London Drugs Ltd. v. Kuehne & Nagel International Ltd.
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Issues
Can the respondent employees obtain the benefit of the limitation of liability clause contained in the contract between their employer and the appellant so as to limit their liability to $40?
Ratio
In order for an employee to obtain a benefit from a limitation of liability clause in a contract between their employer and a customer, two requirements must be satisfied:
1. the limitation of liability clause must, either expressly or impliedly, extend its benefit to the employees (or employee) seeking to rely on it; and
2. the employees (or employee) seeking the benefit of the limitation of liability clause must have been acting in the course of their employment and must have been performing the very services provided for in the contract between their employer and the customer when the loss occurred.
Even if the above requirements are not satisfied, an employee may still establish the existence of a trust or agency so as to obtain a benefit which the contracting parties intended him or her to have, notwithstanding lack of privity.
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Principled Exception
Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd.
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Issues
Can Can-Dive benefit from the waiver of subrogation clause in the contract between Fraser River and their insurance company?
Ratio
The test in London Drugs applies to all third parties and not just employees.
The two-part “Principle Exception” test is as follows:
1. Did the parties to the contract intend to extend the benefit in question to the third party seeking to rely on the contractual provision?; and
2. Are the activities performed by the third party seeking to rely on the contractual provision the very activities contemplated as coming within the scope of the contract in general, or the provision in particular, again as determined by reference to the intentions?
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Lecture 11
Intention, Certainty and Consideration
Wiebe v Bobsien
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Issues
Is the interim agreement a form of option that could be cancelled by the Defendant prior to August 18th, or is it a binding agreement for sale and purchase of the Crescent Beach Property?
Ratio
A condition precedent will not usually prevent the formation of a contract but will simply suspend the obligations of the parties until the condition precedent is met.
In some instances, a condition precedent may prevent the formation of a contract if the agreement itself and the surrounding events indicate that it was never the intention of the parties to bind themselves to a contract.
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Wiebe v Bobsien 1986
LEAVE TO APPEAL TO SCC REFUSED
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Ratio
There are three types of condition precedents:
ENTIRELY SUBJECTIVE: - No Contract - Such a condition is entirely dependent on the subjective state of mind of the contracting parties. It is only a standing offer. Since there is no contract, there is no obligation to act in good faith to remove the condition. Either party can walk away from the contract. The contract does not exist until the condition precedent has been met or waived.
CLEAR, PRECISE AND OBJECTIVE: - Contract - When the condition is fulfilled, the contract is completed. Neither party can withdraw from it, although performance of the contractual obligations remain in suspense until the objective condition precedent is fulfilled.
PARTLY SUBJECTIVE AND PARTLY OBJECTIVE: - Contract - In this situation, there is an implied term that the parties will take all reasonable steps to cause the condition precedent to be fulfilled. This categorization applies when the obligation is objective, but one of the contracting parties has to do something to cause the condition precedent to be fulfilled.
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Reciprocal Subsidiary Obligations
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