1.1.1.

- Cause (1410, 1411, Bruker)

1.1 - Is there a valid oer with all essential

elements? (1388 CCQ)

A cause is the reason parties contracted

(1410).
A cause against public order nullifies the
contract (1411).

1.1.2. - Object (1412,1413 Bruker)

Object is the juridical operation envisioned

by the parties (1412), broadly understood
(Bruker).
An object against public order nullifies the
contact (1413, Bruker).

1.1.3. - Willingness to be bound upon

acceptance (1388 CCQ, Lavoie, Richard)

Step 1 - Has there been an exchange of

consents? (1385 CCQ)

Willingness to be bound will be determined

from perspective of reasonable observer
(Richard, Lavoie).
Oer cannot be made by third parties (Lavoie)

Step 2 - Is the contract absolutely null, in

whole because it is against public order
(1499 CCQ)?

1.2.1.1 - Was there an attempt to revoke?

1.2.1 - Did acceptance meet oer in space &

time?

Oers expires within a reasonable time (1392)

1.2.1b - Was there expiry/revocation?

Step 4 - Following the rules of

interpretation, has debtor failed to perform
obligation without justification (1590 CCQ)?

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a valid claim in contract in the civil

law?

Acceptance must be received before expiry

though, if not, it may be a counter-oer (1393)
Acceptance is eective upon receipt (1387)
Common Law is dierent.

1.2 - Is there valid acceptance?

(1386,1387,1388)

Step 5 - Or was the obligation extinguished

on a 1671 CCQ grounds?

1.2.1a Was there acceptance?

Silence does not imply consent (1394).

Actions can imply consent (1394)

Step 6 Have the parties made stipulations as

to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?
Step 7 - If there is an unexcused nonperformance, what remedies are available
(1590 CCQ)?

A revocation that arrives before oer is always

eective (1391)
Revocation can be a delict, but does
eectively recsind oer (1390, Cere).

Step 3 - Is the contract relatively null, in

whole, because consent was vitiated
(1398,1399 CCQ)?

i - Identifiy the parties

Oers with expiry terms cannot be revoked

beforehand (1390)

Acceptance must substantially correspond

to the essential elements of oer (1393)

1.2.2 - Does acceptance match oer in

content?

Last shot in the battle of the forms wins

(Simon-Beaudry).
There is no partial acceptance of an oer
(Simon-Beaudry)
Acceptance to an essential term so
ambiguous that there no reasonable
interpretation will not constitute acceptance
(Terrase Holdings).

In reward contracts, acceptance is

performance (1395).

A cause is the reason parties contracted

(1410).
2.1. Is the cause against public order?

A cause against public order nullifies the

contract (1411).
An object against public order nullifies the
contract (1413, Bruker)

Step 1 - Has there been an exchange of

consents? (1385 CCQ)
Step 2 - Is the contract absolutely null, in
whole because it is against public order
(1499 CCQ)?

2.2. Is the object against public order?

2.3. Examples of subjects against public order

Object is the juridical operation envisioned

by the parties (1412), broadly understood
(Bruker).

Surrogacy contracts are against public order

(541, Baby X).
Discrimination (Labatt)

Step 3 - Is the contract relatively null, in

whole, because consent was vitiated
(1398,1399 CCQ)?
Step 4 - Following the rules of
interpretation, has debtor failed to perform
obligation without justification (1590 CCQ)?

i - Identifiy the parties

ii - Identify the contractual relations
Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a valid claim in contract in the civil

law?

Step 5 - Or was the obligation extinguished

on a 1671 CCQ grounds?
Step 6 Have the parties made stipulations as
to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?
Step 7 - If there is an unexcused nonperformance, what remedies are available
(1590 CCQ)?

2.4. Consequences of absolute nullity.

If cause (1411) or object (1413) are against

public order, the contract is absolutely null.
(1418)
Interest parties or courts can invoke absolute
nullity (1418)
Cannot be confirmed (1418)

Step 3.1.1 - Fear of serious injury to person

or property vitiates consent (1402)
Step 3.1.2. - Salvage contracts in good faith
are valid (1404)

Step 3.1 - Was consent vitiated through fear/

crainte (1399 CCQ)?

Step 3.1.3. - Apply the Lapierre Test

(Lapierre)

(i) - But for the fear, party would not have

signed.
(ii) - There must be reasonable grounds for
fear.
(iii) - The fear was induced through illegitimate
means (violence). Or
(iv) - Fear was induced to achieve illegitimate
ends (abuse of right or something you had no
personal right to).
(i) - Contract is relatively null, it can still be
confirmed (1419)

Step 3.1.4. - What are the consequences of

crainte?

(ii) - Party can apply to annul contract, claim

damages, or have obligation reduced (1407).
(iii) - If nullified, contract is deemed to never
have existed and prestations must be
returned (1422)

Step 1 - Has there been an exchange of

consents? (1385 CCQ)

(iv) - Restitution can be refused if it would

give undue advantage to a party (1699).

Step 2 - Is the contract absolutely null, in

whole because it is against public order
(1499 CCQ)?

(i) - Children or supervised adults (1405)

(ii) - Consumer Contracts (s. 8 & 9 CPA)
(iii) - Loan contracts (2332)

Step 3.2.1 - Is this a situation where lesion

can apply?

