lecture 3- 4 - OneNote Online Lecture#3 and#4 Wednesday...

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Unformatted text preview: 4/15/2016 OneNote Online Lecture #3 and #4 Wednesday, January 20, 2016 5:00 PM More on Negligence Make notes on preexis뛕ng duty ‐Pure economics Loss(Monetary Loss) Hard to sue someone for a pure economic loss in the past. Even to a degree today. Sue under Contract Physical damage The Defendant has a Fiduciary duty( The duty to act in good faith) This comes under professional negligence. When a client puts their reasonable trust into a professional, the professional should always act in the client's best interests If these three condi뛕ons are not fulfilled, you cannot sue Reasonable foreseeable class ‐Professional Negligence ‐Contract Forma뛕on Defini뛕on of Contract: A voluntary promise between two par뛕es that the court will enforce. The court will fulfill some promises, NOT ALL. Why the court enforces it? Because there is a reasonable expecta뛕on that this promise should be enforced What the par뛕es agree with are not restricted. This is called the freedom of contract. Par뛕es can form any contract as long as it meets the common law requirements. How to form a contract 1. Consensus‐ Consensus formed by an Offer and an Acceptance. Offer The Offeror is the person who offers The Offeree is the person who receives the offer from the Offeror "What is it worth" or Quantum Merit ‐ An equitable remedy (Fairness). Reluctantly, people pay for what the service is worth even if there is no dis뛕nct contract between par뛕es. A valid offer will contain all the terms to be included in this poten뛕al contract. The offer states that the offeror will do whatever promise stated in the offer if the other party consents to do what is requested in return Also, note that the person who made the offer can withdraw it whenever if there isn't an acceptance. Once an acceptance by another party is made, the offeror cannot withdraw So only when it is accepted is when the contract is taken in place. Offer v. Invita΄on to treat Limited commodity and the poten뛕al to be stuck with many contracts ‐ Invita뛕on to treat ­my.sharepoint.com/personal/jb14go_brocku_ca/_layouts/15/WopiFrame.aspx?sourcedoc={14FED323­8280­4DC8­BA05­ED120414BDAE}&file… 1/11 4/15/2016 OneNote Online Treat the first guy It is not an offer A good example is a guy selling only one car to the public. The one car is the limited commodity and the guy selling it must sell it to the first guy who is genuinely interested An auc뛕on is a good example of an invita뛕onal to treat Important thing to note: Example of an offer is person who posts a poster about losing his dog. He will pay the person for bringing the dog. Sure we have a limited commodity but it is not like everyone who has a dog will bring it to me. They have to bring the right dog, THUS it is a contract End of an Offer If the offer specifies a 뛕me, it ends at that 뛕me At a reasonable 뛕me Death or Insanity Say the Offeror gives a contract. Offeror dies. The Offeree cannot accept the contract because the contract is abolished and the Offeree didn't accept before the Offeror died. If the offeree accepted the offer and then the Offeror dies, the contract is s뛕ll in place because the contract was already established An offer can be revealed at any 뛕me before acceptance Communica뛕on of the Offer Before you can acceptan offer, it must be communicated to you. You can't accept an offer made to someone else regardless of how you heard of it. Also, you cannot accept an offer you didn't know about. For instance: Say you return a lost item unaware that there was a reward aached to it, you have no claim to the reward because the offer was not communicated to you. Revoca뛕on of an Offer Even though, the offeror can reject the offer any뛕me, it must be communicated to the offeree for the revoca뛕on to be effec뛕ve Rejec뛕on or Counter Offer Each Counter offer or rejec뛕on ends the offer before it. However an inquiry is different to a counteroffer. For example. You are selling a car for $5000. The guy who you are selling to says, "How does $4750 sound?" Therefore the last offer is abolished. An inquiry would be a ques뛕on or a request for informa뛕on like the person asking, "Does the car have a stereo in it?" However a ques뛕on that is worded like "Will you accept the car or $1000?" will be a counteroffer and end the offer before it Terms of Contracts Companies that write the contracts are strictly interpreted by the courts because they have full authority to write the contract ­my.sharepoint.com/personal/jb14go_brocku_ca/_layouts/15/WopiFrame.aspx?sourcedoc={14FED323­8280­4DC8­BA05­ED120414BDAE}&file… 2/11 4/15/2016 OneNote Online Acceptance The offeree's inten뛕on to commit to the contract is known as acceptance. A key thing to know is that the in acceptance, the commitment must be total Generally acceptance has to be communicated to the par뛕es involved Unilateral Contract‐ Carlill