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Obligation: Consideration (and Ongoing Contracts)
You have had a long year of University studies. After acing your classes, it is finally summer vacation and time to make some money. You and several of your friends decide to start a business to haul trash from construction sites to the local dump. The biggest contractor in town who had several large projects about to begin made you a deal: for each truckload hauled, your company will receive $500.00. You will be paid at the end of every month. You work this all out on the back of an old notebook left over from your Laws 2202 class and figure that this amount will cover the fees at the dump, gas and maintenance on your two trucks and leave a profit! Excellent! You leave one or two points to be worked once you have begun work including the precise schedule for hauling trash away and the number of trips that will be involved. You shake hands with the owner of the construction company and get down to work.
Shortly after work begins, there is a small increase in the price of gas because of a refinery fire in Ontario. It also becomes apparent to you that you have miscalculated the cost of dump fees and how much wear and tear there will be on your trucks (you are going to have service and fix them a few times over the summer). You come up with a strategy: you start taking fewer trips to the dump, and you leave some construction sites with an overload of trash even though this slows down progress in the construction. The manager of the construction company comes to talk to you all in mid-July. He agrees to increase the fee per truckload substantially. So, you all get back to work for the rest of the summer.
At the end of the summer, when your company submits the bill for work after mid-July, using the new price, the construction company refuses to pay. Your figures suggest that you are owed $100,000 more than the construction company is offering to pay you using the original formula. You and your friends need the extra money. You consult a lawyer asking ?what does the construction company have to pay us??
Task
Write a short essay addressing the following questions, analyzing the issues and the problem in light of material (cases, commentary, lectures) addressed in the course.
a. Did you enter a binding contract with the construction company? When and how is a contract formed? Identify the issues that arise on this fact pattern and discuss in light of case discussed in class. Given that there is a divergence in the case law, which stream do you prefer [i.e. As between ECNZ majority and dissent]/4
b. What amount of money should you be paid for your work? Answer the following questions:
i. What principle about consideration does the old (classical contract law) case of Stilk v Myrick as applied in Gilbert v Steel establish and what result does it suggest for your situation? /2.5
ii. What policy choices about contractual obligation (what is just, fair, appropriate and what values should be upheld by judges in contract law cases) were made in Stilk/Gilbert Steel /2
iii. What divergence from Stilk/Gilbert (modified principle) was established in (newer approach) in the case of Williams v Roffey Brothers as approved in NAV Canada and what does it suggest about your situation? /2.5
iv. What policy choices about contractual obligation (what is just, fair, appropriate and what values should be upheld by judges in contract law cases) were made in Roffey Brothers? /2
c. Which approach makes most sense to you? How do you think a judge should resolve your case? (discuss likely result and reasons) /2
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