BU-231

Contracts Continued – Mistake/Misrepresentation, Writing and

Interpretation, Privity of Contract and assignment of contractual
rights
 CONTRACTS SO FAR

• What is a contract?
• Formation of Contracts
• Offer – Invitation to treat vs. Offer; standard form contracts; counter-offers
• Acceptance – definition; unilateral contracts; timing; communication; jurisdiction
• Consideration – definition; value doesn’t matter; past consideration; debtor/creditor
rule; equitable estoppel; seals.
• Intention to Create Legal Relations: reasonable bystander test; mere puffery.
• Capacity: minors/mentally incompetent people; void vs. voidable contracts;
corporations; labour unions; aboriginal bands; bankrupts.
• Legality: void for illegality or public policy.
• Certainty of Terms: void for uncertainty.
 TODAY

• Recission vs. Repudiation vs. Rectification

• Grounds under which a contract can be set aside:
• Mistake
• Misrepresentation
• Undue Influence
• Duress
• Contracts that must be in writing: Statute of Frauds, Sale of Goods Act, Consumer
Protection Act
• Doctrine of Part Performance
• Interpretation of Contracts
• Privity of Contract
• Assignment of Contractual Rights
 TODAY

• Recission vs. Repudiation vs. Rectification

• Grounds under which a contract can be set aside:
• Mistake
• Misrepresentation
• Undue Influence
• Duress
• Contracts that must be in writing: Statute of Frauds, Sale of Goods Act, Consumer
Protection Act
• Doctrine of Part Performance
• Interpretation of Contracts
• Privity of Contract
• Assignment of Contractual Rights
 • Recission: Setting aside a contract because of some defect
affecting its formation, such as mistake, misrepresentation,
duress or undue influence. Both parties are innocent when a
contract is rescinded.
• Can also be rescinded on consent of all parties to the
contract.
• The object is to place the parties as closely as possible to
their pre-contractual positions (i.e. not expectation
RECISSION VS. damages, which would place them in the position had the
REPUDIATION contract been performed).
• Repudiation: if one party fails to perform an essential term
of the contract, then the other party to treat the contract at an
end and sue for damages. Alternatively, they can affirm the
contract and continue to perform and force the other party to
perform under the contract (must remain ready and willing
to continue performing to use this second option).
• Rectification: Court will “fix” a mistake in a contract
(rare).
 TODAY

• The concept of Recission

• Grounds under which a contract can be set aside (i.e. rescinded):
• Mistake
• Misrepresentation
• Undue Influence
• Duress
• Contracts that must be in writing: Statute of Frauds, Sale of Goods Act, Consumer
Protection Act
• Doctrine of Part Performance
• Interpretation of Contracts
• Privity of Contract
• Assignment of Contractual Rights
 Mistake

Misrepresentation
GROUNDS UNDER
W H I CH A CO N T RA C T
C A N BE RES CI N D E D
Undue Influence

Duress
 MISTAKE

• (1) Mistake in the terms of the contract;

• (2) Mistake in assumptions about the subject-matter of the contract;
• (3) Mistake about the identity of a party to the contract; and
• (4) Mistakes about the nature of a signed document.
 • (a) Typographical Errors:
• Test: would a reasonably bystander recognize it as a mistake looking at the
term objectively?
• If so, then the contract would be voidable at the option of the party that
made the mistake.

