Contracts – Law is Cool The law school blog and podcast from Canada Wed, 30 Sep 2015 13:10:01 +0000 en-US hourly 1 1338880 George Lucas Doesn’t Like Legal Bloggers… Tue, 06 Apr 2010 06:50:53 +0000 Ewok! At times I feel like legal blogging is like Mark Hamill’s career. It will lead to Broadway and cartoon voiceovers rather than Bay Street or serious advocacy.

I look after my brother who is a big Star Wars fan. I’ve been to two Star Wars conventions because of him. So when Star Wars Celebration V (“SWCV”) was announced for Orlando, August 12 – 15, 2010, I thought it may be an opportunity to do some legal blogging among one of popular culture’s leading franchises. My brother had already booked the room and I had enough airmiles to make the trip cost effective.

When SWCV’s official web page was launched, I immediately applied for media credentials. As a law student and a legal blogger, the idea of writing stories of importance to the legal profession from the Star Wars universe was literally out of this world for me.

I pitched my involvement in terms of the great depository of legal material available at the convention. Issues of intellectual property, copyright, trademarks, contract, and entertainment law have obvious importance. The geek in me asked, “Could Luke sue in tort for having his hand sliced off by his father?” Or for that matter, “Could Anakin have a claim as well when he lost his right arm years before during a duel with Count Dooku?” Then there was the ever complicated contractual issue involving the clone armies produced by the Kaminoans for the Jedi Council, commissioned by a Jedi long since dead.

I waited for the three week turnaround for approval but nothing. I email the contact at Reed Exhibitions, the company running the convention, and who I must say was always prompt and professional. Eventually I was notified that my request for media credentials was declined. Being a bit of a tie-fighter, I appealed. Lucasfilm’s press department through Reed Exhibitions made it known that did not match “the criteria that they’re looking for to provide a media badge to the event”.

What? I was at Indianapolis and Los Angeles in 2005 and 2007. My bar tabs nearly killed me. What did George Lucas have against law students or lawyers for that matter? Then the asteroid in the room hit me.

Reed Exhibitions is owned by Reed Elsevier who also owns Lexis Nexis, its legal publishing wing. The quicklaw of conspiracies entered into my mind. None of the six motion picture Star Wars films, nor the Clone Wars animation series, and not even the cult favourite Star Wars the Christmas Special featured lawyers. Sure they have bounty hunters, the Sand People, and Hutt mobsters but alas none from the learned profession.

George doesn’t like lawyers. The darth of examples are abundantly clear. It is like lawyers were the Jar Jar Brinks of the money-interested professions, trying to blow up the Star Wars world through the death star of blogging.

By experience, I understand that the Star Wars Celebration gatherings are a wretched hive of scum and villainy but then I went to law school. By Princess Leia’s slave costume, in Indianapolis I even had coffee at Starbucks across the street from the event with Barrie Holland, the English actor who played the Imperial Officer who quipped to Han Solo, “You Rebel Scum” in The Empire Strikes Back. A nice chap, we both were taking a time out from Star Wars fandom.

I’m sorry to droid on like this but I feel like a rebel challenging the dreaded empire. What does the Lucas brand have to lose by giving a legal blogger a media pass? I might increase the interest level in an active and professional market while addressing legal issues affecting more than just the Star Wars universe? I will never force the issue but I do look forward to a new hope.

The Author at Celebration IV in Los Angeles, 2007

As companies battle the recession, bartering comes in handy Thu, 25 Feb 2010 16:45:39 +0000 First posted on Commercial Law International on Feb 24, 2010.

By: Carsten Lexa

Money helps a lot when it comes to exchanging goods. One buys the goods, pays with cash and takes the goods away. So far, so good. But what if free cash to spend is a rare thing? For example in times like today, when the economy is not doing well and money is scarce?

