The law of contracts

Contract law does some really useful things for society. Small scale, it can help plan stuff between people. For instance, maybe I agree to mow the lawn for you everyday and you agree to pay me money. What happens if I mow your lawn and you don’t pay me money? How can I make sure that doesn’t happen?

Well, luckily, the government helps me out with that. Sometimes there are laws about how to hire somebody the right way — maybe I’m not allowed to mow the lawn naked. Maybe you think I should be allowed to, and maybe some other boring people disagree. How should we settle that?

Things get complicated. Under the government, contract law has its own way of doing things. Going back to the lawn mowing example, if you skimp out on paying me, I can talk to you, complain to your wife, say that I’ll never mow your lawn again, threaten to tell your neighbors, ask my dad to step in, or maybe take the money when you go to sleep. Obviously, that last one is against the law. So what can I do? Well, I play by the game of contract law, and if you cheat, I can tell big brother and have the strong arm of the law choke slam your ass. Contracts between you and me, without the law, doesn’t have this threat. Remember, the government can kick anyone’s ass.

The game of contract law is a complicated one. You can learn the rules, but the hardcore players learn the meta. Metagaming transcends the rules or specific doctrines and tries to figure out how the rules come about. Game developers want to make sure that the rules are clear to players, apply throughout the game without glitches, don’t clog up the servers, have a fair outcome, and helps all players out. Making rules around this meta has to make players happy and make sure that even the noobs are having fun (and not getting their armor trimmed). Okay, enough of this gaming metaphor.

Classical contract law, associated with 19th century laissez-faire liberalism, wanted the government out of everyone’s business. Think Ron Swanson. People should be free agree to whatever they want, whenever they want, and with whomever they want. It’s all between you and Ron. The law should only step in so that when you break the contract with Ron, Ron doesn’t have to murder you with his bare hands.

But things get trickier as the world gets more complicated. If the government is going to interfere with you two, it needs to make sure everybody is on the same page about what contracts are. Is a contract just a piece of paper with words? What if you sign it drunk? With a gun to your head? What if you don’t understand the words on the paper? What if they trick you? What if it’s not paper you’re signing? What if they want your pinky instead?

Contract Remedies

Okay, when I said the government will kick your ass, I didn’t mean it literally. Usually, they just take your money. In exceptional cases, they’ll make you do other stuff.

In a case, Warner Bros v. Nelson, an actress breaking her contract didn’t have to pay money. Her acting was priceless. So, they made her stop acting for a while as punishment. Oh, sweet justice.

Again, normally it’s money they take. Why? For one, contracts aren’t like murder and the government hitting your pockets will probably stop you from breaking your promises. Two, daddy government doesn’t care that much and wants you two to stop bickering and get over it. Three, maybe everybody can win, or it can be “Pareto optimal”. Maybe your brother promises to give you a Squirtle, but your brother’s friend want that same Squirtle for a Charizard; so, instead of making your brother give you his Squirtle, it’s better for the family if I make your brother give you his other starter, Bulbasaur. Being able to trust that people will do what they say allows you to do so much more. As Thomas Hobbes wrote, “Covenants, without the sword, are but words.”

Listen, if you followed the rules and your big brother broke them, we want to help you out — you get the “benefit of the bargain”. Your brother doesn’t get to back out of his deal without giving you what you’re owed. If the street value of a Squirtle is 100 yen and you end up with a Bulbasaur worth 80 yen, your brother should throw in an extra 20 yen with the Bulbasaur so it’s like he’s keeping his word. If he didn’t have a Bulbasaur to give you, maybe he should give you the full 100 yen.

Formation of Agreement

So, you can make whatever contract with whoever you want. But what does a contract look like within the game of contract law? The golden standard is complete subjective agreement. The fancy Latin term is “consensus ad idem”, which means “a meeting of the minds”. My Pikachu for your Jigglypuff — in the flip side, you’re thinking: “my Jigglypuff for your Pikachu”. But how would the government know what we’re thinking? We need ways of signaling what we are agreeing to — for instance, a written document.

