What’s a Handshake Worth What’s a Handshake Worth In the Common Law?In the Common Law?

Professor Rosalie JukierProfessor Rosalie Jukier

April 20, 2010April 20, 2010

Civil and Common Law TraditionsCivil and Common Law Traditions

Whereas the Civil Law is said to be “laid Whereas the Civil Law is said to be “laid down”, the Common Law is said to have down”, the Common Law is said to have “grown up”“grown up”

Civil Law: Lauded for its logical, coherent, Civil Law: Lauded for its logical, coherent, taxonomic structuretaxonomic structure

Common Law: Often referred to as “chaos Common Law: Often referred to as “chaos with an index” – “unlike a good lettuce, with an index” – “unlike a good lettuce, the common law is rarely crisp”the common law is rarely crisp”

However, “even messy kitchens can However, “even messy kitchens can produce good food”produce good food”

Different Roles of the Judge and of Different Roles of the Judge and of JudgmentsJudgments

Traditionally, the civilian judge is but Traditionally, the civilian judge is but the “mouthpiece of the Code” – “la the “mouthpiece of the Code” – “la porte-parole de la loi”porte-parole de la loi”

Civilian jurisprudence is but a Civilian jurisprudence is but a “persuasive” source of law, not a “persuasive” source of law, not a binding onebinding one

Contrast with Common Law Contrast with Common Law judgments which are binding sources judgments which are binding sources of law (hence term “caselaw”)of law (hence term “caselaw”)

Doctrines of precedent (stare decisis)Doctrines of precedent (stare decisis)

Civil and Common Law TraditionsCivil and Common Law TraditionsSome MythsSome Myths

Myth 1: Rigidity of the Civil LawMyth 1: Rigidity of the Civil Law Tout n’est pas dit quand un code a parléTout n’est pas dit quand un code a parlé Le code nLe code n’est pas un musée mais une ’est pas un musée mais une

maison, non un château, dit-on, que l’on maison, non un château, dit-on, que l’on visite, mais une demeure où l’on vitvisite, mais une demeure où l’on vit

G. CornuG. Cornu

Myth 2: Flexibility of the Myth 2: Flexibility of the Common LawCommon Law

Generally speaking, the judiciary is Generally speaking, the judiciary is bound to apply the rules of law found in bound to apply the rules of law found in the legislation and the precedents. the legislation and the precedents. Over time, the law in any given area Over time, the law in any given area may change; but the process of change may change; but the process of change is a slow and incremental one based is a slow and incremental one based largely on the mechanism of extending largely on the mechanism of extending an existing principle to new an existing principle to new circumstances. circumstances. McLachlin J in McLachlin J in Watkins v. Olafson Watkins v. Olafson

Reality CheckReality Check

Theoretical versus practical differences Theoretical versus practical differences between role of the judge in two traditionsbetween role of the judge in two traditions

Civil justice system in Quebec is heavily Civil justice system in Quebec is heavily influenced by the English adversarial systeminfluenced by the English adversarial system

Heavy use of jurisprudence by Quebec Heavy use of jurisprudence by Quebec judgesjudges

Common Law style of judgment writing Common Law style of judgment writing adopted by Quebec judgesadopted by Quebec judges

Many civilian concepts have “grown up” in Many civilian concepts have “grown up” in the courts rather than being “laid down” in the courts rather than being “laid down” in the Code (good faith, unjust enrichment)the Code (good faith, unjust enrichment)

How Does This Translate to How Does This Translate to Contract Law and Remedies?Contract Law and Remedies?

Why is it important for a Quebec Why is it important for a Quebec practitioner to care?practitioner to care?

Clients increasingly deal with others in Clients increasingly deal with others in common law jurisdictionscommon law jurisdictions

Lawyers increasingly deal with other Lawyers increasingly deal with other lawyers in common law jurisdictionslawyers in common law jurisdictions

Important to learn about the otherImportant to learn about the other Differences can be very important in Differences can be very important in

negotiating and drafting contractsnegotiating and drafting contracts Eg: choice of law clausesEg: choice of law clauses

Main Differences CanvassedMain Differences Canvassed

Consideration (as a necessary Consideration (as a necessary element of a valid contract)element of a valid contract)

Good Faith Good Faith Third Party BenefitsThird Party Benefits Different Conception of RemediesDifferent Conception of Remedies

ConsiderationConsideration

““Something of value in the eyes of Something of value in the eyes of the law moving from the promisee the law moving from the promisee …” Thomas v. Thomas. …” Thomas v. Thomas.

No “bare promise”No “bare promise” Contrast with the recognition of the Contrast with the recognition of the

gratuitous contract of the Civil Law gratuitous contract of the Civil Law (art. 1390? C.C.Q.)(art. 1390? C.C.Q.)

Role of Formalities in the Civil Law?Role of Formalities in the Civil Law?

ConsiderationConsideration

Where can it get tricky for the Where can it get tricky for the practitioner?practitioner?

Modification of existing contractsModification of existing contracts Contrast article 1433 C.C.Q. with Contrast article 1433 C.C.Q. with

Harris v. Watson Harris v. Watson and and Stilk v. MyrickStilk v. Myrick Modern adaptation: Modern adaptation: Gilbert Steel Gilbert Steel (Ont (Ont

C.A.), C.A.), Williams v. Roffey Williams v. Roffey (English C.A. (English C.A. and introduction of practical benefit) and introduction of practical benefit) and and Nav Canada Nav Canada ( 2008 N.B.C.A.) ( 2008 N.B.C.A.)