Step 3 - Is the contract relatively null, in

whole, because consent was vitiated
(1398,1399 CCQ)?

i - Identifiy the parties

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

(v) - Renunciation of rights in divorce (422 &

474)

Step 4 - Following the rules of

interpretation, has debtor failed to perform
obligation without justification (1590 CCQ)?

ii - Identify the contractual relations

Step 0 - Outline the situation

Is there a valid claim in contract in the civil

law?

(vi) - Penalty clauses (1632)

(i) - Objective lesion results from a serious
disproportion of prestations.

Step 5 - Or was the obligation extinguished

on a 1671 CCQ grounds?
Step 6 Have the parties made stipulations as
to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

(iv) - Abusive clauses in consumer

contracts and contracts of adhesion (1437).

Step 3.2 - Was consent vitiated through

Lesion?

Step 3.2.2. - Was there lesion as per 1406, as

applied in Gareau and Kechichian?

(ii) - Subjective lesion is where the obligation

is exceptionally onerous for one party, as
determined by the circumstances knowable to
the parties at time of contract (Gareau).
(iii) - Abusive clauses, as per 1437, is a form
of lesion (Slush Puppie)
(iv) - Bad faith can nullify an abusive clause
(Kechichian)

Step 7 - If there is an unexcused nonperformance, what remedies are available

(1590 CCQ)?

Step 3.2.3. - What are the consequences of

Lesion?
(i) To vitiate consent the error must relate the
nature of the contract, identity of object or
an essential element of consent? (1400,
*Huot*).

(i) - If lesion of contract as whole, consent is

vitiated and whole contract can be nullified,
with damages, or obligation reduced (1407)
(ii) - Defendant can petition for reduction in
obligation (1408)
(iii) - If lesion of clause, clause is annulled or
reduced (1437 - Cons. & Adh., 1623 - penalty)
(iv) - Contract is still valid unless clause was
fundamental (1438)

(ii) Would, but for the error, they not have

contracted? (1400 *Huot*)
Step 3.3. - Was consent vitiated through the
error of one party (1400 CCQ)?

(iii) Was the error not inexcusable? (1400,

Huot)
(iv) Remedy for innocent error is annulment of
the contract. (1407, Huot).
(v) Where error was product of negligence or
other fault, damages (1407, Huot).
(vi) Error does not need to be shared and is
judged subjectively (*1400* *Huot*).

Where an error is produced by fraud through

act or omission, and because of fraud party
would have not contracted or contracted on
dierent terms, consent is **vitiated** (*1401
CCQ*, *Creighton v Grynspan*).

Step 3.4. - Was the error a result of fraud/

dol? (1401 CCQ)?

The presence of fraud will generally mean an

error is not inexcusable (Les Ptroles).
Vitiated consent means a contract is
relatively null (*1419*) and may still be
confirmed through actions of victim (*1420*,
*Les Petroles*).

Damages may be awarded (1407) putting the

victim in the place as if the contract had not
been made (Les Ptroles).

(i) - Common intention of the parties will be

sought (1425).
(ii) - Clauses are interpreted in light of the
contract as a whole (1427).

Step 2.1 - Apply General Rules

(iii) - Clauses will be interpreted so as to give

some Eect (1428).
(iv) - Good faith is assumed (1375)
(v) - Nature of the contract, past conduct,
and the circumstances in which it was
formed will be taken into Account (1426)

Step 1 - Has there been an exchange of

consents? (1385 CCQ)

(vi) - Contracts are interpreted in favour of

party incurring obligation (1432)

Step 2 - Is the contract absolutely null, in

whole because it is against public order
(1499 CCQ)?

Step 3 - Is the contract relatively null, in

whole, because consent was vitiated
(1398,1399 CCQ)?
Step 4 - Following the rules of
interpretation, has debtor failed to perform
obligation without justification (1590 CCQ)?

i - Identifiy the parties

ii - Identify the contractual relations
Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a valid claim in contract in the civil

law?

Step 5 - Or was the obligation extinguished

on a 1671 CCQ grounds?

(i) - Terms are always interpreted in favour of

consumer/adherant (1432)
Step 2.2 - If contract of adhesion (1379
CCQ) or consumer contract (1384 CCQ),
apply special rules.

(ii) - External clauses not expressly identified

are null (1435, dell)
(iii) - Incomprehensible terms are null (1436)
(iv) - Abusive Clauses are null (1437)

Step 6 Have the parties made stipulations as

to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?
Step 7 - If there is an unexcused nonperformance, what remedies are available
(1590 CCQ)?
(i) - There is a general duty of good faith (6
CCQ)
(ii) - Abuse of right (7 CCQ) is also a delict.

Step 2.3 - Check to see if either party

breached a duty of good faith (6,7,1375)

(iii) - What is the nature of the relationship

(closer, stronger)?

(i) - Bank-Client relationships, there is a

general prohibition not to exercise bad-faith
(Soucisse).
(ii) - Long term Bank-Client relationships,
unreasonable exercise of a right is a fault
(Houle, 1457 CCQ)
(iii) - Franchise relationships (or relationships
of control), require loyalty (Provigo)
(i) - Fin de non recevoir, the bad faith partys
claim becomes unenforceable (Soucisse).

(iv) - What are the consequences?

(ii) - Breach of duty is a fault that can imply

extra-contractual obligations (Houle)
(iii) - Breach of duty can be a breach of
contract (Provigo, Houle)

6.1. Was the obligation performed (1553

CCQ)?

Payment means the actual performance of

whatever forms the object of the obligation.

