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Final

RSM225H1 Final: RSM225 - Final Exam Review


Department
Rotman Commerce
Course Code
RSM225H1
Professor
Jaclyn Seidman
Study Guide
Final

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Canadian&Legal&System
Common%Law
Substantive%and%procedural%law
Public%vs%private%law
Civil%vs%common%law
"Law"%vs%equity
(1)
Hierarchy%of%Laws
Constitution%
Includes%Charter%of%Rights%and%Freedoms
Oakes%Test%-"demonstrably%justified"
Notwithstanding%clause
Statute%and%Common%Law%Creation
Federal%parliament%&%provincial%legislatures
Bill%presented%at%parliament,%receives%3%readings,%proclaimed%into%force,%
then%a%statute%i.e.%The%Securities%Act%(Ontario)
§
Statutes%generally%set%"the%main%framework%for%law"
§
Legislations:%framework%in%governing%relationships%with%and%among%
public;%regulate%behaviour;%!"#$%$&'()*#(!)*("+&,,$#&(!"--"*(.)/
§
Regional%and%municipal%governments
Regulatory%bodies
Set%their%own%procedures%often%and%set%substantive%law
§
Experts%in%the%field;%"quasi-judicial"
§
Courts
Oakes%Test
The%object%of%infringement%is%of%sufficient%importance
There%must%be%pressing%and%substantial%need
The%infringement%must%impair%the%Charter%as%little%as%possible
The%object%must%justify%the%infringement
Who%May%Sue?
Natural%persons
Corporations
Trusts,%partnerships,%unincorporated%associations
Resolving%Dispute%out-of-court
Settlement%
Alternate%Dispute%Resolution%(ADR)
Mediation
§
Arbitration
§
Because%litigation%process%has%very%high%costs%associated%with%the%party,%
solicitor,%costs%in%motions,%contingency%fees,%etc.%
Types&of&Businesses(2)
0".&(1,"2,$&3",'4$2
No%legal%separation%from%owner%-owner%has%5*.$-$3&#(.$)6$.$37(
Associated%costs:%minimal
1),3*&,'4$2
Partnership%Test
A%relationship
§
Between%two%or%more%persons
§
Carrying%on%business%in%common%(together)
Must%manage%business%together**%and%make%contributions%
proportionate%to%their%capital%contribution
**Cannot%be%a%single%venture%or%owning%property%together;%
!)**"3(6&()*($*+&'3-&*3(8-5'3(9!),,7("*9(34&(65'$*&''
§
With%a%view%to%profit
Profit%calculated%after%expenses;%'"(&:2&*'&'()*#(,&+&*5&(-5'3(
6&('4),&#
Generally,%profits%shared%2,"(,)3)(86)'&#("*(&)!4(2),3*&,';(
#&<,&&("%($*+".+&-&*3(",(!)2$3).(!"*3,$653$"*
Royalty%or%sharing%gross%revenues%is%not%enough
§
Created%usually%by%written%agreement
Can%be%established%",)..7(",(67(!"*#5!3
If%pass%a%partnership%test,%deemed%as%partners%regardless%of%what%
the%persons%call%their%relationship
§
="3()('&2),)3&(.&<).(&*3$37(
Owners%can%have%unlimited%or%limited%liability%-depending%on%the%type%
of%partnership
§
Creditors%of%partnership%have%first%claim%against%partnership%asset%>%
creditors%of%any%particular%partner
§
1&,'"*)..7(.$)6.&(
Type%of%partnership%contract
Tort%liability% such%as%negligence
§
>"$*3.7()*#('&+&,)..7(.$)6.&(
Any%partner%held%liable%under%the%partnership%has%rights%to%collect%
contribution%against%other%partners%for%claim
§
Contracts
Offer%-3&*3)3$+&(2,"-$'& subject%to%condition%or%request
Communicated%in%writing%or%orally
§
?34&,(2),37(-5'3(6&()/),&("%%&,($'(-)#&
No%contract%if%you%realized%after%performing%that%there%was%an%
offer
"Invitations%to%do%business"%-display%of%goods/ads%-->%*"3("%%&,'
unless%ad%=%offer%for%
Fixed%#%of%items,%Fixed%price,%First-come-first%serve%basis
®
§
03)*#),#(@",-(A"*3,)!3'(
Terms%printed%on%offer%-no%negotiations%-->%unequal%bargaining%
power
Must%accept%/%reject
Purchaser%bound%by%terms%with%notice%(special%notice%of%
unexpected%terms%must%be%given)
§
B)2'&("%(?%%&,
Not%accepted%within%time%specified%or%reasonable%time,%if%party%
dies/mentally%incompetent
C"$#()*#(!)**"3(6&()!!&23&#
D&+"!)3$"*(-5'3(,&)!4("%%&,&&(6&%",&()!!&23)*!&
§
D&E&!3$"*(
Offer%is%void
Subsequent%reply%is%counter-offer
Inquiry%on%whether%the%terms%offered%are%best%to%expect%does%not%
equal%rejection
§
Acceptance
Communicated%or%can%be%through%conduct%(what%has%constituted%as%
accepted%in%the%past)
§
Tender%=%invitation%to%put%an%offer;%inviting%party%must%accept%/%reject
§
A"*'$#&,)3$"* -required%element%to%form%a%6$*#$*<(!"*3,)!3
F*$.)3&,).-offer%accepted%through%performance%of%an%act%/%service
§
G$.)3&,). -exchange%of%promises
§
Moral%duty%is%not%sufficient%to%form%contract%-motives%are%not%relevant
§
Some%exchange%of%value%must%flow%to%every%party%in%contract%(subject%
to%exceptions)
Exceptions%(require%no%consideration):%
Transfer%/%Exchange%/%co-signing%of%debts
®
Charitable%donations%
®
Contracts%under%seal
®
§
H'3"22&.(-"the%principle%that%prevents%a%person%from%asserting%
something%contrary%to%what%is%implied%by%a%previous%action%or%
statement%of%that%person"
Promissory,%statements%of%facts,%equitable%-is%prevented%to%make%
contradictory%statements%to%prior%positions,%act%or%promises
Promissory%estoppel%-legal%principle%that%a%promise%is%
enforceable%by%law%when%promisor%makes%a%promise%to%
promisee%who%relies%on%it%to%their%detriment%(reliance%
causes%injury%or%losses)%in%US
®
§
Court%will%not%inquire%into%)#&I5)!7(653("*.7('"-&(!"*'$#&,)3$"*(6&(
2,&'&*3
Must%look%at%#5,&''J(%,)5#J(5*#5&($*%.5&*!&J(-$'3)K&
Mistake:&does%not%include%errors%as%to%value,%errors%of%
judgment,%failure%to%remember%other%obligations/promises;%
"*.7(&''&*3$).(-$'5*#&,'3)*#$*<'()6"53(*)35,&("%(!"*3,)!3(
",(.)/(",("6+$"5'(&,,",'($*(#,)%3$*<(L'2"K&*(",(/,$33&*(
%",-)..7(",($*%",-)..7(8!.&),.7(5*,&)'"*)6.&M
Nature%of%contract:
Terms%are%reasonable%-->%enforce%as%it%is
}
Unreasonable%-->%mistake%had%been%made;%
must%be%rectified%or%hold%contract%as%void
}
Mistake%of%Law/facts:
Object%of%contract%may%no%longer%exist
}
Party%may%not%be%who%they%claim%to%be%-
contract%voidable%at%other%party's%request
}
Unilateral:%one%party%makes%mistake%and%other%party%
is%aware%of%mistake%L34&,&(-5'3(6&(*"(
-$',&2,&'&*3)3$"*M
Mutual%Mistake:%both%party%mistaken%or%one%party's%
mistake%and%other%party%unaware%
Mistakes%of%major/key%terms%-->%unenforceable
}
If%reasonable%terms%exist%-->%enforceable
}
Only%errors%in%drafting%or%terms%-->%rectified%
L'2&!$).(,&-&#7M
}
D&!3$%$!)3$"*N(/4&*(/,$33&*(!"*3,)!3(#"&'(*"3(
,&%.&!3(3,5&()*#()!35).()<,&&-&*3("%(2),3$&'(
Must%be%agreement%present,%can%not%be%
uncertain/ambiguous%and%conditional,%no%
further%negotiation%to%amend
Change%most%easily%explained%as%error%in%
recording%or%drafting
}
Sale%of%Goods
Perished%with%no%involvement%from%either%
parties-->%contract%is%void
}
Subject%exists%but%its%value%fluctuates%-->%
reasonable%expectation%of%the%parties%will%
determine%who%bears%the%risk%(party%that%first%
knows%of%the%risk%must%bear%them)
}
Unusual%risks%-->%%consider%,&)'"*)6.&(
&:2&!3)3$"*'("%(2),3$&'J(%)$,(,&'5.3 of%
enforcement%or%rescission,%consequences%of%
rescission
}
®
Fraud
If%original%contract%is%valid%between%1st%and%2nd%
party;%3rd%party%is%owner%of%goods%/%services
If%original%contract%is%void%between%1st%and%2nd%
