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First Semester Battle CAN

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Mitchell Mc Innes

A. Contracts BATTLE CAN B. Intention to Create Legal Relations B. Intention to Create Legal Relations Rose and Frank Co v JR Compton and Bros Ltd, 1924 UK • In a commercial context we presume the parties have an intention to create legal relations but that presumption is rebuttable (we can say it’s not true). Balflour v Balflour, 1919 England • There is a rebuttable presumption against the intention to create legal relations in the family context (NO intention to create legal relations). o (Husband agreed to pay wife when gone but didn’t) Toronto Dominion Bank v Leigh Instruments Ltd, 1999 ONCA • Documents (e.g. “comfort letters”) are determined by the reasonable person test C. Offer andAcceptance Offers and Invitations to Treat Pharmaceutical Society v Boots Cash Chemists, 1953 EngCA • Display of items on shelf or window or an advertisement leads to the presumption of an invitation to treat Goldthorpe v Logan, 1943 OWNCACA • Application of Carbolic. When there is an offer (advertisement or otherwise) to treat, an acceptance, and good consideration then a contract enforceable by law is formed. If that contract is breached D is liable. o *NOT good for exam Carlill v Carbolic Smoke Ball, 1892 • Advertisements are generally invitations to treat, but in these facts, it constitutes a unilateral K. Tender Process - Call for tenders = invitation to treat. Entitled to accept or reject all tenders. - Tenders (bids) = offers. Entitled to revoke prior to acceptance Harvela Investments v Royal Trust Co of Canada, 1986 Eng • Terms of an invitation to treat may be binding on eventual offeree o (Bid + $101k if not lowest) Page 2 R v Ron Engineering & Construction, 1981 SCC • Tender process involves creation of two contracts (KAand KB). MJB Enterprises Ltd v Defence Construction, 1999 SCC • Privilege clauses are generally effective only for cost and not for noncompliant bids o (Three materials could be used) Communication of Offer Carlill v Carbolic Smoke Ball Co, 1892 • Contract formed upon performance of act of acceptance of offer Blair v Western Mutual Benefit Association, 1972 BCCA • No contract unless acceptance motivated by desire to accept offer. No contract unless statement communicated as offer. o (Secretary’s retirement package) o *NOT good for exam (wrongly decided) Williams v Carwardine, 1883 England • Motivation is irrelevant if offeree knowingly performs stipulated act. o (Brother of D murdered, offered money for information leading to murderer) R v Clarke, 1927Australia • Offeree need not be motivated by desire to accept, but cannot accept offer in ignorance. o (Reward for two murderers. P forgot about reward) Acceptance: Counter-Offer Livingstone v Evans, 1925ABSC • Counter-offer is rejection of old offer and creation of new offer. Acceptance: Battle of the Forms Butler Machine Tool Co v Ex-Cell O Corp, 1977 Eng CA • There are various means of resolving battle of the forms. o (Here: last contract won). o Denning (concurring): Strong judicial concern to find K if it’s already executed. Three approaches (no longer viable in England): o 1. Last shot wins- if no objection to last set of terms, there is deemed acceptance o 2. First shot wins- later terms irrelevant unless highlighted to the other party o 3. Reconciling the shots- all terms construed together. If consistent, valid K on such terms. If contradictory, judicially create reasonable terms. o Implication today – in Canada judges often take Denning’s way. Is that good law? We don’t know in Canada. Page 3 Tekdata Interconnections Ltd v Amphenol Ltd, 2009 EWCA • In most situations apply the orthodox analysis (Butler). But, there’s an exception, which applies if the parties have made it abundantly clear that the parties are willing to be bound by something other than the orthodox analysis and they are willing to look at the terms together. o (This is rarely the case) Principles a. Go with orthodox, with rare exceptions (Tekdata) aside. Denning approach is no longer viable in England. In Canada we don’t know. b. If you had a case on the exam like Butler or Tekdata but you need a reasonable explanation, Denning route would be harder to explain. Acceptance: by Performance ProCD v Zeidenberg, 1996 USCA • Existence of terms must be sufficiently disclosed at outset BUT don’t have to be specified as long as they are reasonable. Buyer accepts terms when, after having opportunity to inspect them in greater detail, he fails to reject them. o (Three contracts: 1. Between store and manufacturer, 2. Between store and consumer, and 3. Between consumer and manufacturer) Carlill v Carbolic Smoke Ball • Unilateral K: acceptance of offer through performance ONLY (use of product) and NOT promise. Williams v Carwardine • Motivation is irrelevant if offeree knowingly performs stipulated act. Mutual consent is not necessary. If P fulfilled all conditions of the