WEEK 3(A) BUSINESS LAW: CONTRACT LAW MISREPRESENTATION, LEGALITY, FRUSTRATION, REMEDIES A.

. MISREPRESENTATION The classical position is that if a party enters into a contract on the basis of certain statements of fact which turn out to be untrue, the court may be prepared to hold that the presence of such untrue statements of fact can form the basis of relief for an aggrieved party. The courts are not impressed by statements that are mere puffs, opinions, beliefs, representations as to the future or representations with regards to the law. Miller v Edelweiss International Franchise Corp (1996) B.C.S.C. C91 !9" Vraj Pankhania, Joshna Pankhania v The London Borou h o! "ackne#, The $eceiver !or the Metropolitan Police %istrict #$%%$& E.W.'.C. $ 1 (C( D) &pice 'irls Ltd v (prilia )orld &ervice Bv #$%%$& E.W.C.A. C)* 1" ($ +,-.,/0 $%%$) E1232-45 67 M)5/28/252-4,4)6Where a representation does not have contractual force, it will only give rise to remedies if it is unambiguous and material and if the representee has relied on it. Morris v Jones *+,,+- E.).C.(. Civ /01, 2C.(.3 B. PRI9ITY It was once the case that only a person that was party to a contract could commence legal proceedings with respect to the contract. This is based on the rule of privity of contract and largely on the notion ofconsideration, as a third party to a contract would not have provided the requisite consideration to turn an obligation, moral or otherwise, into a contact. The situation has changed tremendously and there have been so many exceptions to the rule of privity of contract that it is now considered more of a fossil from the days of classical contractual dogma. Fraser $iver Pile 4 %red e Ltd v Can5dive &ervices Ltd #1999& 3 S.C.R. 1%! C. FRUSTRATION The early common law courts took the view that a contract, after its formation, must be performed even where events beyond the control of a party occurred and prevented the party obligated to perform the contract from so performing. The law has changed from the days of strict enforcement even when performance of a contract has been prevented by acts beyond the control of a party. However, it should be noted that the courts are not yet ready to release a party from its contractual obligations except in limited circumstances and where there is no reasonable opportunity for the contract to be substantially performed.

6ational Carriers Ltd v Panalpina 26orthern3 Ltd #19!1& A.C. 6:" ('.L.) E. Johnson 4 Co 2Bar7ados3 Ltd v 6 & $ Ltd (1993) : W.I.R. $! The courts are also vigilant to prevent self-induced frustration as a mechanism to escape contractual obligations. F.C. &hepherd 4 Co Ltd v Jerro8 #19!:& ;.B. 3%1 D. ILLEGAL CONTRACTS It stands to reason that a contract that is contrary to law or public policy will not be enforced. ontracts that are tainted by the element of illegality will be re!ected by the courts. Meer &a!dar (lli5&haw v J )ailoo 2/1903 // ).I.$. :;0 (l!red Mara h v Ja8es )illia8s and Edith )illia8s, $achael )illia8s v Leonard Mara h 2/10,3 /9 ).I.$. :++ R254/,)-4 67 T/,<2 A restrictive covenant in a contract of employment will be void ab initio unless the restraints that it imposes are reasonable having regard to the interests of the parties and of the public. In practice this test of what is reasonable tends to be resolved by considering whether or not the restrictive covenant is reasonably necessary to protect legitimate interests of the employer in preserving goodwill and confidential information. It is well settled that the reasonableness of a restraint clause is to be tested by reference to the position as at the date of the contract of which it forms a part. Esso Petroleu8 Co Ltd v "arper<s 'ara e 2&tourport3 Ltd #196!& A.C. $69 BFi =ptilas v Bl#th 4 =thers #$%%$& E.W.'.C. $693 (;.B.D.) Fitch v %ewes #19$1& $ A.C. 1"! 6ational Che8search Corporation Cari77ean v %avidson (1966) 1% W.I.R. 36 Barr# (llsuch 4 Co v "arris #$%%1& WL :$%3"! %rane> (nstalt and =thers v ?a8ir "a#ek and =thers #$%%$& E.W.C.A. C)* 1:$9 $ichard (itcheson To7# v (ttorne# 'eneral o! Trinidad and To7a o (19:3) $: W.I.R. $66 C6-4/,=45 C6-4/,/0 46 P.>1)= P61)=0 The public policy which a court is entitled to apply as a test of validity to a contract is in relation tosome definite or governing principle which the community as a whole has already adopted either formally by law or tacitly in its general course of corporate life. The court is not a legislator" it cannot initiate the principle" it can only state or formulate if it already exists. The courts refuse to give effect to such a bargain, not for the sake of the defendant # indeed they do not fail to notice that his failure to abide by the agreement sometimes adds dishonesty to illegality # but for the sake of the community, who will be pre!udiced if such a bargain were countenanced.