party%-->%Third%party%must%return%all%goods/services
Generally%treated%as%voidable%contract;%as%original%
party%is%in%better%position%to%protect%their%interests
="*(H'3(@)!35-(82),37(34)3(#&%&*#'(34)3(34&7(/&,&(
-$'.&#(,&<),#$*<(*)35,&("%(!"*3,)!3(
Requirements%for%defense:
Some%infirmity%that%makes%understanding%
impossible
Reasonable%actions%were%taken%to%make%
attempt%in%understanding%contract%i.e.%
independent%advice
}
®
Misrepresentation 8)('3)3&-&*3("%(%)!3(34)3($'(/,"*< (not%
opinions,%glowing%descriptions,%!)*(6&(&:2&,3("2$*$"*(
34"5<4)
Innocent%-unaware
Negligent%-carelessness
Fraudulent%-intention%to%deceive;%reckless%disregard%
/%ignorance
Consequences:
Material%-->%is%it%reasonably%expected%to%
influence%party%to%enter%into%contract%on%the%
specified%terms
}
Misrepresentation%-->%wronged%party%can%
choose%3"(,&'!$*#(L3&,-$*)3&M(!"*3,)!3(",(
,&!"+&,(*"*8&:2&!3)3$"*O(,&.$)*!&(#)-)<&'((if%
negligent%or%fraudulent)
}
If%innocent%misrepresentation%-->%can%rescind%
(or%money%as%compensation%for%indemnity%for%
expenses%incurred%under%contract)%only%if%
subject%matter%can%be%restored%(otherwise%time%
lapsed)
}
If%it%was%a%3&,-("%(!"*3,)!3 vs%misrepresentation%-->%
violation%of%term%is%called%6,&)!4("%(!"*3,)!3 -->%more%
to%recover%damages
Statement%was%important%inducement%to%enter%
into%contract
}
Wronged%party%suffered%substantial%loss
}
Misrepresentation%made%at%time%of%entering%
into%contract
Ads%can%be%misrepresentations
}
Time%constraint%for%wronged%party%to%ask%for%
rescission
Generally,%no%obligation%to%make%statements%at%
contract%formation%other%than%verification%of%terms%
of%contract%and%anything%material%BUT%specific%
contracts%i.e.%partnership,%insurance,%special%
trust/confidence%have 4$<4&,(#537(O(%$#5!$),7(8'2&!$).(
K*"/.&#<&(P(#537("%(53-"'3(<""#(%)$34
®
Undue&Influence&
Q(2),37;'(!"*3,".("+&,(/$..("%(34&("34&,(2),37 i.e.%
client-solicitor;%doctor-patient
Suggestion%for%party%who%cannot%make%independent%
decision:%-5'3('&&K($*#&2&*#&*3()#+$!&(3"(*&<)3&(
5*#5&($*%.5&*!&
®
Duress
If%there%has%been%a%genuine%34,&)3("%(+$".&*!&("*(
2),37(3"(-)K&(34&-(#"('"-&34$*<()<)$*'3(34&$,(/$..(
",(6&33&,(E5#<&-&*3 (parties%or%non-parties%
influence)
®
C).$#$37N('"-&(!"*'$#&,)3$"*(-5'3(6&(2,&'&*3R()*734$*<("%(+).5&(
34)3(%."/' (don't%have%to%question%how%or%whether%or%not%it%had%
value%to%the%individual%in%particular)
§
Tenders%-requested%under%0HQB((enforceable%until%expiration%or%
acceptance)
Bids%are%irrevocable%
Bidders%receive% consideration%in%form%of%tendering%process
§
0&).&#(#"!5-&*3(",()<,&&-&*3'(#"(*"3(,&I5$,&(!"*'$#&,)3$"* i.e.%real%
estate
§
Considerations%already%2,&+$"5'.7(&:!4)*<&#(#"&'(*"3('3)*#(%",(+).$#$37(
"%(!"*3,)!3 -STHDH(UF0S(GH(=HV(A?=0WXHDQSW?=
Service%performed%gratuitously%then%a%party%asks%for%payment%for%
service%-no%contract
A%party%was%already%bound%to%do%something%and%then%offered%
more%to%finish%it%-no%contract
One-sided%re-negotiation%of%terms%-no%contract
§
Y5)*35-(U&,5$3
0&,+$!&(/)'(2&,%",-&#(/$34(&:2&!3)3$"*("%(2)7-&*3(653(2)7-&*3(
/)'(*"3(&:2.$!$3.7(#$'!5''&#(
Court%will%enforce%promise%to%pay%as%consideration%in%
exchange%of%original%service
®
Or%court%awards%payment%on%I5)*35-(-&,5$3 basis%-at%the%
fair%market%value%of%service;%a%quasi-contractual%remedy
®
§
Gratuitous&services&8L%",(%,&&M('56E&!3(3"(3",3(.$)6$.$37(%",(*&<.$<&*!&R(*"3(
&*%",!&)6.&()'(!"*3,)!3("6.$<)3$"*'
(3)
Capacity&and&Legality&
Void:%not%valid%(if%contrary%to%law)%
Voidable:%currently%valid%but%void%at%parties'%discretion
Illegal:%no%assistance%from%court
G.5&(2&*!$.(,5.&(8!"5,3(-)7()''$'3($*(,&#,)/$*<()(2,"6.&-)3$!(!"*3,)!3R(
'3,$K$*<("53(!.)5'&'(3"(2&,%&!3(!"*3,)!3
Capacity%
Any%party%who%does%not%currently%have%full%capacity%-has%a%window%to%
escape%contract%until%this%party%regains%full%capacity;%4)+&()(3&-2",),7(
!"*#$3$"*(/$34(.)!K("%(!)2)!$37(
§
Minors%can%validly%contract%for%necessities;%other%contracts%voidable%at%
minor's%discretion%(time%is%up%when%minor%reaches%age%of%majority)
Repudiation%
Ratification
Minors%can%sue%BUT%not%be%sued%except%
Contracts%for%necessities%/%beneficial%contracts%of%service
®
§
Restraint%of%Trade%
Restrictive%covenants%i.e.%vendor-purchaser,%employer-employee
Look%at%reasonableness%-period%or%extensiveness%of%restriction
§
Sales%of%Goods%Act%-).."/(2,$!&("%()(!"*3,)!3(3"(6&(#&3&,-$*&#("34&,(34)*(67(#$,&!3(
)<,&&-&*3(
i.e.%receiving% goods,%partial%payment%can%make%contract%enforceable%
Consideration%determined%subsequently
Buyer%has%no%recourse%for%poor%quality%goods%unless%implied%warranties%as%to%
quality,%suitability%were%provided
Seller's%Title
§
Description%
§
Sale%by%Sample
§
Suitability%and%Merchantable%Quality
Goods%should%be%of%reasonably%sound%condition,%free%from%
defects%that%would%make%them%unsuitable%for%use
§
If%buyer%has%chance%to%&:)-$*&(<""#'()*#(*"(-$',&2,&'&*3)3$"*(-)#&(67(
'&..&,(88Z(A)+&)3(H-23",(9657&,(6&(6&/),&9
Contractual&Terms&
Interpreted%on%a%reasonable%(business)%person%standard
Meanings
Which%meaning%is%more%,&)'"*)6.& in%the%circumstances?
General%dictionary%meaning,%then%special%meaning%in%context
}
Upon%ambiguity%-->%court%rules%against%party%insisting%on%the%ambiguous%
term
}
Generally%courts%want%to%give%validity%to%contract
}
Words%/%Phrases%allowed%at%their%",#$*),7(-&)*$*<(+'(.$6&,).()22,")!4
Q-6$<5$37
Circumstances%and%negotiations
Common%understandings%in%industry
Past%transactions%
§
1),".(H+$#&*!&(D5.&
Once%contract%set%in%writing,%no%other%agreements%can%be%admitted%in%
evidence
§
Not%evidence%that%reduces%ambiguity%-->%this%can%be%admitted
§
Not%separate%consideration%agreements%or%condition%precedent
§
VWBB(=?S(WU1B[(Q(SHDU(A?=SDQD[(S?(DH0?=QGBH(H\1HASQSW?=0(?D(
W=SH=SW?=0(?@(1QDSWH0
Privity&
Party%has%privity%to%contract%=%party%has%enforceable%rights%or%obligations%to%
contract
Must%be%original%party%to%contract%(no%transfer%/%exchanges)
Exceptions:%insurance,%undisclosed%principal%(party%acting%as%
agent),%interests%in%land,%collateral%/%warranty%contracts,%
exemption%clauses
§
Vicarious&Performance&
Liabilities% cannot%be%reassigned%L,$<43'(!)*(6&()''$<*&#M(unless%form%a%new%
contract%-*"+)3$"*(L,&2.)!&-&*3("%('56E&!3(-)33&,J(,&2.)!&-&*3("%(2),37(3"(
!"*3,)!3M
Or%accept%benefits%that%come%with%the%liabilities,%prior%interests%in%land,%
assignment%of%debt
§
EX.%Jane%contracts%with%Cal%and%requires%Bob%to%perform%services,%Jane%
CANNOT%assign%liabilities%to%Bob%and%be%discharged%from%that%unless%
novated%
§
Contractual%obligations%may%be%performed%vicariously%(by%another%party)%if%
reasonable%and%accepted%by%receiving% party%unless%specified%NOT%in%contract
BUT%still%between%same%parties,%not%performer
§
Promisor%upon%given%notice%must%make%payment%to%assignee;%if%made%to%
assignor%then%assignee%can%hold%promisor%liable%to%pay%him/her%
H:&-23$"*(A.)5'&'(
H:"*&,)3&'(2),37(%,"-($3'("/*(%)$.5,&(3"(2&,%",-(",(.$-$3'(.$)6$.$37(8,$'K(
