Law Lecture 12 Chapter 9
CONTRACT INTERPRETATION RULES;
The Golden Rule:
• Words will be given their ordinary and plain meaning.
The Contra Referendum Rule:
• The meaning that is least favorable to the person who wrote the term will prevail.
• The courts accept the interpretation of the other party (that didn’t write the
contract) because they had the chance to clarify things but they didn’t so the court
will choose what is least favorable to that person.
IMPLIED TERMS OF CONTRACT
• The courts will say that even if these terms aren’t actually WRITTEN in the
contract we are going to assume that it is.
• Only use if the contract wouldn’t make sense without this implied term.
Sale of Goods Act
• Applies to all consumer contracts. Any time an individual makes a purchase of
goods (not a business.)
• Applies to contracts for the sale of goods for businesses but they can choose to
• Consumers cannot opt out and neither can businesses dealing with consumers.
• It has to be a SALE not a lease or rent of GOODS not services & it has to be for
MONEY not trade
5 Rules for Transfer of Title (Read the other 2)
*If something gets damaged, who bears the loss and when should you get insurance?
1. An unconditional sale of a specific item that was already in a deliverable
a. There are no conditions to the sale
b. Nothing left to be done by either party
c. A specific item that had been set aside for your use
d. Deliverable state means that the goods are in a condition that would
require them to be accepted under the contract. (EG, if you agree to
buy a car but you want them to add a new stereo, it is not yet in a
e. TITLE PASSES WHEN CONTRACT IS MADE. (When offer is
f. If you buy something and let someone watch it and while you’re gone
they ruin your product, YOU are responsible because you are the
owner. (Even if you haven’t paid for it because in this case, as SOON
as the contract is formed, you are responsible.
2. Contract for specific goods but seller is bound to do something to put the
goods in a deliverable state. a. Alterations, additions etc.
b. TRANSFER OCCURS WHEN GOODS ARE IN A DELIVERABLE
STATE AND BUYER RECIEVES NOTICE.
3. When goods are delivered to the buyer on approval, or on sale, or return.
a. Taking goods home with you to see if you like it (clothing, shoes etc)
b. Scenario 1: When the buyer signifies approval or does any act that
adopts the approval. If you wear it out in public, you have adopted the
c. Scenario 1: Even if the buyer has not signified acceptance but retains
the good without giving notice to rejection on the expiration of a
reasonable period of time.
Standard Form Agreements (Contracts)
• Standard set of terms and conditions whenever you do a certain type of
• You can’t negotiate these types of contracts.
• One party is in the drivers seat and the other person is on a take it or leave it
• You don’t have to ensure that the other party actually read the contract you just
have to ensure that they had the opportunity to read the contract.
Exclusion Clauses for Standard Form Agreements (Contracts)
• Limit liability
• Very common in standard for agreements.
• They are very flexible
• They may completely exempt a party for liability.
• Certain types of liability might be excluded. (EG carelessly cause damages but
not responsible for reckless damages)
• COMMON: Not liable for loss of profit, not liable for punitive damages.
o Clear and unambiguous
o Has to be reasonable notice to affected party before or when you enter into
o Consent by the affected party (you don’t have to have a signature, but that
is your best bet)
o Make sure people are very aware of the limitations.
Consumer Protection Act In Ontario
Chapter 10 Contractual Defects
• A contractual defect is a reason for not enforcing the contract. VOID
• Avoid the consequences of being in a contract.
• Avoid contractual liability
• Put an end to a contract without attracting damages or other forms of remedies.
• The contract is utterly and completely un enforceable
• The protected party has the choice to follow through with the contract or to avoid
Incapacity to Contract
• Capacity means the legal power to bind oneself in a contract and to consent.
• When you have certain limitations on your capacity, we will make your contract
void or voidable.
• This Includes:
o Minors (Youth) under the age of majority (18)
Most of their contracts are voidable.
They will have the option of whether or not to enforce a contract
and if they will go through with it.
IF they choose to void it, they will be excused for FUTURE
liabilities but will not be excluded from PAST liabilities.
If they have gotten benefits under the contract, they will have to