Mar. 23, 2026 - Contracts (Valid, Void, Voidable, Unenforceable)

What Does it Mean to Impugn a Contract?

Means to challenge or attack whether the contract is valid. The defendant is trying to show the contract isn’t valid so they don’t have to be liable.

• In a lawsuit, the plaintiff is trying to enforce the contract (they want it upheld).

• The defendant is the one being sued, so they want to prove the contract isn’t valid.

• If the defendant succeeds, they can avoid being held responsible under the contract.

Four Results When Attacking a Contract

Valid Contract: Contains all the 6 required elements of a contract.

• Enforced by the courts.

Void Contract (Common Law): Contract is not valid at all. There is a fundamental defect, asking if the contract is valid.

• Courts will not enforce.

Voidable Contract (Equity Law): More flexible and focused on fairness. Contract is found to be valid in common law, but asking whether it is fair.

• Courts may or may not enforce.

Unenforceable Contract (Common Law): Contract is valid, but contains a technical or legal defect.

• Courts will not enforce.

Unenforceable Contract

A contract that is valid in its formation (meaning it has all the elements of a contract: offer, acceptance, consideration, and intention to create legal relations), but cannot be enforced in a court of law due to some legal technicality or rule.

1. Valid but legally barred: The law prevents the court from enforcing it.

2. Common reasons a contract becomes unenforceable:

   • Statute of limitations: Too much time has passed since the contract was breached.

   • Lack of written form: Some contracts (like real estate sales or certain guarantees) must be in writing to be enforceable.

   • Illegality or public policy issues: Even if the parties agree, certain contracts are unenforceable if they conflict with the law or public policy.

   • Incapacity or misrepresentation: If one party lacked legal capacity or there was fraud that doesn’t make the contract void but makes it difficult to enforce.

Void Contract (Common Law)

Treated as if it never legally existed at all. Not a real contract, and no ownership title ever passes onto anyone else (even an innocent buyer). So even an innocent buyer does not get good title, and must return the goods to person A.

• Grounds are very narrow: Only specific, limited situations make a contract void. Regardless of the situation (e.g. duress, coercion, threat), the contract is still valid.

  • There was a desire for certainty within a contract for economic means, so voiding was difficult to do even if someone was coerced.

• Key effect of a void contract: No transfer of ownership (title) ever occurs. The original owner (e.g., vendor A) keeps legal ownership.

• Property consequences: If property was given under a void contract:

  • The original owner can get it back.

  • Even if it was passed to someone else.

Situations that Make a Contract Void

(U / NEF/ FM)

• Uncertainty: If the offer or agreement is too vague (like “I’ll sell you something later for some money”), the courts can’t enforce it because they don’t know what exactly was agreed.

• Non est factum (not my deed): When someone signs a contract without understanding it, maybe because they were misled or didn’t know what it was.

• Fundamental mistake: When both parties are seriously wrong about something essential in the contract, like the identity of the person they’re dealing with, or the main thing being sold.

  • Example: Buying a painting thinking it’s by Picasso, but it isn’t. The mistake goes to the heart of the contract, so it can be void.

Important Rule in Void Contract

Important rule: The original owner (A) can recover the property from the other party (B), or any later buyer (C). Even if the later buyer paid for it, and did not know that anything was wrong (C). If a contract is said to have never existed, then the original owner (A) always gets their property back.

Example (3 parties):

• A (vendor), B (rogue/thief), C (innocent buyer).

• A can recover the item from C.

• C may sue B, but C loses the item.

ISTP4V (Innocent Subsequent Third Party for Value)

Void Contract (Common Law)

An ISTP4V is someone who buys something in good faith, pays for it, and has no idea there was a problem with the original deal. They are an innocent buyer. The Void (Common Law), and Voidable (Equity) approach, take different positions of dealing with this.

• Innocent: Person did not know anything was wrong (no fraud, no bad intent).

• Subsequent: Person got the item after the original transaction.

• Third party: They are not one of the original people in the contract.

• For value: Paid for it (not a gift).

Voidable Contracts (Equity Law)

Equity tries to be fairer than the common law. It often favours the innocent third party (C). Unlike void contracts, they are not automatically invalid. A voidable contract is valid at first, and it remains valid until it is rescinded (cancelled).

• Ownership (title): Ownership can pass under a voidable contract. If the buyer (B) sells to C (an ISTP4V). C usually keeps the property. This is different from void contracts.