(1) MISTAKE IN
TERMS
 • (b) Mistake in reducing the terms to writing: usually happens when
an oral agreement is reduced to writing, but there is a mistake in the
contract.
• Court may grant rectification (i.e. fix the term where there is a
mistake) where:
• Mutual Mistake: Both parties made a mistake in recording their actual
agreement;

(1) MISTAKE IN • Unilateral Mistake:

TERMS • There was an otherwise complete agreement;

• Parties did not engage in further negotiations;
• Possibly the occurrence of fraud (not required)
• When the document was signed, the defendant knew or should have
known of the mistake and the plaintiff did not;
• Any subsequent attempt to enforce the inaccurate document would be
equivalent to fraud.
• Rectification is very rare and is an extreme remedy in cases of
unilateral mistakes.
 • (c) Misunderstanding about meanings of words (i.e. ambiguity): Multiple
interpretations of the same term.
• One more reasonable interpretation: Court will simply interpret which meaning is
most reasonable. In light of the factual matrix.
• Two equally reasonable interpretations: mutual mistake exists, and will be void for
mistake as to the meaning of terms.

Raffles v. Wichelhaus (1864), 159 E.R. 375: ship called “peerless”

(1) MISTAKE IN
TERMS
 MISTAKE

• (1) Mistake in the terms of the contract;

• (2) Mistake in assumptions about the subject-matter of the contract;
• (3) Mistake about the identity of a party to the contract; and
• (4) Mistakes about the nature of a signed document.
 (2) MISTAKE IN SUBJECT MATTER

• (a) Mistake in assumption as to the existence of the subject matter: K is

void.
• (b) Mistake in assumption as to the value of the subject matter:
• Court will only intervene if mistake in value was present from the outset (court will
not intervene due to fluctuations in the market price).
 (2) MISTAKE IN SUBJECT MATTER

• Hyrsky et al. v. Smith (1969), 5 D.L.R. (3d) 385:

• Land purchased for development;
• Parcel of land significantly smaller than believed to be; and
• Court held that the mistake was so substantial as to change the quality of the subject
matter and granted recission to the purchaser.
• More recent example: Laidar Holdings Ltd. v. Lindt & Sprungli (Canada) Inc.,
2018 BCSC 66
• Purchased retail store, but it could only be used partly for retail;
• However, the party's original intention was to only buy properly for part-retail
• Should this be rescinded?
 MISTAKE

• (1) Mistake in the terms of the contract;

• (2) Mistake in assumptions about the subject-matter of the contract;
• (3) Mistake about the identity of a party to the contract; and
• (4) Mistakes about the nature of a signed document.
 (3) MISTAKE IN IDENTITY

• Often occurs in Fraud

• If the identity of the party is assumed then the contract is void; if the identity of the party is completely fabricated, then
the contract is voidable.
• Cundy v. Lindsay:
• Fraudster buys goods on credit from Lindsay by faking the name of a real company, then sells them to an innocent third party
(Cundy);
• Since there was a mistake as to identity of fraudster, the contract is void as between Lindsay and fraudster, and goods still belong to
Lindsay.
• Loss is borne by Cundy who had to return the goods.
• King’s Norton Metal Co. v. Edridge:
• Fraudster buys good on credit from fraudster by faking name of non-existent company, then sells them to innocent third party.
• Court holds that they cannot recover from innocent third party since the contract was only voidable, and before contract was elected
 (3) MISTAKE IN IDENTITY

Void Contract (Cundy): Voidable Contract (Kings):

- K is deemed void, then - K is deemed voidable, then
there was no K and there was a K and therefore
therefore goods or money goods or money stayed with
fraudster until seller elected
must be returned to seller
to void the contract.
- Title did not pass to - Title did pass to fraudster,
fraudster, but stayed with so he could pass the title to
Seller the subsequent purchaser.
 (3) MISTAKE IN IDENTITY

• Subsequent purchaser must be innocent.

