Understanding Contracts: Professor Anita John BLAW 150

Understanding Contracts
Chapter 4
Professor Anita John
BLAW 150
ContractFormation 1
What is a contract?
What is a contract?
An agreement
between 2 or more
parties that is
enforceable by law.
ContractFormation 2
Contracts are part of our daily lives.
What contracts have you entered into?
Cell phone
Cable TV
Internet
Education
Car
What are the four elements that constitute a legal
and enforceable contract?
For an agreement to constitute a legal and
enforceable contract, it must contain four elements:
i. An intention to create a legal relationship
ii. Offer and acceptance
iii. Consideration: something of value given up
by each party to a contract
iv. Legality: must conform to the law of the
land and must not violate public policy
ContractFormation 4
Breach of Contract
Failure on your part to fulfill your contractual
obligations is known as a breach of contract
ContractFormation 5
The Importance of Contract Law
for Business Success
Contracts can clarify your business dealings
Contracts can prevent unexpected and

undesirable results
Contracts can provide for a dispute resolution

process
Contract law governs disputes

Copyright 2018 Emond Publishing. All
rights reserved. 6
The Importance of Written Contracts
The law does not require all contracts to be in
writing.
A verbal agreement of this sort is just as binding
as the most detailed of written contracts.

rights reserved. 7
A mutual exchange of promises
over lunch,
confirmed with a handshake
and an intention to be bound,
can constitute a binding contract,

This Photo by Unknown Author is licensed under CC BY-NC-ND
provided that the agreement is legal

and represents a meeting of minds.
This Photo by Unknown Author is
licensed under CC BY-SA
ContractFormation 8
Written contracts
Written contracts provide provide proof of the
the parties with a record of parties’ agreement in
their rights and obligations
the event of a dispute
A contract provides
excellent evidence of
the parties intentions
This may be necessary
from an accounting and tax and mutual promises.
perspective.
ContractFormation 9
Case Study: UBS Securities Canada Inc. v. Sands Brothers Canada Ltd. 2009 ONCA 328
Facts: An agreement was reached between two

companies for the purchase of 100,000 shares of
a private company.
An agreement was reached through telephone
and email exchanges.
ContractFormation 10
Case Study: UBS Securities Canada Inc. v. Sands
Brothers Canada Ltd. 2009 ONCA 328
 Before the share  Sand Brothers tried to
transaction was back out of the deal,
finalized,  claiming that the
 the share price doubled contract with the plaintiff
when the company had not yet been
announced its intention finalized
to list its shares publicly.  because a formal written
share purchase
agreement had not been
signed.
This Photo by Unknown Author is licensed under

CC BY
Issue: Had a binding contract been

reached through telephone and email
messages?
Result: The plaintiff was able to introduce the
evidence necessary to persuade the court that a
contract was formed based on telephone
conversations and email messages between
representatives of the parties.
Business Lesson #1
In determining whether an oral agreement

constitutes a binding contract,
A court will consider whether or not it is
customary in a particular industry,
Usually one involving fast-paced
transactions, for deals to be completed
that way.
Business Lesson #2
It is important to maintain digital records,

because the use of technology creates a
time-stamped record of all
communications between the parties,
Which can supplement oral testimony as
evidence to help prove when a binding
contract was formed.
Business Lesson #3
Make it a habit to follow up telephone

conversations to confirm what was said
and respond to messages and notes during
negotiations to correct or confirm the
essential elements of an agreement.
E-Commerce – tremendous development
Online transactions brings buyers and
sellers together from all over the world
 and provides unprecedented
opportunities for the exchange of goods,
services and ideas.
Online Contracts and the Pandemic
Social distancing, lockdowns in response
to the COVID-19 pandemic has led
buyers to ramp up online shopping, social
media use, videoconferences,
teleconferencing, and streaming of videos
and films.
Case Study: Macatula v. Tessier 2003 MBCA 31
 Facts: A homecare worker purchased a Lotto 649

ticket for her employer,
 a senior who was disabled with arthritis.
 The worker claimed that she and her employer had an
agreement to share the proceeds.
 When the ticket holder won $11.4 million, the family
of the senior, who was in possession of the winning
ticket, claimed the money.
 The homecare worker sued the employer,

 claiming that the senior was in breach of their contract
to share the proceeds.
 Although the worker had a credit card receipt to prove
she had paid for the ticket,
 The employer insisted during the trial that she had paid
for the ticket and denied any agreement to divide the
winnings.
Issue:  the judge was forced to