So how do we get to agreeing on something. Well, it starts with one of us offering something. I walk up to you and say that I want your Jigglypuff, and maybe you’d give it to me if I gave you my Pikachu. I have communicated my offer to you. Here, you might tell me you don’t like that deal and to go away, or you might like it and say that you’ll take that deal (you communicate your acceptance). If you accept and tell me you accept, then we have an agreement. So far it’s very intuitive and it comes naturally to us. Still, it’s like a formula: have an offer, communicate it, accept or reject it; and, if you accept, communicate the acceptance. This is a sequence for bilateral negotiations, which is a fancy way of saying it’s a two-way street. So far so good, but things can go so, so wrong.

What if the offer I communicate to you is something difficult for you to understand because I’m a big company with a lot of lawyer who can draft 50 page contracts? You need procedural protection. What if I’m trying to sell you water in a place that doesn’t have any water around? It’s an offer you can’t really refuse, and you need substantive protection.

Canadian Dyers v. Burton

Okay, let’s take a closer look at how offer and acceptance can get muddy. First, a case from the Ontario Supreme Court, all the way from 1920. The Canadian Dyers Association (CDA) wanted Burton’s property, and Burton replied back that $1650 was the lowest he would care to sell it at. A year passes and they ask again, and Burton replies that the last price is the lowest he is “prepared to accept.” CDA takes this as an offer and accepts by sending a cheque for $500. Burton’s lawyer sends a draft of the deed and is ready to close for the 1st of next month. There was some more back and forth with “no trouble”, but on the 5th of next month, Burton’s lawyer says there’s no contract and returns the $500 cheque.

The problem here is when Burton said the price he quoted was what he was “prepared to accept”. It doesn’t seem like an offer. It seems like something before an offer. It seems like an invitation to treat. This sexy little term just means a you’re inviting an offer or willing to negotiate; it’s like a little dating phase before getting into bed. Now, before you say Burton was asking for it, contract law really does look at more than just the words people say. It also looks at conduct. What kinds of words and conduct matter? An expression of a willingness to be legally bound.

An offer is saying that you’re willing to play the game of contract law and follow its rules. In Burton’s case, he set a clear price and went out drafted a deed then picked a closing date. His conduct is more than just negotiation. He had the chance to stop it or say he wanted more money; instead, he went on drafting the deed. He straight up paid for the hotel room and took all his clothes off. He was ready to go.

Pharmaceutical Society of Great Britain v. Boots Cash Chemist

Let’s look at another example, this time from 1953. This was when self-service was becoming cool. You pick the drugs yourself, cool guy. The issue here is what self-service stores are doing: is it an offer or invitation to treat. If it is an offer, then we get into hot waters. It could mean that when a customer picks it up, the customer accepts the offer and a contract is complete. So if you grab some rat poison for your cold, the pharmacist would have to break the contract to stop you from taking it home; or if you grab the poison by accident, you don’t have to break the contract to put it back. Instead, the smart judges said that it’s not the store making the offer, it’s the customer. Self-service stores just give you the convenience to picking stuff out and carrying to the register for the store; once you’re at the register, you’re making an offer: “Please, sir, may I purchase this at the price written on the sticker?” The store will probably accept and the contract is complete — offer and acceptance. If you buy the poison, the store won’t accept; if you don’t want something, you can put it back — everybody is a winner.

Carlill v. Carbolic Smoke Ball Co.

