Solution Manual for Law and Business Administration in
Canada Canadian 13th Edition Smyth Soberman
Easson McGill 0132604795 9780132604796
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CHAPTER 6
FORMATION OF A CONTRACT: CONSIDERATION AND INTENTION
Placing the requirement of consideration in its historical setting should help to explain the criticisms made of its sometimes rigid application in modern situations. To require consideration in order to make an agreement legally binding is to insist that it must have the qualities of a bargain. The emphasis on the need for a bargain has its roots in nineteenth century England. Consideration was viewed as central to bargains and as encouraging commerce by providing a sure legal test for binding commercial relationships. The definition of consideration illustrates this emphasis: the price paid (or the sacrifice made) by the promisee in return for the promise of the promisor. (Source p. 135)
EQUITABLE ESTOPPEL (Source p.
142)
The law of contracts has gradually evolved in response to changing values and economic conditions. The doctrine of injurious reliance (or promissoryor equitable estoppel) can best be explained as a modification in some circumstances of the rule requiring consideration. However, the courts have not been willing to abandon the requirement of consideration entirely and it remains an essential ingredient in the law of contracts.
RELATION BETWEEEN EXISTING LEGAL DUTY AND CONSIDERATION
(Source p. 139)
A common situation where the requirement of consideration is questioned arises when one party proposes, and the other party agrees, to a change in an existing contract. The change imposes an added burden on the other party without the first party offering any new consideration for it. Can such a change ever be binding, and if so, under what circumstances? United States courts have been prepared to waive the requirement of consideration where the change appears to be acceptable and fair to the party agreeing to an increased obligation. English and Canadian courts have been more reluctant to recognize post agreement changes without consideration. To find consideration, we must examine the facts at the time of making a bargain, and not later with the benefit of hindsight. If the parties make a bargain in good faith, one to pay a sum in settlement of a dispute and the other to surrender a right to sue, consideration is determined in light of the information available to the parties at that time. Subsequent information to the effect that, the original action would not have succeeded does not have any retroactive effect in
determining whether there was consideration; this recognizes the need for certaintyin business.
INTENTION TO CREATE LEGAL RELATIONS (Source p. 148)
Many students have a difficult time wrapping their heads around this legal principle. Students will often ignore it altogether, or assume that any agreement between friends or family automatically creates a situation where no contract is formed. It is often good to
create fictional situations where the principle applies. For example, a woman is the owner of a successful business. Her mother asks her to get her brother a job. The woman “hires” her brother to do some menial task around her business and pays him a small stipend each week. Is there a contract of employment? Was there an intention to create legal relations? Compare that to the similar situation where the woman of the successful business is looking for a web designer and hires her brother as a qualified candidate; places him on the payroll; and supplies him with office space to work.
STRATEGIES TO MANAGE THE LEGAL RISKS (Source p. 150)
This part looks at how businesses are specifically dealing with some of the legal concerns surrounding consideration and the intention to create legally binding relationships.
ETHICAL ISSUE (Source p. 138) PROMISES
This issue raises questions related to the values of trustworthiness, fairness, respect, and caring.
Question 1 - This question asks students to consider what difficulties may arise when evaluating a motive. Motives are subjective, which could be very difficult to prove. Further, even if there is proof of the motive, who is to say whether a motive is good or bad? Value judgments are subjective. Judges may be hesitant to make such determinations. Another aspect to consider is how would a court determine the motive of a corporation? Is it the motive of the shareholders? The board of directors or the directing mind?
Question 2 - This question asks whether moral cause will generate fairer outcomes than the standard of consideration. One could argue that it is not an appropriate standard as a result of the difficulties that arise in determining what the motive is and whether it is appropriate. On the other hand, it could be argued that consideration as a standard is arbitrarysince courts do not assess any assessment of the adequacy of the consideration. It does not even attempt to determine if the deal is fair
INTERNATIONAL ISSUE (Source p. 145) WILL INJURIOUS RELIANCE BE ADOPTED BY THE CANADIAN COURTS?
Question 1 - This issue provides an opportunity to discuss the respective merits and demerits of the traditional Anglo-Canadian position on consideration and injurious reliance as opposed to the more radical American view.
Neither system allows for the enforcement of a gratuitous promise as such. The American position does allow a promisee to sue if he has relied on the promise and has done so to his own detriment. In one sense, the promise can be said to have been the cause of the
loss. (There is some similarityhere with the liability in tort for a negligent misstatement.)
By contrast, Canadian courts restrict the injurious reliance principle to cases where a legal relationship already exists between the parties. The principle of equitable estoppel can be used only as a defence by the promisee. In Hepburn v. Jannock Limited an employee sought to enforce a promise to provide a thirty-six month pension benefit that was not included in the written employment agreement. The court rectified the agreement to add the term but went on to say that it would have allowed the claim in any event based on promissory estoppel. Although clearly obiter, it appears to flyin the face of the “only a defence” principle.
Most students would probably agree with the outcome of the Hughes case (Case 6.4 at p. 143) but should the courts go further? Is a person entitled to relyon a gratuitous promise, as opposed to a binding contract? Does he take a risk upon himself if he changes his position as a result? The Canadian courts are likely reluctant to adopt the principle of injurious reliance as it would make almost all promises binding on the promisor regardless of intent or any consideration to the promisor.
Question 2 – Students need to analyze the comparisons between the two systems and consider the merits of each position. Fairness is a principle of equity, but in each case there is unfairness to either party. Should the person who relied on a gratuitous promise suffer a loss as a result? Or should the person who makes a casual promise bear a loss, because the other party chose to rely on it?