)''$<*-&*3(!.)5'&'(L'4$%3$*<(34&(,$'K(3"(34&("34&,(2),37M
§
Limited%to%exact%wording%-not%implied%(word-for-word)
§
Liability%shifted%unfairly%if%there%is%no%equality%of%bargaining%power
§
@F=XQUH=SQB(GDHQAT(=H]QSH0(H\HU1SW?=(ABQF0H
§
Discharge&of&Contracts
By%performance
Full%performance%by%all%parties
§
One%party%fulfills%but%is%refused%
Obligation%to%perform%remains%(onus%on%the%other%party)
Refusal%is%legitimate% if%performance%/tender%is%not%according%to%
contract
§
By%agreement
Underperformance:%mutual%consideration%support%agreement%to%end%
contract
§
Full%performance:%agreement%to%discharge%must%be%made%by%some%
other%consideration%
§
Contract%includes%its%own%termination
Condition%precedent%-an%event%that%must%occur%for%performance%
to%begin
Condition%subsequent%-uncertain%events%i.e.%natural%calamity
Option%to%terminate%-clause%could%be%included
§
By%frustration
If%performance%of%contract%has%become%$-2"''$6.&(Q@SHD(%",-)3$"*(
Must%not%be%by%acts%of%any%party%or%self-induced
Must%materially%change%performance
Must%occur%after%contract%formation
Must%not%be%contemplated%%or%dealt%with%in%contract
§
?=HD?F0(",('3,&''%5.(2&,%",-)*!&($'(*"3(%,5'3,)3$"*
§
By%statue,%if%money%has%been%paid%or%expenses%have%been%incurred%-->%
payment%must%be%made%to%cover%costs%incurred%by%other%party
§
SALES&OF&GOODS&ACT&vs.&FRUSTRATED&CONTRACTS&ACT
Sales%of%goods%act
Identified%goods%perish%without%fault%of%seller/buyer%and%
before%risk%has%passed%to%buyer%-->%Remedy:%contract%of%
sale%is%avoided
a)
1)
Frustrated%Contracts%Act
Deposits%must%be%returned%less%expenses%incurreda)
Identified%&%frustrated%-->%seller%can%recover%amount%up%to%
value%of%goods%otherwise%must%deliver%from%alternative%
source
b)
2)
§
By%operation%of%law
Limitations%Act%-no%action%for%breach%or%damages%can%be%brought%after%
2%years%have%passed%
§
May%relate%to%illegality,%fraud,%duress
§
Breach&of&Contract
When%a%party%repudiates%its%obligations%by%word%or%deed
Repudiation
Accept%repudiation%to%end%contract%(other%party%does%not%have%to%
perform%further%and%can%sue%for%damages%when%time%for%
performance%passes)
OR%Other%party%continues%to%perform%(then%assumes%all%risks%
potentially)
§
Or%does%not%carry%out%one%or%more%terms%of%agreement%(no%or%under%
performance)
Or%acts%so%as%to%make%its%performance%impossible
Minor%Breach%-breach%of%minor/subsidiary%term%or%breach%of%major%
term%in%a%minor%way
"Breach%of%warranty"
1),3$&'(-5'3(!"*3$*5&(2&,%",-$*<()*#(-)7('5&(%",(#)-)<&'
§
Major%Breach%-breach%of%essential%term
"breach%of%condition"
1),3$&'(-)7(!&)'&(2&,%",-)*!&()*#('5&(%",(#)-)<&'(?D(!"*3$*5&(
2&,%",-$*<()*#('5&(%",(#)-)<&'
§
Anticipatory%Breach%-repudiating%before%the%time%for%performance%
Other%party%can%sue%immediately%
§
Failure&to&Perform
Complete%failure
Partial%failure%-other%party%can%sue%for%damages%cause%by%lack%of%full%
performance%until%time%of%performance%surpasses
Failure%to%perform%major%term%-can%treat%contract%as%repudiated
Failure%to%perform%minor%term%-gives%only%right%to%damages%and%requires%
continued%performance
Installment%Contract
Purchaser%may%treat%contract%at%end%if%failure%to%perform%if
Good%reason%to%think%future%performance%will%also%be%defective
Actual%/%expected%deficiency%is%significant%relative%to%required%
performance
§
A"*3$*5$*<(3"()!!&23(%",(2),3$).(2&,%",-)*!&((",(.&),*'("%(6,&)!4()%3&,(
,&!&$+$*<(6&*&%$3("%(!"*3,)!3-->%cannot%then%repudiate%entire%
agreement%and%can%only%get%damages
§
Statute&of&Frauds
May%render%otherwise%valid%oral%contracts%invalid%unless%evidenced%in%writing
Covered%-guarantees,%indemnities,%contracts%dealing%with%interest%in%
land,%over%1%year%contracts
§
]5),)*3&&' -X%promises%to%pay%debt%of%Y%if%Y%does%not%pay;%-5'3(6&($*(
/,$3$*<
§
W*#&-*$37 -X%promises%to%pay%any%debts%or%liabilities%should%they%arise;%
!)*(6&(",).()*#(&*%",!&)6.&
§
A"*3,)!3'(2,"+$#&'(&:2.$!$3.7(%",(2&,%",-)*!&(%",(-",&(34)*(^(7&),,%not%
indefinite%contracts;%-5'&(6&($*(/,$3$*< to%have%existed/enforced
§
Writing%on%Contract
Note%/%Memorandum%
§
Identities%of%parties
§
Essential%terms%-description%on%subject%matter%&%consideration
§
Signatures
§
Doctrine%of%Part%Performance
Concerning%land%-->%oral%contract%is%made,%performance%based%on%oral%
contract%becomes%evidence%of%contracts%and%renders%it%enforceable;%#&2"'$3'(
),&(*"3(&*"5<4(3"(+).$#(&:$'3&*!&("%(!"*3,)!3
DAMAGES& REMEDIES
Q$-N(3"(2.)!&(34&(/,"*<&#(2),37($*(
2"'$3$"*($3(/"5.#(4)+&(6&&*($*(4)#(34&(
!"*3,)!3(6&&*(2&,%",-&#
Consequential:%damages%that%a%
party%knew%or%ought%to%have%
known%to%flow%naturally%from%
breach
-
General:%estimated%amounts%
awarded%by%court%to%fairly%
compensate%wronged%party
-
Reliance:%damages/losses%
reasonably%incurred%in%
preparation%for%performance%
under%contract
-
Liquidated:%amounts%agreed%to%be%
paid%in%damages%by%party%to%a%
contract%should%it%commit%a%
breach
-
Nominal:%"token"%sums%awarded%
when%breach%of%contract%results%
in%negligible% damages/losses
-
-02&!$%$!(1&,%",-)*!&N(court%order%
requiring%party%to%do%something
-W*E5*!3$"*N(court%restraining%a%party%
from%acting%in%a%particular%manner%or%
engaging%in%particular%activity
-D&'!$''$"*N set%aside%contract%
completely;%place%parties%in%position%
they%would%have%been%in%had%there%
been%no%contract%at%all
U$3$<)3$"*N(wronged%party%is%expected%to%do%what%it%can%to%-$*$-$_&(",(,&#5!&(
&:3&*3("%(."''(!)5'&#(67("34&,(2),37;'(6,&)!4("%(!"*3,)!3 -cannot%recover%damages%
for%losses%that%could%have%been%avoided%by%acting%reasonably%to%mitigate
(4) Tort&8/,"*<%5.()!3(#"*&(3"(34&(2&,'"*(",(2,"2&,37("%()*"34&,(
Liability%in%tort%does%not%depend%on%pre-existing%legal%relationship
Only%to%compensate%victim%for%losses;%no%punishment%or%no%retribution
=&<.$<&*!&(S&'3
§(1)%Is%there%a%duty%of%care%owed?
Must%have%reasonably%foreseen%that%his/her%actions%may%harm%
another
§(2)%Was%the%duty%breached?
Measure%breach%using%standard%of%care
If%conduct%falls%below%standard%of%care%-->%duty%is%breached
®
Measure%using%"what%the%average%reasonable%person%would%have%
done?"
§(3)%Did%the%breach%cause%the%injury?
Causation:%breach%of%duty%must%directly%or%indirectly%have%caused%
injury%
®Cause-in-fact%or%"But%for"
Without%this%breach%would%the%damage%have%
occurred?%NO%-->%breach%is%cause%in%fact%-->%
negligence%&%liability
®Proximate%cause%/%"not%too%remote"
Time%interval%between%breach%&%injury%
Intervening%events
§(4)%Were%the%damages%reasonably%foreseeable?
No%recovery%for%the%unforeseeable%harm
§Upon%finding%negligence%
Other%defendants%/%people%who%breached%duty%/%other%parties%at%
fault?
Apportion%damages%among%them
®
Conduct%of%victim?
Contributory%negligence
®
Voluntary%assumption%of%risk%-"volenti"
®
Vicarious%liability%-employers%are%liable%for%negligence%of%
employees%committed%during%course%of%employment
®
"Pure"%economic%loss%is%recoverable%
i.e.%lost%wages,%mental%impacts,%etc.
