state should no t intervene to limit free choice

2 types of contracts:

1) instantaneous - e.g. buying a newspaper2) ongoing-when time is long, contracts and contract law become important

-e.g. A promises to build house for B, contractual rights to minimize costs of production

3 Basic ec. functions of contract law:

1) sanction against reneging, expectation interest, fairness, reciprocity-e.g. A can pocket Bs money w/out building the house

2) enforce parties agreed upon allocation of risk, standard provisions, increases efficiency,certainty3) standard set of allocation terms, reduce costs of exchange process, guard against recklessnessin marketplace, impose costs on careless behaviors in contracting process

-e.g. A promises B boat if he stops smoking, then A denies it. May want to enforce sothat A isnt careless about maybe creating a contract that isnt fulfilled

Does contract law actually reflect the 3 values (or is value ec. efficiency)?

1) competitive mech., contractors get around inefficient terms, only efficient terms survive2) willingness of courts to accept the parties designations of laws to be used, competition bet.jurisdictions, parties gravitate to where interests served best, e.g. Delaware3) right to submit to private arbitrator-cts w inefficient rules lose out to tribunals w/ efficientrules, parties decide who resolves

2) Feinman, Critical approaches to common law (left wing)

3 views of role of common law of contracts:

1) instrumentalist: big stick in hands of capitalists to beat workers

contracts is way dominant class imposes + perpetuates capitalist ec on society

as ec. needs of capitalist class changes, lackeys of capitalists change the rulese.g. in 19th century hindered executory, speculative transactionbutmass economy required standardized transactions

2) functionalist: useful to the capitalists to solve their problems

designed to resolve tensions amongst capitalist class, for their benefit, rejects pluralismeg. contract law facilitates comm exchange, contracts as salvage operation, low cost debt

collection

critically, contracts is how powerful parties discipline weak ones

3) legitimating ideology, f.o.c., caveat emptor

conceal reality of ec. injustice, people believe in ideas, induce acceptance of values + institutionsthat support s.q., just the way it is, I surrender

think that inequality is because of individual stupidity, more accept ideology, more accept place

in world order

Why contract is not just a legitimating ideology:

1) this view assumes contract law has coherent principles

butcontracts lacks coherence, tons of contradictions2) penetration, people dont understand the basic principles of contracts

but contract not product of conscious manip. by dom. group, not known to everyone3) powerful fn. of contract law is to affirm legitimacy of existing order while denying its nature

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law by judges restating basic facts of concrete social experience, byproduct of ec. norms

privileged, dont believe in conspiracy, legitimates unjust social relns.

judges have ec. vision of world, are reproducing vision in own language

Note: Posner and Feinmann represent opposite ends of the spectrum, but they both believe contracts isinfluenced by ec., and that ec. drives law

Compared to next two articles, their opinions are pessimistic and materialistic.

3) Wiegers, A Feminist Critique Public vs. private notions

Ec. exchanges privately determined in 2 ways:

1) free of state intervention2) not a matter of 3rd party concern,

private domain was sexuality, procreation, domestic labour of women

unequal relns. of power between men + women, hunter gatherer, believed to be efficient, onlyreally efficient for men

Capitalism supposedly gives women more responsibility, but not a one way street:

1) expectation that woman must be a superwoman, creates a double burden2) capitalists got benefits from sexual division of labour according to Marxists,

a) reprod. of labour at low costb) cheap reserve labour e.g. call centres, nanniesc) divided working classd) created a dependence of women on male wage

Traditionally:

family has never been free of state intervention, women submitted to male authority

privacy takes advantage of women (subordinates them), shielded women from exploitation but

also from protection from abuse

Now:

women no longer excluded based on sex, no longer depdt. on men

new roles offer autonomy and new forms of exploitation

4 criticisms of laissez-faire assumption of private and free market:

1) contract w/the employer, free choice, individualizes the womans social status-e.g. nannies from Phillipines, claims indiv. choice but really isnt, misrepresents womens reality2) need state to intervene to redistribute power

more excited about giving women welfare than addressing regulatory means inworkplace

gender equality, affirmative action, daycare, pay equity

basic response is that this makes the govt. the employer, Canada cant afford, produces -ve gains,makes women less attractive to hire

Wieger argues this theory is politically conservative and not backed up by fact

3) -market sees people as unrelated, isolated indiv. doesnt inspire any collective action

devalue shared interests by classifying wants as private and subjective, passivizing,individualizing

- 4) values of market not those of women (masculinist)

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4) N. Williams: Offer, Acceptance, and Improper Considerations: ACommon-Law Model for the Prohibition of Racial Discrimination in theContracting Process:

has been asserted that contracts incompatible with prohibition of racial discrimination

but prohibition of racial discrim. would be perfectly consistent with its natural orderly evolution

I - in society there is a strong concensus against racial discrim., law could make the

world better for minorities

can make contracts with whomever for whatever reason, no implied norm of non-discrim.Harm: 1) means society not fair and just, bad for indivs. harm ec. + psych.

2) as a nation of minorities, need to promote social cohesion, racism bad for comm.e.g. slavery, Af. Americans have less ec. power now, persistent patterns

3)internalization of laws moral message causes people to act properly, law moralmedium

II - contracts imposes community standards of decency and fairness

..........DUTY TO SERVE DOCTRINE (INNKEEPER), UNCONSCIONABILITY DOCTRINE AND

DUTY OF GOOD FAITH

III - mechanics to prohibit racial discrim.

such as lawful performance doctrine, duty of good faith and fair dealing

IV - state law should prevent discrim.

need HRA in c/l, no particular reason to separate anti-discrim. into public law

V - new section in restatement of torts to prohibit racial discrim. in contracts

process

Note: Wiegers and Williams are idealist articles, law makes society better, optimistic.

Legal Structure and Legal Reasoning I

Paul, A Bedtime story

1. manipulation, prior babysitting decisions (precedent)2. authoritative text, parental note (statutes)3. facts of scenario, whats happening at school, in contracts look a conduct of participants4. how do we approach written texts, literal v. purposive (the note)5. institutional factors, activist or constructionist, proactive or say hands are tied (babysitter)6. do diff. rules apply to exceptions, allow people to walk from contracts

Gall, The doctrines of precedent and stare decisis:

Role of judge: (reality lies in between)

1. quasi-legislative, activist role, deliver judgments in context

judicial decisions should respond to changing times

use and develop precendent, danger that judges might enforce own moral vision

2. interpretative, strict constructionist

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apply law to facts, predictable, anachronistic approach

Overall dictates of certainty, predictability, consistency, legislative resp., justice, fairness

Definitions: (artificial to consider precedent and stare decisis separately)

precedent - requires judge to follow decision in previous case if same fact sitn.stare decisis - previous decision of highest crt in that prov. juris. to resolve conflicting judgments

Stare Decisis: (degree of persuasiveness of other crt determined by factors)

1. nature of other juris (Canadian, which province?)2. level of crt, decision of highest crt most persuasive3. date of the precedential case, more recent, more reliable4. Judges reputatione.g. Hate propaganda, Alberta CA struck down rule, On CA didnt, S.C.C. final arbiter

Distinguishing (how to avoid stare decisis and precedent):

1. distinguishes based on material facts that are absent in one and present in another2. obiter dicta, ratio decidendican be interpreted as obiter dicta

ratio decidendi - part of the case which has the rule upon which case foundedobiter dictum - a statement of rule of law, but not on what the case is based

3.per incuriam, can decide that precedent case judged inadvertently4. previous case wrongly decided and choose to ignore it5. just pick a judges reason, e.g. if there are 3 judges with 3 reasons, choose one that like

Legal Structure and Legal Reasoning II

Twining and Meirs, Interpreting Cases:

Cases as precedents:

builds on human frailties and needshabit, laziness, routine, prop for inexperience and instability, social use of predictability

Basis of c/l treatment of precedent:

1.obligation, judges have obligation to treat like cases alike, dictates to future decisions2.expectation interest, base conduct on expectation that future cases will be similarly decided3. rational devpt. of general policies, gradual interstitial growth4. indiv. decisions have weight as expressions of public policy + principle, chain novel

