Contracts Ratios

Table of Contents
Offer vs. Invitation to Treat
Invitation to Treat
Unilateral Offer: Offers to General Public
Bilateral Contracts
Offer
To form a valid contract there must be an offer to purchase/sell, and
acceptance of that offer. Canadian Dyers

An offer is a statement by one party of a willingness to enter into a contract

on the terms put forward.
An offer is often contrasted with an invitation to treat/deal/negotiate, which
is an invitation to enter into negotiations, but is not an offer that can be
legally accepted. Canadian Dyer

Whether a proposal is an offer or an invitation to treat depends on the

partys intentions, which are to be objectively assessed based on the
language used and the surrounding circumstances. How would a reasonable
person understand it, as an offer to contract or an invitation to treat?
Carbolic Smoke Ball

A mere quotation of price does not necessarily imply an offer to sell.

Canadian Dyers

An offer which expressly or impliedly specifies the performance of an act as

the manner of acceptance is considered a unilateral offer. Carbolic Smoke
Ball

Whether or not an offer is unilateral is to be determined by the language of

the offer and the nature of the transaction. Carbolic Smoke Ball
A unilateral offer can be made to the world, and is then accepted by the
performance of the stated condition. Carbolic Smoke Ball
An offer must be communicated to the offeree to be capable of acceptance.
Communication of offer is necessary to demonstrate that the offeror intends
the offer to be carried into practice Blair.

Acceptance
Acceptance occurs where the offeree accepts an offer on mirrored terms
Livingstone
The rejection of an offer, or a counter-offer, kills the offer, unless the offeror
revives the original offer Hyde v. Wrench; Livingston

To revive an offer the offeror must show him or herself once again willing
for that offer to be accepted Livingstone; Cowan v. Boyd
An inquiry into the terms of an offer is not a counter-offer, and does not
impede the ability to accept that offer Livingstone
The offeror is the master of the offer, and as such can specify how acceptance
is to be performed and how it is to be communicated Carbolic Smoke Ball
A unilateral offer may be accepted by the performance of an act, as specified
expressly or implied by the terms of the offer or the nature of the transaction
Carbolic Smoke Ball
Performance of a required act constitutes acceptance so long as the offeree
knows of the offer at the time of performance, even if he or she is not solely
motivated by the desire to contract Williams v. Cawardine.
However, if the offeror can demonstrate that the offeree did not intend to
accept the offer at the time the act was performed, the act does not constitute
acceptance R v. Clarke
Silence does not constitute acceptance (Felthouse v. Bindley), unless the
offerors conduct implicitly demonstrates acceptance of the offered terms (St
John Tugboat).

General rule is that acceptance must be communicated to the offeror.

Acceptance occurs when the offer and where the offeror learns of the
acceptance.

Exception to the General Rule: The Post Office Rule:

Acceptance sent by mail is communicated once deposited in the mail,
so long as mail is an objectively appropriate means of communication.
Adams v. Lindsell

Revocation/Termination of Offer
An offer may be withdrawn or revoked prior to acceptance, whether or not a
timeframe is specified in the offer. Dickinson v. Dodds
Revocation must be communicated to the offeree Byrne
Communication is present, however, where the offeree learns of the
revocation indirectly Dickinson v. Dodds
A unilateral offer, like others, may be revoked prior to performance, unless the
circumstances suggest an additional implied offer to keep the offer open while
performance is underway Errington, or unless the offer can be construed as
bilateral - Dawson
An offer must be accepted within a reasonable period of time or it lapses
Barrick v. Clark
1. An offer may be withdrawn or revoked prior to acceptance. Dickinson v.
Dodds

2. Revocation must be communicated to the offeree Byrne

3. Communication is present, however, where the offeree learns of the
revocation indirectly Dickinson v. Dodds
4. A unilateral contract, like others, may be revoked prior to performance,
unless the offerors offer includes an implied undertaking not to do so
Errington
5. 5. An offer must be accepted within a reasonable period of time or it lapses
Barrick v. Clark

Special Issues: Tendering

A call for tenders may constitute an offer which is accepted by the
submission of a bid.
In such a case Contract A arises between the issuer and bidder, which
stipulates the conditions on which the bids will be evaluated. R. v. Ron
Engineering.
The submission of a bid also constitues an offer to undertake the
construction contract on specific terms. Where Contract A exists between the
parties, the building/procurement offer is irrevocable, and is accepted by the
issuer when selecting the winning bid. R v. Ron Engineering.
However, whether or not the Call constitutes an offer which can be accepted
and give rise to Contract A depends on the intent of the parties. The intent of
the parties is determined based on whether the Call includes terms that
suggests that it is intended as an offer capable of acceptance to give rise to
binding obligations Tercon.
Contract A will arise between the issuer and all compliant bidders, whereas
contract B will arise only between the issuer and the successful bidder.
Violation of contract A entitles the bidder to damages MJB Enterprises