QUESTIONS FOR REVIEW
1. The requirement is that the promisee give something in return, not that the promisor receive a benefit. The example at Illustration 6.1 shows that where the promisee refrains from suing a third person provides the needed consideration for the promisor’s undertaking to pay the debt. (Source p. 135)
2. The charity may have agreed to undertake some new activity or to incur some expense in return for the promise of a donation. If so, it has given consideration. (Source p. 136)
3. The consideration given for the promise must have some value, but the court does not inquire as to the adequacy of that consideration. In the absence of fraud, the promise to pay one penny is sufficient to make the contract valid. (Source p. 136)
4. When one party, A gives up its right to sue in exchange for a payment from the other party, B, both are bound by the settlement. As a matter of public policy it does not matter that A would likely have lost in court; it is important to encourage such settlements and decrease the burden on the courts. (Source p. 137)
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5. The promisor’s reason for making the promise is irrelevant – whether it be gratitude, affection, or a sense of moral obligation. (Source p. 138)
6. A creditor may actually find it advantageous to offer to settle a debt for a lesser sum than is legally due, but since the debtor provides no new consideration, the creditor is not bound by the promise to settle for less. This rule is avoided when: (1) the debtor delivers an item of nominal value to the creditor in return for the creditor's promise; or (2) the creditor makes its promise to accept the lesser sum under its seal; (3) the lesser payment is made by a third party; or (4) the legislature enacts a statute stating that the debt is extinguished once the lesser sum is paid. (Source pp. 141-142)
7. The rule in Foakes v. Beer has been modified by statute in five provinces. Under any of those acts, if a creditor agrees to accept part performance (that is, a lesser sum of money) in settlement of a debt, it is bound once it has accepted this part performance.
(Source p. 142)
8. “Injurious reliance” places the emphasis on the reasonableness of the promisee’s conduct; that is, if he relied reasonablyon the promise and suffered a loss as a result the court concentrates on the unfairness of denying him a remedy. In contrast, “equitable estoppel” appears more concerned with the conduct of the promisor rather than the harm it caused to the other party (Source p. 145)
9. The Hughes case illustrates the classic situation in which equitable estoppel arises:
(1) some form of legal relationship alreadyexists between the parties
(2) one of the parties promises (perhaps byimplication only) to release the other from some or all of the other’s legal duties to him; and
(3) the other party in reliance on that promise alters his conduct in a waythat would make it a real hardship if the promisor could renege on his promise. (Source p. 144)
10. It remains uncertain how far our Canadian courts will go. In Conwest, there was a prior existing relationship under the option agreement. Suppose instead there had only been a promise to extend an offer for a week; A had relied heavily on the extension investing money in a project, but had not paid for an option. Thus far it is very uncertain that our courts will find such a promise binding. (Source p. 144)
11. When one person requests the services of another and the other performs those services, the law implies a promise to pay. Such a promise is implied between strangers or even between friends, if the services are rendered in a customary business transaction. But a promise to pay is not usually implied when the services are performed between members of a family or close friends. (Source p. 146)
12. A seal represents a formal act, an act of “deliberation” in making a promise that makes it binding without consideration being given in return. There must be physical evidence on a document that represents that act of deliberation. (Source p. 147)
13. Offer and acceptance (Chapter 5), consideration (Chapter 6) and intention of create legal relations (Chapter 6).
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14. The public accountants have no contract with their clients because of a lack of consideration. Theydo, however, have a special relationship out of which a duty of care arises. Breach of that voluntary duty exposes them to liabilityin negligence or for breach of fiduciary duty. (Chapter 4)
15. There is a presumption that an intention to contract exists. The presumption is strong in dealings between strangers and in commerce generally. Otherwise, it is the reasonable bystander test that is used to determine if an intention to create legal relations exists. (Source p. 148)
16. No. Early payment is good consideration for the discount. (Source p. 141)
CASES AND PROBLEMS
1. The main question is whether the parties intended to create a legal relationship, rather than providing friendly advice Since a court cannot discover what was actually present in the minds of Burkowski and Adams, their intention must be inferred from all the circumstances, including their relationship. Having a late-night coffee together is rather different from Burkowski going to Adams’ office for a meeting.
The American humorist, Will Rogers, is said to have been invited by a prominent Hollywood socialite to attend a partyshe was giving. Afterwards he sent her a bill for professional services (his presence had made the party a successful occasion) She protested that he had been invited onlyas a guest. He is reported to have replied that when he was invited anywhere out of pure hospitality, his host usually invited his wife as well.
The problem mayalso be used to show, if the point has not already come up, that when there is a serious intent to create legal relations, consideration need not be agreed upon expressly. When Burkowski asked where she might get investment advice, was she expecting to pay for it? Very likely, she would have, if she went to a third person. Did Adams’ suggestion for coffee together imply that, at least initially, he would offer his advice as a friend? In any event, if Burkowski believes Adam’s fee is too high, at most she impliedly agreed to pay Adams a reasonable price for the advice and his claim for a fee would be on a quantum meruit basis. The test to determine whether an intention to create legal relations exists is the reasonable bystander test. Would a reasonable bystander have understood the meeting between the parties to have intended to create legal relations?
2. This problem is based on Central London Property Trust, Ltd. v. High Trees House, Ltd., [1947] K.B. 130. The case is a landmark decision because Lord Denning's reasons recognized the concept of promissory(or equitable) estoppel. It had been widely accepted that estoppel was a rule of evidence that would prevent a person from denying the truth of facts he or she had asserted and which had induced another party's injurious reliance But it was another thing to say that estoppel could extend to a promise, as opposed to an assertion of facts. In the High Trees case, Lord Denning stretched the concept so that it applied to the gratuitous promise of the landlord to reduce the rent,
relied on bythe tenant who did not then abandon the premises as others had done in wartime London. Lord Denning did not propose to change existing law, but rather to resurrect an earlier case, Hughes v. Metropolitan Railway Co. (1877), 2 App. Cas. 439, (as discussed in the text in Case 6.4 at p. 143). Denning provided authority for the view that estoppel could apply to a promise of future conduct even to an implied promise not to insist on strict legal rights while negotiations were in progress.
In this case, Barney was willing to return to the original rent after the flood waters receded, but in the High Trees case, the tenant resisted paying higher rent; however, the landlord (actually a receiver who had succeeded to the landlord's rights) was held entitled to revert to the higher rent originally agreed upon in the lease but only after he had given the tenant notice of his intention to do so, and only in respect of further payments of rent after such notice. This conclusion is consistent with the fact that the promise to reduce the rent was gratuitous and not in itself binding except to the extent that it had already been reasonably relied on. If Ruth were to sue Barney for the payments, Barney’s defence would be promissory estoppel where the one party leads the other party to believe that the first partywill not enforce its strict legal rights then the courts will not allow it to do so later
3. This case is based on Governors of Dalhousie College v Boutilier, [1934] 3 D L R. 593. When a person agrees to subscribe a sum of money for the general and undefined purposes of a charitable organization, the situation does not ordinarily suggest that there is anyconsideration moving from the promisee (charity). Here however, Autotech did make its promise for a specific project, the construction of the Millennium Centre, but we are not told that the project is already underway, or whether the town has signed a contract with a construction company. Further, Autotech’s pledge is conditional upon matching pledges being received by the town. As a result it is highly unlikely that a court would find Autotech bound to contribute the full $9,000,000. However, with respect to the request by Autotech for the return of the money pledged, it would have no cause of action; once a gift has been voluntarily made, it is no longer the donor’s property, and the donor has no control over it.
