Contract Law: Misrepresentation and Mistakes
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Questions and Answers

What defines an illegal contract?

  • It is not formed in writing.
  • It has no signatures from parties involved.
  • It involves a personal guarantee.
  • It is contrary to legislation or public policy. (correct)

    • What is the primary remedy available when a party relies on a misrepresentation?

  • Monetary compensation
  • Rescission (correct)
  • Specific performance
  • Injunction

    • In the event that a contract does not meet the writing requirement, what is the general consequence?

  • The contract is generally unenforceable. (correct)
  • The contract becomes partially enforceable.
  • The contract is typically enforceable.
  • The parties must renegotiate the contract.

    • Which type of misrepresentation involves a deliberate intent to mislead?

    <p>Fraudulent misrepresentation</p> Signup and view all the answers

    Which of the following must be true for a statement to be considered a misrepresentation?

    <p>The statement must be factually false and material to the contract.</p> Signup and view all the answers

    What is the legal concept that holds an employer responsible for the negligent actions of their employee?

    <p>Respondeat superior</p> Signup and view all the answers

    What results when parties decide to cancel the original contract and create a new one?

    <p>Novation</p> Signup and view all the answers

    What does the term 'frustration' refer to in contract law?

    <p>A supervening event that prevents contract performance</p> Signup and view all the answers

    What happens to the rights of an assignee in relation to the original assignor's rights?

    <p>They have rights that are equal to the assignor's rights</p> Signup and view all the answers

    What distinguishes frustration from a mistake in contract law?

    <p>Frustration relates to events after the contract formation</p> Signup and view all the answers

    What is the burden of proof that a plaintiff must meet in a civil action?

    <p>The plaintiff must prove it is more likely than not.</p> Signup and view all the answers

    Which situation describes vicarious liability of an employer?

    <p>An employee committing a tort during the course of employment.</p> Signup and view all the answers

    What is contributory negligence?

    <p>A defense claiming the plaintiff is partially responsible for the harm.</p> Signup and view all the answers

    What is the primary goal of a tort remedy?

    <p>To compensate the victim for their loss.</p> Signup and view all the answers

    When can an employer be vicariously liable for an employee's wrongful act?

    <p>When the unauthorized act is connected to authorized acts.</p> Signup and view all the answers

    Which scenario typically does NOT establish vicarious liability?

    <p>An employee robbing a store after work.</p> Signup and view all the answers

    What is an example of actual pressure arising from undue influence?

    <p>An elderly person giving their estate to a caregiver for care</p> Signup and view all the answers

    What type of relationship is most likely to raise a presumption of undue influence?

    <p>A family tie or a relationship between a client and a professional</p> Signup and view all the answers

    Which of the following is an example of an intentional tort?

    <p>False imprisonment</p> Signup and view all the answers

    Who brings the action in tort law?

    <p>The injured party, known as the plaintiff</p> Signup and view all the answers

    What does the term 'negligence' imply in tort law?

    <p>Failure to take reasonable care, leading to damages.</p> Signup and view all the answers

    Which of the following criteria is NOT necessary to establish frustration in a contract?

    <p>The event was self-induced</p> Signup and view all the answers

    What outcome occurs once frustration has been established in a contract?

    <p>Obligations under the contract cease</p> Signup and view all the answers

    Which term describes a contractual term that, if breached, allows for termination of the contract by the innocent party?

    <p>Condition</p> Signup and view all the answers

    Which event would NOT typically qualify as frustration of contract?

    <p>A rise in operational costs</p> Signup and view all the answers

    When can an event that causes performance to become more expensive be considered as frustration?

    <p>It cannot be considered frustration in any circumstance</p> Signup and view all the answers

    What is required for an assignment of rights to be effective?

    <p>Notice must be given to the debtor about the assignment.</p> Signup and view all the answers

    Which of the following best describes 'vicarious liability'?

    <p>Employers can be held liable for their employees' negligent acts.</p> Signup and view all the answers

    Typically, when can a creditor assign the right to collect a debt?

    <p>As long as the debtor receives notice of the assignment.</p> Signup and view all the answers

    What is one potential consequence of a contract becoming impossible to perform due to frustration?

    <p>The contract is automatically terminated.</p> Signup and view all the answers

    What are pecuniary damages primarily intended to compensate for?

