2275 CLASS NOTES
January 15 , 2013
Aaron Swartz died (committed suicide) at 26 years old on Jan. 11 . Programmer and
What is the law?
A set of rules that governs how we are supposed to act
With punishment if they’re broken
That come from GOVERNMENT
Natural lawyers say the law as we know it is just a human-made approximation of ‘the law.’
There are moral laws just like there is a law of gravity.
Utilitarian notion: A law is a law if it’s good for society.
Dr. Henry Morgentaler
Abortion doctor (did it when is was illegal, could be imprisoned)
o Jury found him not guilty, even though he admitted to it
o Then changed their mind, went to prison where he appealed to Supreme Court
Protest when he was honored to give a commencement address as Western
People threatened to pull their donations and children from the school
Controversy over his occupation, say he had killed thousands of unborn children
The idea that someone could be barred from speaking at a university because their
opinions are too controversial is abhorrent
We have to air opinions at a place like this if, for no other reasons, we can discard the
Constitution, Statutes, and Common Law (see textbook)
Constitution: the most important. A mixture of stuff that’s written down and stuff that’s not
The Constitution Act is written
o Includes Division of Powers
Two sections, 91 & 92, delineate jurisdiction of provincial and federal
When areas overlap, the federal gov. gets them by default
What about areas that aren’t mentioned? Federal
The Charter of Rights and Freedoms is written
o Essentially a bill of rights, guaranteed to every person IN Canada (not
o Freedom of religion, belief, assembly, opinion, association…
o It sets us apart from most of the world
Not written: that 3/9 judges on Supreme Court are from Quebec, that the Governor
General will alternate between a francophone and Anglophone. In most of the world, governments do whatever they want. Most people live in fear of their
governments because their governments are not bound by the law.
Most people would give up their lives to be able to vote. That is why we can’t take it for granted.
98% of lawsuits are settled before court.
January 22 , 2013
Lance Armstrong doping case. Lance Armstrong admits to drug use. Also made it a
rule that everyone on his team also took performance-enhancing drugs, and the doctors
were in on it as well.
Spanish athlete Ivan Fernandez Anaya impressed the world by giving up victory to do
the right thing. The Kenyan runner in first place mistakenly thought he had crossed the
finish line and won, so Fernandez helped show him the finish line and allowed him to
take first, even though he could have surged ahead.
Point: so much corruption that is in news, need more people like Fernandez.
o Imagine what the U.S. government (democrats and republicans) could
accomplish if they worked together? They are some of the most creative, smart
people in the world yet they spend so much time squabbling.
o What we need in the world today is for our law and business leaders to start
thinking more like Fernandez and less like Armstrong: to start playing by the
rules and apply the same rules to everything.
o QC bribing example: did you feel like accepting a bribe was wrong? No. Why?
Because everyone was doing it. That does not make it right!
In-class example - cell phone contracts:
How many people read them? Almost none. And did you have a chance to negotiate it with
the salesperson? No.
Did you have a lawyer when you read it? No? Did they have a lawyer when they prepared
it? Definitely. They have vastly more resources than the customer.
If you had read it, you’d realize it was completely unfair and against you.
One question: is it binding? Is it legally enforced?
o YES. But why would courts uphold it, if it’s so unfair?
Because we didn’t have to agree to it. We voluntarily agree to be bound.
So if we don’t use fairness to determine whether contracts are legally binding, then we must
use something else.
Why do we spend so much time discussing contracts? Because they’re everywhere.
Why do we spend taxpayer money to enforce agreements between private people?
Because if we didn’t enforce contracts, people wouldn’t enter them.
If people didn’t enter them, there would be no business.
We enforce contracts to promote trade and commerce, it greases the wheels and flow of
Enforcing contract law is the corner stone of capitalist society. So, what is a contract?
It is a binding exchange, a bargain, a transaction.
Assumptions of a contract:
1. People will not enter into contracts without benefit
2. Contracts voluntarily entered into are fair
In order to have a contract, you must have five factors (slightly different than book):
o Determined by offer and acceptance
o Offer: When accepted, results in a legally binding contract.
o Seal: A little red seal next to your signature is binding
o Promissory estoppel: Tricky
Now that the offer’s out, what could make it go away?
It could lapse/expire
Counter-offer (legally and logically, this is a rejection and a new offer)
Death or incompetence (we are talking about offers, NOT contracts)
o Contracts are usually still binding after death. You die physically, but legally you
Offer rec. Revoc. rec. Acceptance rec.
Offer mailed Revoc. mailed Acceptance mailed
Acceptance mailed = when offer is official
Rational: this is the point when both parties have indicated that they are willing to be
Doesn’t apply to email
What about an auction? An auction is the search for the best offer.
Where is the offer and acceptance?
‘Do I have a bid for $100?’ invitation to treat
When first person holds up their paddle offer
‘Going, going, gone’ contract
Typically, silence does not constitute acceptance. But, it can be in some cases.
Promissory Estoppel An exception to the general rule that promises are not enforceable unless there is consideration.
A set of circumstances where a promise is enforceable even though there is no consideration.
o Ex: Landlord and tenant
o Can only be used in the defense. Only as a shield, not as a sword.
