MIDTERM Weekly Questions
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Capilano University *
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300
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Law
Date
May 27, 2024
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WEEK 1 Questions –
Answer Guide Question 1.1: In what sense did the court use an “objective” approach to interpretation of the words and conduct in Canadian Dyers
? [Question 2 on page 44 of the casebook.]
Answer:
While the court didn’t explain this clearly, in referring to the Burton’s words –
“the price…is the lowest I am prepared to accept…if it were to any other party I would ask more” –
the court suggested any reasonable person would conclude this was an offer. The court stated: “Surely, unless l
anguage is used to conceal thought, this is an offer
.”
Question 1.2: Objective intention is determined by looking at the alleged offeror’s words, conduct/actions, and the surrounding circumstances. What happens if such language is ambiguous? What did the court do here?
Answer:
The first question is a difficult one. The court does refer to the question of ambiguity, but doesn’t fully explain how the courts approach this issue. In Contracts II, we will learn that the courts use a number of techniques to determine meaning when confronted with ambiguous contractual language. One approach is to look at the entire contract in context to determine if that removes the ambiguity of the words in isolation. Concerning what the court did here, it stated that if the language here was ambiguous, the conduct/actions of Burton (not disavowing the contract after receiving a part payment, but preparing a draft deed and working toward closing the deal) suggested he regarded his letter as an offer. In other words, sometimes ambiguous language can be clarified by looking at the party’s conduct as well. This relates back to question 1.1, as well. Burton’s conduct objectively showed he intended to make an offer.
Question 1.3: In a retail situation similar to the Boots case, what would happen if the contract to purchase a good was completed when the customer puts it in her basket?
Answer: Potentially, no substitutions would be permitted. You’d be stuck with it once it was in your basket.
Question 1.4: If the customer usually makes the offer in retail contexts, is there anything stopping a seller from refusing to accept an offer because he doesn’t like a customer, perhaps because of the customer’s race or sexual orientation? Answer: Despite the ruling in an old Supreme Court of Canada (SCC) case, Christie v York Corporation
, human rights legislation across Canada now prevents such behaviour when dealing with the pubic. See also question/note 3 on pages 49-50 of the casebook.
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Question 1.5: In the Carlill case, what was it about the facts, specifically, that led the court of conclude that an offer was intended by the terms of the newspaper advertisement?
Answer: The court focused on the £1,000 that had been deposited in the bank. This showed that the Carbolic Smoke Ball Co.’s intention to make an offer, despite its extravagance, was serious. Also, the fact that the offer called for action on the part of offerees/acceptors in order to accept (using the smoke ball three times a day for at least two weeks) meant that a broad-based offer
—
to all who read or knew about the ad
—
is not a problem when the intention is clear, as it was here.
Question 1.6: As in Carlill
, there were multiple issues in Goldthorpe
. For now, we are just interested in the offer issue, but try to list them all, together with any sub issues.
Answer: The court in Goldthorpe referred to three issues: 1) Was there negligence in performing the hair removal procedure? (This is a tort claim and the court held there was no evidence of negligence.) 2) Was there a contract between Logan and Goldthorpe? This triggered the following sub issues: a. Did Logan make an offer? (Yes, both in the ad and when Goldthorpe visited Logan’s place of business.) b. Was the offer accepted by Goldthorpe? (Yes, by assenting to the terms of the proposal.) c. Did Goldthorpe provide consideration for the Logan’s promise? (Yes, when she submitted to the treatment [and also when she paid for it].) 3) If so, assuming it was breached, what was the remedy? (Yes, damages, the main part of which represented the value of her expectation to be rid of hairs, which was valued at $100.) Question 1.7: This last question foreshadows an issue we examine in the next lecture. In BC, when is a contract completed at an auction sale? See question/note 3(a) on page 58 of the casebook.
Answer: According to s 72(b) of BC’s Sale of Goods Act
, with the fall of the hammer. So, the bidder makes the offer when indicating a bid in the customary way (waiving a paddle, tugging an ear, etc.) and the auctioneer accepts with the fall of the hammer (or other customary way).
WEEK 2 Questions –
Answer Guide Question 2.1: What distinguishes a bidding process that is structured as a fixed bidding sale as opposed to one structured as an auction? Answer:
A fixed bidding sale requires the bidder to submit one price without reference to other bids. Auction sales are generally structured to allow bidders to bid against each other.
Question 2.2: Following the KA/KB analysis, when is KA formed and when is KB formed? Answer:
Contract A is formed after the bid is submitted and, according to the bidding rules, the tendering process is closed and the bid is stated to be irrevocable. Contract B is formed when the winning bid is accepted.
Question 2.3: In your opinion is the traditional approach to tenders (
Harvela
) or the KA/KB approach (
Ron Engineering
) the better one? Explain. Answer:
No right answer, but the finding of a Contract A creates legal certainty of rights and obligations, such as the promise of irrevocability.
