Canadian contract law

Individual common law provinces have codified certain contractual rules in a Sale of Goods Act, resembling equivalent statutes elsewhere in the Commonwealth.

[6] The rules governing the formation of a contract under Québecois law are codified in Book Five, Title One, Chapter 2, Division 3 of the Civil Code.

[16] Where a purported acceptance is received either after the expiry of the applicable time period or which substantially modifies the terms of the proposed contract, it instead constitutes a counter-offer.

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 Canadian common law jurisdictions, like in England and Wales but unlike in India, the performance of pre-existing duties has not traditionally been regarded as good consideration.

[36][37][38][39] This can create uncertainty where parties to a contract agree to amend its terms after it has been concluded since such post-contractual modifications may run afoul of the requirement for fresh consideration.

Consequently, the criteria for the creation of contracts for the international sale of goods are substantially harmonised among civil, common, and mixed law jurisdictions around the world.

[52] Under the CISG, an offer to contract must be addressed to a person, be sufficiently definite – that is, describe the goods, quantity, and price – and indicate an intention for the offeror to be bound on acceptance.

[53] The CISG does not appear to recognise common law unilateral contracts[54] but, subject to clear indication by the offeror, treats any proposal not addressed to a specific person as only an invitation to make an offer.

Changes to price, payment, quality, quantity, delivery, liability of the parties, and arbitration conditions may all materially alter the terms of the offer.

[65] Although possibly non-negotiable, a promissory note may be a negotiable instrument if it is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand to the payee, or at fixed or determinable future time, a sum certain in money, to order or to bearer.

The following chart shows the main differences between bills of exchange and promissory notes:[70] In Canadian contract law, there are two distinct duties requiring parties to act in good faith.

Additionally, in the common law provinces and territories, the doctrine of estoppel is another way in which the courts restrict the ability of parties in a contract to act in bad faith.

[79] One type of estoppel recognised in Canada's common law jurisdictions is estoppel by convention, which operates where three criteria are satisfied: 1) a "manifest representation" of a "shared assumption of fact or law" pertaining to the application or construction of a contractual term, 2) one party acts in reliance of the "shared assumption" in a manner that alters its legal position, 3) the party that acted in reliance shows that it did so reasonably and would be significantly harmed if the term is strictly enforced.

[80][81] The Ontario Court of Appeal has held that the "shared assumption" required to invoke estoppel by convention does not need to arise as a representation by the party seeking enforcement of the contractual term.

[83] In Canada's common law provinces and territories, these categories of estoppel serve to require parties to a contract to act in good faith in invoking contractual terms.

[84] Improvidence must be measured with reference to the time of the contract's formation and involves a contextual assessment of "whether the potential for undue advantage or disadvantage created by the inequality of bargaining power has been realised".

Both the Civil Code of Québec and statutes in the common law provinces provide for certain standard rules in relation to contracts for the sale of goods.

[101] 2) The right, "where the seller is bound to deliver the area, volume or quantity specified in the contract and is unable to do so, ... [to] obtain a reduction of the price or, if the difference causes him serious injury, resolution of the sale".

Additional provisions include requirements as to formalities; for instance, section 1785 of the civil code provides that a contract for the sale of residential property must be preceded by a preliminary agreement to sell under which the buyer has 10 days to withdraw from the transaction;[122] as well as special rules governing the rights of the buyer and seller such as section 2 of British Columbia's Property Act, which provides a rebuttable presumption that "recitals of facts, statements and matters, and descriptions of parties in instruments or statutory declarations over 20 years old at the date of the contract" are true and that "the inability of a vendor to give a purchaser a legal covenant to produce and furnish copies of documents of title is not an objection to the title if the purchaser has, on the completion of the contract, an equitable right to the production of the copies that affirmatively prove his or her title".

[128] The lessee is bound to make reparation for injury suffered by the lessor by reason of any loss sustained by the leased property, unless he proves that the loss is not due to his fault or that of persons they permit to use or access the property; additionally, the lessee is not bound for injury resulting from a fire unless it is proved that the fire was due to his fault or that of persons he allowed to have access to the immovable.

[152] Additionally, a landlord may apply for permission to increase the rent by an amount greater than 3% on the grounds of extraordinary capital expenditure or rises in municipal taxes.

[155] A tenancy agreement may require a deposit of up to half a month's rent[156] and may include a provision prohibiting the consumption or possession of tobacco or cannabis products.

[166] The code also provides that a "clause by which a creditor, with a view to securing the performance of the obligation of his debtor, reserves the right to become the irrevocable owner of the property or to dispose of it" is void.

"[177] Property that is the subject of a leasing, even if attached or joined to an immovable, retains its movable nature for as long as the contract lasts, provided it does not lose its individuality.

The most common remedies in Canadian contract law are compensatory and restitutionary damages, which serve to compensate or provide restitution to the party that is not in breach and are determined by the court.

[188] Article 1226 of the French Civil Code provides for clause pénale, a variant of liquidated damages which combines compensatory and coercive elements.

There are two primary categories of quasi-contract: negotiorum gestio or restitution (which are similar but codified separately in the Civil Code of Québec) and unjust enrichment.

In other words, quasi-contracts arise where there is no exchange of consent (Québec) or intention to create legal relations (common law provinces and territories) but public policy necessitates a remedy.

[208] The absence of justification is satisfied if a plaintiff establishes a reason why the benefit ought not be retained, or if the Defendant demonstrates a convincing argument in favour of retention of the property.