Biz Law 2- Contracts Notes .pdf

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Management and Organizational Studies
Management and Organizational Studies 2276A/B
Phillip King

Maggie Sellers Business Law 2 1 Midterm 1 Contract Case Notes - For all cases need to review: o 1) In what capacity was the court acting/ level of court? o 2) Specific questions about the cases we reviewed in class o 3) What is the impact of these cases? o 4) What is ratio/ obiter about the cases? o 6) Need to be able to be given the set of facts and apply the law from one of these cases to another Anne of Green Gables Licensing Authority Inc. v. Anonlea Traditions Remedies: Injunction - Level of Court o Ontario Court of Appeal - Parties Involved o Appellant- Avonlea Traditions o Respondents- Heirs of Lucy Montgomery (author Anne of Green Gables) - Case Facts o The heirs were awarded damages and an injunction prohibiting Avonlea from selling merchandise connected to the characters of the book o Because Avonlea failed to pay royalties ongoing inly - Result: injunction was ordered Aurora TV and Radio v. Gelco Express Exemption Clause - Level of Court o Manitoba Court of Queen’s Bench (Trial) - Parties Involved o Plaintiff- Aurora TV o Defendant- Gelco Express - Case Facts o Plaintiff’s action is for the recovery of the defendant (national courier company) of the value of a videocassette recorder, (lost or stolen in transport) - 2 issues o 1) Is there a clause in the contract which limits liability if there is a loss o 2) If so, is the defendant entitled to rely upon that clause? - Case Facts (Part 2) o Clauses limiting liability are legit if they are reasonably communicated to the other party o In this case, the clause was on the reverse side of the contract, in very small print, with no heading reference to the limit, also ambiguous and complex (there was not reasonable notice) o A carrier is liable for loss when theft is a possibility, except if there is a clause limiting this liability Maggie Sellers Business Law 2 2 Midterm 1 Contract Case Notes o In a contract for the delivery of goods, the failure to deliver is a fundamental breach (condition???) - Decision o Goods were not delivered, and the limitation clause is NOT enforceable because it was so complex and did not have any clarity or notice to the other party o Judgment for the plaintiff for the sum of the video player - Ratio o An exemption clause has to be clear, concise, visible, and reasonably communicated to be valid, other wise disregarded BMO v. Overland Freight Lines An Exemption clause fails to be effective: 1) When on its true interpretation the clause does not cover the incident - Level of Court o BC Court of Appeal - Case Facts o The defendant courier promised on time delivery to BMO o The breached contract delivering some of the tax payments a day late, resulting in late penalties (damages) for BMO o Motor Carrier Act limited liability of damage to 2.00 per pound but did not cover in late deliveries o The BC court of Appeal upheld the trial court’s interpretation that the regulations only applied to loss of damage to the goods themselves and did not apply to damages arising from the delay o The courier must pay the 93,000 penalties 2) When there was no reasonable notice of the term 3) When there was a fundamental breach on the true construction of the contract it wasn’t meant to cover such a breach Bitz, Szemenyi, Ferguson & MacKenzie v. Cami Automotive Inc. Assignment of Contractual Rights Equitable Assignment - Level of Court o Trial Court - Case Facts o Bitz was a law firm that got Cami to pay the Mr. Mr’s settlement to the law firm (assignment to the firm) o Bitz got an assignment for Cami which took Mr. M’s money straight to the law firm, in which they would subtract the legal fees owed to them by Mr. M and then the law firm would give the rest to Mr. M o Ignoring this assignment, Cami paid the settlement to Mr. M o Bitz then sued Cami for ignoring the assignment, the court agreed with Bitz and received the damages (legal fees that Mr. M incurred) that was in the original assignment o Defendant required to pay twice Maggie Sellers Business Law 2 3 Midterm 1 Contract Case Notes o The plaintiff is entitled to summary judgment against the defendant - Ratio o An equitable assignment to a contract is binding Booth v. Knibb Developments Inc. The Statue of Frauds - Level of Court o Court of Appeal Alberta - Parties Involved o Appellant – Knibb o Respondents- Booths - Case Facts o The booths and the appellant, Knibb, were business associates and friends o Knibb purchased the Booth’s land and permitted the Booths to remain on the land after purchase o Booths alleged that there was an ORAL agreement with the appellants that the Booths could repurchase their land for the original sale price when they