Contract Defences - Revision history

Drew Jackson: /* Unfairness of bargain */

2018-10-11T12:25:28Z

Unfairness of bargain

← Older revision		Revision as of 12:25, 11 October 2018
Line 60:		Line 60:
	==== Unfairness of bargain====		==== Unfairness of bargain====
	Several common law grounds deal with contracts that are '''fundamentally unfair'''. In many instances, these principles overlap:		Several common law grounds deal with contracts that are '''fundamentally unfair'''. In many instances, these principles overlap:
	* '''Unconscionability:''' A contract is said to be unconscionable if a stronger party uses power to gain an unfair advantage over a weaker one. Inequality between the parties created by one party’s ignorance, need or distress can result in substantial unfairness in the overall bargain; for example, with one party setting an inordinately high or low price. Notable BC cases on unconscionability are [http://canlii.ca/t/gd7z1 ''Morrison v. Coast Finance Ltd.''] and [http://canlii.ca/t/1dm18 ''Waters v. Sun Route Tours Inc.'']		* '''Unconscionability''': A contract is said to be unconscionable if a stronger party uses power to gain an unfair advantage over a weaker one. Inequality between the parties created by one party’s ignorance, need or distress can result in substantial unfairness in the overall bargain; for example, with one party setting an inordinately high or low price. Notable BC cases on unconscionability are [http://canlii.ca/t/gd7z1 ''Morrison v. Coast Finance Ltd.''] and [http://canlii.ca/t/1dm18 ''Waters v. Sun Route Tours Inc.'']
	* '''Under duress:''' External coercion or compulsion exerted by one party against another can result in a contract being made under duress or force. Compulsion may be physical, psychological or economic. The most obvious example of duress is if one party is threatened with physical harm unless they enter into an agreement.		* '''Under duress''': External coercion or compulsion exerted by one party against another can result in a contract being made under duress or force. Compulsion may be physical, psychological or economic. The most obvious example of duress is if one party is threatened with physical harm unless they enter into an agreement.
	* '''Undue influence:''' Undue influence is when one party uses the other party’s confidence in them to gain an advantage. The confidence may arise from the nature of the relationship, such as between members of a family, or between professionals and their clients.		* '''Undue influence''': Undue influence is when one party uses the other party’s confidence in them to gain an advantage. The confidence may arise from the nature of the relationship, such as between members of a family, or between professionals and their clients.

	=== Statutory defences===		=== Statutory defences===

Drew Jackson: /* Illegality */

2018-10-11T12:24:07Z

Illegality

← Older revision		Revision as of 12:24, 11 October 2018
Line 40:		Line 40:
	Courts generally do not enforce contracts that are for an '''illegal purpose''' or that contravene a statute. An obvious example of an unenforceable contract is one made with the intent of harming someone. Some interesting exceptions to the general rule include:		Courts generally do not enforce contracts that are for an '''illegal purpose''' or that contravene a statute. An obvious example of an unenforceable contract is one made with the intent of harming someone. Some interesting exceptions to the general rule include:
	* '''Gambling debts''': Historically considered uncollectable and illegal, court decisions suggest they are now collectable.		* '''Gambling debts''': Historically considered uncollectable and illegal, court decisions suggest they are now collectable.
	* '''Illegally paid interest''': Although it is illegal under the [~~http~~://canlii.ca/t/~~7vf2~~ ''Criminal Code''] to lend or collect interest at an annual rate above 60% (except as authorized under [[Payday Loans\|payday loan]] legislation), in at least some instances the courts have allowed the recovery of the illegally paid interest.		* '''Illegally paid interest''': Although it is illegal under the [https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-c-46/latest/rsc-1985-c-c-46.html#sec347_smooth ''Criminal Code''] to lend or collect interest at an annual rate above 60% (except as authorized under [[Payday Loans\|payday loan]] legislation), in at least some instances the courts have allowed the recovery of the illegally paid interest.