®
Products%liability
Liability%of%manufacturers%(duty%of%care%owed%to%customers)%for%injury%or%loss%
arising%from%defects%in%products
Burden%of%Proof%-#&%&*#)*3(4)'(65,#&*("%(2,""%
Injured%party%must%prove%other%party%was%negligent%and%that%has%caused%harm
Other%party%can%show%
Cause%of%defect%is%not%something%for%which%it%should%be%liable%-->%
reasonably%unforeseeable
§
Took%all%reasonable%precautions%to%prevent%defective%product%from%
reaching%injured%party
§
STW0(1QDS[(AQ=(GH(THBX(CWAQDW?F0B[(BQWGBH(AQF0HX(G[(STH(=H]BW]H=AH(
?@(STHWD(HU1B?[HH0 or%if%it%could%have%reasonably%expected%to%be%aware%of%
the%defect
Cannot%claim%that%it%was%too%expensive%to%pull%back%or%eliminate% defective%
products
X537(3"(V),*(
Any%dangers%must%be%presented%to%consumer%continuously%
§
?!!52$&,;'(B$)6$.$37(
Duty%of%owner%or%occupier%of%land%to%visitors%-"/*&,(-5'3(*"3(6&(
*&<.$<&*3(!"*!&,*$*<(#)*<&,'(&'2&!$)..7(!"*!&).&#(#)*<&,'("*(2,"2&,37
§
§Duty%of%common%humanity%toward%trespassers
But%otherwise%not%liable
Tors%parallel% to%criminal%offences%
Conversion%(theft)
§
Deceit%(fraud)
§
Trespassing
§
Assault%and%battery
§
False%imprisonment%(kidnapping)
§
Malicious%prosecution
§
=5$')*!&(
Public%(i.e.%blocking%public%road)%
§
Private%-interfering%with%occupier's%use%or%enjoyment%of%his/her%land
§
X&%)-)3$"*
Libel%(written)
§
Slander%(spoken)
§
§F*3,5&('3)3&-&*3(-)#&(34)3($*E5,&'(,&253)3$"*("%()(2&,'"*
If%the%truth%=%absolute%defense%
Absolute%privilege%=%complete%immunity%
Qualified%privilege% =%immunity%if%proved%that%statement%was%
made%in%good%faith%and%accuracy
Economic%Torts%-intentional%interference%with%contractual%relations%i.e.%A%
induces%B%to%come%work%for%A%(thereby%B%breaches%contract%with%C);%unlawful%
interference%(i.e.%threats)
Product%defamation
§
Passing%off
§
Remedies
=",-).N(damages%for%losses
Special%-quantifiable%losses
§
General%-cannot%be%quantified
§
D&'3$353$"*("%(2,"2&,37(
W*E5*!3$"*()<)$*'3()!3$+$37 -restrains%activity%
U)*#)3",7($*E5*!3$"*(8compels%activity%i.e.%remove%a%fence
Duties%of%Professionals%
Contract
Fiduciary%Duty%
Owed%by%virtue%of%special%relationship%of%trust
§
Not%to%omit%essential%steps%/%information%in%providing%services
§
Privilege%=%maintain%client%information%in%confidence
§
No%allowance%for%being%a%novice%/%no%expectation%of%being%a%genius
§
Tort%(negligence%or%other)
Standard%=%reasonable%professional%
§
Negligent%misrepresentation%
A%professional%may%be%liable%to%third%parties%for%negligent%work%despite%
no%relationship%between%them
§
W%('3)3&-&*3(",()!3$"*(-)#&(/$34"53('5$3)6.&(!),&()*#(,&<),#(%",(3,534(
§
If%reliance%can%be%reasonably%expected,%professional%can
Keep%silent%-->%no%liability
§
Offer%advice%with%disclaimer%-->%no%liability%
§
Offer%advice%without%disclaimer%-->%liability%
§
RSM225&-Final&Exam&Review

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Canadian&Legal&System
Common%Law
Substantive%and%procedural%law
Public%vs%private%law
Civil%vs%common%law
"Law"%vs%equity
(1)
Hierarchy%of%Laws
Constitution%%"highest/Supreme%statute"-->%Statute%Law%"government-
made"%-->%Common%Law%"judge-made"
Constitution%
Includes%Charter%of%Rights%and%Freedoms
Oakes%Test%-"demonstrably%justified"
Notwithstanding%clause
Statute%and%Common%Law%Creation
Federal%parliament%&%provincial%legislatures
Bill%presented%at%parliament,%receives%3%readings,%proclaimed%into%force,%
then%a%statute%i.e.%The%Securities%Act%(Ontario)
§
Statutes%generally%set%"the%main%framework%for%law"
§
Legislations:%framework%in%governing%relationships%with%and%among%
public;%regulate%behaviour;%!"#$%$&'()*#(!)*("+&,,$#&(!"--"*(.)/
§
Regional%and%municipal%governments
Regulatory%bodies
Set%their%own%procedures%often%and%set%substantive%law
§
Experts%in%the%field;%"quasi-judicial"
§
Courts
Oakes%Test
The%object%of%infringement%is%of%sufficient%importance
There%must%be%pressing%and%substantial%need
The%infringement%must%impair%the%Charter%as%little%as%possible
The%object%must%justify%the%infringement
Who%May%Sue?
Natural%persons
Special%cases:%minors,%undischarged%bankrupts,%mentally%incompetent%
Corporations
Trusts,%partnerships,%unincorporated%associations
Resolving%Dispute%out-of-court
Settlement%
Alternate%Dispute%Resolution%(ADR)
Mediation
§
Arbitration
§
Types&of&Businesses
(2)
0".&(1,"2,$&3",'4$2
No%legal%separation%from%owner%-owner%has%5*.$-$3&#(.$)6$.$37(
Associated%costs:%minimal
1),3*&,'4$2
Partnership%Test
A%relationship
§
Between%two%or%more%persons
§
Carrying%on%business%in%common%(together)
Must%manage%business%together**%and%make%contributions%
proportionate%to%their%capital%contribution
**Cannot%be%a%single%venture%or%owning%property%together;%
!)**"3(6&()*($*+&'3-&*3(8-5'3(9!),,7("*9(34&(65'$*&''
§
With%a%view%to%profit
Profit%calculated%after%expenses;%'"(&:2&*'&'()*#(,&+&*5&(-5'3(
6&('4),&#
Generally,%profits%shared%2,"(,)3)(86)'&#("*(&)!4(2),3*&,';(
#&<,&&("%($*+".+&-&*3(",(!)2$3).(!"*3,$653$"*
Royalty%or%sharing%gross%revenues%is%not%enough
§
Created%usually%by%written%agreement
Can%be%established%",)..7(",(67(!"*#5!3
If%pass%a%partnership%test,%deemed%as%partners%regardless%of%what%
the%persons%call%their%relationship
§
="3()('&2),)3&(.&<).(&*3$37(
Owners%can%have%unlimited%or%limited%liability%-depending%on%the%type%
of%partnership
§
Creditors%of%partnership%have%first%claim%against%partnership%asset%>%
creditors%of%any%particular%partner
§
1&,'"*)..7(.$)6.&(
Type%of%partnership%contract
Tort%liability% such%as%negligence
§
>"$*3.7()*#('&+&,)..7(.$)6.&(
Any%partner%held%liable%under%the%partnership%has%rights%to%collect%
contribution%against%other%partners%for%claim
§
Contracts
Offer%-3&*3)3$+&(2,"-$'& subject%to%condition%or%request
Communicated%in%writing%or%orally
§
?34&,(2),37(-5'3(6&()/),&("%%&,($'(-)#&
No%contract%if%you%realized%after%performing%that%there%was%an%
offer
"Invitations%to%do%business"%-display%of%goods/ads%-->%*"3("%%&,'
unless%ad%=%offer%for%
Fixed%#%of%items,%Fixed%price,%First-come-first%serve%basis
®
§
03)*#),#(@",-(A"*3,)!3'(
Terms%printed%on%offer%-no%negotiations%-->%unequal%bargaining%
power
Must%accept%/%reject
Purchaser%bound%by%terms%with%notice%(special%notice%of%
unexpected%terms%must%be%given)
§
B)2'&("%(?%%&,
Not%accepted%within%time%specified%or%reasonable%time,%if%party%
dies/mentally%incompetent
C"$#()*#(!)**"3(6&()!!&23&#
D&+"!)3$"*(-5'3(,&)!4("%%&,&&(6&%",&()!!&23)*!&
§
D&E&!3$"*(
Offer%is%void
Subsequent%reply%is%counter-offer
Inquiry%on%whether%the%terms%offered%are%best%to%expect%does%not%
equal%rejection
§
Acceptance
Communicated%or%can%be%through%conduct%(what%has%constituted%as%
accepted%in%the%past)
§
Tender%=%invitation%to%put%an%offer;%inviting%party%must%accept%/%reject
§
A"*'$#&,)3$"* -required%element%to%form%a%6$*#$*<(!"*3,)!3
F*$.)3&,).-offer%accepted%through%performance%of%an%act%/%service
§
G$.)3&,). -exchange%of%promises
§
Moral%duty%is%not%sufficient%to%form%contract%-motives%are%not%relevant
§
Some%exchange%of%value%must%flow%to%every%party%in%contract%(subject%
to%exceptions)
Exceptions%(require%no%consideration):%
Transfer%/%Exchange%/%co-signing%of%debts
®
Charitable%donations%
®
Contracts%under%seal
®
§
H'3"22&.(-"the%principle%that%prevents%a%person%from%asserting%
something%contrary%to%what%is%implied%by%a%previous%action%or%
