Post-Contractual Amendments (Consent)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-05-19
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 2024-05-19
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.

...

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.

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.

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[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.

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[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.