Haberstockwell Outline of the Century

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HABERSTOCKWELL OUTLINE OF THE CENTURY

• Take a breath—ur gonna be great!
• Read what you are being asked to do. What type of problem?
• Are you supposed to be making any specific assumptions?

1.Is there a contract?

MISTAKE:

Before you go any further ask this:

Does the K allocate the risk of the particular mistake?

EXPRESS: Can’t rely on doctrine (i.e. mutual release for payment in Miller Paving) (can look at language and practices for allocation) {Note from Miller: It was the plaintiff’s fault because they had allocated the risk by sending the final $ which was then signed”this is the full amount”}
IMPLIED: Associated Japanese Bank: Can also be implied allocation of risk. (look to knowledge disparity here ie. McRae vendor allocated risk- who in best position)
*Is rectification an option? Was the allocation in the contract recorded WRONG?

IT’S A TERM! UNCERTAIN K(MISTAKE AS TO TERMS)

1. FIRST try to apply rules of K formation: - were the parties not even on the same page?

Mutual mistake if parties were at cross-purposes (2 ships in the night): this is a mutual mistake and rules of contract formation apply where we find there was no meeting of the minds and so contract is void. (this is not under doctrine of mistake just K formation and applies to mutual mistake only) (Q: mistake as to term only)
I.e. would not be able to apply objective test because no evidence/reason/ factors to cause a RP to prefer one party’s understanding over another’s THEN there will be automatically a TRUE AMBIGUITY = no true agreement = no contract (only when SO ambiguous)(Raffles)
Staiman: Objective Test:can ONLY decide that there is NO CONTRACT due to a MUTUAL MISTAKE when circumstances are so ambiguous that a RP test would not work such as in the case of Raffles
(*Come back to this for conditions/warranties)
UNILATERAL MISTAKE not enough to break K on mistake (Smith v Hughes) UNLESS mistake as to terms:
(If mistake as to FACT, see below)
(1)the mistake is as to the terms of the contract (as opposed to motivation) and
(2)the mistake is known to the offeree at the time of purported acceptance (Hartog)“Snapping Up”
(3)Do NOT apply objective formation principle (Staiman) here (Hartog) (Purpose: It would be against the purpose of the principle of objectivity to apply an objective analysis here) [subjective test should be used for fairness sake)
IF CAN’T FIND MISTAKE TO BREAK K, MAY BE ABLE TO USE EQUITABLE MISTAKE (below)
IT’S THE DEED ITSELF!“It’s not my deed” “I did not know what I was signing”

1. SECOND:NON EST FACTUM?

A kind of mistake that involves a party who mistakes the kind of contract being signed. Because this type of "mistake" could be abused, it is severely limited by the common law
cannot be relied upon if the party could have easily have read the contract or if the party had a general idea as to the nature and purpose of the contract
Must prove they believed that the document they thought they were signing was fundamentally different from the one they actually signed
When there is a signature given by a person with capacity - non est factum very difficult.
Saunders v. Anglia: Can usenon es factum if (1) not negligent (2) fundamentally different from what thought (ie still a deed, just deed to a different person)
“No man can take advantage of his own wrong”