@niversal Cari77ean Esta7lish8ent v E A/ ).I.$. /+; C6-4/,=4 46 C633)4 , C/)32

5"ill "oldin

Co Ltd 2/11+3

It goes without saying that a contract to commit a crime will not be sanctioned by the courts as this would be contrary to public policy and would undermine the rule of law. Le8enda Tradin Co Ltd v (!rican Middle East Petroleu8 Co Ltd */1BB- / Llo#d<s $ep. :9/ 2C.B.%.3 2Co88 Ct3 Parkinson v Colle e o! (87ulance, Li8ited, and "arrison */1+;- + D.B. / @D

E. REMEDIES FOR BREAC' OF CONTRACT D,3,?25 The underlying principle of damages as a remedy for breach of contract is to put the plaintiff in the position he would have been if the contract which had been breached had been performed as agreed. It would seem that the measure of damages can now include in certain circumstances damages for mental distress. Col7# v &untours Ltd (19:9) 3" W.I.R. :! $amages should be awarded when arising naturally or as may reasonably be supposed to have been within the contemplation or knowledge of both the parties at the time they made the contract. %nowledge can be based on awareness &or what the party in breach ought to be aware of' in the ordinary course of things of the party in breach imputed &(ordinary course of things)' or special circumstances outside the ordinary course of things which the party in breach was made aware of at the time of the making of the contract. "adle# v BaEendale 2/B;A3 1 EE :A/ Victoria Laundr# v 6ew8an Industries */1A1- + D.B. ;+B If a party who is claiming damages for breach of contract would have in fact suffered more losses if the contract had been properly performed, the court may be inclined to award nominal damages. $ain7ow Industrial Caterers Ltd v Canadian 6ational $ailwa# Co #1991& 3 S.C.R.

*nce the defendant breached his obligations or stated his intention to breach his obligations, the plaintiff has a duty to mitigate his loss, unless the plaintiff had (substantial and legitimate interest) in actual performance. Fetton v Eastwoods Fro# Ltd */190- / ).L.$. /,A (lcoa Minerals o! Ja8aica Inc v "er7ert Broderick #$%%$& 1 A.C. 3:1 P/)*0 C6.-=)1 (+,3) (+uantum meruit) literally translates (as much as he deserves). It is trite law that when a contract is terminated under a termination clause or at common law, both parties are discharged from the further performance of the contract but that rights are not divested or discharged which have already been unconditionally acquired unless the contract provides to the contrary. +uantum meruit is an equitable doctrine based on the principle that one who benefits from the labour and materials supplied by another should not be un!ustly enriched thereby. ,nder circumstances where contracts are not enforceable because of uncertainty or where there has been no contract &eg, the voluntary provision of goods and services under certain circumstances', the law implies a promise to pay a reasonable amount for the materials and labour which have been furnished. Parr# "us7ands v )are!act Li8ited (pp. 6o. 0A o! +,,/ 2+,,:3 %esi n Construct Mana e8ent (ssociates Ltd v To7a o $ace Clu7 Li8ited 2".C.(. 6o. /B,B o! /11A3 The parties to a contract may anticipate the possibility of a breach and include in the contract a term that a certain sum shall be paid to the in!ured party by the party in default if a specified breach occurs. If this sum is a genuine pre-estimate of the damage the term is known as liquidated damages but if it is in excess of a genuine pre-estimate, it may be deemed a penalty and not enforceable. %unlop Pneu8atic T#re Co Ltd v 6ew 'ara e and Motor Co Ltd #191"& A.C. :9 S82=)7)= P2/76/3,-=2 -pecific performance is exceptional and ordered only when an award of damages would be (inadequate). -pecific performance is often the preferred remedy with respect to land contracts. The court more often than not would order the party in breach to perform his contract primarily due to the irreplaceable character of the goods or services covered. -pecific performance is a (coercive) remedy and is a creation of equity, thus making those seeking specific performance sub!ect to the rules of equity. Powercor (ustralia Ltd v Paci!ic Power */111- V.&.C. //,+ TUTORIAL ;UESTIONS TUTORIAL ;UESTIONS .. *n /0 1ebruary .223 the -pice 4irls, a well-known group of girl singers then consisting of five members, embarked on a tour of 5urope. The claimant &(-46)', a company owned by them and through which their services were