Precedent: Previous decision is authoritative if:

1. previous decision is authority ifanalogous to a present dispute2. crt which has status to make authoritative decisions

3. decision hasnt been overridden by a statute

How to deal with precedent:

1. If crt higher then must followprecedent2. if precedent one ofits own decisions then it should follow it3. if decision that ofcrt inferior to it then not bound to follow precedent

The practice of precedent:

no formula for determining ratio decidendi,

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difference bet. theory and practice, precedent is manipulable

Karl Llewellyn found 64 techniques of following and avoiding precedent

Primary technique: precedent wrongly decided or of weak authority:

(AVOIDANCE)

1. the precedent involved faulty interp. of prior cases2. precedent was decision givenper incuriam, in ignorance of binding statutory authority3. the precedent subsequently overruled ordoubtedby other judges4. the precedent is irreconcilable with prior or subsequent decisions

Secondary techniques to weaken precedential value: (ENFEEBLEMENT)

1. the deciding crt was oflow authority2. the scope of the decision unclear3. reasoning weak4. deciding crt particularly influencedby special considerations5. social condtns have changed6. report unreliable7. criticizedby academic writers

Class notes:

Contracts are end result of these processes, elements of contract:

1. formation2. performance

3. breach4. remedies

Formation of a contract:

1. offer - promise of by party A to do or abstain from doing something provided party B willaccept and that B will pay price for offer

a. intimation of willingness to be bound

b. statement of price

c. offer must be communicated

doesnt need to be in writing, look at words and actions, outward manifestation of assent

not everything is offer, can be invitation to treat (like advertising in some cases)2. acceptance3. consideration4. intention to create legal relns

Promises are not a contract (no agreement, and are unidirectional)

Pizza example:

flyer -> check off options -> phone -> specify -> price -> how long?-> preparation -> doorbell -> payment

Offer I

Case-note on Canadian-Dyers Association Ltd. v. Burton, (1920) H.C., Middleton

Keywords: offer, quotation, words and actions

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Facts:May 1918 -C.D.A. wrote B. and asked lowest price for houseJune 6 1918 -B. answered saying $1650 last price lowest willing to acceptOct 16 1919 -wrote B again asking the priceOct 21 1919 -B. responded saying the previous price lowest I am prepared to accept

-treated as offer and accepted by CDA.Oct 23 1919 -cheque for $500 sent by CDAOct 27 1919 -Bs solicitor sent draft deed, names date for closing and suggests search of his title. Nov 5 1919 -B.s solicitor wrote said no contract and returned $500.Issues: Did the words and actions of the defendant constitute an offer? (general)

How does one distinguish between offer and invitation? (specific)Held: For CDA, that there was an offer capable of being accepted because of Bs words and actions.Reasons:Words: letter was more than mere quotation of price but a statement of the price at which willing to

sell constitutes an offer, readiness to sellActions:Bs conduct suggests a contract has been made, didnt send out letter denying sale, but wrote

up deed, did title search and suggests closing date.

Ratio: Apply an objective test of the words and actions of the parties involved to determine if offer orinvitation.

Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd.,

C.A.[1953] 1 Q.B. 401, [1953] 1 All E.R. 482, Sommervell, L.J., Birkett, L.J.

Keywords: offer, poison, self-serve, invitation to treatFacts: -April 13 1951 two customers took poison from shelf in pharmacy, put in basket and paid at exit.

-Pharmacist near poisons section, but sale unsupervised by pharmacist-Pharma. Society resp. for enforcing provisions of the Acts (Pharmacy and Poisons Act 1933)

Issues: At what stage of a purchase in a self-serve store is there an acceptance of offer?Is the customer bound to a purchase once they place an item in their basket?Are Boots liable for selling poisons w/out a pharmacists supervision?

Held: Appeal dismissed, no breach of the Pharmacy and Poisons Act.Why:

Contentions

Pharma society Self-serve store(ruling) Non-self serve store

display offer invitation invitationin basket acceptance offer (ask for goods) offer pay for goods x acceptance acceptance

Sommervell:

1. -analogy to bookseller still browsing when place things in basket, no acceptance2. -the shopkeepers display cant be an offer, must be invitation

-extending law to respond to newly emergent self-service, determines supervision of pharmacist3. -logical outcome of Ps args is that once put things in the basket have committed to the purchase,

would not allow for substitutionBirkett:-refers to Goddards decision, known as a good chief justice (lower cts influence higher crts)

Ratio: Distinguishes between invitation and offer. Goods on a display are invitation not an offer.The customer makes an offer when takes goods to register.The cashier is under the shopkeepers authority to make acceptance, hence the contract has notbeen made until the cashieraccepts the purchase.

Comments: -really fight between small (cornerstore pharmacies) + big business, new set of market relns

Fred Christie and the York Corporation, [1940] S.C.C. Rinfret

Keywords: race, freedom of contract, tort of humiliationFacts: -C. entered a tavern and asked to be served beer. He was refused because he was black.Issues: Can one use f.o.c. to exclude commerce with people based on race?

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Held: Yes, freedom of commerce can be used to exclude people based on their race.Why: -only exception to f.o.c. would be adoption of rule contrary to good morals or public order

-no need to question the sellers motives or reasons, invitation to treat (existence of bar)-offer to buy (C.), refusal (allowed by precedent, see Comments)

Ratio: Freedom of contract license to discriminate based on race so long as the vendor isnt engaged in amonopoly. Justified through wealth maximization.

Shows use of precedent; no need to reach this decision since no other ct had ruled on it.Comments:-precedents show that f.o.c. trumps in cases, imp. of free choice, all decisions lower than S.C.,

Feature of precedent - fossilizes the law, only retrospective, diff. if want law to change

F.o.c. more imp. than fundamental h.r. (contracts trumps torts)

C. v, York has 4 imp. principles:1. final discretion is to sellers not buyers (f.o.c.)2. protecting business interests (privacy)3. maximize wealth, ec. gain (capitalism)4. racism

R. v. Dawood, [1976] 1 W.W.R. 262, 31 C.R.N.S. 382, Alta. C.A., McDermid J.A.

Keywords: theft, fraud, criminal law, authority, property lawFacts: -D. rearranged outfit to indicate price was $5.77, should have been $9.66-D. took this outfit to the counter and cashier accepted $5.77 for it.

Issues: Did the cashier have the requisite authority to form a contract w D?If so, is this theft or buying under false pretenses?

Held: Yes, the cashier did have the authority.No it is not theft.

Why: Theft - if p. passed to D. then isnt theft, whether p. passed is determined by contractMcDermid: (hands are tied, FORMALIST)

vendor agreed to transfer of possn hence transfer of p. in blouse, cashier had authority

goods on shelf are invitation, offer money, acceptance by store, have contract (Boots)

formation of contract means D. has p., not theft, should be contract under false pretensesDissenting judge (Clement J.A., REALIST)

role of cashier is to receive good and ascertain price, no authority of shopkeeper, doesnt offerdisplayed goods not just invitation but offer that can only be accepted at marked price by

customer

disagrees wBoots (display is not an offer to sell), deflates precedent, self serve store

if display just offer to treat no sale would be concluded until had dealt w shopkeeper

no p. or possn transferred, acceptance was not on offer made by store on price tag so no contract

Ratio: Agrees with Boots. Goods displayed on shelf are invitation.

Note dissenting point that goods displayed in a self-serve establishment constitute an offer.

Offer II

Carlill v. Carbolic Smoke Ball Co. , [1893] 1 Q.B. 256, C.A., Bowen, L.J.

Keywords: advertisement, influenza, conditions, acceptance, offer, unilateral contractFacts: -C. bought the Carbolic Smoke Ball from ad in paper.

-She used it 3 times a day from Nov. 20 to January 17 when she caught influenza.-The ad claimed that 100l reward will be paid to anyone who contracts anything 2 wks after takingball 3 times daily, 1000l is deposited with the Alliance Bank, shewing our sincerity in the matter

Issues: 1. Can one make a contract with the whole world?2. Interpretation of vague terms - (a) scope, with whom? (b) temporal, how long?3. Was the ad a mere puff?4. Does performance of the conditions advertised in the paper constitute acceptance of an offer?