Today, more and more companies turn to third party networks to contribute and use barter schemes. Of course, bartering is nothing new: It is a medium in which goods or services are directly exchanged for other goods and/or services without a common unit of exchange, e.g. money (according to Wikipedia). Firms routinely arrange exchanges on their own. But cultivating relationships with business partners in such a way, that barter schemes can be discussed and established among each others takes time and presents numerous hurdles. Let´s assume the owner of a restaurant needs printing services with a value of $ 10.000,00. Where can he find a printshop with an owner who is hungry for a $10.000,00 meal?

Formal barter schemes can help. One of the biggest providers for example is Bartercard, the largest exchange network with trades through its network worth more than $ 2 billion and 75.000 members in more than 9 countries. By using such a provider, the restaurant owner in the example above would owe $ 10.000,00 to the exchange network, not the printshop. The provider provides the business partners and makes sure that every member of the network honors the services of the other members. It therefore provides security and accountability, something informal bartering cannot provide in an adequate way.

What are the additional advantages of such barter schemes, other than security and accountability? The biggest advantage is the fact that no money is needed to “pay” for services and goods. Another one is the fact that a member can “buy” services first throught the network and pays later in his own services and goods – sometimes months later, if nobody wants his services or goods earlier. And finally such a scheme can work not only in one country, but – ideally – worldwide, as long as the members accept the scheme.

Even in Germany such barter schemes are tried and – especially among small and midsize compamies – found helpful. But currently, no big exchange networks exist. So, member of traditional business networks try to establish their own barter networks. Reason is that a company owner who knows another company owner through a traditional business network and has done business with him in a traditional way using cash will be more open towards doing barter transactions with this person than with a total stranger.

Is barter the holy grail for companies in recession times? Probably not. But it can be a helpful to do business if cash is scarce. The difficulty is to find the right partner.

For inquiries please contact the author:

A contract to end the homework Wed, 18 Nov 2009 19:43:29 +0000 How one family won the battle to ban homework

Shelli and Tom Milley were exhausted by the weepy weeknight struggles over math problems and writing assignments with their three school-aged children. They were fed up with rushing home from soccer practice or speed skating only to stand over their kids tossing out answers so they could finish and get to bed. …

So … the two Calgary lawyers finally negotiated a unique legal contract: their kids will never have to do homework again.

Milleys’ Differentiated Homework Plan

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Privy Council In Bank Ruling Wraps Jamaican Judiciary On the Knuckles, Part III Wed, 20 May 2009 12:39:47 +0000 First posted on Commercial Law International on May 19, 2009.

Injunction, injunction, what´s your function?

Sorry I just could not resist. Despite my lame attempts at a joke, it is a very valid question.

What is the function of an injunction?

It is a power whereby the court may order positive action be taken or an order to refrain from acts being currently done. It may be granted at the interlocutory (that is to say at any stage before the end of a trial) or it could form part of a judge´s final judgment. In either case it is a very powerful tool of the courts and one that is not exercised lightly. Special attention, however, should be paid to the interlocutory injunction as it is a pre-trial determination, it is also a subject on which the Privy Council had a few choice words for both the Jamaican judiciary and Jamaican Bar in National Commercial Bank Jamaica Limited vs. Olint Corporation Limited.

The interlocutory injunction is best thought of as a pause button. It is designed to freeze in place the item that is in dispute by ideally preserving the status quo. However, we do not live in a static world and there are going to be winners and there are going to be losers with such an order – you could go as far as saying such an order creates only losers and worse losers. This is why judges are or ought to be extremely cautious in the exercise of this discretion. It should not be that the making of such an order – one that is done without the full rigors of a trial – be determinative of the (main) issue or issues in dispute. This is why judges look to what is called balance of convenience (American Cyanamid Co v. Ethicon Ltd) or more accurately the balance of inconvenience. As Lord Hoffman explains in the NCB case, ¨the basic principle is that the court should take whichever course seems likely to cause the least prejudice to one party or the other.¨

Having decided that Mr. Justice Jones was correct in the first instance to dismiss the case, holding that there was no triable issue, their Lordships had no need to go any further. However (a favorite word of a lawyer), their Lordships went on to deliver a dicta that wrapped the knuckles of the Jamaican judiciary and Bar – as would a school master a disobedient pupil in days of old. As many a current and former law student come to learn, while the ratio of a case deals with the issues at hand, it is often the dicta though said by the way, that is the most significant aspect of a judgment.  And this I believe is the case here.