• Who is protected: Equity aims to protect innocent third parties (C). So C often “wins” over A (original owner).

• Rescinding the contract: The original party (A) can cancel (rescind) the contract through court process, or by informally giving notice.

• When contracts are voidable: Situations involving unfairness, such as threats, duress and misrepresentation.

• Voidable contract: Exists until cancelled, C may keep property.

Important Timing Rule in Voidable Contracts (Rescinding)

Equity Law

A must rescind before the goods are passed to an innocent third party (ISTP4V). If you wait too long, you may lose the property permanently.

Important timing rule:

• If A rescinds before B sells to C, then A can get the property back.

• If A rescinds after B sells to C, then C keeps the property.

Example:

• Alice agrees to sell her house to Bob.

• Bob relies on Alice’s statement that the roof is “new and in perfect condition.”

• After moving in, Bob discovers the roof is actually 10 years old and leaking.

What happens:

1. Bob can seek rescission because Alice’s statement was misrepresentation.

2. The contract is cancelled, as if it never happened.

3. Bob returns the house to Alice, and Alice returns any money Bob paid.

Difference Between Void (Common Law) and Voidable (Equity)

Void contracts (Common Law): No ownership (title) ever passes

• A person who gets goods under a void contract cannot pass ownership to anyone else.

• So even an innocent buyer (ISTP4V): Does NOT get good title, and must return the goods to the original owner (A).

Voidable contracts (Equity Law): The contract is valid until it is rescinded (cancelled)

• Ownership can pass between parties, if goods are sold to an ISTP4V before rescission: The innocent third party gets good title and they keep the goods.

How do you rescind (set aside) a contract?

Rescission undoes the contract as if it never happened (for voidable contracts). The contract was valid at first, but becomes voidable because of misrepresentation.

• Give clear notice: Tell the other party you are rescinding the contract (e.g. written or verbal).

• Act quickly: You must rescind within a reasonable time. Waiting too long can mean you lose the right.

• Return what you received: Both parties should be returned to their original positions. This is called “restoration.”

• Avoid affirming the contract: Don’t act like you still accept it (e.g., continuing to use goods or services). If you do, you may lose the right to rescind.

• Go to court if needed: If the other party disputes it, you can ask a court to rescind the contract officially.

Elements of a Voidable Contract (Equity Law)

[M(INF) / UI(RDB) / D(R)]

Misrepresentation: Inside or outside.

• Innocent

• Negligent

• Fraudulent

Undue Influence

• Relationship

• Domination

• Burden shift

Duress

• Rectification

Misrepresentation (IO)

Voidable Contracts

A false statement of fact that influences someone to enter a contract. Makes the contract voidable. Courts can treat a misrepresented term as if it were a term of the contract, this can make it easier for those wronged to sue for breach.

Inside the contract: Courts ask “Was this statement intended to be part of the contract from the beginning” as it relates to the misrepresented term.

• If yes, it becomes a term of the contract (Common Law).

• If no, it remains a misrepresentation (Equity Law).

Outside the contract (before it’s made): Not a term within the contract, but rather a representation that has induced an individual to enter into the contract. This still matters because this outside promise may have been the reason someone entered into a contract in the first place. This can be determined by the Objectives Test.

• Includes innocent misrepresentation, negligent misrepresentation and fraudulent misrepresentation.

Objectives Test (Misrepresentation)

Asking how a reasonable person would interpret the promised statement, rather than what the speaker actually intended.

Used to decided whether the statement is a term (breach) or misrepresentation (voidable).

• Question asked: “Would a reasonable person think this statement was intended to be a binding promise (a term)?”

  • Is it a term or a representation?

  • If it is a representation, did it induce a contract?

  • If yes, this is misrepresentation making the contract voidable.

Innocent Misrepresentation & Example

Types of Misrepresentation (INF) / Voidable Contracts

A person makes a false statement of fact, that they honestly did not know was untrue. Had reasonable grounds for that belief. The misled party can rescind the contract (cancel it and return things to how they were).

• They were not lying (fraudulent), not careless (not negligent), it was just an honest mistake.

• Remedy: Rescission only. No damages because the person didn’t act carelessly or lie. Money is returned, goods and services are returned (if possible), and it is like the contract never happened.

  • This remedy is limited because the law is attempting to be fair on both sides. The misled party should not be stuck in a bad contract, and the person who made the statement did nothing wrong.