Now, what about advertisements? Are they an offer or invitation to treat? One interesting case involves a “smoke ball” claiming to be a influenza cure. It said that anybody who got influenza after using it would be paid 100 pounds, and claimed to deposit 1000 pounds in the bank to prove that they were serious. Well, Carlill took the smoke ball and got sick. The company didn’t want to pay out and said that the advertisement was mere puff. They said the offer was so vague that it couldn’t possibly be a contract with everybody in the world. The judge didn’t agree. It’s the offeror who sets the terms and if they set vague terms, then it’s their fault. Moreover, it’s not an offer for everybody in the world, it’s an offer to everybody who met the terms. It is a unilateral contract, which takes performance to be acceptance. Carlill accepted by taking the smoke ball. The contract is not all puff, they said all this to attract customers (and the customer paid), and the company deposited 1000 pounds to show that they were serious.

The lesson here is that the advertisement is sufficiently detailed enough to outline that they’re willing to be bound and the plain meaning that ordinary people (not people in the advertising biz) would consider it a serious offer. The terms they set are clear: use the smoke ball as per the direction and within a period of term get sick, then you get the money. They didn’t expect you to reply back with an acceptance, they wanted you to go out and buy it (and that performance is acceptance). A lot of power is given to the offeror (they are the master) to set the terms; if they don’t use their power to their advantage (i.e., by making grand promises), then it’s their fault. We see something similar in Goldthorpe v. Logan where a newspaper ad claimed “Results Guaranteed” for hair removal — she got her $100 back.

Another lesson learned is that an offeror can say that they don’t need communication of acceptance. For instance, if you offer a reward for finding your dog — a unilateral contract (reward for dog) — then you don’t want people to waste time saying they accept. Go find the dog, perform and we have a contract; I will give you the reward if you have my dog. Still, for most advertisement, it’s usually taken to be an invitation to treat, unless we see the weird cases where the wording is specific enough to indicate a willingness to be bound. Something like, “Reward for this lost dog,” read in its plain meaning, is specific enough to indicate an offer of a unilateral contract.

One takeaway is that the game of contract law is about looking at intentions from the outside. Nobody can get into the intention in your head. So contract law looks at “objective” manifestations, like words and conduct.

Christie v. York Corp.

Alright, so the offeror can set the terms. How far does the freedom to contract go? Can they refuse people on the basis of their skin color. In this next case we see a black man walking into a bar. The punchline is that he is refused service based on the color of his skin, so he sued to bar. Now, how far can the offeror discriminate who they make an offer to? We don’t want anything against public order, but racism wasn’t so bad at the time. Still, it’s not fair to hold out on beer if you’re the only one serving beer in the whole town, so monopolies don’t get complete freedom. Same goes for really important stuff, like food. The moderators want to let the players play and don’t want to interfere as much as possible, but they also want the players to play nice. There are good reasons to turn people away: for instance, if it would violate regulations, or if the person is drunk or underaged, or if they’re trying to buy out all of your stock for profit. Subsequent legislation, like the Human Rights Code, has prohibited refusal on discriminatory grounds.

Formation of Agreement: Communication of Offer

The type of contract law we have been focusing on is under common law. This is different because it gives us a formula for bilateral agreements: offeror makes an offer, and that offer is communicated to the offeree; the offeree can reject and terminate the process, or the offer can assent through acceptance; if the communication of acceptance is required by the offer, then the offeree must communicate the acceptance to the offeror, and thus an agreement is formed.

Williams v. Carwardine

A guy was murdered and his brother posted a $20 reward for information. Beaten close to death by her husband, Ms. Williams gave information that her husband was the murderer. It was clear the main motive for her confession was to clear her conscious. When she didn’t die, she wanted the reward, and the courts ruled that it didn’t matter what her motivation for giving the information was. What was important was that she met the terms of the offer and accepted by performing; in doing so, there was a unilateral contract formed.

Acceptance

Even if motivation mostly doesn’t matter for the acceptance of an offer, knowing that there is an offer is important. In Carwardine, a reward posted to the general public gives some reason to believe that the offeree had read it or come upon it. She also knew about the reward since she was so close to the case. In the case of R. v. Clarke, however, the Clarke went the extra mile to say that he didn’t know when he was giving information leading to an arrest. He made it very clear that he was only giving information to clear his own name. Since you can’t agree to something you don’t know about.