Their Lordships wanted to point out, provide some guidance and in a display of judicial politics, gave the Jamaican legal establishment scolding – that was at times not so well veiled.

There were two features of this case that troubled the Privy Council. The first was that, ¨there appears to have been no reason why the application for an injunction should have been made ex parte, or at any rate, without some notice to the bank.¨ An injunction applied for and given without presence or notice to the other party ought to be a very rare thing, ¨although the matter is in the end one for the discretion of the judge, audi alterem partem is a salutary and important principle.¨ Audi alterem partem – sorry for the Latin but it had to be done –  is a fundamental tenet and a cornerstone of justice and cannot be trotted on lightly. It is the right for the other side in a dispute to be heard – like I said a cornerstone of our justice system.

Given the facts of the case, especially the nature of what was in dispute, there should have been no reason why the application for the injunction should not have been inter partes but at a minimum with there should have been some notice to the bank. As their Lordships pointed out, ¨any notice is better than none.¨ The guidance provided to judges considering such applications was made by Lord Hoffmann in no uncertain terms.  He lays down the law (literally), ¨that a judge should not entertain an application of which no notice has been given unless either giving notice would enable the defendant to take steps to defeat the purpose of the injunction…or there has been literally no time to give notice before the injunction is required to prevent the threatened wrongful act.¨ The italics are Lord Hoffmann´s.  Lord Hoffmann further went on to point out these two conditions are enshrined in the Section 17.4 (4) of the Jamaican Civil Procedure Rules 2002.

What characterizes both these alternatives is a sense of urgency. Olint it would seem feared that the immediate closure of its accounts would prejudice it in its main action against the bank. However such fears are not substantiated by the facts of the case. Not only was Olint given ample notice, they were given an extension. Moreover, the closure of a bank account, with or without extensive notice, is not sufficient grounds on which to say that there was no time to give notice. Their Lordships wondered why, ¨no explanation has been given for why it was not possible for the bank to be given notice of the application.¨

However, it was later explained to their Lordships that such last minute ex parte applications had become common practice in Jamaica. The recent cases of World Wise Partners Ltd v RBTT (2008) and Smith v NCB (2008) were cited as examples.

The Privy Council, expectedly, took exception to such blatant disregard for the law and the Civil Procedure Rules by both the judiciary for granting such injunctions and the Bar for applying for them.   They went on to say, ¨these cases appear to show a disregard of rule 17.4 (4) for which no justification is offered. If the rule is not generally enforced, plaintiffs will be encouraged to make a tactical use of the legal process which should not be allowed.¨

Like I said a wrap on the knuckles – actually in legal terms a wrap is highly understating things.

The second feature that troubled the Privy Council was the way in which both Smith J and the Court of Appeal applied the balance of convenience test in the refusal, in the case of the former, and the granting, in the case of the latter of the interlocutory injunction. The basic principle that both had to be mindful of, ¨is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other.¨ Moreover, ¨what is required in each case is to examine what on the particular facts of the case the consequences of granting or withholding of the injunction is likely to be¨

It appears that what the Jamaican courts did was first to characterize the injunction as either mandatory (requiring positive action) or prohibitory while applying the balance of convenience test. Each requires different factors to be taken into account. A mandatory interlocutory injunction would require a ¨high degree of assurance¨ that the applicant would be prejudiced by its refusal, while a prohibitory interlocutory injunction required a ¨serious issue to be tried.¨ At first instance Mr. Justice Jones characterized it has mandatory and refused to grant it while the Court of Appeal characterized it as prohibitory and granted it.