• Example: Sarah is selling her car. She tells Alex “This car has never been in an accident.” Sarah truly believes this is true because she checked records and saw nothing. Unknown to her, the car was in a minor accident before she owned it.

Negligent Misrepresentation & Example

Types of Misrepresentation (INF) / Voidable Contracts

A person makes a false statement of fact. They believe that it is true, but they did not take reasonable steps to verify the truth. The misled party can rescind the contract and/or claim damages for losses caused by the carelessness.

• Remedy: Buyer can rescind the contract and claim damages (e.g. repair costs). Damages include compensation from reasonably foreseeable losses. However it must be shown that a duty of care was breached, and a loss caused.

• Example: A real estate agent tells a buyer “This house has no water damage.” The agent didn’t check properly, and the house ends up having water damage. If they had inspected carefully, they would have discovered damage.

Fraudulent Misrepresentation & Example

Types of Misrepresentation (INF) / Voidable Contracts

The person knows the statement is false or is recklessly careless about the truth, recklessly not caring whether it was true or false. Courts treat this the most seriously, as there was intent to deceive for one party to gain, and it undermines trust in contracts.

• Remedy: Buyer can rescind the contract and claim full damages (for deceit). Damages vary (lost of investment, lost opportunities, any direct financial loss).

• Example: A seller says that “This business makes $100,000 profit annually.” They know that this is false (profit is actually $20,000). This is fraudulent mispresenting.

• Covers all losses directly resulting from the fraud, even if they were not foreseeable. This means that if someone lies to you, they are responsible for everything that goes wrong because of that lie even things they couldn’t have predicted.

Caveat Emptor

Voidable Contracts

When you buy something, it’s your responsibility to check it and make sure it’s what you expect. The seller doesn’t have to warn you about defects unless the law says otherwise (like for fraud or misrepresentation).

• Today consumer protection laws and misrepresentation rules limit caveat emptor, but the principle still applies in general property and contract law.

• Exception: if the seller misrepresented a fact, then there may be a remedy.

• Example: You buy a used car “as is” without asking for inspection. Later, you find the brakes are bad. Under caveat emptor, it’s generally your responsibility, unless the seller lied or hid a serious defect.

Contracts of Upmost Good Faith (Uberimma Fides)

Voidable Contracts

Opposite of caveat emptor. Requires full disclosure of all important facts. Duty for one to give full details about a purchase. You must tell the whole truth and not hide anything important. A contract can be rescinded if one party fails to act in utmost good faith, even if the other party was careless.

1. Insurance contracts: Buyer must disclose health and relevant info.

2. Securities contracts: Must disclose all important financial information.

3. Partnerships or Fiduciary Agreements: Must disclose important information for transparency and good faith.

Doctrine of Merger

Voidable Contract

Once a deal is completed, the original contract is absorbed into the final deed, and the deed becomes the only document that matters. As a result, most promises or warranties from the contract can no longer be enforced unless they were specifically meant to survive closing.

If a problem comes up afterward (like a defective roof), the buyer usually cannot rely on the original contract because it no longer exists.

• The deed itself is not automatically void or voidable just because of the doctrine of merger.

• However, it could become voidable if there is something like misrepresentation, fraud, or mistake affecting the deed.

Undue Influence

Voidable Contract

Happens when one person dominates or pressures another so much that, the other person can’t make an independent decision. The contract becomes voidable (can be cancelled by the victim).

• The victim must act quickly to cancel the contract.

• If they delay or accept it, they may lose the right to rescind.

• There are three key elements of undue influence.

Three Key Elements of Undue Influence (SR-DL-BS)

Voidable Contract

• Special Relationship: One party trusts or relies on the other.

  • Examples: Family members, lawyer–client, doctor/patient or caregiver, and financial advisor (e.g., stockbroker).

• Domination Likelihood: The situation suggests the stronger party could influence or control the weaker one. If a special relationship exists, this is usually easier to prove.

• Burden Shifts to Dominant Party: If (1) and (2) are proven. The dominant person must prove they did NOT use undue influence.

Three Factors Courts Look at in Undue Influence

(NR-SB-ILA)

To determine undue influence, the courts look at a few factors. This includes:

• Nature of the Relationship: How much power that one party had. Reviewing the nature of the relationship.

• Size of the Benefit: Looking at if one person gained a lot. What was the extent of the benefit.

• Independent Legal Advice: Courts will check whether there was any legal advice provided prior. This helps prove that someone understood the contract.

  • Shows that they were not pressure or controlled.