statement%of%that%person"
Promissory,%statements%of%facts,%equitable%-is%prevented%to%make%
contradictory%statements%to%prior%positions,%act%or%promises
Promissory%estoppel%-legal%principle%that%a%promise%is%
enforceable%by%law%when%promisor%makes%a%promise%to%
promisee%who%relies%on%it%to%their%detriment%(reliance%
causes%injury%or%losses)%in%US
®
§
Court%will%not%inquire%into%)#&I5)!7(653("*.7('"-&(!"*'$#&,)3$"*(6&(
2,&'&*3
Must%look%at%#5,&''J(%,)5#J(5*#5&($*%.5&*!&J(-$'3)K&
Mistake:&does%not%include%errors%as%to%value,%errors%of%
judgment,%failure%to%remember%other%obligations/promises;%
"*.7(&''&*3$).(-$'5*#&,'3)*#$*<'()6"53(*)35,&("%(!"*3,)!3(
",(.)/(",("6+$"5'(&,,",'($*(#,)%3$*<(L'2"K&*(",(/,$33&*(
%",-)..7(",($*%",-)..7(8!.&),.7(5*,&)'"*)6.&M
Nature%of%contract:
Terms%are%reasonable%-->%enforce%as%it%is
}
Unreasonable%-->%mistake%had%been%made;%
must%be%rectified%or%hold%contract%as%void
}
Mistake%of%Law/facts:
Object%of%contract%may%no%longer%exist
}
Party%may%not%be%who%they%claim%to%be%-
contract%voidable%at%other%party's%request
}
Unilateral:%one%party%makes%mistake%and%other%party%
is%aware%of%mistake%L34&,&(-5'3(6&(*"(
-$',&2,&'&*3)3$"*M
Mutual%Mistake:%both%party%mistaken%or%one%party's%
mistake%and%other%party%unaware%
Mistakes%of%major/key%terms%-->%unenforceable
}
If%reasonable%terms%exist%-->%enforceable
}
Only%errors%in%drafting%or%terms%-->%rectified%
L'2&!$).(,&-&#7M
}
D&!3$%$!)3$"*N(/4&*(/,$33&*(!"*3,)!3(#"&'(*"3(
,&%.&!3(3,5&()*#()!35).()<,&&-&*3("%(2),3$&'(
Must%be%agreement%present,%can%not%be%
uncertain/ambiguous%and%conditional,%no%
further%negotiation%to%amend
Change%most%easily%explained%as%error%in%
recording%or%drafting
}
Sale%of%Goods
Perished%with%no%involvement%from%either%
parties-->%contract%is%void
}
Subject%exists%but%its%value%fluctuates%-->%
reasonable%expectation%of%the%parties%will%
determine%who%bears%the%risk%(party%that%first%
knows%of%the%risk%must%bear%them)
}
Unusual%risks%-->%%consider%,&)'"*)6.&(
&:2&!3)3$"*'("%(2),3$&'J(%)$,(,&'5.3 of%
enforcement%or%rescission,%consequences%of%
rescission
}
®
Fraud
If%original%contract%is%valid%between%1st%and%2nd%
party;%3rd%party%is%owner%of%goods%/%services
If%original%contract%is%void%between%1st%and%2nd%
party%-->%Third%party%must%return%all%goods/services
Generally%treated%as%voidable%contract;%as%original%
party%is%in%better%position%to%protect%their%interests
="*(H'3(@)!35-(82),37(34)3(#&%&*#'(34)3(34&7(/&,&(
-$'.&#(,&<),#$*<(*)35,&("%(!"*3,)!3(
Requirements%for%defense:
Some%infirmity%that%makes%understanding%
impossible
Reasonable%actions%were%taken%to%make%
attempt%in%understanding%contract%i.e.%
independent%advice
}
®
Misrepresentation 8)('3)3&-&*3("%(%)!3(34)3($'(/,"*< (not%
opinions,%glowing%descriptions,%!)*(6&(&:2&,3("2$*$"*(
34"5<4)
Innocent%-unaware
Negligent%-carelessness
Fraudulent%-intention%to%deceive;%reckless%disregard%
/%ignorance
Consequences:
Material%-->%is%it%reasonably%expected%to%
influence%party%to%enter%into%contract%on%the%
specified%terms
}
Misrepresentation%-->%wronged%party%can%
choose%3"(,&'!$*#(L3&,-$*)3&M(!"*3,)!3(",(
,&!"+&,(*"*8&:2&!3)3$"*O(,&.$)*!&(#)-)<&'((if%
negligent%or%fraudulent)
}
If%innocent%misrepresentation%-->%can%rescind%
(or%money%as%compensation%for%indemnity%for%
expenses%incurred%under%contract)%only%if%
subject%matter%can%be%restored%(otherwise%time%
lapsed)
}
If%it%was%a%3&,-("%(!"*3,)!3 vs%misrepresentation%-->%
violation%of%term%is%called%6,&)!4("%(!"*3,)!3 -->%more%
to%recover%damages
Statement%was%important%inducement%to%enter%
into%contract
}
Wronged%party%suffered%substantial%loss
}
Misrepresentation%made%at%time%of%entering%
into%contract
Ads%can%be%misrepresentations
}
Time%constraint%for%wronged%party%to%ask%for%
rescission
Generally,%no%obligation%to%make%statements%at%
contract%formation%other%than%verification%of%terms%
of%contract%and%anything%material%BUT%specific%
contracts%i.e.%partnership,%insurance,%special%
trust/confidence%have 4$<4&,(#537(O(%$#5!$),7(8'2&!$).(
K*"/.&#<&(P(#537("%(53-"'3(<""#(%)$34
®
Undue&Influence&
Q(2),37;'(!"*3,".("+&,(/$..("%(34&("34&,(2),37 i.e.%
client-solicitor;%doctor-patient
Suggestion%for%party%who%cannot%make%independent%
decision:%-5'3('&&K($*#&2&*#&*3()#+$!&(3"(*&<)3&(
5*#5&($*%.5&*!&
®
Duress
If%there%has%been%a%genuine%34,&)3("%(+$".&*!&("*(
2),37(3"(-)K&(34&-(#"('"-&34$*<()<)$*'3(34&$,(/$..(
",(6&33&,(E5#<&-&*3 (parties%or%non-parties%
influence)
®
C).$#$37N('"-&(!"*'$#&,)3$"*(-5'3(6&(2,&'&*3R()*734$*<("%(+).5&(
34)3(%."/' (don't%have%to%question%how%or%whether%or%not%it%had%
value%to%the%individual%in%particular)
§
Tenders%-requested%under%0HQB((enforceable%until%expiration%or%
acceptance)
Bids%are%irrevocable%
Bidders%receive% consideration%in%form%of%tendering%process
§
0&).&#(#"!5-&*3(",()<,&&-&*3'(#"(*"3(,&I5$,&(!"*'$#&,)3$"* i.e.%real%
estate
§
Considerations%already%2,&+$"5'.7(&:!4)*<&#(#"&'(*"3('3)*#(%",(+).$#$37(
"%(!"*3,)!3 -STHDH(UF0S(GH(=HV(A?=0WXHDQSW?=
Service%performed%gratuitously%then%a%party%asks%for%payment%for%
service%-no%contract
A%party%was%already%bound%to%do%something%and%then%offered%
more%to%finish%it%-no%contract
One-sided%re-negotiation%of%terms%-no%contract
§
Y5)*35-(U&,5$3
0&,+$!&(/)'(2&,%",-&#(/$34(&:2&!3)3$"*("%(2)7-&*3(653(2)7-&*3(
/)'(*"3(&:2.$!$3.7(#$'!5''&#(
Court%will%enforce%promise%to%pay%as%consideration%in%
exchange%of%original%service
®
Or%court%awards%payment%on%I5)*35-(-&,5$3 basis%-at%the%
fair%market%value%of%service;%a%quasi-contractual%remedy
®
§
Gratuitous&services&8L%",(%,&&M('56E&!3(3"(3",3(.$)6$.$37(%",(*&<.$<&*!&R(*"3(
&*%",!&)6.&()'(!"*3,)!3("6.$<)3$"*'
(3)
Capacity&and&Legality&
Void:%not%valid%(if%contrary%to%law)%
Voidable:%currently%valid%but%void%at%parties'%discretion
Illegal:%no%assistance%from%court
G.5&(2&*!$.(,5.&(8!"5,3(-)7()''$'3($*(,&#,)/$*<()(2,"6.&-)3$!(!"*3,)!3R(
'3,$K$*<("53(!.)5'&'(3"(2&,%&!3(!"*3,)!3
Capacity%
Any%party%who%does%not%currently%have%full%capacity%-has%a%window%to%
escape%contract%until%this%party%regains%full%capacity;%4)+&()(3&-2",),7(
!"*#$3$"*(/$34(.)!K("%(!)2)!$37(
§
Minors%can%validly%contract%for%necessities;%other%contracts%voidable%at%
minor's%discretion%(time%is%up%when%minor%reaches%age%of%majority)
Repudiation%
Ratification
Minors%can%sue%BUT%not%be%sued%except%
Contracts%for%necessities%/%beneficial%contracts%of%service
®
§
Restraint%of%Trade%
Restrictive%covenants%i.e.%vendor-purchaser,%employer-employee
Look%at%reasonableness%-period%or%extensiveness%of%restriction
§
Sales%of%Goods%Act%-).."/(2,$!&("%()(!"*3,)!3(3"(6&(#&3&,-$*&#("34&,(34)*(67(#$,&!3(
)<,&&-&*3(
i.e.%receiving% goods,%partial%payment%can%make%contract%enforceable%
Consideration%determined%subsequently
Buyer%has%no%recourse%for%poor%quality%goods%unless%implied%warranties%as%to%
quality,%suitability%were%provided
Seller's%Title
§
Description%
§
Sale%by%Sample
§
Suitability%and%Merchantable%Quality
Goods%should%be%of%reasonably%sound%condition,%free%from%
defects%that%would%make%them%unsuitable%for%use
§
If%buyer%has%chance%to%&:)-$*&(<""#'()*#(*"(-$',&2,&'&*3)3$"*(-)#&(67(
'&..&,(88Z(A)+&)3(H-23",(9657&,(6&(6&/),&9
Contractual&Terms&
Interpreted%on%a%reasonable%(business)%person%standard
Meanings
Which%meaning%is%more%,&)'"*)6.& in%the%circumstances?
