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Flashcards in Steps Deck (27):

Misrepresentation test.

1. Must be positive misstatement (Bank of British Columbia v. Wren Developments).
2. Intended to induce a contract (reliance) (Redgrave v. Hurd).
3. Did they rely on the misstatements (Redgrave v. Hurd)?


Three kinds of misrepresentation:

1. Innocent (Ennis v. Klassen, Oscar Chess Ltd. v. Williams).
2. Negligent (Dick Bentley Productions Ltd. v. Harold Smith (Motors) Ltd.).
3. Fraudulent (Kupchak v. Dayson Holdings Ltd.).


Unsigned documents test.

1. If you choose not to read, you are bound (Parker v. South Eastern Ry. Co.).
2. Standard of notice required tied to severity (Thornton v. Shoe Lane Parking Ltd., Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd.).
3. Knowledge of terms tested subjectively (McCutcheon v. David MacBrayne Ltd.).


Signed documents test.

1. If you sign you are bound (L’Estrange v. Graucob).
2. Standard of notice required (and whether document is too confusing/long) is tied to severity (Tilden Rent-A-Car Co. v. Clendenning).
3. If terms are expected, you are bound (Delaney v. Cascade River Holidays).


Unconscionability test.

From Tercon Contractors Ltd. v. British Columbia (Ministry of Transportation & Highways):
1. Does the exclusion clause apply.
2. Was it unconscionable at the time the contract was signed?
3. Public policy.


Factors to consider in whether something was unconscionable at the time the contract was formed (second part of the unconscionability test):

From Davidson v. Three Spruces Realty Ltd.:
1. Standard form.
2. Attention drawn.
3. Unusual in character.
From Tercon Contractors Ltd. v. British Columbia (Ministry of Transportation & Highways):
1. Procedural (age, employment, level of education).
2. Substantive (grossly unfair/fraud, lack of legal advice, imbalance in bargaining power).


Three types of terms:

From Hong Kong Fir Shipping Co. v. Kawasaki Kisen Kaisha:
1. Condition.
2. Warranty.
3. Innominate.


Test for collateral warranty.

Was it intended to be acted upon, and was it in fact acted upon (Dick Bentley Productions Ltd. v. Harold Smith (Motors) Ltd.)?


How to find collateral warranty:

From Heilbut Symons & Co. v. Buckleton:
1. Do elements of contract.
2. Was there imbalance in knowledge between parties?


P.E.R. requires ___ in order to co-exist with main contract.

There must be an intention to enter legal relations (Hawish v. Bank of Montreal).


Can P.E.R. be used when the written agreement appears to be a complete agreement?

Where a written agreement appears on its face to be a complete agreement, parol evidence could not be admitted that contradicts, varies, adds to, or subtracts from the terms of the written agreement (Bauer v. Bank of Montreal).


P.E.R. strength of presumption in favour of written agreement from Gallen v. Butterley:

- Strongest when oral misrepresentation contrary to written terms; less strong when merely adds to them.
- Stronger where parties themselves negotiated and prepared written agreement; less strong where printed form used.
- Less strong where contest was between specific oral representation and general exemption/exclusion clause, in which case can read specific representation as intended to be exception to more general stipulation.


Exceptions to P.E.R.:

1. Validity/effectiveness (fraud, establishing precondition of enforceability, passing of consideration).
2. True nature of agreement (fix mistake, resolve ambiguity, prove something was supposed to be included, characterized as collateral contract).


Special duty of care situations.

There is liability for pure economic loss in torts for special relationships where the party with special knowledge has a duty not to be negligent in the representations they give (Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd.) which can be extended to contract law (Esso Petroleum Co. v. Mardon).


Agency — Lord Reid test.

From Scruttons Ltd. v. Midland Silicones Ltd.:
1. If the party is meant to be covered by the provisions.
2. If the promisor is clearly acting as agent of the party.
3. If the promisor had authority to do this.


Employment (and subrogation) — “principled exception” test.

From London Drugs Ltd. v. Kuehne & Nagel International Ltd. and Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd.:
1. The limitation of liability clause must (expressly or impliedly) extend the benefit to the employee.
2. The employee must have been acting in the course of their employment performing the services provided for in the contract when the loss occurred.


What remedies are available for misrepresentation?

If innocent, only rescission but if fraudulent or negligent, rescission and damages.


What are some bars to rescission?

1. Impossibility of restoration (but not always as seen in Kupchak v. Dayson Holdings Ltd.).
2. Affirmation (not complete bar as per Halleran v. O’Neill Brothers Auto., Kupchak v. Dayson Holdings Ltd.).
3. Unexcused delay (Leaf v. International Galleries).
4. Third party rights.
5. Execution of agreement (not complete bar as per Ennis v. Klassen).
5. Radical injustice to representer.


What is needed for a substantial performance claim?

Evidence from which a new contract to accept and pay for the work done could be inferred (did other party prevent completion, was the new contract entered into for part performance?) (Fairbanks Soap Co. v. Sheppard).


Two options in anticipatory breach:

1. Affirmed (continue performing and insist on performance, requires cooperation) — may present problems with mitigation.
2. Disaffirmed (stop performing and immediately sue/bring action for restitution) — only allowed if it deprives the party of substantially the benefit of the contract (fundamental breach).


Expectation damages.

1. Fair market value at time of breach - (contract price - how much has already been paid) = expectation damages.
2. Intangible injuries are pleasure and relaxation component — Must be major or important (Farley v. Skinner) object of contract was enjoyable experience (Jarvis v. Swan Tours, Fidler v. Sun Life Assurance Co. of Canada).


Reliance damages.

- Shift in burden of proof (McRae v. Commonwealth Disposals Commission).
- Have to go expectation before reliance (Bowlay Logging Ltd. v. Domtar Ltd.).


Restitution (disgorgement) damages.

More than efficient breach, other wrongdoer should not be benefitting (Attorney General v. Blake).


Punitive damages test.

From Vorvis v. Insurance Corp. of British Columbia:
1. Defendant must not only commit breach of contract, but also act in a “harsh, vindictive, reprehensible, and malicious” manner; and
2. In committing that breach of contract, the defendant must have committed another independently actionable wrong — can be breach of duty of good faith per Whiten v. Pilot Insurance Co.


Remoteness of damages test.

From Hadley v. Baxendale:
1. a) In reasonable contemplation of parties as serious possibility (Koufos v. Czarnikow (The Heron II)) of the breach (imputed knowledge acceptable) — reasonably foreseeable (Victoria Laundry v. Newman Indust. Ltd.), b) at formation, c) as naturally arising in the usual course of things (likelihood of loss — would anyone in that position know that (Victoria Laundry v. Newman Indust. Ltd.).
2. Plus any special circumstances communicated (actual knowledge required) — there must be an element of acceptance (Scyrup v. Economy Tractor Parts).


Two ways to mitigate:

1. Steps taken to mitigate.
2. Steps taken to bring matters to swift legal conclusion.


Overview of how to tackle problem:

1. Misrepresentation (test, kind of misrepresentation, remedy).
2. Exclusion clause (incorporation, unconscionability).
3. Collateral warranty (test).
4. P.E.R.
5. Privity.
6. Termination (substantial performance, anticipatory breach).
7. Damages (kind of interest protected, remoteness, mitigation).