Mar. 16, 2026 - Professionals & Contract Law / Elements

What is a Professional?

Skills draw on a underlying developing body of theory affecting he practice of their profession. Offer services through a system of licensing administered by the government. Clients will pay for and rely on their certain skills.

• Occupation governed by a delegate body established by statute and the delegate body is governed largely by members of that occupation, that is elected by that occupation (Statute that creates a delegate body is created).

  • Governed by a self-regulating society and created by a statute.

• Examples include accountant, lawyers, doctors, engineer, dentist, architect.

Five Basis of Liabilities for Professionals

1. Criminal liability

2. Professional liability

3. Contractual liability

4. Fiduciary liability

5. Tort liability

6. Liability in respect to the standards that are imposed upon the professional body or society

Criminal Liability

Five Basis of Liabilities for Professionals

• Professionals can be criminally charged for illegal acts (e.g., theft).

• Criminal courts handle the offence, and the professional body may discipline them separately.

Professional liability

Five Basis of Liabilities for Professionals

• Occurs when a professional breaches their professional code of conduct.

• Can lead to disciplinary action by the professional regulatory body.

Contractual Liability

Five Basis of Liabilities for Professionals

• Professionals have an explicit or implied contract to provide services with due care.

• Breach of contract can lead to damages.

• Contract claims may be used when tort limitation periods expire (e.g., tort ~2 years vs contract ~6 years).

Fiduciary Liability

Five Basis of Liabilities for Professionals

• Applies when a professional is in a position of trust.

• Duties include:

  • Acting with care and skill

  • Acting in good faith (bona fide).

Tort Liability (Two Types IN)

Five Basis of Liabilities for Professionals

Includes intentional torts and negligence. Negligence claims are most common due to:

• Increasing complexity of professional work.

• Economic pressure and heavier workloads can lead to a greater change of error.

  • Greater competition for the same income.

• More informed and litigious clients, becoming more demanding.

• Professional liability insurance encouraging lawsuits.

  • Because professionals are insured and the law has broadened, more lawsuits happen and more professionals are held liable for errors.

  • More easily found at fault for mistakes now, then in the past.

• Expansion of tort law principles applying to professionals.

Liability Adherence to Public Governing Bodies

Five Basis of Liabilities for Professionals

Professionals (like lawyers, doctors, accountants) must follow the standards set by their professional organization. These organizations create rules about how professionals should behave and perform their work. If a professional fails to meet those standards, the professional body can discipline them.

• Examples of discipline: Warnings or fines, suspension, losing their professional license.

• Professionals are responsible for meeting the standards set by their profession, and their professional body can punish them if they don’t.

Key Legal Developments for Professionals

• Donoghue v Stevenson – established the neighbour principle and duty of care.

• Hedley Byrne v Heller – recognized pure economic loss from negligent statements.

• Ross v Counters – applied duty of care principles to lawyers in Canada.

What is a Contract?

An agreement that requires the mutual ascent of at least two parties to do something or conversely, to refrain from doing something. The parties then by their mutual ascent or agreement create certain rights and duties that did not exist in their particular relationship before that point in time. If these rights and duties can be enforced by the courts of law, the parties have as between themselves created certain rules of conduct which they are obliged to observe in their actions.

• They have in effect voluntarily created legal obligations or laws governing their relationship for their own purposes.

• The legal rules the parties must follow to establish their own rights and duties are called the laws of contract.

Contract & Two Key Principles of Contract Law

A promissory agreement between two or more people that creates, changes, or ends legal rights and duties. The rules governing these agreements are called contract law. Contract law is separate from tort law because it follows different legal principles. The elements in contract law are often more detailed and precise than in tort law.

1. Certainty

• Contracts must be clear and precise.

• This is important because contracts often involve money, property, or business interests.

2. Freedom of Contract

• People are generally free to choose who they contract with and the terms of the agreement.

• This idea comes from liberal-capitalist principles that emphasize individual choice.

Six Elements of a Contract

1. The Offer

2. Acceptance

3. Consideration

4. Intention to create legal relations

5. Capacity

6. Legality of the contract

The Offer

First Element of a Contract

A draft contract made by the offeror that becomes a binding contract when accepted by the offeree.