Was there a breach of base his decision on the
contract to share the testimony of the parties.
proceeds?  The worker did not
Held: Without the succeed in convincing

evidence that a written the judge that her
agreement could have version of events was
provided, more credible than that
of the senior.
BUSINESS LESSON:
 Put your agreements in
writing
Rules of Construction
Courts will use rules of 1. Apply an objective

construction which are test
common law rules used 2. Interpret the
in interpreting disputed contract against the
contracts. drafter
3. Determine the
parties’ intentions
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Publishing.
22 All rights reserved.
1. Apply an objective test
◦ What would a reasonable person mean, or
understand, by the term?
◦ Judges act on the principle that contracts
should be strictly enforced according to the
ordinary meaning of the words chosen by the
parties themselves.
1. Apply an objective test
◦ The judge might The judge might be

consult a dictionary guided by earlier
decisions of other
courts about the
meaning of similar
words.
2. Interpret the contract against the drafter
 Where there is ambiguity, interpret against
the drafter (contra proferentum rule)
 Interpretambiguous terms against the
party that drafted the contract
2. Interpret the contract against the drafter
Question: Why have the courts taken this approach?
◦ Answer: Power imbalance
 E.g. Standard form insurance contracts
3. Determine the parties’ intention
Court may imply Obligations of good

certain terms – faith
insert terms into the Parties must not lie
contract to give or mislead each other
effect to what the about matters
court’s decide the directly linked to the
party’s intentions performance of the
were contract.
E.g. End date to a Bhasin v. Hrynew
service contract 2014 SCC
Standard Form Contracts
• Boilerplate/ standard form contracts

contain little or no opportunity for
negotiating changes
• It is often the party that provides a service
• or sells a product that dictates the terms of
the contract.

rights reserved. 28
Standard Form Contracts
Advertising agreements
Service agreements
Commercial leases
Equipment rental agreements
Insurance policies
rights reserved. 29
Missing and Applied Terms
Contract disputes An implied term is
commonly occur one that a court
when the parties fail inserts into a contract
to include essential when it believes that
terms in their the term is necessary
agreement to give effect to the
parties’ intentions
Copyright 2018 Emond

Publishing.
30 All rights reserved.
Custom within an industry
 Basketball players are allowed to share sneakers
merchandise with whomever they want.
 If Player X has a sister who needs a new pair of shoes,
 he can use his shoe merchandise contract to order her
new shoes if he so chooses.
Missing and Applied Terms
Business Effectiveness Obvious omission
• If, • If,
• the actions of one • the price is missing
party undermine the from a contract for
business the sale of goods or
effectiveness of services,
another party, • a court or tribunal
• a court may imply an will imply a
obligation to refrain reasonable price.
from such actions.
Business Effectiveness – Nickel Developments Ltd. v.
Canada Safeway Ltd.
Facts: A supermarket was a tenant of a shopping

mall under a 20 year lease.
13 years into the lease, the supermarket
closed because it was operating a more
profitable store close by.
Canada Safeway Ltd.
It continued to pay the rent,

