AFM231 Chapter Notes - Chapter 7: Parol Evidence Rule, Late Fee, Judicial Interpretation
18 May 2018
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Chapter 7- The Terms of a Contract
The Content of a Contract
• Terms of a contract and how a court interpret those terms.
Terms
• Can be express or implied
Express terms
• Express term is a poisio of the otat that states o akes epliit oe pat’s promise to
another. E.g. price, quantity.
• Do’t ake assuptios he egotiatig a otat
Judicial interpretation of Express Terms
Vague of Ambiguous Language
• Drafter should bear risk of unclear language.
• If the contract cannot be understood because its so ague, the it’ll fail fo uetait
• Rules of construction- guidig piiples fo itepetig o ostutig the tes of a otat
• This is often conflicting and hard to predict how a court will interpret a contract
• E.g. should the court give the plain-meaning rule which is how a reasonable person would
regard the terms or give effect to the paties’ itetios that a e iadeuatel efleted
in the written contract itself
• E.g. Coaster-Take ase. Cotat said if Take is late, it’ll have to pay a fee per day. This
is eat fo otiatio fo Take to ot e late. If soethig outside of Take’s otol
made them miss the deadline, should Coaster still ask for late fees?
• The la a help to fill i the laks fo hat paties fail to address in their contractual
relationship
Implied Terms
• If ot epessed, out a ipl a te i ode to gie effet to the paties’ itetios.
• A plaintiff that want to include an implied term will have to proof that the term existed based on the
balance of probabilities.
Business efficacy
• The doctrine of business efficacy permits judges to imply terms necessary to make the contract
workable.
• E.g. if Takes poised to use a etai gade of takig, poidig it’s aailale, a out
will imply a promise by Trackers to put reasonable effort to try and find that grade of
tracking. Although Trackers has not expressly committed itself to make systematic efforts in
this regard, business efficacy makes the obligation implicit
Customs in the Trade of the Transaction
• Relying on customs to imply a term is rarely successful
find more resources at oneclass.com
find more resources at oneclass.com
Previous Dealings Between the Parties
• If parties have contracted in the past, it may be possible to imply that their current contract contains
the same terms. Just clarify each time they do business
Statutory Requirements
• Certain terms are a mandatory part of every contract for the sale of goods unless specifically
excluded by the parties.
• E.g. if Trackers delivered more goods than asked to Coasters the Ontario Sales of Goods Act would
say
• The buyer may accept the goods included in the contract and reject the rest or may reject
the whole, or pay for the extra goods at the contract rate if they do want it.
• Court will not imply terms if the parties have agreed that their contract is complete as written. The
parties can signal this intention through an entire contract clause.
• Contractual quantum meruit: awarding one party a reasonable sum for the goods/services provided
under a contract. I Lati, it eas as uh as is eited o deseed.
• Ee if a ue ad selle do’t agee o the pie, the out ill ipl that i a usiess, it
is the intention of the parties that the goods are not free and it must be charged at a
reasonable price.
The Parol Evidence Rule
• Contracts can take three possible forms:
• Entirely oral
• Entirely written
• Both oral and written
• A fe speialized istaes i Chapte 8 shos that the fo a otat takes does’t affet its
enforceability
• There is an important consequence to having a written contract. Some contract may trigger the
parol evidence rule when a court is asked to determine- aodig to the paties’ itetios- what a
contract means and includes
• A rule that limits the evidence a party can introduce concerning the contents of the
contract.
• paol eas oal ut i this context, refers to any kind of evidence that is extrinsic to
the written agreement
• The rule forbids outside evidence as to the terms of a contract when the language of the
written contract is clear and the document is intended to be the sole source of contractual
content. Therefore, ou do’t at to el o oal assuaes ade the othe pat.
• The Parol Evidence Rule has its limits. There are several situations where evidence outside the
contract is important and is consider:
• If there is an alleged problem going to the formation of the contract, need to bring evidence
to establish that allegation
• If the contract is intended to be partly oral and partly in writing
• If the promise to be enforced is contained in a separate (collateral) agreement that happens
to be oral
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Chapter 7- the terms of a contract: terms of a contract and how a court interpret those terms. Express terms: express term is a p(cid:396)o(cid:448)isio(cid:374) of the (cid:272)o(cid:374)t(cid:396)a(cid:272)t that states o(cid:396) (cid:373)akes e(cid:454)pli(cid:272)it o(cid:374)e pa(cid:396)t(cid:455)"s promise to another. E. g. price, quantity: do(cid:374)"t (cid:373)ake assu(cid:373)ptio(cid:374)s (cid:449)he(cid:374) (cid:374)egotiati(cid:374)g a (cid:272)o(cid:374)t(cid:396)a(cid:272)t. Vague of ambiguous language: drafter should bear risk of unclear language, rules of construction- guidi(cid:374)g p(cid:396)i(cid:374)(cid:272)iples fo(cid:396) i(cid:374)te(cid:396)p(cid:396)eti(cid:374)g o(cid:396) (cid:862)(cid:272)o(cid:374)st(cid:396)u(cid:272)ti(cid:374)g(cid:863) the te(cid:396)(cid:373)s of a (cid:272)o(cid:374)t(cid:396)a(cid:272)t. Co(cid:374)t(cid:396)a(cid:272)t said if t(cid:396)a(cid:272)ke(cid:396) is late, it"ll have to pay a fee per day. This is (cid:373)ea(cid:374)t fo(cid:396) (cid:373)oti(cid:448)atio(cid:374) fo(cid:396) t(cid:396)a(cid:272)ke(cid:396) to (cid:374)ot (cid:271)e late. If so(cid:373)ethi(cid:374)g outside of t(cid:396)a(cid:272)ke(cid:396)"s (cid:272)o(cid:374)t(cid:396)ol made them miss the deadline, should coaster still ask for late fees: the la(cid:449) (cid:373)a(cid:455) help to (cid:862)fill i(cid:374) the (cid:271)la(cid:374)ks(cid:863) fo(cid:396) (cid:449)hat pa(cid:396)ties fail to address in their contractual relationship. Implied terms: a plaintiff that want to include an implied term will have to proof that the term existed based on the.