Livingstone v. Evans

Alright, another piece of land deal. This time Evans proposes to sell for 1800, and Livingstone replies by saying “Send lowest cash price. Will give 1600 cash. Wire.” Evans responds, “Cannot reduce price.” So Livingstone wrote to accept the 1800 offer, but Evans changes his mind and says he doesn’t want to sell anymore. Alright, so let’s break this down in terms you would understand. I offer my nudes if you show me your nudes. You don’t accept this offer; you reject my offer and present a counter-offer: my nudes for showing your face. The first offer is off the table. But then I reply by saying that I can only do nudes for nudes; “cannot reduce price” to just showing your face, I need tits and vag. Here, I am renewing the original offer (or presenting the same offer again). It’s like saying “take it or leave it”. You accept and send me nudes, and I say no deal. By saying something as ambiguous after the offer is rejected, I am renewing the offer for you to accept; if you accept, there is a contract formed.

We learn here that acceptance must be absolute and unequivocal. “No” means “no,” and rejects of an offer terminates the offer. Any counter-offer terminates the offer. In Hyde v. Wrench, offering a different price (950 instead of the offered 1000) means rejection. But a counter-offer needs to be differentiated from a mere inquiry as to whether the offeror will modify the terms (in Stevenson, Jacques & Co. v. McLean, they asked if they could accept credit instead of cash). For example, if I want nudes for nude, maybe you ask me if showing your left titty is okay. Still, there needs to be a match between the terms of acceptance and the terms of the offer. This is sometimes called the mirror image rule.

Butler Machine Tool Co. v. Ex-Cell-o Corp

Welcome to the “battle of the forms.” In this corner, we have Butler Machine selling machinery for 75535 with a price variation clause (stating they’d change the price of manufacturing costs went up). In the next corner, we have Ex-Cell-o, stating they accept but on their terms with no price variation clause. Butler Machine came back saying they accept your order with a letter restating the price variation clause. No response from Ex-Cell-o. Ding-ding; time to pay up, and they activated their trap card: the price variation clause, adding 2892 to their total. Judges decisions: Butler Machine! The last shot wins.

Dawson v. Helicopter Exploration Co.

In this case, there was a military guy who knew about this sweet mineral spot, and he wanted the help of a helicopter to go out to scout it. He talked to the company and they agreed on the condition that he could get leave from the Naval Reserve and they could find a helicopter pilot; moreover, if he was legit and they found some sweet minerals, they would give him 10% interest. When they found a pilot, they told him but he heard from somebody else that it was a bad time to explore the area. When they didn’t hear back from Dawson, they went ahead without him and found some sweet minerals. The court found that there was a contract and that they didn’t meet the condition by not taking Dawson out on the helicopter.

Tywood Industries v. St. Anne-Nackawic Pulp & Paper Co.

St. Anne asked for a quote from Tywood and it had some terms and conditions. It didn’t have an arbitration clause. They sent back a quote and talked about it — still no arbitration clause. St. Anne sends purchase orders asking the seller (Tywood) to accept, sign, and return a copy — bang: arbitration clause. The seller doesn’t sign or bring back a copy, but does deliver the goods. The seller sues for the price of the goods, the buyer springs the arbitration clause: what now? Alright, the terms don’t match perfectly, but all the important stuff is agreed upon, except this arbitration clause. It looks like the buyer accepted the terms on the first round — the first blow is what matters here. The arbitration clause showed up too late, and the buyer didn’t point it out; moreover, the buyer didn’t complain when they didn’t get the form back signed.

