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CANADIAN BUSINESS AND THE LAW Second Edition by

CANADIAN BUSINESS AND THE LAW Second Edition by Dorothy Duplessis Steven Enman Shannon O’Byrne Sally Gunz. Presentation prepared by Allan Elliott, Southern Alberta Institute of Technology.

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CANADIAN BUSINESS AND THE LAW Second Edition by

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  1. CANADIAN BUSINESS AND THE LAW Second Edition by Dorothy Duplessis Steven Enman Shannon O’Byrne Sally Gunz Presentation prepared by Allan Elliott, Southern Alberta Institute of Technology

  2. CHAPTER NINE TERMINATION AND ENFORCEMENT OF CONTRACTS OBJECTIVES: • The termination of a contract by performance • The termination of a contract by agreement • The termination of a contract by frustration • The methods of enforcing contracts • The concept of privity • Remedies for breach of contract

  3. TERMINATION AND ENFORCEMENT OF CONTRACTS TERMINATION: AN OVERVIEW • through performance – both parties complete their contractual obligations • through agreement – the parties can agree to end the contract at any time • through frustration – unforeseen event makes performance impossible or illegal • through breach – a serious breach can release the innocent party from continuing

  4. TERMINATION THROUGH PERFORMANCE PERFORMANCE • performance is complete when all implied and express promises have been fulfilled • vicarious performance– performance of contractual obligations by others • as long as personal performance by the contracting party is not required

  5. TERMINATION BY AGREEMENT PARTIES MAY AGREE TO: • enter into a whole new contract, know as novation • novation – the substitution of parties in a contract or the replacement of one contract with another • vary certain terms of the contract • end the contract • substitute a party – transferring one party’s rights and obligations

  6. TRANSFERRING CONTRACTUAL RIGHTS ASSIGNMENT OF CONTRACT • the transfer of a contractual right by an assignor to an assignee Step 1 Creditor – Debtor Relationship C(creditor) D(debtor) Step 2 Assignor-Assignee Relationship C(assignor) A(assignee) Step 3 Assignee – Debtor Relationship A(assignee) D(debtor) Figure 9.1

  7. TERMINATION BY FRUSTRATION FRUSTRATION • termination of a contract by an unexpected event or change that makes performance functionally impossible or illegal • must establish: • was dramatic and unforeseen • neither party had assumed risk of occurring • arose without either’s fault • makes performance impossible/illegal

  8. FORCE MAJEURE CLAUSES INTERNATIONAL PERSPECTIVE • Risk of unforeseeen events • A party may terminate the contract for fire, war etc.

  9. TERMINATION BY BREACH PLAINTIFF MUST DEMONSTRATE 3 ELEMENTS ON THE BALANCE OF PROBABILITIES: 1. privity – there is a contract between the parties 2. breach – the other party failed to keep a promise or term in the contract 3. entitlement – must show you suffered loss as a result of the breach • balance of probabilities – proof that there is a better than 50 per cent chance that the circumstances of the contract are as the plaintiff contends

  10. TERMINATION BY BREACH 1. PRIVITY OF CONTRACT • only the parties to a contract can enforce the rights and obligations it contains • modified by statute in 2 areas – consumer purchases and insurance 2.BREACH OF CONTRACT • condition – an important term, which, if breached, gives the innocent party the right to terminate the contract and claim damages • warranty – a minor term, which, if breached, gives the innocent party the right to claim damages only Continued...

  11. TERMINATION BY BREACH 2. BREACH OF CONTRACT (concluded) • innominate term – a term that cannot easily be classified as either a condition or a warranty • exemption or limitation of liability clause – clause limiting or excluding liability for breach • fundamental breach – a breach of contract that affects the foundation of the contract – such a breach may render the entire contract, including the exclusion clause, inoperative • anticipatory breach – a breach that occurs before the date for performance

  12. TERMINATION BY BREACH 3. ENTITLEMENT TO A REMEDY • damages – monetary compensation for breach of contract • defendant is responsible for reasonably foreseeable damages suffered by the plaintiff – pain, suffering, and emotional distress not generally accepted as being a consequence of breach of contract

  13. TERMINATION BY BREACH RESTRICTIONS ON DAMAGES • remoteness – tests 1. damages could have been anticipated 2. damages reasonably foreseeable • duty to mitigate – the obligation to take reasonable steps to minimize the losses resulting from a breach of contract or other wrong

  14. EQUITABLE REMEDIES EQUITABLE REMEDIES • where damages are an inadequate remedy • specific performance • injunction • interlocutory injunction – order to refrain from doing something for a limited period of time • rescission • restitutionary remedies • unjust enrichment - occurs when one party has undeservedly or unjustly secured a benefit at the other party’s expense

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