Lecture Slides

Week Two
Contracts 1
An Introduc+on to Contracts
Outline
1.  the general concept of a contract
2.  the legal factors in the contractual rela+onship
3.  the business factors influencing the forma+on
and performance of contracts

2
What Is a Contract?
CONTRACT – Deliberate and complete agreement
between two or more competent persons, not
necessarily in writing, supported by mutual
consideration, to do some act voluntarily, and
which agreement is enforceable in a court of law
•  Rules governing contract are based on the

common law rather than statute law (e.g.
Consumer Protection Act) Contract law principles
apply whether or not contracting parties know
about them
•  What would business be like without contracts?

3
Advantages of Contracts
–  Permit both par+es to rely on the terms they

have nego+ated and plan their business
affairs accordingly
–  Create binding promises that can be
enforced in court
–  If a dispute arises between the two par+es,
there are various op+ons for dispute
resolu+on.
4
Examples of
Business Contracts
•  Leases
•  Sales contracts
•  Loan contracts
•  Supply purchase contracts
•  Employment contracts
•  Confiden+ality agreements
5
Key Factors in
Contractual Rela+onships
•  Communica+on
•  Start of the contractual rela+onship
•  Objec+ve standard test – How would a
“reasonable person” view the conduct of the
par+es?
6
Key Factors in
•  Bargaining power – Legal assump+on that
par+es to a contract are able to look aUer
their own interests
7
Key Factors in
– Courts normally not en+tled to assess the
fairness or reasonableness of the
contractual terms the business par+es
have chosen
– Occasionally, courts will come to the
assistance of the weaker party and set
contract aside
8
Part 2 Forming Contractual Rela+ons
Consider
•  How nego+a+ons lead to a contractual rela+onship
•  How nego+a+ons can be terminated
•  The legal requirements of a contract
•  How contracts can be amended or changed

9
Legal Ingredients of a Contract
1. OFFER
2. ACCEPTANCE
CONTRACT
3. CONSIDERATION
4. INTENTION
10
Elements of a Contract
•  Agreement between the par+es
•  Completed nego+a+ons
•  Deliberately made
•  Voluntarily made
Consensus ad idem – mee+ng of minds (regarding

rights and obliga+ons pursuant to the contract)
11
Reaching Agreement through
Offer and Acceptance
OFFER
•  The star+ng point for all contracts
•  One party makes a promise to enter into a contract
on specified terms (the “offer”), as soon as the offer is
accepted.
•  Only a complete offer can form the basis of a
contract.

12
Reaching Agreement through
Offer and Acceptance
OFFER versus INVITATION TO TREAT
•  Most adver+sements and displays of goods in stores
are “invita+ons to treat.”
•  Invita+on to treat is not an offer and is only treated
in law as an expression of willingness to do business.

13
Standard Form Contract
•  A “take it or leave it” contract

•  Customer agrees to a standard set of terms
that favours the other side
•  Par+es deemed to have read and
understood the contract before signing it
•  But rules of construc+on will favour non-
draUing party
14
The Par+es to a Contract

OFFEROR – The person who makes an offer

OFFEREE – The person to whom an offer is made
15
An Offer May Be Terminated by:
•  Revoca3on – Withdrawal of an offer

•  Lapse – Expira+on of an offer aUer a specified or
reasonable period
•  Rejec3on – The refusal to accept an offer
•  Counteroffer – Turning down an offer and proposing
a new one in its place
•  Death or insanity
16
Revoca+on of an Offer
•  The offeror can revoke an offer at any +me before

acceptance upon no+fying the offeree of withdrawal.
•  Upon revoca+on, the offer ceases to exist (i.e. no
longer ‘alive’)
17
Firm Offers
•  The law permits offerors to revoke their offers despite a
promise to leave the offer open for a set period of +me
(called a firm offer).
•  Enforceable only if the other party has purchased it or
otherwise has given the offeror something in return for
the commitment (i.e considera+on)
•  OPTION AGREEMENTS – An agreement where, in
exchange for payment, an offeror is obligated to keep
an offer open for a specified +me. It is a separate
contract that may or may not lead to the acceptance of
the offer.
18
Special Rules for Revoca+on in
Tendering Situa+ons
•  Call for tenders is an offer of a preliminary contract.
•  Tender and the owner obligated to follow the rules
governing the tender selec+on process
•  Everyone who submits a tender is accep+ng the
offer of a contract to govern the rela+onship
between par+es.
19
Lapse of an Offer
•  Offer may expire on a specified date
•  Offer ends and can no longer be accepted
•  If no expiry date is specified, then it remains open
for a reasonable +me
•  Reasonable +me depends on the circumstances of
the case
20
Rejec+on and Counteroffers

REJECTION – Offer is automa+cally terminated if
rejected by offeree

COUNTEROFFER – A form of rejec+on that
automa+cally terminates the original offer

21
Death or Insanity
of Either Party

•  Offers generally die if the offeror or offeree dies.
•  As a general rule, someone who is sane at the +me
of the offer but becomes insane before acceptance
would not be bound.
22
Reaching Agreement through Offer
and Acceptance
ACCEPTANCE
•  Occurs when the offeree indicates an unqualified
willingness to enter into a contract on the terms in
the offer
•  Contract comes into existence at the moment of
acceptance
•  Acceptance must normally be communicated to the
other party to be effec+ve.
23
Communica+on of Acceptance
•  If a method of acceptance is specified, then this
method is mandatory.
•  If not specified, then in any manner that is
reasonable in the circumstances
•  Acceptance can be indicated by conduct.
–  See “Landmark Case,” Carlill v Carbolic Smoke Ball Co,
[1893] 1 QB 256 (Eng CA) [unilateral contracts]
24
25
£100 REWARD
WILL BE PAID BY THE
CARBOLIC SMOKE BALL Co
To any person who contracts the increasing
Epidemic
INFLUEZA
Colds, or any disease caused by taking cold,
AFTER HAVING USED the BALL
3 +mes daily for two weeks according to the
printed
Direc+ons supplied with each Ball
£1000
Is deposited with the ALLIANCE BANK,
REGENT STREET,
Showing our sincerity in the maper.
26
Mailbox rule
•  Excep+on to rule that acceptance is effec+ve
upon communica+on to offeror
•  Offerors avoid the applica+on of this rule by
specifying that acceptance must be received
(e.g. in wri+ng) in order to be effec+ve
27
Electronic Business Contracts
ELECTRONIC CONTRACTING
•  Governed by the same rules as all contracts
•  When does “offer and acceptance” occur in the
digital environment?
•  Separate agreement between electronic trading
partners solves this problem.
28
Are there special rules in place to deal with

contracts that are made electronically?
29
ELECTRONIC CONTRACTING
•  Uniform Electronic Commerce Act (UECA)
–  Removes barriers to electronic commerce
(func+onal equivalency to non-digital contracts)
–  Basis for provincial and federal electronic
commerce legisla+on
–  Provides that acceptance of an offer can be made
electronically
30

Uniform Electronic
Commerce Act (UECA)
•  Specifies when a message is sent and when it is
received, but it does not specify where an
acceptance becomes effec+ve
•  Unless electronic traders specify where acceptance
becomes effec+ve, the ques+on of where an
electronic contract is formed will be presumably
decided on a case-by-case basis.
•  Doesn’t change the common law rules governing
contract
31
Legal Requirements of a Contract
CONSIDERATION
•  A price must be paid for a promise (Bargained-for
exchange)
•  Each party must give something of value for
receiving something of value from the other.
•  Gratuitous promise – A promise for which no
considera+on/no contract
32
Considera+on
•  May be other than money, such as goods or services,

as long as something of value
•  Can even be a promise “not to do something,” such
as a promise not to con+nue in a lawsuit in exchange
for a seplement (Forbearance to sue)
•  The adequacy of considera+on is normally not open
to challenge.
33
Promises Enforceable
without Considera+on
PROMISE UNDER SEAL
•  Once a seal is affixed, it is
evidence of serious intent
and acknowledgment that
the contract is
enforceable.
•  No further considera+on
is necessary.
•  Example: Contracts of
Guarantee
34
PROMISSORY ESTOPPEL
•  Someone who relies on a gratuitous promise
may be able to enforce it.
•  Usable only as a defense to legal claims made by
the person who reneged on the promise
•  Necessary factors – Reliance on another’s
promise to change your posi+on, and you are
above reproach (Equitable remedy so must have
‘clean hands’)
35
Pre-exis+ng Legal Du+es

•  A legal obliga+on that a person already owes
cannot be used as considera+on for a new promise.

•  What is the raBonale for this rule?
36
PARTIAL PAYMENT OF A DEBT
•  At common law, a gratuitous promise to accept a
lesser amount leU the creditor free to sue for the
balance.
•  In some provinces, this has been altered by statute,
so that creditor cannot sue for the balance once a
lesser amount has been accepted.
37
Part 3 business factors influencing the formation and
performance of contracts
•  Businesses oUen breach contracts.

•  Court concerned with specific case their judgments will
have implica+ons for the wider business context
•  Should you always sue?
•  Contract law is only one relevant factor in a
commercial transac+on.
•  The par+es must consider the following:
•  business rela+onships
•  economic reali+es
•  reputa+on management

38
Business ApplicaBon of the Law

Economic Breach
Does it some+mes make sense economically to
breach a contract?
Some+mes it is more financially rewarding to breach

the contract in ques+on than to perform it.
39
On October 30, Casgrain offered to purchase some farmland
from Butler for $14 500 with possession in January. On
November 15, Butler made a counteroffer, by telegram, at $15
000. The telegram was delivered to Casgrain’s home on
November 20 but Casgrain was absent on a hunting trip.
Casgrain’s wife opened the letter and wrote back to Butler
saying that her husband was away for 10 days and asked that
he hold the deal open until Casgrain could consider the matter.
Butler did not respond. On December 10, Casgrain returned
home and immediately wired Butler, purporting to accept
Butler’s offer of $15 000. The wire was received on December
12. By this time, Butler had already sold the land to someone
else.
Has Casgrain accepted the offer in time or has it lapsed?

