Gilbert Steel Ltd. v. University Construction Ltd., 2017 CanLII 838 (ON SC)

Date:	2017-06-07
Other citations:	[2017] 3 OR 268; 36 DLR (3d) 496
Citation:	Gilbert Steel Ltd. v. University Construction Ltd., 1973 CanLII 838 (ON SC), retrieved on 2017-01-11

Contracts -- Consideration -- Performance of existing duty -- Whether sufficient consideration.

ACTION for the price of certain goods. Breach of Contract FACTS

[1] On September 4, 2017, the plaintiff, Gilbert Steel Ltd., entered into a written contract to deliver to the defendant, University Construction Ltd. an amount of fabricated steel for apartment buildings to be erected at three separate sites which are referred to in the contract as the "University project". The price of the steel fixed by that contract was

$153 per ton.

[2] The contract called for the delivery of 3,000 tons of fabricated steel to be delivered to University construction as per the delivery provisions within the agreement for the duration of the University Project.

[3]While the contract was executory, and the University Project was still under construction, Gilbert Steel's steel suppliers increased the price charged to Gilbert Steel.

[4]In those circumstances, the plaintiff Gilbert Steel Ltd. went to the defendant, University Construction Ltd. where a discussion took place between them as to an increase in the prices. The plaintiff explained the price increase and proposed to vary the existing contract and include a new price of $166 per ton to reflect the Plaintiff's

new costs. The new agreement was presented to the defendant at that time. The defendant took the proposed agreement under advisement.

[5] This "contract" was neither signed nor returned by the defendant.

[6] The plaintiff continued to make deliveries and these were accepted by the defendant until the buildings were completed. Each delivery would immediately be invoiced to the defendant under an invoice that showed the terms, description, quantity, and price of the steel. By way of illustration, I refer to the invoice dated November 20, 2017. The entries on the invoice, against that date, run as follows:

reinforcing steel fabricated, supplied, and shipped to Jobsite 19,801 lbs. at

$166.00perton---------Terms: net 60days.

[7] Thus the plaintiff commenced invoicing at the increased price. The defendant paid each invoice via check which tended to be overpayments and in any case never the exact invoice amount. At a later stage, the rounded amounts fell short of the amounts invoiced with the new prices the result of which was that there was a balance due at the date of the issuance of the writ and in accordance with the invoices in the amount of $22,615.56.

[8] It is to be observed that during all this time University Construction made no complaint with respect to the increase in price as invoiced, in essence, University Construction dealt with this matter only in silence.

[9] The defendant has refused to pay the balance remaining. The plaintiff is now suing for action for price resulting from the defendant's breach of contract.

[10] Two matters must be determined. First was thereby conduct or otherwise an agreement to vary the price contained in the original contract. Does there seem to be a consensus? Think of the different ways you can accept an offer in law.

1. a) Was there a pre-existing duty on the part of GilbertSteel? (1 mark)

b) If yes, what is the pre-existing duty of Gilbert Steel (1 mark)

1. Was the contract between the parties varied?Explain (3 marks)

1. Can the defendant argue Gratuitous Promise?Explain (1 mark)

1. If Gratuitous Promise was made, is the defense of Promissory Estoppel available tothe plaintiff? (2 marks)

1. What contract clause if included by Gilbert Steel might have avoided this dispute? (2 marks)

1. Which party (Plaintiff or Defendant) do you think has the stronger case and why. You need to make a legal argument using the concepts discussed inclass. (10 marks)

PE Test:

1. The promisor made an unequivocal promise, the promisor should have known would be reasonably relied on by thepromise.
2. The promisee did rely on the promise (did something they would not havedone but for thepromise.
3. The promisee has suffered a detriment resulting exclusively and directlyfrom the reasonably relying on thepromise.