1. Professional Engineering Practice
Contract Law – part 2
Image credit: PCStuff 03:50, 31 July 2006 (UTC)

2. Pre-test

3. Pre-test

4. Contract interpretation
Liberal approach
(what was the intent behind the contract)
vs.
Strict approach
Exclusion clauses enforced unless there was unequal bargaining power or the terms are ‘unconscionable’
but more in “fundamental breach” - coming in another mix
GENERALLY the strict approach will be used by the courts

5. Contract interpretation
Source: Brian Ingmanson
Contra proreferentem
When ambiguous, the preferred meaning is the one that works against the party that drafted the contract
Parol evidence rule
If a written contract exists, verbal or other extrinsic evidence countering it will generally be excluded
Implied terms
If a contract makes no sense without some terms it would be reasonable to assume were implicit, those implied terms can be relied on

6. Equitable estoppel cases
Conwest Exploration Co. v. Letain
Conwest had an option on mining rights for Letain’s land
Conwest exploration ran into difficulty due to weather
Letain implied the deadline for mining claim usage could be extended (gratuitous promise, without consideration) and Conwest continued on that basis.
Letain then tried to enforce the original contract, but the court estopped them as this was deemed inequitable
Conwest was relying on the gratuitous promise

7. Equitable estoppel cases
John Burrows Ltd. v Subsurface Surveys Ltd.
Burrows and Subsurface surveys entered a contract for Burrows to sell his company shares to Subsurface surveys
Subsurface surveys paid later than the contract terms on a few payments, but Burrows took no action.
When Burrows subsequently tried to enforce the contract terms on a new late payment, Subsurface surveys claimed inequity.
Since there had been no negotiation that should have led Subsurface surveys to assume Burrows was OK with the late payments (i.e. a gratuitous promise), inequity not proven.
Inaction does not equal acquiescence

8. Equitable estoppel cases
Owen Sound Public Library Board v. Mial Developments Ltd
Owen Sound contracted with Mial to make renovations to the local public library.
The contract stated that payments were due within five days of receiving an architect’s certificate and that if payment was not made within seven days, Mial could terminate the contract with 5 days’ notice.
Mial requested a payment, but Owen Sound requested the corporate seal of the subcontractor to ensure that Mial had paid their subcontractor.
Mial undertook to get this seal (although not required under contract), but did not do so by the due date.
Owen Sound not pay. After not receiving payment, Mial gave five days notice to terminate the contract on December 20, which Owen Sound did not receive until December 22, and because of the holidays did send payment until December 28, which was not received by Mial until January 2.
Mial claimed the contract was terminated, and Owen Sound sued for breach of contract.

9. Equitable estoppel cases
Owen Sound Public Library Board v. Mial Developments Ltd
Mial’s agreement to get the seal from their contractor was a gratuitous promise.
Owen Sound did not pay per contract terms, as they had understood they could delay payment until receipt of the sealed document.
The court agreed with Owen Sound, as the contract terms were effectively estopped by Mial’s acceptance to get the sealed document and Owen Sound’s reasonable understanding that they did not have to pay until receipt of the document.

10. Contract law
Legality of purpose often arises in non-competition clauses:
Employer must have proprietary interest worth protecting,
clause must be reasonable with regard to geographic restriction and duration,
and there must be sufficient justification to restrict competition instead of just solicitation

11. Contract law Elsley v JG Collins 1978 Lyons v Multari 2000
Covenant is Niagara Falls, 5 years, $1000 damages.
Collins loses 50% of customers - uniquely vulnerable (Elsley has privileged knowledge of customers etc.) – court upholds Collins’ case, awarded $1000
Lyons v Multari 2000
A non-competition clause cannot be upheld if a non-solicitation clause would have sufficed

12. Contract law Misrepresentation Derry v. Peek
 for there to be deceit or fraud it must be shown that a defendant knows a statement is untrue, or has no belief in its truth, or is reckless as to whether it is true or false
Derry v. Peek
William Derry, director of Plymouth, Stonehouse and Devonport Tramway, believed he would be allowed to run steam trams rather than horse-drawn trams. Board of Trade blocked this permission though, shareholders of the tramway (led by Sir Henry Peek) sued for damages
Derry was not shown to have been deceitful in his claim – he had honestly believed he would get permission

13. Post-test

14. Post-test

15. Post-test