Question 2.4: In Ron Engineering and MJB Enterprises
, we see the KA/KB analysis applied between owners and contractors. In some larger contracts, general contractors may base their bids on bids they have in turn invited for subcontracting work covering just part of the overall project. Does the KA/KB analysis also apply to subcontracting bids? See page 70, note 5. Answer:
Yes, the relationship between general contractors who receive bids from subcontractors is also governed by the KA/KB analysis, which means that contractual obligations concerning those bids will apply in the same that they do between owners inviting bids from contractors. See Naylor Group Inc v Ellis-Don Construction Ltd
, 2001 SCC 58. Question 2.5: BC Hydro enters into and administers contracts worth hundreds of millions of dollars each year. Once bidding is closed in a BC Hydro tender, do you think BC Hydro has to act in good faith when considering the bids? If yes, what legal arguments could be made to support this obligation? See page 70, note 3. Answer:
This is a difficu
lt question, so don’t worry if an answer didn’t come to you right away or at all. There are at least two possible answers. One, there is an implied term to exercise good faith (based on an MJB Enterprises analysis), or two, following Bhasin
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(SCC 2014) and other case law, there is a general obligation to exercise good faith during contractual performance (at least in terms of not actively misleading the other party). You will look at implied terms and the Bhasin
rule in more detail in Contracts II.
WEEK 3 Questions –
Answer Guide Question 3.1: In Williams
, what argument was used to suggest that Mary should not be entitled to the award? Answer:
Mary was not induced to disclose information about the murder by the offer set out in the handbill. She disclosed the required information as a result of circumstances unrelated to the offer.
Question 3.2: In Clarke
, how does the Court describe pre-existing case law that deals with similar situations? In other words, how does the court rationalize the different conclusions in these earlier cases with the conclusion it reached in this case? Answer:
The cases considered and reviewed by the Court are as follows: Williams
—
this case held that the motive of the informer in accepting the offer is irrelevant (although the language of the court in Clarke
was less than clear on this point); Gibbons v Proctor
—
in this case, it was held that a person can accept before she knows of an offer (the court in Clarke
held that Gibbons
was incorrectly decided, and later cases have affirmed this); Fitch v Snedaker
—
this case stands for the proposition that the motive inducing consent may be immaterial, but the consent is vital (without consent there can be no contract, meaning the offeree must at least be aware of the offer and not have forgotten about it).
Question 3.3: In Butler
, the equipment was delivered at a higher price than originally stated. Was the Buyer bound to pay the increased price? What is the court's analysis? Answer:
The traditional analysis in these battle-of-forms cases is to look at each communication sequentially, and determine which counter offer was the last one not objected to. This counter offer, once accepted, forms the basis of the contract. The better way, said Lord Denning, is to consider all the communications between the parties and their conduct to reach as decision as to the key points upon which the parties have agreed. On the facts of this case, Denning concluded that while Butler’s initial offer to s
ell included a price variation clause, the contract was based on Ex-Cell-
O Corp.’s form, because Butler acknowledged those terms when it completed and returned the tear-off slip.
Question 3.4: Assume that you were dealing with a seller, and you emailed an offer to purchase some materials. You received an immediate acceptance from the seller, also by email. You then realized that you had made an error by reversing two numbers, resulting in a vastly inflated purchase cost. Are you bound? Look at the Electronic Transactions Act. Answer:
No, s 17 of the Electronic Transactions Act
provides that if your electronic agent (ISP) did not provide you with an opportunity to correct your error, then your offer is invalid and unenforceable: provided you notify the seller as soon as practicable, return or destroy any consideration you may have received (and as instructed by the seller), and you have not materially benefitted from the mistake.
WEEK 4 Questions –
Answer Guide Question 4.1: In discussing Dawson’s response to the defendant’s offer, what was Justice Rand getting at when he referenced Cardozo J’s expression that a writing may be imperfectly expressed but still “instinct with and obligation?”
Answer:
Where offer and acceptance language is not clear, the courts prefer to find that the intended contractual arrangement is bilateral (a promise for a promise) rather than unilateral (a promise for an action). Bilateral contracts become binding upon acceptance, and even though performance may be delayed until some time in the future the parties are bound from the moment the contract is entered into. This creates certainty and the courts support this policy objective. In interpreting Daw
son’s response, Rand J stated that precise language is not required to create contractual obligations. In his letter of April 12, and despite not saying this expressly, Dawson was impliedly promising to take the defendant to the place where Dawson had earlier staked claims (the Leduc River site). It was clear enough that that was what he intended to say, thereby creating a bilateral contact (a promise for a promise). Question 4.2: In Dawson
, Rand J discussed how the defendant’s letter of June 7 to Dawson amounted to an anticipatory breach of their bilateral contract. What does this mean? Answer:
An anticipatory breach (or repudiation) occurs when one party demonstrates to the other an intention not to perform its obligations in advance of the time set for performance. The site visit was planned for August or September. By indicating in June that it wasn’t going to fulfill its obligation under the contract to take Dawson to inspect the site, the defendant committed an anticipatory breach.