vs. Carbolic Smoke BALL Company Some뛕mes, performance of the contract ac뛕vates the contract without being in a contract in the first place. You do not have to contact the party that you accept the contract. That is a Unilateral Contract You cannot foist a contract based on silence. You cannot assume the person agreed to the contract However, some business models like a book of the month club will keep sending you books un뛕l you request them to stop. This is an important excep뛕on to silence. It is reasonable for the supplier to keep sending books to you because a prudent consumer would know before signing up for this monthly book thing as he/she pays a monthly fee The Post Box Rule Monday‐ A offers to sell a business to B for $50000‐ Offer is open un뛕l 5:00pm on Friday Tuesday‐ C offer A $60000‐ A accepts and immediately puts a revoca뛕on(revoke) in the mail to B Wednesday‐ B mails an acceptance to A Friday a.m‐ B receive A's revoca뛕on Friday p.m‐ A receives B's acceptance Where communica뛕on by mail is reasonable, an acceptance is effec뛕ve when it is in the mail. The revoca뛕on is effec뛕ve when the person receives it 2. Considera뛕on‐ There as to be some exchange. The courts do not enforce contracts where only one party benefits. HOWEVER, THE COURTS WILL NOT BARGAIN FOR THE PARTIES EVEN IF IT IS A BAD DEAL. This is assuming that there isn't any fraud or illegal aspect of the deal with the inten뛕on of taking advantage of a party The bargain element of the contract There is also a 뛕me element. Say someone says the contract is open 뛕ll the end of the week. They can close the contract because there is no considera뛕on to keeping the contract open 뛕ll the end of the week. If a person fails to uphold their end of the bargain in a contract, it is considered a breach of contract A good example to look at are dona뛕ons to chari뛕es. The donator can default on his/her promise because it there is no considera뛕on of the contract between the non‐profit and the donator. This is called a gratuitous promise or gi횦. The person promising the gi횦 doesn't have to exercise it. There is no LEGAL obliga뛕on to do it HOWEVER, if the money is going to be used a specific way or the building the organiza΄on creates is in the donator's name then there is considera뛕on because both par뛕es are doing something of value for each other Although, the considera뛕on paid doesn't need to be fair, it must have some legal value. The promise of "love and affec뛕on" or stop "bothering your father" is not good enough. It must have some material value so the courts can enforce the contract The considera뛕on must also be specified. For example, Suppose someone agrees to do "some work" around the house in exchange for a car cannot be enforced by the courts because the "some work" is too vague that it is not reasonable for the courts to enforce such a contract. This holds especially true when dealing with a monetary exchange. The amount of money given HAS TO BE SPECIFIED FOR THE ­my.sharepoint.com/personal/jb14go_brocku_ca/_layouts/15/WopiFrame.aspx?sourcedoc={14FED323­8280­4DC8­BA05­ED120414BDAE}&file… 3/11 4/15/2016 OneNote Online CONTRACT TO BE ENFORCEABLE!! A party can also say they will pay "market value" for this item as it is based on the market's perceived value of the item Prior Exis뛕ng duty Some뛕mes people enter into new agreements when they were already legally obligated to do the task. Say Olsen agrees to paint for $1500 for Tom. The pain뛕ng is 3/4 finished and Olsen demands another $500 bucks to complete the pain뛕ng on 뛕me. Even if Tom agreed, there is no binding obliga뛕on that Tom have to fulfill his promise to pay an extra $500 bucks because these two par뛕es already contract sta뛕ng that Olsen WILL COMPLETE THE PAINTING FOR $1500. Plus, there is no considera뛕on because Tom doesn't get anything in exchange for paying $500 dollars extra because it was already promised that the pain뛕ng was going to be done. ‐Past considera뛕on is no considera뛕on Meaning a promise a횦er the work is done does not count when making a contract. So you cannot make a contract on something you have already done. Example, Telling someone to pay you $100 000 for building a house for them BUT you already did that before offering them. Op뛕on ‐A contract to leave an offer open for a specified 뛕me HighTrees( Injurious Reliance)‐ Court of Equity(Fairness) 3. Capacity‐ Both par뛕es have to have a capacity to understand what they are doing. This issues is of significance when we are dealing with infants Infants < 18 years They cannot be bounded by a contract because they are considered immature or not sophis뛕cated enough to get into a contract. This is purely objec뛕ve as it doesn't maer how mature a person looks or acts. If he/she is below 18, they are not bound to the contracts they form However, this is limited to: the necessaries of life And the beneficial contract of service Ra뛕fica뛕on 4. Legality‐ In order for a contract to be binding. The courts have to