Age - Minors do not have the capacity to enter into contracts.
The exceptions are food, shelter and clothing. We don’t want teenagers to be homeless
because landlords are afraid to rent to them on the basis that the contracts are
Incompetence – Ex: being drunk.
January 29 , 2013
RIM has chosen to go after its competition head to head (didn’t have to, could have kept
the key board market).
o Most people say the company’s future rests on the success of this new product.
o King thinks that RIM’s decline can be directly attributed to poor management
choices, specifically with law.
o RIM was sued by NTP in the U.S. (2004/2005) and could have settled for $7
million, but didn’t take it seriously. As a result, they had to pay over $600 million
to get rid of this case.
o Immediately after, decided to bid on Pittsburg Penguins (unsuccessful), then
unsuccessful bids on Nashville Predators and Phoenix Coyotes. Each time, it
was obvious he was trying to pull a team to Hamilton.
o Point: Jim Balsillie (co-CEO) was so completely off-chart and had a ridiculous
strategy. His idea was to bully NHL into allowing to put a team in Hamilton
against the wishes of Toronto and Buffalo.
When it didn’t work, he went to court and sued NHL and owners for not
being allowed to buy the team. In other words, the guy running the
largest technology company in Canada is completely distracted and
spends 2.5 years trying to bring an NHL team to Hamilton. He was not
able to achieve his goal or even understand why his strategy was
doomed. He lost his passion for RIM sell your stock. Nail in the coffin.
o Also involved in back dealing of options. One scandal/failed strategy after
another. All the time the share price and market share are dropping.
o Point: All started with a failure to recognize basic legal issues like corporate
Is Apple next? They’ve taken their eye of the ball too. They’re busy fighting lawsuits
with Samsung, but it’s about SELLING PHONES!
iPhones are cool for another 5 years, maybe.
Contract: An exchange that the law will enforce.
We do not enquire about the fairness of contracts, we assume it: that’s capitalism. Remember - to have a contract, you must have five factors (slightly different than book):
Age – no contracts with minors, except for necessities. We don’t want to deny these to minors.
Incompetence involves a two-part test (must have both!):
1. Were you so incompetent that you didn’t appreciate the nature of what you were doing
2. Did the other party know this or should they have been reasonably aware.
General principal: freedom of contract, because we want to promote the free market.
To be enforceable…
Contracts obviously must be legal to be enforceable.
Contracts also must NOT be contrary to public policy
o When an agreement violates public policy, it will not be enforceable for
reason of legality (ex: non-competition covenants)
You have to do what you say you are going to do.
Arguments People Make so to Make a Contract Unenforceable
To get around a contract, can argue that it was…
Void (never existed, missing consensus/consideration/legality…)
Voidable (exists, but one of the parties can avoid/escape/cancel it, ex: contracts with
o Results in potential rescission
Unenforceable (valid, but courts will not enforce)
o Ex: statue of frauds requires certain contracts to be in writing
Duress: A contract is voidable when someone threatens physical harm.
o If you’re going to show economic duress, you have to show that you had no practical
alternative other than entering into the contract.
Undue influence: Influence by which a person is induced to act otherwise than by their own free
will or without adequate attention to the consequences.
o Ex: King says that if we enter into a contract to buy his car, he’ll give us a better mark.
o This makes it avoidable, because it’s not really voluntary.
Unconscionability: A vulnerable person is taken advantage of. o Ex: see a homeless person, offer to sell a loaf of bread for $50 and they agree.
o Appears we have a contract, but it’s unconscionable: inequality of bargaining power,
person who is extremely vulnerable.
Misrepresentation: A statement of fact that is false. Only care about material
misrepresentations (which would change whether someone would enter into a contract).
o Ex: once you install your new machine, it doesn’t make as much as was promised.
o Could it ever be a statement of opinions that is wrong? Yes, if it’s made by an expert.
o In this case, rescission is available to you.
o What can you do now?
o Determine whether it was a term of the contract or not:
If yes, then you have rescission or sue for damages for breach of
If no, then you only have rescission
o What else should you have done to protect yourself?
o Due diligence! Hire an engineer to test the machine. This is preventative.
o Tort law analysis: was the misrepresentation…
o Negligent/fraudulent? damages
o Tort law is backward looking, putting the party where they were before incident.
Privity of contract: Only the parties to a contract can have rights or obligations under the
Exemption clauses: Courts will enforce them provided they are…
1. Perfectly clear
2. Known to parties at time of contract signing
Example 1: guy signs up for tubing race in the morning, but later shows up drunk.
He says they can’t stop him for going, so they make him sign a waiver saying they
aren’t responsible for any injuries that occur. He gets injured and then sues. They
hold up the waiver he signed but it isn’t enforced because of CAPACITY (he was
drunk and they knew it).
Example 2: huge waiver sign saying mountain biking is dangerous, not responsible
for injury etc. This is visible before you enter contract (buy ticket). Can’t sue.
Example 3: huge waiver sign saying mountain biking is dangerous, not responsible
for injury etc. You buy your ticket and this sign is only visible AFTER. You then
break your leg and you can sue, because you entered into the contract BEFORE the
sign was posted.