    <p>Financial loss usually through out-of-pocket expenses</p> Signup and view all the answers

    What must a plaintiff prove regarding remoteness of damages?

    <p>Proximate cause of damages arose naturally from the breach and but for the actions of the defendant</p> Signup and view all the answers

    What is the nature of the damages that are recoverable under pecuniary categories?

    <p>Usually represents the out-of-pocket expenses of an injured party</p> Signup and view all the answers

    What defines the remoteness test in determining damages?

    <p>The foreseeability or natural occurrence of damages</p> Signup and view all the answers

    What is the primary definition of agency in business law?

    <p>A relationship where one party can affect the legal relationships of another.</p> Signup and view all the answers

    What type of authority is granted to an agent through explicit communication from the principal?

    <p>Actual Authority</p> Signup and view all the answers

    Which authority exists based on the perceptions of a third party regarding the agent's ability to act on behalf of the principal?

    <p>Apparent Authority</p> Signup and view all the answers

    Under what condition can agency by estoppel occur?

    <p>When the principal allows others to believe that the agent has authority.</p> Signup and view all the answers

    What typically triggers the creation of an agency relationship?

    <p>The explicit contract between the principal and agent.</p> Signup and view all the answers

    Which statement correctly describes apparent authority?

    <p>It allows an agent to act even if they lack the principal's actual authority.</p> Signup and view all the answers

    A contract is considered illegal if it violates public policy or specific statutes.

    <p>True</p> Signup and view all the answers

    Simple carelessness in signing a document is usually enough to avoid enforceability of a contract.

    <p>False</p> Signup and view all the answers

    Non-competition clauses are always considered enforceable.

    <p>False</p> Signup and view all the answers

    Courts will often re-draft overly broad non-competition clauses to make them enforceable.

    <p>False</p> Signup and view all the answers

    Nuisance involves interference with a plaintiff's land that is substantial and unreasonable.

    <p>True</p> Signup and view all the answers

    Trespass to land can occur even without proof of harm or damage.

    <p>True</p> Signup and view all the answers

    Not all torts cause personal injury, and other types of losses are also compensable.

    <p>True</p> Signup and view all the answers

    A minor must expressly adopt or ratify most contracts upon reaching the age of majority for them to remain enforceable.

    <p>True</p> Signup and view all the answers

    Termination of a contract by performance occurs when one party fails to fulfill their obligations.

    <p>False</p> Signup and view all the answers

    Vicarious liability applies only to intentional acts committed by employees.

    <p>False</p> Signup and view all the answers

    Study Notes

    Misrepresentations and Important Mistakes

    • Misrepresentation of Relevant Facts:
      • One party may be obligated to disclose information without prompting.
      • This can occur when one party provides only partial information, actively conceals the truth, fails to correct prior inaccurate information, the parties have a relationship requiring utmost good faith, or a statute imposes a disclosure obligation.
    • Consequences of Misrepresentation:
      • A party relying on misrepresentation can have the contract canceled.
      • Rescission returns parties to their pre-contractual positions.
      • Prompt action is required when seeking rescission.
      • The court might provide monetary compensation if rescission is impossible.
    • Ingredients of an Actionable Misrepresentation:
      • The statement must be false, clear and unambiguous, material to the contract, actually inducing the wronged party, and deal with fact, not opinions unless the speaker claims special expertise.
    • Categories of Actionable Misrepresentations:
      • Fraudulent Misrepresentation: The speaker intends to mislead or acts recklessly, remedy is rescission or tort damages.
      • Negligent Misrepresentation: The speaker makes the statement carelessly, remedy is rescission or tort damages.
      • Innocent Misrepresentation: The speaker is not fraudulent or negligent but misrepresents a fact, remedy is rescission.

    Mistake

    • Mistake: An error made by one or both parties that significantly undermines the contract.
    • Common Mistake: Both parties share the same fundamental error.
    • Mistake is rarely proven, but if successful, the contract can be set aside.
    • Unilateral Error: One party's error, without significance to the other party, does not constitute a legal mistake.
    • Courts may fix errors in contracts on a limited basis, especially when parties have made a common mistake in recording their agreement.
    • Rectification: A remedy available when parties make a mistake in recording their agreement, requiring evidence of the actual terms agreed upon.
    • Carelessness in Signing: Carelessness in signing a document without understanding its content does not usually lead to unenforceability.

