Contract Terms 2010

8/6/2019 Contract Terms 2010

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Contractual TermsContractual TermsWhat is the contract? What doesWhat is the contract? What does

the contract say and mean?the contract say and mean?


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Express terms:Express terms:

Signed documentsSigned documents

Unsigned documents (the ticket cases)Unsigned documents (the ticket cases)

size and nature of writing/ efforts tosize and nature of writing/ efforts tobring to attention /circumstances/bring to attention /circumstances/

rushed/ unusualrushed/ unusual

Battle of the formsBattle of the forms the contract will bethe contract will bemade on the last set of terms sentmade on the last set of terms sent


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Implied terms:Implied terms:

Obligation of good faith bargaining leadingObligation of good faith bargaining leading

up to contract? No! (up to contract? No! (MartelMartel))

Implied term of good faith contractualImplied term of good faith contractualrelations?relations?

GatewayGateway: owned mall with Zellers as main: owned mall with Zellers as main

tenanttenant competitorcompetitor ArtonArton approachedapproached

Zellers and took assignment of leaseZellers and took assignment of lease

ArtonArton rejected all prospective tenantsrejected all prospective tenants


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Implied terms (cont.)Implied terms (cont.)

QuantumQuantum meruitmeruit

FrustrationFrustration

Contracts of adhesionContracts of adhesionBusiness efficacyBusiness efficacy

Previous dealingsPrevious dealings

StatutoryStatutory


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Interpreting contracts:Interpreting contracts:

Plain meaning/strict meaningPlain meaning/strict meaning

Objective or subjectiveObjective or subjectiveContraContra ProferentemProferentem if there is anyif there is any

ambiguity as to the meaning of a term theambiguity as to the meaning of a term the

court will interpret it against the party whocourt will interpret it against the party whoinserted it into the contractinserted it into the contract


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Case example: InsuranceCase example: Insurance

ContractsContractsInjuries arose directly or indirectly from the useInjuries arose directly or indirectly from the use

or operation of an automobileor operation of an automobile

HerbisonHerbison [2007] the defendant hunter, who[2007] the defendant hunter, who

stopped his pickup truck after he spotted a flashstopped his pickup truck after he spotted a flash

of white in his headlights, nearly blew off the legof white in his headlights, nearly blew off the leg

of the Plaintiffof the Plaintiff

VytlingamVytlingam [2007] defendants drove to a[2007] defendants drove to ahighway overpass where they proceeded to drophighway overpass where they proceeded to drop

boulders onto the traffic below, injuring theboulders onto the traffic below, injuring the

plaintiffplaintiff transported rocks in back of trucktransported rocks in back of truck

used truck to then escapeused truck to then escape


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Other examples:Other examples:

Car bomb explosionCar bomb explosion

Suicide attempt by driverSuicide attempt by driver

Bite from dog tied to back of truckBite from dog tied to back of truckDrive by shootingsDrive by shootings

Murder of son in running vehicleMurder of son in running vehicle

Person injured when a van drove by herPerson injured when a van drove by herand a passenger grabbed herpurseand a passenger grabbed herpurse


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ParolParol evidence rule:evidence rule:

If written contract cannot admit evidenceIf written contract cannot admit evidence

of verbal or written statements madeof verbal or written statements made

before contract was made or at time thebefore contract was made or at time the

contract was made to prove existence ofcontract was made to prove existence of

other terms or help interpret written termsother terms or help interpret written terms

Exceptions: ambiguityExceptions: ambiguity, condition, condition

precedentprecedent, fraud, fraud, collateral, collateralcontractcontract


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Misrepresentations and the duty toMisrepresentations and the duty to

disclosedisclose

::Generally no duty to discloseGenerally no duty to disclose

Fiduciary relationships and contracts ofFiduciary relationships and contracts ofutmost good faithutmost good faith

Must ask questions!Must ask questions!

Representation is a clear statement ofRepresentation is a clear statement offact, not opinion, which induces anotherfact, not opinion, which induces another

party to enter into the contractparty to enter into the contractStatement of law is not aStatement of law is not amisrepresentationmisrepresentation

Silence is not a misrepresentation (??)Silence is not a misrepresentation (??)


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When is a misrepresentation a termWhen is a misrepresentation a term

of the contract?of the contract?

Timing of statementTiming of statement

Importance of statementImportance of statementIncluded in later written contractIncluded in later written contract

Special knowledge/skillsSpecial knowledge/skills


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Classification of terms:Classification of terms:

ConditionCondition term which goes to the root ofterm which goes to the root of

the contractthe contract

WarrantyWarranty not to the root/ a lessernot to the root/ a lesserobligationobligation

IntermediateIntermediate in between andin between and

classification as a condition or warrantyclassification as a condition or warranty

depends on the consequences of breachdepends on the consequences of breach

to innocent partyto innocent party


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Consequences of classification:Consequences of classification:

DamagesDamages putting the innocent party in theputting the innocent party in theposition they would have been in if the contractposition they would have been in if the contractwas properly performedwas properly performed

RecissionRecission putting the innocent party in theputting the innocent party in theposition they were in just prior to entering intoposition they were in just prior to entering intothe contractthe contract

If breach of condition then entitled to damagesIf breach of condition then entitled to damagesoror recissionrecission

If breach of warranty only entitled to damagesIf breach of warranty only entitled to damages

If fraud then may be also entitled to punitiveIf fraud then may be also entitled to punitivedamages (but rare and difficult to prove)damages (but rare and difficult to prove)


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Limits on right toLimits on right to recissionrecission::

Continue with contract even with fullContinue with contract even with full

knowledge of misrepresentationknowledge of misrepresentation

Action to rescind not taken withinAction to rescind not taken withinreasonable timereasonable time

Unable to restore parties to originalUnable to restore parties to original

positionposition

In mean time innocent third parties haveIn mean time innocent third parties have

acquired rightsacquired rights


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Innocent misrepresentation:Innocent misrepresentation:

Even if misrepresentation is notEven if misrepresentation is not

considered a term of the contract and isconsidered a term of the contract and isinnocent then still entitled toinnocent then still entitled to recissionrecission

butbut recissionrecission onlyonly

Usually in cases where statement did notUsually in cases where statement did not

induce party to enter into contractinduce party to enter into contract

Made honestly believing it to be trueMade honestly believing it to be true


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::

Pre estimate of damages in contractPre estimate of damages in contract

If not reasonable then considered aIf not reasonable then considered apenalty and no enforceablepenalty and no enforceable


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Fiduciary Duties:Fiduciary Duties:

Relationship of utmost trust and good faithRelationship of utmost trust and good faith

Established relationshipsEstablished relationships solicitor client, doctorsolicitor client, doctor

patient, investor client, director/officer andpatient, investor client, director/officer and

corporationcorporation

Other relationshipsOther relationships Scope for the exercise of some discretion orScope for the exercise of some discretion or

powerpower

Can unilaterally exercise that power or discretionCan unilaterally exercise that power or discretion

so as to affect the otherpersons legal orpracticalso as to affect the otherpersons legal orpracticalinterestsinterests

Otherperson is peculiarly vulnerable to or at theOtherperson is peculiarly vulnerable to or at the

mercy of the person with the discretion and/ormercy of the person with the discretion and/or

powerpower

Contract Terms 2010

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