As it turns out the judge at fist instance was correct in result but not in his reasoning. Because what matters is what the practical consequences of the injunction are, ¨arguments over whether the injunction should be classified as prohibitive or mandatory are barren (Films Rover International Ltd v Cannon Films Sales Ltd). Their Lordships made it clear that they ¨consider that this type of box-ticking approach does not do justice to the complexity of a decision as to whether or not to grant an interlocutory injunction.¨

Yet another wrap on the knuckles….Ouch.

It will be very interesting to see what that reaction of the judiciary and Bar will be in Jamaica. This may be a bitter pill to swallow; however, to my mind their Lordships are wholly correct in fact and in law.

Privy Council In Bank Ruling Wraps Jamaican Judiciary On the Knuckles, Part II Fri, 15 May 2009 17:39:08 +0000 By: Ainsley Brown

The claims advanced by Olint, though ultimately would proven to be groundless is very important because it, gave us a brief glimpse into the subtleties of judicial politics. Before I go any further some context by way of an example I believe would be useful. The words with all due respect, seem quite mundane or you could even say respectful, however, not so in a court room – it is quite disrespectful. The respect for a judge and his or her court room flow naturally from their position and there is no need to remind the judge that you are being respectful. This is something that lawyers and judges know alike, so whenever such words are uttered it is code for hey, judge I am right and you are just full of it – like I said disrespectful.

Though totally unrelated to the case, this example illustrate the point nicely, that words matter and that in the politics of the courtroom they often have much greater meaning than they seem at first glance. Now back to the case.

Olint´s first argument would provide the ground for strongest rebuke by their Lordships of the Jamaican Court of Appeal. Lord Hoffmann even went as far as calling out the reasoning or better yet lack thereof of one of the judges of the Court of Appeal – a one Morrison JA. In the Court of Appeal Morrison JA criticized Mr. Justice Jones, at first instance for disposing of the matter by way of mini-rail, holding that the matter gave rise to a serious issue and ought to be tried. However, Lord Hoffmann goes on to point out, saying of Morrison JA that ¨ he did not explain what the issue would be and their Lordships consider that one has only to read section 4(3) (c) to see that it is irrelevant to any issue in this case.¨

This is Lord Hoffmann´s way of saying: your work is sloppy and you don’t know what you are talking about. Like I said a strong rebuke.

The claim, by the way, was that s. 4(3)(c) of the Banking Act had modified the bank´s contractual right to terminate the banking relationship by giving reasonable notice. Unfortunate for Olint s. 4(3)(c) of the Banking Act is part of the general fit and proper licensing provisions of s.4, under which the Bank of Jamaica grants licenses. It therefore does not take a legally trained mind to see that Olint is simply fishing and that there is not only no serious issue here but no issue at all – no wonder the strong rebuke.

The second argument advanced by Olint was that NCB by closing its accounts was abusing its market position. As I like to call it, and to put it in the Jamaican vernacular: dem a fight gainst man (translated: they are opposed to us) argument. This argument while it has great cultural resonance, and it could be argued reflects a commercial reality; it however has no basis in law.

Firstly, no evidence was furnished that NCB did indeed have a dominant position in the commercial banking sector in Jamaica. However, their Lordships did take judicial notice that NCB was ¨the second largest in Jamaica, with 34-37% of total loans and 30-35% of total deposits, but the Bank of Nova Scotia is larger and there are four other commercial banks in Jamaica, to say nothing of the foreign banks. They are all in competition with each other. It is not easy to acquire dominant position in the banking market.¨ Secondly, even if NCB had a dominant market position the refusal to continue be Olint´s banker does not procure for NCB some market advantage. If anything it does quite the opposite by enabling ¨competitors to pick up another customer if they felt inclined to do so.¨