    Case 8.3: The Queen (Ont) v. Ron Engineering

    • Ron Engineering submitted a tender for a project, including a deposit cheque as required by the tendering rules.
    • The tendering rules allowed withdrawal before closing, but tenders became irrevocable afterward.
    • Ron Engineering discovered a $750,000 error in its bid after closing.
    • The Court ruled that Ron Engineering could not withdraw its tender after the closing time.
    • The submission of the tender created a preliminary contract ("Contract A") requiring the owner to follow tender evaluation rules and tenderers to not withdraw after closing.
    • Only the successful tenderer would then enter the larger contract to perform the work ("Contract B").

    Illegal Contracts

    • Illegal Contract: A contract unenforceable due to violation of legislation or public policy.
    • Examples:
      • Interest rates exceeding legal limits.
      • Sales practices violating the Competition Act.

    Case 8.4: M & P Drug Mart Inc v. Norton

    • A non-compete clause prohibited a pharmacy manager from competing with his employer for a year after termination.
    • The clause stated a 15-kilometer radius restriction.
    • The employee resigned and took a position at a drug store less than three kilometers away.
    • Court ruled the non-competition agreement unenforceable due to unreasonable and overly broad terms, including vagueness about prohibited activities.

    Non-Solicitation Clauses

    • Non-solicitation clauses must be reasonable, unambiguous, and have limited timeframes.
    • Territorial restrictions in these clauses have largely become obsolete due to globalization and technology.

    Writing as a Requirement

    • Oral contracts are enforceable but require proof through witnesses.
    • Statute of Frauds: Requires certain contracts to be in writing for enforceability (intended to prevent fraud and perjury).
      • Categories:
        • Contracts of guarantee
        • Contracts not to be performed within a year
        • Contracts dealing with land
        • Contracts for the sale of goods
    • The writing requirement needs to be met by documents signed by the party against whom enforcement is sought.
    • Several documents can be combined to satisfy the requirement.
    • If the writing requirement is not met, the contract is generally unenforceable.
    • Province-specific modifications or repeals of the Statute of Frauds apply.
    • Distinguish between the party with contractual obligations and the party performing the work.
      • The person doing the work, not party to the contract, can't sue or be sued on it, but potential liability in tort exists.
    • Vicarious Liability: Employers are responsible for their employees' negligence (vicarious liability).

    Termination by Agreement Between Parties

    • Parties can agree to:
      • Novation: Cancel original contract and enter a new one, requiring new consideration in most provinces.
      • Vary Terms: Require new consideration for changes in most provinces.
      • Terminate Contract: Both parties agree to end the contract.
      • Substitute a Party: A limited form of novation where both parties agree to replace one participant with another.

    Termination by Agreement: Transfer of Rights

    • Assignment: A party can transfer their rights under the contract to someone else.
      • Example: Transferring the right to collect payment.
      • This doesn't terminate the contract but ends the assignor's role.
    • Duties cannot be assigned, only rights.
    • Notice to the debtor is required for the assignment to be valid.
    • The first assignee to give notice has priority.
    • Assignee's rights are limited to the assignor's rights.

    Termination by Frustration

    • Frustration: A contract cannot be performed due to a supervening event beyond the parties' control. (Examples: Natural disasters, wars, changes in government regulations).
    • This differs from "mistake" as it deals with events occurring after the contract formation.
    • Difficulty in establishing frustration in court.

    Liability in Tort: Primary and Vicarious Liability

    • Primary Liability: Arises from personal wrongdoing.
    • Vicarious liability: Employers are liable for tortuous acts of employees committed in the course of employment.
      • Authorized or Connected Acts: Applies to acts authorized by the employer or unauthorized acts closely related to authorized acts.
    • Vicarious Liability for Intentional Acts: Employers can be vicariously liable for intentional acts if there's a significant connection to authorized conduct.
    • Employers are not vicariously liable for employees' crimes.

    Liability and Joint Tort-Feasors

    • Tort-feasor: Individual committing a tort.
    • Joint Tort-feasors: Multiple individuals held responsible by a court.
    • Legislation:
      • Allows plaintiffs to sue any or all joint tort-feasors.
      • Fault is apportioned based on responsibility.
      • Plaintiffs can recover 100% from any joint tort-feasor.

    Liability and Contributory Negligence

    • Contributory Negligence: Defendant argues the plaintiff contributed to the harm.
    • If proven, the plaintiff's damages are reduced by the proportion of responsibility.