were financially able to do so o The appellants deny the alleged agreement and rely on the Statue of Frauds- the Booths had a tenancy agreement o Generally, any sale of land must be evidenced in writing under the Statue of Frauds to be enforceable, however, there is the exception of past performance (individual has relied on and acted pursuant to the oral agreement) - The trial judge decision o Found that there was an enforceable oral agreement for resale of the land and ordered the title of the land to be transferred to the Booths - Past Performance Analysis o In order to satisfy past performance ! The acts performed must speak for themselves, must be referable to the contract, and must point to a contract affecting the ownership and tenure of the land, and to nothing else ! The booths paid taxes and utilities and remained on the land and Ms. Booth approached Knibb to repurchase the land when financially able to do so ! The paymen of taxes and utilities cannot be referable to a contract for purchase of sale and nothing else; tenant may be required to do the same thing • The booths on the land could also be a tenancy or lease relationship ! Couldn’t satisfy past performance, therefore the sale of land must be in writing- Statue of frauds- oral agreement does not suffice o Appeal Decision ! Found the trial judge erred in law when he found the Booths were referable to the alleged oral agreement for repurchase of the land ! The appeal is allowed, the decision of trial judge was set aside Maggie Sellers Business Law 2 4 Midterm 1 Contract Case Notes - Ratio o In order to satisfy past performance, to allow an oral contract with the purchase of land, the acts must speak for themselves Boyd v. Newton Legality of Contracts- If the person was engaged in an illegal activity - Level of Court o Supreme Court of BC o Trial Court - Parties Involved o Plaintiff: Boyd o Defendant: Newton - Case Facts o The plaintiff Boyd was trafficking drugs at a locale arcade when Newton offered to buy drugs off him, they went outside to pay the deal o Newton took the drugs and tried to push Boyd away without paying him 10 dollars o Boyd grabbed onto to Newton’s coat and suffered many injuries as newton drove away o The injuries were directly related to Boyd trying to complete his illegal transaction and because the injuries sustained were during the course of a joint criminal enterprise and not after the judge orders that the action be dismissed on the basis that the claim is barred by the application of the defense ex turpi causa non oritur action (from an illegal act, no action can arise) - Ratio o Ex turpi causa non oritur action (from an illegal matter no action can arise) o Specifically, suing for injuries caused from partaking in an illegal act will not stand) Button v. Jones Formation of Contracts: Restrictive Covenants - Level of Court o Ontario Trial Court - Parties Involved o Plaintiff: Button o Defendant: Jones - Issue here o Is an interlocutory injunction ought to issue to enforce a non-competition clause in an association agreement between two dentists - What is the motion o Motion for injunction - Case Facts o Jones sold Button his dentist practice including the goodwill (customers, records, etc.) Maggie Sellers Business Law 2 5 Midterm 1 Contract Case Notes o Jones agreed to sign a non-competition and non-solicitation agreement for 4 years in the Kitchener/ Waterloo region and to not influence patients to go to a new clinic o Then, Jones ignores this clause and goes to open a practice in Kitchener and taking most of his old clients (part of goodwill) - Lets look to the ratio in Porter v Kohler o 1) No consideration ! Is that an issue here? • No because Button gave consideration of 150,000 o 2) Clause is reasonable in circumstances ! Narrower in scope ! No public policy issue- not denying someone a livelihood ! He can practice dentistry anywhere, just not in Kitchener o 3) Procedural of Interim Injunction ! If there is no injunction, like there wasn’t in Porter v. Kohler, there would be unrepairable harm ! Need to do the balance of convenience test: the harm would be much greater to Button if they did not grant an injunction - What does an injunction entail? o Irreparable harm o Strong face of it (on first glance) o Balance of convenience must favour the person asking for it o It is an equitable remedy- you have to act IMMEDIATELY o It is an order - When are courts more willing to enforce a non-competition clause? In a contract for the sale of a business than in an employee contract - Ratio o Courts are willing to enforce a non-competitive clause and injunction if the restriction is reasonable, and the balance of convenience is in the favour of the party asking for it Byle v. Byle et al Duress - Case Facts o Mr. and Mrs. B signed a contract to transfer real property