May & Butcher Ltd. v. R.
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ISSUES
Whether or not the terms were sufficiently defined to constitute a legal binding contract
RATIO
An agreement between the parties to agree in the future on an essential term is no contract at all.
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Hillas & Co. v. Arcos Ltd.
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ISSUES
Was the option clause a binding agreement?
Were the missing terms essential to the validity of the contract?
RATIO
Missing terms in an agreement (price, delivery date, etc) can be implied based on the customary practices of the trade, when the intention to enter into a contractual relationship by the parties are clear.
A court will strain to find a contract where common sense tells you that there is one
In contracts for future performance over a period of time, the parties may not be able. Nor may they desire, to specify any matters of federal, but leave them to be adjusted in the working out of the contract, yet this is still a valid contract
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Foley v. Classique Coaches Ltd.
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ISSUES
Was the supplemental agreement binding?
RATIO
If the terms are capable of being made clear, the court will help out;
If both parties have acted on behalf of the contract, the pieces can be salvaged
Where there has been a course of dealings in the past, missing terms such as price may be implied and a reasonable price may be assumed
(Court will help define terms if: intention + mechanism given)
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Vagueness
R. v. CAE Industries Ltd
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ISSUES
1) Was a contract intended?
2) Is the contract vague and uncertain or incomplete?
3) Is the contract binding?
4) Was the contract breached?
RATIO
The Court will use a reasonable person test, to determine the government’s intention when entering a contract
Contracts will not be considered void for uncertainty of the terms if said terms can be interpreted by the courts
Government pronouncements might be binding rather than being a mere statement of intention
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Lecture 5
Contract Formation/Agreements to Negotiate
Empress Towers Ltd v Bank of Nova Scotia
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Issues
(1) Is the renewal clause void either for uncertainty, or as an agreement to agree?
(2) If the renewal clause is not void, what does that mean?
Ratio
1. The courts will labour to give proper legal effect to any clause that the parties understood and intended to have legal effect
2. Where there is a standard (market value in this case) to measure a duty, the courts will imply the term of negotiating in good faith, and that agreement will not be unreasonably withheld to promote the officious bystander and business efficacy principles
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Mannpar Enterprise Ltd v Canada
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ISSUES
Whether the language of Clause 7 was uncertain?
Should there have been an implied term requiring the defendant, , to negotiate for a renewal or negotiate in good faith for a renewal?
RATIO
There is no common law obligation to negotiate in good faith, it must be in the contract either expressly or impliedly
In relation to this case, an obligation to negotiate in good faith may impede with the fiduciary duty to the Band
Each contract must be looked at within the context of its own facts and the language used by the parties
The implications of a term can only be made if it is the case that both parties would likely to agree that such a term should be implied in order to satisfy the officious bystander test
A term can be implied in a contract if it is found to be necessary by a court in order to give business efficacy to the contract. A court will not, however imply a terms into a contract merely because such a term would be reasonable or more satisfactory
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Enforcement of Agreements to Negotiate in Goof Faith
Contract Interpretation/Contract performance
Bhasin v Hrynew
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Issues
Is there a duty on parties to perform their contractual obligations honestly and in good faith?
(Note: this case is not specifically directed at negotiations)
Ratio
There is a general organizing principle of good faith that underlies many facets of contract law.
In general, the particular implications of the broad principle for particular cases are determined by resorting to the body of doctrine that has developed which gives effect to aspects of that principle in particular types of situations and relationships.
The duty of honest performance is a manifestation of the general organizing principle of good faith and it applies to all contracts and requires the parties to be honest with each other in relation to the performance of their contractual obligations.
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Anticipation of Formalization
Bawitko Investments Ltd v Kernels Popcorn Ltd
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Issues
Was the oral contract a complete and binding contract or was its enforceability subject to the parties’ subsequent agreement on all of the terms and conditions to be contained in the contemplated written franchise agreement?
Ratio
When all essential terms of a formal document have been decided and there is an intention that the agreement shall thereupon become binding, the parties will have fulfilled all of the requisites for the formation of the contract.
The fact that a formal written document to the same effect is to be subsequently prepared and signed does not alter the binding validity of the original contract.
When the original contract is incomplete because essential terms intended to govern the contractual relationship have not been settled or agreed upon or the contract is too uncertain or general to be valid and is dependent on the making of a formal contract or the understanding or the intention of the parties, even if there is no uncertainty to the terms of their agreement, but their legal obligations are to be deferred until a formal contract has been approved and executed, the original contract does not constitute a valid contract.
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Lecture 6
Exchanges and Bargains
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