6.2 . Did parties agree to end the contract

(1439, 1687 CCQ)?
Step 1 - Has there been an exchange of
consents? (1385 CCQ)
Step 2 - Is the contract absolutely null, in
whole because it is against public order
(1499 CCQ)?

6.3. Did debtor rightfully terminate because

of creditors own default of not minor
importance (1604 CCQ)

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a valid claim in contract in the civil

law?

(i) Superior force release debtor when, *(i)*

before default superior force prevents
performance or *(ii)* after default and
performance could not have been enjoyed
anyway. (1693 CCQ) Unless debtor has
expressly agreed to perform regardless.

Step 5 - Or was the obligation extinguished

on a 1671 CCQ grounds?
Step 6 Have the parties made stipulations as
to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

(iii) If an obligation cannot be reduced, then

damages will suce (1604)

(v) Resolution is requires restitution, resiliation

stops future prestations (1606).

Step 4 - Following the rules of

interpretation, has debtor failed to perform
obligation without justification (1590 CCQ)?

ii - Identify the contractual relations

(ii) Where resolution or resilitiation

(successive performance) is requested, the
default must have not been of minor
importance (1604)

(iv) Where there is a lapse of term resilitiation

doesnt need a judicial order (1605)

Step 3 - Is the contract relatively null, in

whole, because consent was vitiated
(1398,1399 CCQ)?

i - Identifiy the parties

(i) Where one party fails to perform the other

may refuse to perform to a similar degree
(1590)

6.4. Was performance of the obligation made

impossible (1693 CCQ)?

Step 7 - If there is an unexcused nonperformance, what remedies are available

(1590 CCQ)?

(ii) Right holder bears risk of loss unless there

is a delivery obligation (1456).
(iii) Superior force is an unforeseeable and
irresistible event (1470 CCQ). Generally
doesnt include human actions (*Otis
Elevator*).
(iv) parties can stipulate what constitutes
superior force (Otis Elevator)

6.5. Was there imprvision?

No provision for simple hardship in civil code.

Other systems

Ontario Frustrated Contracts Act - Where

performance has become frustrated or
impossible, expenses incurred by parties in
relation to performance of contract can be
recovered if it is just. Similar rule of restitution
if other party has gained a benefit.
6.2.1 - Where performance becomes more
onerous performance is still required unless
there is hardship.

Unidroit

6.2.2 - Hardship where occurrence of events

fundamentally alters the equilibrium of
contract either by increased cost or
decreased value. Also must, events occur
after conclusion of contract, could not have
been reasonably foreseen, beyond control,
risk was not assumed.
6.2.3 In case of hardship party can request
renegotiations. This does not entitle to
withhold performance. If failure to negotiate
they may go to court, where the court may
terminate contract or adapt the contract to
restore equilibrium.

Restatement of Contracts s 261- Where

after contract performance is made
impracticable without fault, duty is
discharged, unless otherwise agreed
beforehand.
Principles of European Contract Law

4.102 - Contract is not invalid simply because

at time of contract performance was
impossible.
8.108 - non-performance is excused if there
was an impediment beyond its control that
could not be reasonably foreseen. Where
impediment is temporary, article eects
period of impediment. Notice of impediment
must be received within a reasonable time.

Step 1 - Has there been an exchange of

consents? (1385 CCQ)

6.1 Were the terms incorporated and valid

(1434)?

In a battle of the forms, the terms of the last

shot will prevail (Simon-Beaudry).

Step 2 - Is the contract absolutely null, in

whole because it is against public order
(1499 CCQ)?

Step 3 - Is the contract relatively null, in

whole, because consent was vitiated
(1398,1399 CCQ)?
Step 4 - Following the rules of
interpretation, has debtor failed to perform
obligation without justification (1590 CCQ)?

i - Identifiy the parties

ii - Identify the contractual relations
Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a valid claim in contract in the civil

law?

6.2. Do single clauses conflict with public

policy?

Discriminatory clauses, even if indirectly

discriminatory, are against public order
(Labatt)
Restraint of trade, if not reasonably limited, is
against public order (2089 CCQ, Cameron)
If the term is not essential to the contract it
can be severed (1438, Cameron, Labatt)
The courts will not read down a clause
against public order (Cameron)

Step 5 - Or was the obligation extinguished

on a 1671 CCQ grounds?

A term that is against public order will be null

(1499 CCQ)

Step 6 Have the parties made stipulations as

to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

Abusive Clauses, which are excessive and

unreasonable, in consumer contracts and
contracts of adhesion are null (1437, Slush
Puppy)

Step 7 - If there is an unexcused nonperformance, what remedies are available

(1590 CCQ)?

6.3. Is the clause otherwise unenforceable?

Abusive Clause

Three pronged test for abusive clauses: (i)

Excessive burden on party (subjective) (ii)
Unreasonable (objective) *(iii)* Not in good
faith (Kechichian).
If the term is not essential to the contract it
can be severed (1438, Cameron, Labatt)

Exclusion of liability - A person may not

exclude liability for material injury through
gross or intentional fault (1474).

(i) - Intention to be legally bound will be

determined from perspective of reasonable
observer (Carbolic Smoke Ball)
(ii) - Oers made in obvious jest preclude
intention to be bound (Pepsico).
Step 1.1.1 - Would a reasonable person have
taken the communication as intending to
eect legal relations?

(iii) - An oer must contain essential

elements of contract to be binding upon
acceptance (Pepsico).