Changing the Contexts of Formation of Contract

Welcome to the digital era. If you’ve been on the internet for any amount of time, you’ve agreed to stuff you haven’t read. There are a bunch of things moderators are worried about in adding this feature to the game. Here are a few. Information: you don’t read anything and you probably wouldn’t understand it either, and maybe the digital medium exacerbates that. Power: companies are getting huge, and noobs are making contracts with maxed out players; something fishy might be going on, like in Z.I. Pomey Industrie v. ECU-Line N.V. or Douez v. Facebook (and their forum selection clause). Negotiation and market alternatives: not agreeing to Facebook terms; good luck going to Myspace, loser.

Old rules continue to apply for new cases. In ProCD v. Zeidenberg, it was established that shrink-wrapped licenses count as an offer that you accept when you buy it and don’t return it. It’s sort of like a unilateral contract in between the self-service store and an advertisement. In Rudder v. Microsoft Corp, “click-wrapped” agreements of checking off a box while you scroll mindlessly down the page of terms and conditions were deemed acceptable.

Offer and Acceptance: continued

We saw that the offeror is given a lot of power to set the terms. They can use their power recklessly, like for advertising smokeballs or hair removed, or they can use it for convenience, like in shrink-wraps or click-wraps.

Eliason v. Henshaw

In this case, we see a really clear formulation of the doctrine that acceptance must be in the manner prescribed by the offer. A letter from the buyer (Eliason) was sent stating they wanted to purchase flour, and they wrote, “Please write by return of wagon whether you accept out offer.” The letter reached Henshaw, but the wagoner said he wouldn’t be going back, so he replied back by post about accepting the offer. The letter reached the buyer, but the buyer said it was too late and they failed to accept in the manner prescribed.

Felthouse v. Bindley

Still, offerors can dictate the forms and time for acceptance, they can’t push you to do something to reject the contract. Like if I tell you, “if you blink, it means you accept my contract of giving me all the money you have.” The same (generally) goes for silence. Here, we see an uncle (Felthouse) negotiating to buy a horse from his nephew for 30.15, and saying he’ll consider the horse his if his nephew doesn’t reply. The nephew didn’t reply. Then an auctioneer (Bindley) sold it by accident, and the uncle sues the auctioneer. However, the judge said the uncle had no claim to the horse since no contract was made.

Saint John Tug Boat Co Ltd.. v Irving Refining Ltd.

But there are exceptions to the silence-is-not-acceptance rule. Here, Irving needed tug boats to tow oil tankers and hired St. John to have the boat available. Irving’s president changed and nobody agreed to the services going forward, but they had their tugboat on standby and it was used to tow some tankers. The monthly bill was sent and seen but wasn’t paid. In this case, a reasonable person wouldn’t have assumed that they were offering to work for free. In the same vein, if you buy a CD and take it home, you not returning might be considered an acceptance of the licenses on the CD.

Communication of Acceptance

When the communication is instant, the communication of acceptance is usually instant since it reached the offeror right away. This “receipt” rule also says that the acceptance is made wherever the offeror receives the acceptance – for instance, if I tell you that I accept on the border of South Korea, and you’re on the North Korean side, then the acceptance is in North Korea. This was established with the instant communication of Telex in Brinkibon Ltd. v Stahag Stahl und Stahlwarenhandelsgesellschaft mbH. This receipt rule is likely to apply whenever the communication is more instantaneous (e.g. speaking), under the control of the sender (e.g. nobody control your words), and the receipt is easily confirmed (e.g. they’re right in front of you).

Household Fire and Carriage Accident Insurance Company (Limited) v Grant

Sometimes communication of acceptance is sent by post. This creates a delay in receiving the communication of acceptance, or it could get lost somewhere. In this case, Grant wanted to buy share and Household Fire accepted his offer to buy the share (and added his name to the list); however, their communication of acceptance never reached Grant. The judge ruled that the contract was binding as soon as they put their communication of acceptance in the mail. This is called the postal rule. (This rule doesn’t always apply, especially in cases where the delay of snail mail would lead to absurdity, like a contract on melting ice cream.)