	==== Misrepresentation====		==== Misrepresentation====

Drew Jackson: /* Illegality */

2018-10-11T12:23:00Z

Illegality

← Older revision		Revision as of 12:23, 11 October 2018
Line 39:		Line 39:
	==== Illegality====		==== Illegality====
	Courts generally do not enforce contracts that are for an '''illegal purpose''' or that contravene a statute. An obvious example of an unenforceable contract is one made with the intent of harming someone. Some interesting exceptions to the general rule include:		Courts generally do not enforce contracts that are for an '''illegal purpose''' or that contravene a statute. An obvious example of an unenforceable contract is one made with the intent of harming someone. Some interesting exceptions to the general rule include:
	* '''Gambling debts:''' Historically considered uncollectable and illegal, court decisions suggest they are now collectable.		* '''Gambling debts''': Historically considered uncollectable and illegal, court decisions suggest they are now collectable.
	* '''Illegally paid interest:''' Although it is illegal under the [http://canlii.ca/t/7vf2 ''Criminal Code''] to lend or collect interest at an annual rate above 60% (except as authorized under [[Payday Loans\|payday loan]] legislation), in at least some instances the courts have allowed the recovery of the illegally paid interest.		* '''Illegally paid interest''': Although it is illegal under the [http://canlii.ca/t/7vf2 ''Criminal Code''] to lend or collect interest at an annual rate above 60% (except as authorized under [[Payday Loans\|payday loan]] legislation), in at least some instances the courts have allowed the recovery of the illegally paid interest.

	==== Misrepresentation====		==== Misrepresentation====

Drew Jackson: /* Summary of the law */

2018-10-11T12:20:42Z

Summary of the law

← Older revision		Revision as of 12:20, 11 October 2018
Line 10:		Line 10:

	== Summary of the law==		== Summary of the law==
	Even with the basic elements of a contract present (see the [[Contracts Overview]]), common law and statute law provide a number of grounds for a party to avoid having a contract enforced against them. These ~~'''~~defences to contract actions~~'''~~ give the defending party a legal excuse to get out of the contract. Without such defences, the contract would be legally enforceable. Remedies to enforce contracts are discussed in the section on [[Contract Remedies]]. (See also the sections on [[Opting Out and Cooling-off Periods]] and [[Unfair or Deceptive Practices]].)		Even with the basic elements of a contract present (see the [[Contracts Overview]]), common law and statute law provide a number of grounds for a party to avoid having a contract enforced against them. These defences to contract actions give the defending party a legal excuse to get out of the contract. Without such defences, the contract would be legally enforceable. Remedies to enforce contracts are discussed in the section on [[Contract Remedies]]. (See also the sections on [[Opting Out and Cooling-off Periods]] and [[Unfair or Deceptive Practices]].)
	[[File:Consumer_Law_and_Debt_-_Contract_Defences.jpg\|thumb\|275px\|right\| link=\| <span style="font-size:50%;">Image via www.istockphoto.com</span>]]		[[File:Consumer_Law_and_Debt_-_Contract_Defences.jpg\|thumb\|275px\|right\| link=\| <span style="font-size:50%;">Image via www.istockphoto.com</span>]]

Drew Jackson at 12:19, 11 October 2018

2018-10-11T12:19:43Z

← Older revision		Revision as of 12:19, 11 October 2018
Line 1:		Line 1:
	{{REVIEWEDPLS \| reviewer = [[Alison Ward]]\|date= August 2018}}{{Consumer and Debt Law TOC\|expanded = contracts}}		{{REVIEWEDPLS \| reviewer = [[Alison Ward]]\|date= August 2018}}{{Consumer and Debt Law TOC\|expanded = contracts}}

	This section describes some of the basic grounds in common law and statute law that can help a party get out of a contract.		This section describes '''contract defences''', some of the basic grounds in common law and statute law that can help a party get out of a contract.