The third claim by Olint, was that NCB was attempting to induce breaches of contract between itself and its club members.  Inducement of breaches of contract is a tort (a civil wrong) that would require not only that NCB knew that it would cause the breach of contract but that it intended to so ( OBG Ltd v Allan 2008). This by far was Olint´s strongest argument I think. However, their Lordships described it as a ¨hopeless proposition.¨ It will be remember from Part I that it was the refusal of Olint to furnish its audited books that kicked off this sequence of events. NCB could not without proper knowledge of the relationship of Olint and its members know or set out to cause breaches of contracts. What Olint was in fact saying was that NCB knew its actions would cause the breach and with this certain knowledge set out to cause the said breach of contractual arrangements. But how can you set out to cause or much less know that a breach would be caused in a contract that you haven’t even seen?

Stay tuned for Part III as it will deal with the injunction issue.

Privy Council In Bank Ruling Wraps Jamaican Judiciary On the Knuckles, Part I Thu, 14 May 2009 18:51:28 +0000 First posted on Commercial Law International on May 12, 2009.

The House of Lords, with its Judicial Committee of the Privy Council hat on, as Jamaica’s court of final appeal, handed down a judgment that is set to have repercussions well beyond the interests of the parties involved. In fact the consequences of this judgment go beyond just banking or investing but engages commercial dispute resolution, specifically commercial litigation.

The injunction is a very important – that should read indispensable – tool in the commercial lawyer’s arsenal. It is a power that is highly discretionary and exercised with sensitivity to the peculiarities of the case which by the way includes the idiosyncrasies judge. It is a power jealously guarded by the judiciary and as a matter of judicial comity and judicial politics the power to exercise this discretion is largely left unquestioned, with limited exception, to a judge at first instance. Therefore, whenever a court, much less the highest one in the land, is critical of the way in which this discretion is or has been exercised by other courts all involved in the legal process have right to take pause.

However before I get into what I believe to be the more important aspect of the ruling I should deal with the ratio of the case – for the non lawyers/ non Latin speakers the ratio or ratio decidendi are the reasons or rational for a decision. It will provide not only context for the more important dissuasion on injunctions but will also bring to the fore the importance of this ruling to the banking sector n Jamaica.

National Commercial Bank Jamaica Limited vs. Olint Corporation Limited, is a case that exemplifies why commercial awareness is global.

The question that their Lordships had to focus their minds on was whether a bank, by giving reasonable notice, could lawfully close an account that was not n debit, where there was no evidence of the account being used for unlawful purposes? In the judgment delivered by Lord Hoffmann, ¨their Lordships have no doubt that in the absence of express contrary agreement or statutory impediment, a contract by a bank to provide banking services to a customer is terminable upon reasonable notice.¨

The facts of the case, in brief are: Olint  provided administrative and other services to an investment club. The club allegedly derived its profits from foreign exchange trading which was proffered as an explanation for its high rate of returns to its member. It opened two accounts with National Commercial Bank (NCB) in 2005  and a third in 2007. Near the end of 2006 Olint, along with other investment clubs, began to attract  very unfavorable coverage in the press . They faced allegations that they were operating a Ponzi scheme where returns to older investors were being paid out of money from newer investors.

It is interesting to note that Olint and other investment  clubs sprouted up as a specific  market response to the lack of investment alternatives, especially for the lower and middle strata  of Jamaican society. In this respect they were in direct competition with the financial establishment  – the  commercial banks and other financial institutions.

In August of  2007 NCB as per its anti-money laundering and terrorist financing legal obligations – but no doubt also motivated by its concerns over the fraud allegations – asked to see the audited accounts of Olint. None was forthcoming. NCB being apprehensive that the allegations could turn out to be true, opening it up for reputational damage and or claims for negligent or dishonest assistance, decided to end is relationship with Olint. It wrote to Olint in November informing them of the decision to close their accounts on December 17 – a notice period of 32 days.