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5. Consideration?Held: It isnt a contract with the whole world, but rather with people who fulfill the stipulatedconditions.

The scope is with anyone who fulfills the conditions, lasts as long as one is taking the ball.No it isnt just a puff, stated 1000l in bank.

Why:

1.

becomes contract with anyone who fulfills conditions (further negtn = invitation to treat, notoffer)

2.(a) plain meaning, entitled to reward (contract) if used ball for two weeks, 3 times a day and got flu

not everyone who got flu, no reliance interest if one used ball before the ad promised reward

2.(b) interpret purposively, protection while smoke ball is in use after the ad came out, not forever

perspective of reasonable consumer, not reasonable businessperson

hence the terms are not too vague

3. ad was offer not mere puff - stated that had 1000l in bank

couldnt check use of the smoke ball, but if make such extravagant promises, you are responsible

4. offeror can decide how acceptance of offer will be made, performance of condition sufficientacceptance -e.g. if lose dog, and people find it

extract from contract notification not reqd. (if performs condition) imply from words and actions.

5. inconvenience of one party was consideration, she bought the ball, used it, was inconvenienced

Lindley:notification of acceptance need not precede performance, in this case acceptancecontemporaneous w performance

offeror shows by words and nature of transaction that he didnt require notice of acceptance

Ratio: An ad in a newspaper can constitute a unilateral contract, which can be accepted by fulfilling theconditions of the contract. No formal acceptance required.

The determination of a serious offer will be determined from the words and actions.

The terms of the contract (if vague) will be interpreted purposively from the contract.

Offeror can determine how acceptance of offer will be made.

Comments: trying to protect weak woman from the ravages of the fee market, like Goldthorpe

Posner, deals with careless representations in marketplace

who should bear risk? party that makes the promise

Goldthorpe v. Logan, [1943] O.W.N. 215, [1943] 2 D.L.R. 519, C.A., Laidlaw, J.A.Keywords: electrolysis, advertisement, torts, negligence, offer, acceptance, guaranteeFacts: -G. responded to Ls newspaper ad Ls claimed Results Guaranteed to remove hair

-Was met with by a nurse who told her face could be definitely cleared (no physical exam)-The hair started growing back.

Issues: 1. Was there a contract (invitation, offer, acceptance, consideration) bet. L. and G.?2. What should result be if there was a breach of contract?

Held: 1. Yes there was a contract and it was breached.2. L. has to pay $13.25 for the cost of treatment and $100 for loss of expectation.

Why: intepret whether contract made through words and actions:

words, ad claimed results guaranteed

actions, further assurance at business that hairs would be successfully and permanently

removed, unqualified offerL. vendor seeking purchaser, creates offer to every person willing to accept terms of offer

extravagant promise, not thoroughly researched, promise lightly given, is enforceable

acceptance of the offer communicated by Gs conduct, accepted terms

consideration was that G. paid cash and had the electrodes in her face

Ratio: Look to words and actions to determine if contract made

An ad made in a newspaper constitutes an offer that can be accepted on the terms it proffered.

Offeror bears risk of extravagant promises.

Comments:

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refers to Carlill v. Carbolic Smoke Ball Co. that advertisers that seek to take advantage of theweaker segments of the popn. shouldnt be surprised if their offers are accepted and pursued.

policy statement of consumer protectionism, same rationale as Carlill, prob. of false advertising

R. v. Ron Engineering & Construction (Eastern) Ltd., [1981] S.C.C., Estey

Keywords: tender, unilateral, deposit

Facts: -forfeiture clause 13: lose deposit if withdraw after the close of tenders at 3 pm-Ron submitted tender that was $750 000 lower than it should have been + $150 000 deposit-at 4:12pm Ron sent a telex that requested to withdraw the tender.-Ron then said had not withdrawn tender but that tender incapable of being accepted.-Ron wants its deposit claiming tendering process just invitation to treat, acceptance when

choose bid

Issues: 1. Is there a contract completed during the tendering process?2. When is this contract completed?3. What are the conditions of this contract?

Held: 1. Yes there is a unilateral contract completed.2. Completed when the tender is submitted.3. The conditions of the contract are the terms and conditions of the call for tenders.

Why: Estey reconfigures, when submit bid are accepting terms of offer

Ron could only get out if had withdrawn or submitted a new tender prior to closing time.Ron didnt so assumed had entered into contract A governed by terms of tender

terms and conditions of the tender are 1) irrevocability of bid, 2) obligation to enter into contractB, 3) owner accepts lowest tender, 4) contract A governed by rules in call for tenders

moment of contracting moved forward in time, deposit ensures people are careful

Ratio: A tender constitutes a unilateral contract completed when the tender is submitted.

The conditions of the tender contract are the rules and conditions of the tender.

R. v. Canamerican Auto Lease & Rental Ltd., (1987) C.A., Heald

Keywords: car rental, bid, domestic, breach of contractFacts: -Tilden Canadian, Hertz American.

-T.C. asks for bids for a rental counter in an airport, in open and domestic categories.

-if Tilden were allocated to an open category Hertz might not get counter.-Hertz asked TC what would happen if Tilden bid higher in open than in domestic, responded thatbid in higher category would be accepted.-Tilden bid higher in open than in domestic but TC accepted lower bid in domestic (contrary)-exemption clause - The Dept. will not necessarily accept the highest offer, nor will it be bound toaccept any tender submitted

Issues: 1. Was the invitation of tenders an offer or invitation to treat?2. Did the exemption clause exempt TC from contractual obligations?3. Were the statements of Transport Canada policy statements or binding specifications?

Held: 1. The invitation for tenders was an offer.2. The exemption clause didnt exempt TC from following through with specific policy statement.3. The statements by Transport Canada were binding specifications.

Why:

1. invitation for tenders offer because of a) specific terms and conditions, b) non-refundable deposittendering creates contract (Ron), claims to be followingRonbut isnt since contract B is formedby acceptance of choice of their tender by car companies (as opposed to the choice of bid by govt)

2. exemption clausea. would make choices between tenderers arbitrary/irrelevant/ad hoc, purposive analysisb. as between clauses, one general and 1 specific, specific trumps the general clause

3. get real, putting out the specifications was to encourage competitive process, not just mere policy

Ratio: The moment of contracting has changed again. Offer is the choice of bid and acceptance is theacceptance by the chosen company.

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Look to the parties intentions when determining mere policy or binding specification.

As between clauses, one general and 1 specific, specific trumps the general clause

To determine whether an exeption cluase is binding, engage in purposive analysis to determine itseffect.

Comments: 1. the moment of contracting has been moved forward.2. the non-refundable deposit makes a diff. bet. the old English cases and Ron/Canam

3. the development of the common law-property of self-rectification, develops over time

The contract situation (comparisons of the diff. precedents for contract)

Tenders:

England Reality Ron CanAm

invitation call for tenders offer offer offer submissions of bid acceptance* (unilateral, contract A) acceptance

offeracceptance* choice of bid acceptance* (bilateral, contract B) offer (by govt)

acceptance (beforeperformance)

*point at which contract formed

Communication of offer

The rewards cases

Knowledge Subjective test Objective test Motive Contract

Williams Yes x No, irrelevant Yes

Gibbons No x No Yes

Carlill Yes x Yes Yes

Clarke No (?) ? Yes No

Blair No, not as

offeree

x Yes No

1395 Civil C. No No Yes

Williams v. Cawardine, (1833), K.B., Denman, Curwood, Littledale, Parke, Patteson

Keywords: motive, reward, recoveryFacts: -Walter Cawardine murdered April 12, 1831, was with Anne Williams (pff), she was questioned

-Brother (def) posted handbill for info. as should lead to the discovery of the murder...shouldreceive a reward of 20l-Pff. thought she was going to die made a statement which led to conviction of Willliam Williams-at trial judge said since Mary not induced by the reward no contract

Issues: Has pff. formed a contract with def. in spite of the fact that she did not intend to fulfill the contract

when she gave the info.?Held: Yes she has formed a contract, her intention was not important to her right to recover the award.