(i) A unilateral oer promises a prestation by

oeror on condition of performance by
oeree (Carbolic smoke ball).
(ii) Unilateral oers can be revoked up to last
moment of complete performance (Dawson)

(iv) - Omission of many terms suggests that

it is not an oer but an invitation to treat
(Pepsico)

(iii) - Courts will disfavourably interpret

unilateral contracts, preferring to interpret
them as bilateral contracts so long as there is
a mutual promise (Dawson Helicopter)

Unilateral Contract

Step 1.1.2. - What kind of contractual

relationship did the oer entail.

Step 1.1 - Was there an oer with intention

to be legally bound?

Bi-Lateral Contract

(i) - In family relationships the presumption is

no intention to be bound (Jones v
Padavatton).

Option

Bilateral oers promise an exchange of

prestations binding upon acceptance by
oeree (Boots Pharmaceutical)
In Common Law, an option contract must be
furnished with consideration, see doctrine of
consideration.

(ii) - In commercial transactions the

presumption is that there is an intention to
be bound (Kleinwort Benson), though there
may be deliberate non-law.

Step 1.1.3 - Apply rules for special

circumstances/relationships.

(iii) - Advertisements are generally assumed

not to be oers (Pepsico).
(v) - In retail, the customer makes the oer
(Boots pharmaceutical).

Step 1 - Has there been a valid exchange of

consents?

(vi) - In automatic transactions, the vendor

makes the oer(Thornton).

Step 2 - Is there valid consideration and

form?

(i) - Agreement is not enforceable by courts

(Kleinwort Benson, Padavatton)
Step 1.1.4. - Consequences of no intention to
be bound.

Step 3 - Is contract void in whole because of

illegality or mistake?

Watch out for sneaky third parties!

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

(iii) - Pre-contractual negotiations are not

binding, however a good-faith duty may be
implied from previous contract (Empress
Towers)

Step 4 - Is contract voidable in whole

because of unconscionability,
misrepresentation, duress, undue influence?

i - Identifiy the parties

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

(ii) - Acceptance to treat may constitute an

oer (Pepsico, Boots Pharmaceutical)

Step 1.2.1b - Was there an attempt to

revoke?

Step 5 - Has a breach occurred according to

how a court will interpret the contract?
Step 1.2.1 - Did acceptance meet oer in
space & time?

Step 6 - Has obligation been discharged

either partially or completely? Is nonperformance excused?

Step 1.2.1a Did the oer expire?

(i) - If no term attached, oer expires within a

reasonable time given the circumstances of
the market (Shatford)
(ii) Oeror can stipulate an expiry term, can
still revoke at any time (Waddams)

Step 7 - Have the parties made stipulations

as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

Step 1.2.1c - Apply communication rules to

determine whether attempted revocation or
attempted acceptance was eective.

Step 8 - What are the remedies available for

any breach of contract?
Step 9 - If there are stipulations as to
damages on breach? Are they applicable?

(ii) - Oeror can revoke oer any time prior to

acceptance (Carbolic Smoke Ball, Wormser)

Step 1.2 - Was there valid acceptance of the

oer?

(i) - Acceptance is binding if all essential

elements of a contract are agreed to
(Raes v Wichelhaus, Aerated Bread
Company).

(ii) - In simultaneous communication, where

dispatcher can reasonably know of receipt,
acceptance occurs upon receipt (Entores).
(iii) - Mailbox rule: In two-way, where
dispatcher reasonably cannot know of
receipt, communications acceptance occurs
at dispatch (Entores)
(iv) - In case of miscommunication,
dispatcher has onus to follow up unless he
reasonably could not know of it (Entores).

(iii) - Communication that changes an essential

term constitutes a counter-oer (Butler
Machine Tool)
(iii) - Last shot in the battle of the forms
prevails (Butler Machine Tool). That is, each
form constitutes a counter-oer
(iv) - Ambiguity in essential terms to the
degree that there is no reasonable
interpretation means no contract (Rafles v
Wichelhaus, Aerated Bread Company). See
misunderstanding.
(vi) - Acceptance is determined from
perspective of reasonable observer,
subjective perception is irrelevant (Aerated
Bread Company).
(vii) Where parties continue to negotiate after
an agreement has been made that would
otherwise been binding, when an agreement
is made will be determined from perspective
of reasonable observer (Aerated Bread
Company)
(i) - Acceptance can be explicit or through
actions (Carbolic Smokeball, Entores)
(v) Courts will attempt to find a reasonable
interpretation of vague terms (Carbolic
smoke ball.)

Determination is from reasonable observer.

If there is an error, could dispatcher have
reasonably known? If not, two-way
communication.
Determination is from reasonable observer.

(iv) If a form of communication was

stipulated in the oer, it must be respected by
the acceptance (Waddams)

(ii) - Acceptance is a simply yes (Butler

Machine Tool).
Step 1.2.3 - Does acceptance match oer in
content (mirror image rule)?

If there was an error, could dispatcher have

known? If so its like spoken communication.

Step 1.2.1d - Is there a unilateral contract?

(i) - Acceptance is at 100% performance of

the contract (Carbolic Smoke Ball, Dahl
Pharmaceutical)
(ii) Unilateral oers can be revoked up to last
moment of complete performance (Dawson)
(iii) - Courts will generally interpret unilateral
contracts as bilateral contracts so long as
there is a mutual promise (Dawson
Helicopter)

(i) - Gratuitous contracts are not binding

unless under seal (Waddams, Brudner,
Hutchinson)

2.1.1. General Rule

(iv) - There must be mutual inducement of

consideration in bilateral contracts (Orange
Crush).
Courts will not inquire into the adequacy of
consideration, only whether it was sucient
(Lloyds bank v Bundy)
(ii) - Consideration consists of a restriction of
ones freedoms (Sidway). Can also
constitute obtaining a benefit as a result of the
promise (CITE)
(iii) - Consideration must restrict a future
freedom, otherwise is illusory (Orange
Crush). In other words, if party can end
contract at any time, they never really
promised anything.

