iv. Would one party be unjustly enriched if the contract were not enforced
Be careful enforcing contracts that are illegal/against public policy in situations where the only thing left to do with the contract is for the complainant to pay
New Solutions Financial Corporation v Transport North American Express Inc.
Doctrine of “notional severance” as opposed to blue-pencil
Issue
Ratio
Notes
Credit agreement with too high of interest (extra fees fell under interest)
but trial judge uses “notional severance” to change interest rate to make it legal.
Court of Appeal uses blue-pencil and severs illegal clause
• Notional severance is available, allowing judges to change the interest rate to a particular rate without severing the illegal clause from the contract entirely
• Determination of appropriate remedial consequences will hinge on a careful consideration of the specific contractual context and the illegality involved
Problems with blue-pencil approach:
- the only contract the parties can be said to agree to is the one they in fact did
- was originally used in order to ensure deeds were valid -> intentions didn’t matter
11.A More Modern Approach?
Still v The Minister of National Revenue
Party acts in good faith but unknowingly behaves illegally -> should courts be harsh
Issue
Ratio
Notes
P believed, in good faith, they could legally work (permanent resident letter of approval was confusing
actually is able to work months later, is fired one month after this
• 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
Chapter Eight: Performance and Breach
Repudiatory Breach
Kingston v Preston
When can an action for breach be brought?
Ratio
Notes
• The judge lists out three types of contracts and when an action can successfully be brought for breach :
1.Mutual and independent (both perform tasks that are unrelated)
•Either party may recover damages from the other for the injury he may have received by a breach of the contract
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
2.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
3.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 the sale of the business was dependent upon sufficient security which was not received
Note Cases
Rules of CivPro-bringing breach action + how paying damages isn’t a good solution
Notes
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
How the Court determines if a stipulation is a condition precedent or an independent condition
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
Court looks at the non-compete aspect
And the fact lateness could only affect the first few performances, in which case D could get damages for breach
Will damage caused by unintentional breach goes to root of contract and dissolve obligations)
Issue
Ratio
Notes
P contracts to sing in D’s opera (First showing, a lot riding on performance)
P gets sick
D gets replacement and releases P
P wants back in
• 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.
New Opera needed to be on time, and budget
Had to get understudy to replace, understudy would only agree if she got to do it permanently
Can a single breach justify rescinding entire contract?
Issue
Ratio
P contracts with D to deliver product over period of time
One shipment breaches government standards
Can D rescind contract?
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:
1.The ratio quantitatively which the breach bears to the contract as a whole
2. The degree of probability or improbability that such a breach will be repeated (would repetition be reasonable to infer?)
3. Are the consequences so severe that the breach went to the root of the matter?