Forbearance to sue
ABC Ltd. (ABC) sued XYZ Ltd. (XYZ) for breach of contract, alleging that
a product XYZ supplied is substandard. In response, XYZ offered to pay
ABC $2000 in exchange for ABC dropping its legal ac+on. As the
president of XYZ said to the president of ABC during seplement
nego+a+ons, “We don’t believe that our product is substandard, and
we are confident that your ac+on against us will fail. However, in the
interests of con+nuing good rela+ons between our companies, I will
send you a cheque for $2000 and we’ll put this maper behind us.” The
president of ABC was agreeable, replying, “I don’t have any more
interest in spending my +me in court than you do. Cut me the cheque,
and I will arrange for my lawyers to discon+nue the ac+on we have
brought against your company and have the appropriate releases
signed.”

Iden+fy considera+on in the above-noted situa+on
41
Week Three Contracts 2
Outline
•  Part 1 Contractual Terms
•  Part 2 Non-enforceable Contracts
•  Part 3 Termination of contracts
Part 1 The Terms of a Contract
Consider:
•  The difference between implied and express
terms
•  How judges determine and interpret the content
of a contract
•  How a party can use terms as a business tool to
protect itself from liability
The Content of a Contract
EXPRESS TERMS – Terms of the contract that
state or make explicit one party’s promise to
another
IMPLIED TERMS – Terms that are not expressly

included in a contract but that are necessary to
give effect to the parties’ intention. A judge may
imply terms in a contract to make the contract
workable.
How Do Courts
Interpret Contracts?
Vague or Ambiguous Language?
•  Courts are required to enforce the contract as it is
written and to rely primarily on the plain, ordinary
meaning of the words that the parties have chosen.
•  The court assigns as reasonable a meaning as
possible to vague or ambiguous terms.
•  If the contract has been drafted by one of the
parties, any ambiguity in language will be construed
against that party in favour of the other.
Implied Terms
Terms that are not expressly included in a
contract but that are necessary to give effect to
the parties’ intention (remember consensus ad
idem)
A judge may imply terms in a contract to make
the contract workable.
Examples of Implied Terms
•  Terms imposed for business efficacy – to make
the contract workable
•  Customs in the trade of the transaction
•  If the parties have contracted in the past, it may
be possible to imply that the current contract
contains the same terms (Past dealings)
Examples of Implied Terms
•  Statutory requirements – For example, the Sale
of Goods Act makes certain provisions
mandatory in contracts, unless specifically
excluded by the contract
•  Contractual quantum meruit – Awarding a party
a reasonable sum for the goods/services
provided under the contract.
Parole Evidence Rule
•  A rule that limits the outside evidence a party
can introduce concerning the contents of a
contract that has been put in writing.
•  The rule states that if the language of the
written contract is clear and the document is
intended to be the sole source of contractual
content, then no evidence outside the contract
can be used to change or add to the contract.
Contractual Quantum Meruit
Awarding one party a reasonable sum
for the goods and services provided
under a contract where the contract
was not completed
or
where a price was not agreed upon
but there was an implied promise to
pay
The Terms of a Contract
ENTIRE CONTRACT CLAUSE – Term in the
contract in which the parties agree that their
contract is complete as written
•  Used to ensure application of the parole
evidence rule
Contractual Terms to Managing
Risks
General Rule: The terms of a contract are
settled at the time of acceptance.
But:-
CHANGED CIRCUMSTANCES
•  Circumstances may arise that prevent a party from
performing its contractual obligations.
•  Law permits the use of contractual terms as a
buffer against future, uncertain events to limit
liability.
Contractual Terms to Managing
Risks
CONDITIONAL AGREEMENTS
•  Condition subsequent – A condition that, when it
occurs, brings an existing contract to an end
•  Condition precedent – A condition that, until it occurs,
suspends the parties’ contractual obligations to
perform their contractual obligations
A condition subsequent brings a duty to an end whereas a

condition precedent initiates a duty.
Conditional Agreements
•  Purchasers of real estate may rely on the

conditional agreement by making the
contractual obligation to buy and sell subject
to
–  financing
–  rezoning
–  subdivision approval
Managing Liability
LIABILITY MAY BE MANAGED BY:
LIMITATION OF LIABILITY CAUSE – Term of a
contract that limits liability for breach to something
less than what would otherwise be recoverable
EXEMPTION CLAUSE – Term of a contract that
identifies events causing loss for which there is no
liability
LIQUIDATED DAMAGES CLAUSE – Term of a
contract that specifies how much one party must
pay the other in the event of breach (n.b must be
compensatory rather than punitive)
Terms of a Contract
STANDARD FORM CONTRACTS
•  A contract in which the main terms cannot be
changed through negotiations.
•  Common for obtaining a credit card, renting a car,
buying insurance, or signing a guarantee of
another’s debt.
•  Parties are expected to protect their own interests
and ensure they understand the terms before
accepting them.
•  Red hand rule for onerous terms
Technology and the Law
Shrink-Wrap, Click-Wrap, and

Browse-Wrap Agreements
SHRINK-WRAP AGREEMENT – An
agreement whose terms are enclosed with a
product such as prepackaged software
But contract already formed

Technology and the Law
CLICK-WRAP AGREEMENT – An agreement

that appears on a user’s computer screen
when a user attempts to download software or
purchase goods (also referred to as a licence)
- the entire agreement readily viewable by
using the scrolling function
- a requirement to acknowledge acceptance by
clicking on an "I accept" button
- all terms were displayed in the same format
i.e. no fine print in the document
The Terms of a Contract
•  Parties can bargain for what will be payable in

the event of breach.
•  Courts may refuse to apply a clause that
disadvantages a consumer if the business in
question failed to take reasonable steps to
ensure that the consumer was alerted.
Part 2
Non-Enforcement of Contracts
(or Exceptional circumstances)
Non-Enforcement of Contracts
Questions
Why enforcement of contracts is the norm?
What are the exceptional circumstances in which
contracts are not enforced?
Which contracts must be in writing and why?
The Importance of
Enforcing Contracts
Normally, the law is concerned with enforcing
contracts, and it is difficult to “back out” once you
have entered into a contract.
“But we had a deal……..?”

Situations Where a Court Might
Assist a Party to Cancel a Contract
•  Due to the relationship between the parties
•  Where one party has misrepresented an
important fact
•  Where an important mistake has been made
•  Where there is a defect within the contract itself
Voidable/Void Contracts
VOIDABLE CONTRACT – A contract that in

certain circumstances an aggrieved party can
choose to keep in force or bring to an end
VOID CONTRACT – A contract involving a defect

so substantial that it is of no force or effect
Contracts Based on
Unequal Relationships
LACK OF LEGAL CAPACITY TO CONTRACT
•  The law assumes that individuals and
organizations have the legal capacity to form
contracts.
•  However, children and those with mental
incapacities are given special legal protection.
Lack of Legal Capacity to Contract
MINORS
•  That is, under the age of majority
•  General rule: Minors are not obligated by the
contracts they make – these are usually voidable
at the option of the minor.
MINORS
•  Exceptions:
•  Minors are obligated by contracts for
essentials known as “necessaries” (for
example, food, shelter, and so on that the
minor does not have already).
•  Minors are bound to beneficial contracts of

service (if not unfair to the minor).
MENTAL INCAPACITY
•  Parties must understand the nature and
consequences of the agreement.
•  Those impaired through illness, alcohol, or
drugs may not appreciate the nature and
consequence of actions.
•  Must show other party knew you lacked
capacity
Contracts Based on Unequal
Relationships
DURESS – The threat of physical or economic
harm that results in a contract
UNDUE INFLUENCE – Unfair manipulation that
compromises someone’s free will – the contract
is voidable at option of the victim (for example, a
contract between an elderly person and his or
her caregiver).
Contracts Based on
Unequal Relationships
UNCONSCIONABLE CONTRACTS – Unfair
contract formed when one party takes
advantage of the weakness of another
Two-step process to prove:
1.  proof of inequality between the parties
2.  improvident bargain or proof of exploitation
Misrepresentation
•  Parties involved in negotiating a contract are
usually not obligated to volunteer information.
•  The basic rule is that both parties are to look
out for their own interests, and if they want
information, they should ask for it.
Misrepresentation
A false statement of fact that causes someone to
enter into a contract may allow one party to
cancel the contract.
•  Examples:
  One party provides only partial information to
the other side.
  One party actively conceals the truth.
Misrepresentation
Examples:
–  One party neglects to correct an earlier
assertion that, when stated, was correct but
now no longer is so.
–  The parties are in a relationship requiring
utmost good faith.
–  A statute imposes a positive obligation to
disclose information.
Misrepresentation
THE PLAINTIFF MUST PROVE THAT THE

STATEMENT IS:
•  false
•  clear and unambiguous
•  material to the contract – it must be
significant to the decision of whether or not
to enter into the contract
•  one that actually induces the aggrieved
party to enter into the contract
•  concerned with a fact and not an opinion
Categories of Actionable
Misrepresentations
FRAUDULENT MISREPRESENTATION –
Speaker has a deliberate intent to mislead or
makes a statement recklessly without knowing
or believing it is true
NEGLIGENT MISREPRESENTATION – Speaker
makes a statement recklessly without knowing
or believing that it is true
INNOCENT MISREPRESENTATION – Speaker
has not been fraudulent or negligent but has
misrepresented a fact.
Misrepresentation
RESCISSION – The remedy that results in the

parties being returned to their pre-contractual
positions
Remedies for Misrepresentation
TYPE OF REMEDY
MISREPRESENTATION
Rescission in contract
Fraudulent Damages in tort
Negligent Rescission in contract

Damages in tort
Innocent Rescission in contract
Important Mistakes
MISTAKE
•  An error made by one or both parties that
seriously undermines a contract
•  Rarely accepted by the courts
•  The court is entitled to set the contract aside as
a remedy.
•  It must be an error that seriously undermines the
contract.
Important Mistakes
COMMON MISTAKE
•  Both parties to the agreement share the same
fundamental mistake.
–  Only if the error is such that the contract
deals with a totally different thing from what
the parties thought it was will the contract be
set aside on the basis of mistake.
Contracts Based on a Defect
ILLEGAL CONTRACT – Contract that cannot be

enforced because it is contrary to legislation or
public policy
•  A contract is illegal if it:
a) is contrary to a specific statute and/or
b) violates public policy
Illegal Contract
ILLEGAL BY STATUTE
•  Contravenes legislation, for example:
•  Criminal Code
•  Competition Act
•  Real Estate and Business Brokers Act
Illegal Contract
CONTRARY TO PUBLIC POLICY