to their son Jim o Mr. B testified that they had only signed the contract because Jim had threatened to blow his brother’s head off if the families money dispute was not settled o The agreement was void because of Jim’s duress or alternatively unconscionability o Even although Mr. and Mrs. B had independent legal advice and chose to sign the agreement, they did so because they feared that Jim would harm Bill (brother) if they did not sign the agreement - The court of appeal upheld the decision Maggie Sellers Business Law 2 6 Midterm 1 Contract Case Notes - Ratio o The contract is not valid if it was forced upon in a state of threat (duress) Campbell v. Sooter Studios Inc Offer and Acceptance: Offer - Level of Court o Manitoba Court of Queen’s Bench o Appeal Capacity - Campbell (lessor) made an original contract, Scooter (lessee) revised it and accepted it - Then, the landlord sends over a draft lease which increases the rent and reduced the 3 year term to a 1 year term - The lessee then sends back to the landlord, when the landlord signs it and sends it back - The lessor sued for double rent, for the cost of certain repairs and for a share of realty taxes - Plaintiff (lessor) argued that there was no meeting of the minds – no consensus - Objectively- o It was accepted (the plaintiff accepted the counter offer) - Subjectively o It was not a true meeting of the minds, but objectively there was (a reasonable person would have read the document) - The plaintiff was not successful, they did however receive costs of repairs and share of taxes - Decision o The courts apply a objective analysis, not subjective and say that the standard is that of a reasonable person - Ratios o The courts use an objective test to determine the meeting of the minds (consensus) o Not reading the contract is not a defense to consensus- a reasonable person would Central London Property Trust v. High Trees House Limited Formation of Contracts- Promissory Estoppel Was the root case for this- formed basis! - Level of Court o Trial Court - Promissory Estoppel: When parties have an existing relationship, where one party promises not to enforce its legal rights on the other party, and that other party relies on that promise (detrimental reliance) - Case Facts: o Before the war, the plaintiffs (Central London Property Trust) rented a lease for 2500 pounds annually for 99 years o But during the war, the parties agreed upon 1250 annually Maggie Sellers Business Law 2 7 Midterm 1 Contract Case Notes o In 1945 (after the war), the plaintiff reinstated the 2500 annually and claimed the 7916 in arrears o But this promise was relied on, therefore, under promissory estoppel the money arrears is not recoverable - Decision o Judgment is for full rent from early 1945 onward, but not to make up for the rent during the war years - Ratio o Establishment of promissory estoppel Cerilli v. Klodt Legality: IF the purpose of the contract is to defraud - Level of Court o Ontario High Court - Parties Involved o Plaintiff- Cerilli o Defendant- Klodt - Issue: o Action for specific performance of an agreement for the sale by the defendants to the plaintiff of a house property owned by the defendants as joint tenants - Case Facts o Cerilli was a party to a scheme with defendant Klodt for the selling of a property for $45200, when in actuality he would pay 50,000 o 4800 was to be paid to Mr. Klodt directly without Mrs. Klodt awareness to ensure she couldn’t obtain any of that money o The scheme was fraudulent and thereby unenforceable in the courts o The decision was affirmed by the Ontario Court of Appeal - Ratio o Ex Turpi Clasua non oritur action ! This caluse means that from an illegal matter no action can arise Dmytrow v. Dmytrow Challenges to Contracts: Undue Influence - Level of Court o Court of Queen’s Bench of Manitoba o Trial Court - Case Facts o Involves a husband and wife who die 3 months apart; both without wills; they have 5 grown children o It was agreed that Peter (dad) signed a document transferring ownership of the sawmill to Leonard (one son) for $1 consideration - Issues of this case: o When the document was signed & whether it was signed as a result of undue influence exerted by Leonard on Peter Maggie Sellers Business Law 2 8 Midterm 1 Contract Case Notes - *Influence: the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power - 2 types of cases where undue influence is attributed to gifts o 1) Courts have been satisfied that undue influence was used to secure the gift o 2) The relationship between the 2 parties presumes undue influence - If courts are satisfied, the onus shifts to done to prove that gift wasn’t as a result of undue influence - 2 steps to determine the presumption of undue influence o 1) Whether the nature of relationship gives rise to presumption of undue influence