4(a) This case demonstrates a situation that often arises in the day-to-day business world and a case that many business students enjoy discussing. The facts of the case are those of Roche v. Marston, [1951] 3 D.L.R. 433 and the judgment in that case is in the summaries at the end of this chapter.
Students should consider whether any benefit had been conferred on Matsui in response to his request for Robert's services. If that is so, then the law will implya promise to pay for the services rendered. Matsui requested the services and although no price was set, Roche was entitled to quantum meruit
Students sometimes contend that a case like this is frustrating because they are faced with an irresolvable conflict of evidence. It should be pointed out that it is one of the major functions of the judge or the jury as the trier of fact to sort out the facts when conflicts of evidence arise. Students are therefore entitled to accept as one of the facts of this case that the parties had not agreed that Matsui's obligation to pay a commission would be contingent upon his decision actuallyto make a purchase. The facts then establish a valid quantum meruit claim on Roberts' part.
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Students should understand that there is nothing retroactive about the quantum meruit claim; Matsui's obligation to pay a reasonable price arises at the time he requests Roberts' services. What happens later between the parties may provide evidence about what the reasonable amount should be. Matsui's later "promise" to pay Roberts $50,000 and Roberts' consent provide evidence that they had fixed the dollar value of the work, and a court will hold the agreed value as binding on both parties.
(b) This case turns upon the fact that since Roberts and Matsui had agreed upon $50,000 as the appropriate fee; therefore, Roberts was entitled to that amount and no more under the contract for the services he performed. In these circumstances, Matsui's promise to pay an additional $10,000 was a promise based on a past consideration and therefore was merely a gratuitous promise.
5. The question here is one of waiver by a party to a contract of his strict rights under that contract. Throughout 2009 the parties were on friendlyterms and Dealer tacitly acquiesced in Wheeler's failure to make timely payments. Did Dealer thereby waive, or tacitly promise, not to insist upon his strict legal rights in the future? If so, can Dealer unilaterally and without notice withdraw that implied promise?
Although Dealer's implied promise is gratuitous and unenforceable by Wheeler, there would appear to be an element of undue hardship if Dealer were now permitted to revert to his strict contractual rights without first giving Wheeler notice of his intention to do so. It may be argued that Dealer had lulled Wheeler into a false sense of security by not insisting on prompt payment.
Wheeler could argue promissoryestoppel by pointing out that she relied on Dealer's tacit waiver of his right to insist on prompt payment and that the waiver should not now be withdrawn with serious retroactive effect. Wheeler should be permitted to withdraw only after giving Dealer notice of his intention to do so.
In response to this argument Dealer could claim that although the 2009 payments were late, they were not made thirty-five days late as was the January 1, 2010 payment. Accordingly, while he may be taken to have tacitly promised not to demand the full amount if payments were made ten or fifteen days late, he cannot be taken to have promised to permit Wheeler to be thirty-five days late in making payments.
Another view of this dispute would be that wherever possible, contracts should, in the interest of administrative planning and business confidence, be accorded binding force and effect by the courts. Debtors have a recognized obligation to seek out their creditors and are not entitled readily to draw inferences from past indulgences.
The facts in this case have been drawn from those in John Burrows Ltd. v. Subsurface Surveys (1968), 68 D.L.R. (2d) 354 (S.C.C.), where the creditor's action eventually succeeded. In that case, the trial court rejected the debtor's defence of equitable estoppel. On appeal by the debtor, the court reversed the trial judgment and accepted that the principle of equitable estoppel governed. On further appeal by the creditor to the Supreme Court of Canada, the decision of the trial court was restored. Cogent arguments can be made on either side. However, because of the emphasis given to equitable estoppel in the text, most students are likelyto conclude that equitable estoppel should prevail. It is of particular interest, therefore, to consider the reasons for judgment of the Supreme
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Court of Canada (as delivered by Ritchie, J., at 360-62):
It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.
It is not enough to show that one partyhas taken advantage of indulgences granted to him bythe other for if this were so in relation to commercial transactions, such as promissorynotes, it would mean that holders of such notes would be required to insist on the very letter being enforced in all cases for fear that any indulgences granted and acted upon could be translated into a waiver of their rights to enforce the contract according to its terms...
It does not appear that the evidence warrants the inference that the appellant entered into any negotiations with the respondents which had the effect of leading them to suppose that the appellant had agreed to disregard or hold in suspense or abeyance that part of the contract. It is possible, of course, that one may come to the same conclusion as the Supreme Court of Canada (that the creditor's action should succeed) but for the reason that the creditor's past indulgences (accepting interest payments just a few more than ten days overdue) could create no inference of an implied promise to accept payments as much as thirty-five days overdue.
Insofar as the defence of equitable estoppel is concerned, one should note that the debtor, Wheeler, wisely paid the arrears of interest immediatelyupon receipt of the creditor's (Dealer's) letter of February5. Any further delay in payment of interest would not be protected by equitable estoppel. The "acceleration clause", making the entire principal sum come due upon default in interest payments, would become binding upon the debtor as soon as the creditor made clear his intention to revert to his original legal rights.
An instructor maywish to point out a parallel with the High Trees decision (see Case 2, above) where notice at once restored the promisor's original legal rights as they pertained to the future
6. Susan would likely have a difficult time in bringing a lawsuit in this case
The case of Carlill v. Carbolic Smoke Ball Co., [1892] 2 Q.B. 484 would suggest that an advertisement can create a legitimate offer; however, this case more closely resembles that of Leonard v. PepsiCo, Inc., 88 F. Supp. 2d 116 (States District Court for the Southern District of New York), aff’d 210 F.3d 88 (2d Cir. 2000). In that case the court held that the advertisement to cash in seven million “Pepsi points” for a harrier jet could not be construed as an offer. It further stated that the seriousness of the intention of the advertisement was subject to the objective standard of the reasonable person. In that case, a reasonable person would have known that PepsiCo did not intend to give away a twenty-three million dollar airplane for the equivalent of $700,000 in points.
In Susan’s case, Waymart would argue that there was no serious intent to sell a hot tub, a product that theydo not carry, and that this would be obvious to a reasonable person.