be able to enforce it. It is illegal if the courts cannot enforce it 5. Inten뛕on to create contractual rela뛕ons‐ Inten뛕on in Contracts Did the party intend to create legal rela뛕onships with the other party? Ques뛕ons to ask ques뛕oning the inten뛕on of par뛕es in a contract 1. What's the rela뛕onship between the party 2. The Domes뛕c rela뛕onship between the party 3. Is it an exaggerated claim? Meaning is the contract not real? If the par뛕es in the contract doesn't follow the inten뛕ons to be bound by the contract in these 4 ques뛕ons, the courts can cancel the contract 6. Some뛕mes we want contracts in wri뛕ng ­my.sharepoint.com/personal/jb14go_brocku_ca/_layouts/15/WopiFrame.aspx?sourcedoc={14FED323­8280­4DC8­BA05­ED120414BDAE}&file… 4/11 4/15/2016 OneNote Online Terminology to understand 1. Formal Contracts vs Simple Contract A formal contract is one that is sealed by the party bound to it. So a formal seal will be imprinted in the contract to indicate the party is bound to their promise A simple contract can be wrien or verbal but is not under seal 2. Expressed contracts vs Implied An express contract is one in which par뛕es have expressly stated their agreement whether it is in wri뛕ng or verbally. An implied contract is inferred from the conduct of the par뛕es. For example, when people deposit their coins in a vending machine, it can be inferred that they intend to have a contractual rela뛕onship and thus, an implied contract is in force. Some뛕mes parts of an expressed contract may be implied 3. Contracts can be Valid, Void or Voidable A valid contract is one that is legally binding on both par뛕es A void contract does not quan뛕fy as a legally binding contract because an important element is missing from the contract A voidable contract is legally binding but one of the par뛕es has the op뛕on to end the contract. Hence the word "voidable (avoidable) 4. Unenforceable contracts vs Illegal contracts An unenforceable contract is one that is required to be in wri뛕ng under the Statute of Frauds but does not meet that requirement. It may be valid in all aspects but the courts will not force a party to perform that contract. However, if the party performs the unenforceable contract, then the courts will not be able to help the party escape the contract An illegal contract involves the performance of an unlawful act. These contracts are void. 5. Bilateral vs Unilateral (Acceptance) A Bilateral contract is one where both par뛕es make commitments and assume obliga뛕on A Unilateral contract where is isn't any exchange of both par뛕es. It is driven by an offer of one party and the ac뛕on of the another party to complete the contract. The performance of the contract is the acceptance as the party performing it doesn't have to communicate it to the offeror Lecture 4: More on Contracts Legality: The contract must be legal in order for the courts to enforce it Contracts in restraint of trade Restraints to people from working. They are unenforceable because you can't just force someone out of work. Statute of Fraud ­my.sharepoint.com/personal/jb14go_brocku_ca/_layouts/15/WopiFrame.aspx?sourcedoc={14FED323­8280­4DC8­BA05­ED120414BDAE}&file… 5/11 4/15/2016 OneNote Online If you are selling a property, the contract MUST be in wri뛕ng. Mistake Mistakes or misunderstanding of the terms of the contract by both par뛕es make the contract void. This makes sense because this shows that there is no complete consensus between the par΄es thus it is not a contract The mistake can be made by one party or both par뛕es. Note that the courts will not interfere if the mistake is not significant to the contract. Also, if the party just outright does something different in the contract, they cannot just say they didn’t interpret it. This is where the court uses the reasonable person test. The courts are also less likely to remedy a mistake in the interpreta뛕on of law or its effect. It is expected that you understand the law and its effect of not following it. Unjust enrichment‐ Where a party accidently receives funding because another party misinterpret the terms of the contract. The courts will likely ask that party who received the money to return it IMPORTANT: Note that if a contract is voidable, the innocent 3rd party that acquired some goods because of the contract is en뛕tled to them because the contract is s뛕ll in place. Whereas, if the contract is void, the 3rd party has to return those goods Shared Mistakes So a shared mistake occurs when both par뛕es in a contract are in a complete agreement but both realize they made a mistake in the contract in some sense or form. Note that when the mistake of the contract is in the value of a good, the enforceability of the contract remains neutral. Say a piano that two par뛕es are dealing with just realize it is a super rare piano. This doesn’t change anything. If the wrien contract does not reflect the common inten뛕ons of the par뛕es involved in it, the courts are willing to rec뛕fy the