2.1 - At contract formation, was the

agreement furnished by mutual
consideration.

(vi) - The requirement to bind future freedom

is not required in unilateral contracts (Dahl)
2.1.2. What Constitutes Consideration

(vii) - Promise must be induced by

consideration (Kirksey)
(viii) - Implied duties can constitute
consideration. (Lady Du)

Step 1 - Has there been a valid exchange of

consents?

(ix) - Previous consideration cannot be used

for new promise (Roscorla).

Step 2 - Is there valid consideration and

form?

(x) - In USA, moral consideration can be

considered (Webb v McGovin).

Watch out for sneaky third parties!

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

Step 5 - Has a breach occurred according to

how a court will interpret the contract?

(iii) - Consideration may not be illusory such

as in a tentative promise or increased credit
(Gilbert Steel)

2.2 - Was a Contract Modification furnished

with Consideration?

Step 6 - Has obligation been discharged

either partially or completely? Is nonperformance excused?
Step 7 - Have the parties made stipulations
as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

(i) - Promissory Estoppel can be used as a

defence against a a party going back on a
promised concession given without
consideration but was relied upon (High
Trees)
2.2.2. - Promissory Estoppel
(ii) - Promissory estoppel cannot be used to
enforce a benefit another party promised.
(Gilbert Steel)

Step 8 - What are the remedies available for

any breach of contract?
Step 9 - If there are stipulations as to
damages on breach? Are they applicable?

Note, this emerged from policy considerations

about duress (Hariss v Watson)

(ii) - Even if agreement is between

sophisticated actors, fresh consideration is
needed for common law contract (Gilbert
Steele)

2.2.1 - Pre-existing duty rule

Step 4 - Is contract voidable in whole

because of unconscionability,
misrepresentation, duress, undue influence?

i - Identifiy the parties

(i) - A pre-existing common-law or

contractual duty cannot constitute
consideration (Stilk v Marick)

(v) -Detriment can also count as

consideration (Carbolic Smoke Ball)

Step 3 - Is contract void in whole because of

illegality or mistake?

There is a promise to accept a smaller sum in

exchange for a larger sum (Concession).
With the intention to be bound
Party making the promise knew or would
reasonably know it would be acted upon.
It was acted upon.

Parties entered into contract for goods and

services in exchange for payment.

(i) - In UK, where there is no duress economic

benefit can constitute consideration (Roey
Brothers).

One party has doubts whether other will be

able to perform.
That party provides additional payment to
ensure performance on time.
as a result that party gains in practice a
benefit or obviates a disbenefit

2.2.3. - Reliance based regime (None of this

is good law in Canada, save Nav Can).

There is no economic duress of fraud

The promissee will have then furnished
practical consideration, and the promise will
be binding.
(ii) - In Australia, promissory estoppel can be
used as sword or shield (even in precontractual settings), where breaking reliance
is unconscionable (Walton Stores). Breach
is a tort.

*(i)* Promisor makes a promise,

*(ii)* Promisor creates or encourages an
**assumption that a contract will come into
existence** or a promise will be performed,
*(iii)* **promisee relies** on this to his/her
detriment; and

(iii) - In USA s.90 Restatement of Contracts

provides for a reliance based regime where
justice demands.

(iv) - Nav Canada.

*(iv)* It is **unconscionable**, having regard

to the promisors conduct, for the **promisor
to ignore the promise**.

A post contractual modification, unsupported

by consideration may be enforceable so long
as it is established that the variation was not
procured under economic duress.

(i) - Non-altruistic surrogacy contracts are

against public order (Baby M).
Step 1 - Has there been a valid exchange of
consents?
Step 2 - Is there valid consideration and
form?

Step 3.1 - Is contract void because due to

statutory or common law illegality?

(iii) - Policy reasons must outweigh the heavy

public interest in maintaining the integrity of
contracts (Tercon).

Step 3 - Is contract void in whole because of

illegality or mistake?
Step 4 - Is contract voidable in whole
because of unconscionability,
misrepresentation, duress, undue influence?

i - Identifiy the parties

Watch out for sneaky third parties!

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

Step 3.2 - Was there a mistake?

3.2.1. Misunderstanding

Step 7 - Have the parties made stipulations

as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?
Step 8 - What are the remedies available for
any breach of contract?
Step 9 - If there are stipulations as to
damages on breach? Are they applicable?

Where there is such ambiguity as to an

essential term of a contract that there is no
reasonable interpretation, the contract is
void (Raes v Wichelhaus).

rez extincta - Where, unbeknownst to both

parties, the object of contract was destroyed
prior to contract formation.

Step 5 - Has a breach occurred according to

how a court will interpret the contract?
Step 6 - Has obligation been discharged
either partially or completely? Is nonperformance excused?

(ii) - If courts determine eects/purpose of

conflict to have broad reaching detrimental
eects it will refuse to enforce due to
common-law illegality (Baby M).