•  Contracts that are considered to injure the public
interest
•  International perspective – securing contracts
illegally – paying bribes to a foreign official
Writing as a Requirement
STATUTE OF FRAUDS – Requires that certain

contracts be in writing to be enforceable
Writing as a Requirement
•  GUARANTEES – A promise to pay the debt of
someone else
•  Contracts not to be performed within a year
•  Contracts dealing with land

eSignatures
•  Most provinces have provided for electronic

signatures according to various rules.
•  For example – Ontario Electronic Commerce
Act, 2000
Part 3
Termination and Enforcement of
Contracts
Termination and
Enforcement of Contracts
•  Termination of a contract by performance
•  Termination of a contract by agreement
•  Termination of a contract by frustration
•  Termination by breach of contract
•  Methods of enforcing contracts
•  The concept of privity
•  Remedies for breach of contract
Several Ways in Which a Contract Can
Be Brought to an End
•  Through performance – Both parties complete

their contractual obligations.
•  Through agreement – The parties are always
free to voluntarily bring the contract to an end.
Several Ways in Which a Contract Can
Be Brought to an End
•  Through Frustration - after the formation of the

contract, an important unforeseen event occurs
•  Through breach – A serious breach can release
the innocent party from continuing with the
contract.
Termination through Performance
PERFORMANCE
•  Performance is complete when all implied and
express promises have been fulfilled.
•  Does not necessarily mean the relationship
ends.
•  Parties may continue to do business by means
of new, continuing, and overlapping contracts.
Termination through Performance
PERFORMANCE BY OTHERS
•  Law distinguishes between those who have the
contractual obligation and those who may
actually do the necessary work.
•  Vicarious performance – Performance of
contractual obligations through others
Termination by Agreement
PARTIES MAY AGREE TO:
•  enter into a whole new contract, known as
novation
•  vary certain terms of the contract
•  end the contract
•  substitute a party – transferring one party’s
rights and obligations to someone else; a
limited form of novation
Transfer of Contractual Rights
ASSIGNMENT OF A CONTRACT – The transfer of a right
by an assignor to an assignee.
• A creditor (the assignor) may assign the right to collect to
another person (the assignee) without the agreement of the
debtor.
• To be effective, the debtor must have notice of the
assignment so that she knows to pay the assignee rather
than the creditor.
• The assignee's right to payment is no greater than the
right possessed by the assignor. If the assignor is in
breach of contract and therefore entitled to less than the full
contract price, the assignee is likewise entitled to less.
Termination by Frustration
FRUSTRATION
•  Termination of a contract by an unexpected
event or change that makes performance
functionally impossible or illegal
•  Neither side is liable to the other for breach.
Termination by Frustration
MUST ESTABLISH THAT:
•  event was dramatic and unforeseen
•  neither party had assumed risk of the matter
occurring
•  event arose without being either party’s fault
•  performance functionally impossible or illegal
Enforcement of Contracts
Non-performance of contractual obligations may
result in breach of contract and a lawsuit.
BALANCE OF PROBABILITIES – Proof that
there is a better than 50% chance that the
circumstances of a contract are as the plaintiff
contends
Proving Breach of Contract
•  PLAINTIFF MUST DEMONSTRATE BEYOND
THE BALANCE OF PROBABILITIES THAT:
•  there is a contract between the parties
•  Only the parties to a contract can enforce
the rights and obligations it contains
(privity).
Proving Breach of Contract
1.  there is a breach of contract
The other party failed to keep a promise
or term in the contract.
2.  there is an entitlement to a remedy

Plaintiff must demonstrate that he or she
is entitled to the remedy claimed.
Classification of the Breach
CONDITION – An important term, which, if breached,
gives the innocent party the right to terminate the
contract and claim damages
WARRANTY – A minor term, which, if breached,
gives the innocent party the right to claim
damages only
INNOMINATE TERM – A term that cannot easily be
classified as either a condition or a warranty
Classification of the Breach
FUNDAMENTAL BREACH – A breach of contract
that affects the foundation of the contract.
Such a breach may render the entire contract,
including the exclusion clause, inoperative.
ANTICIPATORY BREACH – A breach that occurs
before the date for performance
Defences
EXEMPTION OR LIMITATION OF LIABILITY
CLAUSE – Clause limiting or excluding liability
for breach
Entitlement to a Remedy
DAMAGES – Monetary compensation for breach of
contract or other actionable wrong
REMOTENESS PRINCIPLE –
1.  Defendant is responsible for damages that could
have been anticipated i.e were reasonably
foreseeable at the time the contract was formed
2.  This includes unusual circumstances that were
communicated to the defendant at the time of
contract formation
Restrictions on Damages
DUTY TO MITIGATE – The obligation to take

reasonable steps to minimize the losses
resulting from a breach of contract or other
wrong
Equitable Remedies
Special remedies that may be available where
damages are an inadequate remedy for breach
of contract, for example, Specific Performance
SPECIFIC PERFORMANCE – Court order for the

party who breached the contract to do exactly
what the contract obligated him to do
Equitable Remedies
INJUNCTION – Promise not to engage in
specified activities
INTERLOCUTORY INJUNCTION – Order to
refrain from doing something for a limited
period of time
RESCISSION – To restore the parties to the
situation they were in before the contract was
formed
Restitutionary Remedies
UNJUST ENRICHMENT – Occurs when one
party has undeservedly or unjustly secured a
benefit at the other party’s expense
RESTITUTIONARY QUANTUM MERUIT – An
amount that is reasonable given the benefit the
plaintiff has conferred
Managing Risk
•  There are several risks that a business faces
when the time comes to perform a contract.
•  It may be that the business cannot perform at
all or that when it does perform, it does so
deficiently.
•  A business can attend to these possibilities
proactively or reactively.
Contracts 1
Seminar
Roadmap
u What is a Contract
u Elements of a Contract
u When is a Contract
u The Dance of Contractual
Negotiations
u Consideration: Special Issues
Contract much?
Have you entered into a contract

today?
Buying a coffee is as much of a contract

as, say, the purchase of a $3million
property!
What is a contract, anyway?
Let’s keep it simple for now.
A contract is
a legally enforceable agreement .
Three Underlying Principles
and Ideas
1. Legalconsequences
2. Objective test (reasonable
expectations)
3. A level playing field and equality
Contract formation
1.  Intention
2.  “Meeting of the minds”
3.  Consideration (the Beyonce
principle)
Some Important Terms
u  Offeror:The person who makes the

offer: Master of the Offer
u  Offeree:the person who receives

the offer: Power of Acceptance
When is a Contract?
A contract is formed when the

offeror receives notification of
acceptance from the offeree.
Implication: after acceptance,
both parties are locked in and
cannot change their minds.
Complexity: Offers carry risk!
u  Making an offer carries risk

u Once issued, can be turned into a
contract through acceptance
without requiring anything more
from the offeror
u Can rescind the offer, but offeree
must be advised before the offer
is considered dead
Let’s think about this some
more….
Dr T wants to sell her road bike.

She puts an ad on Kijiji:
“For Sale: 2013 Specialized Dolce Elite,
size 48. Good condition. $700”
She gets a text message and two emails
at about the same time all saying, “I’ll
buy your bike!” What is Dr. T’s legal
position?
Think about the retail
context…
Suppose you are in a bookstore or a
clothing store or a grocery store. You
pick an item up and walk around with
it. You’re thinking about buying it…
but you are not sure. What are your
reasonable expectations at this
moment about whether or not you
are legally obligated to purchase the
item?
Now graft the legal dimension
onto this analysis
Is the item on display an

OFFER?
Why or why not?
u  Offers
become legally binding contracts as
soon as they are accepted.
u  Peoplebrowse in stores, and therefore do
NOT expect to be legally obligated to
purchase an item they pick up.
u  Therefore,it is not reasonable to think
customers have accepted an offer when
they pick up an item and carry it around
u  Therefore,customers are probably NOT
accepting an offer. So they must be…
Invitations to Treat
Invitation to Treat: “Make me an offer!”
Responses to Invitation = Offers (which
signify willingness to be legally bound by
terms and conditions right away, if
accepted)
Generally, goods on display in a store,
advertisements, catalogues, ads on
Kijiji, Craigslist, LetItGo, etc are
Invitations to Treat
Complexities: Contracts with
Family Members or Friends
“If you take out the garbage and
babysit your brother today, you can
use the car on Friday night”
“Let’s see a movie tonight. Let’s
agree to meet at 7pm so that we can
get tickets, treats, and good seats.”
Are there contracts in these cases?
Intention
Rule: Parties must be serious about

creating an agreement with legal
consequences
Test: The reasonable person test:

would a reasonable person think that
the parties really meant to create
something enforceable by a court???
u  Jokes, families, and businesses
What is the main issue?
Do family and friends intend their

agreements to carry legal
consequences?
What about businesses? When 2

businesses have an agreement, do
they intend there to be legal
consequences?
Rebuttable Presumptions
Rebuttable Presumption: Law

makes an assumption but allows
the parties to rebut (disprove)
the assumption by bringing
evidence to show that the
assumption does not apply in
their case.
Intent & Rebuttable
Presumptions
Rebuttable Assumptions:
(1) Family & Friends do NOT intend
their agreements to carry legal
consequences.
(2) Business DO intend their

agreements to have legal
consequences.
Complexity: Contractual
Negotiations
u  Thedance of contractual
negotiations
u  Effect of:
u Rejection
u Counteroffer
u Lapses
u Revocations
Lowe v. Upper Clements Family Theme
Park
Upper Clements Family Theme Park wanted to rent a
crane from Lowe Company to do construction. Lowe
offered a crane for 2 months, fixed term, @$10K/
month. Upper Clements Manager wrote back: “OK,
BUT no fixed term, payment to be pro rated, AND you
pay fuel and maintenance. If agreed, sign and return
this letter.”
Crane was delivered, but letter NOT signed. Lowe
objected to terms in letter. Offered lower monthly
price. UC Manager refused and returned the crane.
What is going on in this case?!
What are the legitimate expectations of the parties?
On October 30, Casgrain offered to purchase some farmland
from Butler for $14 500 with possession in January. On
November 15, Butler made a counteroffer, by telegram, at $15
000. The telegram was delivered to Casgrain’s home on
November 20 but Casgrain was absent on a hunting trip.
Casgrain’s wife opened the letter and wrote back to Butler
saying that her husband was away for 10 days and asked that he
hold the deal open until Casgrain could consider the matter.
Butler did not respond. On December 10, Casgrain returned
home and immediately wired Butler, purporting to accept
Butler’s offer of $15 000. The wire was received on December
12. By this time, Butler had already sold the land to someone
else.
Issue: Whether Casgrain accepted the offer in time or has it

lapsed?
Complexities: “I need a
moment to think”
“Think about my offer. I’ll hold it

open for you until Friday. Let me
know by then.”
What is the value of this promise?