• The offer is the most important element of a contract.

• Once an offer is accepted, the parties are legally bound and it is difficult to withdraw.

• The offer must be communicated to the offeree.

Offer vs. Invitation to Do Business (and Case)

The Offer

Advertisements and store displays are usually invitations to make an offer, not actual offers. Customers make the offer to buy, and the store accepts at the checkout.

Example case: Pharmaceutical Society of Great Britain v Boots Cash Chemists (exam)

• Items displayed in stores or advertisements are not legal offers. They are invitations to customers to make an offer.

• The store displays goods → invitation to do business.

• The customer picks up the item and goes to the cashier → customer makes the offer to buy.

• The cashier accepts the price and processes payment → contract is formed.

• Picking an item from a shelf is NOT acceptance of an offer.

• If every display were an offer, stores could be forced to sell items even if mistakes occurred, which would clog the courts with disputes.

When an Offer Lapses

The Offer

An offer ends if:

• The time limit expires for the offeree to accept the offer.

• A reasonable time passes with no acceptance.

  1. Always time limit the offer. Doe not let the judge decided the offer.

• Either party dies or becomes insane before acceptance.

Revoking an Offer (Revocation Principles)

The Offer

The offeror can withdraw the offer anytime before acceptance, even if they promised to keep it open. Two ways to make an offer bindingly open:

• Offer under seal

• Option contract (a contract to keep the offer open)

  1. Someone promises to keep the option open for agreement.

Counteroffers (and Volley of Offer)

The Offer

Usually when contractual agreements take place there is bargaining that takes place; there is a volley of offers going back and forth.

• Acceptance must be unqualified and match all terms.

• If the offeree changes any term, it becomes a counteroffer, not acceptance.

• A counteroffer kills the original offer unless the offeror renews it.

Fundamental Breach

The Offer

Occurs when a fundamental portion of a contract is breached. The exception of liability clause no longer applies.

• If offeree rejects the offer, it is terminated. Can now only revise it.

Acceptance of Offer

The Offer

1. In order for a contract to exist Offer must be made by the offeror and there must be communication of the offer to the offeree.

2. An offer can be communicated in writing, orally or by gestures (auction, hailing a cab) but they must be unequivocal.

3. An offer cannot be accepted by the offeree until he/she has first learned of it (can’t be forced into a contract by people who do work for us without our knowledge).

Standard Forms of Contracts

The Offer

A pre-written contract that a company uses over and over again for many customers.

• The terms are already written by the business.

• Customers usually cannot negotiate the terms.

• You either accept it or refuse the service (“take it or leave it”).

• Examples include: Phone contracts, gym memberships, airline tickets, parking tickets.

Courts Concerns with Standard Forms of Contract

The Offer

Courts didn’t like these contracts at first because:

• Customers have no bargaining power

• Businesses sometimes included unfair clauses, especially limitation of liability clauses (clauses saying the company isn’t responsible if something goes wrong).

The court made Exception of Liability Clauses: A person cannot be bound by a contract term they did not know about unless the business took reasonable steps to bring the term to their attention.

Contra Preferentum

The Offer

A rule courts use when a contract term is unclear or ambiguous. If a clause can be interpreted in two different ways, the court will interpret it against the party that wrote the contract. This usually affects businesses, because they are typically the ones who draft standard form contracts.

• Businesses write the contract terms.

• They have more power and control over the wording.

• If they write something unclear, they should bear the risk of that ambiguity, not the consumer.

Contra Proferentem = “Against the drafter.”

Termination of Offer (Ways an Offer Can End)

The Offer

1. Rejection: If the offeree rejects the offer, the offer immediately ends. The offeree cannot later change their mind and accept it unless the offeror makes the offer again. The first offer may be the best, so rejecting it can be risky.

1. Counteroffer: A counteroffer happens when the offeree changes any term of the original offer. This is legally treated as rejecting the original offer and making a new one.

2. Lapse of time: An offer can expire if it is not accepted in time. The time limit stated in the offer passes, if no deadline was given. A reasonable amount of time passes if no deadline was given.

3. Revocation: The offeror can withdraw the offer anytime before it is accepted. Once the offeree accepts, it is too late to revoke because a contract has formed.