    Damages in Tort

    • Main Goal: Compensation of victim through a money judgment.
    • General damages: Compensation for loss of income, pain and suffering, physical disability, emotional distress.
    • Special damages: Specific, quantifiable losses like medical expenses, lost business profits, or property damage.
    • Punitive damages: Intended to punish the defendant for outrageous or reprehensible conduct in a tort.

    Undue Influence

    • Undue influence can be actual pressure arising from unfair influence, such as a contract between an elderly person and their caregiver, or presumed pressure based on a special relationship, such as a contract between family members, a lawyer and client, or a doctor and patient.
    • This presumption of undue influence is rebuttable.
    • Recommending independent legal advice may help protect the stronger party.

    Case 8.1: Bank of Montreal v Duguid

    • Facts: Duguid and his partner applied for a loan from Bank of Montreal for a condominium project, the bank agreed but required his wife to co-sign the loan. Duguid's wife, a real estate agent, signed the loan despite the bank not recommending independent legal advice, as per their usual policy. The loan defaulted, Duguid declared bankruptcy and the bank sued his wife for the outstanding $87,000.
    • Court ruling: The bank did not exert undue influence, but any undue influence from the husband would release the wife from her obligation if the bank knew or should have known.
    • Reasoning: Because of the close relationship, the bank had a duty to inquire since the loan was clearly disadvantageous to Duquid's wife. Failure to do so resulted in the wife's loan being set aside.

    Unconscionable Contracts

    • An unconscionable contract is an unfair contract where one party exploits the weakness of another.
    • The law distinguishes between parties who are bound by the contract and those who actually perform the work.
    • Employers are liable for their employees’ negligence (vicarious liability).

    Termination by Agreement Between Parties

    • Parties can agree to cancel the original contract and enter into a new one (novation).
    • They can also modify certain terms of the contract, but that requires fresh consideration in most provinces.
    • Both parties can agree to end the contract.
    • One party’s rights and obligations can be transferred to someone else (substitution of a party), which is a limited form of novation.

    Termination by Agreement: Transfer of Rights

    • A party can transfer their rights under a contract to someone else, such as the right to collect payment from a customer.
    • This is called an assignment.
    • The assignor’s role in the contract ends, however they cannot assign their duties under the contract, only rights.

    Termination by Agreement: Transfer of Rights (continued)

    • A creditor can assign their right to collect to someone else without the debtor’s agreement.
    • The debtor must have notice of the assignment to pay the assignee.
    • The first assignee to give notice has priority.
    • The assignee’s enforcing rights are no greater than the assignor’s original right to collect the debt.

    Termination by Frustration

    • Frustration occurs when a contract becomes impossible to perform due to a supervening event beyond the parties' control, such as natural disasters, wars, or changes in government regulations.
    • It differs from “mistake” as it deals with events that occur after the contract is formed.
    • This is difficult to establish in court.

    Termination by Frustration (continued)

    • To establish frustration, the party must prove that the event:
      • Was unforeseen
      • Was not due to the fault of the parties
      • Was not addressed in the contract
      • Radically changed the contract from the agreed-upon terms
    • If all criteria are met, both parties are excused from the contract.
    • Neither side is liable for breach.

    Termination by Frustration (continued)

    • An event that makes performance more difficult or expensive will not amount to frustration.
    • The event can't be self-induced.
    • If frustration is established, further obligations cease and parties are left as they were when the contract was frustrated.
    • Some jurisdictions have legislation allocating losses between the parties.

    International Perspective 9.1: Force Majeure Clauses

    • Force majeure clauses are common in domestic and international contracts.
    • These clauses define what constitutes frustration in advance.
    • They typically relieve one or both parties from performance and suspend contractual obligations during the event.
    • They generally, but not always, displace the doctrine of frustration, depending on the wording of the clause.

    Enforcement of Contracts

    • Non-performance of contractual obligations can lead to breach of contract and a lawsuit.
    • The plaintiff must demonstrate:
      • Privity of contract: Only parties to the contract can enforce it.
      • Breach of contract: The other party failed to keep its promises.
      • Entitlement to a remedy: The plaintiff is entitled to the remedy claimed.

    Breach of Contract

    • To determine the remedy, courts distinguish between terms breached as a condition or a warranty.
    • Condition: An important term, breach allows termination of the contract and damages.
    • Warranty: A minor term, breach allows damages but not termination.

