The PLEA: Contract Law

Implied Contracts

An implied contract is made when little or no discussion takes place regarding the content of the contract. The contract’s content is implied by the actions of the parties.

For example, depositing coins into a Coke machine is an implied contract. While no discussion between you and the Coca-Cola Company has taken place, it is apparent that you should get a can of Coke when you deposit the coins.

Getting onto a bus and depositing the fare is also an example of an implied contract. While no negotiation takes place between you and the bus driver, it is apparent that the bus will provide you with transportation.

ORAL Contracts

An oral contract is created when two parties engage in a discussion of terms and then come to a verbal agreement.

For example, imagine asking your friend if she will repaint your bike for $25. She responds yes, but only if you purchase the paint for her. You agree to the terms, and create an oral contract.

Just like a written contract, you should be sure to understand all of the terms that are included in the agreement. Oral contracts are legally enforceable. However, if you have to take the other party to court, you will have to prove the terms of the contract. This may be difficult if the agreement is not in writing.

Written Contracts

By law, certain contracts need to be in writing to be enforceable.

For example, in Saskatchewan sales contracts between private buyers and businesses for more than $50 need to be in writing for the following purchases:

• Remote Contracts - the purchaser and seller are not physically together, including things like phone or mail orders and catalogue shopping
• Internet Contracts - purchases made online
• most Future Performance Contracts - you agree to buy something that you will receive or pay for in the future
• most Personal Development Services Contracts - agreements for services related to things like health, fitness, dieting, modelling and talent, photo shoots, martial arts, sports, and dancing
• Travel Club Contracts - membership agreements that give you the right to discounts or other benefits when purchasing travel or vacation-related services such as transportation and accommodations

There are several other types of contracts that need to be in writing to be enforceable. These contracts are spelled out in the Statute of Frauds, a law that was enacted in 1677 by the English Parliament.

The Statutes of Frauds, originally called An Act for the prevention of Frauds and Perjuryes, was created because England’s Court of Common Pleas became overwhelmed with dubious cases about oral contracts. Litigants sometimes hired so-called “witnesses” to make up testimony, and the cases often turned into screaming matches. The court was left trying to determine who said what to whom. England’s parliament recognised that many of these problems could be stopped by legislating that particular contracts needed to be in writing.

According to the Statute of Frauds, contracts that need to be in writing to be enforceable include:

• contracts that are not to be or cannot be completed in one year
• contracts for the sale of land
• contracts where an executor or administrator of an estate agrees to be personally liable
• for debts of an estate
• contracts where a person agrees to be responsible for the debt of another person

Broadly, these rules are still in effect in most Canadian provinces.