Holwell Securities Ltd. v Hughes

In the same way offerors can stipulate that an acceptance be communicated by wagon instead of post, the offeror can sidestep the postal rule by requiring that the offer of acceptance reach them. In this case, Hughes gave Holwell 6 months to buy a property, but stipulated that their acceptance had to be a notice in writing. Howell sent a cheque and letter of acceptance within the 6 months (time limit and writing requirement met), but the letter was never delivered to Hughes (no notice to offeror). With no notice, the court rules, Holwell failed to meet the manner of acceptance prescribed.

Termination of Offer

Revocation of an offer gives more power to the offeror. Anytime before acceptance, the offeror may revoke the offer.

Dickinson v. Dodds

In this case, Dodds gave an offer to Dickinson to sell the house, with a promise to keep the offer open until June 12 at 9 AM (this is sometimes called a firm offer). Dickinson learns from his agent that Dodds sold the property to somebody else. Dickinson gives his acceptance to Dodds but says it is too late. Despite the promise, Dodds can revoke the offer at anytime. Still, the revocation of the offer has to be communicated to the offeree; it was just dumb luck that Dickinson found out from his agent.  The revocation shows that the offeror is no longer willing to be legally bound. Despite the offeree’s disappointed reliance and expectation, the firm offer was just a bare promise without consideration, or a nudum pactum (“naked promise”).

An option contract supported by consideration can limit the revocability of an offer by the offeror, like in Mountford v. Scott and Politzer v. Metropolitan Homes.

In Byrne v Van Tienhoven (re-sold tin plates and accepted by telegram), we see that the postal rule doesn’t apply to communication of revocation.

In Errington v. Errington and Woods, a father leaves his son a house on the condition that he make the mortgage payments. Here, we see that unilateral contracts are not revoked while the offeree has commenced performance. If you started look for the dog, the offer of the reward can’t be revoked.

Barrick v. Clark

A lapse in an offer happens after a time expressly fixed by the offer. If there is nothing expressly fixed the reasonable time an offer lapses can be determine by words and conduct. In this case, 7 weeks of negotiations happen with Clarke offering to purchase Barrick’s land for 14,500. Barrick wants 15,000 and Clarke goes on a hunting trip; however, Clarke’s wife receives the letter and asks to hold offer open for another 10 days. Thirteen days later, Barrick sells the land to someone else.

Auctions and Tenders

Problems occur when there are multiple bidders. In auctions, bids are taken as offers and the acceptance happens with the bang of the hammer. This might mean that before the hammer, the bids can be withdrawn before the hammer and the offer of the highest bid can be rejected. A way out of this is hold the auction “without reserve,” where the offer will be sold to the highest bidder.

Tenders, not the chicken kind, are a formalized process for bidding to supply goods or services (e.g. construction or supplies). An invitation to tender is an invitation to treat.

M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd.

Here, things get weird. An invitation to tender was invited and MJB Enterprises submits tender as do 3 others. The invitation to tender included a “privilege clause,” which said that the lowest tender wont necessarily accepted. But one of the bidders entered a bid that was not compliant with the terms set, and the Defence company went with them. The others played by the rules of submitting the tender, but the winner didn’t — the winner should be disqualified.

R v. Ron Engineering

A call for tenders went out with a requirement of a 150,000 deposit (to show they were serious). Ron Engineering submitted their bid that was accidentally too low, and sued to get their money back. The specific terms and conditions of the call for tenders made this an offer instead of an invitation to treat. The invitation to tender is considered, in such specific cases, a unilateral contract which binds you to entering the second contract of doing the job.

Certainty of Terms

In theory, we can deal with ideal scenarios and try to form principles around them to buff out the sharp edges. However, in practice, people are bad communicators and the law has to account for that. For instance, parties have incomplete or inexact expressions but still go on dealing with each other — this is especially true for long business relationships. The aim is to preserve the contract relationship — “verba ita sunt intelligenda ut res magis valeat quam pereat” or “words are to be so understood that the subject-matter may be preserved rather than destroyed.” Still, the law is not here to make stuff up or interpolate into the contract more than what is intended. If there’s vagueness in terms of the material terms of the contract, then there is no contract formed.