exploited, had instructed agents &(%67)' to obtain sponsors for the tour. The agents made contact with 8prilia -pa &(8prilia)', a company incorporated in Italy and a manufacturer of motorcycles. *n 0 9arch .223 heads of agreement were reached between -46 and 8prilia for the latter to sponsor the -pice 4irls tour of 5urope, due to end on /2 9ay .223, and, on a more limited basis, the tour of the ,nited -tates then planned for the period from .: ;une to <. 8ugust .223. The sponsorship was announced on 3 9arch .223. The terms of the heads of agreement were substantially performed by all parties until given contractual effect by an agreement in writing dated = 9ay .223 &(the 8greement)' made between -46 and 8prilia >orld -ervice ?@ &(8>-)', a member of the 8prilia 4roup incorporated in the Aetherlands. The 8greement signed on = 9ay .223 described the -pice 4irls as (currently consisting) of the five named members. *n <. 9ay .223 it was announced that 9s 4eri Halliwell, professionally known as 4inger -pice, had left the -pice 4irls on /B 9ay .223. In *ctober .222 9s 4eri Halliwell published her autobiography entitled (If *nly). -he disclosed that on both < and 2 9arch .223 she had informed the other four members of the -pice 4irls that she intended to leave the -pice 4irls at the end of the 5uropean Tour in 9ay .223. 8>- has refused to pay part of the fees due to the -pice 4irls and is seeking your advice as to whether it can legally continue to refuse to make such payments. 7lease advise. / 4rouper 6imited entered a contract with an employee, -hark Camnarine which purported to restrict -hark from working with or being interested in any business that competed or proposed to compete with any business carried on by 4rouper at any time during the last two years of -harkDs employment or at the date of the termination of -harkDs employment. -hark was employed by 4rouper for six years until he left on 3 *ctober /EE.. It was accepted that -hark had acquired confidential information and trade secrets during that time. -hark then commenced work setting up a new venture similar to 4rouperDs business that was to begin trading shortly after the period of restraint ended. 4rouper is of the opinion that -hark had to have used the confidential information and trade secrets he acquired over the course of his employment with 4rouper to the advantage of his new employer. 7lease advise 4rouper. < %ai 9itt 6imited owned some land which it wanted to develop. The land needed to be reFoned and the company applied to the Town and ountry 7lanning $ivision for the reFoning. The Town and ountry 7lanning $ivision stated that the consent of the -an 1ernando ity orporation was required and accordingly %ai 9itt 6imited commenced negotiations with the -an 1ernando ity orporation and came to an agreement whereby %ai 9itt 6imited would carry out certain works at the -an 1ernando Hill in exchange for the consent to have the land reFoned &the land is not located near the -an 1ernando Hill'. The 4overnment of Trinidad and Tobago proceeded to compulsorily acquire the lands of %ai 9itt 6imited for use as a school. The -an 1ernando ity orporation would still like %ai 9itt 6imited to honour its agreement and do the works to the -an 1ernando Hill. Please advise the &an Fernando Cit# Corporation.