Question 4.3: In Felthouse
, could the nephew have sued the uncle, if the horse had been reserved from the sale but the uncle had then changed his mind? [Question 1 on page 102 of the casebook.] Answer:
Yes, but only if the nephew had done something to express his acceptance. Silence, we learn, would not be enough, even if in his own mind the nephew considered that he had accepted the offer.
Question 4.4: If you were provided with unsolicited goods, or unsolicited services (for example, an increased data plan for your cell phone), what argument could you make that you have no legal obligation to pay for them? Assume that the goods or services were intended for you for your personal use, and that you had no prior agreement with the seller that obligated you to reject the goods or services to avoid liability. [See also questions 2 and 7 on pages 102-104 of the casebook.]
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Answer:
Was this too easy? The answer is in the notes immediately before the question. This situation is covered by ss 11-14 of the Business Practices and Consumer Protection Act, SBC 2004, c 2. Unsolicited goods and services are defined in s 11. A consumer has no obligation in respect of such goods and services unless he expressly acknowledges in writing that he accepts them per s 12(1). Without this legislation, the use of the goods or benefiting from the services might be construed as acceptance by conduct. Please review these provisions. Note that if you knew or ought to have known that the goods or services were intended for someone else, the goods or services would not meet the definition in s 11, and you might not be protected if you used the goods or services.
Question 4.5: Could the seller in Eliason have accepted by dispatching a rider who arrived at Harper’s Ferry before the wagon? If so, when would the acceptance by effective? [See question 1 on page 94 of the casebook.] Answer:
Answer: Yes, acceptance by a rider back to Harper’s Ferry (as opposed to by a wagon) would not prejudice the offeror in any way and would be effective. The acceptance would be effective when it arrived. If the acceptance arrived after the wagon, that would raise issues about the appropriateness of the method used, and also whether the offer had lapsed (lapse of offer is considered later in the chapter).
WEEK 5 Questions –
Answer Guide Question 5.1:
Describe the general rule concerning communication of acceptances, and how the postal acceptance rule (PAR) is an exception to it? Answer:
The general rule (or receipt rule) usually means that the acceptance must be received by the offeror, but not necessarily that the offeror has read, heard, acknowledged or is even aware of the acceptance. There are exceptions, though. The PAR is one of those exceptions. If the PAR applies, because it is reasonable to use the post in the circumstances and there is no contrary intention as to its application, the acceptance becomes effective when it is delivered to the postal authorities (that is, when it is dispatched) and regardless of whether the acceptance is actually received by the offeror. Question 5.2:
Assume that two parties in BC were negotiating a contract, and after a month of back-and-forth one of the parties made an offer by mail. Assume also, that the contract is bilateral and that the offeror did not stipulate anything concerning how the acceptance needed to be communicated. Describe some circumstances that might lead a court of conclude that it is not reasonable to expect the PAR to apply. Answer:
Some circumstances that might lead a court to this conclusion, include: - a short closing time has been proposed - the product or service involves a volatile market and delays will affect pricing - previous dealings between the parties were concluded through electronic means. These circumstances point to further delay being “absurd or inconvenient.”
Question 5.3:
Assume you were negotiating a business contract with a supplier. If you sent an email to the supplier accepting a supply offer they made you, when would the acceptance take effect and the contract come into existence. Answer:
If you were communicating u
sing your business email accounts, s 18(1) of BC’s Electronic Transactions Act states that information “in electronic form is sent when it enters an information system outside the control of the originator.” And s 18(2) stipulates that information is deemed received when it enters an information system designated or used for the purposes at hand and is capable of being retrieved. However, the Electronic Transactions Act
isn’t clear about when the communication is effective. The common law, which generally adopts the receipt rule for instantaneous communications, may continue to apply. In most cases it won’t make a difference, though, because under s 18, the point when a communication is sent/dispatched and received will be the same.
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Question 5.4:
If you wanted to lock down an offer a construction company made you to do a small project, but you needed more time before committing to an agreement, how could you ensure that its offer would kept open for say 30 days? Answer:
A firm offer by the construction company would not be enough –
its promise to keep the offer open would not be binding without more. To ensure that the offer is kept open, structure the offer as an option by providing consideration to the company for its promise to keep the offer open for 30 days (options are often valued at around 5% of the value of the main contract) or ask the company to put its promise under seal. The offer would then be open for acceptance any time within the 30 days, and could not be revoked.
