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54 Cards in this Set
- Front
- Back
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Elements of a Contract |
-Consensus -Consideration -Capacity -Legality -Intention Generally there is freedom to contract but can be modified by legislation (eg. a will or prenuptial agreement) |
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Definition of Contract |
An exchange of promises creating obligations that can be enforced/remedied by the courts |
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A contract can be |
-express/implied -valid/void/voidable -unenforceable/illegal -bilateral/unilateral (Separate) Some offers cannot be revoked: -options -unilateral contract where performance begun |
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Consensus |
-"meeting of the minds" (keyphrase) -terms must be clear and unambiguous -agreement as to essential terms -parties must have opportunity to read/understand -may be implied via contract |
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Offer |
-tentative promise -must contain all essential terms -some terms may be implied (consumer protection legislation) -can have a binding interim agreement (ie letter of intent) -"subject to" clauses - contract not binding unless satisfied -"invitation to treat" - not a contract (ie invitation to visit store) -offer by contract, ie auction -offer must be communicated all important terms must be disclosed (ie waiver, exemption clauses, etc) -end of an offer: o specified time o death/insanity o revoked o counter-offer o illegality o destruction of goods o offer a reasonable time |
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Acceptance |
-must be communicated -must be complete/unconditional -incomplete offer does not equal acceptance -communication can be via a contract (ie unilateral contract) -unsolicited offer not accepted by silence -silence may be ok based on previous conduct -acceptance is effective when/where received post box rule -effective when dropped in the mail -technology - now instantaneous so no extension of postal rule |
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"post box rule" |
-effective when dropped in the mail -technology - now instantaneous so no extension of postal rule |
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Consideration |
-the price one is willing to pay -something of value -can be a benefit/detriment -exception-charity -exchange of promises - cannot be gratuitous -consideration does not have to be fair - can make a bad deal -but may include fraud, lack of capacity, or undue influence. |
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other lack of consideration |
-existing duty -past consideration -paying less to satisfy debt -illegal consideration Valid Consideration (examples on p 201) |
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Capacity |
Was the contract fair? |
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Minors |
-under age 18 or 19 -generally allowed to opt out of contract entered into with adults -contracts with minors not binding on them, except for contracts for necessities and beneficial contracts of employment or for service -minor can ratify a contract at the age of majority -once ratified, they lose the right to avoid the contract -Employment contracts binding if contract is for the benefit of the minor -test for capacity of minors is objective |
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Insane and Drunk |
A contract with someone who is insane or drunk will be rendered invalid only when the person was so incapacitated as to not know what he was doing, and the other contracting party knew, or ought to have known, of that incapacity. To qualify for the protection of the law, it must be shown that the person could not understand the nature of the act being performed. The burden of proving incapacity on the basis of insanity or mental incompetence rests with the person claiming to be incapacitated (needs medical evidence of the mental variety) -Person trying to escape contract on basis of drunkeness must show that upon reaching sobriety, the contract was repudiated. |
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Others of Limited Capacity |
-Crown corporations, government bodies, bankrupts, native Canadians have their ability to enter into contracts limited to some extent. -Crown corporations and government bodies capacity depends on the legislation creating them and their power to contract is often limited by that legislation. -Aliens-when at war, any contract with a resident of an enemy country is void if detrimental to Canada and if not detrimental, then it is suspended until the end of hostilities. -Natives are not subject to any charge, pledge, or mortgage so their ability to enter into contracts is limited (they are not able to lose their land). |
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Contracts performed illegally |
If lawful contract is performed illegally, the courts may rule that the contract is illegal and void, or just void, or they may enforce some, or all, of the contract. Involves a breach in legislation that is regulatory in nature |
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Contract formed illegally |
-an illegal contract is illegal at the time it is formed. -An illegal contract will not be enforced; it is void. -usually, when faced with a void contract, the court will restore the parties to their original position ordering them to return deposits advanced and property that had been transferred. However, since an illegal contract involves unacceptable or immoral conduct, the courts will not assist the parties by restoring them to their original position unless one of them is innocent of any wrong doing. |
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Intention |
For a contract to be binding, each of the parties must intent to be bound by it. In family and other social relationships, there is a presumption of no intention This presumption can be challenged by evidence that shows intent to be bound. In commercial relationships, intention is presumed. Determining intention is done by looking to the reasonable expectations of the promisee, would a reasonable person thought that the person making the promise was serious and the agreement was legally binding? |
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Requirement for Contracts to be in writing |
Writing of contracts enforced in three contexts: -Contracts not to be performed within one year -Land dealings: any contract that affects a person's interest in land must be evidenced in writing to be enforceable. -Guarantees and Indemnities Importance of written contract is practical, not theoretical. Guarantee: someone will pay you back if I can't. Indemnities: I will pay you back |
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Principle of Part Performance |
When part performance is established, verbal agreements dealing with interests in land are also enforceable. Courts will waive the requirement of writing if the parties can produce evidence to show that a contract dealing with land has been partially performed. Limitations -must be evidence of the existence of the contract and consistent only with the existence of the contract -payment of money owed under the contract will not usually be acceptable as proof of part performance as the payment of money is consistent with any number of different obligations. |
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Factors affecting contractual relationship (includes definition, elements, and remedies) |
Definition: -misleading statement that induces contract -must be allegation of fact, not opinion -unless opinion offered by expert -silence is not misrepresentation unless duty to disclose -partial disclosure may equal misrepresentation |
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Innocent |
-false statement made honestly without carelessness. Main remedy: rescission unless: 1. contract is affirmed 2. impossible to restore 3. third party transaction with "clean hands" occurs 4. failure on part of victim - no clean hands |
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Fraudulent |