	== Client problems==		== Client problems==

Elena Renderos at 05:00, 20 September 2018

2018-09-20T05:00:29Z

← Older revision		Revision as of 05:00, 20 September 2018
Line 10:		Line 10:

	== Summary of the law==		== Summary of the law==
			Even with the basic elements of a contract present (see the [[Contracts Overview]]), common law and statute law provide a number of grounds for a party to avoid having a contract enforced against them. These '''defences to contract actions''' give the defending party a legal excuse to get out of the contract. Without such defences, the contract would be legally enforceable. Remedies to enforce contracts are discussed in the section on [[Contract Remedies]]. (See also the sections on [[Opting Out and Cooling-off Periods]] and [[Unfair or Deceptive Practices]].)
	[[File:Consumer_Law_and_Debt_-_Contract_Defences.jpg\|thumb\|275px\|right\| link=\| <span style="font-size:50%;">Image via www.istockphoto.com</span>]]		[[File:Consumer_Law_and_Debt_-_Contract_Defences.jpg\|thumb\|275px\|right\| link=\| <span style="font-size:50%;">Image via www.istockphoto.com</span>]]
	Even with the basic elements of a contract present (see the [[Contracts Overview]]), common law and statute law provide a number of grounds for a party to avoid having a contract enforced against them. These '''defences to contract actions''' give the defending party a legal excuse to get out of the contract. Without such defences, the contract would be legally enforceable. Remedies to enforce contracts are discussed in the section on [[Contract Remedies]]. (See also the sections on [[Opting Out and Cooling-off Periods]] and [[Unfair or Deceptive Practices]].)

	=== Defences versus causes of action===		=== Defences versus causes of action===

Elena Renderos at 04:57, 20 September 2018

2018-09-20T04:57:25Z

← Older revision		Revision as of 04:57, 20 September 2018
Line 10:		Line 10:

	== Summary of the law==		== Summary of the law==
			[[File:Consumer_Law_and_Debt_-_Contract_Defences.jpg\|thumb\|275px\|right\| link=\| <span style="font-size:50%;">Image via www.istockphoto.com</span>]]
	Even with the basic elements of a contract present (see the [[Contracts Overview]]), common law and statute law provide a number of grounds for a party to avoid having a contract enforced against them. These '''defences to contract actions''' give the defending party a legal excuse to get out of the contract. Without such defences, the contract would be legally enforceable. Remedies to enforce contracts are discussed in the section on [[Contract Remedies]]. (See also the sections on [[Opting Out and Cooling-off Periods]] and [[Unfair or Deceptive Practices]].)		Even with the basic elements of a contract present (see the [[Contracts Overview]]), common law and statute law provide a number of grounds for a party to avoid having a contract enforced against them. These '''defences to contract actions''' give the defending party a legal excuse to get out of the contract. Without such defences, the contract would be legally enforceable. Remedies to enforce contracts are discussed in the section on [[Contract Remedies]]. (See also the sections on [[Opting Out and Cooling-off Periods]] and [[Unfair or Deceptive Practices]].)

Elena Renderos at 19:10, 19 September 2018

2018-09-19T19:10:20Z

← Older revision		Revision as of 19:10, 19 September 2018
Line 79:		Line 79:
	== Related topics and materials==		== Related topics and materials==
	See the other sections under contracts:		See the other sections under contracts:
	* Contracts ~~Overview~~		* [[Contracts Overview]]
	* Opting Out and Cooling-off Periods		* [[Opting Out and Cooling-off Periods]]
	* Contract ~~Remedies~~		* [[Contract Remedies]]
	* Contracts Made by ~~Minors~~		* [[Contracts Made by Minors]]

	See related topics:		See related topics:
	* Co-signing, Guarantees and Joint ~~Debts~~		* [[Co-signing, Guarantees and Joint Debts]]
	* Deposits in Consumer Transactions		* [[Deposits in Consumer Transactions]]
	* Misleading Advertising		* [[Misleading Advertising]]
	* Prepayment Rights		* [[Prepayment Rights]]
	* Sale of Goods Law		* [[Sale of Goods Law]]
	* Unfair or Deceptive Practices		* [[Unfair or Deceptive Practices]]

	See also People’s Law School’s pages on [https://www.peopleslawschool.ca/everyday-legal-problems/consumer/contracts contracts].		See also People’s Law School’s pages on [https://www.peopleslawschool.ca/everyday-legal-problems/consumer/contracts contracts].

