CLA1501 Summary (Chapters 6 - 12)
These notes include:
● The learning outcomes for each chapter in the study guide followed by the
corresponding information in the textbook.
● A summary of each chapter in the textbook.
Chapter 6: The agreement must be possible
6.1 Introduction
6.2 Legal Possibility
6.3 Possibility and certainty of performance
Learning outcomes and answers:
1. Determine which contracts and performances are illegal, unenforceable or
impossible:
Illegal Contracts:
● Contracts that violate the law, including their conclusion, purpose, or agreed rights
and duties.
● Contracts that are contrary to common law principles, such as those involving legal
impossibility, moral opposition, or public policy.
● Contracts that go against the Constitution's values, such as human dignity, equality,
non-racialism, and non-sexism.
● Contracts that violate specific statutory prohibitions, such as those related to
prohibited items like weapons, ammunition, or unpolished diamonds.
● Contracts that deal with crimes, delicts, or activities that are against public policy,
such as agreements planning fraud or supplying military aid to an enemy state.
Unenforceable Contracts:
● Contracts that are considered against public policy, even if the terms themselves are
not inherently illegal.
● Contracts that restrain a person's freedom to participate in legal transactions
excessively, which can be deemed against the public interest.
● Contracts that restrain a person's freedom to participate in trade, if such restrictions
are deemed unreasonable.
● Gambling contracts that involve uncertain future events based on chance. While legal
gambling debts can be enforceable, illegal gambling debts are not.
Impossible Contracts or Performances:
● Contracts that involve performance that is objectively impossible for anyone to
perform.
, ● Divisibility of performance is a consideration for determining possibility. If the
performance is indivisible and part of it is impossible, the entire contract may be void.
● Contracts where performance is not clear, certain, and determinable.
2. Describe the consequences of such contracts:
Illegal Contracts:
● Void Contracts: Contracts that are illegal are generally considered void from their
inception. This means that the contract is treated as if it never existed, and neither
party can enforce its terms. The parties cannot seek remedies for breach of contract,
such as damages or specific performance.
● Criminal Consequences: In some cases, engaging in illegal contracts might lead to
criminal consequences for the parties involved. Engaging in activities that are
prohibited by law can result in fines, penalties, or even imprisonment.
● Restitution: In some instances, if one party has already performed its obligations
under an illegal contract, they may be able to seek restitution of what they've
provided. However, this varies based on jurisdiction and the specific circumstances.
Unenforceable Contracts:
● No Remedies for Breach: Unenforceable contracts are typically valid contracts that
cannot be enforced in court due to public policy concerns. Therefore, parties cannot
seek remedies for breach of contract, such as damages or specific performance.
● Return of Consideration: If one party has provided something of value under an
unenforceable contract, they might be entitled to seek the return of that consideration
if the contract is voided.
Impossible Contracts or Performances:
● Void Contracts: If a contract involves a performance that is objectively impossible for
anyone to fulfill, the contract may be deemed void. Parties are released from their
obligations under such contracts.
● Subsequent Impossibility: If performance becomes impossible after the contract is
formed due to unforeseen circumstances, the parties may be excused from
performing, and the contract might be discharged.
● Divisibility and Severance: If a contract involves both divisible and indivisible
performance, the impossibility of part of the performance may lead to the contract
being void for the indivisible portion but still valid for the divisible part.
3. Outline remedies that are available in the various circumstances:
Remedies for Illegal Contracts:
● Illegal contracts are generally void and unenforceable.
● Remedies for parties involved in an illegal contract are usually limited, as courts are
hesitant to aid parties in enforcing or benefiting from illegal activities.
● In some cases, a party who is not equally at fault might be able to claim restitution
(recovery of benefits conferred) under the principle of unjust enrichment.
Remedies for Unenforceable Contracts:
, ● Unenforceable contracts are those that cannot be enforced by a court of law due to
legal restrictions.
● Depending on the nature of the unenforceability, parties might be left without legal
remedies. However, parties can attempt to negotiate a new agreement or resolve the
matter through alternative dispute resolution methods, such as mediation or
negotiation.
