Proving Unconscionability in Contracts
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Questions and Answers

What constitutes a legal mistake in the context of contract law?

  • A significant oversight that the other party should have noticed. (correct)
  • Any clerical error made during the drafting of the contract.
  • An error made by one party during contract negotiations.
  • A shared fundamental mistake by both parties. (correct)

    • What is the remedy available when parties make a mistake in recording their agreement?

  • Rectification of the agreement (correct)
  • Injunction against the contract
  • Termination of the contract
  • Substitution with a new contract

    • In the case of Ron Engineering, what prevented them from withdrawing their tender after the official closing time?

  • The non-refundable deposit requirement
  • The nature of the contract being illegal
  • The common mistake doctrine
  • A binding clause in the tendering rules (correct)

    • What defines an illegal contract?

    <p>A contract that contradicts legislative provisions or public policy.</p> Signup and view all the answers

    Which of the following is NOT an example of an illegal contract?

    <p>A standard employment agreement.</p> Signup and view all the answers

    What happens to the deposit if the successful contractor refuses to proceed with the project according to tendering rules?

    <p>It is forfeited.</p> Signup and view all the answers

    Which of the following statements about contract errors is true?

    <p>Errors must be significant enough for the other party to notice.</p> Signup and view all the answers

    What type of contract is known as Contract B in the Ron Engineering case?

    <p>The contract to perform the actual work.</p> Signup and view all the answers

    What was the primary reason the non-compete clause in M & P Drug Mart Inc v Norton was deemed unenforceable?

    <p>It contained ambiguous and overly broad language.</p> Signup and view all the answers

    Which of the following statements is true regarding non-solicitation clauses?

    <p>They must be reasonable and unambiguous.</p> Signup and view all the answers

    Under the Statute of Frauds, which of the following contracts must be written to be enforceable?

    <p>Contracts dealing with land.</p> Signup and view all the answers

    What is a significant characteristic of contracts that are required to be in writing under the Statute of Frauds?

    <p>They must contain essential terms in signed documents.</p> Signup and view all the answers

    What were the two main elements that needed to be proven to deem the arbitration clause unconscionable?

    <p>Proof of inequality of bargaining power and improvident bargain</p> Signup and view all the answers

    In the case of M & P Drug Mart Inc v Norton, how far away did the employee take a new position after resigning?

    <p>Less than three kilometers.</p> Signup and view all the answers

    Why was Heller's case deemed to have an inequality of bargaining power?

    <p>There was a significant gulf in sophistication between Heller and Uber.</p> Signup and view all the answers

    What key aspect of the arbitration process contributed to the improvident nature of the bargain for Heller?

    <p>The cost of initiating arbitration was considerably high compared to Heller's income.</p> Signup and view all the answers

    What is one of the primary purposes of the Statute of Frauds?

    <p>To prevent fraud and perjury.</p> Signup and view all the answers

    Which of the following is NOT a category relevant to the Statute of Frauds?

    <p>Contracts for leasing equipment.</p> Signup and view all the answers

    What was problematic about the location and governing law specified in the arbitration agreement?

    <p>It gave drivers the impression they had to travel to the Netherlands at their own expense.</p> Signup and view all the answers

    What may happen if the writing requirement of the Statute of Frauds cannot be met?

    <p>The contract is generally unenforceable.</p> Signup and view all the answers

    How is misrepresentation defined in the context of contract negotiation?

    <p>A false statement of fact that influences the formation of a contract.</p> Signup and view all the answers

    In the context of Heller's case, which factor was not considered a violation leading to misrepresentation?

    <p>A prior assumption of Heller's understanding of arbitration.</p> Signup and view all the answers

    What does 'improvident bargain' refer to in legal terms?

    <p>A bargain characterized by a lack of foresight or sound judgment.</p> Signup and view all the answers

    What resulted from the court's finding regarding the arbitration clause in Heller's case?

    <p>Heller was allowed to proceed with a class action against Uber.</p> Signup and view all the answers

    What is NOT a requirement to establish frustration in a contract?

    <p>The event was due to the fault of the parties.</p> Signup and view all the answers

    Which scenario would be considered self-induced and therefore not amount to frustration?

    <p>An individual fires all their employees before a performance is due.</p> Signup and view all the answers

    What do force majeure clauses typically achieve in contracts?

    <p>Define what constitutes frustration in advance.</p> Signup and view all the answers

    What is the role of privity of contract in enforcement of contracts?

    <p>Only parties involved in the contract have rights to enforce it.</p> Signup and view all the answers

    What distinguishes a condition from a warranty in a contract?

    <p>A warranty is a minor term that does not allow for termination.</p> Signup and view all the answers

    Which of the following does NOT generally result from a breach of contract?

    <p>Legal obligations cease under the contract.</p> Signup and view all the answers

    Which statement is true regarding an event that makes contract performance more difficult or expensive?

    <p>It is irrelevant for establishing frustration.</p> Signup and view all the answers

    What outcome typically occurs if frustration is established in a contract?

    <p>Further obligations under the contract cease.</p> Signup and view all the answers

    What is the primary burden of proof in a civil action?

    <p>The plaintiff must prove it is more than a 50% chance the defendant committed the tort.</p> Signup and view all the answers

    Which scenario illustrates primary liability?

    <p>An individual committing a tort on their own during personal time.</p> Signup and view all the answers

    Under which circumstances can an employer be vicariously liable?