Acceptance

Second Element of a Contract

For a contract to form, the acceptance must be clear and definite. The offer must be clear, unconditional and communicated.

Acceptance must be: Positive → clearly agreeing to the offer, and Unequivocal → no uncertainty or changes to the terms. Acceptance can happen in two ways:

• By Words: Saying or writing something like “I accept your offer.”

• By Conduct (Actions): Your actions clearly show you accept the offer.

Example: If someone offers to sell you a bike and you pay the money, your conduct shows acceptance. But the conduct must clearly match the offer.

Acceptance (Communication) Rules

Acceptance

1. Offeror Controls the Method of Acceptance

2. Acceptance by Performance (Doing an Act)

   • General Rule: Acceptance Must Be Received

   • Exception: The Mailbox Rule (Postal Rule)

   • Instant Communication Rule

3. Reasonable Person Test

Offeror Controls Method of Acceptance (Communication Rules)

Acceptance

The person making the offer (offeror) can decide how acceptance must be communicated.

• They can require things like: Acceptance by email, mail and or only when actually received. They can also require performance of an act instead of words.

Example:

• “If you deliver the materials, I will pay you $500.”

• The act of delivering the materials becomes the acceptance.

Acceptance by Performance (Doing an Act)

Acceptance

Example case: Carlill v Carbolic Smoke Ball Co.

• A company advertised that if someone used their smoke ball product and still got sick, they would pay £100.

• A woman used it as instructed and still got sick, so she claimed the money.

Court decision:

• The act of using the product was acceptance.

• No written acceptance was required.

If the offer says doing the act counts as acceptance, then performing the act forms the contract.

General Rule: Acceptance Must Be Received

Acceptance

Normally, the offeror is not bound until they receive the acceptance.

Example:

• You email accepting an offer.

• The contract only forms when the offeror receives the email.

Exception: The Mailbox Rule (Postal Rule)

Acceptance

If mail is the accepted method, the rule changes. Mailbox Rule: Acceptance is effective when the letter is placed in the mailbox, not when it is received.

Conditions:

• The letter must be properly addressed and stamped.

• Mail must be a reasonable method of communication.

So the contract forms when the letter is sent.

Instant Communication Rule

Acceptance

For instant methods (like phone, telegram, email, etc.):

• Acceptance is effective when it is received and understood by the offeror.

So the postal rule does NOT apply.

Reasonable Person Test

Acceptance

Courts often ask: What would a reasonable person think the parties intended?

If a reasonable person would believe a contract was formed, the court may treat it as one.

Rules of Acceptance

Acceptance

1. Offeror Controls the Method of Acceptance: The offeror (person making the offer) can decide how acceptance must happen.

2. Postal Rule (Mail Exception): If mail is used as the acceptance method, the postal rule applies.

3. When the Offeror Suggests Mail: When the Offeror Suggests Mail.

4. When the Offeror Prefers Another Method: When the Offeror Prefers Another Method.

5. General Contract Rule: Normally, a contract forms when the offeror learns about the acceptance.

General rule: Acceptance effective when received

Exception (postal rule): Acceptance effective when mailed

Certainty of Offer

Acceptance

For a contract to be valid, the terms must be clear and certain. The wording cannot be vague or unclear. If the important terms are too uncertain, the contract may be void (not legally enforceable).

• Not valid: Agreement to agree later (parties saying that they will agree on the price later).

• Valid if: There is a formula or third party to determine the term

  • A contract with a point to agree to later can still be valid if there is a legitimate method to later determine the missing part.

What Law Governs a Particular Contract?

Acceptance

• Lex causae: The law that will govern a contract. Determined by the principles of conflict law. When parties from different places or countries make a contract, there can be a question: Which country’s or province’s law applies? To avoid this problem, contracts often include a clause that chooses the governing law.

• Revocation by mail: Revocation means withdrawing an offer. The revocation only needs to arrive at the destination. The offeree does not have to personally read it yet. The revocation only needs to arrive at the destination. The offeree does not have to personally read it yet.

  • Dickinson v. Dodds Case.

• Courier service: If revocation is sent by courier, courts usually treat it similar to mail. Revocation is effective when it arrives at the destination.