3.2.2. Mistaken Assumption

rez sua - Where already belonged to the

purchaser prior to contract formation, the
contract is void (Lever Brothers)
Where there is a shared mistake as per the
subject, had that error been known to the
parties they would have found the contract to
have been of a fundamentally dierent
nature, the contract is void (*Lever Brothers*,
*Sherwood Walker*).
The doctrine of mistake has become very
restricted in Lever Brothers, it is dicult to
employ successfully (MacMillan).

4.1.1. In Case of actual threats of violence

consent is vitiated (Kafco)

Requirements

(iii) - There was illegitimate pressure, which

includes threat to brake contract.

4.1.1. Duress of goods involves withholding

ones goods until agreement (Bundy)
Step 4.1 - Was consent vitiated through
Duress?

(i) - did the victim protest?

4.1.2. Was there economic duress (Kafco)?
Factors

Step 1 - Has there been a valid exchange of

consents?
Step 2 - Is there valid consideration and
form?

(i) - There is little or no benefit in the

arrangement for the weaker party
(inadequacy of consideration).

Step 4 - Is contract voidable in whole

because of unconscionability,
misrepresentation, duress, undue influence?

i - Identifiy the parties

Watch out for sneaky third parties!

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

Step 3.3a - Actual Undue Influence (Bundy)

or Class 1 UI (OBrian)?
Step 4.2 - Was consent vitiated through
Undue Influence?

(iii) - Was there independent advice?

Eect - Party whose consent was vitiated

can revoke their consent. Can relate to either
contract as a whole or a modification.

(ii) - Parties bargaining power is impaired by

his own needs, desires or infirmities.
(iii) - Undue influence was exercised, though
not necessarily intentionally, for benefit of
other party.
(iv) - Actual notice Stronger party must have
known of their influence and can discharge it
by having the party get third party advice.

Step 5 - Has a breach occurred according to

how a court will interpret the contract?

(i) - Class 2a - Automatic presumption of UI in

relationships of contractual trust (Lawyers,
accountants).

Step 6 - Has obligation been discharged

either partially or completely? Is nonperformance excused?

Step 3.3b - Presumed Undue Influence

(Obrian & Duguid)?

Step 7 - Have the parties made stipulations

as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?
Step 8 - What are the remedies available for
any breach of contract?

(ii) - Were there alternative courses of

action?

(iii) - Did they take subsequent steps to avoid

the contract?

Undue influence is where one party abuses

their position of trust and influence over
another (Bundy)

Step 3 - Is contract void in whole because of

illegality or mistake?

(i) - Parties entered contract against their

will.
(ii) - Party had no practical alternative.

(iii) - Even if a third party to influence, creditor

is fixed with constructive notice and must
discharge duty to ensure consent is proper,
often through third party advice (Duguid,
OBrian).

(i) - Doctrine applies where the lack of

consideration is extreme and there is a
serious inequality in bargaining power
(Bertolo, Harry).
Step 4.3 - Was consent vitiated through
Unconscionable Bargain?

(i) - Class 2b - Party proves a relationship of

trust and influence (OBrian), there is a
presumption of Undue influence.

(ii) - UC can be avoided by requiring party to

seek independent advice (Bertolo, Harry).
(iii) - Eect is to nullify the agreement (Harry)

Step 9 - If there are stipulations as to

damages on breach? Are they applicable?

(i) An untrue statement

Step 4.4. - Was there negligent
misrepresentation?

4.4.1. Does the situation meet the requires set

out in VK Mason?

(ii) Made negligently

(iii) Where there is a duty of care
(iv) With foreseeable reliance.
Result is a tort that puts P in place as if
contract had never happened (*VK Mason*,
*Esso Petroleum*). Doesnt need contractual
relations to be established.

4.4.2. If true, what is result?

Lost opportunity costs are included in

damages (*VK Mason*).
Implied collaterol warranty can also apply,
but result is the same (*Esso Petroleum*)

Husband and wife are in this category

(OBrian and Duguid)

(i) - Clauses are interpreted in light of the

contract as a whole (Novopharm)

Step 5.1 - Apply General Rules

(ii) - Clauses are given meaning that give it

some eect (Novopharm - specifically in
redrafting errors).
(iii) - Contra proferentum applies to contracts
of adhesion (Tercon) but cannot be invoked
by third parties.

Step 1 - Has there been a valid exchange of

consents?

(i) - Parole evidence rule means that signed

documents prevail over unwritten evidence
(Novopharm).

Step 2 - Is there valid consideration and

form?

(ii) - External evidence will be taken into

account when resolving ambiguous terms
(Novopharm).

Step 5.2 - Is there a signed Document?

(iii) - Signing a document means total

agreement to the terms (McCutcheon)

Step 3 - Is contract void in whole because of

illegality or mistake?
Step 4 - Is contract voidable in whole
because of unconscionability,
misrepresentation, duress, undue influence?

i - Identifiy the parties

Watch out for sneaky third parties!

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

Step 5 - Has a breach occurred according to

how a court will interpret the contract?
Step 6 - Has obligation been discharged
either partially or completely? Is nonperformance excused?
Step 7 - Have the parties made stipulations
as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

(i) - Implying terms into a contract requires

demonstrating what could objectively be
known at the time (McCutcheon, British
Crane Hire).
Step 5.3 - Is there an unsigned agreement?

(iv) - Recent case law suggests that this may

not apply to voiding rights of action in
boilerplate contracts (Tilden Rent-a-Car)

(ii) - The type of contract can inform what will

be implied (McCutcheon).
(iii) - Standard business practices and past
practice can be used to imply terms (British
Crane Hire).

