When a document containing contractual terms is signed, then in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.
If there be a contract which has been reduced into writing, verbal evidence is not allowed to be given of what passed between the parties, either before the written instrument was made, or during the time that it was in a state of preparation, so as to add to, or subtract from, or in any manner to vary or qualify the written contract
Federal Commerce & Navigation Co. Ltd. v Trade Export S.A.
Some weird boat contract where parties disagree on the meaning of terms
Issue
Ratio
Notes
Parties disagree on meanings of terms in contract
Particular type of contract (charter) has a general way it is usually interpretted
• Standard Forms will be given Standard interpretations, the intents of the parties will not be considered
Courts don’t care about subjective intentions of parties
Policy reasons: 1. Helps predictability, 2. Allows parties to allocate risk more precisely
Prenn v Simmonds
Interpretation of contract not limited to linguistic meaning, objective test
Condition not met because profits are left in subsidiaries of company
We’re the profits of subsidiaries implied?
•The contractual intent of the parties is to be determined by reference to the words they used in drafting the document, possibly read in the light of the surrounding matrix of facts that was prevalent at the time
•AKA Negotiations and party's intentions should be excluded; what would reasonable person think of contract’s meaning
Question is: “What would anyone engage in this contract”
How to determine matrix of facts: “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man” (Investors Compensation Scheme, Ltd. v West Bromwich Building Society)
Farah v Barki
Allowing evidence in of fraud
Issue
Ratio
Notes
P signed contract buying shares believing he would sell them to 3rd party
This was misrepresentation
P is stuck with useless shares
•Misrepresentation of a fact, prior to entering into a contract, is grounds to void the contract ab initio due to fraud.
•Actions “equivalent to fraud” are included but this is tricky-> someone might argue they meant what they said at the time and then a supervening event occurred
“Where there has been fraud or conduct equivalent to fraud on the part of the defendant, there may be a ground for putting the defendant to elect between having the transaction annulled altogether or submitting to the rectification of the deed in accordance with the plaintiff's intention. This rests on unilateral mistake in one party, fraud or conduct equivalent to fraud in the other party"
Equivalent to fraud is huge loophole
Curtis v Chemical Cleaning and Dyeing Co., Ltd.
D misrepresents the extent of limitation clause, tries to rely on it
Issue
Ratio
Notes
P signs receipt with exemption clause
Is told liability clause is limited to liability of a certain kind - D damages item in different way and tries to rely on liability clause
•Verbally describing the contract as relating to a particular fact when it in fact refers to something else is misrepresentation (Fraud)
•Oral evidence can be given regarding the establishment of a misrepresentation
Canadian Indeminity Co. v Okanagan
Note Case: Reiterates Curtis and includes innocent misrepresentation
Issue
Ratio
Notes
Note Case
•"A party who misrepresents, albeit innocently, the contents or effect of a clause inserted by him into a contract cannot rely on the clause in the face of his misrepresentation"
Note Case
Hawrish v Bank of Montreal (Key Case)
P contracts with D, D gives P collateral agreement, court explains collateral agreements admissibility
Issue
Ratio
Notes
P signs agreement with D
P is given oral assurance he would be released from guarantee if certain conditions were met
They were
D did not release P from agreement
•Collateral agreements can be admissible by parol evidence if it is an independent agreement that could be made without writing, and is not inconsistent or contradictory to the main contract.
•The consideration of the collateral agreement must not just alter the consideration of the main contract. In the case that it just alters the consideration of the main contract the court would just incorporated into main contract.
•Parol evidence doesn’t keep out collateral or post-contractual evidence so long as they are supported by consideration
“In exchange for you signing contract A, we will release you from your obligations under contract A if X occurs” -> this is valid collateral agreement so long as it doesn’t contradict Contract A -> IE if contract A explicitly stated: “you will not be released from obligations under this contract under any conditions” the collateral agreement would be void because it contradicts a clause
Collateral Agreement: tenant notices problem w/ property, agrees to resign lease if landlord takes care of it
Issue
Ratio
Notes
P is tenant, notices rabbit infestation
Agrees to resign lease on condition landlord takes care of rabbits
Landlord doesn’t, P brings action
Step 1: would collateral agreement fit into main agreement
Step 2: does the side agreement effect the consideration of the main agreement
I don’t know what “effect the consideration of the main agreement means”
This case isn’t very helpful
Pym v Campbell
Parties agree to K but attach condition precedent that K is not binding unless ____
Issue
Ratio
Notes
P & D agree to a contract, but agree orally that contract isn’t binding without approval of 3rd parties
•Evidence to vary the terms of the agreement in writing is not admissible, but evidence to show that there is not an agreement at all is admissible.
•Verbal agreement that attached a condition precedent to the contract is admissible
The condition precedent is a statement that there is no contract unless certain conditions are met
Needs to be consensus ad idem
“if you want to do this put the documents in escrow”?
Corbin on Contracts
A summary of the need to include the “matrix of facts”
Note Case
•"It is therefore invariably necessary, before a court can give any meaning to the words of a contract and can select a single meaning rather than other possible ones as the basis for the determination of rights and other legal effects, that extrinsic evidence be admitted to make the court aware of the "surrounding circumstances," including the persons, objects, and events to which the words can be applied and which caused the words to be used."
A collateral agreement that looks like it evokes promissory estoppel will be valid consideration
The promise was made, it was meant to be acted upon, and it was in fact acted upon (they signed the contract). Now there is a detriment
The promise induces the plaintiff to sign->plaintiff agreeing to sign is valid consideration as otherwise they would not have
Note case: "Where, as here, the collateral agreement is consideration for the entering into the written agreement, the exclusionary clause cannot prevail against it" (Francis v. Trans Canada Trailer Sales Ltd ) Sask court of appeal -> clause excluding previous representations doesn’t apply
Tilden Rent-A-Car v Clendenning
Party signs contract, asks if paying for insurance covers everything, clerk says yes, exclusion clause exists
Exclusion clause existed for if the renter was intoxicated
•Evidence that that a party did not take reasonable measures to draw unusual contractual terms to the attention of the signing party is admissible to show that the signature could not have amounted to a representation that the party accepted all exclusion clauses.
•In absence of evidence that reasonable measures were taken to make the party aware, the party deny knowledge does not need to prove fraud, misrepresentation or non est factum
This is especially true in cases where the contract is signed in a hurry and situations where the contracts is standard and does not usually include such stringent limitation clauses