Promises, Promises, Promises
u  Whatis the status of certain

promises made during negotiations?
u  E.g.,what happens if the offeror

promise to “hold an offer
open” (i.e., “I won’t exercise my
power to revoke this offer”) for
someone for a certain period of
time?
Dickenson v Dodds, p.
118 Text
Hmm…
That’s
I offer to
sell you funny he’s
offered to
this house
for £800. sell to Mr.
Allen
Accept by
9am Friday
I accept
your offer!
You are too

late!
No, I am
not! 27
What issues come up?
u  Have any contracts been

formed?
u  Powers of offeror to revoke
u  Consideration
Firm offers v. Invitations to
treat
Status of promises to hold an

offer “open” for someone
depends on consideration.
Apply the Beyoncé principle:
u Firm offer: not a contract
u Option: a contract b/c pay for it
Focus on Consideration
Consideration:
Something for something
The law does not enforce gratuitous

promises!
As Madam Justice Beyoncé of the High Court

of Hip Hop has ruled: “if you liked it, you
shoulda put a ring on it”.
Consideration, con’t
u  Each
party must either confer a
benefit or suffer a detriment
u  Consideration must flow from each
party
u  Mutuality:
party’s consideration
must be given in exchange for the
other’s.
Contracts 2
Tutorial
First Midterm
u  February 10 @ 9am
u  Location UB2080
u  Format: MC and short answer; 90 minutes
long; closed book. RESPONDUS: MAKE SURE
YOU HAVE THE LASTEST SOFTWARE LOADED
AND YOU BRING YOUR LAPTOP AND
ETHERNET CABLE AND POWER CORD
u  Will cover everything in lectures and
seminars up to and including the class prior
to the midterm
Contract, this is your life!
u Creation
u Life of the contract (terms)
u Avoiding contracts
u Getting to discharge
u The end of the contract’s
life: Remedies
Consideration: The Story
Continues
u  The exchange, in which each person either confers a
benefit or suffers a detriment.
The Peppercorn Theory
u  Youcan trade your horse (a mighty

beast!) for a peppercorn (something
small and insignificant)
u  Generally,law won’t look at the terms
of the deal.
u  Law won’t protect you from stupidity
and bad deals. All that matters is that
there really is a bargain (something
for something)
Suffering a Detriment:
Forbearance to sue
ABC Ltd. (ABC) sued XYZ Ltd. (XYZ) for breach of contract,
alleging that a product XYZ supplied is substandard. In
response, XYZ offered to pay ABC $2000 in exchange for ABC
dropping its legal action. As the president of XYZ said to the
president of ABC during settlement negotiations, “We don’t
believe that our product is substandard, and we are confident
that your action against us will fail. However, in the interests
of continuing good relations between our companies, I will
send you a cheque for $2000 and we’ll put this matter behind
us.” The president of ABC was agreeable, replying, “I don’t
have any more interest in spending my time in court than you
do. Cut me the cheque, and I will arrange for my lawyers to
discontinue the action we have brought against your company
and have the appropriate releases signed.”
Identify consideration in the above-noted situation
6
Exceptions to Consideration
u Seals
u Estoppel
Seals: “You’re welcome”
Special case: Partial Payment
of a Debt
u  Common law rule: a creditor’s
promise to accept a lesser payment
in full discharge of a debt is never
enforceable unless there is some
new form of consideration added
u  Ontario:
Mercantile Law
Amendment Act provides way
around this rule
Re-negotiation of contractual
terms
What happens if
something changes during
the life of a contract, and
one party needs to change
the terms of the contract?
Some Complexities in
Canadian Law
u  ONTARIO: Gilbert Steel v. University
Construction:
u  Contractual
modification must be supported by
new consideration
u  NEWBRUNSWICK: NAV Canada v. Greater

Fredericton Airport Authority
u  Based on commercial realities and efficiency, a
post-contractual modification may be
enforceable even if it is unsupported by fresh
consideration so long as it can be established
that the variation was not procured under
duress
Risk Management:
Contractual Modification
u  ExAnte: Include terms in contract that
anticipate possible variation
u  ExPost: Negotiate, taking care to ensure
there is good consideration
u  Add benefit, modify your own contractual
rights, agree to accept different form of
payment
u  Get the promise under seal
u  Use variation or novation
Gilbert v. University
Construction
Gilbert Steel and University Construction
were in a contract that required Gilbert to
supply a set amount of steel at an agreed
upon price. When steel prices rose
dramatically, Gilbert asked University
Construction if it would pay more for the
steel. University agreed but later refused to
pay the increase and sent only payment for
the originally agreed upon price. Gilbert
sued for breach of contract
Pre-Existing Same Party Obligation
14
Truth is stranger than fiction
The Scene: 1995 National League Championship

Series, Game 6, Houston Astros v. St Louis
Cardinals
u Astros owner Drayton McLane wandered into
the change room, told Astros Ace pitcher Roy
Oswalt "You win this game tonight, and I'll buy
you a Caterpillar D6 (a bulldozer).“
u Roy did win that game.
u Now, the Astros made good on that promise
(and had to amend Roy’s contract to do so). But
did they have to do so?
15
What do YOU think?
16
Source: http://www.crossingbroad.com/2011/05/roy-oswalt-is-back-with-phillies-after-helping-to-
clear-storm-damage-with-his-tractor.html
Offer made? No Contract e.g.
No invitation to treat
Yes
Deadline
specified?
No
Yes
Has the No Reasonable Yes No
No
deadline time Contract
Contrac
passed? elapsed?
t
No Yes
No
Offer Revocation Contract
Yes, but…
No
Contrac Offeree Knowledge of
t revocation?
Yes, but…
Yes No
Did Offeree pay a price No
Contrac Contract
or was offer under seal?
t
Terms: The Heart of the
Contract
u  Express & Implied Terms
u  Principles of Interpretation
u The Golden Rule
u The Contra Proferentem Rule
(ambiguity)
u Parole Evidence Rule
u  Common Terms
What is the function of an
express term with respect
to a contract?
A.  It gives effect to the parties’ intentions.
B.  It brings an existing contract to an end.
C.  It explicitly states contractual promises.
D.  It implicitly states contractual promises.
Avoiding Contracts
“I want out!”
Contractual Defects exist when:
u Theproblem isn’t meeting the
three requirements for formation,
BUT
u Some other issue (the contractual
defect) existed at the creation of
the contract, and now the
protected party wants OUT
Avoiding contracts: Defects
u  Defects include:
u  Lackof capacity (legal power to enter into a
contract) [watch for children, mentally ill,
drunken parties]
u  Involuntary (made under duress)
u  Exploitative(undue influence/unconscionable
transactions)
u  Illegal or contrary to public policy
u  Defects can make a contract unenforceable

(void or voidable)
Which of the following would immediately
let you know that a contract contains an
element that would cause a court to hold
that the contract is unenforceable?
A.  a desire to end a contract for economic

benefit
B.  a failure to diligently negotiate a good
outcome
C.  an auxiliary mistake concerning the
contract
D.  an inequitable relationship between the
parties
Can minors form contracts?
A.  Yes, but only with parental permission.

B.  Yes, but they also have the ability to
avoid the contract so long as certain
conditions are met.
C.  No, they lack capacity.
D.  No, except for contracts for necessities.
In contract law, the presence of which of
the following elements would immediately
alert a court to the possibility that an
agreement may be voidable due to duress?
A.  An error by one or both parties seriously

undermines a contract.
B.  The use of a threat of physical harm results in
a contract.
C.  Unfair manipulation compromises one party’s
free will.
D.  A false statement of fact causes someone to
enter a contract
Other forms of defects
u Misrepresentation
u Mistake
u (Review online lecture)