Remedies for Performance Impossibility:
● If a contract becomes impossible to perform due to circumstances beyond the control
of the parties, it might be discharged.
● Parties might be excused from performance due to impossibility or frustration of
purpose.
● If the performance was objectively impossible at the time of contract formation, the
contract might be void.
● In cases of subsequent impossibility, parties might be excused from further
performance.
● The doctrine of anticipatory repudiation might apply if one party indicates they will not
perform their obligations before the performance is due.
Remedies for Breach of Contract:
● If one party fails to perform their contractual obligations, the other party may have
remedies for breach of contract.
● Common remedies include damages (monetary compensation), specific performance
(forcing the breaching party to fulfill their obligations), and restitution (return of
benefits conferred).
● The availability of these remedies depends on the circumstances, the nature of the
breach, and the type of contract.
Remedies for Statutory Violations:
● Contracts that violate statutes or regulations might be void or unenforceable.
● Remedies might involve penalties specified in the statute or regulations.
● Courts might invalidate contracts that contravene statutory provisions meant to
protect public interests.
4. Give reasons why agreements that purport to be contracts could be contrary to
the common law:
Legal Impossibility:
Contracts can be contrary to the common law if they involve legal impossibility. This
means that the agreement's performance or purpose is prohibited by law, making it
impossible to fulfill the contract without violating the law. For instance, if the subject
matter of the contract is inherently illegal or prohibited, the contract would be
considered contrary to the common law.
Moral Opposition:
Contracts that go against common morality or community standards of decency can
be considered contrary to the common law. These contracts are deemed improper
because they oppose widely accepted moral values. An example given in the text is
, agreements for illicit sexual services, which are considered immoral and therefore
contrary to the common law.
Public Policy:
Contracts that are against public policy can be deemed contrary to the common law.
Public policy refers to principles that protect the general welfare and well-being of the
society. If a contract's terms are unconscionable, immoral, or illegal, it can be
considered against public policy and unenforceable. The text provides examples of
various indicators of public policy, such as agreements hindering justice, involving
crimes, and affecting state safety.
5. Identify contracts that are contrary to the common law and contracts that are
contrary to statutory law:
Contracts Contrary to the Common Law:
● Legal Impossibility: Contracts that involve legal impossibility, where the subject
matter or purpose of the contract is prohibited by law, can be contrary to the common
law. For instance, contracts to buy or sell things that are incapable of private
ownership, such as the sea or the moon, would be contrary to the common law due
to legal impossibility.
● Moral Opposition: Contracts that oppose community standards of decency or
common morality are contrary to the common law. Examples include agreements for
illicit sexual services or contracts that destabilize marriages. These contracts are
considered improper and go against commonly accepted moral values.
● Public Policy: Contracts that are against public policy and harm the general public
can be considered contrary to the common law. These contracts are not limited to
offending personal sensibilities; they should be unconscionable, immoral, or illegal.
Contracts contrary to public policy won't be enforced, even if the terms themselves
are not inherently against it.
Contracts Contrary to Statutory Law:
● Introduction to Statutory Contraventions: Contracts can be in conflict with statutory
law due to prohibitions set by Acts of Parliament, provincial laws, or municipal
regulations. Such prohibitions often arise from societal concerns regarding harm.
Contracts that are deemed illegal under common law might also be regulated by
legislation, sometimes with added criminal consequences.
● Illustrative Example of Statutory Law Contravention: An example is given where an
owner of a licensed liquor store sells to a buyer who doesn't have a license but has
an application in progress. Even though the buyer violates the prohibition by not
obtaining the license in time, the contract is still considered valid due to the specific
circumstances.
● Contracts and Constitutional Rights: Contracts that violate rights entrenched in the
Bill of Rights (Chapter 2 of the Constitution) could be contrary to statutory law.
Compliance with the limitation clause is necessary; the limitation should be
reasonable and justifiable in an open and democratic society, considering various
factors.
