Issue: Whether a pre-contractual statement is a term or a mere representation.
Rule: Where one party relies on the statement made by the knowledgeable party, the statement is interpreted as a term. Where the statement is the other party uses its own judgement in deciding whether to enter into the contract or not. The statements are interpreted as mere representations as the other party do not rely on them in changing the position.
Application: The seller clearly stated that he had no knowledge on when the guitar was manufactured. In this case, it was up to me to examine whether I should buy it or not. The fact that I decided to buy it without knowing the model was an independent decision that was not induced by the seller’s statement.
Conclusion: There is no remedy as the misrepresentation did not cause reliance. The seller already stated that he had no knowledge regarding the model, but I decided to buy it anyway.
Issue: Right to sell.
Rule: There is always an implied condition in all contracts of sale that every seller of goods can only sell goods that he/she owns. The seller must have the right to transfer title of the goods before they pass to the buyer. Where the goods were stolen, the seller would be in breach of these terms and the goods would be returned back to the true owner as the true owner still retained the title. The person who stole the goods must then return all the money to the buyer and cannot charge for any benefit the buyer had earned before the goods were recovered.
Application: Cheryl had no right to sell the tractor, and therefore the ownership did not pass to John. Also, Cheryl cannot charge any amount on the days the tractor was used.
Conclusion: Ownership of the car did not pass to John since Cheryl had no right of ownership, and no right to sell. John should get back all the money.
Issue: Enforceability of non-compete agreement.
Rule: In an agreement for the sale of the business, a non-compete agreement is valid unless the seller provides grounds for its exemption. These grounds are a long duration and different geographical location. In most cases, the courts find it reasonable for a non-compete to extend to five years especially the one that involve a sale of business.
Application: A duration of five years limitation on Janine would seem reasonable to court for a limitation. Also, the one-mile radius is reasonable for a limitation.
Conclusion: The limitation is valid and Janine cannot put up a similar business for up to 5 years within a one-mile radius.
Issue: Breach of a sale agreement.
Rule: Where a contract is breached, the innocent party can elect an action suing the other party for breach and claim for the damages. In section 49 of the sale of goods act. The acts state that
“49 (1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery.”(1)
Subsection (2) provides that the damages to be recovered by the buyer are those resuling directly from the breach (1). Under subsection (3), the buyer can get the goods from the market and then sue for the difference in price (1).
Application: Under section 49, Marion should sue for the breach of contract and claim the loss that directly arises from the breach. She can also get the drawing from the market and sue for price difference.
Conclusion: Marion should sue for breach of contract.
The answer is B
There is a standing rule that the exclusion clause must be incorporated in the contract. Limitation or exclusion clauses cannot be added to the contract when it has been executed.
There was no binding agreement since the parties agreed on some but not all matters. The only reequipment was that both parties should negotiate good faith over the remaining mattes of the program. In addition, there was no obligation that the future negotiations were to end into a legally binding agreement.
The contract was unenforceable on the basis of unconscionability. The principles of unconscionability bar one party into a contract from attaining its benefit if one of the parties was weak, and there was a proof of inequality in the bargaining power.
In law, there is always an intention to create a legal relationship in business contexts unless there come grounds for rebutting this presumption. The main grounds for the exemption of this presumption is that the parties already had a written agreement not to enforce the agreement. The second grounds of rebutting the presumption is when the facts of the case demonstrate that both parties contemplated that the negotiations were not going to result to a binding agreement. However, for this case, Jimmy has no likelihood of rebutting assumption because the two requirements are not available.
- Sale of Goods Act, R.S.O. 1990, c. S.1. 1989.