  • Lawyer explains the risks and consequences.

  • This is why many businesses say “we encourage you to seek outside legal advice,” so they are not liable.

Duress & Rectification

Voidable Contract

Occurs when someone is forced into a contract through improper pressure. Makes the contract voidable. This includes threats of physical harm, actual physical force and economic duress (very limited and narrowly applied).

• Rectification (Fixing a Written Contract) can be offered as a remedy to correct mistakes in a written contract.

Rectification & Requirements

Duress

Means a court can fix a written contract when the document doesn’t correctly reflect what the parties actually agreed to. The court fixes the paperwork, so it matched the written version of the original deal. Requirements of this include:

• Clear agreement (no ambiguity): Both parties had a definite, shared understanding of the deal before it was written down. There’s no confusion about what was agreed.

• No later changes: The parties didn’t change their minds afterward. The written mistake isn’t due to a new agreement, it’s just recorded wrong.

• Recording error: The written contract has a mistake in writing (like wrong numbers, names, or terms), even though the real agreement was different.

• Obvious and explainable mistake: The error is clear and can be proven (emails, drafts, conversations). It’s not just one party trying to change the deal after the fact.

3 Elements Related to the Enforcement of Contracts

(CW / IC / DP)

1. Contracts in Writing: The Statutes of Frauds (1677), the Sales and Goods Act demand that certain important contracts be in writing.

2. Interpretation of Contracts: Courts must figure out what the contract actually means before enforcing it. Objective test can be used.

   • Literal and Liberal meaning interpretation.

3. Doctrine of Privity: Only the people who are parties of the contract can enforce it, and be bound by it.

Requirement of Contract in Writing (Common Law)

Most contracts in common law do not need to be in writing and can be oral. However, some types of contracts must be in writing to be enforceable, usually due to legislation (such as agreements involving land or guarantees).

• While provinces like MB, and BC have modified the traditional Statute of Frauds, they still require certain contracts to be in writing under other statutes.

  • Each province adopted its own version of the Sale of Goods Act (starting in the early 1900s).

  • The purpose stayed the same, creating clear rules for contracts involving goods.

Types of Contracts Affected by the Statute of Frauds

Legislation that indicates that certain types of contracts are unenforceable if they are not in writing. Contracts effected under this rule include:

• Executor/Administrator promises: A promise to personally pay debts/damages from an estate.

• Guarantee of another’s debt: Promise to pay someone else’s debt if they don’t. Does NOT include indemnity agreements.

• Agreements made in consideration of marriage: Prenuptial agreements.

• An interest in land: Buying, selling, or transferring land/property.

• Not performable within 1 year: If it cannot be completed within one year, must be in writing.

• Ratification of a minor’s contract: When a person confirms a contract made while they were a minor.

Statutory Contracts Requirement (SF / SG)

These are contracts that are governed or required by legislation (statutes/laws) rather than just common law. The law sets a specific rule for these contracts (e.g. must be in writing, or follow certain formal requirements). If the rules are not followed for these specific contracts, then they would be deemed unenforceable.

Two types of statutory contracts include:

Statute of Frauds (1677):

• Created to prevent fraud and lying in court.

• Requires written evidence of certain contracts.

• Written proof is more certain that verbal claims.

The Sales of Goods Act (1893):

• Act that governs buying and selling of goods.

• Sets rules about rights and duties of buyers and sellers, quality of goods. and remedies if something goes wrong.

• Higher value goods require written evidence or proof of the agreement.

What Does “Writing” Mean (Statute of Frauds)

There must be a written memorandum (record) of the contract. It must include essential terms such as:

• Identity of parties involved.

• Subject matter (what the contract is about).

• Consideration (what is being exchanged).

• Key details (e.g., possession/closing date).

Form of the writing:

• Does NOT have to be one single document.

• Is only required to be signed by the party being sued (defendant), to show validity.

Effect if not in Writing (Statue of Frauds)

Contract is unenforceable in court. However, this does not make the contract void. The contract is still a real agreement. It is not treated as if it never existed. You cannot go to court to enforce the contract.

• Even though it’s unenforceable, things that already happened may still stand.

• Courts assume that important agreements should be written.

  • Example: A gives B a car under an unwritten contract (that should have been in writing). B keeps the car. A can’t use the contract to get it back through court.

  • Neither side can enforce the contract. So, A can’t demand performance. B can’t demand performance. The law just refuses to get involved.