Discharge: The End is Nigh
u  Contractual discharge: exists
when a party no longer is
required to do anything under the
contract
u  Can arrive at discharge by:
u Performing
u Agreement
u Breach*
u Frustration
Mark agreed to rent his boat to James for the first two weeks
of April if James paid Mark the rent due on March 28 in cash.
On the last day in March, a freak storm destroyed the boat.
What is the role of the doctrine of frustration with respect to
the status of the contract?
A.  It applies because Mark has breached the

contract.
B.  It is not applicable; performance can be
postponed.
C.  It applies, as performance is no longer
possible.
D.  It is not applicable; the settled amount
has been paid.
End of Life: Remedies
u  If
a contract is breached (violated in
any way), what remedies does the
innocent party get?
u  Normally, compensatory damages ($$
$$)
u  Sometimes, the right to walk away
from own obligations in the contract
u  Rarely, an equitable remedy like an
injunction or specific performance
Watch out for…
u  Duty to mitigate
u  Remoteness
u  Contractual clauses that affect
remedies, such as:
u  Liquidated damages clause
u  Exclusion or limitation of liability
clause
What is the usual remedy for
a breach of contract?
A.  Acourt order to force the other
party to keep their promise
B.  Compensatory damages
C.  Punitive damages
D.  Compensatory damages and
punitive damages
Wiley’s Widgets Co. had a contract with Ace
Shipping in which Ace was contractually bound to
deliver widgets for Wiley’s Widgets at set times on
set routes for the next 12 months. One month into
the contract, Ace Shipping told Wiley’s Widgets
that it was no longer able to perform its obligations
and would be breaching the contract. Under these
circumstances, which of the following statements
is TRUE?
a)  Wiley’s Widgets can get a court order that
requires Ace to keep its promise.
b)  Wiley can only claim damages for reasonably
foreseeable losses.
c)  Wiley doesn’t really have to do anything. It can
sit around and let the losses pile up.
Diana is a soprano soloist. She entered
into a contract to sing with the
Duckworth Orchestra. However, when
she discovered that she would be
required to sing a duet with a tenor,
she refused to perform. The Duckworth
Orchestra plans to sue for breach of
contract. What is its likely remedy?
A. Specific Performance
B. An injunction.
C. Compensatory damages
D. Punitive damages.
WK 11
Sales/Marketing
WK 6/7 law
Property 1 & 2
WK 4/5
Torts
WK 10
The WK 1 Legal
Employment Canadian Environment
Relationship Legal System of
Business
Fall 2016
WK 2/3
Contracts
1 and 2
WK 8/9 WK 12
Business Organizations Review
1 and 2
WK 11
Employment Dr. Rajen Akalu
Learning outcomes (General)
•  aim for personal, meaningful understanding of material
•  interact with content
•  examine the logic of an argument
•  relate evidence to conclusions
•  relate new ideas to previous knowledge
•  relate concepts to everyday experience
Learning Outcome (Specific)
Anticipate events that might give rise to legal consequences
and offer solutions on how and when to reduce, transfer or
accept the risks associated with these events
Course Assessments
Midterm (40%) Oct. 22, 2016

Participation (10%) (Ongoing)
Final Exam (50%)
Evaluation Format
Midterm (90 mins) Final (3 hours)

Multiple Choice Multiple Choice
Problem Question
Course Format
•  Video Lecture view before class
•  Seminar – 90 Mins
•  Contact me via Blackboard
•  Dr. Akalu Office hours Fridays 2:00 – 3:30pm ERC 2084
n.b. The more your read prior to class the more you will get
out of the class and the better you will perform on the
assessments
Flipped Classroom
Classroom
Introduction to new content
Homework
Reinforce content
Course Question
How is the law applied to the business environment?

Business Law
•  A set of established rules governing commercial relationships,

including the enforcement of rights
•  Defines general rules of commerce
•  Protects property and ideas
How Is Law Useful in the Business
Environment?
•  Facilitates business planning
•  Provides mechanisms that permit businesspeople to manage
their participation
in business activities and exposure to risk in business ventures
•  Provides mechanisms to ensure losses are borne by those who
are responsible for them
Knowledge of Law as a Business Asset
Consider:
–  the role of law in guiding business
–  the importance of legal knowledge in the business
environment
–  the challenges posed by business ethics and their
relationship to legal requirements
•  Law impacts every aspect of society, including the business
environment.
•  Knowledge of the law helps entrepreneurs maximize protection
and avoid pitfalls.
•  The law affects most business decisions.
Business Law Protects People and Property
•  The law is to provide protection for businesses and customers

•  It structures the rights and obligations that exists between them
•  And provides mechanisms to resolve disputes and enforce of
these rules
Business Application of the Law
How does business law protect intangible property such as ideas

and inventions?
What about conflicting interests?

Business Law Facilitates Commercial Activity
CONTRACT LAW – Rules that make agreements binding and

facilitate planning and enforcement expectations
BREACH OF CONTRACT – Failure to comply with a contractual

promise
Business Law Provides Methods for Resolving
Disputes
LITIGATION – The process involved when one sues another using
the formal court system
Alternatives to Litigation
•  NEGOTIATION
•  MEDIATION
•  ARBITRATION
Negotiation
•  Solutions to a legal dispute exist at various levels of formality.
•  The first logical step is for the parties to try to come to a
negotiated resolution between themselves.
•  If necessary, a formalized settlement agreement can be created.
Mediation
•  A process through which parties try to reach a resolution with the
assistance of a neutral person (the mediator)
Arbitration
•  A process through which a neutral person (or panel) makes a

decision
•  Arbitration is usually binding.

Law and Business Ethics
BUSINESS ETHICS – Moral principles and values that seek to

determine right and wrong in the business world
From the perspective of reputation and profitability, is it enough for a

commercial enterprise to simply comply with the law?
Using Knowledge of the Law as a Business
Asset
An effective way to minimize negative business experience and
enhance returns is to implement a legal risk management plan.
•  Owners and managers can protect their business by ensuring
compliance with legal requirements.
•  Businesses can use contracts to plan for the future.
•  Laws can protect people and property.
•  Businesses can use laws to enforce legal rules against those who
do business and have interactions with the enterprise.
•  Identify the legal risks associated with a business and implement
measures for managing those risks.
•  Identify and plan for risks before they occur rather than adopting
a reactive mode.
•  Business ethics are not always aligned with legal requirements
but are increasingly important for running a successful business.
The Canadian Legal System
Consider:
–  the judiciary’s role in assessing the constitutionality of
legislation
–  the classifications of law
–  how administrative law affects business
LEGISLATIVE BRANCH – The branch of government that creates
statute law
STATUTE LAW – Formal, written laws created or enacted by the
legislative branch of government
JURISDICTION – The power that a given level of government has
to enact laws
The Canadian Constitution
•  Contained in several different documents
•  All Canadian laws must comply with the Canadian Constitution
•  Is difficult to change – a special amending formula must be met
Constitution Act, 1867
•  Formerly the BNA Act
•  Sets up the courts
•  Contains the “DIVISION OF POWERS” Exclusive Federal
Jurisdiction (s. 91),
such as:
•  currency
•  national defense
•  criminal law
•  banking
•  postal service
Exclusive Provincial Jurisdiction (s. 92) includes:
•  hospitals
•  property and civil rights with the province
•  administration of justice
•  local matters
•  incorporation of provincial corporations
•  municipalities
•  Municipalities
•  Have no constitutionally recognized powers
•  Are usually delegated powers by the provinces in some areas,
such as
•  zoning
•  property tax
•  licensing
Canadian Charter of
Rights and Freedoms (Charter)
•  Created in 1982, part of the Constitution Act, 1982
•  Guarantees specific rights and freedoms enshrined in the
Constitution and is enforceable by the judiciary
Fundamental Freedoms
2. Everyone has the following fundamental
freedoms:
a. freedom of conscience and religion;
b. freedom of thought, belief, opinion and expression, including
freedom of the press and other media of communication;
c. freedom of peaceful assembly; and
d. freedom of association.
Are There Limits to
Our Charter Rights?
SECTION 1 The Canadian Charter of Rights and Freedoms
guarantees the rights and freedoms set out in it subject only to such
reasonable limits prescribed by law as can be demonstrably justified
in a free and democratic society
SECTION 33 (THE “NOTWITHSTANDING CLAUSE”) – Allows

governments to “opt out” of some Charter rights by enacting
legislation “notwithstanding” that it violates the Charter
Concurrent Jurisdiction
•  Jurisdiction that is shared between levels of government,

such as public health or the environment
DOCTRINE OF PARAMOUNTCY – Provides that federal laws

prevail when there are conflicting or inconsistent federal and
provincial laws
Executive Branch of Government
FORMAL EXECUTIVE – The branch of government responsible
for the ceremonial features of government
POLITICAL EXECUTIVE – The branch of government responsible
for day-to-day operations, including formulating and executing
government policy, as well as administering all departments of
government
RATIFY – To authorize or approve

TREATY – An agreement between two or more states that is
governed by international law
BYLAWS – Laws made by the municipal level of government
CABINET – A body composed of all ministers heading government

departments, as well as the prime minister or premier
REGULATIONS – Rules created by the political executive that have
the force of law
Judicial Branch of Government
JUDICIARY – A collective reference to judges

JUDGES – Those appointed by federal and provincial governments
to adjudicate on a variety of disputes, as well as to preside over
criminal proceedings
The System of Courts
INFERIOR COURT – A court with limited financial jurisdiction whose
judges are appointed by the provincial government
SMALL CLAIMS COURT – A court that deals with claims up to a
specified amount $25,000 in Ontario
SUPERIOR COURT – A court with unlimited financial jurisdiction whose
judges are appointed by the federal government
SUPREME COURT OF CANADA – The final court for appeals in the
country
The System of Courts
SUPREME COURT OF CANADA (SCC) – The final court for

appeals in the country
FEDERAL COURT OF CANADA – The court that deals with some

types of litigation involving the federal government
Sources of Law
Common Law and the system of precedents
COMMON LAW – Judge-made law. Common law
is created when judges make decisions. The decisions become
precedents, and they are cumulatively referred to as the common
law.
How the Common Law System Works
•  A lower court must follow a relevant precedent created by a higher
court within the same jurisdiction.
•  Not all precedents are of equal value – the higher the court that
created the precedent, the more valued the decision is.
•  The Supreme Court of Canada – the highest court in Canada. It’s
decisions are binding on lower courts
Courts Dealing with Commercial Disputes
Sources of Law
LAW OF EQUITY – Another set of rules, known as rules of equity.
Like common law, equity originated in England. Equity focuses on
what would be fair given the specific circumstances of the case,
as opposed to what the strict rules of common law might dictate.
An example is the remedy of an injunction.
•  Equity assists only those with “clean hands.”
Classifications of Law
Business
Law ???
Course
Outline
•  PUBLIC versus PRIVATE LAW
PUBLIC LAW – Areas of law that relate to or regulate the
relationship between persons and government at all levels, such
as Criminal Law
PRIVATE LAW – Areas of law that concern dealings between

persons, (e.g . Law of Contracts)
•  COMMON LAW versus CIVIL LAW
COMMON LAW – A system of law that includes judge-made law.
Used in all provinces except Quebec.
CIVIL LAW – A system of law in which judges look to the Civil
Code for general principles to be applied to the case at hand.
They are not bound by how other judges have interpreted the
Code.
Administrative Law
and Business
ADMINISTRATIVE LAW
•  Refers to rules created and applied by the various boards,
agencies, commissions, and tribunals
•  Functions of administrative bodies and officials often varies.
•  Example: Canadian Radio-television and Telecommunications
Commission (CRTC)
Examples of Administrative Bodies and
Officials
Affecting Business?
•  If you plan to sell alcohol, you may interact with the liquor
control board or commission.
•  If you plan to hire employees, you may interact with the
workers’ compensation board.
•  The Constitution protects certain commercial rights and
freedoms and establishes limits on governmental authority.
•  The government’s law-making powers under the Constitution
Act, 1867, are divided between the federal and provincial levels
of government.
•  There are numerous courts that may be involved in business-
related law matters.
The Canadian Legal System - Summary
– The judiciary has a role in assessing the constitutionality
of legislation and can also create “common law.”
– There are numerous classifications of law.
– Administrative law can affect business.