allowing the store to remain vacant.
This action had a negative impact on attracting
customers to the shopping mall.
The mall owner successfully sued for breach of
contract.
Canada Safeway Ltd.
Issue: Held:
Can the court imply a The court implied an
term to give business obligation of
efficacy to the continuous operation
commercial shopping on the part of the
centre? supermarket/tenant in
order to give
business efficacy to a
commercial shopping
centre operation.
Legislation – Ontario Sale of Goods Act
The Sales of Goods Act applies to contracts
involving the sale of physical goods.
Can opt out by including a term that Sale of Goods
Act does not apply
Business to Business (B2B) contain these terms:
The seller has a right to sell the goods
The goods are not subject to claims like liens
The goods correspond accurately to a description
or sample
The goods are of merchantable quality/reasonably
fit for a purpose specified by the purchaser
Reading the Fine Print:
Typical Terms in Business Contracts
Identification of Parties
If the
parties are Ifthe parties are
individual
s, corporations,
use the names that
use the appear on the articles
name that
appear on of corporation.
official
documents You may also include
,
a brief role
description: “seller”
such as “buyer”
drivers’
licences.
Identification of Parties
The operation contract is restricted to those who
are parties to it –
 privity of contract
Accurately name all parties who intend to
participate in the benefits and assume the
obligations of the contract
This Photo by Unknown Author is licensed under CC BY-SA
Privity of Contract
Privity of contract Stranger (or third
refers to the party): someone
relationship that without privity
exists between the ◦ Cannot sue or be sued
individuals who under contract
create a contract. ◦ It is irrelevant that
General rule: Only stranger is beneficiary of
contract
parties to a contract  “I’ll pay $5,000.00 to your
can sue or be sued sister if you give me your
under the contract car.”
Description of Product or Service
The designer will Be as precise as

create a website that possible when
uses Val-Nam’s describing the
trademarked stylized products and services
“V-N” with an art deco covered by your
design, five art deco
agreement
line drawings, and an
art deco typeface, and
the features the colours
black, jade and salmon.
Quantity
Be accurate as possible when specifying
quantity.
Use commonly understood industry terms
Be specific on the quantity of goods that
agreement covers:
Quantity
◦ “Zolo agrees to deliver 5 crates of canned
beans to Young’s Supermarket every two
weeks.
◦ Each crate will contain twenty (20) cans of
200 mL of cooked red kidney beans.”
Quality
Partieswill often rely:
on provincial or federal government standards
Grade A, B, C,
or other third-party ratings when specifying
product standards
Quality
Will any kind of “The cooked beans
beans do? will be grown and
◦ “Zolo agrees to deliver sourced in Ecuador
5 crates of canned beans using fair trade
to Young’s Supermarket practices, as per….”
every two weeks.
◦ Each crate will contain
twenty (20) cans of 200
mL of cooked red
kidney beans.”
Pricing
How will price be
determined?
◦ Specifically set out the
price Allow
flexibility:
◦ Set out price according “flexible
to a formula pricing clause.”
- “Subject to
increase in
price ….”
MJM Custom v. Big Drum CanLII 34584
 Facts: A buyer The manufacturer

contracted with a still had a number of
manufacturer to pay design changes to the
$21,000.00 for the machine.
creation of a chocolate-
processing system for a
food product business.
The buyer knew there would be

additional expenses associated with the
changes.
The buyer refused to pay the full

amount.
The manufacturer delivered its final

invoice in the amount of $41,363.00.
The manufacturer sued for the balance of

$14,597.00.
Issue: Should the Held:
buyer pay for the The ON SCJ
extras? concluded that the
extra work and
materials were worth
approximately 2/3 of
the amount charged,
resulting in favour of
the manufacturer of
$6,500.00.
Issue: Should the Held:
buyer pay for the  The judge stated that
extras? the only reasonable
method of analysis is
to start with the fixed
price contract,
as it was never
revoked,
and calculate the
value of the extras
Business Lessons:
Use a flexible pricing clause to predetermine the basis

for calculating increases to the initial price,
Agree on the price of any changes to the original

contract before any extra work is performed.
Payment
Include a clause Terms of payment:
regarding payment by cash,
terms certified cheque,
money order,
credit card
Payment
Before delivery of a product or service
At the time of delivery of a product or service
After delivery of a product or service
Consider a schedule of partial payments for long