Question 5.5:
Lapse rules tell us that open-ended offers come to an end after a “reasonable time” has elapsed, and what is a reasonable time depends on the circumstances. Briefly stated, what does the Manchester Diocesan case add to the law on this issue? Answer:
Although there was some “dancing on the head of pin” in the court’s reasoning in Manchester Diocesan, the essence of the decision is that in determining what is a reasonable time, all circumstances can be considered, including post-offer circumstances (for example, communications between the parties that might extend what would otherwise be a shorter “reasonable time”). The court held that if the offeree does not accept the offer within a reasonable period of time, looking at all the circumstances, he or she must be treated as having refused it. This test simply involves "an objective assessment of facts and the determination of the question whether on the facts the offeree should in fairness to both parties be regarded as having refused the offer". And the "subsequent conduct of the parties is relevant" in determining the answer to this question.
Question 4.5: Could the seller in Eliason have accepted by dispatching a rider who arrived at Harper’s Ferry before the wagon? If so, when would the acceptance by effective? [See question 1 on page 94 of the casebook.] Answer:
Yes, acceptance by a rider back to Harper’s Ferry (as opposed to by a wagon) would not prejudice the offeror in any way and would be effective. The acceptance would be effective when it arrived. If the acceptance arrived after the wagon, that would raise issues about the appropriateness of the method used, and also whether the offer had lapsed (lapse of offer is considered later in the chapter).
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WEEK 6 Questions –
Answer Guide Question 6.1:
What is the basic rule or test used by the courts to determine the meaning of vague or uncertain terms in a contract? How did the Federal Court of Appeal apply the test in the CAE Industries
case? Answer:
The test used is that a court must make every effort to ascribe some meaning
to the words of the contract. “If the real intentions of the parties can be collected from the language within the four corners of the instruments, the court must give effect to such intentions by supplying anything necessarily to be inferred and rejecting whatever is repugnant to such real intentions.” In CAE Industries
, the Federal CA held that the letter agreement requiring the Government to use its “best efforts” to find additional work up to 700,000 hours meant, in light of the language used in the contract, that consultation and negotiation with other government departments and agencies would need to occur. The contract was not so vague and uncertain as to be unenforceable. Question 6.2:
Which sections of the BC Sale of Goods Act
are equivalent to the ones cited in this case? Why did the “reasonable price” rule in the legislation not apply on these facts? Answer:
The English Sale of Goods Act
was passed in 1893. The sales of goods legislation in the common law provinces of Canada are modeled on and very similar to this legislation. It has only been modified slightly over the years. The sections of the English act referred to May & Butcher
are ss 8-9. The equivalents in the BC legislation are ss 12-13. Lord Buckmaster was not clear why s 8 (our s 12) and the “reasonable price” rule did not apply. However, he did say that the “agreement to agree” provision in the contract was similar to appointing a valuer as described under s 9 (our s 13), and that section provides that if a price is not fixed as set out in the contract it is avoided. Another judge, Viscount Dunedin, was clearer; he said that the “reasonable price” rule only applies if the contract is silent
on the question of price. In this case, the contract was not silent on price but made provision for further agreement by the parties, which, said the court, meant that the contract was void for incompleteness (given that price was an essential term on these facts).
Question 6.3:
Can you think of an argument why the price of petrol in Foley would not be essential, whereas the price of surplusage in May & Butcher
would be? Answer:
In May & Butcher
, the purchase of the surplusage was the main purpose of the contract. In Foley
, the purchase of the petrol was part of a supplemental agreement. The main agreement concerned the purchase of land, and the parties were agreed on the price of the land.
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Question 6.4:
Assuming the parties have a binding obligation to negotiate in good faith, describe at least two issues relating to certainty that arise. Answer:
As mentioned in the comment on pages 169-75, one issue
has to do with what the good faith standard requires of the parties in the circumstances, and that will apparently depend on the “particular facts of the case.” Another issue
has to do with what the appropriate remedy will be in the event of breach of the obligation to negotiate in good faith. For instance, it will often be difficult to know whether an agreement would have been reached if good faith had been exercised and precisely what the terms would be.
Question 6.5:
Assume you are negotiating an agreement in the $10,000 range with a supplier. After some back-and-forth over the phone and by email you consider that all the essential terms have been agreed to. Even though you have mentioned to the supplier during negotiations that the agreement will need to be formalized, how can you ensure that you are not bound prior to the formal contract documents being signed? Answer:
During negotiations (early on is best), clearly state that any agreement you reach is “subject to
contract” or similar wording. Stating that your preliminary understanding is “subject to the preparation and approval of a formal contract, and until then there is no binding agreement between the parties” would make it even clearer that the parties’ intentions require formalization in order to be bound.