General%dictionary%meaning,%then%special%meaning%in%context
}
Upon%ambiguity%-->%court%rules%against%party%insisting%on%the%ambiguous%
term
}
Generally%courts%want%to%give%validity%to%contract
}
Words%/%Phrases%allowed%at%their%",#$*),7(-&)*$*<(+'(.$6&,).()22,")!4
Q-6$<5$37
Circumstances%and%negotiations
Common%understandings%in%industry
Past%transactions%
§
1),".(H+$#&*!&(D5.&
Once%contract%set%in%writing,%no%other%agreements%can%be%admitted%in%
evidence
§
Not%evidence%that%reduces%ambiguity%-->%this%can%be%admitted
§
Not%separate%consideration%agreements%or%condition%precedent
§
VWBB(=?S(WU1B[(Q(SHDU(A?=SDQD[(S?(DH0?=QGBH(H\1HASQSW?=0(?D(
W=SH=SW?=0(?@(1QDSWH0
Privity&
Party%has%privity%to%contract%=%party%has%enforceable%rights%or%obligations%to%
contract
Must%be%original%party%to%contract%(no%transfer%/%exchanges)
Exceptions:%insurance,%undisclosed%principal%(party%acting%as%
agent),%interests%in%land,%collateral%/%warranty%contracts,%
exemption%clauses
§
Vicarious&Performance&
Liabilities% cannot%be%reassigned%L,$<43'(!)*(6&()''$<*&#M(unless%form%a%new%
contract%-*"+)3$"*(L,&2.)!&-&*3("%('56E&!3(-)33&,J(,&2.)!&-&*3("%(2),37(3"(
!"*3,)!3M
Or%accept%benefits%that%come%with%the%liabilities,%prior%interests%in%land,%
assignment%of%debt
§
EX.%Jane%contracts%with%Cal%and%requires%Bob%to%perform%services,%Jane%
CANNOT%assign%liabilities%to%Bob%and%be%discharged%from%that%unless%
novated%
§
Contractual%obligations%may%be%performed%vicariously%(by%another%party)%if%
reasonable%and%accepted%by%receiving% party%unless%specified%NOT%in%contract
BUT%still%between%same%parties,%not%performer
§
Promisor%upon%given%notice%must%make%payment%to%assignee;%if%made%to%
assignor%then%assignee%can%hold%promisor%liable%to%pay%him/her%
H:&-23$"*(A.)5'&'(
H:"*&,)3&'(2),37(%,"-($3'("/*(%)$.5,&(3"(2&,%",-(",(.$-$3'(.$)6$.$37(8,$'K(
)''$<*-&*3(!.)5'&'(L'4$%3$*<(34&(,$'K(3"(34&("34&,(2),37M
§
Limited%to%exact%wording%-not%implied%(word-for-word)
§
Liability%shifted%unfairly%if%there%is%no%equality%of%bargaining%power
§
@F=XQUH=SQB(GDHQAT(=H]QSH0(H\HU1SW?=(ABQF0H
§
Discharge&of&Contracts
By%performance
Full%performance%by%all%parties
§
One%party%fulfills%but%is%refused%
Obligation%to%perform%remains%(onus%on%the%other%party)
Refusal%is%legitimate% if%performance%/tender%is%not%according%to%
contract
§
By%agreement
Underperformance:%mutual%consideration%support%agreement%to%end%
contract
§
Full%performance:%agreement%to%discharge%must%be%made%by%some%
other%consideration%
§
Contract%includes%its%own%termination
Condition%precedent%-an%event%that%must%occur%for%performance%
to%begin
Condition%subsequent%-uncertain%events%i.e.%natural%calamity
Option%to%terminate%-clause%could%be%included
§
By%frustration
If%performance%of%contract%has%become%$-2"''$6.&(Q@SHD(%",-)3$"*(
Must%not%be%by%acts%of%any%party%or%self-induced
Must%materially%change%performance
Must%occur%after%contract%formation
Must%not%be%contemplated%%or%dealt%with%in%contract
§
?=HD?F0(",('3,&''%5.(2&,%",-)*!&($'(*"3(%,5'3,)3$"*
§
By%statue,%if%money%has%been%paid%or%expenses%have%been%incurred%-->%
payment%must%be%made%to%cover%costs%incurred%by%other%party
§
SALES&OF&GOODS&ACT&vs.&FRUSTRATED&CONTRACTS&ACT
Sales%of%goods%act
Identified%goods%perish%without%fault%of%seller/buyer%and%
before%risk%has%passed%to%buyer%-->%Remedy:%contract%of%
sale%is%avoided
a)
1)
Frustrated%Contracts%Act
Deposits%must%be%returned%less%expenses%incurreda)
Identified%&%frustrated%-->%seller%can%recover%amount%up%to%
value%of%goods%otherwise%must%deliver%from%alternative%
source
b)
2)
§
By%operation%of%law
Limitations%Act%-no%action%for%breach%or%damages%can%be%brought%after%
2%years%have%passed%
§
May%relate%to%illegality,%fraud,%duress
§
Breach&of&Contract
When%a%party%repudiates%its%obligations%by%word%or%deed
Repudiation
Accept%repudiation%to%end%contract%(other%party%does%not%have%to%
perform%further%and%can%sue%for%damages%when%time%for%
performance%passes)
OR%Other%party%continues%to%perform%(then%assumes%all%risks%
potentially)
§
Or%does%not%carry%out%one%or%more%terms%of%agreement%(no%or%under%
performance)
Or%acts%so%as%to%make%its%performance%impossible
Minor%Breach%-breach%of%minor/subsidiary%term%or%breach%of%major%
term%in%a%minor%way
"Breach%of%warranty"
1),3$&'(-5'3(!"*3$*5&(2&,%",-$*<()*#(-)7('5&(%",(#)-)<&'
§
Major%Breach%-breach%of%essential%term
"breach%of%condition"
1),3$&'(-)7(!&)'&(2&,%",-)*!&()*#('5&(%",(#)-)<&'(?D(!"*3$*5&(
2&,%",-$*<()*#('5&(%",(#)-)<&'
§
Anticipatory%Breach%-repudiating%before%the%time%for%performance%
Other%party%can%sue%immediately%
§
Failure&to&Perform
Complete%failure
Partial%failure%-other%party%can%sue%for%damages%cause%by%lack%of%full%
performance%until%time%of%performance%surpasses
Failure%to%perform%major%term%-can%treat%contract%as%repudiated
Failure%to%perform%minor%term%-gives%only%right%to%damages%and%requires%
continued%performance
Installment%Contract
Purchaser%may%treat%contract%at%end%if%failure%to%perform%if
Good%reason%to%think%future%performance%will%also%be%defective
Actual%/%expected%deficiency%is%significant%relative%to%required%
performance
§
A"*3$*5$*<(3"()!!&23(%",(2),3$).(2&,%",-)*!&((",(.&),*'("%(6,&)!4()%3&,(
,&!&$+$*<(6&*&%$3("%(!"*3,)!3-->%cannot%then%repudiate%entire%
agreement%and%can%only%get%damages
§
Statute&of&Frauds
May%render%otherwise%valid%oral%contracts%invalid%unless%evidenced%in%writing
Covered%-guarantees,%indemnities,%contracts%dealing%with%interest%in%
land,%over%1%year%contracts
§
]5),)*3&&' -X%promises%to%pay%debt%of%Y%if%Y%does%not%pay;%-5'3(6&($*(
/,$3$*<
§
W*#&-*$37 -X%promises%to%pay%any%debts%or%liabilities%should%they%arise;%
!)*(6&(",).()*#(&*%",!&)6.&
§
A"*3,)!3'(2,"+$#&'(&:2.$!$3.7(%",(2&,%",-)*!&(%",(-",&(34)*(^(7&),,%not%
indefinite%contracts;%-5'&(6&($*(/,$3$*< to%have%existed/enforced
§
Writing%on%Contract
Note%/%Memorandum%
§
Identities%of%parties
§
Essential%terms%-description%on%subject%matter%&%consideration
§
Signatures
§
Doctrine%of%Part%Performance
Concerning%land%-->%oral%contract%is%made,%performance%based%on%oral%
contract%becomes%evidence%of%contracts%and%renders%it%enforceable;%#&2"'$3'(
),&(*"3(&*"5<4(3"(+).$#(&:$'3&*!&("%(!"*3,)!3
DAMAGES& REMEDIES
Q$-N(3"(2.)!&(34&(/,"*<&#(2),37($*(
2"'$3$"*($3(/"5.#(4)+&(6&&*($*(4)#(34&(
!"*3,)!3(6&&*(2&,%",-&#
Consequential:%damages%that%a%
party%knew%or%ought%to%have%
known%to%flow%naturally%from%
breach
-
General:%estimated%amounts%
awarded%by%court%to%fairly%
compensate%wronged%party
-
Reliance:%damages/losses%
reasonably%incurred%in%
preparation%for%performance%
under%contract
-
Liquidated:%amounts%agreed%to%be%
paid%in%damages%by%party%to%a%
contract%should%it%commit%a%
breach
-
Nominal:%"token"%sums%awarded%
when%breach%of%contract%results%
in%negligible% damages/losses
-
-02&!$%$!(1&,%",-)*!&N(court%order%
requiring%party%to%do%something
-W*E5*!3$"*N(court%restraining%a%party%
from%acting%in%a%particular%manner%or%
engaging%in%particular%activity
-D&'!$''$"*N set%aside%contract%
completely;%place%parties%in%position%
they%would%have%been%in%had%there%
been%no%contract%at%all
U$3$<)3$"*N(wronged%party%is%expected%to%do%what%it%can%to%-$*$-$_&(",(,&#5!&(
&:3&*3("%(."''(!)5'&#(67("34&,(2),37;'(6,&)!4("%(!"*3,)!3 -cannot%recover%damages%
for%losses%that%could%have%been%avoided%by%acting%reasonably%to%mitigate
(4) Tort&8/,"*<%5.()!3(#"*&(3"(34&(2&,'"*(",(2,"2&,37("%()*"34&,(
Liability%in%tort%does%not%depend%on%pre-existing%legal%relationship
Only%to%compensate%victim%for%losses;%no%punishment%or%no%retribution
=&<.$<&*!&(S&'3
§(1)%Is%there%a%duty%of%care%owed?
Must%have%reasonably%foreseen%that%his/her%actions%may%harm%
another
§(2)%Was%the%duty%breached?
Measure%breach%using%standard%of%care
If%conduct%falls%below%standard%of%care%-->%duty%is%breached
®
Measure%using%"what%the%average%reasonable%person%would%have%
done?"
§(3)%Did%the%breach%cause%the%injury?
Causation:%breach%of%duty%must%directly%or%indirectly%have%caused%
injury%
®Cause-in-fact%or%"But%for"
Without%this%breach%would%the%damage%have%
occurred?%NO%-->%breach%is%cause%in%fact%-->%
negligence%&%liability
®Proximate%cause%/%"not%too%remote"
Time%interval%between%breach%&%injury%
Intervening%events
§(4)%Were%the%damages%reasonably%foreseeable?
No%recovery%for%the%unforeseeable%harm
§Upon%finding%negligence%
Other%defendants%/%people%who%breached%duty%/%other%parties%at%
fault?
Apportion%damages%among%them
®
Conduct%of%victim?