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Susan mayhave other causes of action under misrepresentation (Chapter 8) and consumer protection (Chapter 30)
To protect itself from legal risk, Waymart should have included a disclaimer in the advertisement explaining that the items displayed were not redeemable with points; PepsiCo added the phrase “just kidding” to its advertisement regarding the harrier jet to avoid further lawsuits.
CASE SUMMARIES
Source p. 136, n. 2
Governors of Dalhousie College v. Boutilier, [1934] 3 D.L.R. 593 (Supreme Court of Canada)
Boutilier signed a form pledging $5000 towards the Dalhousie College Campaign Fund (1920), a fund to increase the general resources of the institution. Subsequently, he met with financial setbacks that kept him from honouring the pledge. In response to a letter of inquiry from the President of the University, Boutilier wrote in April of 1926 that he intended to keep his pledge when he was able Boutilier died in 1928 without honouring the pledge and the University sued his estate. The court held that the purpose of the fund (the general improvement of the institution) did not constitute consideration in the form of a promise by the University and that no contract had been created. The court also held that promissory estoppel would not lie against the estate because the University was unable to show any injurious reliance on Boutilier's pledge.
Source p. 136, n. 3
Brantford General Hospital Foundation v. Marquis Estate (2003), 67 O.R. (3d) 432 (Ontario Superior Court of Justice)
See Case 6.1 at p. 136 in the text. Mrs. Marquis pledged a donation to the plaintiff for $1 million over a five year period. She made the first payment of $200,000, but then died. Her estate refused to honour the pledge. The plaintiff brought suit to collect the outstanding $800,000 although they had already received a bequest of $800,000 under the deceased’s will. The plaintiff argued that they had relied on the promise to their detriment; that is, they had commenced construction on a critical care unit. Further, they had provided consideration for the pledge in that they had suggested naming the unit after the deceased. The court held that there was no contract. Theyhad received funds under the will and could have used that money toward the unit. Further, the promise to name the unit was not consideration as that was the plaintiff’s suggestion and it had not yet been approved.
Source p. 137, n. 5
Haigh v. Brooks (1839), 113 E.R. 119 (England – King’s Bench)
Brooks promised in writing to guarantee payment of £10,000 loan by the plaintiff to a third party. The facts are rather complicated, but later Brooks bargained for the return of his guarantee by giving a new guarantee for the payment of certain bills of exchange for
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£9,600 drawn on the third party debtor. The plaintiff agreed and returned the original guarantee. The third party debtor then defaulted and Brooks refused to honour his new guarantee. The plaintiff sued Brooks, who claimed that:
i. the first guarantee was invalid because the written memorandum did not satisfy the Statute of Frauds (see Requirement of Writing in Chapter 9);
ii. accordingly, he had not been legally indebted to the plaintiff; and
iii. therefore, the plaintiff had given no new consideration for the second promise to pay, but had merely returned a worthless piece of paper
However, the court held that the plaintiff, by abandoning what he honestly believed to be a legally enforceable guarantee, had given valid consideration for Brooks' second promise
Famous Foods Ltd. v. Liddle, [1941] 3 D.L.R. 525 (British Columbia Court of Appeal)
Liddle purchased flour from a scoundrel, Oldaker, and gave Oldaker a bill of exchange in payment. Famous Foods then in turn sold flour to Oldaker, taking in payment from him the bill of exchange signed by Liddle. None of the parties noticed that changes made to the bill when it was signed over to Famous Foods made it unenforceable against Liddle Oldaker, the "middle man", absconded without delivering all the flour to Liddle and Liddle protested at having to pay the balance due on the bill to Famous Foods. When Famous Foods threatened to sue, Liddle gave Famous Foods a new note in return for deferring the suit. The court held that Famous Foods' forbearance to sue on the original bill, in the honest belief that it had a good cause of action, constituted good consideration for the new note.
Fairgrief v. Ellis, [1935] 2 D.L.R. 806 (British Columbia Supreme Court)
The elderly defendant, who was separated from his wife, made an oral agreement with the plaintiffs that if they would act as his housekeepers and take charge of his home during his lifetime, the home would be theirs upon his death. Subsequently, his wife decided to return home and the defendant agreed with the plaintiffs that if they would surrender their rights under the oral agreement and leave his home, he would pay them $1,000. They left the house and when ultimately the defendant refused to pay, they sued him for the $1,000. The court held that even though the first contract was unenforceable under the Statute of Frauds, the second contract could be enforced because when the plaintiffs gave up their rights under the first contract, they believed that those rights were legally enforceable. Therefore there was valid consideration for the defendant's promise to pay the $1,000.
Source p. 138, n. 6
Eastwood v. Kenyon 1 (1840), 113 E.R. 482 (England – Queen’s Bench)
See Case 6.2 at p. 138 in the text. The plaintiff had been guardian to the defendant’s wife when she was a child. He had borrowed money to pay for her education and to support the estate to which she was sole heir Both she and then later her husband made a promise to repay the monies the plaintiff had expended on her behalf. The plaintiff sued the husband on his promise. The court held there was no legal obligation to make good
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on the promise as there was no present consideration on the part of the defendant; past consideration is no consideration.
Source p. 139, n. 7
Stilk v. Myrick (1809), 70 E.R. 1168 (England – High Court)
This was an action brought by a sailor against the captain of a ship. During the course of the voyage, many of the seamen deserted ship. The captain promised those who remained an increase in wages if they would continue the voyage. The captain refused to pay the increase in wages. The court held that the plaintiff was already under a legal duty to perform the contract. There was no further consideration for the increase in wages.
Source p. 139, n. 8
Turner v. Owen (1862), 6 E.R. 79 (England – High Court)
Another seafarer case – this time the ship was damaged and the captain made promises for more moneyto the sailors to agree to continue the voyage. Because the ship was no longer considered seaworthy and this is an implied term of the original contract, the agreement to continue the voyage did amount to consideration for the increase in wages.
Source p. 139, n. 9
Gilbert Steel Ltd. v. University Construction Ltd. (1976), 67 D.L.R. (3d) 606 (Ontario Court of Appeal)
The plaintiff supplies steel bars to the defendant construction company. Due to increases in the price of steel, the plaintiff and defendant renegotiated the price for the steel bars, part way through the construction project. Both parties agree to an increased price orally, but not in writing. The trial judge found that the defendant did agree to the higher price. The question then became one of whether or not there was consideration for the increase in price. The trial judge held that the oral agreement was an agreement to vary the contract; not to replace the contract with a new one. Therefore, the variation had no new consideration for the promise of the increase in price and the plaintiff could not succeed. The Court of Appeal upheld this decision.