1. THIRD: IT’S A MISTAKE AS TO UNDERLYING FACT!(MISTAKE OF FACT)

COMMON LAW MISTAKE DOCTRINE: NARROW
DEPENDS on a common mistake (both parties made the same mistake about an essential aspect) = void a contract based on a common, mistaken assumption of material fact.
3 types of operative mistake mistake assumptions where could find void (Bell v Lever): (1) Identity of individual (2) Mistake RE subject matter (3) Mistake RE quality of subject matter
1. MISTAKE OF IDENTITY OF PARTY CONTRACTING WITH
*Intention may be to contract with a specific individual only : therefore VOID.
These cases are always dealing with the innocent victims, NOT the rogue themselves and the court must decide which party losing out would be more just.
Must ask question: Who was in the best position to have discovered that the party was a rogue?
Written Dealings:
Where an offer is not intended to be made to the rogue, but rather to the party being impersonated, no K. How decided: ABC (A retains title to property because no original K was formed between A&B therefore could not pass to C)(Cundy v. Lindsay)
Looking at intentions of parties on the face of the K.
Shogun: written dealings.
Face to Face Dealings: (Don’t find void @ CL. Exception: equity time frame)
Intention is to contract with the person who is in front of you. Names are just labelscontract with who is actually in front of you. (How decided: AB3P 3P holds title, there was K b/c A in better position to determine if rogue) (Phillips v. Brooks)
EXCEPTION*: K can be voidable because of fraudulent misrepresentation (Would be voidable prior to sale to 3P) AB(“celebrity)3P: since 3P bought in good faith, 3P keeps.
(rationale: If doesn’t outwardly appear that anything wrong, not your responsibility. Original owner of the car was in best position to avoid. (Lewis v. Avery)
Mixed Dealings: (Shogun) SPatel(fax/written)3P(in person)
Follows Cundy: where written offer not intended for rogue, no K.
3P loses out here: Newcombecrit: Shogun was in best place to avoid risk.
Dissent: what about ‘voidable’ Hudson should have had. Presumption that all should be handled the same way (like face to face)
Sale of Goods Act:26(1) Subject to this Act, if goods are sold by a person who is not the owner of them and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner’s conduct precludes the owner from denying the seller’s authority to sell. nemodat
2. MISTAKE THAT SUBJECT MATTER EXISTS/BUYING SOMETHING THAT ALREADY YOURS
Res extincta
-McRaebut not relied on that case because cannot rely on mistake if you made the mistake
-If found to be implied condition precedent, could rely on mistake.
-In this instance, there would be a K (breach) [aka didn’t find it void].
Sale of Goods Act: if you have contracted for something that has perished (such as foodstuffs) then K is void.
Res Sua
3. MISTAKE AS TO QUALITY OF SUBJECT MATTER (Bell v. Lever Bros)
To find contract VOID for mistake:
(1) Must involve the actual subject matter of the agreement AND
(2) Be of such a fundamental character as to constitute an underlying assumption without which the parties would not have entered into the agreements.
 If you have complied with the terms and essential subject matter, even if K is unfair, still void. (*In this case, if they had wanted to protect against insider trading in an employment severance situation could have stipulated this explicitly in the K{policy}remember contract drafting class here)
Decision: In this case, insider trading during employment did not render the severance agreement entirely different.
*Bell v. Lever is a really narrow formulation of this rule.
If you still find a K at the end of this analysis, proceed to EQUITABLE MISTAKE.
Cannot Rely on Mistake where you are Responsible for mistake:(McRae)
-A mistake can be genuine but also be reckless and unreasonable.
-This is largely related to fairness: Who was in the best position to know of the risk?
POLICY: It is easier for the party with information to accept the risk than for the other party to have to suss it out more onerously.
-Generally this would arise in situations where the defendant is attempting to claim mistake. If can’t rely on mistake doctrine, we are acknowledging that K exists and is not void and therefore, breach would have ensued  damages.

1. FOURTH: EQUITABLE MISTAKE: Lower Threshold “CL’s derpy little sister”

(*Can apply for mistake of FACT or mistake of TERMS)
[Despite the English CA disapproval of equitable mistake in Great Peace, Canadian courts have approved of the doctrine and the remedial flexibility it providesMiller Paving]
(1)Need not relate to the essential substance of the contract (but still fundamental)[this is why it would not have worked under CL: NOT ESSENTIAL](2)looking for an honest mistake (clean hands)
When mistake operative at law – apply when unfair, unjust, or unconscionable not to correct it.
Any type of mistake (common, mutual or unilateral) can give rise to relief under equitable mistake
 stronger case where you have a unilateral situation and one person is taking advantage of another’s mistake (Hartog, snapping up)
Solle v. Butcher(TEST FOR EQUITABLE MISTAKE)
You’ve gone through Lever and have found not enough to find for mistake at Common Law (Does the mistake about the rent render the subject matter entirely different from what it was thought to be? NO: “a lease is a lease” – not void)
TEST: (Solle v. Butcher)
(1)UNILATERAL:Has one party been induced by a material misrepresentation OR one party, knowing that the other is mistaken about the terms of the offer or the identity of the person by whom it is made, lets him remain under his elusion and conclude a contract on the mistaken terms instead of pointing out the mistake. (“snapping up”)
(2)COMMON: A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to facts or as to their relative and respective rights, provided that the misapprehension was fundamental and that the party seeking to set it aside was not himself at fault.(cited in Miller)
Example: Rent ceiling gone wrong one party at fault but not fraudulently so.
Miller (1) If allocated for risk, too bad (2) Works through Solletest
- in this case, what charging does not fundamentally change the K (same idea as Solle: “a lease is a lease”)

Link to other doctrines:

• Was there free and informed consent? Duress, undue influence [p.11]

doctrine of duress : consent, voluntariness, NO relationships, “extortionate”, commercial situations

undue influence : special relationship categories, questionable interaction, disadvantage (?)