• Instantaneous forms of communication: For instant communication, the rule is different: Revocation or acceptance is only effective when it is actually received. Examples include email, phone call or fax. Sometimes confirmation is required to show it was successfully received.

  • Brinkibon Ltd v Stahag Stahl (often cited for instant communication rules).

Consideration

Third Element of a Contract

Consideration is the core idea of a contract because a contract is basically an exchange or bargain between parties. Each party must give or promise something of value for the contract to be valid. Consideration is described as: “The price paid for the promise.”

• This means: One person promises to do something, and the other person gives something in return. Both sides must exchange something.

• For a valid contract: Every party must give consideration. If only one side promises something, it may just be a gift, not a contract.

• There are different types of consideration: Personal property, real property, and services or labour.

4 Types of Consideration (P-S/W-M-R/F)

Consideration

Consideration can be anything of value that one party gives or promises to give in exchange for the other party’s promise.

Property: Can be used as consideration.

• Personal Property: This is property that is not land.

  • Chattels (Tangible property): This can be physical objects, and moveable and visible (car, laptop, furniture).

  • Choses in Possession / Choses in Action (Intangible property): Rights rather than physical things, often contractual rights or the right to sue (a cheque, a debt that someone owed you, a legal claim). The transferring these rights is called an assignment.

• Real Property: This means land or things attached to land.

  • This can include things such as houses, buildings, land. A chattel becomes real property when it is attached to land.

    • A loose cabinet = chattel.

    • A cabinet built into the wall = real property.

Services or Labour: Work performed can also be a consideration.

• Work performed can also be consideration. This includes painting a house, fixing a car, providing consulting services.

Money: Money is the most common form of consideration. Example: Paying $500 for a laptop

Restraint on Freedom: Sometimes consideration is agreeing not to do something. Example: Non-compete clause (agreeing to not starting a competing business).

Gratuitous Promise

Consideration

• A promise without consideration is gratuitous (a gift promise).

• Gratuitous promises are not enforceable in contract law.

• A contract requires an exchange of value (consideration).

• If an essential element (like consideration) is missing, the contract is void.

Types of Gratuitous Promises

Consideration

1. Past Consideration

   1. Nominal consideration

2. Existing Legal Duties and Considerations

3. Rules n Foakes v. Beer

Past Consideration - Types of Gratuitous Promises

Consideration

• Past consideration = not valid consideration.

• A reward for something already done cannot create a binding contract.

• There must be a present exchange, not something done in the past.

• Reciprocity alone does not make a promise enforceable.

Existing Legal Duties & Consideration - Types of Gratuitous Promises

Consideration

• If Party A is already legally obligated to do something,

  • Party B’s later promise to pay extra for the same duty is not binding.

• Example (sailors case principle):

  • If sailors are already hired to complete a voyage,

  • They cannot demand extra pay unless they provide something additional.

• To make a new promise enforceable, there must be:

  • New or additional consideration.

Nominal Consideration

• Small/token amounts (e.g., $1, peppercorn, seal) can be valid at common law.

• Courts at common law focus on whether consideration exists, not its value.

• In equity, consideration must be substantial, not just nominal.

• Nominal consideration can help convert a gratuitous promise into an enforceable agreement.

Rule in Foakes v Beer - Types of Gratuitous Promises

Consideration

• A creditor’s promise to reduce a debt is not enforceable unless there is consideration.

• If a debtor owes money and the creditor agrees to accept less,

  • The creditor can still sue for the remaining balance.

• To make the agreement binding, the debtor must provide some form of consideration.

• The key issue: No consideration = no enforceable reduction of debt.

Intention to Create Legal Relations

Element Four

For a contract to exist, both parties must have the intention to be legally bound. The law presumes intention exists in agreements.

• The plaintiff does NOT have to prove intention.

• It is up to the defendant to rebut (disprove) the presumption.

• Includes: Presumption of intent, family situations (domestic agreements), and informal family loans.

  • Commercial agreements → intention presumed strongly.

  • Family/social agreements → presumption against legal intention.

  • Money transactions should be treated carefully, even between family members.

Presumption of Intention

Intention to Create Legal Relations

• The presumption is easier to rebut in family/domestic situations.