Good FaithGood Faith

Supreme Court of Canada, in Supreme Court of Canada, in Houle Houle and and Bail Bail cases, introduces the doctrine of cases, introduces the doctrine of good faith in the formation and good faith in the formation and performance of contracts in the Civil performance of contracts in the Civil LawLaw

Codified in C.C.Q. in article 1375 as well Codified in C.C.Q. in article 1375 as well as more generally in articles 6 and 7as more generally in articles 6 and 7

Duty to act reasonably is thereby Duty to act reasonably is thereby imported into contractual realmimported into contractual realm

Good FaithGood Faith

Not a favourite of the Common LawNot a favourite of the Common Law Importing a duty to bargain in good Importing a duty to bargain in good

faith would “hobble the marketplace” faith would “hobble the marketplace” (Iacobucci J. in (Iacobucci J. in MartelMartel))

No duty to disclose – disincentivize No duty to disclose – disincentivize parties from acquiring useful parties from acquiring useful information (Law and Economics information (Law and Economics movement in U.S.)movement in U.S.)

Good FaithGood Faith

More receptive in the performance of More receptive in the performance of an already formed contractan already formed contract

Some key decisions in Canada Some key decisions in Canada ((HondaHonda, , GatewayGateway, , RBC Dominion RBC Dominion SecuritiesSecurities) )

But far from an established doctrine But far from an established doctrine that you want to rely on in a that you want to rely on in a Common Law courtCommon Law court

Third Party BenefitsThird Party Benefits

Civil Law: Stipulation pour autrui Civil Law: Stipulation pour autrui (article 1444 C.C.Q.)(article 1444 C.C.Q.)

Third party given direct right of Third party given direct right of action to enforce benefit in contract action to enforce benefit in contract to which he is not a partyto which he is not a party

Common Law: much stricter concept Common Law: much stricter concept of privity of contractof privity of contract

Third Party BenefitsThird Party Benefits

Practical problem: Exoneration of Practical problem: Exoneration of Liability clauses for employees and Liability clauses for employees and other independent contractorsother independent contractors

Line of English Shipping cases where Line of English Shipping cases where the House of Lords performs mental the House of Lords performs mental gymnastics to allow stevedores the gymnastics to allow stevedores the benefit of exclusion clauses benefit of exclusion clauses contained in contracts between contained in contracts between shippers and owners of goodsshippers and owners of goods

Third Party BenefitsThird Party Benefits

England has statutorily altered the England has statutorily altered the traditional Common Law positiontraditional Common Law position

Canada: Canada: London Drugs London Drugs case provides case provides some relaxation of privity for reasons of some relaxation of privity for reasons of commercial reality and justicecommercial reality and justice

Limited exception now exists for Limited exception now exists for employees to use their employers’ employees to use their employers’ limitation of liability clauses as shieldslimitation of liability clauses as shields

Contractual RemediesContractual Remedies

Different ConceptionDifferent Conception Civil Law: Rights precede RemediesCivil Law: Rights precede Remedies Common Law: Remedies precede RightsCommon Law: Remedies precede Rights

Specific PerformanceSpecific Performance Civil Law considers S.P. a primary Civil Law considers S.P. a primary

remedy as of right, as long as it is remedy as of right, as long as it is possible, does not interfere with rights possible, does not interfere with rights of third parties and does not unduly of third parties and does not unduly interfere with personal liberty of interfere with personal liberty of debtordebtor

Different Conception of RemedyDifferent Conception of Remedy

Oliver Wendell Holmes: “the duty to Oliver Wendell Holmes: “the duty to keep a contract at common law keep a contract at common law means a prediction that you must means a prediction that you must pay damages if you do not keep it, - pay damages if you do not keep it, - and nothing elseand nothing else””

Doctrine of Efficient BreachDoctrine of Efficient Breach Civilian mentality: the duty to keep a Civilian mentality: the duty to keep a

contract ought presumptively to contract ought presumptively to mean a duty to perform it.mean a duty to perform it.

Specific PerformanceSpecific Performance

Civil Law: Primary, presumptive Civil Law: Primary, presumptive remedy of rightremedy of right

Common Law: remedy is discretionary, Common Law: remedy is discretionary, exceptional, available only where exceptional, available only where damages are “inadequate”damages are “inadequate”

Result: Arguments of hardship and Result: Arguments of hardship and alleged problems of supervision will be alleged problems of supervision will be used by Common Law courts to not used by Common Law courts to not award the remedyaward the remedy

Concept of efficient breachConcept of efficient breach

Specific PerformanceSpecific Performance

Compare and contrast English Compare and contrast English Hourse of Lords decision in Hourse of Lords decision in Argyll Argyll StoresStores with Quebec decision in with Quebec decision in Golden Griddle, Golden Griddle, both dealing with a both dealing with a continuous operation provision in continuous operation provision in commercial leasecommercial lease

What’s the difference?What’s the difference?

ConclusionConclusion

Different historical development of two Different historical development of two great legal traditionsgreat legal traditions

Different conceptions of the role of the Different conceptions of the role of the judge and the role of jurisprudencejudge and the role of jurisprudence

Key differences in doctrinal dimensions of Key differences in doctrinal dimensions of contract law contract law

Notwithstanding – uniformity in result may Notwithstanding – uniformity in result may be obtainedbe obtained

Necessary to understand the key Necessary to understand the key differences and react accordingly to themdifferences and react accordingly to them