Post-Contractual Amendments (Consent)

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Date Retrieved:	2024-04-27
CLNP Page ID:	2323
Page Categories:	[Contract Law, Leases, & Sub-Letting (LTB)], [Payment of Rent (LTB)]
Citation:	Post-Contractual Amendments (Consent), CLNP 2323, <https://rvt.link/a8>, retrieved on 2024-04-27
Editor:	Sharvey
Last Updated:	2023/12/05

Gilbert Steel Ltd. v. University Construction Ltd., 1976 CanLII 672 (ON CA)

Where one is bound by agreement to supply goods to another at a certain price, and the other subsequently agrees to pay a higher price, the supply of the goods is not sufficient consideration to support the promise to pay the higher price.

APPEAL and CROSS-APPEAL from the judgment of Pennell, J., 1973 CanLII 838 (ON SC), [1973] 3 O.R. 268, 36 D.L.R. (3d) 496, dismissing an action for the price of certain goods.

...

I am not persuaded that either of the parties intended by their discussions in March, 1970, to rescind their original contract and replace it with a new one. Indeed, it is significant that no such plea was made in the statement of claim which confined itself to an allegation that "it was orally agreed in March 1970 that the prices as set forth in the said contract [i.e., of October 22, 1969] would be varied ...". Accordingly, consideration for the oral agreement is not to be found in a mutual agreement to abandon the earlier written contract and assume the obligations under the new oral one.

Nor can I find consideration in the vague references in the evidence to the possibility that the plaintiff would give the defendant "a good price" on the steel for the second building if it went along with the increased prices on the first. The plaintiff, in my opinion, fell far short of making any commitment in this regard.

Having found on the evidence that the defendant had orally agreed to pay the increased prices, the legal issue confronting Mr. Justice Pennell was whether that agreement was legally binding upon the defendant or whether it failed for want of consideration. Counsel for the defendant submitted at the trial that past consideration is no consideration and that the plaintiff was already obliged before the alleged oral agreement was entered into to deliver the steel at the original prices agreed to in the written contract of October 22, 1969. Where then was the quid pro quo for the defendant's promise to pay more?

Counsel for the plaintiff sought to supply this omission from the evidence of Hersz Tenenbaum who, during the course of discussions which took place in September, 1970, with a view to a contract for the supply of steel for the second building at the University site, asked whether the plaintiff would give him "a good price" on steel for this building. Plaintiff's counsel argued that the promise of a good price on the second building was the consideration the defendant received for agreeing to pay the increased price on the first. The trial Judge rejected this submission and found the oral agreement unenforceable for want of consideration. In the course of his reasons for judgment the trial Judge adverted briefly to an alternate submission made by the plaintiff's counsel. He said:

I should, in conclusion, mention a further point which was argued with ingenuity by Mr. Morphy. His contention was that the consideration for the oral agreement was the mutual abandonment of right under the prior agreement in writing. I must say, with respect, that this argument is not without its attraction for me.*

Appeal and cross-appeal dismissed.

EDITOR'S NOTE ^{(From CanLII)}

The passage quoted on p. 21 will not be found in the report of the trial judgment (1973 CanLII 838 (ON SC), [1973] 3 O.R. 268 et seq.). Some two months after those reasons were published the concluding paragraphs were revised by the trial Judge at the common request of counsel, but the revision was not brought to our attention. The concluding paragraphs on p. 279, from the paragraph beginning "I have postponed to this stage ..." to the end, were deleted and the following substituted:

"I should, in conclusion, mention a further point which was argued with ingenuity by Mr. Morphy. His contention was that the consideration for the oral agreement was the mutual abandonment of right under the prior agreement in writing. I must say, with respect, that this argument is not without its attraction for me. I am conscious that my views have changed with frequency during the helpful argument of Mr. Morphy. The defendant itself was evidently impressed with the belief that some advantage would come to it from a promise to pay an increased price of steel. But I am unable to discern an advantage, however technical or trivial, to which the defendant was not already entitled. Here the plaintiff was contributing nothing but the fulfilment of its duty; the plaintiff could not have done less without being guilty of a wrong. On the part of the defendant, it was a promise to the ear to be broken on the demand for payment, a teasing illusion perhaps intended as wine to warm the plaintiff to its obligations. Grappling with my own ignorance and limitations, I have come to the conclusion that the defendant's promise is unenforceable against it for lack of consideration. I cannot abandon ancient principles. I cannot breathe the breath of life into a contract that never was.

For the reasons above given I feel constrained to dismiss the action. I make no order as to costs."

Richcraft Homes Ltd. v. Urbandale Corporation, 2016 ONCA 622 (CanLII)

[14] The appellant argues Richcraft gave no consideration for the 2005 Agreement. It is accordingly not a true bargain, and therefore not enforceable: see John D. McCamus, The Law of Contracts, 2d ed. (Toronto: Irwin Law, 2012), at p. 215; G.H.L. Fridman, The Law of Contract in Canada, 6th ed. (Toronto, Carswell, 2011), at p. 81-82. The appellant also relies on the proposition of Ontario law that a subsequent agreement that purports to alter the terms of an existing agreement also requires consideration to be enforceable: see Gilbert Steel Ltd. v. University Construction Ltd. (1976), 1976 CanLII 672 (ON CA), 12 O.R. (2d) 19 (C.A.), at p. 24.

[15] I begin by setting the context for this issue, next I set out the application judge’s holding, then consider the parties’ arguments, and finally address the legal analysis.

...

[26] The appellant submits Richcraft gave no consideration for the 2005 document, so it is not a true bargain, and is therefore unenforceable. The only enforceable contract between the parties is the original LPA. The appellant relies on three decisions of this court to argue the law of Ontario precludes enforcement of the 2005 agreement: Gilbert Steel; Gregorio v. Intrans-Corp (1994), 1994 CanLII 2241 (ON CA), 18 O.R. (3d) 527 (C.A.); and Holland v. Hostopia.com Inc., 2015 ONCA 762, 392 D.L.R. (4th) 650.