Why: she knew about the reward since it was posted all over.Denman - Yes, she has come within the terms of the ad.Littledale - Handbill promised to give money for info. Mary gave that info.Parke - Contract w any person who performed the condition.Patteson - Cant look at the plaintiffs motives.

Ratio: The motive of an informer in accepting the contract offered has nothing to do with his right torecover under the contract.

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Neither mutual consent nor communication of assent is important in case of reward.

R. v. Clarke, (1927) Aust. H.C., Higgins

Keywords: expectation, reliance interest, conditions, reward, ignoranceFacts: -murders of 2 people committed end of April 1926, reward was issued May 21

-one of the murderers Treffene was arrested on June 6 with Clarke, Clarke gave false info-Coulter was arrested June 10, Coulter and Treffene were indicted and convicted-Clarke wants reward, he had seen the reward, up to June 10th had no intention to earn the reward.-first decided to claim the award a few days after the appeal had been dealt with-I gave no consideration and no intention with regard to the reward

Issues: 1. Was there a contract between C. and the Crown and how would one determine this contract?2. Where the conditions of the contract fulfilled?

Held: 1. No there was no contract between C and the crown becausea. C. couldnt accept an offer he didnt know about (Fitch v. Snedaker), forgetting asgood as ignoranceb. C. had no expectation interest when he gave info. to fulfill conditions of contract.

2. No, C. didnt fulfill the conditions of the contract.Why:

1. No contract because of ignorance and lack of expectation interesta. Ignorance (didnt know about award,per incuriam):

distinguishes (Williams)on facts, appliesFitch v. Snedaker, how can one consent to a contracthave never heard of, ignorance is the same as forgetting about the contract, same as if never heard

Gibbons v. Proctor policeman sent info to superintendent w/out knowing about the reward, wasentitled to recover award

hence can accept offered contract before knowing that there is an offer

decides this case decided wrongly!

ct superimposes notion that C. forgot about reward in his own danger, no meeting of minds

b. Expectation interest (there was none):

did act in reliance on the reward, not motivated by ad (not like Carlillhad expectation interest)

2. Didnt fulfill conditions of contract:

a. gave info. after T. arrest, the reward had stated as shall lead to the arrest, didnt lead to arrestb. info didnt lead to conviction of person for both murders, just for one of the murders

Ratio: One cannot accept an offer one doesnt know exists, or that one has forgotten exists.

One needs an expectation or reliance interest in the reward in order for that reward to berecoverable, i.e. for the contract to be fulfilled.

Comments: -clear contradiction bet. Clarke (motive everything) and Williams (motive irrelevant)

Blair v. Western Mutual Benefit Assn., [1972] B.C.C.A., Bull, McFarlane, Robertson

Keywords: communication of offer, rewardFacts: -Blair (B) was a stenographer and secretary employed by Western (W)

-she retired in June 1969 and claimed $8000, equivalent to 2 years salary, from receivers

-she was not at a meeting where a specific resolution passed, but the president or director dictatedher minutes of the meeting which stated if Miss Blair decided to relinquish her position...she begiven a grant of at least two years salary, as retirement pay resolution passed-she transcribed the minutes and delivered them to the president-the offer was never communicated to her as an offer or a promise or an act-no evidence that she resigned because of the existence of the resolution

Issues: 1. B. contends that resolution was offer to pay on retirement, actual retirement was acceptance,which created a contract (unilateral refer to Carlill, Goldthorpe)2. B. contends that in equity, expected her to act on representation, cant be said not to be bound

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3. Was the company bound to pay B. the retirement salary?Held: 1. Was not a contract.

2. Equity arg. that will be dealt with later.3. No because no offer had been made, communicated (Bs role as stenographer), and accepted.

B. didnt retire because of the knowledge of this contract.Why:

Bull:

1. no promise made (through the passing of the resolution) and accepted for valid consideration

she did not have knowledge as offeree but as secretary, subjective analysis

2. no change in existing reln. bet. parties, no comm. of minutes, typing cant convert into offer

3. no evidence of intention to change those relns. to create legal relns. (acceptance?)

B. didnt retire because of promise, no representation on which she was expected to act or actedMcFarlane - focusses on motive, didnt retire based on the promised package

Robertson -agrees with Bull, received offer as stenographer not as authorized communication

Wilson v. Belfast,-found that unauthorized publication in Press didnt constitute communication

comm of resolution through dictation was no more a comm of offer than publishing in the paper.

Ratio: Simply communicating a resolution through some sort of unauthorized medium does notconstitute an offer which can create binding legal relns.

Courts can look to reliance/expectation interest to determine if a contract binding.

Comments - note idea that woman automaton who heard about resolution and then not motivated by it.

Acceptance

1. Until moment of acceptance, revocable offer, no one bound2. After moment of acceptance have a contract3. To determine acceptance

a. offeree, intimation of willingness to be boundb. offeror, intimation of willingness to be boundc. look at words and actions, giving sthing in returnd. creation of a promise or the performance of an act (unilateral), exchange of mutual promises(bilateral)

4. Correspondence between the acceptance and offer: unequivocal, unqualified, absolute, unconditional

Counter-offer

kills the original offer

not every equivocation is a counter-offer but can be a mere inquiry

Livingstone v. Evans, [1925] Alta. S.C., Walsh

Keywords: acceptance, counter-offer, rejectionFacts: -E. wrote to L. propose to sell him land for $1800. (offer) (A)

-L. sent proposal for $1600 cash Send lowest cash price. Will give $1600 cash. Wire (could becounter-offer, mere inquiry, rejection) (B)-E. responded with Cannot reduce price (could be rejection or renewal) (C)-L. then wrote to accept the offer of $1800 that maybe no longer exists. (D)

-E. no longer wants to sell to L. sells to 3rd person, L. seeks specific performanceIssues: Was the 1st telegram (B) from L. a counter offer?

If so, did this counter-offer constitute a rejection of Es offer and free E. from it?Held: Yes the telegram was a counter-offer.

Counter-offer was a rejection but Es letter cannot reduce price indicates a renewal of offer.Why:

Precedent-Hyde v. Wrench, counter offer constitutes a rejection, v. firmly est.-Stevenson v. MacLean, a letter can be a mere inquiry not a counter-offer

Ls telegram (B) a counter-offer + inquiry, although both, counter-offer kills original

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Es cannot reduce price (C) renewal of offer

Cowan & Boyd, landlord and tenant, renew lease, tenant said wanted early reply, landlord saidwould call bet. two dates, tenant wrote accepting original offer, landlord left open original offer

thinks landlords letter much more unconvincing evidence of open offer than telegram here

Ratio: An offer can be renewed after a counter-offer through ambiguous language.

Hyde v. Wrench, counter-offer constitutes a rejection

Comments: -the task of a lawyers is to characterize a sitn. w legal relations

OLRC, Report on Sale of Goods: The Battle of the Forms, (1979)

standard form promotes efficiency

buyers and sellers terms may differ

inject oral communications etc.

discover disparity only when conflict arises

using the rules of classical contracts would have no mutual agreement so no contract

if actually followed this logic market would fall apart

solution is to a. reconcile termsb. pick one side over another

Butler Machine Tool Co. v. Ex-Cell-O Corp., [1979] C.A., Lord Denning

B- seller E -buyerKeywords: forms, terms, buyer, sellerFacts:

May 23 -in response to Es request, B quoted price and 10 mths for delivery (offer, a great deal of detail)-Bs offer had terms and conditions which

a. prevailed over and terms and conditions in the buyers orderb. said B could charge price of machine at delivery

May 27 -E. placed order with B. (counter-offer or rejection)-order said they were subject to various terms and conditions none of which dealt with achange in price, tear off slip

June 5 -B returned Es form which said accepted Es terms and price was that of May 23rd-machine delivered, B. claimed $2892 more, E. said their order prevailed, fixed price contract-B. said their term prevailed for an increase in price.