Elena Renderos at 21:21, 16 September 2018

2018-09-16T21:21:14Z

Elena Renderos at 04:25, 3 September 2018

2018-09-03T04:25:44Z

← Older revision		Revision as of 04:25, 3 September 2018
Line 46:		Line 46:
	To some extent, common law principles of misrepresentation have been overtaken by related defences for deceptive acts or practices that apply to a wide range of consumer and credit transactions under the provisions of the [http://canlii.ca/t/84mr ''Business Practices and Consumer Protection Act''].		To some extent, common law principles of misrepresentation have been overtaken by related defences for deceptive acts or practices that apply to a wide range of consumer and credit transactions under the provisions of the [http://canlii.ca/t/84mr ''Business Practices and Consumer Protection Act''].

			==== Mistake ====
			“'''Mistake'''” refers to a basic, or fundamental, misapprehension or misunderstanding between the parties to a contract. For example, the parties might be mistaken about who the contracting parties are, the subject matter of the contract, or the nature of the contract itself.
			In common law, a contract based on a fundamental mistake is void — that is, ineffective for all purposes and at all times. Neither side can enforce the agreement. This has often resulted in hardship for one or both sides. Recent findings tend to favour the concept of a contract being “voidable” as opposed to a contract being void. Voidability allows a court to terminate the contract, but gives partial compensation to one party.

			In most standard credit and consumer contracts, this concept of fundamental mistake seldom arises. Although clients may complain that they did not understand the papers they were signing, a perfect understanding of all the terms of a contract is not necessary to make it binding, as long as clients grasp the basic terms of the contract.
			In general, courts look at the reasonableness of the mistake and the behaviour of the parties when deciding whether to enforce a contract. If one party clearly did not bother to read some of the “fine print” of a contract when they had the opportunity to do so, a court may not be sympathetic to an argument based on a mistake.

			However, if one of the parties knows about the mistake and does not reveal that knowledge, the courts may let the mistaken party out of the contract.

			In recent years, courts have decided that consumers may be relieved from the strictness of some written contract terms if they find it is the duty of the business to draw a specific term to the consumer’s attention. In [http://canlii.ca/t/g1bxl ''Tilden Rent-A-Car v. Clendenning''], for example, it was not that the consumer was mistaken about the terms of the contract, but that the consumer was unaware of a “fine print” term that had an unfair effect on the relationship between the parties.

			==== Unfairness of bargain====
			Several common law grounds deal with contracts that are '''fundamentally unfair'''. In many instances, these principles overlap:
			* '''Unconscionability:''' A contract is said to be unconscionable if a stronger party uses power to gain an unfair advantage over a weaker one. Inequality between the parties created by one party’s ignorance, need or distress can result in substantial unfairness in the overall bargain; for example, with one party setting an inordinately high or low price. Notable BC cases on unconscionability are [http://canlii.ca/t/gd7z1 ''Morrison v. Coast Finance Ltd.''] and [http://canlii.ca/t/1dm18 ''Waters v. Sun Route Tours Inc.'']
			* '''Under duress:''' External coercion or compulsion exerted by one party against another can result in a contract being made under duress or force. Compulsion may be physical, psychological or economic. The most obvious example of duress is if one party is threatened with physical harm unless they enter into an agreement.
			* '''Undue influence:''' Undue influence is when one party uses the other party’s confidence in them to gain an advantage. The confidence may arise from the nature of the relationship, such as between members of a family, or between professionals and their clients.

			=== Statutory defences===
			Statute law provides an additional range of defences in consumer and credit contract transactions. In some instances, these statutory defences are extensions of common law principles; in other instances, the defences are specific to the statute. Some of the more important statutes containing consumer or debtor defences are listed below. These statutes are discussed in more detail under a number of topics in this publication. Federal statutes are followed by “(Canada)”; all others are BC statutes:
			* [http://canlii.ca/t/7vd0 ''Bills of Exchange Act''] (Canada)
			* [http://canlii.ca/t/84mr ''Business Practices and Consumer Protection Act '']
			* [http://canlii.ca/t/7vf2 ''Criminal Code''] (Canada)
			* [http://canlii.ca/t/8446 ''Infants Act '']
			* [http://canlii.ca/t/7vh8 ''Interest Act''] (Canada)
			* [http://canlii.ca/t/8459 ''Law and Equity Act '']
			* [http://canlii.ca/t/8qx3 ''Limitation Act '']
			* [http://canlii.ca/t/8495 ''Personal Property Security Act '']

			== Solving the problem==
			This section provides only a brief overview of some of the more important defences available in consumer and debtor transactions. Take care when raising a defence during negotiations with a seller or creditor. While there is a range of possible defences, they are rarely successful in court. In general, you should consult a lawyer if the issue of a defence arises.