This action by NCB only added to the atmosphere at the time that NCB and the financial establishment were using at best the strictures of the law or at worst under handed tactics in order to remove the competition that Olint and the other investment clubs offered. To put it in the Jamaican  vernacular: dem a fight gainst man (translated: they are opposed to us) . Unfortunately, even if  this is a commercial reality and I offer no opinion pro or con, it finds no basis in law.

In response on November 21st Olint asked NCB for an extension to March 14 2008, NCB believing that this period was too long agreed to extend until January 14 2008. On January 1, days before the extension period was going to expire Olint without any notice successfully applied ex parte (from (by or for) one party) injunction preventing NCB from closing its accounts until January 15th.  An application inter parties (between the parties) came before Mr. Justice Jones on the 17th and 18th of March. He dismissed the application because he did not find that it gave rise to a serious issue. Olint appealed and on July  18th 2008 the Court of Appeal grated the injunction until trail.

Based on the allegations in the particulars of claim served by Olint, it did not claim that the extended period was too short, ¨instead , it is alleged that the bank was acting maliciously, contrary to its statutory obligations under the banking Act and Fair Competition Act and with the intent of inducing breaches of contract between the company and members of the investment club.¨ their Lordship review each of these agreements and had no problem dismissed each in turn as being baseless.

Stay tuned for Part II.

Tupac’s Mother Files Counter-Suit Over Late Son’s Film Rights Fri, 03 Apr 2009 14:33:56 +0000 First posted on Commercial Law International on March 19, 2009.

The mother of late rapper Tupac Shakur, Afeni Shakur, filed a $10 million suit against Morgan Creek, an independent production company over the rights to make a biopic of the rapper. This is a counter claim to a suit filed earlier by Morgan Creek in Los Angeles alleging Amaru Entertainment reneged on a deal to sell the rights for a biopic about the deceased rapper.

Amaru Entertainment, what is that and how did they get involved in this dispute? Isn’t it between Morgan Creek and Ms. Shakur?

This is easily explained. Amaru Entertainment controls the estate of the late rapper which in turn is over seen by Ms. Shakur.

Ok, with me now.

This whole morass it would seem stems from, and you will never guess, Biggie Smalls. Yes the other late rapper and Tupac’s rival, Christopher Wallis a.k.a. the Notorious B.I.G – no no please don’t get me wrong, I am not trying to reignite the whole West Coast-East Coast, Tupac vs Biggie thing. I simply want to point out that this dispute, in my opinion, is highly connected and only arose after the biopic, “Notorious,” about Biggie grossed over $20 million in its opening weekend earlier this January and potentially profitability of a Tupac biopic became fully crystallized in the minds of both parties.

The central legal question is this case appears to whether or nor there was a deal between Morgan Creek and Amaru entertainment. For all the present and former law students out there, yeah, offer and acceptance is rearing it ugly head out side the safe confines of a law school.


Was there in fact a deal? You decide:

Both parties were in advanced negotiations about a biopic on the later rapper. In December of last year Morgan Creek received a final term sheet which detailed everything that would be required to reach a deal. Morgan Creek’s executives in late January accepted this proposal – please note that this is after the “Notorious” opening weekend. It then began tell others in the film industry that it in fact owned the rights to a Tupac biopic. Morgan Creek then file suit in order to get Amaru to honor the deal.

Amaru Entertainment for its part claims that that there was no deal but that the final term sheet was in fact a counter offer and was the basis of further negotiations. In fact key details of a deal were not workout, such as an executive producer credit for Ms. Shakur. Because Morgan Creek was only one of many suitors for the biopic rights – others included Fox Searchlight, Paramount and Kennedy/Marshall – when they began telling others in the industry that they owned the film rights it sabotaged negotiations with the other studios.

Like I said a morass.

Lottery Winnings Denied for Being 7 Seconds Late Thu, 09 Oct 2008 04:01:52 +0000 Lucky Sevens

A lottery winner has been denied his fortune because his lottery ticket was processed a mere 7 seconds after the day’s deadline.