Issues: Whose terms prevailed, Es or Bs?Held: Es terms prevailed. (last shot)Why:

surface quotation of price was offer subject to terms and conditions

order by E constituted a counter-offer, diff. terms and conditions, B. accepted counter-offer

Trollope & Colls v. Atomic Power Constructions - counter offer kills the original offer

purposiveBrogden v.Metropolitan Railway Co., consensus gleaned from letters or other docs

British Road Services v. Arthur V. Crutchley & Co., generally last shot wins (in this case E)

could also be won by first blow or shots from both sides (no examples given)

differences irreconcilable, conflicting terms may have to be scrapped, reasonable implication

Denning says thats nice, look at docs. as a whole + conclusive doc. is 5th June, on Es terms

Ratio: In a battle of forms generally the last shot wins, but open to other interpretations.

Look at the documents as a whole to determine whose terms prevail.

Comments:-classical contracts no contract, keep machine at price, but large machine, dont do this

Tywood Industries Ltd. v. St. Anne-Nackawic Pulp and Paper Co. Ltd., (1979) Ont.

H.C., Grange

S. - buyer T - seller

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Keywords: forms, conflict, arbitrationFacts:

Sept. 19 -S. invitation to treat- listed goods required- on reverse side 13 Terms and Conditions, none of which dealt with arbitration

Sept. 26 -T. responded offer-quotation in letter-12 Terms and Conditions of Sale-no reference to arbitration-Condtn. 12 stated wouldnt be modified by receipt of purchase order w diff condtns.

Nov 7 -T submits revised proposal, same 12 condtns., new offerJan, July-Two purchase orders from S., rejection

- 19 Terms and Conditions-Condtn. 19, according to laws of N.B., any controversy will be settled in arbitration-purchase order neither signed by T. nor returned to S.

-T. delivers goods, S. doesnt pay, T. sues for price, S. claims have to go to arbitrationIssues: Whose terms prevail (do they have to go to arbitration)?Held: Ts rules govern (no arbitration).Why:

Classical model -S wins, buyers contract holds.

First shot -S. wins, got first shot in (if just invitation to treat then not imp.)Last shot -S. wins, but diff. terms for 1st and last shotGrange -T. imposed non-arbitrable condtn. when quoted initial price, never acknowledged Ss terms

S. tried to smuggle in arbitration terms and didnt complain when purchase orders not returned

conduct indicates both parties interested only in specs and price, sense that dont read contracts

Ratio: The person who is most innocent terms will prevail. Cant sneak terms into contracts withoutproper notification.

Look to actual conduct of business (do people really read the terms?)

Shift away from voluntarism/free choice to judicial intervention to obtain consensus.

Rules of contracts to this point:

offer

offer distinct from invitation to treat

offer must be communicated

offer revocable until time of acceptance

acceptance

offeree needs knowledge of offer before acceptance possible

acceptance must be mirror image of offer

if not, is a counter offer

not every equivocation by an offeree is a counter offer, it can be a mere inquiry

but if it is an offer then acceptance is on the terms of the counter-offer

Vulnerability of offeror reduced by:

1. offeror can revoke his/her offer up to the moment of acceptance by offeree2. offeror can dictate time, place and manner of acceptance

-telegram, respond by letter, this is not good since one is much slower-telegram, respond by fax, equally fast, has to be same sort of medium

3. acceptance must be communicated from offeree and receivedby offeror.

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Eliason v. Henshaw, (1819), 4 U.S. (L.Ed.) 556, Washington

Keywords: time, place, manner, acceptanceFacts:

Feb 10 -letter from def. to pff. proposing to buy flour at Georgetown-say Please write by return of wagon whether you accept our offer-flour will be delivered to Georgetown

-please reply to Harpers ferry-sent from Harpers Ferry to Mill Creek

14 Feb -letter delivered to pff-wagoner explicitly informs them he isnt returning to Harpers Ferry

15 Feb -answer written by pff19 Feb -letter sent 1) by mail 2) to Georgetown

-pff accepts offer and says will send flour25 Feb -defs send letter acknowledging receipt, but said response too late because not by wagon

-sellers (pff) suing buyers (def) for non-performanceIssues: Was the offer accepted in the right time, place and manner (was acceptance valid)?Held: No.Why:

1. not accepted within the proper time (w wagon reply date 18th, letter not received until after 19th)

2. not accepted in the right place (shouldve sent back to Harpers Ferry, was sent to Georgetown)3. not accepted by the correct manner (shouldve been sent by wagon (faster), sent by mail (slower))

Ratio: The offeree must follow the terms of the offeror (time, place and manner of acceptance) for anacceptance to be valid and binding.

Jen-Den Investments Ltd. (buyer) v. Northwest Farms Ltd. (seller), [1978] Man CA,

OSullivan

Keywords: implicit, revoke, agent, oralFacts:

Jan 25 1973 -3 offers signed by pff. proposing to buy land sent by TP to def. (offer)- $23 520-proposed purchase to be paid 1/2 cash and 1/2 mortgage

Feb 2 1973 -def revised terms on which he accepted (counter-offer)-full amt paid on possession date-delivered to TP who is W.

Feb. 3 1973 -that evening W. orally communicated counter-offer to pff.-pfforally accepted and agreed to initial on the Monday

Feb. 4 1973 -before oral acceptance communicated, def had 2nd thoughts orally asked W. to revokecounter offers

Feb. 5 1973 -W. took counter-offers and had them signed by pff. despite contrary orders-oral acceptance by pff. Sat night, written acceptance by pff. Monday

Issues: Which came first, the revocation of the counter-offer or the acceptance by the buyer?Held: The revocation of the counter-offer was before the buyers acceptance.

Why: objective test to determine whether oral acceptance should suffice

1. nature of exchange -agent, offers to purchase on form with form of acceptance, dealing w land

so writing necessary, all assumed sthing in writing necessary2. relevant legis.- Real Estate brokers Act, if broker used, acceptance must be written before

communicated to offeror

3. Customary practise in Manitoba - offer in writing should be accepted in writing

Ratio: Use an objective test to determine if acceptance valid.

Look at nature of exchange, relevant legislation, customary practise.

Offeror can revoke up to any pt prior to acceptance.

Comments - implicit rather than explicit determination, risk transferred to offeree

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Felthouse v. Bindley, (1862) Ex Ch, Willes

Keywords: objective test, silence, outward manifestationFacts:

Jan 2 -uncle wrote to nephew that wanted horse, if doesnt hear anymore considers horse his, no replyFeb 25 -auction, auctioneer (def) ordered not to sell horse, forgot, horse sold for 33 poundsFeb 27 -nephew writes uncle to say that horse sold, def also wrote saying forgot and sold horse

-pff. claims conversion of the horse, def. claimed pff didnt have p. in the horseIssues: Can an offeror say that silence dictates an acceptance?Held: No.

Why: letter from uncle was an open offer, bargain not complete1. subjective intentions not enough, need objective demonstration, outward manifestation2. there has to be communication from offeree to offeror (nephew to uncle)

letter from nephew on Feb 27 is an acceptance (too late), protect innocent TP, whos moreinnocent, prevent carelessness in marketplace

Ratio: Silence is not enough to determine acceptance of an offer.

Subjective intentions not enough to communicate acceptance, need outward manifestation.

Crt wants to protect innocents and prevent carelessness in marketplace.

St.John Tug Boat Co. v. Irving Refinery Ltd., [1964] SCC Ritchie

Keywords: silence, deceit, acceptanceFacts:March 27-letter from pff. to def. saying make available Rockswift at $450/day whether working or not

-def. verbal arrangement to rent starting June 13 on terms of March 27, extended twice for 2weeksJuly 1961-def. stopped paying pffs invoicesAug 15 -official agreement to renew services endedAug 1961-president of def. company (Irving) succeeded by Forsythe from Henning

-no formal extension but Rockswift employed until Feb. 1962, accounts given to def. each monthFeb 1962- notification in change of arrangements for tug

-pff. denies having to pay for tug since Aug. 1961, silence cant constitute acceptance (Felthouse)

-at trial found def liable for paymentsGenerally, basic rule: mere receipt of services or goods w/out protest is insufficient to create liability.

