Commercial Law

University

What does ‘Tort’ mean

A wrongful act causing harm to a person or property of another

What is the purpose of the law of tort?

To provide compensation for victims of wrongful acts and to deter future harm.

Strict liability used to be the basis for all tort law, if they caused the ‘harm’ they were liable. What is the basis now for tort law?

Fault. A person must have done something wrong or careless to be held liable for a tort.

What is a pro and a con of tort law and civil suits for tort?

Pro: Provides victims with compensation for damages. Con: Can lead to excessive litigation and increased costs.

In what case(s) do(es) strict liability still apply?

Strict liability applies in cases involving abnormally dangerous activities and in the workers compensation act.

When does vicarious liability apply?

Vicarious liability applies when an employer is held responsible for the actions of an employee performed in the course of their employment.

Why does vicarious liability apply in tort? (3)

Encourages employers to be responsible for their employees

Employers can often compensate victims for torts during employment better

and those profiting from the loss should be liable for damages

What are the two kinds of torts?

Intentional and Unintentional

List as many intentional torts as you can

Assault and Battery

Nuisance (Public or Private)

False Imprisonment, False arrest, malicious persecution

Defamation,

Trespass,

Inducing breach of contract

Unlawful interference with economic relations

Intentional Infliction of Emotional Distress (AI)

Product defamation

Breach of copyright or trademark

Misrepresentation (fraud)

Name a defense against the tort of battery.

Consent

Self-defense ( requires proof that the force used was reasonable and necessary)

Describe the tort of private nuisance

Protects the use of ones own land without substantial interference.

2 kinds- physical damage or amenities nuisance.

Noise bylaws and zoning dictate what is a reasonable ‘nuisance’.

Malicious persecution must include (4)

1. unsuccessful charges against plaintiff

2. initiated by the defendant

3. without reasonable and probable grounds

4. with malice or other improper purpose

Describe the tort of defamation

false or insulting statements that cause injury to the (private or professional) reputation of the plaintiff ‘in an ordinary persons mind’.

Does not include exaggerations, generalizations, or unbelievable remarks.

What are some defenses against defamation suits?

-the statement is true, ridiculous, or not shared by you.

-absolute privilege (in parliamentary debates)

-qualified privilege ( such as employer reference when they believe statement to be true)

-Fair comment/ Responsible communication on matters of public interest (if statement is a reasonable and researched opinion)

Name Unintentional Torts

Negligence (most common)

Also, medical malpractice, product liability, slip and fall accidents, trespass, misrepresentation,

Name the elements of proof of tort (4 or 1+3)

1. Duty of care: The defendant had a legal obligation to act (or refrain from acting) in a certain way towards the plaintiff.

2. Breach of duty: The defendant breached that duty of care through action or inaction.

3. Causation: The breach of duty caused harm to the plaintiff.

4. Damages: The plaintiff suffered actual damage or injury as a result of the breach.

What is ‘Duty of Care’ and define a reasonably foreseeable risk.

The legal obligation to act in a way that considers and avoids a ‘reasonably foreseeable risk’; a risk of someone in proximity to an activity that would be assumed/predictable by a ‘reasonable man’

What is a breach of the standard of care?

Careless behavior as compared to a competent person of that field and is ‘reasonable’ when compared to the level of danger.

What kind of harm must be sustained to sue in tort?

Real damage, not hypothetical and either physical, mental, economic, or of property, land, or goods.

What is the ‘but for test’

It refers to the element of proof of causation, that ‘but for’ the behavior, the injury would not have occurred.

Remoteness of damage in tort refers to

damage or harm that is deemed too remote and therefore unforeseeable, meaning no duty of care was owed to plaintiff.

What is the ‘Thin skull rule’?

When harm was foreseeable but damage was far worse than predictable, you are still liable to the full extent of the damage and must ‘take the victim as they are.’

What effect did contributory negligence have in the past? What did the contributory negligence act do?