Contributory%negligence
®
Voluntary%assumption%of%risk%-"volenti"
®
Vicarious%liability%-employers%are%liable%for%negligence%of%
employees%committed%during%course%of%employment
®
"Pure"%economic%loss%is%recoverable%
i.e.%lost%wages,%mental%impacts,%etc.
®
Products%liability
Liability%of%manufacturers%(duty%of%care%owed%to%customers)%for%injury%or%loss%
arising%from%defects%in%products
Burden%of%Proof%-#&%&*#)*3(4)'(65,#&*("%(2,""%
Injured%party%must%prove%other%party%was%negligent%and%that%has%caused%harm
Other%party%can%show%
Cause%of%defect%is%not%something%for%which%it%should%be%liable%-->%
reasonably%unforeseeable
§
Took%all%reasonable%precautions%to%prevent%defective%product%from%
reaching%injured%party
§
STW0(1QDS[(AQ=(GH(THBX(CWAQDW?F0B[(BQWGBH(AQF0HX(G[(STH(=H]BW]H=AH(
?@(STHWD(HU1B?[HH0 or%if%it%could%have%reasonably%expected%to%be%aware%of%
the%defect
Cannot%claim%that%it%was%too%expensive%to%pull%back%or%eliminate% defective%
products
X537(3"(V),*(
Any%dangers%must%be%presented%to%consumer%continuously%
§
?!!52$&,;'(B$)6$.$37(
Duty%of%owner%or%occupier%of%land%to%visitors%-"/*&,(-5'3(*"3(6&(
*&<.$<&*3(!"*!&,*$*<(#)*<&,'(&'2&!$)..7(!"*!&).&#(#)*<&,'("*(2,"2&,37
§
§Duty%of%common%humanity%toward%trespassers
But%otherwise%not%liable
Tors%parallel% to%criminal%offences%
Conversion%(theft)
§
Deceit%(fraud)
§
Trespassing
§
Assault%and%battery
§
False%imprisonment%(kidnapping)
§
Malicious%prosecution
§
=5$')*!&(
Public%(i.e.%blocking%public%road)%
§
Private%-interfering%with%occupier's%use%or%enjoyment%of%his/her%land
§
X&%)-)3$"*
Libel%(written)
§
Slander%(spoken)
§
§F*3,5&('3)3&-&*3(-)#&(34)3($*E5,&'(,&253)3$"*("%()(2&,'"*
If%the%truth%=%absolute%defense%
Absolute%privilege%=%complete%immunity%
Qualified%privilege% =%immunity%if%proved%that%statement%was%
made%in%good%faith%and%accuracy
Economic%Torts%-intentional%interference%with%contractual%relations%i.e.%A%
induces%B%to%come%work%for%A%(thereby%B%breaches%contract%with%C);%unlawful%
interference%(i.e.%threats)
Product%defamation
§
Passing%off
§
Remedies
=",-).N(damages%for%losses
Special%-quantifiable%losses
§
General%-cannot%be%quantified
§
D&'3$353$"*("%(2,"2&,37(
W*E5*!3$"*()<)$*'3()!3$+$37 -restrains%activity%
U)*#)3",7($*E5*!3$"*(8compels%activity%i.e.%remove%a%fence
Duties%of%Professionals%
Contract
Fiduciary%Duty%
Owed%by%virtue%of%special%relationship%of%trust
§
Not%to%omit%essential%steps%/%information%in%providing%services
§
Privilege%=%maintain%client%information%in%confidence
§
No%allowance%for%being%a%novice%/%no%expectation%of%being%a%genius
§
Tort%(negligence%or%other)
Standard%=%reasonable%professional%
§
Negligent%misrepresentation%
A%professional%may%be%liable%to%third%parties%for%negligent%work%despite%
no%relationship%between%them
§
W%('3)3&-&*3(",()!3$"*(-)#&(/$34"53('5$3)6.&(!),&()*#(,&<),#(%",(3,534(
§
If%reliance%can%be%reasonably%expected,%professional%can
Keep%silent%-->%no%liability
§
Offer%advice%with%disclaimer%-->%no%liability%
§
Offer%advice%without%disclaimer%-->%liability%
§
RSM225&-Final&Exam&Review

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Canadian&Legal&System
Common%Law
Substantive%and%procedural%law
Public%vs%private%law
Civil%vs%common%law
"Law"%vs%equity
(1)
Hierarchy%of%Laws
Constitution%%"highest/Supreme%statute"-->%Statute%Law%"government-
made"%-->%Common%Law%"judge-made"
Constitution%
Includes%Charter%of%Rights%and%Freedoms
Oakes%Test%-"demonstrably%justified"
Notwithstanding%clause
Statute%and%Common%Law%Creation
Federal%parliament%&%provincial%legislatures
Bill%presented%at%parliament,%receives%3%readings,%proclaimed%into%force,%
then%a%statute%i.e.%The%Securities%Act%(Ontario)
§
Statutes%generally%set%"the%main%framework%for%law"
§
Legislations:%framework%in%governing%relationships%with%and%among%
public;%regulate%behaviour;%!"#$%$&'()*#(!)*("+&,,$#&(!"--"*(.)/
§
Regional%and%municipal%governments
Regulatory%bodies
Set%their%own%procedures%often%and%set%substantive%law
§
Experts%in%the%field;%"quasi-judicial"
§
Courts
Oakes%Test
The%object%of%infringement%is%of%sufficient%importance
There%must%be%pressing%and%substantial%need
The%infringement%must%impair%the%Charter%as%little%as%possible
The%object%must%justify%the%infringement
Who%May%Sue?
Natural%persons
Special%cases:%minors,%undischarged%bankrupts,%mentally%incompetent%
persons
Corporations
Trusts,%partnerships,%unincorporated%associations
Resolving%Dispute%out-of-court
Settlement%
Alternate%Dispute%Resolution%(ADR)
Mediation
§
Arbitration
§
Because%litigation%process%has%very%high%costs%associated%with%the%party,%
solicitor,%costs%in%motions,%contingency%fees,%etc.%
Types&of&Businesses(2)
0".&(1,"2,$&3",'4$2
No%legal%separation%from%owner%-owner%has%5*.$-$3&#(.$)6$.$37(
Associated%costs:%minimal
1),3*&,'4$2
Partnership%Test
A%relationship
§
Between%two%or%more%persons
§
Carrying%on%business%in%common%(together)
Must%manage%business%together**%and%make%contributions%
proportionate%to%their%capital%contribution
**Cannot%be%a%single%venture%or%owning%property%together;%
!)**"3(6&()*($*+&'3-&*3(8-5'3(9!),,7("*9(34&(65'$*&''
§
With%a%view%to%profit
Profit%calculated%after%expenses;%'"(&:2&*'&'()*#(,&+&*5&(-5'3(
6&('4),&#
Generally,%profits%shared%2,"(,)3)(86)'&#("*(&)!4(2),3*&,';(
#&<,&&("%($*+".+&-&*3(",(!)2$3).(!"*3,$653$"*
Royalty%or%sharing%gross%revenues%is%not%enough
§
Created%usually%by%written%agreement
Can%be%established%",)..7(",(67(!"*#5!3
If%pass%a%partnership%test,%deemed%as%partners%regardless%of%what%
the%persons%call%their%relationship
§
="3()('&2),)3&(.&<).(&*3$37(
Owners%can%have%unlimited%or%limited%liability%-depending%on%the%type%
of%partnership
§
Creditors%of%partnership%have%first%claim%against%partnership%asset%>%
creditors%of%any%particular%partner
§
1&,'"*)..7(.$)6.&(
Type%of%partnership%contract
Tort%liability% such%as%negligence
§
>"$*3.7()*#('&+&,)..7(.$)6.&(
Any%partner%held%liable%under%the%partnership%has%rights%to%collect%
contribution%against%other%partners%for%claim
§
Contracts
Offer%-3&*3)3$+&(2,"-$'& subject%to%condition%or%request
Communicated%in%writing%or%orally
§
?34&,(2),37(-5'3(6&()/),&("%%&,($'(-)#&
No%contract%if%you%realized%after%performing%that%there%was%an%
offer
"Invitations%to%do%business"%-display%of%goods/ads%-->%*"3("%%&,'
unless%ad%=%offer%for%
Fixed%#%of%items,%Fixed%price,%First-come-first%serve%basis
®
§
03)*#),#(@",-(A"*3,)!3'(
Terms%printed%on%offer%-no%negotiations%-->%unequal%bargaining%
power
Must%accept%/%reject
Purchaser%bound%by%terms%with%notice%(special%notice%of%
unexpected%terms%must%be%given)
§
B)2'&("%(?%%&,
Not%accepted%within%time%specified%or%reasonable%time,%if%party%
dies/mentally%incompetent
C"$#()*#(!)**"3(6&()!!&23&#
D&+"!)3$"*(-5'3(,&)!4("%%&,&&(6&%",&()!!&23)*!&
§
D&E&!3$"*(
Offer%is%void
Subsequent%reply%is%counter-offer
Inquiry%on%whether%the%terms%offered%are%best%to%expect%does%not%
equal%rejection
§
Acceptance
Communicated%or%can%be%through%conduct%(what%has%constituted%as%
accepted%in%the%past)
§
Tender%=%invitation%to%put%an%offer;%inviting%party%must%accept%/%reject
§
A"*'$#&,)3$"* -required%element%to%form%a%6$*#$*<(!"*3,)!3
F*$.)3&,).-offer%accepted%through%performance%of%an%act%/%service
§
G$.)3&,). -exchange%of%promises
§