Issues: Was defs silence and conduct a continued acceptance of the offer of tug services?Held: Yes.Why:

Precedents:

-Anson, objective test, if wouldnt suppose B meant to do work for nothing, A liable to pay-Smith v. Hughes, conduct just as good as acceptance-Williston, services to be paid for at fair value, silence is deceptive-Falcke v. Scottish Imperial Ins. Co., liabilities cant be forced behind peoples back

Irving being sneaky, shouldnt be deceptive, under +ve obligation to act fairly

knew Rockswift standing by, knew expected to pay, accepting terms in letter, contract formed

Smiths leading cases, can imply terms of acceptance into contract when:1. there is a benefit being received2. the party receiving benefit is aware of this3. there is a knowledge that there is an expectation to pay from the other side

implies Irvings acceptance 1. benefit to Irving, 2. Irving knew that this service was beingprovided

3. Knew expected to pay because of monthly order.

Ratio: Silence can constitute an acceptance, especially if it appears to be sneaky.

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Contractors are under a positive obligation to act fairly.

Can imply terms of acceptance into a contract (in this case 3 conditions).

Rules of contract as they now stand:

1. nothing inherently acceptance

2. no particular formalities reqd for acceptance3. offeror can dictate time, place and manner4. all circs to determine words and conduct5. silence alone is not acceptance, but not indicative

-i.e. omissions if deceptive can be acceptance6. cts can imply terms into contracts

-sense of fairness

Dawson v. Helicopter Exploration Co., [1955] S.C.C., Rand, Estey

Facts:

1931 -pff. staked a claim in BC, filed claims which lapsedJan 1951 - received letter from def.

-finance pff. in staking claims-10% interest in claims

-pff. replied fair dealFeb 1951 -pff. sent overseas and could obtain leave to show p.March 5 1951 - def wrote, repeats original terms and

-August, last half of July or Sept good time-keep advised as to when could get away

April 12 1951 -pff. writes and says-Aug. or Sept good-would like to know ASAP if cant get pilot for copter

June 1951 -def. writes-McQuillan thinks couldnt get to stakings-has pilot but doubts whether will have time to visit showings

-says to make other arrangements to goAug 1 1951 -defs exploration party investigated area, became known to pff in 19521953 -def. entered agreement to develop claim

Issues: Was there a contract bet. the two parties?Held: Yes there was a contract.Why:

Estey:

1. there was a contract, March 5 letter an offer, April 12 acceptance mirror image and unqualified

contract had two conditions a. def could get a pilot b. the claim was worth staking

contracts allowed to have condtns. subsequent to terminate contract, contingencies (seeAnson)

2. there was enough certainty in the contract, look at contents of all docs.

3. no mutual abandonment of contract, look at circs a. pff. was geographically far away, 2. pffsactions (contacting minig recorder and revisiting sites) dont indicate a repudiation

def. explored in July after repudiation of June 7, would appear that def. had concluded couldcontinue w.out pff. and wrote letter of repudiation

pff. didnt accept letter of repudiation, contract remained, def in breach of contract

Rand false analogy to reward case where offeror remains passive, in this cases def. has to participate

in a bilateral contract as soon as parties exchange mutual promises, 1 party cant revoke

in a unilateral contract, offer can be revoked up to before complete performance

Rand decides better to be bilateral, dont look at every exact word, instinct with obligation-pff. bound to attempt leave of absence-impliedly agreed wouldnt prevent complementary performance of each other

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-implied promise to cooperate (ct implies terms)

def. violated engagement and ended contract

Ratio: The formation of a contract is instinct with an obligation.

Can imply obligations on parties to cooperate.

Contracts is about responsibility as much as indiv. rts.

In a unilateral contract offer can be revoked before full performance.

Obiter: Can look at docs. surrounding contract to see if there is a contract.Conditions subsequent dont remove power to contract.

Comments:Wood v. Lady Duff Gordon, promise may be lacking but writing may be instinct with obligation

Communication of Acceptance

A. Mailed Acceptances: Who should bear the risk of loss in non-instantaneous communication?

Household Fire and Carriage Accident Insurance Co. v. Grant, (1879), 4 Ex. D. 216,

C.A., Thesiger, BramwellKeywords:acceptance, mailFacts:

Sept 30 1874 -def. applied for shares in pff. company (offer) (stated paid deposit, agreed to pay more)Oct 20 1874 -pff company made out letter of allottment, sent to def., never reached def. (acceptance?)

-dividends credited to his account, didnt pay deposit, company goes bankruptDec 7 1877 -liquidator applied for funds from def., def. wont pay because says hes not shareholder

Issues: At what point is an acceptance effective when acceptance is communicated through mail?Held: The communication was completed when the letter was placed in the post.Why:

Thesiger-acceptance requires mutual assent, achieved through communication from offeree to offeror

the PO is agent, give answer to agent are communicating to offeror, otherwise fraud potential

offeror stuck with risk but could build into contract condtns. orinquire if receives nothing

justifies p.a.r. 1. offeror dictates time, place, manner,2. certainty and efficiency in marketplace, who can best bear risk

Bramwell (dissent):

needs to be communication of acceptance to offeror, depart from rule when1. special agreement bet. parties (no, not in this sitn)2. a general rule that overrides (no, no gen principle in this sitn)

this ruling makes law arbitrary, offeror bound w/out knowing bound, implications

Ratio: An acceptance is concluded once the letter of acceptance is dropped in the mailbox (POSTALACCEPTANCE RULE). Offerors risk can be mitigated through condtns or inquiry.Communication of acceptance can be overruled when there is a special agreement between partiesor there is some overriding general rule.

Holwell Securities v. Hughes, [1974] C.A., LawtonKeywords: acceptance, communication, mailFacts: -pff. offered to sell land, exercisable by sending letter to def. within 6 mths notice

-pffs acceptance of purchase was mailed to the defs, def. never receivedIssues: Was there a contract? or at what stage was the acceptance communicated to the offeror from the

offeree?Held: No contract. The result can be found the short way or the long way.Why:

Short route-by defn of word notice, had agreement to exclude the operation of p.a.r. (see Bramwell above)

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Long route-def. argued p.a.r., many precedents:Henthorn,BrunerandHousehold Fire Insurance

exception to p.a.r. when a. expressed in terms of offer that acceptance must reach offerorb. leads to inconvenience and absurdity (Bramwell inBritish &

American Telegraph Co. v. Colson)

(b) demonstrates principle that rule doesnt apply if there is no way that the parties would haveintended no binding agreement until the acceptance communicated

larger and wider rule that is so large it guts the p.a.r., stupid rule

Russell -counters absurd arg., cant give notice in writing by writing sthing, phoning + reading it to another

Ratio: Discomfort w postal acceptance rule, make exceptions if:a. expressed in terms of offer that acceptance must reach offeror (look at actual words)b. leads to inconvenience or absurdity (introduces wide priciple that invalidates p.a.r.)

Offeree should bear risk of loss.

Instantaneous Methods of Communication

Brinkibon Ltd. v. Stahag Stahl, [1983] H.L., Lord Wilberforce

Keywords: telex, instantaneous communication, postal acceptance ruleFacts: -two possible fact combinations, buyers (pff) want to sue sellers (def)

May 3 1979 -telex from def in Vienna (counter-offer)May 4 1979 -telex from pffs in London to sellers in Vienna (acceptance)

orMay 3 1979 -telex from def in Vienna (counter-offer)

-action, by opening of letter of credit, acceptance by conduct-pffs want English law, where contract made, depdt on when contract made, depdt onwhen was acceptance, depdt on when acceptance communicated from offeror to offeree

Issues: When was acceptance communicated from offeror to offeree?Held: Acceptance was communicated when telex received in Vienna.

Why: conflict bet p.a.r. (London-sent) + classical rule (Vienna-received)

ct. says it was instantaneous communication, contract made in Vienna

refers toEntores Ltd. v. Miles Far East Corp., telex instantaneous, this ruling works in market

in making ruling 1. refers to intentions of parties

2. business practices3. risk allocation

opening of letter in credit wasnt sufficient conduct to say acceptanceLord Fraser of Tullybelton:

treat acceptance by telex as effective of receipt1. the person owning telex should be resp. for messages to be delivered to him2.person sending telex knows if not sent, but person receiving wont know hasnt

received

Ratio: The telex is a mode of instantaneous communication, where acceptance of a contract is made onreceipt.

The postal acceptance rule doesnt apply to instantaneous communication.

