In examining whether to give aid to a party who is involved in a prohibited contract the court should look to the policy considerations surrounding the legislation in question to see if this contract is contrary the goals of the legislation
The court should also look to see if the punishment (what the party is being denied of) fits the crime (the statutory breach)
Class note: USE DOHERTY
Facts:
The applicant married husband and moved to Canada
In Sept. 1991 she received a letter stating that she was approved for permanent residence, subject to Governor-in-Council approval and pending other requirements are met
Applicant believed this letter meant she could work in Canada
She obtained a job in May of 93, and worked there until Oct. of 93
She received her official residency in Sept. of 93
She was fired in Oct. of 93 and denied unemployment benefits on the grounds she had only been working legally for 1 month
The Tax Court Judge noted that she had acted in good faith but held she was in violation of Immigration Regulations and wasn't able to receive unemployment benefits
Appeal to Federal Court
Issue:
Should the public policy doctrine that contract that contravenes an Act of Parliament operate in the context of this case thus denying the applicant unemployment benefits
Does the doctrine of illegality need to be updated
Decision:
For applicant, she is a legal immigrant and acted in good faith
Reasons:
Judge believes the court needs to address the doctrine of illegality as judges are just making exceptions to it anyway
Judge sees this principle as more valuable:
Where a contract is expressly or impliedly prohibited by statute, a court may refuse to grant relief to a party when, in all of the circumstances of the case, including regard to the objects and purposes of the sta tutory prohibition, it would be contrary to public policy, reflected in the relief claimed, to do so.
The judge examines what the policy considerations (purposes) related to immigration employment laws.
Purpose is to prevent illegal immigrants from breaking Canadian law and collecting Canadian benefits
This doesn't mean that everyone who works without a permit in Canada should be judged like this
Not all are intending to break the law
The document shows she acted in good faith, and that she may have been misled by it.
Judge then examines whether the punishment (denial of unemployment benefits) is a proportionate punishment for the breach
That section of the statute has no particular penalty's
Penalty would have to be pursued under Immigration Act
This act is only concerned with those who knowingly fail to obtain work permit
There is no penalty available under this statutory breach
No defense for defendant to allege a breach of the covenants on part of the plaintiff
Neither promise is conditioned upon the other
Sale for good contracts would never look like this
Conditions and dependent (both perform tasks, one depends on performance of other)
Performance of one depends on the prior performance of another
Until the prior condition is performed, the other party is not liable to an action on his agreement
Delivery of goods depending on performance of payment
Mutual conditions (both perform tasks that must take place at the same time)
If one party is ready and offered to perform his party, and the other neglected or refused to perform his, the ready party may bring an action against the other
Doesn't matter that neither is obliged to go first
In this case there was a prior condition that was needed to be performed before the defendant could be held liable
The plaintiff did not perform the condition of finding sufficient security, so the judgment is for the defendant
Rules of Civil Procedure (Ontario Superior Court of Justice 1990)
If someone is bringing an action for breach of contract it is assumed that they met all the conditions necessary in order to bring their action.
If the other party wishes to say there was a condition that wasn't met the other party must bring it to the attention of the court
McDonald v Murray (1885)
Problematic aspect of paying for damages?
Parties generally in contracting intend on getting what they bargained for when they part with what they are to give
They do not intend on giving what they are they are to give in exchange for performance or payment for lack of performance.
Payment for lack of performance is not generally a part of the contract and if it is it should be explicitly stated
Bettini v Gye
Ratio:
In determining whether a stipulation is a condition precedent or an independent condition the court asks:
If a particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the plaintiff a thing different in substance from what the defendant has stipulated for, then it is a condition precedent
If failure to perform it only partially affects what the defendant has stipulated for the defendant may be compensated in damages
Facts:
Defendant is director of Royal Italian Opera in London
Plaintiff is a professional singer
The two contract:
Plaintiff gets hired as prime tenor for 4 months at 150/month
Shall not sing anywhere out of the theatre for 1 year
Unless 50 miles from London or out of season
Plaintiff shall show up a week before commencement without fail
Bunch of other junk
Plaintiff couldn't show up a week before due to illness
Can any excuse be brought that allows the plaintiff to fail to perform a part of the contract and have the contract still enforced?