• Does the law prohibit the formation of K? Illegality: Restrictive Covenant/Statute? [p. 15]

2.What are the terms of the contract?

Interpretation of Contracts: (Guiding Principles)
PARSE THE WORDING CAREFULLY: USEINTERPRETIVE PRINCIPLES
(1) Look for intentions of parties at time K signed.
(2) To find meaning, do not just rely on literal written terms if would not make sense within context. (Bathurst)
(3) If ambiguous (ie two possible meanings), court will decide in favour of more fair result. (“sensible commercial result”) (Eli Lilly)
(4) The courts apply an objective approach to the determination of the parties’ intention at the time of K. (Electric Limited)
(5) Purpose and context will always be relevant in interpreting K. (Reardon Smith)
(6) Where there is no ambiguity in written, no need for extrinsic evidence. (parol evidence rule) (KPMG)
(7) Generally: evidence of prior negotiations is inadmissible for the purpose of construing the final agreement. (Can be used if essential to ‘genesis of the transaction’)
(8) Interpretation must give effect to all parts of the agreement (‘harmonious’) (Checo)
(9) Subsequent conduct: If ambiguous result and long history of contracting together. How have issues been interpreted in the past.
(10) Related agreements (ie. If part of larger transaction)
(11) Meaning of words Ordinary meaning assumed unless evidence to back that it is a technical term.
(12) Construction: contra proferentum: Employs a narrow construction against drafter of ambiguous provision.
The most recent word: Sattava Capital Corp v. Creston Moly Corp (SCC 2014)
Driedger your K: ie. Look at context, purpose, relationship etc but extrinsic info will never override words of the agreement itself.
What parties using those words in that background and context would reasonably have understood them to mean.
Word on parol evidence rule: Surrounding circumstances should be admitted to better understand written word and thus does not contradict.
Sale of Goods Act: “language express or implied statutory and otherwise.”—If no express language dealing with warranty, look to this act. You can essentially contract out of anything but if you are missing information that is included in this act, act will apply as default.

Parol Statements Is there inconsistency between parol statements and the written contract? Apply the Gallenframework – there is a strong presumption the written agreement trumps but….courts will not allow written agreement to override a clear, specific representation on which there has been significant reliance.

