Mos 2275 Chapter 7 Notes.docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 2275A/B
Desmond Mc Keon

Chapter 7: The Terms of a Contract Content of a Contract  Terms: Promises made by one party to another by virtue of offer or acceptance  Express terms: Provision of a contract that states a promise explicitly o Essential terms must be expressed so that each party knows the obligations of both sides o Parties should not make assumes, since only terms have legal weight. o Vague language:  The court will assign a reasonable a meaning as possible to vague terms.  If one of the parties drafted the contract, ambiguity will be construed against that party.  It is difficult to predict how a court will interpret the language because the rules of constructionism (guiding principles for interpreting the terms of a contract) are often conflicting.  Courts are supposed to rely on the plain meaning of the words that have been chosen  But also must consider the parties’ intentions.  Implied terms: Provision that isn’t expressly included in a contract but that is necessary to give effect to the intentions o A judge will do so if he is satisfied that not all of the terms that the parties intended to include in the contract were in fact included. o The plaintiff classically argues to include the implied terms but the defendant asserts no such term was included. The burden of proof lies on the plaintiff, and she will lose unless she can demonstrate the term exist based on the balance of probabilities. o Implied terms are based on:  Business Efficacy:  A judge is entitled to imply terms necessary to make the contract workable.  Courts are increasingly willing to imply this doctrine in various cases.  Customs in the trade of the transaction  It must be proved that the custom is so notorious that the contract in question must be presumed to contain such implied terms.  Rarely successful  Previous dealings between parties  Imply their contract with previous contracts between the two companies  Statutory requirements  Provincial sale of good legislation provides that certain terms are a mandatory part of every contract for the sale of goods unless specifically excluded by parties. o Gateway Realty Ltd v Arton Holdings Ltd [1991]  Gateway owned a shopping mall in which Zellers was the anchor tenant (could occupy, leave vacant, or rent without consent of the landowner)  Arton, a competitor of Gateway, takes over Zellers’ contract with agreement that Arton will find a tenant for the space. However, Arton keeps the store empty and declines tenants.  The court finds that Arton breached the express obligation to use its best effort to find a tenant. o Glenko Enterprises Ltd v Ernie Keller Contractors Ltd [1994]  Glenko worked on a project but was not paid by the contractors. The contractor admits the amount due, but refused to pay interest on the overdue account that Glenko argued is implied.  The court finds that the contractor was aware of the industry practice of interest on overdue account, and awards the sum to Glenko. o If the parties have not included the term in question, the court will not imply the terms except in routine transactions or the Sale of Goods Act applies o If the parties have agreed that their contract is complete as written (using an entire contract clause), courts will ordinarily not imply terms.  Contracts can be formed in: o Entirely oral o Entirely written o Both oral and written o The form of a contract does not affect its enforceability. An oral contract is harder to prove, however.  Parol evidence rule: A rule that limits the evidence a party can introduce concerning the contents of a contract o Entire c
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