Source p. 140, n. 11
Williams v. Roffey Brothers & Nicholls (Contractors) Ltd., [1990] 1 All E.R. 512 (England – Court of Appeal)
This case was a classic situation of a building contractor who could not finish a construction project on time for the agreed price The two parties made an oral agreement to increase the payments above the original contract price, and the contractor completed the project. The defendant refused to paythe increase in price, and the contractor sued for the additional sum, claiming that the second agreement was unenforceable for want of consideration. The English Court of Appeal found that in the circumstances of this case, the promise to paya higher price was enforceable because it was in the interests of the defendant and there was no economic duress. It stated that performance by A of his preexisting contractual obligation to B may be good consideration for a promise by B to pay A an additional sum for the performance of those contractual obligations.
Glidewell L.J. summarized view of the present state of English law in the following
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propositions:
(1) If A contracts with B to do work for, or to supply goods or services to, B in return for payment by B; and
(2) Before A has completely performed his obligations B has reason to doubt that A will, or will be able to, complete his side of the bargain; and
(3) B promises A an additional sum in return for A's promise to perform his contractual obligations on time; and
(4) As a result of giving his promise B obtains a practical benefit, or obviates a disbenefit; and
(5) B's promise is not given as a result of economic duress or fraud on the part of A; then
(6) The benefit to B is can be consideration for B's promise, so that the promise will be legally binding (at 521-2).
Glidewell, L.J. did not go so far as to overrule Stilk v Myrick; rather it was his view that "the propositions above ...refine and limit the application of… [the principle in Stilk v Myrick], but they leave the principle unscathed, eg., [sic] where B secures no benefit by his promise." This decision goes considerably further than do Canadian decisions; it can be argued that Glidewell transforms injurious reliance into consideration. (See Halyk's commentary cited in the footnote.)
Source p. 140, n. 12
Shadwell v. Shadwell (1860), 142 E.R. 62 (England – Chancery)
The plaintiff and Ellen Nicholl agreed to marry each other. The defendant (the plaintiff's uncle), knowing of the planned wedding, promised in writing to pay the plaintiff a yearly income for a certain period if the plaintiff would marry Ellen. The wedding took place but the defendant died before having made all the payments. The plaintiff sued his uncle's estate for the balance. The court held that the plaintiff's promising the defendant he would marry Ellen was good consideration for the defendant's promise to pay, even though the plaintiff had already promised Ellen that he would marry her.
Source p. 140, n. 13
Scotson v. Pegg (1861), 158 E.R. 121 (Exchequer Court)
A coal merchant sold coal to the defendant buyer and then paid the plaintiff, a carrier, to deliver it. In discussions about arrangements for delivery, the defendant said that if the coal was delivered at a particular location at a specified time, he would unload it at a rate that could allow the plaintiff to complete the job quickly. The plaintiffs delivered the coal but the defendant waited five days before unloading it. The defendant claimed that there had been no consideration for the promise to unload since the plaintiffs were already bound to the third party (the seller) to deliver the coal. The court disagreed: it held that the plaintiffs' promise to the defendant to do something they were already bound to a third partyto do was valid consideration for the defendant's promise because if the plaintiff had defaulted, then both the seller and the defendant buyer could have sued him.
Pao On v. Lau Yiu Long, [1979] 3 W.L.R. 435 (Privy Council)
The plaintiffs, owners of shares in a private company, contracted to sell their shares to a public companyin return for a new issue of shares in the public company. The
defendants, who were majorityshareholders in the public company, were worried that a quick sale of the new issue might push down the market price of the public company's shares. They persuaded the plaintiffs to agree not to sell sixtypercent of their newly acquired shares for over a year.
Subsequently, at the plaintiffs' request, the defendants agreed orally to indemnify the plaintiffs for any losses they might suffer from retaining the shares. Later the parties had a disagreement and the plaintiffs refused to complete the share exchange contract with the public company unless the defendants promised in writing to indemnify them for any losses. The defendants so agreed, the main transaction was completed and the plaintiff retained the shares as originally promised.
The shares lost value while the plaintiffs retained them, but the defendants refused to indemnifythe plaintiffs for the loss, claiming that their promise to do so was gratuitous and not binding. The court held that the plaintiffs' promise to retain the shares, although made before the defendants' agreed to give a guarantee, was valid consideration if:
(a) done at the defendants' request;
(b) the parties understood that the act of retaining the shares was expected to be "paid for" (that is, was not a "gift"); and
(c) the guarantee, had it been bargained for in advance, would have been a binding arrangement.
The court found that the promise to retain the shares met these requirements and thus was sufficient to bind the defendants to their guarantee
Source p. 140, n. 14
Glasbrook Brothers v. Glamorgan County Council [1925] A.C. 270 (England - House of Lords)
During a coal miners’ strike, hostilities broke out between the strikers and the “safety men” set to guard the mines from damage. The owners of the mines, offered to pay the local police if they would protect the mines. After, peace had been restored, the owners refused to paythe fees. The Court held that there was no consideration for the protection of the mines as it was an existing legal duty on the part of the police.
Source p. 141, n. 15
Foakes v. Beer (1884), 9 App. Cas. 605 (England - House of Lords)
See Case 6.3 at p. 141 in the text. The plaintiff was a creditor of the defendant. The defendant was in a position where he was unable to repay the debt. The creditor agreed to accept the principal and waive the interest owing After the defendant paid the principal, the creditor sued for the interest. The court held that there was no new consideration for the reduction in debt and the defendant was liable to the creditor for the interest.
Source p. 142, n. 16
Hirachand Punamchand v. Temple, [1911] 2 K.B. 330 (England – Court of Appeal)
The plaintiffs lent money to the defendant in return for a promissorynote. When the defendant defaulted on payment, the plaintiffs wrote to his father who offered an amount
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less than that of the debt in full settlement and enclosed payment. The plaintiffs retained the proceeds and afterwards brought an action against the defendant for the balance of the debt. The court held that the creditors must be taken to have accepted the money from the third party, who was under no duty to paythe amount received bythem, on the terms upon which the amount was offered. The payment amounted to a full settlement, so that the plaintiffs could not maintain an action against the defendant.