    Pecuniary and Non-Pecuniary Damages

    • Pecuniary damages: Monetary losses are recoverable unless a clause limits or fixes liability.
    • Non-pecuniary damages are for loss of enjoyment, mental distress, etc., and are usually not recoverable.
    • An exception is Fidler v Sun Life, where the contract's purpose was psychological benefit and the mental suffering warranted compensation.

    Damages Must Not Be Too Remote

    • To be recoverable, damages must pass a remoteness test:
      • Damages must have "arisen naturally" from the breach.
      • Damages, although difficult to anticipate in typical cases, are reasonably foreseeable if unusual circumstances were communicated to the defendant during contract formation.

    Breach of Contract and Reasonable Foreseeability

    • In the case of Gabriella Nagy v Rogers, Rogers changed her account without permission, her husband found out about an affair, left her, and she became distressed and lost her job.
    • Nagy is suing for breach of contract.

    Business Application 9.3: Sunwing Charter to Cancun

    • A group of passengers on a chartered Sunwing flight from Montreal to Cancun engaged in behaviour violating Canadian Aviation Regulations and public health regulations.
    • Sunwing cancelled the return flight.

    How Torts Are Categorized

    • Torts can be intentional or negligent:
      • Intentional Tort: Deliberate harm, such as false imprisonment or battery.
      • Negligence: Liability for damages even without intention, the person was careless.

    Tort Law and Criminal Law

    • The same event can give rise to legal consequences in both tort and criminal law.
    • For example, an impaired driver injuring a pedestrian may be liable for negligence and have committed a criminal offense.
    • Criminal Law: Censure behavior, prosecution by government, victim may not receive compensation.
    • Tort Law: Compensation for the victim, the injured person sues.

    Commencing the Actions

    • In criminal law, the Crown prosecutes the accused, the wrongdoer, and the victim is the complainant.
    • In tort law, the injured person (the plaintiff) sues the wrongdoer (the defendant) for compensation.

    Proving the Actions

    • Criminal Law: The Crown must prove the crime beyond a reasonable doubt, conviction may result in imprisonment.
    • Tort Law: The plaintiff bears the burden of proof, proving the wrongful act on a balance of probabilities.

    Agency Relationship

    • Agency is where one person (agent) represents another person (principal) in legal matters.
    • The agent can affect the principal's legal relationships.

    Examples of Agency Relationships

    • Sport agent negotiates deals for athletes.
    • Insurance agent sells policies on behalf of insurance companies.
    • Travel agents sell travel packages.

    Relationships in Agency

    • Agent-principal relationship: The agent representing the principal.
    • Outsider-principal relationship: The principal and the party the agent deals with.

    Law of Agency

    • It governs the relationship where an agent acts on behalf of a principal.
    • Addresses the rights and duties of the principal, agent, and third party involved.
    • Derived primarily from tort and contract law.

    Creation of Agency

    • Usually arises from a contract where the principal authorizes the agent to act on their behalf.
    • The contract can be for a single purpose or part of a larger agreement like an employment contract.
    • Can also be created by the conduct or behavior of the principal.
    • An agency agreement can be expressed (spoken or written), implied (understood), oral, in writing, or written under seal.

    Power of Attorney

    • A document granting the agent specific or broad powers to act on the principal's behalf.

    Concept of Authority

    • Key aspect of agency, determines if a contract between the principal and a third party is valid.
    • When an agent acts within their authority, the principal is bound by the contract they negotiate.

    Actual Authority

    • Power an agent obtains through express or implied agreements.
    • Express authority is granted specifically by the principal (e.g., buying supplies).
    • Implied authority arises from the agent's position, necessity to carry out express authority, or recognized customs in a trade.

    Apparent Authority

    • Power the agent seems to have based on the principal's conduct or statements.
    • This can occur even if the agent doesn't have actual authority.

    Agency by Estoppel

    • Arises in three situations:
      • Agent exceeds actual authority but not apparent authority, binding the principal.
      • Principal misrepresents someone as their agent when no relationship exists, can't avoid the contract later.
      • Agency relationship is terminated or authority reduced, but the principal's conduct makes the outsider believe the agency continues.

    Agency by Ratification

    • Principal adopts a contract entered into by an agent who lacked actual or apparent authority.
    • The principal is not compelled to do this as in estoppel.

