On the heels of a six-year tuition freeze put in place by the previous provincial government, the Dean of Vancouver Business School was relieved to see a change in provincial power. For quite some time the business school had been planning to raise its tuition gradually over several years in order to meet its basic costs. Precluded by the freeze from doing so, the school now found itself in the awkward position of having to quadruple the price of admission for its 15-month MBA program to $28 000 in order to recover costs incurred during the freeze. Even worse, because the newly formed government had not yet lifted the tuition freeze, offer letters sent to students who had been accepted into the program were legally precluded from implementing the new fee structure. Consequently, the offer letters included the following term:

Tuition Fees: $7000* for the 15-month program (payable in four instalments of $1750).

* Student activity fees are also assessed. Fees for the year are subject to adjustment and the university reserves the right to change fees without notice. Please see attached information sheet and fees section of the university calendar.

A number of applicants received and accepted the offer of admission between November and February. In March, as expected, the provincial government officially lifted the tuition freeze and the business school swiftly approved an increase in tuition, raising the price from $7000 to $28 000. Shocked to later learn about the spike in tuition, a number of applicants claimed that they had accepted admission offers at the old tuition rate. The school replied that the contract students accepted clearly and expressly permitted changes that would allow for the new fee structure. Both parties agreed that the contract contained the fee adjustment clause. They disagreed, however, on its proper interpretation.

Under Canadian Law does the University have a contractual right under the adjustment clause to increase tuition by 4 times?