Source p. 142, n. 17
Rommerill v. Gardener (1962), 35 D.L.R. (2d) 717 (British Columbia Court of Appeal)
The defendant agreed to pay and the plaintiff agreed to accept a lesser sum in satisfaction of a debt. The defendant agreed to pay the amount by Easter but failed to do so. In October, the plaintiff wrote demanding payment of the full debt. The defendant sent a cheque for the lesser sum to which the parties had earlier agreed: the plaintiff retained but did not cash the cheque, and commenced an action for the full debt. Two days before the trial, the defendant paid the plaintiff the lesser sum which the plaintiff then accepted on account but continued the suit for the balance of the debt. The court looked at the statute which states that when a creditor accepts or agrees to part performance in full satisfaction of a debt, the debt is extinguished when this lesser sum is paid. The court held that such an agreement is binding under the statute, although it is unsupported byconsideration, once it is performed. The plaintiff was therefore not entitled to be paid the balance of the debt.
Source p. 143, n. 18
Hughes v. Metropolitan Railway Co. (1877), 2 App. Cas. 439 (England – House of Lords)
See Case 6.4 at p. 143 in the text. The plaintiff brought action against the defendant for breach of a contract term that required the defendant to effect repairs to a property it leased from the plaintiff. The defendant had commenced repairs, but then ceased when it began negotiations with the plaintiff to buyback the lease After several months, the negotiations fell through. The plaintiff then commenced the action as the six month deadline to complete the repairs had passed. The plaintiff sought to recover the property under the terms of the contract. The Court held that the parties negotiated in good faith and that the plaintiff impliedly undertook not to enforce the contract during that time. The plaintiff was estopped from claiming breach of contract under the circumstances; the defendant had six months in which to make the repairs from the time the negotiations broke down.
Source p. 144, n. 19
Central London Property Trust, Ltd. v. High Trees House, Ltd., [1947] K.B. 130 (England – High Court)
The defendant leased a block of flats from the plaintiff. During WWII the occupancy rates were drastically reduced and so the two parties agreed that the defendant would only have to pay half of the rent; no stipulation was made for how long this agreement would continue. By 1945 the occupancy of the flats was back to full capacity. The plaintiff sued for the full amount of the rents from 1945 forward and the Court agreed; however,
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in obiter the Court commented that if the plaintiff had requested the full rents from 1940 when the reduction began it would have been denied. This comment was based on the premise that if one party leads the other partyto believe that the first party will not enforce its strict legal rights, then the courts will not allow it to do so later; this was the doctrine of promissoryestoppel.
Source p. 144, n. 20
Conwest Exploration Co. v. Letain, [1964] S.C.R. 20 (Supreme Court of Canada)
See Case 6.5 at p. 144 in the text. Letain gave Conwest an option to purchase certain mining claims that could be exercised if, on or before a specified date, Conwest incorporated a company to hold the claims and alloted at least 50,000 shares in the company to Letain. With Letain's co-operation, Conwest filed the papers to incorporate the company with the appropriate government office before the specified deadline, but the formal completion occurred almost three weeks late. Letain rejected Conwest's attempt to exercise its option. The Supreme Court of Canada held that Conwest had complied with the option requirements byfiling the papers on time, but the Court also said that Letain was estopped from from insisting on strict performance of the condition in the option, because he had participated in the incorporation process in a manner that induced Conwest to believe that he would not require strict adherence to the deadline.
Re Tudale Exploration Ltd. and Bruce (1978), 20 O.R. (2d) 593 (Ontario Divisional Court)
The plaintiff paid for an option agreement from Tudale, with respect to mining claims, to expire in three years. Shortly before the expirydate, Tudale orally gave the plaintiff an extension of "sufficient time" to comply with the terms of the option, without requiring further payment. The plaintiff relied on that extension and tried to exercise the option after the original option period had expired, but Tudale claimed that the option agreement was terminated. The court held that because the plaintiff had reasonably and honestly relied on the extension, Tudale could not treat the option as terminated and had to afford the other party a reasonable amount of time within which to comply with the agreement.
Source
p. 144, n. 21
Crabb v. Arun District Council, [1976] Ch. 179 (England – Court of Appeal)
Crabb owned a narrow piece of land that fronted onto a main road. He wished to sell the front portion but then would have no access to the back portion which he wished to retain. Luckily the Council was building a new road along the side of Crabb's property. He learned that although he did not have a right of access to the new road, he could apply to the Council for permission to build a new entrance for a fee. After being assured by the Council that he would have no difficulty obtaining approval, and relying on that assurance, Crabb sold the front portion of his property and built a new entrance from the back portion to the side road.
Shortly afterwards, the Council removed his new gate and fenced in the entrance Crabb was landlocked and had no right of access to his property. He sued for a declaration that he was entitled to the entrance and the court supported his claim. The Council had encouraged Crabb to act to his detriment, and his reliance was not reversible; there was no way he could undo what he had done since he had sold the front pan of his lot to an
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innocent third person and could not recover it. Crabb was entitled to regain his entrance on paying the normal fee. This case is remarkable because it is the onlyEnglish decision granting an unconditional remedybased on promissory estoppel rather than merely giving additional time. Some of the judges called it an exception known as "property estoppel".
Source p. 144, n. 22
Ricketts v. Scothorn 77 N.W. 365 (1898) (U.S.A. - Supreme Court of Nebraska)
Ricketts, the grandfather of Scothorn, gave a promissory note for a certain sum plus annual interest to Scothorn so that she would no longer have to work. Scothorn claimed that in consideration for the note, she agreed to give up working as a bookkeeper for a living. Relying on the note as a means of support, she gave up her employment. Ricketts died and his estate refused to pay according to the note. The court found that the note was given gratuitously and was not dependent on the fulfilment of anypromise that Scothorn no longer work. However, Ricketts' estate could not resist payment on the ground of no consideration because Ricketts intentionallyinfluenced the plaintiff to alter her position to her detriment in reliance on the note Remind students that this is an American case and that there is no Canadian equivalent.