0. ?ugs -paniard advertised for a partner in his accounting practice who would also purchase his residence. 9ary -hoat replied and during two interviews, -paniard represented that his business was bringing in either about G<EE,EEE.EE a year, or from G<EE,EEE.EE-G0EE,EEE.EE a year. 8t a third interview -paniard produced summaries of business done, which showed gross receipts below G/EE,EEE.EE a year. -hoat asked how the difference was made up and -paniard produced a quantity of letters and papers which, he stated, related to other business which he had done. -hoat did not examine the books and papers thus produced, but only looked cursorily at them, and ultimately agreed to purchase the house and take a share in the business for G.,=EE,EEE.EE. It turned out that the letters and papers, if examined, would have shown business of only G:,EEE.EE or G=,EEE.EE a year. 1inding that the practice was utterly worthless, -hoat refused to complete the contract. Please advise &paniard i! &hoat can 7e sued !or speci!ic per!or8ance. :.The hief 5xecutive *fficers of several multinational energy companies operating in Trinidad and Tobago have expressed concerns over the movement of skilled employees from company to company. The hief 5xecutive *fficers have accordingly executed a Hnon-poaching pactI which essentially prevents a company that is a member of the non-poaching pact from employing certain designated categories of workers from another member of the non-poaching pact within six months of that person leaving the employ of the original employer. ;anet >ingley has learnt that ?urma *il and 4as 6imited, a new multinational operating in Trinidad and Tobago is looking for someone with her skills and would pay three times as much as her current employer, -cottish Aational *il ompany 6imited, however ?urma *il and 4as 6imited and -cottish Aational *il ompany 6imited are both signatories to the non-poaching pact. Janet is unhapp# a7out the prospect o! not 7ein e8plo#a7le !or siE 8onths 7# 8e87ers o! the non5poachin pact i! she departs !ro8 &cottish 6ational =il Co8pan# Li8ited and would like #our advice as to her options. Please advise Janet )in le#. =. $r. @ay 9al had been practicing medicine for over twenty years. In /EE:, he indicated to his wife that he was tired of the daily grind of medicine and he wanted to sell his practice and move to edros to have a nice relaxing life. His wife agreed and $r. 9al advertised his practice for sale. He got a serious inquiry from a recent medical graduate, $r. ra @at and commenced negotiations. $r. 9al correctly indicated to $r. @at that the medical practice was worth G0E,EEE.EE per month. Aegotiations took place over a six month period during which time $r. 9al fell ill and his practice declined to around G.E,EEE.EE per month, a fact he did not disclose to $r. @at. $r. @at bought the practice and discovered the new value of the practice and is quite annoyed and would like to take legal action against $r. 9al. Please advise %r. Vat. B. 9r. hi +uito, who is of ?olivian origin, entered the Cepublic of arabobo on a visitorsD visa on ;anuary .E, /EE:. 8t the expiration of his two month visa, 9r. +uito applied for asylum in the arabobo in 9arch of /EE:. In

$ecember /EE: while his asylum request was still being considered, 9r. +uito made a graduate training teacher application under a new scheme which made it possible for those with overseas qualifications to train in arabobo as teachers. 9r. +uito incorrectly ticked the box which indicated that he had right of abode in arabobo and did not tick a box indicating that he needed a work permit. The law of arabobo is that a person cannot work or apply to work while an asylum request is pending. 9r. +uito applied to Iere High -chool for a post as a graduate trainee teacher. He again indicated that he did not need a work permit, though the final decision on his asylum appeal was pending. In ;une /EE=, the -chool 7rincipal asked 9r. +uito to drop something at the laundry for him and 9r. +uito refused. The -chool 7rincipal who did not like 9r. +uito then got the -chool ?oard to dismiss 9r. +uito on a flimsy excuse. 9r. +uito would like to sue for breach of contract. The true facts of his contract have finally become known to the -chool and they would like to oppose his action. Please advise Iere "i h &chool. 3. 8lexander 1u -heng is a young graduate from the ,niversity of arabobo in 5lectrical 5ngineering. He migrated to Trinidad and Tobago and is desperate for a !ob. He receives an offer to work for +uick -ilver 6td. and despite misgivings as to the contract, he signs it because of his need to work. Three months into his new !ob, he receives a better offer and is seeking your advice as to the legality of the restraint of trade clause in his contract. The clause is reproduced below. Please advise Fu &hen . H&8' Cestraint 7eriod means the period commencing on 5mployee)s employment by 5mployer and terminating three &<' years after 5mployee)s employment with 5mployer ceases" &?' 5mployee undertakes during the Cestraint 7eriod in Trinidad and Tobago and abroad, not to, directly, indirectly, on its own account or as an agent, partner, director, or employee of any other entity, &i' solicit or transact business with any of the entities with which 5mployee was materially involved with during 5mployee)s employment" &ii' be employed by or employ or enter into partnership with any person who was, during 5mployee)s employment, an employee or director of 5mployer or any of its associated companies and shall not solicit, entice or procure any such other person to leave the employment of 5mployer or do anything which if done by the former employee or director would be a breach of this 8greement. & ' 5mployee undertakes during the Cestraint 7eriod to ensure that no related person of 5mployee shall engage in the conduct referred to in subclause &b'.I 2. 8 hinese company entered into a contract with a Trinidad and Tobago importer, for the importation into Trinidad and Tobago of assorted feathers for use in the annual arnival celebrations of Trinidad and Tobago. The feathers arrived in Trinidad and Tobago and the importer was not impressed with the quality of the feathers based on comparision with samples that had been previously sent. The feathers, however, were consistent with the description contained in the purchase documents. >hile awaiting final