• Bonafide Purchaser for Value without Notice of the fraud (legal jargon)
 MISTAKE

• (1) Mistake in the terms of the contract;

• (2) Mistake in assumptions about the subject-matter of the contract;
• (3) Mistake about the identity of a party to the contract; and
• (4) Mistakes about the nature of a signed document.
 (4) NON EST FACTUM

• Non Est Factum: This is not the contract I agreed to

• Historical defence devised when people were mostly illiterate.
• Reliance on another person’s word that the document contains the terms agreed
to
• Often works today for blind persons or illiterate persons.
 (4) NON EST FACTUM

150 In Andrews & Millet's Law of Guarantees, 4th ed. (London: Sweet & Maxwell, 2005) at 127, the
authors summarize the contractual defence of non est factum as follows:
The principle of non est factum is a special category of the law of mistake, and is
extremely narrow in scope. It is a defence which may be available to someone who has been misled
into executing a deed or signing a document which is fundamentally different from that which he
intended to execute or sign. His mistake must have been as to the essential nature of the transaction,
rather than as to its terms; a mistake as to the legal effect of those terms by the signatory or by his legal
adviser will not suffice. In most cases in which the defence is raised, the mistake will have been
induced by fraud, though this is not an essential or decisive factor.
151 Non est factum is a "difficult defence to establish. Otherwise, commercial and other transactions,
and the legal rights flowing from those transactions, could be wrongly frustrated. Signed documents need
to be accepted at face value except in rare circumstances.": Tang v. Chan, 2014 BCSC 2251at para. 51.
 Mistake

Misrepresentation
GROUNDS UNDER
W H I CH A CO N T RA C T
C A N BE RES CI N D E D
Undue Influence

Duress
 MISREPRESENTATION

• Misrepresentation: A statement/representation made during

negotiation of a contract, before formation of the contract, that turns out
to be false.
• Three Types of Misrepresentation:
• Fraudulent
• Negligent
• Innocent
 MISREPRESENTATION

Elements of the Tort of Misrepresentation:

(1) Statement must be made;
(2) Statement must be false;
(a) Fraudulent: false statement is made knowingly or with reckless disregard to its
truth;
(b) Negligent: Statement is made when a duty of care is owed, and the
making of the statement fell below the standard of care.
(c) Innocent: If not (a) or (b).
(3) Reliance on the statement caused the injured party to enter the contract;
(4) Reliance on the statement caused the innocent party harm.
 MISREPRESENTATION

Esso Petroleum v. Mardon, [1976] 2 All E.R. 5 (C.A.):

• Mardon purchasing Esso station franchise.
• Esso told him that they had estimated the throughput of 200k gallons/yr.
• This was false since city council changed the roads which affected access to the
station;
• Esso knew about this city council decision.
 MISREPRESENTATION

Lord Denning:

“Now I would quite agree… it was not a warranty - in this sense - that it did not guarantee that
the throughput would be 200,000 gallons. But, nevertheless, it was a forecast made by a party -
Esso - who had special knowledge and skill. It was the yardstick… by which they measured
the worth of a filling station. They knew the facts. They knew the traffic in the town. They
knew the throughput of comparable stations. They had much experience and expertise at
their disposal. They were in a much better position than Mr Mardon to make a forecast. It
seems to me that if such a person makes a forecast, intending that the other should act upon
it - and he does act upon it, it can well be interpreted as a warranty that the forecast is
sound and reliable in the sense that they made it with reasonable care and skill. It is just as if
Esso said to Mr. Mardon:
Our forecast of throughput is 200,000 gallons. You can rely upon it as being a sound forecast of
what the service station should do. The rent is calculated on that footing.
If the forecast turned out to be an unsound forecast such as no person of skill or experience
should have made, there is a breach of warranty.”
 MISREPRESENTATION

• Representation must be a statement of fact, not opinion

• Expert exception: Expert opinions are considered to be statements of fact.
• Omissions: Not necessarily a misrepresentation unless there is a duty of good
faith owed (e.x. a fiduciary duty, or an implied contractual duty of good faith)
or if there is some latent defect.
• Specific roles/contracts that require disclosure: directors to their corporation
(fiduciary duty); partners in a partnership; insureds to their insurance company;
professionals to their clients.
• Caveat Emptor (i.e. buyer beware): Sales of Goods Act, s. 15.
 SALES OF GOOD ACT S. 15