    Requirements for Agency by Ratification

    • Principal must ratify within a reasonable time.
    • The principal must have the capacity to enter the contract when the agent did and when ratifying.
    • The agent must have identified the principal at the time of entering the contract.

    Mistake

    • A contract may be set aside if both parties to the agreement share the same fundamental mistake.
    • It is rarely proven that both parties made the same mistake.
    • An oversight or error by one negotiating party does not constitute a legal mistake, unless it is so significant that the other party should have noticed.
    • Courts will adjust errors in a contract on a limited basis, such as when parties have made a common mistake in their agreement.

    Rectification

    • Rectification is a remedy available when parties made a mistake in putting their agreement in writing.
    • To use this remedy, a court needs proof of the specific terms agreed to by the parties.
    • Simple carelessness in signing a document without attention to its content or consequences is not enough to avoid enforceability.

    Ron Engineering Case

    • Ron Engineering submitted a tender on a project for a price of 2748000,andincludedacertifieddepositchequefor2 748 000, and included a certified deposit cheque for 2748000,andincludedacertifieddepositchequefor150 000 as the tendering rules required.
    • The tendering rules stipulated that tenders could be withdrawn up to the official closing time, after which they would be irrevocable and the deposit would be forfeited if the successful contractor refused to proceed with the project.
    • Shortly after closing, Ron Engineering discovered a $750 000 error in its bid.
    • The court ruled that Ron Engineering could not withdraw its tender after the official closing time.

    Illegality

    • An illegal contract cannot be enforced because it is contrary to legislation or public policy.
    • A contract is illegal if it is contrary to a specific statute and/or violates public policy.

    Examples of Illegal Contracts

    • The Criminal Code limits the rate of interest on a loan to 60 percent per year.
    • The Competition Act invalidates some sales practices to allow competition.
    • The Ontario Real Estate and Business Brokers Act provides that an unlicensed realtor cannot maintain an action for services rendered.

    Public Policy

    • Public policy embodies the community’s common sense and common conscience.
    • Contracts are contrary to public policy when they injure public interest.

    Restrictive Covenants

    • Clauses that restrict someone’s business activities are known as restrictive covenants or covenants in restraint of trade. These covenants are unenforceable if they are too broad, because they unduly interfere with the other side’s ability to earn a livelihood. This reduces competition in a sector.

    Restrictive Covenants in Sale of Business vs. Employment

    • Restrictive covenants in the sale of a business are subject to less scrutiny because the business owner is typically paid for goodwill.
    • Restrictive covenants in the employment context will be scrutinized because of the power imbalance between employer and employee.

    Non-Solicitation and Non-Competition Clauses

    • Non-solicitation clause: A clause forbidding contact with the business’s customers.
    • Non-competition clause: A clause forbidding competition.
    • Non-competition clauses are enforceable if they are reasonable for both parties and the public interest.

    Non-Compete Clauses in Ontario

    • Ontario recently banned most non-compete clauses based on the concern that employees were being subject to unfair disadvantages.
    • Non-compete clauses can still be used in senior executive agreements and in the sale of a business scenario.
    • This legislation does not ban non-disclosure agreements.

    Punitive Damages

    • Punitive damages, also known as exemplary damages, are intended to punish the defendant for outrageous, antisocial, or illegal behavior.
    • These damages are like a fine.

    Aggravated Damages

    • Aggravated damages compensate for intangible injuries such as distress and humiliation caused by the defendant’s reprehensible conduct.
    • Unlike punitive damages, these seek to compensate the plaintiff for the emotional consequences of the defendant’s poor behavior.

    Steve Moore vs. Todd Bertuzzi

    • Moore was sucker-punched by Bertuzzi during an NHL game, ending Moore’s NHL career.
    • Bertuzzi pleaded guilty to assault.
    • Moore sued Bertuzzi and his team for 35Mpecuniarydamages,35M pecuniary damages, 35Mpecuniarydamages,1M for aggravated damages, and $2M for punitive damages.
    • The lawsuit settled for an undisclosed sum.

    TMS Lighting Ltd v KJS Transport Inc

    • KJS did not pave its parking lot, and dust from trucks driving on it damaged TMS’s factory and lighting products.
    • Even with closed windows and doors, factory fans drew in dust, resulting in production slow-downs and shut-downs.
    • KJS failed to remedy the dust problem, leading to TMS’s lawsuit.