o 2) Examine the transaction itself to determine if there is a dominant relationship - Court Decision o Leonard did exert undue influence to get him to sign the document o Setting aside the transfer of equipment to Leonard because it was obtained with undue influence and must be returned to the state of Annie Dmytrow - Ratio o A contract is not valid if agreed upon due to undue influence Gateway Realty Ltd. V. Arton Holding Ltd, Formation of Contracts: General Duty of Good Faith - Level of Court o Nova Scotia Supreme Court o Trial Court - Parties Involved o Plaintiff: Gateway o Defendant: Arton - Case Facts o Gateway rented out mall space to Zellers; Mr Hurst persuaded Zellers to move to their mall and convinced them to sublet the space to his company; Arton (competitor of Gateway) o This was NOT in good faith because it was a competitor of Gateway; as a result the lease was terminated - Ratio o Laws require that parties to a contract exercise their rights under the agreement honestly, fairly and in good faith o The duty is breached if a party acts contrary to community standards of good faith Gendis Inc. v. Richardson Oil and Gas Ltd. Offer and Acceptance- The Writing Requirement - Level of Court o Appeal Manitoba - Parties Involved o Appellant: Richardson Maggie Sellers Business Law 2 9 Midterm 1 Contract Case Notes o Respondent: Gendis - Issue here: o Whether or not the trial judge erred in finding that the parties negotiated a valid contract for the sale of shares in a privately held company - Trial Decision o The written document to be prepared by the plaintiff was not a prerequisite to the contract being made, The written document was only for the purpose of identifying the terms of the agreement made between the parties in person o The fact that the contract was verbal, doesn’t matter o There was consensus, consideration, capacity, legality and intended to be legally bound- therefore contract exists o In this case, all requirements of a contract were fulfilled - Trial Case Facts o There was a verbal contract for 39 million dollars o Richardson said “we have a deal” and then they agreed that Gendis would provide Richardson with a written document to confirm transaction o Gendis made the document but included 3 clauses that were not in original agreement; Richardson then refused to do the deal o Later, there was a written agreement, but no contract; written issues were not agreed upon, therefore not binding o Whereas the verbal contract was agreed upon, so the result was binding - Appeal Case o Richardson (Appellant) argued that trial judge erred because the agreement could not be binding because it was to be followed by a written agreement which was never executed - Appeal Decision o Appeal dismissed because there was a clear intention between the two parties to the contract ! The intention was precise, clear, and fixed o The trial judge made no error on the facts- intention to be legally bound and therefore a contract existed - Ratio o A verbal contract is binding if the facts indicate intention to be legally bound o There needs to be consideration, capacity, consensus and legality Geophysical Services Inc v. Stable Mary Seismis Inc. Anton Piller Order- Remedies - Level of Court o The Supreme Court of Nova Scotia - The parties o Plaintiff: Geophysical services Inc. o Defendant: Stable Mary - The facts Maggie Sellers Business Law 2 1 Midterm 1 Contract Case Notes 0 o The plaintiff is suing Stable Mary because after receiving an audit, they discovered that they were overcharged for providing crewing services o Plaintiff wanted to affirm the Anton Piller Order o What is the Anton Piller Order? ! 1) There must be an extremely strong prima facie case ! 2) The damage, potential or actual, must be very serious for the appellant ! 3) There must be clear evidence that the defendants have in their possession- incriminating documents or things, and that there is a REAL possibility that they may destroy such material before any application inter can be made o Decision ! The Anton Piller order was set aside- defendant won; trial dismissed Hoffer v. Verdone Equitable Remedies Quantum Meruit - Level of Court o Ontario Court of Justice - Verdone promised to convey a condo unit to Ms. Hoffer in exchange for her marketing services for the condo project - She was not able to enforce the agreement - The court did however, award Hoffer 25000 on a quantum meruit basis for the services she rendered in making the project a successful one - Ratio o Quantum meruit is established; situation in which contract is breached when partial services have been performed o These services paid for under the principle Hyde v. Wrench Offer and Acceptance: Rejection and Counter-Offer - What is the effect on the offer if the offeree makes a counter offer? - Defendant offered to