In the past, proving contributory negligence would be a full defense against a suit, now, courts assign damages based on % contribution. Contributory negligence can still be used as a defense to limit damages.

What defenses other than contributory negligence are there in tort?

1. Duty to mitigate not met (reduced damages)

2. Voluntary assumption of risk (consent)

3. Unreasonable expectations for duty of care

4. Standard of care met or exceeded

5. Indirect causation

What is it called when insurance has paid a plaintiff but the defendant was found guilty and where the insurance company becomes entitled to the defendants’ damages?

Subrogation

What is special about the manufacturers product liability in tort?

They have a duty of care to ‘the ultimate consumer’

They have expectations to prevent defective goods from reaching the market

The circumstantial evidence principle infers liability ( less required proof from plaintiff)

Proper labels are required for inherently dangerous products

They have a duty to warn which makes consumers aware of risks of misuse

Remedies in Tort law;

Damages ($) - sum of money meant to ‘right the wrong’

2 kinds- special damages- quantifiable

general damages - speculative and estimated

Punitive damages/exemplary damages- to punish particularly bad behavior

Restitution- i.e. return property

Injunction- Order to halt behaviour

Mandatory Injuction- Order to take positive action- Take down a fence

What are the three kinds of professional liability??

Contract, Tort, and Fiduciary

What are draw backs of suing or being sued in each type of lawsuit?

In tort: the defense could be contributory, meaning you could loose out on damages meant to correct loss from harm.

In fiduciary duty, defendant may be called by duty to account, meaning to return profits made by the breach.

In contract, when a contract limits damages or protects a measure of duty.

What is the purpose of contract law?

it empowers parties to create legal obligations.

What are the four main elements and 2 subsequent elements of a contract?

4 elements:

Offer, acceptance, consideration and intention

2 subsequent elements

Capacity and legality

What is an offer and how does it different from and invitation to treat or a gratuitous promise?

An offer is a promise with a condition or a request.

An invitation to do business may seem like an offer but includes no promise ( an ad, a negotiation, and inquiry)

A gratuitous promise is a promise with no condition or request.

In the case of standard form contracts, which are expected to be unconditionally accepted, and include onerous or unexpected clauses, what condition would make this binding?

Disclosure, the business must take necessary steps to inform.

Example, the front of a purchased ticket includes a statement that a customer should mind all signage in the parking lot. Signage in the parking lot says customers who purchase ticket to park cannot sue for lost or damaged property. Purchase of ticket is assumed acceptance of the terms and conditions.

Name the three ways an offer can lapse.

1. failure to accept in specified time frame

2. When no time is specified, a reasonable amount of time (different depending on context)

3. if a party dies or becomes insane

What is an ‘option’.

An option is a contract that ensures the opportunity for another contract remains available.

The option becomes a contract only with consideration (a price)

and can be irrevocable or for a specified time period.

What happens to the original offer if you alter conditions and counter offer?

The original offer is nullified and the counter-offer becomes an offer open for acceptance.

What are the necessary elements for a valid acceptance?

Certain, unconditional, and a positive action either communicated or through performing requested action.

Can you accept and offer through mail?

Yes. If the terms of the contract either specify mail as an acceptable form of communication or don’t specify another form of communication.

Is there a difference between accepting over the phone versus by mail?

Acceptance of an offer over the phone is considered a binding acceptance when it reaches the offeror.

Acceptance by mail however, is considered binding when it is stamped, addressed, and put int he mail, which can change the contracts legal jurisdiction unless a clause says otherwise.

Does revocation of an offer has the same rules as acceptance?

Yes, except the postal rule of acceptance with which delivery is considered a completed revoking of the offer.

What is a bilateral contract? How is it different from a unilateral contract?

Bilateral contracts are the trade of a promise for a promise, which are later fulfilled.

Ex. i promise to give you a highfive if you promise to give me 10$ after?