...

Consideration was a live issue before the application judge

[39] The respondent objects that the issue of consideration was not addressed by the application judge in his reasons because it was not a live issue before him.

[40] However, the appellant notes the general issue of the 2005 document’s enforceability was raised in the Notice of Application. Further, in Urbandale’s factum before the application judge the issue was raised, albeit somewhat obliquely:

93. One needs to understand or characterize what the May 9, 2005 document is. According to Mr. Singhal it was to be a “reconfirmation of Richcraft’s entitlement to building lots from the KNL and RSDC projects.” It accordingly was not intended to create new rights but to confirm rights that have purportedly already existed. There was no consideration passing between the parties as no new rights or benefits were created or intended to be created. As such, one ought not to view this as a stand-alone agreement.

[41] The respondent points out that it did not address the issue of consideration in affidavits or examination-in-chief and that the appellant asked no questions in cross-examination about the issue. This explains the statement in Richcraft’s factum before this court: “there is no evidence of fresh consideration supporting the 2005 agreement.”

[42] I would reject the respondent’s argument that this is a new issue on appeal. While it may not have been pursued vigorously, it was raised below and there is sufficient information on the record for this court to dispose of it.

...

[49] The appellant argues that an option agreement is required by law to have certain elements, none of which are found in the 2005 document: see Mitsui & Co. (Canada) Ltd. v. Royal Bank, 1995 CanLII 87 (SCC), [1995] 2 S.C.R. 187, at paras. 26-27.

Holland v. Hostopia Inc., 2015 ONCA 762 (CanLII)

[52] It is well-settled that a promise to perform an existing contract is not consideration: see e.g. K.M.A. Caterers Ltd. v. Howie, 1968 CanLII 172 (ON CA), [1969] 1 O.R. 131 (C.A.); Hobbs; Braiden. Fresh consideration was required: Francis.

[53] In my view, the law in this respect is a matter of simple fairness. It is also a matter of sound employment practice. As Juriansz J.A. noted in Hobbs, at para. 1:

Accepting an offer of employment and committing the next stage of one’s career to a new employer is an important life decision that most people make carefully. Instability in an individual’s life, and in the workforce generally, is minimized when the decision is made on the basis of complete and accurate information about the new position.

[54] Juriansz J.A. noted the importance of fresh consideration where an employer seeks to amend the employment agreement. He stated, at para. 42:

The requirement of consideration to support an amended agreement is especially important in the employment context where, generally, there is inequality in bargaining power between employees and employers. Some employees may enjoy a measure of bargaining power when negotiating the terms of prospective employment, but once they have been hired and are dependent on the remuneration of the new job, they become more vulnerable. The law recognizes this vulnerability, and the courts should be careful to apply Maguire [v. Northland Drug. Co, [1935] S.C.R. 32] and Techniform Products [v. Wolder (2001), 2001 CanLII 8604 (ON CA), 56 O.R. (3d) 1 (C.A.)] only when, on the facts of the case, the employee gains increased security of employment, or other consideration, for agreeing to the new terms of employment.

[55] Without fresh consideration, the Employment Agreement could not displace the implied term of reasonable notice contained in the Offer Letter. The result is that the appellant was entitled to reasonable notice of termination at common law. This impacts, potentially, his damages in lieu of notice and his entitlement to commissions that became payable after his termination.

Gregorio v. Intrans-Corp., 1994 CanLII 2241 (ON CA)

While the purchase order itself does not disclose when Intrans accepted the order, Gregorio's evidence was that he "bought the truck" from MacDonald, and the parties as well as the trial judge conducted the proceedings on the basis that the May 12 document was an "agreement" subject to financing. No witness suggested otherwise. Thus, in my opinion, on May 12, 1984, the parties entered into a contract for the purchase and sale of the truck, conditional only upon bank financing, which condition was removed on July 3 when the bank confirmed it would finance Gregorio's purchase. The appellants, on their own evidence, did not give Gregorio notice of the terms of the warranty until August 2, which was well after the date the contract was made. Therefore the appellants are precluded from relying upon the limitation clauses to defeat Gregorio's claim. Timely notification of these clauses is especially important where they purport, as they do in this case, to extinguish or limit common law rights.

To have succeeded on this issue, the appellants would have had to show that there was a variation of the contract after it was made or that they could rely upon the limitation clauses as long as Gregorio was given notice of them prior to the performance of the contract. In this case there was no additional consideration that would support a proper variation or modification of the contract. Consequently Gregorio's acknowledgement and signature on the warranty did not import the limitation clauses into the contract of purchase and sale.

Absent a proper variation, this court in Trigg, supra, rejected the proposition that notice of a limitation clause given after a contract is made but before it is performed, is effective. Tarnopolsky J.A., who delivered the judgment of the court, said at pp. 567-68:

The question remains, however, whether notice may be given, and the party's assent obtained, after the contract is signed, but before it is performed.

(b) Timing of notice

Once the issue is framed so that the adequacy of the notice determines whether the clause was imported into the agreement, then the timing of the notice becomes crucial. Essentially, a term cannot be included in an agreement unless it was contemplated at the time that the agreement was concluded, or was added thereto by a proper variation or modification. As stated in Cheshire, Fifoot and Furmston: The Law of Contract, 11th ed. by M.P. Furmston (London: Butterworths, 1986), at p. 152:

The time when the notice is alleged to have been given is of great importance. No excluding or limiting term will avail the party seeking its protection unless it has been brought adequately to the attention of the other party before the contract is made. A belated notice is valueless.