Moral%duty%is%not%sufficient%to%form%contract%-motives%are%not%relevant
§
Some%exchange%of%value%must%flow%to%every%party%in%contract%(subject%
to%exceptions)
Exceptions%(require%no%consideration):%
Transfer%/%Exchange%/%co-signing%of%debts
®
Charitable%donations%
®
Contracts%under%seal
®
§
H'3"22&.(-"the%principle%that%prevents%a%person%from%asserting%
something%contrary%to%what%is%implied%by%a%previous%action%or%
statement%of%that%person"
Promissory,%statements%of%facts,%equitable%-is%prevented%to%make%
contradictory%statements%to%prior%positions,%act%or%promises
Promissory%estoppel%-legal%principle%that%a%promise%is%
enforceable%by%law%when%promisor%makes%a%promise%to%
promisee%who%relies%on%it%to%their%detriment%(reliance%
causes%injury%or%losses)%in%US
®
§
Court%will%not%inquire%into%)#&I5)!7(653("*.7('"-&(!"*'$#&,)3$"*(6&(
2,&'&*3
Must%look%at%#5,&''J(%,)5#J(5*#5&($*%.5&*!&J(-$'3)K&
Mistake:&does%not%include%errors%as%to%value,%errors%of%
judgment,%failure%to%remember%other%obligations/promises;%
"*.7(&''&*3$).(-$'5*#&,'3)*#$*<'()6"53(*)35,&("%(!"*3,)!3(
",(.)/(",("6+$"5'(&,,",'($*(#,)%3$*<(L'2"K&*(",(/,$33&*(
%",-)..7(",($*%",-)..7(8!.&),.7(5*,&)'"*)6.&M
Nature%of%contract:
Terms%are%reasonable%-->%enforce%as%it%is
}
Unreasonable%-->%mistake%had%been%made;%
must%be%rectified%or%hold%contract%as%void
}
Mistake%of%Law/facts:
Object%of%contract%may%no%longer%exist
}
Party%may%not%be%who%they%claim%to%be%-
contract%voidable%at%other%party's%request
}
Unilateral:%one%party%makes%mistake%and%other%party%
is%aware%of%mistake%L34&,&(-5'3(6&(*"(
-$',&2,&'&*3)3$"*M
Mutual%Mistake:%both%party%mistaken%or%one%party's%
mistake%and%other%party%unaware%
Mistakes%of%major/key%terms%-->%unenforceable
}
If%reasonable%terms%exist%-->%enforceable
}
Only%errors%in%drafting%or%terms%-->%rectified%
L'2&!$).(,&-&#7M
}
D&!3$%$!)3$"*N(/4&*(/,$33&*(!"*3,)!3(#"&'(*"3(
,&%.&!3(3,5&()*#()!35).()<,&&-&*3("%(2),3$&'(
Must%be%agreement%present,%can%not%be%
uncertain/ambiguous%and%conditional,%no%
further%negotiation%to%amend
Change%most%easily%explained%as%error%in%
recording%or%drafting
}
Sale%of%Goods
Perished%with%no%involvement%from%either%
parties-->%contract%is%void
}
Subject%exists%but%its%value%fluctuates%-->%
reasonable%expectation%of%the%parties%will%
determine%who%bears%the%risk%(party%that%first%
knows%of%the%risk%must%bear%them)
}
Unusual%risks%-->%%consider%,&)'"*)6.&(
&:2&!3)3$"*'("%(2),3$&'J(%)$,(,&'5.3 of%
enforcement%or%rescission,%consequences%of%
rescission
}
®
Fraud
If%original%contract%is%valid%between%1st%and%2nd%
party;%3rd%party%is%owner%of%goods%/%services
If%original%contract%is%void%between%1st%and%2nd%
party%-->%Third%party%must%return%all%goods/services
Generally%treated%as%voidable%contract;%as%original%
party%is%in%better%position%to%protect%their%interests
="*(H'3(@)!35-(82),37(34)3(#&%&*#'(34)3(34&7(/&,&(
-$'.&#(,&<),#$*<(*)35,&("%(!"*3,)!3(
Requirements%for%defense:
Some%infirmity%that%makes%understanding%
impossible
Reasonable%actions%were%taken%to%make%
attempt%in%understanding%contract%i.e.%
independent%advice
}
®
Misrepresentation 8)('3)3&-&*3("%(%)!3(34)3($'(/,"*< (not%
opinions,%glowing%descriptions,%!)*(6&(&:2&,3("2$*$"*(
34"5<4)
Innocent%-unaware
Negligent%-carelessness
Fraudulent%-intention%to%deceive;%reckless%disregard%
/%ignorance
Consequences:
Material%-->%is%it%reasonably%expected%to%
influence%party%to%enter%into%contract%on%the%
specified%terms
}
Misrepresentation%-->%wronged%party%can%
choose%3"(,&'!$*#(L3&,-$*)3&M(!"*3,)!3(",(
,&!"+&,(*"*8&:2&!3)3$"*O(,&.$)*!&(#)-)<&'((if%
negligent%or%fraudulent)
}
If%innocent%misrepresentation%-->%can%rescind%
(or%money%as%compensation%for%indemnity%for%
expenses%incurred%under%contract)%only%if%
subject%matter%can%be%restored%(otherwise%time%
lapsed)
}
If%it%was%a%3&,-("%(!"*3,)!3 vs%misrepresentation%-->%
violation%of%term%is%called%6,&)!4("%(!"*3,)!3 -->%more%
to%recover%damages
Statement%was%important%inducement%to%enter%
into%contract
}
Wronged%party%suffered%substantial%loss
}
Misrepresentation%made%at%time%of%entering%
into%contract
Ads%can%be%misrepresentations
}
Time%constraint%for%wronged%party%to%ask%for%
rescission
Generally,%no%obligation%to%make%statements%at%
contract%formation%other%than%verification%of%terms%
of%contract%and%anything%material%BUT%specific%
contracts%i.e.%partnership,%insurance,%special%
trust/confidence%have 4$<4&,(#537(O(%$#5!$),7(8'2&!$).(
K*"/.&#<&(P(#537("%(53-"'3(<""#(%)$34
®
Undue&Influence&
Q(2),37;'(!"*3,".("+&,(/$..("%(34&("34&,(2),37 i.e.%
client-solicitor;%doctor-patient
Suggestion%for%party%who%cannot%make%independent%
decision:%-5'3('&&K($*#&2&*#&*3()#+$!&(3"(*&<)3&(
5*#5&($*%.5&*!&
®
Duress
If%there%has%been%a%genuine%34,&)3("%(+$".&*!&("*(
2),37(3"(-)K&(34&-(#"('"-&34$*<()<)$*'3(34&$,(/$..(
",(6&33&,(E5#<&-&*3 (parties%or%non-parties%
influence)
®
C).$#$37N('"-&(!"*'$#&,)3$"*(-5'3(6&(2,&'&*3R()*734$*<("%(+).5&(
34)3(%."/' (don't%have%to%question%how%or%whether%or%not%it%had%
value%to%the%individual%in%particular)
§
Tenders%-requested%under%0HQB((enforceable%until%expiration%or%
acceptance)
Bids%are%irrevocable%
Bidders%receive% consideration%in%form%of%tendering%process
§
0&).&#(#"!5-&*3(",()<,&&-&*3'(#"(*"3(,&I5$,&(!"*'$#&,)3$"* i.e.%real%
estate
§
Considerations%already%2,&+$"5'.7(&:!4)*<&#(#"&'(*"3('3)*#(%",(+).$#$37(
"%(!"*3,)!3 -STHDH(UF0S(GH(=HV(A?=0WXHDQSW?=
Service%performed%gratuitously%then%a%party%asks%for%payment%for%
service%-no%contract
A%party%was%already%bound%to%do%something%and%then%offered%
more%to%finish%it%-no%contract
One-sided%re-negotiation%of%terms%-no%contract
§
Y5)*35-(U&,5$3
0&,+$!&(/)'(2&,%",-&#(/$34(&:2&!3)3$"*("%(2)7-&*3(653(2)7-&*3(
/)'(*"3(&:2.$!$3.7(#$'!5''&#(
Court%will%enforce%promise%to%pay%as%consideration%in%
exchange%of%original%service
®
Or%court%awards%payment%on%I5)*35-(-&,5$3 basis%-at%the%
fair%market%value%of%service;%a%quasi-contractual%remedy
®
§
Gratuitous&services&8L%",(%,&&M('56E&!3(3"(3",3(.$)6$.$37(%",(*&<.$<&*!&R(*"3(
&*%",!&)6.&()'(!"*3,)!3("6.$<)3$"*'
(3)
Capacity&and&Legality&
Void:%not%valid%(if%contrary%to%law)%
Voidable:%currently%valid%but%void%at%parties'%discretion
Illegal:%no%assistance%from%court
G.5&(2&*!$.(,5.&(8!"5,3(-)7()''$'3($*(,&#,)/$*<()(2,"6.&-)3$!(!"*3,)!3R(
'3,$K$*<("53(!.)5'&'(3"(2&,%&!3(!"*3,)!3
Capacity%
Any%party%who%does%not%currently%have%full%capacity%-has%a%window%to%
escape%contract%until%this%party%regains%full%capacity;%4)+&()(3&-2",),7(
!"*#$3$"*(/$34(.)!K("%(!)2)!$37(
§
Minors%can%validly%contract%for%necessities;%other%contracts%voidable%at%
minor's%discretion%(time%is%up%when%minor%reaches%age%of%majority)
Repudiation%
Ratification
Minors%can%sue%BUT%not%be%sued%except%
Contracts%for%necessities%/%beneficial%contracts%of%service
®
§
Restraint%of%Trade%
Restrictive%covenants%i.e.%vendor-purchaser,%employer-employee
Look%at%reasonableness%-period%or%extensiveness%of%restriction
§
Sales%of%Goods%Act%-).."/(2,$!&("%()(!"*3,)!3(3"(6&(#&3&,-$*&#("34&,(34)*(67(#$,&!3(
)<,&&-&*3(
i.e.%receiving% goods,%partial%payment%can%make%contract%enforceable%
Consideration%determined%subsequently
Buyer%has%no%recourse%for%poor%quality%goods%unless%implied%warranties%as%to%
quality,%suitability%were%provided
Seller's%Title
§