BUSI 3705
Legal
Environment of
Business
Fall 2017
Dr. Theresa
Miedema
Course Road Map
u  Week1 (and 2): Introduction to the Canadian Legal
System, dispute resolution
u  Weeks 2-4: Contracts
u  Weeks 5-6: Torts
u  Week 7-8: Property
u  Week 8-9-10: Business Organizations
u  Week 11: Sales and Marketing Law
u  Week 12: Catch-up and Review
Learning outcomes (General)
u  aim for personal, meaningful understanding of material
u  interact with content
u  examine the logic of an argument
u  relate evidence to conclusions
u  relate new ideas to previous knowledge
u  relate concepts to everyday experience
Learning Outcome (Specific)
Anticipate events that might give rise to

legal consequences and offer solutions
on how and when to reduce, transfer or
accept the risks associated with these
events
Dr T’s Top Three
u  I am a doctor. Really. Just not the useful kind of doctor.
u  Iam very sensitive to noise. So please help me out by not
talking in class. I am also very sensitive to scents, so
please do not wear strong perfume or cologne when
visiting office hours. (Bad allergies!)
u  I love baseball, especially the Blue Jays.
Your turn!
Please write down up to three things you would like
ME to know about you! You might, for example, let
me know:
u  What your expectations of this course are.
u  What your pet peeves in a course are.
u  What concerns you have about this course.
u  What particular interests in law you have.
Dr T’s Three Rules
Rule 1: Dr T is Your Professor

(a) I am here to help you learn, and I want you to
succeed.
(b) If you are having difficulties, please come to see
me.
(c) In order to maximize the time available for
helping you with real issues, I do not repeat
announcements or provide information that is
readily available on BB or the course syllabus. If
you miss an announcement, ask your colleagues for
the details. If you miss class, ask your colleagues
for notes.
Dr T’s Three Rules, con’t
Rule 2: Smartphones are stupid
(a)  You may not use your phone (or view your phone)
while class is in session. Put it away until the break.
(b)  Exceptions are made for pressing family and work-
related matters. Please let me know in advance if
you need to check your phone for these purposes.
Comment: Using your phone while class is in session is
rude and unprofessional. Also, you are bad at multi-
tasking. No, really. You are. You need to focus on
the course, not on texts or emails.
According to research from USC’s Marshall School of Business, which
surveyed 500+ professionals making more than USD30K at companies with
50 employees or more:
u  86% think it's inappropriate to answer phone calls
during formal meetings
u  84% think it's inappropriate to write texts or emails
u  75% think it's inappropriate to read texts or emails
u  66% think it's inappropriate to write texts or emails
during any meetings
u  At least 22% think it's inappropriate to use phones
during any meetings
u  See: KEVIN KRUSE, “WHY SUCCESSFUL PEOPLE NEVER BRING SMARTPHONES INTO MEETINGS” FORBES (DEC. 26, 2013):https://www.forbes.com/
sites/kevinkruse/2013/12/26/why-successful-people-never-bring-smartphones-into-meetings/#487c3ad63ffb
Rule 3: Laptops are for learning
(a)  You may use your laptop to take notes and to
engage in other course-related activities.
(b)  You may not use your laptop for any other
purpose while class is in session.
(c)  If you feel deeply tempted to mentally “check
out” during class such that you NEED to look at
some non-course-related thing, then please sit in
the back three rows of the classroom.
Rule 3, con’t.
(d) Sanctions for violating Rule 2 & 3 may include, but
are not limited to: being asked to relocate during
class; losing the privilege of using your laptop; and/
or being ejected from class.
Comment: Using your laptop is a privilege, not a right.
Using your laptop, especially to goof off, not only
affects your performance, but it also subverts the
performance of people around you.
Laptops and learning
For more information about the effect of using a laptop in class, see, for example:
u  “Why Smart Kids Shouldn’t Use Laptops in Class”: https://
www.washingtonpost.com/news/wonk/wp/2016/05/16/why-smart-kids-shouldnt-use-
laptops-in-class/
u  “Laptop Use in Class: Effects on Learning and Attention”:
https://teachingcenter.wustl.edu/2015/08/laptop-use-effects-learning-attention/
u  “Students think they can multitask. Here’s proof they can’t”: http://
www.facultyfocus.com/articles/teaching-professor-blog/multitasking-confronting-
students-with-the-facts/
u  “Laptop use Lowers Student Grades, Experiment Shows”:
http://www.cbc.ca/news/technology/laptop-use-lowers-student-grades-experiment-
shows-1.1401860
See also:
http://www.theglobeandmail.com/life/parenting/back-to-school/laptops-in-class-lowers-
students-grades-canadian-study/article13759430/
Misc. Matters
u  If you are late to class, please come in quietly.
u  Yes, you can eat and drink in class, but please be considerate of the
people around you. And clean up your mess before you leave the
classroom.
Canadian Business and
the Law: Dorothy
Course Text DuPlessis, Shannon
O'Byrne, Steven Enman,
Sally Gunz; Nelson
Publishers; 6th edition.

See also:
http://
www.nelsonbrain.com/
shop/isbn/9780176568849
to purchase individual
chapters.
Evaluation
u  Quizzes 20% (Released Jan. 29 & March 26)

u  Assignment 10% (Released March 19)
u  Midterm 20% (TBD, stay tuned)
u  Final Exam* 40% TBD
u  Participation 10% (in-class activities, various)
*You must pass the final exam to pass this course.
Evaluation Format
Midterm Final
Multiple Choice Multiple Choice
Problem questions
Problem Questions
Course Format
u  Video Lecture view before class; review lecture
slides; and read assigned materials
u  Seminar – 90 Mins
u  Contact me via Blackboard
u  Office
hours: Office Hours: Mondays, 2:00 –
4:00pm OR by appointment, UB3006
u  n.b.The more your read prior to class, the more
you will get out of the class and the better you
will perform on the assessments
Let’s Get Started
What is law?
u  Simplestversion: Rules that will be enforced by
the courts
u  More complex (and accurate) version: a set of

rules and principles, as well as a particular form
of reasoning (how we think about those rules and
principles and how we apply them)
Law: Principles, Rules & Reasoning
Guides the resolution of

Dispute between A resolution that
the dispute: tells us how
two private parties the dispute will be will be enforced by
or perhaps between resolved and, crucially, the institutions of
a person and the WHY it will be resolved in the state (the
government that particular way. E.g.,
why will we favour the
courts)
rights of Party A over Party
B?
Law and Risk management
u  Law shapes the risk landscape of a business
u  Tells businesses what they cannot do
u  Tells businesses what they CAN do
u  Gives businesses ways of managing risk, e.g., create a
corporation
u  Creates opportunities, e.g., by creating RIGHTS
u  Attaches consequences to failure to follow the law so
businesses have a sense in advance of possible costs of
different strategies
u  Promotes certainty in business relationships
Managing Legal Risks
u  Four step process:
1. Identify legal risks
2. Evaluate the risks (likelihood/probability
& seriousness/magnitude of harm)
3.Develop a risk mgmt plan
4. Implement the plan
Four Risk Management Strategies
1. Avoid the risk

2. Reduce the risk
3. Transfer the risk
4. Accept the risk
The Canadian Legal System: Some Terms
STATUTE LAW – Formal, written laws created or
enacted by the legislative branch of
government
FEDERALISM: A system of governance where the
power to make law is shared among different
levels of government
JURISDICTION – The power that a given level of
government has to enact laws
JUDICIARY – The courts
Sources of Law: A Hierarchy
Constitution: s. 52: “supreme law of

Canada”
Statutory Law: made by our legislation

democratically-elected representatives
Common Law: Judicial decisions, incl equity

The Canadian Constitution
u  Highest source of law in Canada
u  Contained in several different documents, and

includes the Canadian Charter of Rights and Freedoms
u  Is
difficult to change – a special amending formula
must be met
u  Consent of Parliament, plus two-thirds of the provinces
that together represent at least a majority of the
Canadian population
Canadian Constitution
Section 52:
“The Constitution of Canada is the supreme
law of Canada, and any law that is
inconsistent with the provisions of the
Constitution is, to the extent of the
inconsistency, of no force or effect.”
Canadian Constitution
u Two important dimensions for our

purposes:
u Division of Powers, and
u Charter of Rights and Freedoms
Division of Powers
u  Canada has a federal system of governance
u Power to make law is divided between
provinces and the federal government
u  Ss. 91 & 92 contain Division of Powers
u S. 91: federal government powers
u S. 92: provincial government powers
u “Intra vires”: within the jurisdiction of
u “ultra vires”: outside the jurisdiction of
Canadian federalism
Section 91, Federal government Section 92, provincial
powers government powers
u currency u  hospitals
u national defense u  property and civil rights

with the province
u criminal law
u  administration of justice
u banking
u  local matters
u postal service &
u  incorporation of
telecommunications provincial corporations
u International trade u  Municipalities
u Residual power u  Education
Intra vires v. Ultra vires: Federal
Government Powers. S. 91
Ultra Vires Intra Vires