Termination of Offer I:Risk is transferred from offeror to offeree in 3 manners:

1. offeror can revoke offer up to the moment of acceptance: 4 manners:1. death

-contracts are in personum, no one to contract with (seeDickinson v. Dodds)-e.g. offer made Nov 1, offeror dies Nov. 2, offeree accepts Nov. 3, no knowledge ofdeath, who bears the risk?

-if allocating risk offeree should get the contract, revocation not communicated2. rejection

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-Livingstone v. Evans, an offer can be renewed after a counter-offer through ambiguouslanguage-Hyde v. Wrench, counter offer constitutes a rejection, v. firmly est.-Stevenson v. MacLean, a letter can be a mere inquiry not a counter-offer

3. revocation: 3 major questions:

a. must offeree have knowledge of revocation? (Dickinson v. Dodds)

b. what is the reln. bet. revocation and p.a.r.? (Byrne v. van Tienhoven)c. what is reln. bet. revocation and unilateral contracts? (Errington v. Errington +Wood)4. lapse: 3 ways:

a. offeror expresses particular time after which offer will lapseb. lapse might occur on occurrence of some condition other that the passing of time

-e.g. in Hull, selling houses to bureaucrats, offer would lapse if yes votec. lapse can occur after lapse of reasonable time (Barrick v. Clark)

2. offeror can dictate time, place and manner of acceptance3. acceptance must be communicated from offeree and received by offeror.

Revocation

Dickinson v. Dodds, (876), 2 Ch. D. 463, C.A., Mellish

Keywords: revocation, knowledge of offeree, deathFacts:

June 10 -def. gives pff. document, agrees to sell property, offer held until Friday at 9 am, June 12(promise)June 11 -(afternoon) def. had signed formal contract to sell to third party

-pff. informed that def. wanted to sell to third party-(evening) went to mother in law of def. and gave her acceptance of doc. of June 10

-she claims she forgot to give this doc. to defJune 12 -7 a.m., agent of pff. then pff. himself give def. acceptance and def. says too late

Issues: Was the offeror allowed to revoke the offer?Held: Yes, offeror entitled to revoke offer.Why:

1.

def not obliged to hold offer open til 9 a.m., just bare promise, no reliance interest, buyer beware2. pff. knows p. sold to TP, cant then propose a binding contract knowing no meeting of minds

analogous sitn. of death, if offeror dies then performance of offer impossible

3. the knowledge of sale to a third party doesnt have to be directly communicated, but can bethrough an agent (indirect communication)

Ratio: An offeree must have knowledge of a revocation but secondhand knowledge is adequate.

Parties to a contract shouldnt rely on a bare promise.

Comments -compare toDawson, party trying to get out of contract, but contract already existed-this case is in a precontractual phase

Byrne v. van Tienhoven, (1880), 5 C.P.D. 344, Lindley

Keywords: revocation, postal acceptance rule

Facts:Oct 1 -def. (offeror) mailed proposal to sell 1000 boxes of tin plates to pff. (offeree)Oct 8 -def. mailed revocation of offerOct 11 -offer received by pffs, pffs accepted by telegramOct 15 -pff. accepted by mail, assuming had bought plates had sold them to 3rd partyOct 20 -revocation received by pffs

Issues: Must the offeree have knowledge of a revocation?What is the relation bet. the postal acceptance rule and revocation?

Held: Yes, the withdrawal should be communicated to the offeree.Postal acceptance rule does not apply to revocation.

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Why:

1. refers toDickinson, butPothierstates no contract if offer withdrawn before accepted regardlessof commmunication to offeror (no meeting of minds), rejects him as irrelevant

uncommunicated state of mind irrelevant, too subjective, communication objective

2. def argues revocation complete once posted (Household) by p.a.r., post office as agent

inapplicable to withdrawal of offer cases since pffs. (offeree) have not used or implied p/o as

agentno clause that stated that a withdrawal could be communicated by letter

otherwise great injustice, offerees would have to wait to be certain, impractical for commerce

Ratio: Revocation must be communicated to the offeree so that the offeree has knowledge of therevocation.

Mere posting of a revocation is not sufficient communication, p.a.r. does not apply to revocation.

Comments: -generally the p.a.r. puts the risk on the offeror, in this case it places the risk on theofferee

Errington v. Errington and Woods, [1952] K.B. C.A., Denning

Keywords: revocation,Facts:

1930 -father bought house for son and daughter-in-law in own name-told daughter-in-law that the down-payment was a gift, but they were expected to pay mortgage-stated house will be your p. when mortgage paid, when he retired would put house in their name-couple have been paying mortgage and still have more to pay-widow wants the house back

Issues: Can a unilateral contract be revoked after the death of the offeror?Held: No.

Why: no express promise by son and daughter to pay, ct cant imply terms (even though ct did inDawson, implied promise to cooperate)

characterize fathers promise as unilateral contract (like Carlill) performative act payingmortgage to ultimately get house, only revocable if couple didnt pay mortgage

continues after fathers death (contrast toDickinson)

once performance starts the offeror cant revoke the offer (contradictsDawson)

fathers implied intention to keep house in their possn. if pay mortgage, trumps theDawson ruleDenning says cant imply terms but then superimposes implied term of fathers promise

Ratio: Can only revoke unilateral contract if didnt live up to the offerees side of the contract. (seeDawson)There can be a reliance on promises in contracts. (contrast withDickinson)The crt cant imply terms into contracts (seeDawson). (is this a valid result?)

Daulia v. Four Millbank Nominees, [1978] C.A., Goff

Keywords: revocationFacts:

Dec 21 1976 -terms of sale concluded partly orally and partly in writing-Osgoodby (agent of defs), promised pff. def would conclude contract for sale of land if:

1. pff. got Bankers Draft for deposit2. got to defs offices before 10am next morning3. tendered to defs pffs part of contract and Bankers Draft

-pffs completed these conditions, def. refused to complete contractIssues: Was there a concluded unilateral contract by defs to enter into 2nd contract?Held: Yes, there was a unilateral contract to enter into a 2nd contract.

Why: in unilateral contract no contract until the offeree starts to perform (Errington)

full performance of condtns, if partial performance offeror can still revoke (contrast wErrington)

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implied term by offeror that subject to imp. qual. that offeror not trying to prevent condtn. frombeing satisfied, duty to cooperate

once offeree embarks on performance offeror cant revoke

Ratio: In a situation of partial performance of a unilateral contract, the offeror can revoke (contrast wErrington, accords withDawson).

There is a duty to cooperate in contracts, ct can imply terms (contrast wErrington)

In a sitn of full performance or start performance of a unilateral contract the offeror cant revoke.Comments - Dickinson, caveat emptoris imp.,Daulia saying caveat emptorisnt

Termination of Offer II

Lapse

Barrick v. Clark,[1951] S.C.C., Estey, Kellock

Keywords: lapse, reasonable timeFacts:

Oct 30 1947 -C. offered to purchase land (offer)

-for $14,500-w possn date bet Jan 1st and Marsh 1st 1948-asked B. to respond by telegram

Nov. 15 1947 -B. replied by mail, (counter-offer)-for $15,000-if this price good, deposit of $2000

Nov 20 1947 -letter delivered to Sask, but C. was absent on hunting trip-Mrs C. opened letter from B. and responded to him that her husband would be back in10 days and requested that B. hold the deal

Nov 30 1947 -TP inquired about land, B. offered TP land for $15,000Dec 3 1947 -TP accepted Bs offer Dec 10 1947 -C. returns, writes letter (acceptance)

-encloses cheque for $2000

-kindly acknowledge receipt of letter by mailDec 11 1947 -C. sends B. telegram saying has heard rumors about his sale to TPDec 12 1947 -B. writes back and explains sitn and says he has sold to TP and will return deposit

-C. sought specific performance but this was dismissed, judgment reversed in C.A.- trial judge found reasonable time had elapsed-C.A. judge found acceptance on Dec 10 was within a reasonable time

Issues: Had the offer by B. lapsed? (what was a reasonable time for Cs response?)Held: Yes, the offer by B. had lapsed; C. didnt respond in a reasonable time.Why:

Estey

reasonable time based on 4 standards: 1. nature and character of business2. normal course of business3. circs. of offer4. conduct of parties

B.s counter-offer didnt stipulate a reasonable time for acceptance

1. farm lands dont fluctuate wildly in price, not perishable, expands the reasonable time

2. C. asks for decision as fast as possible, counter-offer received by C. on Nov. 20, C. had madeup mind on Oct. 30 as to selling price of land, contracts time

3. C.s wife requested an extension of the reasonable time, irrelevant factor since B. didnt respond

4. Possn not till March 1st, farming couldnt start until spring condtns, expands reasonable time,

other demands for the land (hot market) this contracts the time

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5. B. wanted C. to reply by wire on Nov. 15, hoped offer could be closed immediately, responsefrom C. As soon as possible, contracts the reasonable time

Kellock:

3 indications that Dec. 10 letter too late

1. transaction should be immediately closed, no delay (language)2. C. asked to give response A.S.A.P.