Doctrine of Part Performance (Statute of Frauds)

Even if there is no written contract, a court may still enforce the agreement if one party clearly started acting on it. Actions can replace writing if they strongly prove a contract existed. Requirements to invoke this doctrine include:

• Doctrine mainly applies to real estate deals, where writing is normally required.

• The person did something that only makes sense if there was a contract.

• The action must clearly point to this specific agreement (not something else).

• The person asking the court for help must have taken the action.

• They trusted the agreement and would be unfairly harmed if it isn’t enforced.

The Sales and Goods Act 1893

A law that governs contracts for buying and selling goods (movable items). It is a statutory rule that can require written proof for certain sales

• In Manitoba: Applies to sales of goods over $50. There must be some written evidence of the contract.

• Writing counts as something that is not a full contract, and a simple receipt is good enough.

• This proves who the parties are, what was sold and that a deal actually happened.

• If there is NO writing the contract may be unenforceable, meaning that someone cannot sue to enforce it in court.

• The Sale of Goods Act adds extra rules on top of common law, as a mechanism to reduce fraud.

How Courts Interpret Contract

When there is a dispute, courts try to figure out what the contract actually means, especially if some wording is unclear (ambiguous).

• Even if a contract seems clear at first, one party might later argue that a term is too uncertain.

• If the court agrees that the contract is too unclear to understand, it can declare the contract void (invalid).

• However, courts generally prefer to keep contracts valid, so they will try to interpret the wording and give it a reasonable meaning instead of cancelling the contract.

  • There are two ways that contracts can be interpreted.

Two Other Ways Contracts can be Interpreted

(LPM-LA)

• Literal/Plain Meaning Approach: Restricts interpreting to the dictionary meaning, however there is often more than one definition. So this can create uncertainty.

• Liberal Approach: Looks to the intent of the parties in drafting their agreement. It stresses the circumstances surrounding the contract, negotiations leading up to the contract, the knowledge of the parties and any relevant facts as a reasonable person could agree with.

  • Generally the courts combine the two approaches. They take the approach that will render the contract effective.

  • Because courts can switch between the approaches, the outcome isn’t always predictable, which creates uncertainty.

Parol Evidence Rule

When a contract is fully written and finalized, you generally cannot use outside statements (spoken or written before the contract) to change or add to its terms. Courts assume that the written document is the complete and final agreement.

• This creates certainty and clarity for enforcement of contract.

• Parol: Means outside the written agreement (extrinsic).

• However, changes can be made through a formal amendment process.

  • This creates a new valid modification to the contract.

Parol Evidence Rule Exceptions

Exceptions exist for incomplete, amended, collateral, or conditional agreements.

1. Written contract not meant to include all terms: If parties intended some terms to remain outside the document, evidence is allowed.

2. Formal amendments: Changes after the written contract can be considered.

3. Collateral agreements: Separate, additional agreements can still be enforced.

4. Condition precedent: Terms that must happen before the contract takes effect can be introduced.

Reasonable Notice (Implied Term in Employment Contracts)

An implied term courts insert into employment contracts. Applies especially to non-union (non-collective bargaining) employees.

Employer must give reasonable notice before terminating an employee without just cause. Employees also must give reasonable notice to employers if leaving.

Factors determining reasonable notice:

1. Length of service: More years, means a longer notice.

2. Type of occupation: Skilled/professional jobs may require longer notice.

3. State of the economy: General and sector-specific conditions.

4. Age of the employee: Older employees may need more time to find new work.

Typical Reasonable Notice Guideline & Mali Fides Dismissal

Usually 2–4 weeks per year of service, up to a maximum of 2 years. This comes from the UGG v. Wallace case, which established that employers must act fairly when dismissing employees.

• Bad faith dismissal (mali fides): If the employer acted unfairly, the notice period can be extended.

• Alternative to working notice: Employers can pay severance instead of having the employee work through the notice period. Sometimes the employee can choose between severance or working the notice.

  • Employer gives 6 months’ pay so the employee doesn’t have to work those 6 months.

Doctrine of Privity of Contract & Exceptions

Only parties to a contract can enforce the contract (sue for breaches), and be bound by its obligations. People who are not parties cannot sue or be sued under the contract. Exceptions include insurance, trust, or novation (replacing old contract with new one, with added parties).

• You become a party through either:

  • You are either the offeror or offeree.

  • You give consideration (something of value in exchange).

    • Only then can you enforce promises made to you.