term contracts
Obtain financing if payment is required on

acceptance
Deadlines
Know how and There may be one

which deadlines will hard deadline, or
negatively impact several interim ones:
your business, and time of delivery,
make those clear in service,
negotiations and in payment,
contract
date of completion,
etc.
Liquidated Damages
Allows parties to set The purpose of a
an amount to be paid liquidated damages
upon a specified clause is to quantify,
breach of the contract in advance of a
problem,
the compensation that
one party will pay to
the other in the event
that a problem, arises.
Examples where Liquidated Damages may arise
If you cancel
leasing
agreement
mid-lease
Trade
kickers represent extra
If you are late with
cash a player can
service or delivery
receive if his
team trades him
If you don’t
provide the
catered food
as per
agreement
Liquidated Damages - Not be a penalty clause
Ifliquidated damages clause is excessive,
then it is unconscionable (too punitive).
The courts will throw out the whole thing,
usually.
Ensure clause is not a penalty clause in
disguise.
32262 BC Ltd. v. See-Rite Optical Ltd. 1998 ABCA
89
Facts: The defendant rented a business
sign from the plaintiff under a standard
form contract that included a liquidated
damages clause.
89
When the defendant The liquidated
stopped making damages clause give
monthly rental the plaintiff the right
payments, to receive an amount
the plaintiff sues for equal to the total of
damages. all monthly payments
owing for the
outstanding term of
the contract.
89
Issue: Was the Was it a genuine pre-
liquidated damages estimate of damages
clause too oppressive for breach of contract
as to amount to a that the plaintiff is
penalty clause? entitled to?
89
Result: The liquidated damages

clause was closely related to the
amount which the plaintiff would
have been entitled according to
contract law.
The defendant was ordered to pay 70

months sign rental + interest + legal
fees.
Automatic Renewal
◦ Clause stating the Give notice to

contract is to be terminate within the
automatically time and
renewed for a  in the manner that
specified period of the contract specifies
time (month or one
year)

rights reserved. 63
Cancellation
Specifies the rights and obligations

of the parties in the event that one of
them decides to terminate the
agreement
Cancellation clauses provide a

release from a long-term contract at a
known and agreeable price.
How is cancellation permitted?
Beware of long term

Be clear on
the terms: contracts that contain
cancellation
penalties/fees.
method,
amount of
time,
Condition Precedent
Specifies that something must happen before a

party is required to fulfill its contractual
obligations
Example #1 ~ Make completion of the contract

conditional on the purchaser’s obtaining
financing
Example #2 ~ Permission to rezone a property

within a certain time period
Condition Subsequent
Terminates a contract Example #1:

when a specified Subsequent: If it rains,
event or then the concert will
circumstance occurs be cancelled.
Example #2:
A sales target can be a
condition subsequent,
and if not met,
can terminate the
agreement.
Deposit
 A contract may require a Are they refundable

deposit of a fixed or not?
amount
 or a percentage of the
total contract price Read the clause!
Amount of deposit
still has to be fair and
not unconscionable.
Deposit may be
forfeited
Tender Process
A tender is an offer to undertake a project on
particular terms.
◦ E.g. The city wants to construct new library
◦ City needs to attract offers from builders
Tender Process
◦ Potential builders need to prepare offers
◦ City issues an invitation to treat,
◦ promises to award to company who submits
who best offer.
◦ A special contract is created between the city
and each company that submits an offer.
TENDER PROCESS CONTRACTS
◦ City calls for tenders ◦ Contract A: Contract to

(offers) select winning tender
◦ Builders submit tenders (There are many Contract
As)
◦ City selects winning
tender ◦ Contract B: contract to
build library (There is
only one Contract B)
The Tender Process

Contract A obligations Contract B obligations
◦ Parties are required to ◦ Builder must build library

honour the terms of as promised in offer
contest ◦ City must pay as
◦ City required to fairly promised in acceptance
select best bid
◦ Builders prohibited from
revoking offers
Tender Process
Tendering Process
Dhillon v. City of Coquitlam, 2004 BCSC
924
Facts: The city of A newspaper ad
Coquitlam advertised indicated that bidders
its intention to offer include a deposit of
22 underdeveloped 10% of the total bid
lots for sale through a amount.
bid process.
924
The package contained an information sheet that
stated,
Deposits will be defaulted if the successful
bidder do not complete their obligations by
October 14, 2003.
The plaintiffs were the successful bidders.
924
They signed and The contract contained
submitted an the following provision:
agreement of Unless the unpaid
purchase and sale, balance is paid on or

