copyright © 2004 by nelson, a division of thomson canada limited. 9-1 canadian business and the law...

9-1Copyright © 2004 by Nelson, a division of Thomson Canada Limited.

CANADIAN BUSINESS CANADIAN BUSINESS

AND THE LAWAND THE LAWSecond EditionSecond Edition

byby

Dorothy Duplessis

Steven Enman

Shannon O’Byrne

Sally Gunz

Presentation prepared by Presentation prepared by

Allan Elliott, Southern Alberta Institute of TechnologyAllan Elliott, Southern Alberta Institute of Technology


CHAPTER NINE CHAPTER NINE TERMINATION AND TERMINATION AND

ENFORCEMENT OF CONTRACTSENFORCEMENT OF CONTRACTS

OBJECTIVES: The termination of a contract by performance The termination of a contract by agreement The termination of a contract by frustration The methods of enforcing contracts The concept of privity Remedies for breach of contract


TERMINATION AND TERMINATION AND ENFORCEMENT OF CONTRACTSENFORCEMENT OF CONTRACTS

TERMINATION: AN OVERVIEW through performance – both parties

complete their contractual obligations through agreement – the parties can agree

to end the contract at any time through frustration – unforeseen event

makes performance impossible or illegal through breach – a serious breach can

release the innocent party from continuing


TERMINATION THROUGH TERMINATION THROUGH PERFORMANCEPERFORMANCE

PERFORMANCE performance is complete when all implied and

express promises have been fulfilled vicarious performance– performance of

contractual obligations by others as long as personal performance by the

contracting party is not required


TERMINATION BY AGREEMENTTERMINATION BY AGREEMENT

PARTIES MAY AGREE TO: enter into a whole new contract, know as

novation novation – the substitution of parties in a

contract or the replacement of one contract with another

vary certain terms of the contract end the contract substitute a party – transferring one party’s

rights and obligations


TRANSFERRING CONTRACTUAL TRANSFERRING CONTRACTUAL RIGHTSRIGHTS

ASSIGNMENT OF CONTRACT the transfer of a contractual right by an

assignor to an assigneeStep 1

Creditor – Debtor RelationshipC(creditor) D(debtor)

Step 2Assignor-Assignee Relationship

C(assignor) A(assignee)

Step 3Assignee – Debtor RelationshipA(assignee) D(debtor)

Figure 9.1


TERMINATION BY FRUSTRATIONTERMINATION BY FRUSTRATION

FRUSTRATION termination of a contract by an unexpected

event or change that makes performance functionally impossible or illegal must establish:

was dramatic and unforeseen neither party had assumed risk of

occurring arose without either’s fault makes performance impossible/illegal


FORCE MAJEURE CLAUSESFORCE MAJEURE CLAUSES

INTERNATIONAL PERSPECTIVE

• Risk of unforeseeen events• A party may terminate the contract

for fire, war etc.


TERMINATION BY BREACHTERMINATION BY BREACHPLAINTIFF MUST DEMONSTRATE 3ELEMENTS ON THE BALANCE OFPROBABILITIES:

1. privity – there is a contract between the parties

2. breach – the other party failed to keep a promise or term in the contract

3. entitlement – must show you suffered loss as a result of the breach

balance of probabilities – proof that there is a better than 50 per cent chance that the circumstances of the contract are as the plaintiff contends


TERMINATION BY BREACHTERMINATION BY BREACH

1. PRIVITY OF CONTRACT only the parties to a contract can enforce the

rights and obligations it contains modified by statute in 2 areas – consumer

purchases and insurance

2. BREACH OF CONTRACT condition – an important term, which, if

breached, gives the innocent party the right to terminate the contract and claim damages

warranty – a minor term, which, if breached, gives the innocent party the right to claim damages only

Continued...



2. BREACH OF CONTRACT (concluded)

innominate term – a term that cannot easily be classified as either a condition or a warranty

exemption or limitation of liability clause – clause limiting or excluding liability for breach

fundamental breach – a breach of contract that affects the foundation of the contract – such a breach may render the entire contract, including the exclusion clause, inoperative

anticipatory breach – a breach that occurs before the date for performance



3. ENTITLEMENT TO A REMEDY damages – monetary compensation for breach

of contract defendant is responsible for reasonably

foreseeable damages suffered by the plaintiff – pain, suffering, and emotional distress not generally accepted as being a consequence of breach of contract



RESTRICTIONS ON DAMAGES remoteness – tests

1. damages could have been anticipated

2. damages reasonably foreseeable duty to mitigate – the obligation to take

reasonable steps to minimize the losses resulting from a breach of contract or other wrong


EQUITABLE REMEDIESEQUITABLE REMEDIES

EQUITABLE REMEDIES where damages are an inadequate remedy

specific performance injunction

interlocutory injunction – order to refrain from doing something for a limited period of time

rescission restitutionary remedies

unjust enrichment - occurs when one party has undeservedly or unjustly secured a benefit at the other party’s expense

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