sell estate, plaintiff counter-offered at a lower price - Defendant rejected new offer, as a result, the plaintiff tried to accept the original offer - Defendant claimed that there was no longer a contract, and the plaintiff argued that the original offer had not been withdrawn previous to its acceptance - The plaintiff rejected the original offer when they counter offered, therefore, no binding contract exists - Ratio o When a counter-offer is made, the original offer is immediately rejected KBK v. Canada Safeway Limited Termination of Contracts: Frustration - Level of Court o Court of Appeal for BC Maggie Sellers Business Law 2 1 Midterm 1 Contract Case Notes 1 - KBK entered into a contract for a purchase of land for 8.8 million dollars from Safeway to build condos - City rezoned the property making the building of condos impossible for KBK (frustrated) - The court of appeal dismissed Safeway’s appeal and upheld the trial decision that ordered Safeway to return 150,000 (down payment) to KBK due to a frustrated contract - Ratio: o A contract that is no longer possible to perform or the use it’s primary use frustrated then the contract will be terminated due to frustration Kanitz v. Rogers Cable Inc. - Level of Court: o Superior Court of Justice o Trial Court - What type of hearing is this? o A motion by rogers ! They do not want a trial, and they want the case dismissed o Why do they want the case dismissed? ! There is an arbitration claim in the contract saying that disputes will NOT go to court ! Kanitz was not aware of this and all Rogers has to do is post a copy and change it at any time that they want - Case Facts o The initial Rogers contract allowed for Rogers to be able to amend portions of the original agreement at any time. They agreed to notify you of these changes on the Rogers home website or sending notice o Rogers then amended the contract claiming that customers couldn’t’ sue because they removed the right to litigate and enforced absolute arbitration o The plaintiff continued to use Rogers services, which implies acceptance o The plaintiff argued that Rogers never notified, but as long as the defendant used an authorized method, cannot be faulted - Parties Involved o Plaintiff: Kanitz o Defendant: Rogers Cable Inc. - What does the court say? o Develop a test to determine if it was unconscionable to accept the clause - What is the result? o Case dismissed, and motion granted o Court said that it was exactly what Mr. Kanitz agreed to - What is the impact of this case? o Law was changed o Ontario Government amended this rule of law ! Does not allow companies to use only arbitration and cannot use class action law suits o There is still a principle that comes from this case that is NOT over ruled Maggie Sellers Business Law 2 1 Midterm 1 Contract Case Notes 2 ! The idea that one party can amend the contract unilaterally - Ratio o Any party can make an amendment to a contract if there is an amendment provision contract o In addition, that party must take reasonable steps to notify the other party of the amendment that they made Kassian v. Hill Challenges to Contracts: Mistake - Level of Court o Court of Queen’s Bench of Alberta - Parties Involved o Plaintiff: Kassian o Defendant: Hill - Case Facts o Kassian was involved in a car crash, not at fault and sustained injuries o Kassian met with the defendant’s insurance adjuster and signed a release in exchange for 2000 - Two issues: o 1) Is there a legally binding settlement and release? If so, the case is at an end o 2) If the release is not upheld, what then are the plaintiff’s damages as a result of her accident - Facts o The plaintiff’s claims are general and special damages o The defendant argues that the claim was fully settled and a valid release was signed for consideration, therefore releasing from all liability o The plaintiff had previous physical injuries from a fall and psychological problems, all exacerbated by the accident with Hill - The Law: is the defense of non est factum applicable? o The plaintiff has to establish three aspects to the plea to use defense ! 1) The burden is on plaintiff to prove ! 2) The document signed must be radically different than what the person believed they were actually signing ! 3) The person must not have been careless in signing the document (not negligent) - Court Decision: o Found that just because she didn’t understand the significance or magnitude of it, but because she understood the basic premise of it (that it was a release) and she was not radically misled from what it was o Therefore, there was no legal mistake here, just unfortunate o Claim of the plaintiff is dismissed - Ratio: o Non est factum will not stand if the 3 provisions are not upheld Maggie Sellers Business Law 2 1
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