clearance from ustoms $ivision, the Trinidad and Tobago government announces a ban on the importation of feathers from countries with acknowledged cases of bird flu. hina is one such country. The Trinidad and Tobago importer is refusing to pay the hinese exporter for the feathers which have been returned to hina. Please advise the Trindad and To7a o i8porter. .E. $rupatee Harry always had ambition of being a hair stylist. 1rom a little girl, she always spent time styling the hair of her dolls. 8t age .=, she announced to her parents that she was not interested in pursuing -econdary -chool 8dvanced 6evel -tudies and that she wished to be apprenticed to a hair stylist. Her dad, ?oopslal Harry, spoke to 9adame -piffy, a famous hair stylist from -iparia and she agreed to meet with $rupatee. $rupatee met with 9adame -piffy and signed a contract agreeing to be trained as a hair stylist for two years and to continue working for 9adame -piffy after the completion of her training. $rupatee also agreed not to work with any hair styling establishment within a .E mile radius of the hair styling establishment of 9adame -piffy for a period of : years after leaving the employ of 9adame -piffy. $uring her training period, $rupatee did third party private training in pedicure and manicure and she obtained a certificate of proficiency. $rupatee completed her training with 9adame -piffy and has taken up a position at a rival hair styling establishment located next door to 9adame -piffy, as a manicuristJpedicurist. Mada8e &pi!!# is threatenin le al action, please advise %rupatee. ... 7eter 4ift applied for a homeownerDs policy from ?agwatee Insurance ompany. *n the application, he was asked whether he had made a homeownerDs insurance claim within the past three years, and whether he used the insured premises for business. 4ift answered KnoK to both questions. 4ift subsequently renewed the policy for three consecutive years but was never asked questions as to previous claims and business activities. In the third year of the policy, 4ift house was partially burnt and he made a claim. 8t that point in its investigations, ?agwatee Insurance ompany found out that 4ift had made a claim within the previous five years, and that he operated a used car lot on the premises prior to taking out the insurance with ?agwatee Insurance ompany. ?agwatee Insurance ompany is resisting making any payments. Please advise 'i!t. ./. hang %ee %it, a contractor, agreed to build a golf course for the Coyal ity of 1yFabad. 8fter the contract was around 3E percent executed, an unseasonable heavy rain fall eroded much of the work and required repair. The cost of the repair to be borne contractually by the contractor would have caused the cost of the contract to be exceeded by as much as 0: percent resulting in an overall loss to the contractor. The 1yFabad city council insisted the work must go on and the cost borne by the contractor. The contractor has decided not to proceed further. Please advise the contractor as to his possi7le lia7ilit#. .<. -andra $ass sought to purchase a parcel of commercial property with the understanding that the property was contaminated. 5co-Aonsense, an