Source p. 145, n. 24
Maracle v. Travellers Indemnity Co. of Canada [1991] 2 S.C.R. 50 (Supreme Court of Canada)
An insured brought an action for compensation under its fire insurance policy after the expiration of the limitation period. There were negotiations between the parties prior to the expiration of the limitation period. The Supreme Court overturned the Court of Appeal and found that there was no contractual promise not to relyon the limitation period defence Promissory estoppel was not available to the plaintiff to prevent the insurer from relying upon the limitation period defence. The three requirements of the doctrine were not made out: a pre-existing relationship, words or conduct designed to affect the relationship, and reliance to the detriment of the plaintiff
Source p. 145, n. 27
Doef’s Iron Works Ltd. v. MCCI, [2004] O.J. No. 4358 (Ontario Court of Appeal)
The plaintiff sought to have a mortgage declared void on grounds or promissory estoppel; that is, that the defendant made a representation that the plaintiff relied on to its detriment. The trial judge declared the mortgage void. The defendant appealed. The Court of Appeal held that promissory estoppel could only be used as a shield and not a sword. It was open to the plaintiff to assert its rights through other means, such as a lack of consideration. The court held that the trial judge erred in applying the doctrine of promissory estoppel and ordered a new trial.
Reclamation Systems Inc. v. The Honourable Bob Rae 1996 CanLII 7950, (1996), 27 O.R. (3d) 419 (Ontario Supreme Court)
The plaintiff sued the defendant for statements made while he was in office. The statements were with regard to a proposal to build a reclamation plant near Acton. Eventually, Bill 62 was passed and the plaintiff was unable to proceed with its plans.
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Among other causes of action, the plaintiff pleaded promissory estoppel; the plaintiff relied on the statements to its detriment in expending monies on the project. The court confirmed that in order for promissory estoppel to apply there had to be a pre-existing contractual relationship between the parties which was not the case here. Further, the court reiterated that the doctrine cannot be used as a sword, but only a shield.
Source p. 145, n. 28
N.M v. A.T.A., 2003 BCCA 297 (British Columbia Court of Appeal)
The plaintiff claimed that the defendant had promised her that he would pay off her mortgage on her property in England, if she would quit her job and move to Vancouver to live with him. She did this and he failed to payoff her mortgage (but did give her $100,000 which she used to pay down her mortgage). Shortly thereafter, he asked her to move out. She was unable to find employment in either Canada or England. The plaintiff sued for her reliance on the promise of the defendant to her detriment. The trial judge declined to adopt the doctrine of promissory estoppel because there was on legal relationship existing between the parties at the time of the promise. The Court of Appeal held that the defendant’s failure to keep his promise was neither unconscionable nor unjust; a necessary element of promissory estoppel is the promisee’s assumption or expectation of a legal relationship. There was no evidence that the defendant intended his promise to have binding effect.
Source p. 145, n. 29
Hepburn v. Jannock Limited (2008), 63 C.C.E.L. (3d) 101 (Ontario Divisional Court)
The plaintiff was an employee of a company owned by the defendant for more than twenty-one years. The defendant set up a trust account for executives of the company to act as a supplement to their pension plan as part of a “golden parachute” in the case of a change of control of the corporation. The plaintiff was made a partyto this plan. When the company was sold in 1999, the new owner refused to honour the agreement with the plaintiff with respect to the supplementarypension as the plaintiff accepted a position with the purchaser of the corporation, and was therefore, not entitled. The plaintiff sued. Shortly thereafter the defendant filed for insolvency protection under the CCAA. The court allowed the plaintiff to continue his action with respect to the pension in order to obtain a verdict as to whether he was entitled to the pension funds held in trust. In this case the court held that the doctrine of estoppel did apply; that it was not being used as a sword, because the defendant was in bankruptcy protection and asserting that the plaintiff was not entitled to the funds. The court held that it would be a windfall to the defendant if the plaintiff were not allowed to rely on estoppel. The promise bythe defendant to the plaintiff was that he was entitled to the supplement, even if he took employment with the purchaser. Money was placed in trust to secure the promise. The promise was intended to affect the legal relations of the parties. Therefore, the plaintiff was allowed to rely on promissory estoppel.
Source p. 146, n. 30
Lampleigh v. Braithwait (1615), 80 E.R. 255 (England – King’s Bench)
The defendant murdered Patrick Mahume and instantly asked the plaintiff to do his best to obtain the King's Pardon for the defendant. The plaintiff gave his best efforts and
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afterwards the defendant promised to pay the plaintiff a certain sum. When the defendant failed to pay, the plaintiff sued. The court held that if an act is done at the request of a party, a subsequent promise bythat partyto pay for the act is binding.
Source p. 147, n. 31
Royal Bank of Canada v. Kiska (1967), 63 D.L.R. (2d) 582 (Ontario Court of Appeal)
The plaintiff held a secured debt in the name of the defendant’s brother. The brother was unable to meet his obligations and in an effort to help, the defendant agreed to sign a guarantee of part of the indebtedness of the brother. The plaintiff had the defendant sign the guarantee, but failed to affix a seal to it. The court held that as there was no seal, consideration was necessary. The majority of the court found there was consideration in the concession bythe bank to hold off on pursuing its security interest in the brother’s assets. Laskin, J. dissented and commented on the proper form of using a seal as quoted at p. 147 in the text.
Source p. 147, n. 33
Canadian Imperial Bank of Commerce v. Dene Mat Construction Ltd. and others, [1988] 4 W.W.R. 344 (Supreme Court of the North West Territories)
The plaintiff bank sued the defendant, Matchiuk for payment under a guarantee. The guarantee was signed by the defendant, but no wafer was affixed as a seal. The court held that the document had the words “Given under seal” printed at its foot. Further, there is a preprinted “scrolled indication of a seal” next to where the defendant signed. The court held that these were sufficient indications that the document was signed under seal; therefore, no consideration was necessary.
Hongkong Bank of Canada v. New Age Graphic Design Inc., [1996] B.C.J. No.; 1996 CanLII 1898 (Supreme Court of British Columbia)
The plaintiff sued the defendant, Chronister for payment under a guarantee. The guarantee was signed by the defendant, but no wafer was affixed as a seal. Following the decision in Canadian Imperial Bank of Commerce v. Dene Mat Construction Ltd. and others, [1988] 4 W.W.R. 344 (above), the court held that the printing of the words “Given under seal” printed on the form was sufficient and no consideration was necessary.
Source p. 147, n. 34
Friedmann Equity Developments Inc. v. Final Note Ltd., [2000] 1 S.C.R. 842 at para 36 (Supreme Court of Canada)
This is a case of a corporation acting as a trustee for beneficial owners of a property. A mortgage was obtained on the property and payments went into default. The mortgagee commenced an action against the beneficial owners. The beneficial owners brought a motion to have the action dismissed against them as theywere undisclosed principals who could not be sued on an indenture executed by their agent under seal. The Supreme Court agreed and held that the action should be dismissed.