I’ll promise 5$. (Deal)*acceptance*

(acceptance occurs when offeree communicates its counter-promise

Unilateral contracts differ because they are trading a promise for a behaviour, and performance is considered the acceptance. Ex. Pay 10$, i will give you a highfive.

Hands over 10$ *acceptance*

What if an offer is unclear or uncertain?

It’s not enforceable.

It must include certainty about essential terms. Courts cannot enforce an agreement to agree.

What is consideration?

The price for which the other promise is bought. It forms a bargain. It can be an action or behaviour or a dollar ammount.

What is ‘past consideration’?

A price or behaviour completed in the past outside of contract that some may try to call consideration but it is not as it was never a part of a formal agreement/contract.

Are courts concerned about the adequacy of consideration?

No. Court does not care if you made a bad deal, only that it was not made under undue influence, fraud, or duress.

Can a creditor gratuitously reduce debt?

Yes. a statute in Manitoba and some other provinces allow for the gratuitous reduction of debt as binding. Without the statute, a reduction of debt without consideration (paying early) is not considered binding.

What is estoppel and what are the required conditions (4)?

Estoppel prevents someone from claiming they are not bound to a gratuitous promise when;

1.Its used as a defense against the promisor

2.Where there is an existing legal relationship

3.Where the promisor agreed to release the promisee/defendant in court from some of their duties and

4.This promise influenced the other party to alter their position in such a way to cause real hardship.

What does a ‘seal’ do?

A seal binds the promisor to an act without the need for consideration. The word seal should be written and/or a red gummy mark should be affixed.

What test is used to determine if legal intention exists?

The reasonable bystander test; would a reasonable bystander assume both sides were serious about the agreement. Often assumed to be yes when the other elements exist.

What circumstances are people of limited legal capacity still bound by their contracts?

For necessaries (food, shelter, clothing, legal advice, transportation, medical attention) at a reasonable price. (or when they did not repudiate promptly)

(minors, people of diminished capacity (proof they cannot make rational decisions), bankrupt debtors.

Please give an example of a contract void by statue.

Any contract that is contrary to the purpose of legislation.

1. Contracts against the workers compensation act that includes clause depriving a worker of compensation under the act.

2. A contract that includes the selling of a bankrupt’s assets under 1 year before bankrupsy

3. A contract not outlined as void by statute but in contrary to legislation the court will decide.

Contracts including the sale, loan, gift, bater or exchange of property for betting purposes are;

Are unlawful, but statute designates them as void (however, court will not help parties return to precontract state an instead, the property is forfeited to the queen to deter people from illegally attempting to enforce betting contracts in civil court)

Define and differentiate between a void contract, an unlawful contract, and a voidable contract.

A void contract means no legally binding agreement has been formed. The court will aid in returning parties to precontract position (as long as no third party has been harmed.

An unlawful contract, is considered unenforceable and the court will offer no assistance.

A voidable contract, is a contract that remains in effect but some or all of its agreements can be set aside (as long as no

What are the four categories of equitable principles that set aside a contract? Or allow for Impugning (please define)

Mistake, Misrepresentation, Undue influence and Duress.

Impugning means to attack (a legal standing contract)

What are the three types of legal mistake in a contract?

Common mistake- both mistaken about the same thing in the same way

Mutual mistake- both mistaken about the same thing in a different way

Unilateral mistake- One party is mistaken

(Remedy is opportunity to rescind or rectify)

What subjects can someone be mistaken of, and therefor have opportunity to rescind?

Terms- ex. mistyping

Misunderstanding of words - Ex. which ship?

Mistakes about subject - Ex. goods destroyed at no fault

Mistakes about value- unforeseeable risk reduced goods value

Mistakes about identity- ex. Agent/fraud

Mistakes about nature of the document

What is misrepresentation and what does it entitle someone?

Misrepresentation is an untrue statement or omission.

Innocent misrepresentation- if corrected promptly can be rectified(corrected)

Material misrepresentation- (reasonably expected to induce change in decision) can induce a right to rescind.