Doctrine of Privity Exceptions

(IC-T-N)

Exceptions:

1. Insurance contracts: A beneficiary can sue the insurer, even if not a party. A party maybe able to sue an insurer to get a payout of a specific amount of money.

2. Trusts: A trust creates rights for a beneficiary, even though they didn’t make the agreement. Beneficiaries may have rights (though not technically a contract). Legal action can be taken against the trustee.

3. Novation: A new contract replaces an old one, creating new parties and rights. The old contract is extinguished and replaced with a new one involving new parties.

Contract Differences (Void, Voidable & Unenforceable)

Difference from other types of contracts:

• Void contract: Never valid, no legal effect from the start. Innocent third party usually gets no protection.

  • Is the contract even a contract?

• Voidable contract: Valid but one party can choose to cancel it. If a third party acts in good faith before cancellation, they may be protected. But if the contract is cancelled early, they can lose rights.

  • Is the contract fair?

• Unenforceable contract: Valid in formation but the law prevents enforcement (has elements of a contract). Rights exist, but it is not enforceable in court.

  • Does a technicality effect the contract?

Examples of Contracts

Void, Voidable and Unenforceable

Void Contract (never valid at all):

• Two people agree to sell drugs. This contract is automatically void because it involves illegal actions.

• An adult signs a contract with a very young child to buy a house. The law doesn’t recognize this as valid.

• Someone agrees to sell you a piece of land they don’t own. The contract can’t exist legally.

Voidable Contract (valid, but can be cancelled):

• A 17-year-old (minor) buys a car. The contract is valid, but the minor can cancel it if they want.

• A seller (misrepresents) lies about a car being accident-free. The buyer can choose to cancel the contract.

• Someone is forced to sign a contract under threat. They can later void (cancel) the agreement.

Unenforceable Contract (valid but cannot be enforced by law):

• A handshake deal to sell a house. Real estate contracts must be in writing, so it can’t be enforced.

• You loan someone money, but wait too long to sue after they don’t repay. The contract still exists, but the court won’t help you enforce it.

• A contract that should be notarized or in writing but isn’t. It’s valid but not enforceable in court.

Contra Proferentem

Other Terms / Rules of Interpretation

Courts use these additional rules to resolve ambiguity, protect weaker parties and ensure that contracts are reasonable and workable.

• Contra Proferentem: If a contract term is ambiguous, the court will interpret it against the party who drafted it. Protects the weaker party from unfair drafting, as they were not the person who wrote the agreement.

Judicial Notice

Other Terms / Rules of Interpretation

Allows a court to accept commonly known or easily verifiable facts without proof, but it does not replace the need to prove the terms or existence of a contract. If something is obvious, widely known or easily verifiable, the judge can just accept it.

Example in a Contract Case:

• A dispute arises over a delivery delay. One party claims bad weather caused it.

• The court might take judicial notice that a major snowstorm happened on that date.

• But the party still must prove how it affected their specific contract.

Agreements to Agreements & Exception

Other Terms / Rules of Interpretation

When a contract depends on another agreement to be made later (e.g., house possession dates). Usually uncertain making the contract void.

• Exception: An arbitrator clause can help save the contract, because it provides a clear mechanism to decide the missing term at a later date.

• Example: A supplier and a retailer sign a document saying:
  “We will enter into a contract next month for the sale of 1,000 units at a price to be agreed upon.”

  • This is not a binding contract, because the price (an essential term) is missing.

Incompleteness

Other Terms / Rules of Interpretation

If important details are missing (e.g., lease start date), the contract can fail. Courts need enough detail to understand what was agreed to (offer and acceptance) and what each party must do (consideration).

• If courts cannot understand this, they may deem the contract void.

Implied Terms & Two Types (S / CL)

Other Terms / Rules of Interpretation

Terms not written in the contract but courts assume reasonable parties would have included in the contract. This is used to fix minor incompleteness, reflect what the parties obviously intended, ensure fairness and functionality.

Two types:

• Statutorily implied terms: Rules imposed by governments and required by law (federal and provincial). This includes elements such as goods sold must be of reasonable quality, and services must be done with reasonable care.

  • Sales of Goods Act and consumer protection laws.

• Common law implied terms: Based on custom or court precedent. Created by judges to reflect intent, fairness or practicality. These are rules developed by judges to make contracts work.

Bilateral Contract

A contract in which both parties make promises to each other.

• Example: A promises to deliver goods, and B promises to pay money. Both parties have mutual obligations.