    Nuisance: TMS Lighting Ltd v KJS Transport Inc

    • Nuisance involves an interference with the plaintiff’s use or enjoyment of land that is both substantial (i.e., non-trivial) and unreasonable.
    • Unreasonableness is assessed by balancing the gravity of the harm against the utility of the defendant’s conduct. Factors considered include the severity and frequency of the interference, the character of the neighborhood, sensitivity of the plaintiff, and the duration of the interference.
    • The Court of Appeal upheld the trial judge’s decision that found the interference of KJS was both substantial and unreasonable.

    Trespass to Land

    • Trespass to land is the wrongful interference with someone’s possession of land.
    • Trespass occurs in a few ways:
      • A person comes onto the property without the occupier’s express or implied permission.
      • A person comes onto the property with the occupier’s express or implied consent but is subsequently asked to leave.
      • A person leaves an object on the property without the occupier’s express or implied permission.
    • Trespass is actionable without proof of harm or damage, and injunctions are usually the remedy sought. Legislation in some provinces imposes fines for trespass.

    TMS Lighting Ltd v KJS Transport Inc (Continued)

    • Large KJS trucks frequently pulled onto TMS’s driveway because there was an insufficient turning radius on KJS premises.
    • This was considered trespass to land.

    Injurious or Malicious Falsehood

    • An injurious or malicious falsehood is a statement about another’s goods or services that is false and harmful to the reputation of those goods or services.
    • The plaintiff needs to establish that the statement was false and was published with malice or improper motive.
    • Malice includes publishing material one knows is false or with a reckless disregard as to its truth or falsity.

    Protection of Privacy

    • The common law has historically protected privacy interests through the torts of defamation, trespass, nuisance, assault, battery, and false imprisonment.
    • In 2012, the Ontario Court of Appeal recognized a tort called Intrusion Upon Seclusion, which permits a person to sue for invasion of privacy and suggested a $20 000 ceiling for damages.

    Intrusion Upon Seclusion

    • Intrusion upon seclusion is the intentional, offensive invasion of another’s personal affairs without lawful justification.
    • Governments protect privacy through legislation that deals with the collection, use, and disclosure of personal information by organizations in the course of commercial activities. Some provinces have passed legislation that creates the tort of breach of privacy.

    Agency

    • Agency is the relationship between two persons that permits one person, the agent, to affect the legal relationships of another, known in law as the principal.
    • Agency: A relationship that exists when one party (the agent) represents another party (the principal) in the formation of legal relations.
    • Agent: A person who is authorized to act on behalf of another.
    • Principal: A person who has permitted another to act on their behalf.

    Minors and Contracts

    • Contracts with minors are generally not enforceable under the law.
    • Minors are exempt from contract obligations if they choose to do so, and this law applies to agreements for necessities or services, such as apprenticeships.
    • When a minor reaches the age of majority, they do not have to uphold contracts made under age.
    • However, if a contract is of a permanent or ongoing nature, such as a partnership agreement, a minor must explicitly repudiate it upon reaching the age of majority.

    Dealing with Minors in Business

    • Minor's vulnerability under the law requires more attention to detail when contracting with them.
    • To reduce risk of unenforceability in contracts, businesses are encouraged to secure a co-signatory or guarantor from a parent or guardian.

    Mental Incapacity

    • For contracts to be enforceable, both parties must understand the implications of the agreement.
    • Those affected by illness, intoxication, or drug use may not be capable of understanding the consequences of their actions.
    • Courts will not invalidate a contract with a mentally impaired person if it was "fair and made in good faith" and the other party was unaware of the person's mental incapacity.

    Duress

    • Contracts made under duress are voidable.
    • Duress occurs when someone is physically coerced.
    • Economic duress also renders an agreement voidable, occurring through threats of financial harm that pressure an individual to enter into a contract.

    Electronic Signatures

    • Electronic signatures must be recognized as legally binding.
    • They must be verifiable, authenticate the signatory, and confirm consent to the document's contents.
    • A handwritten signature is sufficient if the signatory intends for it to authenticate the document.
    • Legislation outlines the requirements for electronic signatures to be legally valid.
    • In one case, an email with the sender's name at the bottom satisfied the signature requirement for the Statute of Frauds.