Regulation of business Criminal Banking
Elementary schools law
Copyright
Zoning bylaws Airports
Sale of alcohol within a province Int’l, inter-provincial
Manufacturing within a province trade
Powers held by Cities & Municipalities
u  Cities and Municipalities:

u Have no constitutionally recognized powers
u Areusually delegated powers by the provinces in
some areas, such as
u zoning
u property tax
u licensing
Concurrent jurisdiction*
Some issues trigger both federal and provincial
jurisdiction. Issues are multi-dimensional. So the
feds may have a legitimate right to makes laws
about one aspect of the matter, while the provinces
have a legitimate right to make laws about a
different aspect. This is called Concurrent
Jurisdiction: the feds and the provinces have
concurrent or overlapping jurisdiction.
Law and regulation of wireless telephone contracts
Prov:
Feds: consumer
telecom: protection:
mobile property
services and civil
rights
Paramountcy*
u  But what happens if the federal and the

provincial laws clash?
u  Doctrine of Paramountcy: if there is a real
conflict between two intra vires pieces of
federal and provincial legislation, then the
federal law prevails.
Charter of Rights and Freedoms
u  Q. Does the Charter of Rights and Freedoms
protect businesses?
u  A. Yes. No. Sometimes. It depends.
u The SCC has held that corporations are
“persons” for some sections of the Charter.
u Where individuals are indistinguishable from the
business (e.g., accountants & lawyers), a wider
scope of rights is available
Section Right Protectee Example
S. 2(a) Freedom of Religion “Persons”, including Big M case: “Lords Day”
corporations act was struck down in
Ontario
s. 2(b) Freedom of Persons, including Irwin Toy, tobacco cases:
expression corporations SCC holds that advertising
by corporations is a
protected form of speech,
subject to reasonable
limits
s. 6(b) Mobility rights Citizens & Permanent Black v. Law Society of AB:
Residents government cannot
prevent an individual from
earning living across
Canada
s. 15 Equality rights Individuals (not Andrews case: province
corporations) cannot discriminate by
restricting practice of law
to Cdn citizens
Charter of Rights and Freedoms*
u “Greatest Hits” Parade of Charter Cases
u Big M Drug Mart: s. 2(a)
u Irwin Toy, RJR MacDonald: s. 2(b)
u Blackv. Law Society of Alberta: s. 6
u Andrews v. Law Society of B.C.: s. 15
Limits on Charter Rights
u  S.1: ALL rights are subject to “reasonable
limits” prescribed by law that are justifiable in
a free and democratic society
u  Somerights are held only by individuals, and not
corporations (e.g., ss. 6 & 15)
u  TheCharter does not protect property rights or
economic rights.
u  Generally,
only Parliament and the Legislatures
must comply with the Charter.****
u  S. 33: the “Notwithstanding Clause”
Common Law and the system of
precedent
COMMON LAW – Judge-made law; the body of judicially-
made law.
Common law is created when judges make decisions. The
decisions become precedents, and they are
cumulatively referred to as the common law.
Most of Ontario’s tort and contract law is found in the
common law. There are no general statutes for tort
and contract!
How the Common Law System Works
u  Doctrine of Precedent: a lower court must

follow a relevant precedent created by a higher
court within the same jurisdiction.
u  Notall precedents are of equal value – the higher
the court that created the precedent, the more
valued the decision is.
u  TheSupreme Court of Canada – the highest court
in Canada. Its decisions are binding on all lower
courts.
Court Hierarchy
Supreme Court
of Canada
Ontario CA Sask CA Federal CA
Ontario Sask. Superior Federal Tax

Superior Court Court Court
Business Law ???
Course
Outline
Public v. Private law
Public Law Private law
u  Regulates our lives in the public u  Governs our private lives
square, as members of a shared (parts of our lives that
society don’t affect order in
u  Focuses on the rules necessary society as a whole)
to making our shared society u  Governs relations between
work, and therefore mostly
individuals (as opposed to
governs the relationship
between individuals and the
individuals’ relationship
state with the state)
u  E.gs: criminal law, u  Egs. Tort and contract
constitutional law, tax law,
admin law, immigration law
Dispute resolution
Four broad approaches:
1. Negotiation
2. Mediation
3. Arbitration
4. Litigation
Negotiation Mediation Arbitration Litigation
What is it? Parties try to resolve 3rd party (mediator) 3rd party (arbitrator) Bring law suit in
dispute directly with assists the parties to hears submissions, court; judge decides
each other through resolve dispute evidence, then gives
discussion a decision
Who is involved? Parties Parties and Parties, their reps., Parties, lawyers,
mediator arbitrator judge (jury)
When does it If successful, with a If successful, with a Usually with a Judge gives binding
end? settlement settlement binding decision decision
Advantages Quick, cheap, private, Quicker, cheaper*, Faster, cheaper than Can initiate w/o
lots of room to private, lots of room litigation; can cooperation of other
customize, can to customize, can choose process & side. Get final
preserve relationships preserve arbitrator; can be decision (but after
relationships private; can get trial and appeals)
binding decison
Disadvantages Both sides must agree Both sides must More acrimonious; Slow, costly,
to use it; might not agree to use it; can be slow & stressful, public,
result in settlement might not result in costly; parties destroys rel’nship,
settlement usually must agree loss of control
to it
BUSI 3705: Week Deux
Constitution, Precedent & Contracts
The Government of Canada (GOC) has been
investigating the use of vaping devices as
alternatives to the use of tobacco. The GOC has
noted that the increase in vaping has reduced
the demand for Ontario-grown tobacco. It is also
concerned about children vaping. Consequently,
the GOC has passed new legislation to address
vaping. Among other things, the new legislation
provides for the following:

u  Section 1, Marketing: Vapes and e-cigarettes must not be
marketed to any person under 18 years of age.
Manufacturers and vendors of vapes and e-cigarettes are
not permitted to sell or to advertise their products within
a 500m radius of any elementary, middle, or high school.
u  Section 2, Canadian Vendors Only: Vendors of vapes and
e-cigarettes in Canada must be Canadian. If the vendor is
a corporation, at least 66% of issued and outstanding
shares must be held by resident Canadians and at least
60% of the directors on the Board of Directors must be
resident Canadians.
u  Section 3, Subsidies for Canadian Manufacturers:
Canadian manufacturers of vapes, e-cigarettes, and e-
liquid (the “juice” consumed in vapes and e-cigarettes)
are eligible for special subsidies so long as they focus on
adult markets only.
Am-Renegade Inc (ARI) is an American corporation that
manufactures vapes and e-cigarettes. Am-Renegade
Retail Inc (ARRI) is a wholly-owned subsidiary that acts
as the retail branch of the corporation; it sells vapes
and e-cigarettes to the public. ARRI has five stores in
Toronto already, and it is quickly growing. However, the
new vaping legislation poses a significant obstacle to its
business plan. ARI and ARRI have come to you for
advice. Is there anything they can do to challenge this
legislation?

Advise ARI and ARRI on whether there are grounds to
challenge Sections 1, 2, and/or 3.
What kind of problem is this?
u  Legalanalyses start by asking, “what issue or

issues are raised by these facts?”
u  Issue
= what legal question has to be resolved?
What are the parties fighting about?
u  Pro-tip:
if a problem talks about legislation/
regulations/bylaws introduced by a gov’t, at least
one issue relates to the Constitution.
Constitutional law….
If a problem involves the Constitution, what

kinds of legal questions (issues!) may arise?
Division of Powers
Let’s break the problem down!
Section 1, Marketing: Vapes and e-cigarettes

must not be marketed to any person under 18
years of age. Manufacturers and vendors of
vapes and e-cigarettes are not permitted to
sell or to advertise their products within a
500m radius of any elementary, middle, or
high school.
Piece it together & ask some questions
u  Canthe federal government restrict

advertising? Isn’t advertising a form of
speech?
u  Canthe federal government prohibit the sale

and marketing of certain goods or services?
Do the feds have the jurisdiction to do so?
Canadian federalism
Section 91, Federal government Section 92, provincial
powers government powers
u currency u  hospitals
u national defense u  property and civil rights

with the province
u criminal law
u  administration of justice
u banking
u  local matters
u postal service &
u  incorporation of
telecommunications provincial corporations
u International trade u  Municipalities
u Residual power u  Education
Intra vires v. Ultra vires: Federal
Government Powers. S. 91
Ultra Vires Intra Vires

Regulation of business Criminal Banking
Elementary schools law
Copyright
Zoning bylaws Airports
Sale of alcohol within a province Int’l, inter-provincial
Manufacturing within a province trade
Analysis
u  Federal legislation attempts to regulate sale and
marketing of vapes.
u  Sales and marketing are likely to be categorized as
involving property rights and local commerce, which are
allocated to the provinces in s. 92.
u  Since the power to create laws about commerce and
property rights are in s. 92 and not s. 91, which is where
the federal government gets its power, this part of the law
likely is ultra vires the federal government.
u  S. 52: the law will be of no force or effect to the extent of
the inconsistency.
Bounce ahead to s. 3
Section 3, Subsidies for Canadian Manufacturers:

Canadian manufacturers of vapes, e-cigarettes, and e-
liquid (the “juice” consumed in vapes and e-cigarettes)
are eligible for special subsidies so long as they focus on
adult markets only.
Feds may be able to argue that this provision is about