• It is harder to rebut in commercial (business/third-party) situations.

Family Situations (Domestic Agreements)

Intention to Create Legal Relations

• Courts usually assume no intention to create legal relations.

• Example:

  • A mother invites her son to dinner.

  • Offer + acceptance + consideration may exist.

  • However, courts may view this as a social agreement, not a legal contract.

  • The son would need to prove there was no intention to be legally bound.

Informal Family Loans

Intention to Create Legal Relations

• Even in family settings, money matters can become legally binding.

• If a mother lends money to her son:

  • It may be argued later whether it was a loan or a gift.

• The son may try to claim it was a gift (especially if informal).

• To avoid disputes, financial agreements should be clear and formal, even within families.

Capacity

Fifth Element of a Contract

Capacity = the legal ability to enter into a binding contract. Each party must have mental competency.

A person must understand:

• The nature of the contract

• The consequences of their actions

• If a party lacks capacity → the contract may be void or voidable.

Types of Incapacity

Capacity

1. No capacity (void contract): Person has no ability to understand the contract, therefore the contract is void.

2. Limited (diminished capacity): The contract exists but can be cancelled (voidable) by the party with limited capacity.

   1. Minors:

   2. Lunatics (mentally insane)

Minors

Capacity

Age of majority: Common law: 21, Manitoba: 18 Contracts with minors are:

• Unenforceable against the minor.

• But enforceable against the other party.

• The minor can choose to void the contract.

Necessaries

• Minors must pay for necessaries (essential goods/services).

• They do not pay the contract price.

• They pay a reasonable price (based on Quantum Meruit).

• The court decides what is reasonable.

Beneficial Contracts of Service

• Minors can enter contracts that are for their benefit, such as:

  • Apprenticeships

  • Employment contracts

• Labour rules: 16+ can enter labour contracts, and 15 may do so with: Guardian consent, principal consent and government certificate.

Mental Incapacity (Lunacy/Insanity) & Intoxication

Capacity

Insanity (Lunacy)

• Contract may be voidable if: The person lacked understanding at the time.

Intoxication

• Contract may be voidable if: The other party knew the person was drunk.

• The intoxicated person must: Repudiate (end) the contract promptly once sober.

Legality of Contract

Sixth Element of a Contract

The object (purpose) of a contract must be legal. The contract (and its terms) must:

• Not violate any law

• Not offend public policy

• Public policy = the court’s view of what is appropriate for society.

• There is a presumption of legality (assumed to be legal unless proven otherwise).

Courts may refuse to help parties involved in illegal agreements. Restraint of trade clauses must be reasonable and limited to be enforceable.

If the Contract is Illegal

Legality of Contract

Void Contract

• If the presumption is wrong → the contract is void.

• A void contract = never legally existed.

• The court may: Restore parties to their original positions (restitution).

Void & Illegal

• If the contract involves illegal purpose: The court will refuse assistance to any party who knowingly participated.

• Courts will not help enforce illegal agreements.

• Illegality can arise from: Common law, public policy

  • Example: activities the court considers socially unacceptable.

Restraint of Trade & to Be Enforceable

Legality of Contract

• Refers to clauses that limit someone’s ability to work or compete (e.g., non-competition clauses).

• Courts generally prefer a free and open market.

• Therefore, restraint of trade clauses are not easily enforced.

To Be Enforceable, It Must Be:

• Clearly defined

• Geographically limited

• Limited in time (duration)

• Reasonable in scope

• Commonly found in employment contracts.

Impugning a Contract

To impugn a contract means to attack its validity or integrity.

It can also mean:

• To challenge

• To impeach

• To contest

If the contract is valid → the plaintiff wins.

If the contract is proven void, voidable, or unenforceable → the defendant wins.

Who Impugns a Contract?

Usually, the defendant tries to impugn the contract. Reason:

• The plaintiff is suing to enforce the contract.

• The defendant wants to avoid liability.

• If the defendant proves the contract is invalid → they may avoid being sued successfully.

Grounds to Impugn a Contract

A defendant can succeed if they prove the contract is:

• Void → legally never existed.

• Voidable → valid but can be cancelled by one party.

• Unenforceable → cannot be enforced by the court.