    <p>For employee acts expressly authorized by the employer.</p> Signup and view all the answers

    What defines contributory negligence?

    <p>A defense claiming the plaintiff contributed to their own harm.</p> Signup and view all the answers

    What may a plaintiff recover in a case involving joint tort-feasors?

    <p>Compensation from all tort-feasors, amounting to the total damages claimed.</p> Signup and view all the answers

    What is a key element in establishing vicarious liability for an employee’s wrongful act?

    <p>There must be a significant connection to authorized conduct.</p> Signup and view all the answers

    When can a defendant successfully argue contributory negligence?

    <p>When the plaintiff is found responsible for a portion of the loss.</p> Signup and view all the answers

    What is the primary purpose of a tort remedy?

    <p>To provide compensation for the victim's damages.</p> Signup and view all the answers

    Study Notes

    Proving Unconscionability in Contracts

    • There’s a two-step process to prove unconscionability in a contract:
      • Inequality of Bargaining Power: One party has significantly more power than the other.
      • Improvident Bargain or Exploitation: The contract is clearly unfavorable to the weaker party.

    Uber Technologies Inc v Heller (2020 SCC 16)

    • UberEats Driver, Heller, sued Uber claiming he was an employee, not an independent contractor.
    • The contract required arbitration in the Netherlands, with a high cost of initiating the process.
    • The Supreme Court of Canada ruled the arbitration clause was unconscionable and Heller could proceed with the class action.
    • Inequality of Bargaining Power: Significantly more sophistication of Uber compared to the food delivery driver.
    • Improvident Bargain: The high cost of arbitration in the Netherlands made it nearly impossible for Heller to pursue his claim.

    Misrepresentation

    • A misrepresentation is a false statement of fact that induces someone to enter into a contract.
    • If the false statement is in the contract, it's a breach of contract.
    • If the false statement is made before the contract but not a term, it may be an actionable misrepresentation.

    Common Mistake

    • Both parties share the same fundamental mistake about the subject matter of the contract.
    • It's rarely successful, but if proven, the contract can be set aside.

    Rectification

    • This remedy corrects a mistake in recording the agreed-upon terms.
    • It's used when parties made a common mistake in writing down their agreement.

    The Queen (Ont) v Ron Engineering (1981 CanLII 17 (SCC))

    • Ron Engineering submitted a tender for a project with a $750,000 error in the bid.
    • They tried to withdraw the tender after the deadline.
    • The Court ruled that Ron Engineering was bound by the tender, creating a preliminary contract.
    • The tendering rules created a contractual obligation not to withdraw after the deadline.

    Illegal Contracts

    • Contracts cannot be enforced if they violate legislation or public policy.
    • Examples:
      • Contracts with interest rates exceeding the legal limit.
      • Contracts involving unfair sales practices that violate competition laws.

    M&P Drug Mart Inc v Norton (2022 ONCA 398)

    • A non-compete clause prohibited a pharmacy manager from working in a similar business within 15km for one year after termination.
    • The clause was deemed unreasonable and unenforceable.
    • It was overly broad, vague, and unnecessary.

    Non-Solicitation Clauses

    • These clauses must be reasonable, unambiguous, and limited in time.
    • Territorial limitations are becoming less common due to globalization and technology.

    Statute of Frauds

    • Some contracts require written evidence to be enforceable.
    • This prevents fraud and perjury.
    • Categories requiring written contracts:
      • Contracts of guarantee.
      • Contracts not performed within a year.
      • Contracts dealing with land.
      • Contracts for the sale of goods.

    Termination by Frustration

    • This occurs when an unforeseen event makes performance of the contract impossible or radically different from what was intended.
    • Criteria:
      • Event was unforeseen.
      • Event was not caused by the parties' fault.
      • Event wasn't addressed in the contract.
      • Makes the contract radically different.
    • If all criteria are met, both parties are excused from the contract.

    Force Majeure Clauses

    • These clauses are common in contracts to define events that constitute frustration.
    • They relieve parties from performance or suspend obligations during the event.

    Enforcement of Contracts

    • To enforce a breached contract, the plaintiff must prove:
      • Privity of Contract: Only parties to the contract can enforce it.
      • Breach of Contract: The other party failed to keep promises.
      • Entitlement to a Remedy: The plaintiff is entitled to the requested remedy.

    Breach of Contract

    • Condition: A key term, breach allows termination and damages.
    • Warranty: A minor term, breach only allows damages.

    Liability in Tort

    • Primary Liability: Based on personal wrongdoing.
    • Vicarious Liability: Employer is liable for the tortious acts of their employee.

    Joint Tort-Feasors

    • Two or more individuals held responsible for the plaintiff's loss.
    • Plaintiff can sue any or all of them.
    • Fault is apportioned according to responsibility.
    • Plaintiff can recover 100% of the judgment from any jointly responsible defendant.

    Contributory Negligence

    • Plaintiff is partially responsible for the harm.
    • Damages awarded to the plaintiff are reduced by the proportion of their responsibility.

    Damages in Tort

    • Primary goal is to compensate the victim, usually with a money judgment.

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    Related Documents

    Non-Enforcement of Contracts PDF

    Description

    This quiz explores the two-step process of proving unconscionability in contracts, with a focus on the case of Uber Technologies Inc v Heller. Learn about the significance of unequal bargaining power and improvident bargains in legal contexts. Enhance your understanding of contract law through this detailed examination.

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