It’s not always clear what counts as essential or material terms (e.g. a price variation clause or an arbitration clause), but in this case it is clear. In Mary and Butcher ltd. v. R., there is no price, nor is there time for payment or delivery. It’s an incomplete contract. At best, they have an “agreement to agree,” and this is no contract. This is because an agreement to agree is a clear acknowledgement that the parties have no agreement at the time (although there is some wiggle room here). A concern for the law with incomplete or uncertain terms is that they wont know when parties are performing their obligations or not, so it wont know whose side to take when there’s a dispute.

Many weasel words are used to keep things vague. In R. v. CAE Industries, we see words like “assurances” or “best efforts” to meet terms. In Hillas and Co. Ltd. v. Arcos Ltd., there is silence on things like timing or quantity and vagueness in other descriptions, but the court has enough to keep the contract going since they both intend on keeping the contract. When the courts do try to construct a meaning, it moves forward with the understanding that the parties intended on creating a contract. With the uncertain terms, the court will try to move forward with an objective approach for a reasonable construction of factors, like language, context, external standards, conduct, shared industry norms, statutory laws, third parties, or a standard of reasonableness.

Generally, a contract will be found if there is something to determine the terms, like an arbitration clause. We find that in Hillas and Co. Ltd. v. Arcos Ltd, but also in Foley v. Classique Coaches Ltd. (where they agreed to sell land provided they use the gas station, but they suddenly stopped using the gas station).

Enforcement of Promises – Consideration

Consideration is a technical term referring to the thing given or the benefit exchanged within a contract. An enforceable contract must have consideration (or, alternatively, a deed — signed, sealed, delivered, etc.; even more rarely, an estoppel) in one form or the other, and it’s important to note early on that consideration isn’t always monetary. The requirement for consideration is a quirk that is debated and other legal systems don’t always require this; sometimes, even judges express their regret in enforcing this element of a contract. For example, in Brantford General Hospital v. Marquis Estate, Ms. Marquis clearly intended to provide charitable support to the hospital, but after her death it was not enforceable because there was no consideration to form a contract. It seems weird to add this requirement of consideration when other doctrinal requirements have already tested that the parties have a serious intention towards a promise, and it might even create unfair scenarios where the reliance and expectations of the promisee are disappointed. Some justification for the need for consideration might be that contract law only supports agreement where there is an exchange; moreover, there is a need to distinguish the institution of contract law from other institutions of interaction (e.g. gift exchange or other areas of permissions). It also protects parties and guarantees that a promise has been bought (or that there is an exchange) — again, it would be weird to enforce things like gifts or acts of charity.

We see that without consideration, even words and signatures are not enough to make a promise enforceable. In Dalhousie College v. Boutilier Estate, Boutilier signed a solicitation to make donations to the college; however, there was no consideration made, and the vague mention of supporting the school wasn’t enough of a benefit to Boutilier to be considered a valid consideration. In Dickinson v. Dodds, we already saw that the lack of consideration made the firm offer (to keep the offer open) a “nudum pactum”, but the 100 in Politzer v Metropolitan Home Ltd was good consideration to make the firm offer enforceable.

Currie v. Misa

We see a host of different modes of consideration that is legally valuable. In Carlil v. Carbolic Smoke Ball, we see an act and inconvenience of Carlil counts as consideration. In Hamer v. Sidway, an uncle pays his nephew to refrain from drinking, swearing, and other fun stuff until age 21 for 5000; the nephew is legally entitled to do this, but this forbearance counts as good consideration on the part of the nephew. Similarly, the forbearance can be a legal entitlement to reframe from suing, like in B.(D.C.) v. Arkin (Zellers illegitamately tried to hold the mom accountable for her son’s shoplifting).