-false statement made knowingly without belief in its truth or made recklessly. -statement can start out innocent but become fraudulent if discovered and other side is not advised ASAP. Remedies: -rescission -damages for deceit (difficult to prove because you have to prove the intention of another party and if you don't prove it, you can probably get sued for saying something untrue) |
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Negligent |
-careless statement -principles of negligence apply (duty of care, breach of duty, causation, loss) remedies: -rescission/damages |
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Duress (includes general rules, elements, legal remedies or legal presumption) |
-contract entered into against party's will -threat of violence/imprisonment/prosecution/ disclosure of information -contract may be voidable |
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Undue Influence |
-pressure that may be from a dominant/trusted person, makes it impossible to contract freely -presumed in certain relationships o special relationships o unique circumstances o based on the facts -legal onus on party that claims undue influence |
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Privity |
-basic rule - only parties to contract are bound by it exceptions: -real estate interests that "run with land" -agency (can bind action of principle) -innovation (introducing a new party to a contract and making a new contract) |
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Assignment |
-parties can assign benefits of the contract but not obligations (ie commercial leases) |
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caveat emptor |
let the buyer beware |
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Mistake |
-must go to nature of agreement/existence of subject matter -types: - both parties make a common error: if serious, no contract - error in recording terms: rectification - misunderstanding: reasonableness test - one sided mistake: caveat emptor unless fraud Key: courts will try to give effect to agreement between parties, to find ways to legitimize the contract |
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Four ways a contract comes to an end |
1. Performance 2. Agreement 3. Breach 4. Frustration |
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Performance |
-substantial performance ok unless exact performance required -if properly tendered but refused, then contract may be discharged |
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Agreement |
-contract may provide for its own end (ie. time, condition precedent, and condition subsequent) -liquidated damages: amount to be paid if breach o cannot be excessive (a "penalty") |
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Breach |
-condition: major term - can treat as discharged and sue -warranty: minor term - contract is binding but can sue for damages |
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Frustration |
Legislation in AB: "Frustrated Contracts Act" (any money that has been paid for the contract has to be refunded) -performance is impossible or fundamentally changed -cannot be self-frustrated -monies apportioned or refunded |
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"Real Property" |
land or anything attached to it, ie house. |
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Interests in Land |
-fee simple: closest thing to pure ownership - infinite right to land -life estate: use of land for lifetime -reverts back to owner -often in wills -dower interest: to protect interests of the spouse not on title (must be married) -leasehold: use of land for a specified time (ie 99 years) -other lesser interests: -easements (to let others cross over your land to get to their land) -rights of way (for power or water) -restrictive covenants (development to have houses look same) -adverse possession: way to acquire ownership via use/control over land -agreement for sale: title transferred when money paid |
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Personal Property |
-"finders keepers": except re:original owner -bailment (see chart page 445 fig 13.1) |
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Common Ways to hold title |
-joint tenancy: right of survivorship -tenancy in common: no rights of survivorship -condominium/cooperative: shared property, fees, and regulations. (Registry of titles in the "Land Titles Office") |
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Mortgages |
-$ is borrowed from lender -land as security -foreclosure: legal remedy -redemption period (time where owner has chance to bring mortgage back into rights) -failure = sell -"seize or sue" except for high ratio (cannot do both unless it is not a high ratio mortgage) |
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Leasehold Interests |
-"run with land" (where land changes hands, lease runs with it) -some registered on title (if > 3 years) -types: periodic (month by month) annual (renewed at end of each year or longer) -right to sublet (allows tenant to rent to someone else) -rights/obligations in lease: o vacant possession (tenant: you can put your own stuff in there) o quiet enjoyment (tenant: can enjoy it without interference from land lord) o repair (land lord obligation) o sublet (tenant right) o pay rent (tenant obligation) o maintenance o improvements (remodeling - belongs to tenant and can take with them) |
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Sales/Consumer Protection: Two main Statutes and the difference between them |
1. Sale of Goods Act 2. Fair Trading Agreement Main Difference is that SGA applies to transactions between individuals and FTA does not. |
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"Sales" |
requires exchange of money (no barter or agreement for sale) |
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"Goods" |
tangible personal property ("chattels") - not land |
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caveat emptor is the general rule if |
1. purchaser can inspect 2. no representations made |
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implied terms (in the contract for sale of goods) |
-right to sell -quiet enjoyment -no liens/encumbrances |
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implied terms as to description |
-goods will conform to the sample (ie cotton shirt). -suitability: goods are suitable for the purpose for which they are intended. -merchantable quality: free from defects that would render unsuitable for sale -sale by sample-bulk will correspond to sample (ie paper) |
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exemption clauses |
may allow seller to escape liability |
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payment |
if not specifically set out in the contract, then upon delivery |
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delivery |
quantity, time, and place should be specified in the contract |
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risk of loss |
general rule is when seller has delivered to the purchaser - unless otherwise in the contract |
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When does title pass? |
1. If unconditional contract for sale of specific goods in deliverable state - when contract is made 2. If seller has to do something to put into deliverable state - when buyer receives notification that it has been done 3. Seller has to do something to ascertain price (ie measure/weigh) - then same as number 2 4. Unascertained Goods - once good is ascertainable. |
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Remedies of Seller |
-lien -stoppage in transit -repossession -resale -damages for non-acceptance -action for price -retention of deposit (cannot be penalty) |
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Seller's Liability |
-misrepresentation -breach of term -wrongful detention |
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Remedies of Buyer |
-damages (rescission) - most common -specific performance |
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Fair Trading Act |
-limited to relationships between businesses and individuals -some key areas: o time shares o negative option practices o cost of borrowing o gift cards |