Certainty of Terms
If an essential term is uncertain (vague, incomplete or an agreement to
agree), a court cannot make a bargain for the parties they have failed to
create for themselves. It will fail for uncertainty May and Butcher
A bare agreement to agree is unenforceable. May and Butcher
The parties may empower a mechanism to fix the price or decide the issue to
be determined. Calvan Consolidated - whether or not the mechanism is so
empowered is a matter of interpretation Calvan vs. May and Butcher.
If the mechanism fails, the contract fails May and Butcher

 However if the transaction is not covered by the SOGA, can argue that the
courts may imply a reasonable price when the valuation mechanism breaks
down Sudbrook
The Sale of Goods Act applies to missing price terms in transactions
concerning tangible and intangible moveable goods (not services, land)
Where the contract is silent as to price, the Act will imply a reasonable price.
s.9(2)
Where the parties appoint a third party valuator to fix price, but the valuator
does not or cannot do so, the contract is void for uncertainty. s.10(1)
An agreement to negotiate in the future is an agreement to agree unless an
objective benchmark/formula is included in the contract. - Mannpar
Where there is an objective benchmark against which to measure
negotiations, a duty to negotiate in good faith may arise. Empress Towers
Such a duty requires good faith and to not unreasonably withhold agreement.
Empress Towers
A duty to negotiate in good faith arises only in narrow circumstances
An agreement to negotiate in good faith may be implied where the parties
specify a formula and that they must mutually agree to its application.
Empress Towers
An agreement to negotiate may be implied where the parties specify a
formula and that they must mutually agree to its application. Empress
Towers
Sale of Goods Act Summary
if the contract is silent on price, a reasonable price will be implied under
s.9(2)
if there is a price in the contract fine s9(1)
If there is a formula for determining price, and the parties are able to
apply it fine s. 9(1)
But if there is a mechanism fixed for applying the price formula, and the
mechanism cannot or does not apply it, the contract is unenforceable
s.10(1)
The Act doesnt say what happens when there is a formula that breaks
down and no mechanism appointed to decide on its application.
Ways to Avoid Uncertainty of terms
Option 1: So, one way to deal with uncertainty over future price, or to delay
fixing other terms, is to expressly empower an arbitrator to fix the price in
the future. If the arbitrator hasnt been expressly given the power to fix price,
argue that it is impliedly so empowered given the commercial realities of the

parties, relying on Calvan Consolidated. But cf May and Butcher where this
wasnt accepted
Option 2: Another way, as hinted in May and Butcher, is to specify that the
price will be a reasonable one, or at market rate. These are both concepts
that that courts believe have objective meaning. If this is in the k, fine, but if
not argue that it is implied less likely.
Option 3: If the SOGA doesnt apply to the transaction, you can make a
principled argument for the implication of a reasonable price even if the
formula/mechanism breaks down, like in Sudbrook Trading

Intention to Create Legal Relations

Consideration
Consideration 2 (promise to pay more or accept less)
discharge of a debt or a contractual variation involving a promise to accept
less requires fresh consideration, Foakes v. Beer, and
that in England consideration doesnt come solely from the receipt of a
practical benefit Re Selectmove,
but it can arise where the promisee provides the promisor SOME new
benefit, such as early payment- Foakes, or the provision of some new thing
Pinnels Case.
One way to enforce promises to accept less- We both promise to forbear
enforcing each others obligations under the original agreement in exchange
for entering into a new contract at lesser terms. argued unsuccessfully in
Gilbert Steel

Ontario Mercantile Amendment Act/ Alberta Judicature act

Only applies where performance of the promise to pay less has already been begun.
In other words, if the agreement is only executor (not yet preformed), not
enforceable.

Promissory Estoppel
High Trees: Promissory Estoppel arises where
a promise is made,
Which is intended to vary legal relations
rather than simply being a friendly indulgence from performance John
Burrows;
which is unambiguous but can be inferred from the circumstances Maracle and
Engineered Homes
which, with the knowledge of the person making the promise, the other party
would act upon,
and then it was in fact acted upon High Trees,
in the sense that the promisee organized its affairs on the faith of the promise
Post-Chaser
that promise will be enforced where it would inequitable not to do so - Hughes
It is not inequitable when there was no true accord, in the sense that the
promisors promise was not voluntary given. DC Builders.
Inequity requires some sort of prejudice arising to the promisee if the original
rights are reasserted Post-Chaser
But the original rights can be reasserted upon the provision of reasonable
notice to the promisee Sask River Bungalows
Notice of reassertion isnt necessary if the promisee never relied on the promise
Sask River Bungalows.
Reassertion of Rights upon Notice (Reasonable Notice)
High Trees allowed the landlord to reinstitute his original rent rate when the
conditions for the promise had lapsed. This suggests that original rights can be
reasserted with the proper notice.
Once notice is given by the promisor of an intent to reassert their original rights, it
takes effect after a reasonable period of time.
In Sask River Bungalows v. Maritime Life Assurance, 1994 the SCC held that if there is
no reliance there is no requirement for reasonable notice to reassert an original
right. Informal communication of an intent to retract is sufficient notice.