3. if formal agreement executed by Jan 1 1948, not enough time for paperworkRatio: The reasonable time to accept an offer can be determined from the conduct and language of thetwo parties, the nature of the goods and other reasonable indications.

Manchester Diocesan Council of Education v. Commercial and General Investments

Ltd., [1970] Ch. D., Buckley

Keywords: lapseFacts: -p. belongs to pffs (formerly a school), Endowed Schools Act

-authorized to sell land subject to approval of purchase price by minister of educationFeb 1963- negotiation opened up bet. pff. and def.Oct 1963-pff. decided to sell p. by tender

1. tenders to be sent to pffs surveyor by Aug 27 19642. sale subject to approval of Secretary of State for Education3. (condition 4) if tender accepted, tenderer becomes purchaser and acceptance of tenderwill be communicated through post, effective moment letter in mailbox, writing p.a.r. in

Aug 25 64-offer from defs to buy the p.-for 28,500 pounds-will adhere to the tendering conditions-no day named as the day on or before any offer should be accepted-give Berkeley St. address

Aug 27 -tender received by pff.Sept 1 -pff. surveyor informed defs surveyor that bid was highest, said will write as received formal inst.Sept 14 -def wrote back look forward to receiving formal acceptance in due courseSept 15 -letter written by pff. saying that are contacting the minister of ed, but sale approved (acceptance)Nov 18 -Secretary of State approved the SaleDec 23 -pff. solicitors wrote to def. solicitors to conclude that contract binding on both parties, ask for

confirmationJan 5 65 -defs write back saying cant confirm theres a contractJan 6 -pffs express surprise and want to hear reasons for this responseJan 7 - wrote to defs company giving formal notice of acceptance of tender, def wrote saying didnt

want to proceed because condtn. 4 violated-def. argues that because of time that lapsed bet. Aug 25 and Jan 7 the offer in tender lapsed, andthat letter of Sept. 15 not an acceptance because not sent to Berkeley St. address-pff. claims that either letter of Sept. 15 or Jan. 7 constitutes acceptance

Issues: Did the unilateral contract created through the tender lapse? (or was there acceptance on Sept 15or Jan 7?)

Held: No the contract didnt lapse, and there was acceptance on Sept. 15.Why:

Letter of Sept. 15 was acceptance of tendered offer:

1. condtn 4 didnt clearly state that p.a.r. the sole means of acceptance (equally effective would do)Tinn v. Hoffman & Co., means not later than those specified

2. condtn 4 designed by pff., could be seen as to protect themselves

acceptance communicated on Sept. 15, even though not consistent w procedure of condtn. 4

offeree (pff.) could waive terms in condtn. 4 if def. not adversely affected

3. lack of ministerial approval doesnt invalidates the contract, condtn subsequent (seeDawson)

still have power to contractOffer was accepted in reasonable time:

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1. offer made on terms that if not accepted in r.t. treat as withdrawn (subjective test)

would test this by asking what does one think offeror was planning/thinking at time theoffer made? uncertainty and subjectivity, subsequent conduct of parties is irrelevant

2. if offeree doesnt accept offer in r.t., offeree must be treated as having refused (objective test)

look at conduct of offeree, what did he do?, subsequent conduct imp. likes this

finds contract made in tendering process due to subsequent behaviour of letter on Sept. 15

Ratio: Mode of acceptance in a tender can be altered by the offeree so long as it is equally effective.If a term is included in the contract to protect one party it should not be allowed to be altered tohurt that party.

A condition subsequent doesnt affect the power to contract. (see alsoDawson)

The acceptance of an offer should be tested through an objective test: if offer not accepted inreasonable time offeree will be treated as having refused.

Ideally:

Rules -> Facts-> Answers

Practically: (factors in deciding facts of a case)judges attitudes

intentions of partiesactions of partiescommon practices

social normsallocation of risk

(UN)CERTAINTY I

Hands-off versus interventionist role of decision makers.

Uncertainty is due to

a) parties intentionsb) in relation to language used by parties

Uncertainty arises in 3 ways:

a) ambiguityb) vaguenessc) missing terms

What have courts done in cases of uncertainty:

1. In cases of ambiguity cts will draw implications to get a reasonable resulte.g.Raffles v. Wichelhaus (1864)

pff. tried to ship goods on the shipPeerless,

2 ships, same name one left in Oct. and other in Dec., wanted one in Oct.

ct decided Peerless ambiguous, using objective test unreasonable, unenforceable

2. How cts deal with vague terms:

(a) e.g. Scammell v. Outston (1941)

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agreement for sale of van, subject to hire-purchase terms being available

cts decide phrase uncertain, too much varn. in types of hire-purchase available

hands off approach(b) e.g. Carlill v. Carbolic Smoke Ball

questions as to which people would be covered (scope) and for how long (temporal)

use the reasonable person test, more interventionist

(c) e.g.Nicolene v. Simmonds, (1953)

Vague terms

Nicolene v. Simmonds, [1953] Q.B. C.A., Denning

Facts: -pffs ordered steel from def. at fixed price, asked for written confirmation of acceptance of order-def. confirmed receipt of order, couldnt confirm on regular printed form

-would have the usual force majeure and war clauses-we are in agreement that the usual conditions of acceptance apply

-def. failed to make delivery, pff. claimed damages for breach of contractIssues: Was there a concluded contract between the two parties?Held: Yes there was a contract.

Why: Two ways to characterize a vague clause:1. clause that can be ignored (meaningless clause), means that there still is a contract2. clause yet to be determined (may mean no contract, no agreement on essential terms)

severs clause from the rest of the contract

concerned about the problem of the free rider who inserts purposely vague phrases into contract,creates uncertainty in the marketplace

Ratio: When trying to decide how to characterize a vague clause look to whether the essential elementsof the contract have been decided.

Where a clause is meaningless it can be extracted from the contract and ignored.

3. (contd) Where parties enter into contracts with missing terms:

Classical - cts wont fill in the gaps

Modern - check 7 elements to see if key terms missing:1. intention of parties2. look at language of contract3. business efficacy4. relevant statute law5. custom of the trade6. fairness or reasonableness7. allocation of risk

Missing terms:

Agreements to agree

May and Butcher Ltd. v. R., [1934] H.L., Lord Buckmaster (decided 1929)

Keywords:

Facts: -pffs. wanted to buy tentage from the Disposals Board (DB)-June 1921 def. defined terms of agreement and gave deposit of 1000 pounds

1. agree to sell (and pff agree to purchase) all old tents3. the price and dates on which payment will be made shall be agreed on by the parties tothe agreement as the tents become available

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10. all disputes will be submitted to arbitration-January 7, 1922, referred to extension of agreement and confirmed sale of the tentage whichwould be available up to March 31, 1923., control of Board changed at this timeEarlier course of business- received specs and given to would-be purchaser, who checked goods

Present course of business - dont deliver specs, allow inspection in case specs dont matchgoods

-proposals made by pffs unacceptable, def. rejected it, DB no longer considered bound by contractIssues: Were the terms of the contract sufficiently defined to constitute a legal binding contract bet. the

parties?Held: No the contract wasnt defined enough.Why:

Pffs claim that there was an enfo

contracts sem1 devlin cans

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