Joel Ifergan of Montreal walked into a convenience store just a couple of minutes before 9:00pm to buy lottery tickets. The clerk informed him that he only had a short time to make the purchases before the deadline for that day’s draw would pass.

Ifergan bought two tickets for Lotto Super 7. Both were purchased just before the 9:00pm deadline.

But a lag in the lottery system’s processing time meant that the purchase was only approved on Loto-Quebec’s end at 9:00:07 – seven seconds after the draw deadline.

Later, Ifergan would be shocked to learn that he had hit all 7 winning numbers.

7 winning numbers, but 7 seconds late.

“When we met with a Loto-Quebec lawyer and two of their technicians at the depanneur, they told us there was a 10 to 12 second delay in transmission time.”

That being the case, Ifergan believes Loto-Quebec owes him $13.5-million.

“My purchase and request for the tickets was done, if we calculate it backwards, approximately 8:59:43,” he said. “Due to transmission delays it was processed at 9:00:07.”

Loto-Quebec refuses to pay, however, and the case is now moving to litigation.

This case raises some interesting questions about the nature of offer and acceptance of contracts, which happens to be the subject our 1Ls are studying right at this time.

Does the transmission delay – the fault of Loto-Quebec – mean that the contract fails?  If the terms of the lottery agreement require that a ticket be purchased before 9 pm, does the purchase take place at the moment Mr. Ifergan asked for the ticket, or when the ticket was processed by Loto-Quebec computers, or when the money was handed over?

These are all interesting questions for the law student to ponder.

Personally, I have a feeling that Mr. Ifergan will be a millionaire after all – as will his lawyer!

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Love, Actionable Sat, 02 Aug 2008 22:26:39 +0000 Love and Marriage

Contract law is no stranger to love, and vice-versa. We in the Western world, and most other places, have formalized romance for centuries in various different ways. What was once the union of a couple in love, witnessed by peers, blessed by relatives and ordained by God, is now a stack of paperwork.

That being the case, it’s no surprise that myriad legal and bureaucratic idiosyncrasies have, over the years, crept into the institution of marriage. One of the most important of which, which is also probably the oldest—aside from perhaps religious scripture—is the law of contract.

“Marriage” is the not-so-legal terminology for an “agreement.”

Damages for Cold Feet

MSNBC recently reported on the story of a woman who was awarded $150,000 in damages after her fiancé acquired a pair of cold feet and decided to use them, despite their frigidity, to back out of their wedding plans.

It’s a classic case at contract law:

  • A asks B to marry him,
  • B says yes (we have an agreement);
  • B quits her high-paying job to relocate (we have an “acting on” to her detriment);
  • A changes his mind and backs out of the contract without fulfilling his promise;
  • B is screwed… figuratively, anyway;
  • B seeks damages to compensate her loss and succeeds.

I sat on the fence for my first read of the story.

The romantic in me told me you can’t put a price on love and that the verdict was ridiculous, while my moral side reminded me that this woman was done wrong by someone who needs to think more before he acts regarding such sensitive situations, especially those that require other people to make significant life changes.

But eventually the romantic in me won out, aided, of course, by the irrational jackass in me.

Because let’s face it. Anyone who has ever been in love has also been an irrational jackass.

Love and Law

There are many conflicts in the world of law that pose impossible questions:

  • Can law and morality intertwine without individuals and groups using “morality” to justify anything and everything, legal or not?
  • To what degree can and should familial relationships be governed by the law?
  • Can the law, which is itself a desperate attempt to provide formal solutions to informal problems, address matters of love and friendship?

The common trend in Canada has been to keep the law out of the most personal aspects of relationships, until of course they become formalized by something like marriage.

In the 2003 case of M.(N.) v. A.(A.T.), the plaintiff quit her job and relocated based on a promise made to her by her lover (who eventually kicked her out… snap).

Her action failed because it was missing one key element that was necessary for her promissory estoppel claim to succeed: A legal relationship.