with 10% deposit, before the completion
date, the City may at
$23,559.00
end the agreement, and
the amount paid by the
purchaser will be
absolutely forfeited to
the City.
Dhillon v. City of Coquitlam, 2004 BCSC 924
The plaintiffs did pay the funds on time due to
delayed receipt of funds from another closing.
Since the city did not receive the funds before
October 14, 2003 deadline, it refused to refund
the deposit.
The plaintiffs sued to get the money back.
Issue: Are the Result:
plaintiffs entitled to The BC court decided
receive their deposit in the city’s favour.
back? Because the clause
calling for forfeit of
the deposit was
reasonable,
and did constitute a
penalty,
the clause was
enforceable.
Ifmissing a deadline may result in your
forfeiting a deposit,
make sure you have a good reminder system in
place.
Disclaimer(Limitation of Liability) clauses
A clause in a contract that limits the amount or
type of damages that a parties might otherwise,
be required to pay.
Disclaimer clauses differ from exclusion
clauses by capping damages for specified losses
rather than barring them entirely.
“not liable for late delivery,”
“not liable for harm or injury caused to child,”
 “not liable for loss of profit,”
London Drugs Ltd. V. Kuehne vs. Nagel International Ltd.
SCC held that the clause was effective to limit

the liability of the warehouse and its employees
after a transformer was damaged while being
moved.
Although the actual damage suffered by the
owner was $22,955.00,
The liability clause in contract for the
warehouse and its employees was limited to
$40.00 as a result of the disclaimer clause.
Dryburgh v. Oak Bay Marina (1992) Ltd. 2001 FCT 671
Facts: The plaintiff’s yacht was damaged when

a dock broke loose at a marina and drifted
aground.
The plaintiff alleged that the dock broke loss
because it was poorly designed, constructed.
The moorage contract contained the following

disclaimer clause:
All vessels, boathouse and ancillary equipment
of the owner stored or moored on the company’s
premises shall be solely at the owner’s risk.
The company shall not be responsible under any
circumstances for any loss or damage caused
thereto whether caused by the negligence of the
Company.
Issue:Is the marina responsible for

damage?
Result:
The court held that the clause was effective to
protect both the marina and its employees from
any liability for damage to the plaintiff’s yacht.
Anyone reading the clause would certainly, if
acting reasonably, take out proper insurance to
cover the losses which the clause purports to
exclude.
 Business Lesson:
 Consider insurance needs before signing a contract
that contains a risky disclaimer clause.
Entire Agreement
A prohibition against KPMG v. CIBC, the

considering evidence Ontario Court of
external to the Appeal held that
contract where that intention is
plainly expressed in
the language of the
agreement,
the court should not
stray beyond the four
corners of the
agreement.
Entire Agreement
“The parties agree that this contract constitutes

the entire agreement between the parties.
No other representation or warranties have been
made, and no other terms have been agreed
upon, express or implied, and no collateral
agreements exist.”
Effect: preclude possibility of trying to bring in
oral evidence or third party interference.
Exclusion
Exclusion: a clause Insurance agreements
that completely do not cover losses
absolves the parties caused by owner’s
of responsibilities if own intentional acts
they do not fulfill or criminal activity.
certain aspects of
their obligations.
Endorsements
 An insurance contract covering a jewellery store
may include an endorsement that requires the
insured business to install surveillance equipment
and security devices in order for the insurance to be
effective.
 Insurers often add endorsements (additional terms)
to either limit or expand their coverage.
Force Majeure
A significant and unanticipated event,

such as war or a natural disaster,
that is beyond the control of the parties
The effect of the force majeure is to
terminate the contract
Force Majeure
By inserting a force Contract is frustrated.
majeure clause in a
contract,
 the parties can
exempt themselves
from liability for
damage caused by
events beyond their
control.
Force Majeure aka Acts of God
Natural disasters: hail, snowstorm, flood,
earthquake
Pestilence: Rats, Frogs, Flies, Locusts
Man-made: War, Strikes, Terrorism
https://www.youtube.com/watch?v=VNRQ9_Hvrpk
Governing Law/Choice of Law Clause
Designate the law Choose Canadian

that is to prevail in domestic law to
the event of a dispute eliminate the
Which jurisdiction’s uncertainty of
law applies? unexpected and
United States? unwelcome legal
Canada?
results
China?
Venue/Forum Selection Clause
Specifying the place where a contractual dispute

