Contractual Obligations – Prof. Helge Dedek Introduction 1

Every person has a duty to honour his contractual undertakings.

Payment means not only the turning over of a sum of money in satisfaction of an obligation, but also the actual performance of whatever forms the object of the obligation.

Obligations are extinguished not only by the causes of extinction contemplated in other provisions of this Code, such as payment, the expiry of an extinctive term, novation or prescription, but also by compensation, confusion, release, impossibility of performance or discharge of the debtor.

Where the creditor does not avail himself of the right to force the specific performance of the contractual obligation of the debtor in cases which admit of it, he is entitled either to the resolution of the contract, or to its resiliation in the case of a contract of successive performance.

An obligation confers on the creditor the right to demand that the obligation be performed in full, properly and without delay.

2) obtain, in the case of a contractual obligation, the resolution or resiliation of the contract or the reduction

of his own correlative obligation;

3) take any other measure provided by law to enforce his right to the performance of the obligation.

Consequences of Breach of Contract – 1590 CCQ

(inexecution)

Terminate the Obtain an Order from Get damages

Contract the Court for Perfomance as performance by (Résolution – one K) in kind equivalence

(Résiliation – successive Ks)

A creditor may, in cases which admit of it, demand that the debtor be forced to make specific performance of the obligation.

• 
  The impact of any misrepresentation is subjective since the state of mind and knowledge of the pretended victim are relevant. A contracting party who does not rely upon a representation cannot subsequently seek relief on the ground that the representation was false. (Degree to which it relied on representations)
  
• 
  The court concluded that the officers and managers of Golden Griddle fully understood the meaning and significance of the offer to lease
  
• 
  GG asserts that there were a number of representations made by Belcourt:
  

• 
  For the foregoing reasons GG’s cross demand for lease cancellation of the lease on the grounds of misrepresentations is rejected
  

• 
  The original lease subjected the tenant to a penalty for failing to operate its business continuously, as well landlord had the right to obtain injunctive relief
  
• 
  According to the K, injunction would be appropriate, but just because a stipulation in an agreement permits one to seek injunctive relief that does not automatically create a right to such a remedy.
  
• 
  Art. 1065 CC.  provides the creditor of the obligation with the right, at his option, to require SP of the obligation, subject only to the qualification that the situation be one of the cases “cases which admit of it.” It is not the role of the court to predetermine the creditors recourse, but rather to respond to his election
  

• 
  Courts do not consider subjective factors such as hardships or personal consequences
  

• 
  GG cannot obtain relief from its obligation to operate on the grounds that it had failed to generate a satisfactory level of sales
  
• 
  Judgment condemned them to pay damages for arrears of rent, as well an injunction was granted ordering them to reopen the restaurant
  

• 
  Not as dramatic as Golden Griddle, because the defendants assigned the lease, however there is still the issue of rent arrears.
  
• 
  “No authority has been quoted to show that an injunction will be granted enjoining a person to carry on a business, nor can I think that one ever would be, certainly not where the business is a losing concern” (Lord Goddard in AG v. Colchester Corporation 1955)
  
• 
  Argyll admitted their breach and consented to an order for damages to be assessed
  
• 
  A decree of SP is a discretionary remedy and the question is whether the COA was entitled to set aside the summary judge’s discretion
  
• 
  The settled and invariable practice of this court is to never grant mandatory injunctions requiring persons to carry on business
  
• 
  Specific performance should only be used where damages prove to be inadequate (in contracts to CVL where the plaintiff is entitled to SP)
  
• 
  There are even reasons which justify the refusal to grant an injunction to continue to operate business (1) it would have to be constantly monitored by the courts, according to Dixon J “specific performance in applicable when the continued supervision of the court is necessary to ensure the fulfillment of the contract”; (2) it’s too complicated to write an injunction.
  
• 
  The defendant who didn’t want to run the biz anymore now must do so under a “Sword of Damocles” which may descend if the way he runs the biz does not conform to the court order and (2) the seriousness of a finding of contempt for the defendant means that any application to enforce the order is likely to be a heavy and expensive piece of litigation (as it would likely be a repeated process over time, as opposed to one time damages)
  
• 
  Further objection: injustice by allowing the plaintiff to enrich himself at the defendants expense (the loss the plaintiff must endure by complying with an order for SP may be far greater than that the defendant will lose from a broken contract
  
• 
  It is not in public interest for the courts to require someone to carry on a business at a loss if there is any plausible alternative by which the other party can be given compensation
  

• 
  General rule is that courts will not enforce specific performance of a positive covenant of personal service (or a positive covenant framed in negative terms). Should not grant an injunction if to do so would be tantamount to ordering the D to perform her K or remain idle OR unless damages would be a more appropriate remedy.
  
• 
  Cannot order mandatory injunction for positive covenant – Nemo Praecise cogi potest ad factum (intuitu personae) – cannot order someone to act as it would infringe their personal liberty.
  
• 
  Court finds that it is reasonable here because it only restricts her from working for a motion picture company and it is the only effective remedy for the breach.
  
• 
  Such an injunction would not force the D to perform her K (although it might tempt her to b/c she could not get as much $ in another occupation) [Jukier is critical of this - could she really wait tables?]
  
• 
  Damages are not a more appropriate remedy. The parties explicitly recognized (in the K) the appropriateness of an injunction over damages. Also, damages would be very hard to evaluate (b/c of the nature of her occupation - she is valuable b/c of who she is) [she is a "unique good" - damages cannot replace her]
  

• 
  Court did not apply the rule cogently: specific performance here is almost equated to a mandatory injunction because she has no choice but to accept to work for Warners.
  
• 
  Comments
  
• 
  Reputation factors would induce her to perform well, as would K’ual provisions for rising salary
  
• 
  Finding this K enforceable had wider effects – set the precedent for a growing industry
  
• 
  Still understood as good law for most principles involved
  
• 
  Connect this case to public order (Cameron: non-compete clauses) – similar philosophical concern
  
• 
  Some of these type of Ks might be considered unenforceable today for unconscionability (esp. provisions allowing for wholly one-sided renewal with no prospect of exit)