Source p. 148, n. 35
Sanitary Refuse Collectors Inc. v. Ottawa, [1972] 1 O.R. 296 (Ontario High Court)
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The city called for tenders for garbage collection: the tenders were required to be sealed and accompanied by a deposit of $60,000. The plaintiff submitted the deposit and a sealed tender which was accepted bythe city. The tender had been made on the basis of information given by the city about the current collection contract and about labour costs: this information proved to be false and the plaintiff withdrew the tender and sued for the return of the deposit. The court held that the sealed tender formed an irrevocable contract between the plaintiff and the city. However, since the plaintiff was induced to make the tender based on material misrepresentations made by the city, the plaintiff could resile without obligation and recover its full deposit.
Source p. 148, n. 36
Olivieri v. Sherman (2007), 86 O.R. (3d) 778 at paras 45–51 (Ontario Court of Appeal)
The plaintiff was a doctor at Sick Children’s Hospital in Toronto. She was engaged in clinical research. She felt there was some disturbing results from her research and publicly stated so. The funding for the research was provided by the defendants. The two parties engaged in disparaging comments to each other. The plaintiff sued for defamation and the defendants cross-claimed for the same. The two parties participated in mandatory mediation. During the mediation offers to settle were made. The defendants made a counter-offer that was eventually accepted by the plaintiff. Sometime later, the defendant stated that there was no settlement agreement, only a negotiation. The agreement as drafted was too vague The trial judge held that as there was no meeting of the minds with respect to the agreement that it did not constitute a valid contract. The Court of Appeal overturned this decision, stating that the test was objective not subjective. The judge should not have considered the state of mind of the defendants. Their belief that further clarification of the agreement terms was necessary was not communicated to the plaintiff. On an objective standard a contract existed.
Source p. 148, n. 37
Lindsey v. Heron & Co. (1921) 64 D.L.R. 92, 98–9 (Ontario Court of Appeal)
The plaintiff asked the defendant if he would be interested in buying shares of Eastern Cafeterias of Canada The defendant looked into prices and then offered the plaintiff $10.50 per share for the “Eastern Cafeteria” shares. The plaintiff agreed and delivered the shares. The defendant paid by cheque. The defendant then realized that Eastern Cafeterias Ltd. and Eastern Cafeterias of Canada Ltd. were different companies; he stopped payment on his cheque. The plaintiff sued. The defendant argued that his offer to buy was ambiguous, as he could have meant either company. The court held that the “words used by the defendant manifested an intention to offer the named price for the thing that the plaintiff was selling.” The plaintiff did not use ambiguous language in describing the shares for sale; the ambiguous language of the defendant then, could only refer to that which the plaintiff was selling
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Source p. 149, n. 38
Wallace v. Allen (2007), 85 O.R. (3d) 88 appeal allowed (2009), 93 O.R. (3d) 723 (Ontario Court of Appeal)
See Case 6.6 at p. 149 in the text. The defendant owned a business and mentioned to his friend, the plaintiff that he was thinking of selling it. The plaintiff expressed interest in purchasing the business. After weeks of negotiation, the parties signed a letter of intent for the share purchase of the companies. The parties then worked with their solicitors to draft a Share Purchase Agreement. A target date of December 29, 2004 was set for closing; the defendant and his solicitor were prepared to close the transaction at that time. The plaintiff did not show up as he was in Florida, with the defendant’s knowledge and consent. When the plaintiff did not appear, the defendant treated the transaction as at an end. The plaintiff sued for specific performance. The Court of Appeal held that the letter of intent acted as evidence of the intention to create legal relations and that the parties were legally bound. The court deemed that damages were sufficient in the circumstances and would not order specific performance
Source p. 149, n. 37
Carlill v. Carbolic Smoke Ball Co., [1892] 2 Q.B. 484 (England – Court of Appeal)
The defendant placed an advertisement in a newspaper stating that anyone who used their “smoke ball” and still contracted the flu would be entitled to collect one hundred pounds sterling. The plaintiff purchased and used the device but still contracted the flu. She sued the defendant for the money promised. The Court of Appeal held that all of the elements of contract were present. The advertisement was not merely an invitation to treat, but an offer that the plaintiff accepted by performance creating a unilateral contract.
Source p. 149, n. 40
Leonard v. PepsiCo, Inc., 88 F. Supp. 2d 116 (United States District Court for the Southern District of New York), aff’d 210 F.3d 88 (2d Cir. 2000)
See Case 6.7 at p. 149 in the text. The defendant ran an advertisement offering consumers a chance to redeem points collected from purchasing the defendant’s product for various merchandise At the end of the television commercial the defendant showed an AV-8 Harrier II jump jet with the words “Harrier Fighter 7,000,000 Pepsi Points.” The plaintiff abided by the rules of the contest and sent in a request to redeem the equivalent of 7,000,000 points for the jet. When the jet was not forthcoming, the plaintiff sued for breach of contract and fraud. The court held that there was no contract; the advertisement did not constitute an offer; and if it did, no reasonable person could have believed that the company intended to convey a jet; and the value of the prize meant that a contract would have had to have been in writing as per the Statute of Frauds
Source p. 150, n. 41
Rose and Frank v. Crompton, [1925] A.C. 445 (England – House of Lords)
Crompton (an English firm) made Rose and Frank (an American firm) its sole agent for sales in the United States and Canada. After the term of the original agreement expired,
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the parties entered into a written agreement to extend the period of the arrangement: one term contained in the document was that the agreement was not legally enforceable Disputes arose between the parties and Crompton ended the relationship without notice. The court held that the arrangement to extend the period of agency was not a legally binding contract because the parties had expressly agreed to that effect.
Kanitz v. Rogers (2002), 58 O.R. (3d) 299 (Ontario Superior Court of Justice)
During the first year of Rogers’ high speed internet service Kanitz experienced frequent and prolonged interruptions to his service and he sued for recovery of the $200.00 service fee. The paper contract under which the service was installed contained an amending clause. Under this authority, Rogers added a mandatory arbitration clause to the terms. No specific notice of the new clause was given to consumers; it was displayed on the Rogers’ website as part of the terms and conditions. Under the Ontario arbitration legislation, Rogers successfully obtained a stay of the Kanitz action. This decision of the Ontario Superior Court is cited by the Supreme Court in Rogers v Murroff 2007 SCC 35.
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