environmental management company provided a statement to the financiers of -andra that the parcel of land would achieve environmental compliance at a cost of G.E,EEE.EE. Celying on the statement made to the financiers, -andra believed that the contamination could be resolved and went ahead with the purchase. -andra has since learned that the local environmental authority has re!ected the remediation plan and has mandated a new plan costing G/EE,EEE.EE. 8 review of previous remediation plans at the office of the local environmental authority would have revealed that the initial proposed plan would not have been accepted. Please advise &andra. .0. ?oth parties are physicians and surgeons. $r. -wift entered into an agreement to give professional services to 5+,57 workers in the county of -t. 7atrick. He thereupon contracted with $r. -mart to assist him in this work at a salary of G/E,EEE.EE a month. The agreement contained a stipulation that on its termination $r. -mart would not, for a period of five years, practice his profession in the county of -t. 7atrick or within a radius of .E miles there from. The agreement was terminated properly by notice, but soon thereafter $r. -mart commenced the practice of his profession at -pencer @illage which is 3 miles outside of the county of -t. 7atrick. Please advise %r. &wi!t. .:. ?y a contract governed by Trinidad and Tobago law. )rupt 6imited appointed $eo $aychenko as a consultant for the procurement of contracts for the sale of military equipment to Trinidad and Tobago. )rupt 6imited is aware that $eo is a former high ranking military official of the army of Trinidad and Tobago and that to obtain contracts, $eo may have to pay bribes or use undue influence. It is illegal in Trinidad and Tobago to pay bribes or attempt to influence the award of a contract wit the army. -everal contracts were awarded to )rupt 6imited and $eo attempted to recover his consultancy fees. )rupt 6imtied has refused to pay the fees arguing that the arrangement with $eo was contrary to public policy because it had been for procuring sales by fraud through bribery or alternatively by illicit personal influence of other kinds. Please advise %eo. .=. 8desh 6td. was appointed as ?ankruptcy Ceceiver of 7inchin 6td. 8desh 6td. place the business for sale and on /2 $ecember /EE:, ;agrom 6imited indicated by telephone, an interest in purchasing 7inchin 6td. In the course of the conversation on /2 $ecember /EE: between 8desh 6td. and ;agrom 6imited, two matters were raised - the extent of that companyDs outstanding debtors and the extent and value of a backlog of contract work which ;agrom 6td. had in hand at the time. In the course of the conversation, 8desh 6td. gave a figure for what was outstanding on both those accounts and those figures were backed up by a fax despatched to ;agrom 6td. 8s a result an offer was made by ;agrom 6td. to purchase 7inchin 6td. and this offer was accepted. ?oth estimates turned out to be wrong by at least .: percent. (dvise Ja ro8 Ltd as to whether it can withdraw !ro8 the contract. .B. Cicky Conaldo is one of the premier batsmen in the >est Indies and is a registered member of the >est Indies ricket 8ssociation. 7ursuant to his

contract of membership, Hmembers are prohibited from playing in cricket matches, tournaments or competitions not sanctioned by the >est Indies ricket 8ssociation for a period of two years after leaving the >est Indies ricket 8ssociation.I Cicky Conaldo contract with the >est Indies ricket 8ssociation can be terminated with one month)s notice. Cicky Conaldo has been offered a lucrative contract to play in a tournament in -outh 8frica and he has proceeded to give one month)s notice of his intention to terminate his contract with the >est Indies ricket 8ssociation. The tournament has not been sanctioned by the >est Indies ricket 8ssociation. The >est Indies ricket 8ssociation has issued a warning to Cicky Conaldo prohibiting him from playing in the tournament in -outh 8frica. (dvise $ick# $onaldo. .3. -ibi purchased a second-hand motor-home from ?ushmoutie. It was a large vehicle, about the siFe of a normal single-decker bus, being <0 ft in length and .E/ inches wide. That width exceeded the maximum permitted by the Coad @ehicles Cegulations .23=, which provided that the overall width of a vehicle must not exceed the equivalent of .EE inches. >hen asked about the width of the vehicle, ?ushmoutie informed -ibi that the vehicle had a maximum width of .EE inches and was Dperfectly legalD. 7rior to purchasing, -ibi had the moved into the vehicle to test drive it for two days. $espite the opportunity to do so -ibi did not measure the width of the vehicle or express any concern as to the legality of the width. 1our months later, -ibi measured the width and found it to exceed .EE inches. -ibi contacted the @ehicle Inspectorate who informed her that the vehicle did not comply with regulation and that use of it on the roads is prohibited. (dvise &i7i.

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