TRADE, not commerce since the intention is to support
national industry. If it is about trade, then what? It is also
about commerce, which is provincial!
Prov:
consumer
Feds:
protection:
internat’l
property
trade
and civil
rights
Some issues trigger both federal and provincial
jurisdiction. Issues are multi-dimensional. So the
feds may have a legitimate right to makes laws
about one aspect of the matter, while the provinces
have a legitimate right to make laws about a
different aspect. This is called Concurrent
Jurisdiction: the feds and the provinces have
concurrent or overlapping jurisdiction.
Paramountcy*
u  But what happens if the federal and the

provincial laws clash?
u  Doctrine of Paramountcy: if there is a real
conflict between two intra vires pieces of
federal and provincial legislation, then the
federal law prevails.
u  Q. Does the Charter of Rights and Freedoms
protect businesses?
u  A. Yes. No. Sometimes. It depends.
u The SCC has held that corporations are
“persons” for some sections of the Charter.
u Where individuals are indistinguishable from the
business (e.g., accountants & lawyers), a wider
scope of rights is available
Restrictions on Advertising and
Marketing & The Charter
2. Everyone has the following fundamental freedoms:
(a) freedom of conscience and religion;
(b) freedom of thought, belief, opinion and
expression, including freedom of the press and other
media of communication;
(c) freedom of peaceful assembly; and
(d) freedom of association.
Analysis
ARI and ARRI are corporations. Are they
covered by the protections in s. 2?
Yes. “Everyone” includes legal persons like
corporations.
Is marketing/advertising a form of protected
speech?
Yes! The SCC has held that commercial speech is a
protected form of speech.
Some conclusions…some more analysis
u  Since ARI and ARRI do have the right to freedom of
expression under s. 2(b) of the Charter and since the
legislation in question would restrict ARI and ARRI’s
ability to exercise their freedom of expression through
marketing and advertising, this legislation likely violates
s. 2(b) of the Charter.
u  But does it violate the Charter? Consider s. 1:
1. The Canadian Charter of Rights and Freedoms guarantees the
rights and freedoms set out in it subject only to such reasonable
limits prescribed by law as can be demonstrably justified in a
free and democratic society.
Section 1 of the Charter: Reasonable
Limits
1. The Canadian Charter of Rights and

freedoms guarantees the rights and freedoms
set out in it subject only to such reasonable
limits prescribed by law as can be
demonstrably justified in a free and
democratic society.
Let’s look at s. 2
Section 2, Canadian Vendors Only: Vendors

of vapes and e-cigarettes in Canada must be
Canadian. If the vendor is a corporation, at
least 66% of issued and outstanding shares
must be held by resident Canadians and at
least 60% of the directors on the Board of
Directors must be resident Canadians.
Issues with s. 2
u  Another attempt to regulate “vendors”,

which may raise federalism issues again.
u  Restriction of the right to sell vapes to
“Canadian” vendors. Does that violate the
Charter?
Equality Rights
EQUALITY RIGHTS
Equality before and under law and equal protection
and benefit of law
15. (1) Every individual is equal before and under the
law and has the right to the equal protection and
equal benefit of the law without discrimination and,
in particular, without discrimination based on race,
national or ethnic origin, colour, religion, sex, age or
mental or physical disability.
Scope of application of s. 15
Reference to “individual”: SCC has said that

“individual” means “natural human being”.
Corporations do not have any rights under s. 15.
ARI and ARRI are corporations. They do not have

rights under s. 15. But Arie is a human being…he
might be able to challenge the legislation on the
grounds of s. 15.
Section Right Protectee Example
S. 2(a) Freedom of Religion “Persons”, including Big M case: “Lords Day”
corporations act was struck down in
Ontario
s. 2(b) Freedom of Persons, including Irwin Toy, tobacco cases:
expression corporations SCC holds that advertising
by corporations is a
protected form of speech,
subject to reasonable
limits
s. 6(b) Mobility rights Citizens & Permanent Black v. Law Society of AB:
Residents government cannot
prevent an individual from
earning living across
Canada
s. 15 Equality rights Individuals (not Andrews case: province
corporations) cannot discriminate by
restricting practice of law
to Cdn citizens
Charter of Rights and Freedoms*
u “Greatest Hits” Parade of Charter Cases
u Big M Drug Mart: s. 2(a)
u Irwin Toy, RJR MacDonald: s. 2(b)
u Blackv. Law Society of Alberta: s. 6
u Andrews v. Law Society of B.C.: s. 15
Limits on Charter Rights
u  S.1: ALL rights are subject to “reasonable
limits” prescribed by law that are justifiable in
a free and democratic society
u  Somerights are held only by individuals, and not
corporations (e.g., ss. 6 & 15)
u  TheCharter does not protect property rights or
economic rights.
u  Generally,
only Parliament and the Legislatures
must comply with the Charter.****
u  S. 33: the “Notwithstanding Clause”
Another question!
Suppose that ARI, ARRI, and Arie litigate the

matter in Ontario’s Superior Court. Judge
Arar hears the case. She knows that she has
to follow established precedent. Which
court’s/courts’ decisions must she consult
and follow if relevant in this case?
What is this question about?
u  What
decisions a judge of Ontario’s
Superior Court must follow…This is about
THE DOCTRINE OF PRECEDENT
u  Doctrineof Precedent: a lower court
must follow a relevant precedent created
by a higher court within the same
jurisdiction.
Court Hierarchy
Supreme Court
of Canada
Ontario CA Sask CA Federal CA
Ontario Sask. Superior Federal Tax

Superior Court Court Court
Analysis
u Which courts are in Ontario’s hierarchy

and which of those courts are above
the Superior Court?
u So, according to the doctrine of
precedent, which court’s decisions
must Judge Arar follow?
Dispute resolution
Four broad approaches:
1. Negotiation
2. Mediation
3. Arbitration
4. Litigation
Negotiation Mediation Arbitration Litigation
What is it? Parties try to resolve 3rd party (mediator) 3rd party (arbitrator) Bring law suit in
dispute directly with assists the parties to hears submissions, court; judge decides
each other through resolve dispute evidence, then gives
discussion a decision
Who is involved? Parties Parties and Parties, their reps., Parties, lawyers,
mediator arbitrator judge (jury)
When does it If successful, with a If successful, with a Usually with a Judge gives binding
end? settlement settlement binding decision decision
Advantages Quick, cheap, private, Quicker, cheaper*, Faster, cheaper than Can initiate w/o
lots of room to private, lots of room litigation; can cooperation of other
customize, can to customize, can choose process & side. Get final
preserve relationships preserve arbitrator; can be decision (but after
relationships private; can get trial and appeals)
binding decison
Disadvantages Both sides must agree Both sides must More acrimonious; Slow, costly,
to use it; might not agree to use it; can be slow & stressful, public,
result in settlement might not result in costly; parties destroys rel’nship,
settlement usually must agree loss of control
to it

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Week Two

• Rules governing contract are based on the

• What would business be like without contracts?

– Permit both par+es to rely on the terms they

Consensus ad idem – mee+ng of minds (regarding

• A “take it or leave it” contract

• Revoca3on – Withdrawal of an oﬀer

• The oﬀeror can revoke an oﬀer at any +me before

Are there special rules in place to deal with

• May be other than money, such as goods or services,

• Businesses oUen breach contracts.

Some+mes it is more ﬁnancially rewarding to breach

Has Casgrain accepted the offer in time or has it lapsed?

IMPLIED TERMS – Terms that are not expressly

A condition subsequent brings a duty to an end whereas a

• Purchasers of real estate may rely on the

Shrink-Wrap, Click-Wrap, and

But contract already formed

CLICK-WRAP AGREEMENT – An agreement

• Parties can bargain for what will be payable in

“But we had a deal……..?”

VOIDABLE CONTRACT – A contract that in

VOID CONTRACT – A contract involving a defect

• Minors are bound to beneficial contracts of

THE PLAINTIFF MUST PROVE THAT THE

RESCISSION – The remedy that results in the

Negligent Rescission in contract

ILLEGAL CONTRACT – Contract that cannot be

CONTRARY TO PUBLIC POLICY

STATUTE OF FRAUDS – Requires that certain

• Contracts not to be performed within a year

• Contracts dealing with land

• Most provinces have provided for electronic

• Through performance – Both parties complete

• Through Frustration - after the formation of the

2. there is an entitlement to a remedy

DUTY TO MITIGATE – The obligation to take

SPECIFIC PERFORMANCE – Court order for the

Have you entered into a contract

Buying a coffee is as much of a contract

Let’s keep it simple for now.

u Offeror:The person who makes the

u Offeree:the person who receives

A contract is formed when the

u Making an offer carries risk

Dr T wants to sell her road bike.

Is the item on display an

Rule: Parties must be serious about

Test: The reasonable person test:

Do family and friends intend their

What about businesses? When 2

Rebuttable Presumption: Law

(2) Business DO intend their

Issue: Whether Casgrain accepted the offer in time or has it

“Think about my offer. I’ll hold it

What is the value of this promise?

u Whatis the status of certain

u E.g.,what happens if the offeror

You are too

u Have any contracts been

Status of promises to hold an

The law does not enforce gratuitous

As Madam Justice Beyoncé of the High Court

u Youcan trade your horse (a mighty

•  Rules governing contract are based on the

•  What would business be like without contracts?

–  Permit both par+es to rely on the terms they

•  A “take it or leave it” contract

•  Revoca3on – Withdrawal of an oﬀer

•  The oﬀeror can revoke an oﬀer at any +me before

•  May be other than money, such as goods or services,

•  Businesses oUen breach contracts.

•  Purchasers of real estate may rely on the

•  Parties can bargain for what will be payable in

•  Minors are bound to beneficial contracts of

•  Contracts not to be performed within a year

•  Contracts dealing with land

•  Most provinces have provided for electronic

•  Through performance – Both parties complete

•  Through Frustration - after the formation of the

2.  there is an entitlement to a remedy

u  Offeror:The person who makes the

u  Offeree:the person who receives

u  Making an offer carries risk

u  Whatis the status of certain

u  E.g.,what happens if the offeror

u  Have any contracts been

u  Youcan trade your horse (a mighty

u  NEWBRUNSWICK: NAV Canada v. Greater

u  Defects can make a contract unenforceable

A.  a desire to end a contract for economic

A.  Yes, but only with parental permission.

A.  An error by one or both parties seriously

u (Review online lecture)

A.  It applies because Mark has breached the

•  A set of established rules governing commercial relationships,

•  The law is to provide protection for businesses and customers

•  A process through which a neutral person (or panel) makes a

•  Arbitration is usually binding.

•  Jurisdiction that is shared between levels of government,

– There are numerous classifications of law.

– Administrative law can affect business.

u  Quizzes 20% (Released Jan. 29 & March 26)

u  More complex (and accurate) version: a set of

1. Avoid the risk

u  Contained in several different documents, and

u Two important dimensions for our

u national defense u  property and civil rights

u  Cities and Municipalities:

u  But what happens if the federal and the

u  Doctrine of Precedent: a lower court must

u  Legalanalyses start by asking, “what issue or

u  Canthe federal government restrict

u  Canthe federal government prohibit the sale

u national defense u  property and civil rights

u  But what happens if the federal and the

u  Another attempt to regulate “vendors”,