• Implied conditions as to quality or fitness

• 15 Subject to this Act and any statute in that behalf, there is no implied warranty or condition as to
the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as
follows:
• 1. Where the buyer, expressly or by implication, makes known to the seller the particular purpose for
which the goods are required so as to show that the buyer relies on the seller’s skill or judgment, and the
goods are of a description that it is in the course of the seller’s business to supply (whether the seller is the
manufacturer or not), there is an implied condition that the goods will be reasonably fit for such purpose, but
in the case of a contract for the sale of a specified article under its patent or other trade name there is no
implied condition as to its fitness for any particular purpose.
• 2. Where goods are bought by description from a seller who deals in goods of that description (whether
the seller is the manufacturer or not), there is an implied condition that the goods will be of merchantable
quality, but if the buyer has examined the goods, there is no implied condition as regards defects that such
examination ought to have revealed.
• 3. An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by
the usage of trade.
• 4. An express warranty or condition does not negative a warranty or condition implied by this Act
unless inconsistent therewith. R.S.O. 1990, c. S.1, s. 15.
 Mistake

Misrepresentation
GROUNDS UNDER
W H I CH A CO N T RA C T
C A N BE RES CI N D E D
Undue Influence

Duress
 UNDUE INFLUENCE

• Undue Influence: The domination of one party over the mind of another to
such a degree as to deprive the latter of the will to make an independent
decision.
• Contract is voidable: at option of the victim to the influence.
 UNDUE INFLUENCE

• Special Relationships:
• Fiduciary relationships
• Husband/Wife
• Need for Independent Legal Advice (ILA)
• Dire Circumstances:
• Where one party is temporarily desperate and will agree to any terms;
• Threat of Prosecution:
• Agreeing to terms to avoid prosecution of yourself or a family member;
• Unconscionable Contracts
• Arising from inequality of bargaining power.
UNDUE INFLUENCE
 UNDUE INFLUENCE

• Test: Plaintiff who make the contract voidable must show on a balance of
probabilities that:
• (1) There was domination by the other party in the circumstances by showing:
• (a) a special relationship exists; or
• (b) That s/he was in a desperate circumstance at the time of contract formation; or
• (c) That s/he was under a threat of prosecution at the time of contract formation; or
• (d) It was an unconscionable contract.
• (2) That the contract is unfair or disadvantageous to the weaker party.
 Mistake

Misrepresentation
GROUNDS UNDER
W H I CH A CO N T RA C T
C A N BE RES CI N D E D
Undue Influence

Duress
 DURESS

• Actual or threatened violence or imprisonment as a means of coercing a party

to enter a contract.
• Contract would be voidable at the option of the victim,
 TODAY

• The concept of Recission

• Grounds under which a contract can be set aside (i.e. rescinded):
• Mistake
• Misrepresentation
• Undue Influence
• Duress
• Contracts that must be in writing: Statute of Frauds, Sale of Goods Act,
Consumer Protection Act
• Doctrine of Part Performance
• Interpretation of Contracts
• Privity of Contract
• Assignment of Contractual Rights
 CONTRACTS IN WRITING

• Statute of Frauds: Introduced in the UK in 1677, still exists in Ontario today.

• Applies to (key ones in red)
• Promise by an Executor of an Estate (Estate Trustee) to pay a debt of the estate:
• Guarantees
• Payment by a third party for the miscarriage of another
• Contracts in consideration of marriage
• Ratification of a minor’s contract
• An agreement not to be performed by either party within one year
• Contracts concerning land
 STATUTE OF FRAUDS

• Guarantees: A conditional promise to pay the debt of another person if the

debtor defaults must be in writing to be enforceable.
• Indemnities (not guarantee): A promise to pay on behalf of a third party as
long as the other contracting party performs (co-signing, not conditional upon
default).
• Indemnities DO NOT have to be in writing (except in B.C.).
 STATUTE OF FRAUDS

• Agreements made in consideration of marriage:

• Historically referred to marriage contracts such as a bridal dowry
• Today contracts relating to marriage are governed by Family Law Legislation, but
must still be in writing to be enforceable
 STATUTE OF FRAUDS

• Agreements not to be performed by either party within one year (self-

explanatory) – must be in writing.
• Exceptions:
• Indefinite time period set out I the contract (e.x. standing agreements).
• Where one of the parties is expected to perform within the year, but the other is not,
then it will not apply.
 STATUTE OF FRAUDS

• Contracts relating to land:

• Any transaction involving real-estate MUST be in writing to be enforceable.
• Includes leases (whether for land, a building or part of a building)
• Exceptions:
• Repairs to a building;
• Building contracts for a house (i.e. not the sale of a house);
• Room and board arrangements.
 WHAT DOES IT MEAN TO BE “IN
WRITING”?

• No specific “form” required – just needs to be in writing so there can be

certainty as to terms.
• Can be across multiple documents (but cannot rely on oral promises to
connect them)
• Electronic writing is sufficient, electronic signatures are fine.
• All essential terms of the contract must be in writing:
• Names of the parties;
• Subject matter of the contract
• Consideration (with the exception of guarantees);
• Payment details; and
• Signature of the paying party.
 WHAT IF REQUIREMENTS OF STATUTE
ARE NOT MET?

• The contract will be unenforceable!

• Unenforceable Contracts: Contracts that courts will not enforce, but otherwise exist. (it is not
void)
• Contract still exists and can affect the legal interests of the parties: parties can choose to still
perform.
• Recovery of Money Paid (Down Payments/Deposits): Agreement can be used as a defence to
keep the deposit if the other party refuses to perform; however, person who received deposit
cannot refuse to perform and keep the deposit.
• Recovery of goods and Services: cannot retain the benefit received without paying something for
it. Either return the goods or pay a reasonable price for them (Quantum Meruit).
• Recovery of Subsequent Written Agreement: As long as agreement is entered into prior to a
lawsuit, it is sufficient.
• Defendant must expressly plead the Statute: must put it in the Statement of Claim or Defence.
• Varying a prior written contract: An oral contract may vary a contract that must be in writing so
long as the party does not have to bring their own action to have it enforced. (same as above re:
oral agreement can still be used as a defence).
 DOCTRINE OF PART PERFORMANCE

• Performance begun by a plaintiff in reliance on an oral contract relating to an

interest in land, and accepted by the courts as evidence of the contract in place
of a written memorandum
• Test for Part Performance:
• (1) Has to be a contract concerning land
• (2) Acts of performance have to clearly indicate the existence of a contract respecting
the land in question
• (3) Acts have to have been performed by the plaintiff (not the defendant)
 SALE OF GOODS ACT

• Applies to every province except BC and Ontario: similar to those found in

the Statute of Frauds – contracts for the sale of goods must be evidenced by
some note or memorandum signed by the party to be charged, or they are
unenforceable.
• What is a sale of good? (usually >$50).
• Evidence that will also be sufficient (aside from writing) under the Sale of
Goods Act:
• Acceptance: any conduct of the buyer in relation to the goods that amounts to
recognition of an existing contract of sale.
• Part Payment: credit toward paying the purchase price;
• Earnest: token sum (or article) given to seal the bargain.
 CONSUMER PROTECTION ACT

• Consumer protection act only applies to B2C contracts not B2B

• Some agreements must be in writing:
• Direct Agreements >$50 – i.e. door-to-door sales.
• Writing must include:
• Detailed description of goods/services;
• Itemized purchase price;
• Name, address and contact information of vendor;
• Notice of Statutory cancellation rights;
• Copy must be provided to consumer.
 TODAY