PAROL EVIDENCE
The parol evidence rule does not allow extrinsic evidence admitted that would alter the terms- add or subtract from the written agreement. (Exceptions will be made if ambiguous or if writing is unclear)
*By arguing your case properly, can almost always get evidence in: can argue if contradicts, varies, adds etc.
Factors influencing application of the rule
(a)General: Intent, reliance, reasonable expectations, unfair surprise
(b)Nature of change/conflict: how serious is the conflict/contradiction.
(c)Nature of Document
- Intended to be whole agreement—entire agreement clause?
- clarity of wording
- read by parties (knowledge)?
(d)Bargaining Relationship
- power
- standard form contract
- past relations/experience
- evidence of sharp practice
- legal advice obtained
(e)Nature of Representation
- quality and credibility of evidence
- clarity and specificity
- significance
“The Leaky Bucket”/Sham Agreement highlights problems with PE rule.
If parties have agreed that their written promises are not to bind them, that agreement controls and no legal obligations flow from the writing
Policy: Criticism that admitting evidence or not has upsides and downsides and can lead to injustice. (Lying witnesses vs. excluding real information.) Acknowledging limitations of objectivity. Admission would impact business efficacy but this problem overstated. Strict application of rule in the past has led to injustices which is why there are so many exceptions.
*Here extrinsic evidence is allowed (distinguishing feature: letter (stated 3-8%) and evidence of sham agreement) Oral term directly contradicts written term(BAD LAW) / Zell v. American Seating Co (US CCA 1943)
(3-8% contingency fee not honored as was letter agreement)
GENERAL – ONLY submist collateral K in parol evidence when it does not contract the written/is intended to be binding/is not inconsistant
*Introduces theme of collateral agreement but REJECTS here.
Oral assurance is collateral to written agreement but parol evidence rule does apply because in order to have collateral K with bearing, cannot directly contradict the written contract which said continuing guarantee. (tenancy music example) **Was not acknowledged as a collateral agreement in court.
Doesn’t matter that didn’t read it.
RATIO: If parol evidence of collateral agreement directly contradicts written K then it is inadmissible.
Distinguishing features: merger clause, did not read K but doesn’t matter, collateral oral assurance. / Hawrish
1969 SCC
(bank & oral assurance (collateral agreement) relieved from debts contradicts standard form K)
GENERAL- STRICT APPLICATION OF RULE
RATIO: Any collateral oral agreement may not stand in the face of a written guarantee. (Bank likely would have gone through with this anyway but not recognized)Could cite case when find lack of evidence that oral agreement actually occurred. / Bauer
1980 SCC
(oral guarantee contradicts written doc)
EXCEPTION (DENNING)SAYS OK TO COTRADICT= bad law
*Considers totality of evidence here the K was intended to be written, oral & conduct.
Finding collateral K: When a person gives a promise to another, intending that they act on it by entering into a K and they do act on it by entering into that K, we hold that promise binding.
Finding: The printed condition is rejected because it is repugnant to the express oral promise/representation. Denning (Mendelssohn v. Normand)
RATIO: Parol evidence can be considered a promise that constitutes a condition of K that override exemption conditions. Must consider oral, written, and conduct in formation of K.
(See also Zippy Print v. Pawliuk(BCCA 1995): Specific oral>general written exemption clause UNLESS you specifically draw attention to it. Aka: Parol Evidence rule ≠ absolute) / J Evans & Son
1976 UK CA
(oral assurance that containers transported below deck- pre-existing relationship)
EXCEPTIONS *Strong presumption in favor of the written document
IF ORAL DOES NOT CONTRADICT WRITTEN, CAN APPLY BOTH
Held: Evidence of oral representation is admissible. Collateral agreement is not inconsistent and does not conflict with written K. Written K is clear so we conclude that oral agreement was not made. If written vs. oral and no clear evidence of oral, written will supersede. Kind of an LLP exercise. Must consider the construction of the K and whether or not an exemption clause was intended to exclude a particular oral term or not. In this case, promise was related to weeds and nothing more.
PAROL EVIDENCE IS ADMISSIBLE WHERE:

1. The written agreement is not the whole K.(J Evans)
2. Interpretation: Extrinsic evidence can be introduced to clear up an ambiguity in the K. (Zippy Print)
3. Invalidity: Extrinsic evidence can be introduced to show that the K is invalid because of lack of intention, consideration or capacity (non es factum?)
4. Misrepresentation: Extrinsic evidence can be introduced to show there was a misrepresentation that was either innocent, negligent or fraudulent.
5. Mistake: Extrinsic evidence can be introduced to show that there was some mistake as to the nature or effect of the agreement.
6. Rectification: Extrinsic evidence can be introduced to correct an error/mistake in putting the agreement in writing. [most readily accepted exception]
7. Condition precedent: Extrinsic evidence can be introduced to show that there was a condition precedent to the agreement taking effect.
8. Collateral K/Warranty/Agreement: Extrinsic evidence can be introduced to show that there was a separate agreement along with the written agreement. (Evans)
9. Unconscionability: Extrinsic evidence can be introduced to show that the transaction was brought about through unconscionable means.
10. Modifications and discharge: Extrinsic evidence can be introduced to show that the K has been modified or terminated.
11. Equitable remedy: Extrinsic evidence can be introduced in support of a claim for an equitable remedy.

------Presumption in favour written K strengthening ------
Adds a term Varies Contradict
There is a strong presumption that if a document ‘looks’ like a K, it is a full K.
Presumption would be less strong if specific oral and general exclusion clause but more strong where specific oral and equally specific written. (Zippy)
Presumption stronger for negotiated K vs standard form K.
LATEST WORD FROM THE SCC: Sattava: K should be interpreted using extrinsic aids, but that extrinsic information can’t actually override the words of the agreement itself, but can be used as background. / Gallen v. Allstate
1984 BC CA
(oral assurance that buckwheat would not smother weeds but destroys all crops clause in written K: “not responsible for success of crop”)
STATUTE: Business Practices and Consumer Protection Act (2004)
RULE DOES NOT APPLY IN CONSUMER TRANSACTIONS
187.NOTE: "consumer transaction" means a supply of goods or services or real property by a supplier to a consumer for purposes that are primarily personal, family or household.
*Deals with Parol Evidence Rule. No such thing as rule in consumer transactions. You always have to be able to admit evidence. Companies cannot get away with hiding things in written Ks when people buying things.

Mistake as to recording of K?Rectification