will be litigated
Include a venue clause to ensure that disputes
will be resolved in a location convenient for
your business
Which courts?
Where will the dispute be litigated?
Important because it will be expensive to go
elsewhere.
Douez v. Facebook Inc.
Facts: The clause, contained in Facebook’s
Terms of Use stated:
 You will resolve any claim, course of action or
dispute (claim) you have with us arising out of
or relating to this Statement or Facebook
exclusively in a state or federal court located in
Santa Clara County.
Douez v. Facebook Inc.
Douez commenced a lawsuit in the B.C.S.C.J.
against Facebook for violation of privacy where
her name and photos were featured without her
consent.
B.C. S.C.J. ~ Violation of privacy found
B.C.C.A. ~ Douez failed to show “strong cause”
that the CA courts would be unable to hear her
claim.
S.C.C.~ She was allowed not to enforce the
forum selection clause, allowing her case to
proceed in B.C.
Douez v. Facebook Inc
The contract was a consumer contract between
an individual consumer and a large corporation
with unequal bargaining power between the
parties
The claim alleged a breach of quasi-
constitutional privacy rights of British
Columbians
Worthy of a higher level of protection than
simple commercial interests,
requiring a statutory interpretation that would
result in better clarity and certainty if decided by
a local court.
Businesses transacting Include a venue

online with Canadian clause to ensure that
consumers need to be disputes will be
aware that their forum resolved in a location
selection clauses may convenient for your
be unenforceable
business.
as a result of this
decision and factor that
risk into their business
decisions.
Venue/Forum Selection Clause
It would be more than to require the
convenient, fair and plaintiff to litigate
accessible to justice, her claim in
for Facebook to make California
its books and records
available for review
in a B.C. legal action
Arbitration
Parties agree to resolve disputes through

arbitration, rather than through litigation
The arbitration is governed by Ontario
Arbitration Act, 1991
Znamensky v. Donaldson International Livestock 2010 ONCA
Facts:
This case involves a
contract providing
for the sale of 8,505
pigs by Donaldson,
an Ontario-based
exporter of purebred
pigs to Znamensky, a
Russian agro-
industrial company.
CONTRACT CLAUSE
Any dispute, controversy, or claim which may
arise of or in connection with the present
contract (agreement), or the execution, breach,
termination or invalidity thereof,
Shall be settled by the International Commercial
Arbitration Court at the Chamber of Commerce
and Industry of the Russian Federation, in
accordance with the material law of the Russian
Federation.
Znamensky v. Donaldson International Livestock 2010
ONCA
The place of
arbitration shall be
Moscow, Russia.
The language to be
used in the arbitral
proceedings shall be
Russian.
The Contract shall be
This Photo by Unknown Author is licensed under CC BY
subject to the law of

Russian federation.
 Before the pigs were shipped, a dispute arose as to

their health.
 Znamensky demanded that $1,666,113 advance
payments be returned.
 Znamensky demanded new pigs under the terms of
the contract.
 Donaldson refused.
 Death threats were uttered.
Znamensky commenced arbitration in Russia.

Donaldson chose not to participate.
Znamensky was awarded almost $1.7 million in
damages and as compensation for the arbitration
fees.
Znamensky sought an order in an Ontario court
requesting recognition and enforcement of the
Russian enforcement award.
Issue: Held: The Ontario

Was the Russian Superior Court of
arbitration award Justice ordered that
recognized and the arbitration award
enforceable in be recognized and
Ontario? enforced.
(The decision is
under appeal).
Business Lesson:
Before entering into an international contract,
give full consideration to the risks associated
with the terms dictating that disputes be
resolved in the other jurisdiction.
Indemnity
To indemnify means Indemnity clause is

to protect that party one that requires one
for losses or of the parties to pay
expenses. for any losses or
expenses
that the other party
may incur as a result
of claims related to
the contract
Indemnity
An indemnity clause Indemnity clauses can