• The concept of Recission

• Grounds under which a contract can be set aside (i.e. rescinded):
• Mistake
• Misrepresentation
• Undue Influence
• Duress
• Contracts that must be in writing: Statute of Frauds, Sale of Goods Act, Consumer
Protection Act
• Doctrine of Part Performance
• Interpretation of Contracts
• Privity of Contract
• Assignment of Contractual Rights
 INTERPRETATION OF CONTRACTS

• General Approach:
• Sattva is now the leading case in Canada.
• Court begins with normal meaning of words.
• Court will then consider “trade usages” and local customs.
• Courts consider the “factual matrix” or surrounding circumstances.
• Contra Proferentum: if there is any ambiguity in terms and 2 reasonable
interpretations, then the court will prefer the interpretation sought by the party
who did not write the contract.
• Parol Evidence rule (now almost non-existent after Sattva).
• Courts will make every effort to enforce the contract.
 IMPLIED TERMS

• Implied term: A term not expressly included by the parties in their agreement
but which, as reasonable people, would have included had they put their minds
to it.
• E.x. Good Faith: Every contract in Canada now has an implied duty of good
faith between the contracting parties. (Bhasin).
• E.x. Nickel Developments Ltd.
 TODAY

• The concept of Recission

• Grounds under which a contract can be set aside (i.e. rescinded):
• Mistake
• Misrepresentation
• Undue Influence
• Duress
• Contracts that must be in writing: Statute of Frauds, Sale of Goods Act, Consumer
Protection Act
• Doctrine of Part Performance
• Interpretation of Contracts
• Privity of Contract
• Assignment of Contractual Rights
 PRIVITY OF CONTRACT

• Privity of Contract: The parties to the contract (i.e. the relationship that exists between
parties to a contract).
• Rule: If there is no privity of contract between persons, then there is no right to obtain a legal remedy
in contract law
• You can still sue in tort, if a tort was committed, since privity of contract is not required to bring a tort
claim.
• This can have harsh results.
 EXAMPLE
Party A

K1: includes term

that A will pay B for
any costs to replace
septic tank (since it
is old); also contains
non-assignment K2: Party B
provision. includes promise
Party B from Party A in sales Septic tank breaks –
agreement but does
not assign the K1 to what can Party C do?
Party C

Resells
Party C
home 5-
years later
 PRIVITY OF CONTRACT – HOW TO GET
AROUND HARSH RULES

• (1) Novation: terminate first contract and create a new contract with the same or similar
terms with only the 3rd party to the contract.
• Has the effect of releasing the original party to the contract.
• Requires consent of all parties / all requirements for contract formation to be met.
 PRIVITY OF CONTRACT – HOW TO GET
AROUND HARSH RULES

• (2) Vicarious Performance: Where a 3rd party performs on behalf of the promisor who
remains responsible for proper performance.
• Not to be confused with “vicarious liability”
• E.x. employee of corporation performs contract on behalf of corporate employer; but corporation (not
employee) remains liable in K law for performance.
• Don’t require consent of the recipient of performance if it “would make no difference” to the recipient
who performed the obligation.
• Also need to ensure contract does not contain “personal performance” clause
• Original Promisor remains responsible for proper performance.
 PRIVITY OF CONTRACT – HOW TO GET
AROUND HARSH RULES

• (3) Trusts: Where property has been transferred to a person who “administers” the property
(trustee or administrator) for the benefit of another (beneficiary)
• Beneficiary: Has a “beneficial interest” in the property and has a right to enforce the trust agreement
as a “true owner” of the property.
• Trustee: Has a “legal interest” in the property.
 EXAMPLE

Party A
(settlor)

T1: Party A settles trust and Party C

transfers home / money to repair
septic tank to Party B as trustee (Beneficiary)
and Party C as beneficiary. Party
A tells Party B to transfer house Septic tank breaks –
to Party C when he turns 18 /
continue to promise to use funds what can Party C do?
to repair septic tank for 20
years.
Party B
(trustee)

