Canadian contract law

Canadian contract law has its foundation in the English legal tradition of the 19th and early 20th century. It remains largely rooted in the old English common law and equity. Individual provinces have codified many of the principles in a Sale of Goods Act, which was also modelled on early English versions. Quebec, being a civil law jurisdiction, does not have contract law, but rather has its own law of obligations that is codified in the Quebec Civil Code.

Elements of a contract

In following with the common law tradition, a contract requires offer, acceptance, and consideration. The parties themselves must be capable of contracting and must have the intention to create legal relations.

Offer

An offer must be some indication of the offeror to the offeree that he is prepared to form a binding legal agreement. Intention is measured objectively.[1] Commercial deals are presumed to be of a legal nature[2] while an agreement made between family members or in a social engagement is presumed not to be of a legal nature.[3]

An offer must also be distinguished from an invitation to treat, which is where one party invites another party to consider a deal.

Advertisements are also considered invitations. Exceptions are made in circumstances where a unilateral contract for performance is offered or where the advertisement is sufficiently serious about its promise such as in the famous Carlill v. Carbolic Smoke Ball Co.. In the similar case of Goldthorpe v. Logan, [1943] 2 DLR 519 (Ont CA) an "absolute and unqualified" guarantee to safely remove all hair by electrolysis, was found to be an offer as the plaintiff paid for the treatment on the basis of the offer.

The display of goods in store is typically an invitation.[4] The quotation of the lowest price is also considered an invitation.[5] However, in some circumstances a quotation will be an offer. In Canadian Dyers Association Ltd. v. Burton, [1920] 47 OLR 259 (HC), a quotation followed by the statement "if it were anyone else I would ask for more" was considered an offer.

A call for tenders is usually considered an invitation. In R. v. Ron Engineering & Construction Ltd., [1981] 1 S.C.R. 111, however, the Supreme Court found that a call was an offer where there the call was sufficiently "contract-like". Later, in M.J.B. Enterprises Ltd. v Defence Construction (1951) Ltd.,[6] the Court again found a call to be an offer which was accepted with the tender submission (known as Contract A). In Tercon Contractors Ltd. v British Columbia (Transportation and Highways),[7] the trial judge summarized the factors to be considered in deciding whether a matter constitutes a call for tenders or a non-binding request for proposals:

  • the irrevocability of the bid,
  • the formality of the procurement process,
  • whether tenders are solicited from selected parties,
  • whether there was anonymity of tenders,
  • whether there is a deadline for submissions and for performance of the work,
  • whether there is a requirement for security deposit,
  • whether evaluation criteria are specified,
  • whether there was a right to reject proposals,
  • whether there was a statement that this was not a tender call,
  • whether there was a commitment to build,
  • whether compliance with specifications was a condition of the tender bid,
  • whether there is a duty to award contract B, and
  • whether contract B had specific conditions not open to negotiation


The label or name of the tender document is not a determinative factor. Neither is the requirement for a security deposit or the existence of established timelines.

References
  • S.M. Waddams, The Law of Contracts (Canada Law Book:Toronto, 1999)

Notes
  1. Grant v. Province of New Brunswick, [1975] 35 D.L.R. (3d) 141 (NBCA)
  2. Edwards v. Skyways Ltd., [1964] 1 All E.R. 494 (QBD)
  3. See Jones v. Padavatton, [1969] 2 All E.R. 616 (CA) and Balfour v Balfour, [1919] 2 K.B. 571 (CA)
  4. See Fisher v Bell, [1961] 1 QB 394 and Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd, [1952] 2 QB 795
  5. Harvey v. Facey [1893] A.C. 552(PC)
  6. [1999] 1 SCR 619 Full text of Supreme Court of Canada decision at LexUM and CanLII
  7. [2010] 1 S.C.R. 69, 2010 SCC 4


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