			== Related topics and materials==
			See the other sections under contracts:
			* Contracts Overview
			* Opting Out and Cooling-off Periods
			* Contract Remedies
			* Contracts Made by Minors

			See related topics:
			* Co-signing, Guarantees and Joint Debts
			* Deposits in Consumer Transactions
			* Misleading Advertising
			* Prepayment Rights
			* Sale of Goods Law
			* Unfair or Deceptive Practices

			See also People’s Law School’s pages on [https://www.peopleslawschool.ca/everyday-legal-problems/consumer/contracts contracts].

← Older revision		Revision as of 21:21, 16 September 2018
Line 10:		Line 10:

	== Summary of the law==		== Summary of the law==
	Even with the basic elements of a contract present (see the Contracts Overview), common law and statute law provide a number of grounds for a party to avoid having a contract enforced against them. These '''defences to contract actions''' give the defending party a legal excuse to get out of the contract. Without such defences, the contract would be legally enforceable. Remedies to enforce contracts are discussed in the section on Contract Remedies. (See also the sections on Opting Out and Cooling-off Periods and ~~Unfair~~ or Deceptive Practices.)		Even with the basic elements of a contract present (see the [[Contracts Overview]]), common law and statute law provide a number of grounds for a party to avoid having a contract enforced against them. These '''defences to contract actions''' give the defending party a legal excuse to get out of the contract. Without such defences, the contract would be legally enforceable. Remedies to enforce contracts are discussed in the section on [[Contract Remedies]]. (See also the sections on [[Opting Out and Cooling-off Periods]] and [[Unfair or Deceptive Practices]].)

	=== Defences versus causes of action===		=== Defences versus causes of action===
Line 22:		Line 22:
	In some instances, however, the issue is less clear. For example, in the case of debt, there may be disagreement over:		In some instances, however, the issue is less clear. For example, in the case of debt, there may be disagreement over:
	* Whether the debtor has been properly credited for all payments made.		* Whether the debtor has been properly credited for all payments made.
	* Whether the amount of interest claimed by the creditor is correct. This is a particularly complicated area where courts often have to decide whether a full or only partial refund should be awarded.		* Whether the amount of [[Interest and the Cost of Borrowing Money\|interest]] claimed by the creditor is correct. This is a particularly complicated area where courts often have to decide whether a full or only partial refund should be awarded.

	=== The defence of making the other side prove its case ===		=== The defence of making the other side prove its case ===
Line 39:		Line 39:
	Courts generally do not enforce contracts that are for an '''illegal purpose''' or that contravene a statute. An obvious example of an unenforceable contract is one made with the intent of harming someone. Some interesting exceptions to the general rule include:		Courts generally do not enforce contracts that are for an '''illegal purpose''' or that contravene a statute. An obvious example of an unenforceable contract is one made with the intent of harming someone. Some interesting exceptions to the general rule include:
	* '''Gambling debts:''' Historically considered uncollectable and illegal, court decisions suggest they are now collectable.		* '''Gambling debts:''' Historically considered uncollectable and illegal, court decisions suggest they are now collectable.
	* '''Illegally paid interest:''' Although it is illegal under the [http://canlii.ca/t/7vf2 ''Criminal Code''] to lend or collect interest at an annual rate above 60% (except as authorized under payday loan legislation), in at least some instances the courts have allowed the recovery of the illegally paid interest.		* '''Illegally paid interest:''' Although it is illegal under the [http://canlii.ca/t/7vf2 ''Criminal Code''] to lend or collect interest at an annual rate above 60% (except as authorized under [[Payday Loans\|payday loan]] legislation), in at least some instances the courts have allowed the recovery of the illegally paid interest.

	==== Misrepresentation====		==== Misrepresentation====