Party C turns 18 and

house is transferred
to him
 CONSTRUCTIVE TRUSTS

• Constructive trusts: When there is not an “express” trust, a constructive trust

is an equitable remedy that permits the notional beneficiary to force the
notional trustee to perform (usually transfer property to him/her).
• Original contract must have been irrevocably: A trust must be permanent with no
option for the settlor of the trust property to later change his/her mind.
 PRIVITY OF CONTRACT – HOW TO GET
AROUND HARSH RULES

• Other exceptions to the rule:

• Insurance: each province has a statute that allows the beneficiary to sue for performance. (e.x. life
insurance).
• Undisclosed principal: if an agent enters an agreement on behalf of an “undisclosed” principal, that
undisclosed principal can sue to enforce the contract.
• Contracts concerning land (leases): New owner must respect previous lease agreement / lease
holder must respect promises made to previous owner to new owner.
• Exemption Clauses (principled exception): exemption from liability clauses may extend protection
to third-parties (agents, employees, directors, etc.). Third party may rely on it if: (London Drugs):
• The parties to the contract intended to extent the protection to the third-party claiming it.
• The activities of the third party were within the scope of the contract generally and the
exemption clause in particular
• Enurement clause: a clause in a contract that extends the rights and benefits to those inheriting from
a party, succeeding the party, or taking an assignment from a party,
 TODAY

• The concept of Recission

• Grounds under which a contract can be set aside (i.e. rescinded):
• Mistake
• Misrepresentation
• Undue Influence
• Duress
• Contracts that must be in writing: Statute of Frauds, Sale of Goods Act, Consumer
Protection Act
• Doctrine of Part Performance
• Interpretation of Contracts
• Privity of Contract
• Assignment of Contractual Rights
 ASSIGNMENT OF RIGHTS

• Assignment: Transfer by a party of its rights under a contract to a third party.

 ASSIGNMENT OF RIGHTS

• The right to enforce a contract has an independent value from the price of the
contract itself.
• This intangible right to “enforce the contract” is what is transferred when the contract
is assigned, and it is known as a chose in action
• In comparison to a chose in action, tangible goods are referred to as choses in
possession.
• Only rights or benefits can be assigned not contractual obligations or liabilities.
 ASSIGNMENT OF RIGHTS

• Parties to the Assignment:

• Promisor: Party 1 to the contract, who is promising to do something.
• Assignor: Party 2 to the contract, who is assigning their rights under the contract.
• Assignee: Party 3 who is receiving the rights from Party 2.
• Equitable Assignment (common law rule): An assignment that does not fulfill
the statutory criteria for a legal assignment. Assignments under the Conveyancing
and Law of Property Act must be in writing. If requirements of statute are not met,
then equitable assignment may still apply.
• Practically, the effect is that the original assignor is left a party to the transaction
therefore in order to enforce the K all 3 parties must be made party to any legal action.
 ASSIGNMENT OF RIGHTS

• Conveyancing and Law of Property Act: Where an assignment meets the

requirements of the Act:
• The assignment was absolute (unconditional and complete); and
• It was in writing; and
• The promisor received notice of it in writing.
• Then it is a statutory assignment and the assignor is no longer bound by the
agreement.
• Assignee can now sue Promisor alone.
 ASSIGNMENT OF RIGHTS

• Notice to Promisor:
• All assignments require that the promisor be given notice of the assignment.
• Only notice, not consent, is required.
• If the promisor ignores the notice and pays/performs for the assignor, then the
promisor will be in breach and will be required to pay/perform again to the assignee.
 ASSIGNMENT OF RIGHTS

• Assignee’s title:
• The assignee cannot obtain a better title than the assignor (i.e. the assignor can only
assign what he/she has).
• The assignment is subject to any rights that the promisor had against the assignee
before the promisor received notice of the assignment.
• Equitable right of set-off.
• Right of recission.
 ASSIGNMENTS BY OPERATION OF LAW

• Examples:
• Death
• Bankruptcy