Contract Law Principles and Characteristics

Principles of Contract Law

• A contract involves an agreement of wills, where one or more parties commit to performing a prestation (good, service, or money) for another.
• Contracts can be in any form unless a specific form is legally required, such as for marriage, insurance, or mortgages.
• Legal contracts have an expiry, while natural contracts, even after legal expiry, ethically imply ongoing rights.

5 Characteristics of Contracts

• Contracts of Adhesion vs. Mutual Agreement:
  • Adhesion contracts have terms set by one party, accepted by the other.
  • Mutual agreements involve both parties contributing to and negotiating the terms.
• Synallagmatic vs. Unilateral Contract:
  • Synallagmatic contracts require both parties to perform a specific action or provide a service.
  • Unilateral contracts only require one party to execute or carry out.
• Onerous vs. Gratuitous Contracts:
  • Onerous contracts involve an exchange of value for the prestation.
  • Gratuitous contracts do not involve any return of financial value.
• Commutative vs. Aleatory Contracts:
  • Commutative contracts are characterized by both parties having a clear understanding of the exact outcome, enabling predictability and accountability throughout the transaction..
  • Aleatory contracts are defined by their inherent uncertainty regarding the outcome, often due to unpredictable variables affecting the transaction. For instance, consider an apple harvester; factors such as weather conditions, market prices, and crop yield can significantly influence the final results and profitability.
• Instantaneous vs. Successive Performance:
  • Instantaneous performance involves a one-time payment.
  • Successive performance involves payment over a time period.

Hydro Quebec Contract Example

• Hydro Quebec contracts are contracts of adhesion
• Payments are synallagmatic as payments result in service provided
• Contracts are onerous, as money exchanged for power
• Aleatory because the amount of power consumed is not certain
• Performance is successive, with payments occurring monthly.

Contract Formation and Consent

• A contract forms when acceptance is received by the offeror.
• If the acceptance differs from the offer, then a counter-offer is made.
  • An exception exists in some laws, such as renting, where acceptance is assumed if no reply is given within a set time (e.g., 10 days).
• Consent requires a clear indication from the person.
  • Consent can be tacit (passive), where actions imply acceptance, even without explicit statements.
  • An offer becomes null if acceptance is not received before the elapsed time.
• Consent must be given freely and willingly.

Defects of Acceptance

• Error involves a misunderstanding of the contract's fundamental sales terms.
  • Involves agreeing to something where reality is different, and cannot be your own mistake.
• Fraud arises when deception or misleading information induces a mistake and contract entry.
• Fear involves violence or threats that make an agreement legally invalid.
• Lesion refers to economic or financial harm, and can allow the contract to be annulled
  • Often the reason is that the injured party is a minor or inapt adult.

Capacity to Contract

• Minors and those under protective supervision are legally incapable.
• Minors 14 years can contract for employment or operating a business
• All minors can fulfill ordinary and usual needs with contracts.
• Persons under protective supervision (inapt) have no legal capacity to enter contracts.
• Adults who cannot manage their financial affairs due to medical, mental, or physical reasons can be under protective supervision
  • Includes permanent curator, temporary tutor, or assistance advisor.

Contract Outcomes

• "Cancelled" contracts maintain past obligations but nullify future ones.
• "Nulled" contracts are treated as if they never existed, requiring restitution.

Nullity in Contracts

• Nullity means a contract is considered never to have existed, requiring all parties to restore what they received.
• Absolute nullity occurs when a contract violates laws or public order, making it impossible for any party to accept it is not null.
• Relative nullity occurs when a contract violates protection of private individual interests
  • Parties protected may choose to confirm or maintain the contract despite the violation.

Performance of Contracts

• Failure to fulfill gives creditor the right to:
  • Nullify by resolution or cancel by reciliation.
  • Reduce or refuse to perform their obligation.
  • Hold debtor's property until paid.
  • Enforce performance via injunction or obligation.
• Injunction is to stop ongoing violation-
  • A 3-step test to get/prove a temporary/interlocutory injunction (court order requiring action):
    • Requires a serious issue for the applicant.
    • Irreparable harm if no injunction is given.
    • A probability that you'll win the case.

Before Filing Lawsuit

• You have to put party in default in one of 3 ways
  • By contract stipulating that if deadlines are not met, it results in default, parties are clearly outlining their expectations and the critical nature of timely performance in fulfilling contractual obligations.
  • This method involves formally notifying the party of their default status, thereby providing them an opportunity to remedy the situation before legal proceedings commence, emphasizing the seriousness of the matter.
  • This can occur in instances where specific statutory provisions establish deadlines for compliance, making it clear that failure to act within the designated timeframe results in automatic default without the need for further notice or action.