So perhaps it’s a question of the varying degrees of formality. But in the current case, the American court decided that the actual legal relationship wasn’t necessary because there was no marriage.

Love and Rationality (or Lack Thereof)

The heightened degree of irrationality that generally accompanies love and its many manifestations render it almost entirely incompatible with anything rational, and further, legal or formal.

Who among us have not been irrational in the name of love? Should we all be forced to pay for things so human in nature?

I’m not talking about waking up next to a total stranger after a night of drunken debauchery. I’m talking about passion-infused statements and actions that may well lead another person to alter their life just because it “felt right at the time.”

Imagine… Cheap Love

A ruling like this could have unfortunate consequences. I’m not suggesting that we paint the bleakest picture possible of course, which I suppose would entail a judge ordering specific performance on a promise to marry.

Imagine that… you fall in love, like the irrational creature you are, you throw caution to the wind and you act on it. Suddenly reality strikes and you have second thoughts.

And then, wouldn’t you know it, the judge orders you to perform specifically the task you promised you would: Marry him/her, have 2.5 children, buy a dog, build a white picket fence and stay married for a minimum of a certain period of time, all in accordance with national averages.

That would, of course, be the legal equivalent of crying out that the sky is falling, but it’s kind of funny to imagine regardless.

Maybe the law hasn’t yet killed the romantic in me, but can we try not to cheapen love any further by putting a price on it?

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Follow-up: SCC tosses “dead fly” appeal Thu, 22 May 2008 16:53:23 +0000 Yesterday I explained the background to the Mustapha v. Culligan of Canada cases. As expected, the Supreme Court issued its decision today. The full text of the lovely (read: short) decision can be be found here: Mustapha v. Culligan of Canada Ltd., 2008 SCC 27.

In a unanimous decision written by McLachlin CJC, the court threw out the appeal against Culligan. The reasons for judgment differed from those of the Ontario Court of Appeal (2006 CanLII 41807), with the Supreme Court finding that the negligence action failed at the remoteness of damages stage.

Here’s a summary:

Duty of care (para 6): As a manufacturer, Culligan owed a duty of care to the consumers of its products as per Donoghue v. Stevenson, [1932] A.C. 562 (HL).

Standard of care (para 7): The court was a little light on its reasons here, because the issue was not seriously argued after the trial level. The trial judge heard evidence that apparently flies were present in the bottling room and (obviously) could get into the bottles in spite of safeguards implemented by the company. Gross.

The Supreme Court concluded simply that Culligan breached the standard of care expected of it by not ensuring that water intended for consumption would be free of contaminants.

Damages (paras 8-10): The SCC reiterated that minor upset, anxiety, disgust, etc. are not recoverable in tort. However, Mr. Mustapha suffered recognizable and serious psychiatric trauma (namely a major depressive disorder coupled with anxiety and phobia). As such, Mr. Mustapha’s psychological injuries were very serious and sufficiently interfered with his quality of life to be recoverable.

Causation (paras 11-18): This was the crux of the SCC’s judgment:

“in order to show that the damage suffered is not too remote to be viewed as legally caused by Culligan’s negligence, Mr. Mustapha must show that it was foreseeable that a person of ordinary fortitude would suffer serious injury from seeing the flies in the bottle of water he was about to install. This he failed to do.” (para 18, my emphasis)

The trial judge was mistaken in applying a subjective standard which took into account Mr. Mustapha’s past history, circumstances, and cultural factors.

The chief justice did make one important qualification to the objective standard. At para 17, she writes:

“In those cases where it is proved that the defendant had actual knowledge of the plaintiff’s particular sensibilities, the ordinary fortitude requirement need not be applied strictly. If the evidence demonstrates that the defendant knew that the plaintiff was of less than ordinary fortitude, the plaintiff’s injury may have been reasonably foreseeable to the defendant.”

Conclusion (para 20): Mr. Mustapha’s appeal was dismissed with costs.

So there we have it.

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