Step 5.4 - If a ticket case (adhesion).

Step 8 - What are the remedies available for

any breach of contract?

(i) - When waiving a right, sucient notice

must be given, such that the issuer can
reasonably assume the customer knows of
their right and could refuse (Shoe Lane
Parking)

(i) - There is no general duty of good faith in

the common law (McKinley)

Step 9 - If there are stipulations as to

damages on breach? Are they applicable?

(ii) - Courts will imply a term of good faith on

the basis of:
Step 5.5 - Check to see if party breached a
duty of good faith,

(iii) - There is no duty of good faith in precontractual negotiations (Martel).

(iv) - Where there is discretionary power for
one party (particularly if more powerful) courts
will tend to imply a duty of good in regards to
the exercise of that power (McKinley).

(i) - Business ecacy, particularly in

contractually mandated negotiations
(Empress Towers, Transamerica)
(ii) - Custom or usage (Transamerica).
(iii) - Legal incidents of a particular kind
(trusts) (Transamerica)

Step 1 - Has there been a valid exchange of

consents?
Step 2 - Is there valid consideration and
form?

Step 3 - Is contract void in whole because of

illegality or mistake?
Step 4 - Is contract voidable in whole
because of unconscionability,
misrepresentation, duress, undue influence?

i - Identifiy the parties

Watch out for sneaky third parties!

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

Step 5 - Has a breach occurred according to

how a court will interpret the contract?

6.1. Was there performance?

6.2. Was contract ended by agreement or
release?

Step 9 - If there are stipulations as to

damages on breach? Are they applicable?

(ii) Did the parties provide for the change in

circumstance/allocation of risk in the contract
(Amalgamated Investments)?
6.3.2. Frustration of Purpose

Step 7 - Have the parties made stipulations

as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

(i) Did the other party breach the contract

first?

6.4. Was contract rightfully terminated

because of a repudiatory breach of the other
party?

To the extent that an obligation is impossible

to perform due to force majeur, nonperformance is excused (Sainsbury)
(i) Was there a change in circumstances after
contract formation (Amalgamated
Investments)?

6.3. Is non-performance excused because

performance was frustrated?

Step 6 - Has obligation been discharged

either partially or completely? Is nonperformance excused?

Step 8 - What are the remedies available for

any breach of contract?

6.3.1. Impossibility

(ii) If the stipulation was a explicit or implied

condition of the contract, any breach of the
stipulation will terminate the contract.
(Cehave)
(iii) If the extent of the breach goes to the root
of the contract, eectively denying
enjoyment, including anticipatory breach,
the contract will be repudiated (Cehave).
(iii) If not, there is only a warranty and
damages will suce (Hongkong Fir).
Reciprocal non-performance will not be
excused.

(iii) Was there a change in circumstances so

substantial as to make the obligation radically
dierent in nature (this is not what I
bargained for?) than what was bargained for
(Amalgamated Investments) by diverging
from implied allocation of risk?
(iv) Reluctance in common law to excuse nonperformance for mere hardship or
impracticability (Sainsbury).

In a battle of the forms, the terms of the last

shot prevails (Butler).

Step 3.4 - If a ticket case (adhesion).

7.1 Has Term been incorporated?

(i) - When waiving a right, sucient notice

must be given, such that the issuer can
reasonably assume the customer knows of
their right and could refuse (Shoe Lane
Parking)
(i) - Parole evidence rule means that signed
documents prevail over unwritten evidence
(Novopharm).

Step 3.2 - Is there a signed Document?

(ii) - External evidence will be taken into

account when resolving ambiguous terms
(Novopharm).
(iii) - Signing a document means total
agreement to the terms (McCutcheon)
(iv) - Recent case law suggests that this may
not apply to voiding rights of action in
boilerplate consumer contracts (Tilden Renta-Car)

Step 1 - Has there been a valid exchange of

consents?
Step 2 - Is there valid consideration and
form?

Step 3 - Is contract void in whole because of

illegality or mistake?
Step 4 - Is contract voidable in whole
because of unconscionability,
misrepresentation, duress, undue influence?

i - Identifiy the parties

Watch out for sneaky third parties!

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

7.2 Does clause violate public policy? See

step 4

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

(i) - Restraint of trade is against public order

unless set within reasonable limits (Provident
Clothing).
(i) - If clause is against public order it will be
null, and will not be read down (Provident
Clothing)

Step 5 - Has a breach occurred according to

how a court will interpret the contract?
(i) - Properly interpreted, would the clause
apply (Tercon)?

Step 6 - Has obligation been discharged

either partially or completely? Is nonperformance excused?
Step 7 - Have the parties made stipulations
as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

7.3.1. Is it unconscionable?
7.3 - If there is a limitation of liability clause,
is it unconscionable?

(iii) - Was clause unconscionable due to

unequal bargaining power at time of
contract (Tercon)?
(iv) - Are there policy concerns that outweigh
the strong interest in enforcing contracts
(Tercon)?
(v) - A null clause will leave the rest of the
contract enforceable (Tercon).

Step 8 - What are the remedies available for

any breach of contract?
Step 9 - If there are stipulations as to
damages on breach? Are they applicable?

7.3.2. Is an exclusion of liability clause

attempting to benefit an employee or third
party (London Drugs)?

(i) There is a contractual limitation of liability

between employer and another party
(ii) loss occurs during employers performance
of its contractual obliagitions
(iii) employees are acting in course of their
employment.
No rule for other third parties. But may be
expanded.