Interpretation of contracts

• These are the principles:
  • Must have real indication of parties
  • Must have historical nature of relations
  • If multiple meaning words must conform to subject matter
  • In contracts of adhesion, accepting party is given benefit of doubt
  • Incidental (non-expressed) associated obligations exist
  • Illegible or incomprehensible clause are null unless explained
  • Abusive clauses are null
  • Nullified clause does not make the whole contract invalid

Damages

• A failure to fulfill may result in either bodily, moral or material damages
• Assessing damages should be compensated for loss sustained / deprived profit
• Possible to seek future damages only in certain like for defamation cases
• Punitive damages can be awarded for violation of charter, intentional and no criminal record for similar act)
• Penalties includes a written initial contract where penalty for failure to complete
  • No need to prove damages, prove only that party fail to meet obligation

Case 4.1 Giroux v. Malik

• Malik sells land to Giroux, who discovers it unusable
• Malik claims declared problem, French not good due to communication issues
• Malik had tried selling twice before
• Court decision: ruled that Malik was aware of land and error due to silence.
  • Ruled contract null and 10k awarded in damages

Case 4.2 Peter v. Fiasche

• The plaintiff buys from a defendant resturant called Chez Gino Smokey's
• Claims defendant hides real sales
• Defendant tell plaintiff have 2 books, 1 for gov, the other the real
• Plaintiff was told of the 2 books existence and assured of no tax debt
• Wanted to annul contract due to error by fraud where they were lied to
• Court decision: not error by fraud because both were made aware
  • However, contract was nullified for illegal tax evasion
  • Requires absolute nullity and ordered testituition: plaintiff get money back

Case 4.3 Richard v. Time Inc.

• Conditional clauses stipulated required action
• Was found suing for misleading representations under consumer protection act
• Court: found mailing was misleading and the action was intential
• Richard asked for a million in punitive but got 16k, awards meant to teach a lession

Case 4.4 Copiscope Inc. v. TRM Copy Centers

• TRM Copy provided copiers to stores with non-competition clause
• Copiscope, similar business, pursued stores to switch arguing that the clause was illegal
• TRM sued and got injunction against Copiscope where faster way to get court hearing
• Copiscope was found appealing the injunction
• The lower court failed to recognizd the legitimacy of the law
• Appeal: clause illegal and therefore null
• The 3 steps to get injunction are:
  • Must be serious
  • Irreparable damages if can't get injection
  • Balance of probability- "TRM will win" was false, the contract was an illegal act of adhesion, so Copiscope was right that temporary injunction should not have been given

Overview of Mandates

• Mandate is a contract where a person (mandator) empowers another (mandatary) to represent them in dealings with an outside party.
  • The mandator is the person who hires, and the mandatary is the person who accepts.

Characteristics of Mandate

• Objective: representation of actions and protection due to incapactity
• Formation: requires consent from both parties, either tacit or verbal
  • Written mandate is called a "Power of Attorney".
• Remuneration can be by gratuitous title (no return payment)
  • Mandates assumed to be free unless professional is expected (hiring a lawyer).
• Scope: can be for special performance of a specific task or be general like look after biz for 6 months
  • Incidental tasks are deemed to cover all tasks incidental if set in the contract.

Obligations Between Parties

• Obligation of Mandatary: must
  • perform the task with prudence and diligence, while remaining honest with no conflict of interest to represent both seller and buyer
  • keep informed and must do the work themselves except sub mandatories where the mandater can have other do a mandate and responsible for action
  • jointly act if they have many mandataries
  • Cannot benefit themselves unless if authorized;
  • Must reduce damages if gratuitous mandate, and must render account+return while receiving payment

Obligation of Mandator

• Mandator must help and pay for the work, performance of best abilities unless outline
• Mandator liable for injuries mandatary suffers completing
• Mandator not liable for actions out of mandate unless they are ratified or acts are advantageous

Obligation to Third Parties

• Mandator liable for actions performed by mandatary
• Mandataries can only be personal liable if they action in own name/ don't disclose it
• Must conceal name of mandator or action outside of limits
• Cannot liable for injury out of limits
• Injury is not their fault/couldn't prevent

Termination of Mandate

• Can be terminated anytime or if party dies/bankrupt

Dowell VS Hay-Ellis CASE

• 3 MANDATES
• Joseph mandate Dowell (illegally) to buy property as Joseph is in bankruptcy
• Joseph mandate Dowell to manage
• Dowell mandates Ellis to oversee trust
• Creditors don't find money so Ellis blindly signed off non related payments so Dowell sues Ellis
• Court says that Dowel was only front so legally remains liable and Ellis violated mandate, they owed dowel $69

Wong VS Leung

• The sister hire Leung to manage 15 units
• Mandated to collect rent, pay expenses, and submit report
• Leung failed to deposit, and fake sent a fake document to court- "money from building should go to him to take care of"
• Failed on all aspects, broke conduct and to report
• Failure to not use property, failed to maintain confidence