- if it was made in precontract bargaining and incorrect statement of act

Other possible ways for a contract to become voidable by the victim?

Undue Influence-

proof of unfair bargaining and unfair outcome such as unconsiousable contracts

Duress-

Proof of threat or actual violence.

What order are creditors of bankrupt peoples paid?

1. Super priority (unpaid sellers and wage earners up to 2000$ from current assets)

2. Secured creditor (mortgage, car loan, other: up to their security)

3. Preferred creditors (funeral homes, trustees and legal, spousal support, EI, CPP, )

4. Unsecured creditors (Credit cards, etc)

What is ‘privy of contract’?

The rule of privy is that, to enforce a contract, one must be a party to the contract. (not a stranger)

What are exceptions to the privy of contract rule?

A Trust- a contract that designates a beneficiary (stranger to contract) who has control of funds and trustee

A beneficiary in insurance or of a resulting trust (from a will)

An undisclosed principle-(stranger of contract that an agent represented)

Concerning land transfer- Contract terms are transferred to new owner

Enurment clause- included clause that lists other parties who retain extended rights

a Principled exemption clause

What is a principled exemption clause and give an example.

Principled exception clause limits liability of those listed (strangers to contract), for example employees, from liability should a party be sued.

What are the four possible responses to an offer?

Acceptance

Rejection

Counter offer

Request for more info

What are the four ways to discharge a contract?

Performance (One of both actions completed (executed vs executory-partially completed))

Agreement (Waiver, Accord and Satisfaction, Novation, Clase providing for dissolution)

Frustration ( destruction of long interruption making completion pointless or impossible)

and Operation of Law (Bankruptcy or statue barred by time limitation)

Describe the legal ways to discharge by acceptance (4).

Waiver- Agreement to forgo performance. As a contract, waiver has consideration if nether performed, but must be sealed if only one party performed.

Accord and satisfaction- Creation of a new agreement to replace an original obligation

Novation- agreement to wave original contract and replace with new contract( either material change or a change in parties)

Enacting a clause for dissolution w a condition precedent, a condition subsequent, r an option to terminate.

Differentiate the different kinds of dissolution clauses (3).

Condition precedent; an event or act that must happen before obligations begin.

Condition subsequent; a condition that exists after an obligation is completed. Ex. transferring of liability

Option to terminate; term describing necessary steps to exit lawfully ex. employment termination and notice

Describe the doctrine of frustration;

A contract is eligible for dissolution if goods are destroyed or meaningfully changed by long interruptions and circumstances that make it impossible, pointless, or radically different from original agreement.

(sometimes only future obligations are discharged, loss falls where it lies)

Outlined by the frustrated contracts act and the sale of goods act

Breach of contract creates what opportunity

A breach can entitle other party to seek damages and a serious breach can discharge obligations.

What are contract conditions versus warranties?

A contract condition is an essential term and failure to meet this would be considered a major breach that could result in discharge and damages.

A warranty is a non-essential term of a contract and failure to meet could result in other party seeking damages.

A minor breach, a breach of a warrantee, but in a major way that causes risks or penalties could result in either or both.

Repudiating is:

to reject performance or a failure to act and is considered a breach.

What are types of breaches:

-express repudiation- communication of intention not to perform

Anticipatory breach- communication before expected performance

Party renders performance impossible- willful or negligent

Failure to perform- minor to total failure (must be substantial (doctrine of substantial performance)

Name the types of remedies for breach.

Damages

• expectation damages- expected position of completion

• opporunity cost- loss of gain of other lost oppurtunity

• consequential damages- secondary losses from breach

• general damages- over and above, including intangible harm

• reliance damages-wasted time and effort and expenses

• punitive damages-rare, for bad faith or maliciousness

Equitable remedies

• Specific performance- do this

• Injunction- don’t do this

• interlotuary injuction- stop temporarily

• rescission-return to pre-contract

• Quantum merit- pay fair ammount for work