What’s a Handshake Worth In the Common Law?

1. What’s a Handshake Worth In the Common Law? Professor Rosalie Jukier April 20, 2010

2. Civil and Common Law Traditions • Whereas the Civil Law is said to be “laid down”, the Common Law is said to have “grown up” • Civil Law: Lauded for its logical, coherent, taxonomic structure • Common Law: Often referred to as “chaos with an index” – “unlike a good lettuce, the common law is rarely crisp” • However, “even messy kitchens can produce good food”

3. Different Roles of the Judge and of Judgments • Traditionally, the civilian judge is but the “mouthpiece of the Code” – “la porte-parole de la loi” • Civilian jurisprudence is but a “persuasive” source of law, not a binding one • Contrast with Common Law judgments which are binding sources of law (hence term “caselaw”) • Doctrines of precedent (stare decisis)

4. Civil and Common Law TraditionsSome Myths • Myth 1: Rigidity of the Civil Law • Tout n’est pas dit quand un code a parlé • Le code n’est pas un musée mais une maison, non un château, dit-on, que l’on visite, mais une demeure où l’on vit • G. Cornu

5. Myth 2: Flexibility of the Common Law • Generally speaking, the judiciary is bound to apply the rules of law found in the legislation and the precedents. Over time, the law in any given area may change; but the process of change is a slow and incremental one based largely on the mechanism of extending an existing principle to new circumstances. • McLachlin J in Watkins v. Olafson

6. Reality Check • Theoretical versus practical differences between role of the judge in two traditions • Civil justice system in Quebec is heavily influenced by the English adversarial system • Heavy use of jurisprudence by Quebec judges • Common Law style of judgment writing adopted by Quebec judges • Many civilian concepts have “grown up” in the courts rather than being “laid down” in the Code (good faith, unjust enrichment)

7. How Does This Translate to Contract Law and Remedies? • Why is it important for a Quebec practitioner to care? • Clients increasingly deal with others in common law jurisdictions • Lawyers increasingly deal with other lawyers in common law jurisdictions • Important to learn about the other • Differences can be very important in negotiating and drafting contracts • Eg: choice of law clauses

8. Main Differences Canvassed • Consideration (as a necessary element of a valid contract) • Good Faith • Third Party Benefits • Different Conception of Remedies

9. Consideration • “Something of value in the eyes of the law moving from the promisee …” Thomas v. Thomas. • No “bare promise” • Contrast with the recognition of the gratuitous contract of the Civil Law (art. 1390? C.C.Q.) • Role of Formalities in the Civil Law?

10. Consideration • Where can it get tricky for the practitioner? • Modification of existing contracts • Contrast article 1433 C.C.Q. with Harris v. Watson and Stilk v. Myrick • Modern adaptation: Gilbert Steel (Ont C.A.), Williams v. Roffey (English C.A. and introduction of practical benefit) and Nav Canada ( 2008 N.B.C.A.)

11. Good Faith • Supreme Court of Canada, in Houle and Bail cases, introduces the doctrine of good faith in the formation and performance of contracts in the Civil Law • Codified in C.C.Q. in article 1375 as well as more generally in articles 6 and 7 • Duty to act reasonably is thereby imported into contractual realm

12. Good Faith • Not a favourite of the Common Law • Importing a duty to bargain in good faith would “hobble the marketplace” (Iacobucci J. in Martel) • No duty to disclose – disincentivize parties from acquiring useful information (Law and Economics movement in U.S.)

13. Good Faith • More receptive in the performance of an already formed contract • Some key decisions in Canada (Honda, Gateway, RBC Dominion Securities) • But far from an established doctrine that you want to rely on in a Common Law court

14. Third Party Benefits • Civil Law: Stipulation pour autrui (article 1444 C.C.Q.) • Third party given direct right of action to enforce benefit in contract to which he is not a party • Common Law: much stricter concept of privity of contract

15. Third Party Benefits • Practical problem: Exoneration of Liability clauses for employees and other independent contractors • Line of English Shipping cases where the House of Lords performs mental gymnastics to allow stevedores the benefit of exclusion clauses contained in contracts between shippers and owners of goods

16. Third Party Benefits • England has statutorily altered the traditional Common Law position • Canada: London Drugs case provides some relaxation of privity for reasons of commercial reality and justice • Limited exception now exists for employees to use their employers’ limitation of liability clauses as shields

17. Contractual Remedies • Different Conception • Civil Law: Rights precede Remedies • Common Law: Remedies precede Rights • Specific Performance • Civil Law considers S.P. a primary remedy as of right, as long as it is possible, does not interfere with rights of third parties and does not unduly interfere with personal liberty of debtor

18. Different Conception of Remedy • Oliver Wendell Holmes: “the duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it, - and nothing else” • Doctrine of Efficient Breach • Civilian mentality: the duty to keep a contract ought presumptively to mean a duty to perform it.

19. Specific Performance • Civil Law: Primary, presumptive remedy of right • Common Law: remedy is discretionary, exceptional, available only where damages are “inadequate” • Result: Arguments of hardship and alleged problems of supervision will be used by Common Law courts to not award the remedy • Concept of efficient breach

20. Specific Performance • Compare and contrast English Hourse of Lords decision in Argyll Stores with Quebec decision in Golden Griddle, both dealing with a continuous operation provision in commercial lease

21. What’s the difference?

22. Conclusion • Different historical development of two great legal traditions • Different conceptions of the role of the judge and the role of jurisprudence • Key differences in doctrinal dimensions of contract law • Notwithstanding – uniformity in result may be obtained • Necessary to understand the key differences and react accordingly to them