cannot be so broadly shift responsibility for
worded that it risks associated in
protects a party business transactions.
against its own
wrongdoing or
negligence.
Indemnity
Use a club for a rave? Newspapers/websites
make businesses sign
Indemnify the club indemnification for
owners against all the ads that they
personal injury place, so they
claims amongst indemnify the carrier
attendees of the ads against any
misrepresentation in
the ads.
Indemnity – Construction & Software Contracts
A general contractor A buyer who
will want to be purchases a software
indemnified against licence can
any damage claims indemnify the
against an sub-trade, software company for
electrical any claims that may
subcontractor arise against from the
buyer’s improper use
of the software.
Assessment ~ True or False
1.It is important to maintain digital

records, because the use of technology
creates a time-stamped record of all
communications between the parties,
Which can supplement oral testimony as
evidence to help prove when a binding
contract was formed.
TRUE FALSE
Assessment ~ MCQ
2. A contract under which businesses

purchase inventory or supplies falls under
which category?
a) Employment contract
b) Insurance contract
c) Contract for the purchase and sale of
goods
d) Leasing contract
True or False Assessment
3. Family members or friends who enter
into unwritten business agreements with
one another may have difficulty proving
they intended the agreement to be legally
binding.
TRUE FALSE
4. If you shake hands on the essential

terms of a business transaction,
 it will not be legally binding, until a
contract is written up and signed by the
parties.
TRUE FALSE
5. Before entering into an international
contract, give full consideration to the
risks associated with terms dictating that
disputes be resolved in the other
jurisdiction.
Znamensky Selekcionno-Gibridny Centre
LLC v. Donaldson International Livestock
Ltd. 2010 ONCA 303.
TRUE FALSE
True of False Assessment
6. In the1991 AB Court of Appeal
decision, 32262 B.C. Ltd. v. See Rite
Optical Ltd., the court held that a
liquidated damages clause should address
compensation and should not be a penalty
clause in disguise.
TRUE FALSE
7. Make it a habit to follow up telephone

conversations to confirm what was said and
respond to messages and notes during
negotiations to correct or confirm the
essential elements of an agreement.
TRUE FALSE
Assessments
5% Kawhi Leonard Toronto Raptors
Blackboard Contracts Assignment
Key Terms

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Understanding Contracts

Contracts can prevent unexpected and

Contracts can provide for a dispute resolution

Contract law governs disputes

Copyright 2018 Emond Publishing. All

confirmed with a handshake

and an intention to be bound,

can constitute a binding contract,

provided that the agreement is legal

Facts: An agreement was reached between two

This Photo by Unknown Author is licensed under

Issue: Had a binding contract been

In determining whether an oral agreement

It is important to maintain digital records,

Make it a habit to follow up telephone

 Facts: A homecare worker purchased a Lotto 649

 The homecare worker sued the employer,

Issue:  the judge was forced to

Held: Without the succeed in convincing

Courts will use rules of 1. Apply an objective

Copyright 2018 Emond

◦ The judge might The judge might be

Court may imply Obligations of good

• Boilerplate/ standard form contracts

Copyright 2018 Emond Publishing. All

Equipment rental agreements

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Facts: A supermarket was a tenant of a shopping

It continued to pay the rent,

This Photo by Unknown Author is licensed under CC BY-SA

The designer will Be as precise as

 Facts: A buyer The manufacturer

This Photo by Unknown Author is licensed under CC BY-SA

The buyer knew there would be

The buyer refused to pay the full

The manufacturer delivered its final

The manufacturer sued for the balance of

Use a flexible pricing clause to predetermine the basis

Agree on the price of any changes to the original

Before delivery of a product or service

At the time of delivery of a product or service

After delivery of a product or service

Consider a schedule of partial payments for long

Obtain financing if payment is required on

Know how and There may be one

Result: The liquidated damages

The defendant was ordered to pay 70

◦ Clause stating the Give notice to

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Specifies the rights and obligations

Cancellation clauses provide a

Beware of long term

Specifies that something must happen before a

Example #1 ~ Make completion of the contract

Example #2 ~ Permission to rezone a property

Terminates a contract Example #1:

 A contract may require a Are they refundable

◦ City calls for tenders ◦ Contract A: Contract to

The Tender Process

◦ Parties are required to ◦ Builder must build library

purchase and sale, balance is paid on or

SCC held that the clause was effective to limit

Facts: The plaintiff’s yacht was damaged when