contract, she is entitled to recover. • (NOT the case here) Dawson v Helicopter Exploration Co, 1955 SCC • The Court presumes a bilateral contract over a unilateral contract in commercial matters. o Bilateral K provides protection for both parties. Acceptance: by Silence or Conduct Felthouse v Bindley, 1862 Eng • Silence alone is not acceptance. o (P wants to purchase horse from nephew.Auctioneer sells it) Saint John Boat Co v Irving Refinery, 1964 SCC • Acceptance if so construed on reasonable person test. Silence + something usually = acceptance. New contract is deemed each time tugboat service is provided. o (Continued service after contract up. D made no changes but later refused to pay) Page 4 Communication of Acceptance: Waiver of Communication Requirement: Unilateral Contracts Carlill v Carbolic Smoke Ball • Unilateral contract: acceptance is not necessary to communicate until performance is completed. Communication of Acceptance: Mode of Communication Eliason v Henshaw, 1819 US • Oferror can specify means or location that the acceptance must be delivered. Means, however, specifies a time limitation only, and must be interpreted in context. o (“Return of wagon”) Carmichael v Bank of Montreal, 1972 MBQB • Offeree must make reasonable attempts to comply with required communication requirements. Offeror cannot frustrate attempts by failing to make acceptance by deadline possible. If make offer have to give person reasonable way to accept. o *NOT good for exam Communication of Acceptance: Instantaneous Communication Brinkibon v Stahag, 1983AC • When there is instantaneous communication, a contract is formed when and where the acceptance is received. When there is non-instantaneous communication (mail, couriers) the contract is formed when and where acceptance is sent. o (Buyer accepts offer by fax, Seller receives in Vienna) Communication of Acceptance: Postal Rule Household Fire & Carriage Accident Insurance v Grant, 1879 Eng CA • If dealing with non-instantaneous forms of communication and dealing with acceptance, it is effective when it goes into postal system, regardless if it is received. Holwell Securities v Hughes, 1974 Eng CA • The postal rule is only applicable if reasonable in the situation, and only as a letter of acceptance. Termination of Offer: Counter-Offer (same asAcceptance: Counter-Offer) Livingstone v Evans, 1925ABSC • Counter-offer is rejection of old offer and creation of new offer. Termination of Offer: Revocation Page 5 Byrne v Van Tienhoven, 1880 • Revocation is effective where and when received. The postal rule applies if at all, only to acceptances. Dickenson v Dodds, 1876 • Afirm offer is unenforceable unless provided under contract. Knowledge of sale is revocation. o (D offers to sell land to P and will hold until Friday. P finds D later sold land) Termination of Offer: Revocation of Unilateral Offer Errington v Errington Woods, 1952 Eng CA • Unilateral offer is irrevocable while offeree performs terms. o (Father buys house for son to be paid off) o (Collateral K: little K running alongside big K) Termination of Offer: Lapse of Time Barrick v Clarke, 1951 SCC • Lapse after reasonable time based on offeror’s implied intention. o (P wants to buy land, goes on vacation during negotiations) Termination of Offer: Death - Offer generally revoked upon death, but only if the offer is particular to the party such as their personal characteristics (not land or widget); a specific service may be dead upon the death of the party D. Certainty of Terms - Orthodox rule: No K unless terms sufficiently clear. Courts will not create terms. - Practical Approach: Courts strive to try to find certainty; seemingly uncertain bargains are often enforced, but uncertain as to when courts exercise flexibility. - Recurring themes: detrimental reliance, bad faith, reasonable expectations of concluded contract will lead the court to try very hard to find a contract Vagueness of Terms R v CAE Industries, 1985 FC • There is a presumption of intention to create legal relations. Vagueness is avoided by definition gleaned from circumstances (if it’s just a value term, you can overcome it). o (Federal gov’t ownedAir Canada, sold and said they’d give P business). Nicolene v Simmons, 1953 • Can sometimes sever out hopelessly vague terms so long as everything else left is a good contract. o (Severability of terms) o (D accepts according to ‘usual conditions’) Page 6 Missing Terms - No contract if important terms are missing. To overcome: 1. Court may find term (officious bystander test – so obvious it had to be there) 2. Statute 3. Parties may have intended one party to supply meaning Hillas Ltd v Arcos Ltd, 1932 HL • Missing terms may be implied by circumstances. o (Russians entering timber market). o Court’s desire to cure defects (P: detrimental reliance, D: bad faith) and mechanisms for this (terms implied – Sale of Goods Act, industry, context of documents). Agreement toAgree - No contract if agreement
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