7.4 - Stipulations of breach

If contract stipulates a clause is a condition,

any breach will repudiate the contract
(Cehave).

General principle that claimant will not be

made better o and the defendant will be
sanctioned (Forsyth).
Remedy will be the dierence between
promised and actual performance (Hawkins)

Expectation Damages

Reliance
8.1.1. What is the measure of damages

Restitution

8.1.2. Is the damage too remote applying Victoria

Step 1 - Has there been a valid exchange of
consents?

8.1.3. Will the plainti be entitled to Amenity/

Aggravated Damages
8.1. Will Damages be Provided as a Remedy?

ii - Identify the contractual relations

Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

Step 5 - Has a breach occurred according to

how a court will interpret the contract?

Specific performance is an equitable remedy

available where damages would be inadequate
or impractical (Warner Bros).

Step 7 - Have the parties made stipulations

as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?
8.2.1. Inadequacy of Damages?

Where the object of contract is a unique good or

service and not readily exchangeable in the
market, specific performance may be available
(Warner Brothers).

8.2. Can Specific Performance be Granted?

Where, due to privity of contract, a party would

be able to escape the consequence of breach,
specific performance will be ordered (Beswick)

Step 9 - If there are stipulations as to

damages on breach? Are they applicable?

Performance is in lieu of damages (Warner Bros)

Positive obligations to work will not be enforced,
neither will negative obligations that would
effectively force the performance through
hardship (Warner Bros)

8.2.2. Is this a situation will specific

performance will not be ordered.

Courts will generally not order specific

performance in commercial contracts (Warner
Bros, Argyle)
Orders for continuing performance will not be
enforced, though orders for result may (Argyle)

8.3. Can a third party seek remedy for a

benefit?

Must be reasonably foreseeable to have been

not unlikely (Heron II), meaning less than 50%
probability.
Takes into account professional knowledge of
parties (Victoria Laundry)

Where the object of the contract is to furnish

enjoyment, the deprivation of that enjoyment can
be claimed (Jarvis)

8.1.4. Will the plainti be entitled to punitive

damages?

Step 6 - Has obligation been discharged

either partially or completely? Is nonperformance excused?

Step 8 - What are the remedies available for

any breach of contract?

The injured party may only recover for losses that

were reasonably foreseeable at the time the
contract was formed (imputed knowledge);

Aggravated damages can be awarded when the

object of the contract was to secure a
psychological benefit that brings mental distress
upon breach that is within the reasonable
contemplation of the parties and the degree of
suffering was sufficient so as to warrant
compensation (Fidler)

Step 4 - Is contract voidable in whole

because of unconscionability,
misrepresentation, duress, undue influence?

Adhesion

Reinstatement will be granted on grounds only if

it is reasonable in comparison to the loss or
decrease in value. Personal intention and the
object of the contract will be taken into account
(Forsyth).

Damage for unforeseeable reasons can be

recovered only if the possibility of such a loss was
communicated to the other party at the time the
contract was formed (actual knowledge).

Step 3 - Is contract void in whole because of

illegality or mistake?

Watch out for sneaky third parties!

Loss profits are in principle available (Security

Stove, Esso Petroleum)

Laundry (restatement of Hadley)?

Step 2 - Is there valid consideration and

form?

i - Identifiy the parties

Investments made in reliance of promise and

rendered useless because of breach will be
remedied (Security Stove).

State of Common Law does not allow third

party to sue directly. The contracting party
may require specific performance (Beswick)
Under UK Third Party Rights Act the third
party may confer a benefit.

Punitive damages should only be awarded

exceptionally and in cases of clear bad faith or
egregious conduct (Fidler).
There must be a separate actionable wrong,
which can be another contractual (Whiten).
Whether the breach was egregious enough to
warrant punitive damages should be assessed on
degree of misconduct, relative vulnerability of
other party, advantage or profit to breacher
(Whiten).
The quantum of damages should be in
proportion with injury (Whiten).

Step 1 - Has there been a valid exchange of

consents?
Step 2 - Is there valid consideration and
form?

Step 3 - Is contract void in whole because of

illegality or mistake?
Step 4 - Is contract voidable in whole
because of unconscionability,
misrepresentation, duress, undue influence?

i - Identifiy the parties

Watch out for sneaky third parties!

ii - Identify the contractual relations

Adhesion
Consumer

iii - Classify contracts

Loan
iv - Identify potential defects and breaches
(Rest of Diagram)

Step 0 - Outline the situation

Is there a claim for breach of contract in the

common law?

Step 5 - Has a breach occurred according to

how a court will interpret the contract?
Step 6 - Has obligation been discharged
either partially or completely? Is nonperformance excused?
Step 7 - Have the parties made stipulations
as to the extent of contractual duties,
definitions of breach, discharging events,
conditions, limitation or exclusion of liability?

Penalty clauses that anticipate likely damages

are enforceable.

Step 8 - What are the remedies available for

any breach of contract?

Penalty clauses that attempt to sanction

breach by stipulating amount more than
actual damages are unenforceble.

9.1. Is the penalty clause enforceable

(*Thermidare*)?

Step 9 - If there are stipulations as to

damages on breach? Are they applicable?

Primary concern is fairness and

reasonableness.
If unenforceable normal damages are
assessed.

9.2. Are additional damages applicable?

Would require interpretation of contract,

penalty clause and additional damages
cannot leave other party better o.