Decision:
For the plaintiff, the condition was not a condition precedent, defendant must seek redress through damages
Reasons:
Answer to issue depends on whether paragraph 7 (the requirement to show up on time) is a condition precedent to the defendant's liability, or an independent agreement
If condition precedent the defendant the defendant is not yet liable to uphold the agreement
If an independent agreement that contract cannot be voided but the defendant can recover damages for breach of the independent clause
A party can make any clause a condition precedent or an independent condition by showing his intent to have it so
Good drafting takes care of this
There is no such intention in this contract
The court looks at the contract as a whole and follows the following rule:
If a particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the plaintiff a thing different in substance from what the defendant has stipulated for, then it is a condition precedent
If failure to perform it only partially affects what the defendant has stipulated for the defendant may be compensated in damages
In this case the length of the contract (4 months), the fact that the plaintiff has agreed not to sing in London for a year by fulfilling the contract, and the fact that his lateness could only effect performances for the first week or so,
In the case of an unintentional breach (such as illness), the defendant's may still be dissolved of contractual obligations to the plaintiff if the damage caused by the breach goes to the root of the agreement
The court will examine the facts to see if there were any implicit conditions available to the defendant that would have allowed them to uphold the contract. If not, the obligations are dissolved.
Facts:
Defendants were putting on a French opera
Contracted the Plaintiff ('s wife) to play the lead female role
The play was delayed, the music was delayed, this was the first time it was being put on and the length of the run would depend on the success of the production
The plaintiff was taken ill 5 days before the start of the opera
Plaintiffs claim defendant said she would be taken back when she got better
Defendants claim the length of illness was unknown and the plaintiff stated she could not make the opening night, which the defendants took as a rescission of the contract
Jury found the plaintiff did not rescind the contract
Issue:
Did the Plaintiff's illness discharge the defendants of the responsibility of upholding the contract, did it go to the root of the contract?
Decision:
For Defendants, Severity of failure made it go to the root of the contract
Reasons:
The judge notes that the fact that she was sick shows there was no breach of the contract by the plaintiff, and so no action can lie against her (damages cannot be recovered)
But in certain cases the damage caused unintentionally can go to the route of the contract and dissolve the defendant's obligation
Charter-party example:
Ship is chartered to go to a port and load a cargo
If ship is delayed by perils the ship owner is excused
But if the delay is so great that it goes to the root of the matter it frees the charterer from his obligation to furnish a cargo
The judge notes the importance of the lead performer being able to perform when it is a new production, whose success will depend on this performance
Whether or not her failure to perform goes to the heart of the matter is decided by looking at the evidence (weighing what options were available to the defendant's)
If she could be replaced temporarily than it would not go to the root
If she could only be replaced by a performer who required higher pay and permanent engagement, than the defendant's must take this option and are dissolved
Maple Flock Company, Ltd. V Universal Furniture Products (Wembley), Ltd.
Ratio:
When a contract involves a series of payments or shipments, and a party defaults on a payment or shipment, the court will:
In the case of default on a payment (buyer's breach):
Examine the conduct to see whether it amounts to a rescission, to an absolute refusal to perform the contract. Examine whether the conduct evinces an intention no longer to be bound by the contract
In the case of default on a delivery (seller's breach):
The objective test of the relation in fact of the default to the whole purpose of the contract. The court will look at:
The degree of probability or improbability that such a breach will be repeated (would repetition be reasonable to infer?)
Are the consequences so severe that the breach went to the root of the matter?
Facts:
Appellant company makes rag flock (fabric stuff)
Respondent company makes furniture, including beds that use flock
Breach of contract
Contract:
Sale of 100 tons of black flock, at set price, 3 loads per week as needed
Flock must meet government standards
Rag Flocks Act: Flock must not exceed 30 parts chlorine per 100,000 parts flock
The respondents take a sample from one shipment that comes back at 250 parts/100,000
The respondents voice concerns but take several more shipments before deciding to rescind contract
The appellants present a writ claiming damages
The judge finds that the appellants did operate their business well, and that there wasn't a reasonable probability that a defective shipment might happen again
Issue:
Is a defective shipment grounds for rescinding a contract?
Is the condition that the shipments conform to regulation a dependent condition that would allow for expediation?
It may be that any breach of condition in one of the installments might repudiate the contract
Or, it might be that one breach doesn't have consequences extending beyond that breach
It is up to the courts to decide case by case.
How do they decide?
The Judge looks at the case-law informing the Act
The tradition was to see if the acts and conduct of the party show intention to no longer be bound
This history relates to a buyer not making prompt payments
The test for a defective delivery may be different
Judge concludes:
"The true test will generally be, not the subjective mental state of the defaulting party, but the objective test of the relation in fact of the default to the whole purpose of the contract."
Does the default go to the root of the agreement?
Two grounds on determining the relation of the breach to the whole purpose of the contract
The ratio quantitatively which the breach bears to the contract as a whole
The degree of probability or improbability that such a breach will be repeated
Case by case, there could be a case where the illegality of the shipment was so severe that it justifies an immediate rescinding