    Contracts and Goods

    • Contracts for goods exceeding 30(or30 (or 30(or50 in certain jurisdictions) must be in writing.
    • Despite legal exceptions and the Statute of Frauds, creating a record of an agreement is generally advisable.

    Internet Contracts

    • Most Canadian governments have implemented protections for online agreements, aiming to protect consumers.
    • Merchants are required to provide a copy of their online contracts and other details about the purchase.
    • Failure to comply with these requirements allows consumers to cancel the contract, rendering it unenforceable.

    Contract Termination

    • Contracts can end through performance, agreement, frustration, breach, or through legal enforcement.
    • The plaintiff is the injured party in a contract dispute.
    • The wrongdoer is the defendant.
    • The Crown has the burden of proof in criminal actions, proving wrongdoing "beyond a reasonable doubt".
    • Convictions in criminal cases can result in imprisonment.
    • The plaintiff has the burden of proof in civil actions, establishing a "more likely than not" chance of the defendant's actions causing the alleged wrongdoing.
    • Successful civil actions typically result in damages awarded to the plaintiff.

    Liability in Tort (1)

    • Primary liability is incurred by a person's own wrongful actions.
    • Vicarious liability stems from the employer's responsibility for their employees' tortious actions performed within the scope of employment.

    Liability in Tort (2)

    • Employers are vicariously liable for:
      • Actions authorized by the employer.
      • Unauthorized actions that can be considered improper methods of performing authorized tasks.
    • Determining whether unauthorized acts fall under vicarious liability can be challenging.
    • An employer may be held liable for an employee's intentional wrongdoing when a significant connection to authorized conduct is proven.
    • Employers are not vicariously liable for crimes committed by their employees.

    Joint Tortfeasors

    • A person who commits a tort is known as a tortfeasor.
    • Joint tortfeasors are two or more people held jointly liable for the plaintiff's losses or injuries.
    • Several joint tortfeasors may be sued individually or collectively.
    • Responsibility is apportioned among them according to their involvement.
    • Causation must be established for liability.
    • The plaintiff must show that the harm would not have occurred had the defendant's actions not happened.

    Case Study - Resurfice Corp v Hanke, 2007 SCC 7

    • Hanke, an ice-resurfacing machine operator, suffered severe burns from a misplacement of hot water into the gasoline tank due to a design flaw.
    • Hanke sued the manufacturer, Resurfice Corp, but ultimately the Supreme Court ruled in favour of the defendant, finding that Hanke understood the machine's operations and did not pay attention while using it.

    Establishing Negligence (6)

    • Remoteness of damage is a crucial factor in determining liability.
    • The court examines whether the harm suffered was foreseeable.

    Establishing Negligence (7)

    • The thin skull rule stipulates that a defendant is liable for the full extent of the plaintiff's injuries, even if pre-existing vulnerabilities exacerbated the harm.

    Torts and Business Operations (7)

    • Injurious or malicious falsehood occurs when a false statement harms someone's goods or services.
    • The statement must be false and published with malice or improper motive.
    • Malice encompasses knowing publication of false information or reckless disregard of its truthfulness.

    Protection of Privacy

    • Law offers protection against invasion of privacy through torts such as defamation, trespass, nuisance, assault, battery, and false imprisonment.
    • The Ontario Court of Appeal recognized "intrusion upon seclusion" as a tort, allowing people to sue for privacy violations.
    • The upper limit for damages is $20,000.
    • Governments regulate the collection, use, and disclosure of data through legislation.

    Agency Relationships

    • Agency occurs when one person (the agent) acts on behalf of another (the principal).
    • An agent can affect the principal's legal standing.
    • Agents are authorized to represent the principal.

    The Nature of Agency

    • The relationship between agent and principal is crucial in business.
    • The agency relationship is established through agreement or through law.
    • An agent must fulfill duties and responsibilities towards the principal, including loyalty, honesty, and good faith.
    • The agency relationship ends when the parties agree, through expiration of the agreement, due to notice, or by operation of law.

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    Related Documents

    Non-Enforcement of Contracts PDF
    Non-Enforcement of Contracts PDF
    Chapter 13 Agency Relationship PDF

    Description

    Explore the crucial aspects of misrepresentation in contract law, such as the obligation to disclose relevant facts, the consequences of misleading statements, and the process for rescission. This quiz delves into the ingredients of an actionable misrepresentation and its impact on contractual agreements.

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