contract or correct it. Say a clerical error was made with a mistakenly wrien value of a good. The courts can just correct that value and enforce the par뛕es to exchange to that value of the good. Legal mistakes Error in the wri뛕ng of a contract A mistake with the terms(Common mistake) Words that are used mistakenly in a contract. The courts will use the reasonable person test on the situa뛕on of the case ­my.sharepoint.com/personal/jb14go_brocku_ca/_layouts/15/WopiFrame.aspx?sourcedoc={14FED323­8280­4DC8­BA05­ED120414BDAE}&file… 6/11 4/15/2016 OneNote Online Say if both the par뛕es made a mistake. The courts cannot accept either par뛕es' interpreta뛕on. The courts will either: 1. Correct/Change the contract (Ra뛕fica뛕on) 2. Rescission Cancel the contract all together 1. Complete Agreement 2. No further nego뛕a뛕ons happened 3. The error can be easily explained. A clerical error. If these elements, the courts will be able to ra뛕fy the contract Some뛕mes, par뛕es have different interpreta뛕ons of a specific word. Again, to resolve it, the courts will use the reasonable person test and see how a reasonable person would interpret this There can also be a mistake in assump뛕on. There are few types that the court considers 1. Mistake as to the existence of the subject maer of the contract A contract for a certain subject maer that does not exist. The courts will see that as a void contract 1. Mistake as to the value of a contract If the value in a par뛕cular item in the contract is radically different. The courts will say there is a legal error in the contract. The courts will say the contract is void. Now we have an innocent third party in this scenario. Now, this complicates the situa뛕on about interpre뛕ng mistake contracts Misrepresenta뛕on Allega뛕on of Fact: Misrepresenta뛕on comes from the allega뛕on of fact. A promise to do something will qualify as misrepresenta뛕on if the person who gave the promise had no inten뛕on of honoring their promise. The tradi뛕onal defini뛕on refers to a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. Thus, All facts that are claimed to be true but false is misrepresenta뛕on. So promises and opinions are not considered misrepresenta뛕on EXCEPT: Say somebody promises to do something for the person in the future with no INTENT of honouring it at the 뛕me it was made. That is an example misrepresenta뛕on through a false promise Opinions can also be considered misrepresenta뛕on if the person who provided the opinion was an expert. If a guy is selling a car he can say that it is "good car" is en뛕tled to say it because it is his opinion. If the car breaks down later, it is fine. But if a mechanic makes that opinion and the car breaks down, that is ac뛕onable as misrepresenta뛕on because he ­my.sharepoint.com/personal/jb14go_brocku_ca/_layouts/15/WopiFrame.aspx?sourcedoc={14FED323­8280­4DC8­BA05­ED120414BDAE}&file… 7/11 4/15/2016 OneNote Online is an expert in his role. Misrepresenta뛕on must be communicated: There must be some communica뛕on on informa뛕on from one party to another for it to be misrepresenta뛕on. Silence or non‐disclosure by itself is not usually ac뛕onable as misrepresenta뛕on. However, there are special situa뛕ons where one party has to disclose certain informa뛕on. For example, par뛕es applying for life insurance are required to disclose personal informa뛕on such as mental and medical problems such as heart aacks, cancer, etc. etc. If the person fails to disclose whatever informa뛕on is stated in the contract, that the contract will be terminated. But Professionals also have to obliga뛕on to disclose certain informa뛕on that might the ac뛕ons of their clients A person ac뛕vely trying to hide informa뛕on that would be important to a contrac뛕ng party can be considered as misrepresenta뛕on. False Statement: As it is necessary to prove that the statement was an allega뛕on of fact, it is also necessary to prove that the statement was wrong. Even if the individual has technically told the truth, if that person has withholds informa뛕on that would have created a different impression, this can amount to misrepresenta뛕on. For example: If a car salesperson tells the client that they replaced the car with an engine but he didn't tell the client that he replaced it with an old engine then that statement would count as misrepresenta뛕on if it leads to the client to buy the car believing the engine he replaced was new. 1. However, if the client knew that the statement was false and entered into the agreement anyways then the misrepresenta뛕on is not ac뛕onable to the courts. 2. Similarly, if the client would have agreed to the contract regardless of the statement or not, that salesperson's misrepresenta뛕on wouldn't be ac뛕onable. THUS, for there to be an ac뛕onable misrepresenta뛕on, the false statement must affect the outcome of a decision that otherwise wouldn't have been made by the vic뛕m. Misrepresenta뛕on stated in a contract: Normally, ...
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