D. Reform

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 269-274

Page 269

Many observers consider the common law rules for recognizing the enforceability of undertakings - the doctrines of consideration and form - to be less than ideal. As far as the rules relating to sealed instruments are concerned, they are vulnerable to the criticism that they rest on an arcane practice rarely followed in contemporary society. Further, under modern practice, it is unlikely that non-lawyers will appreciate the significance of the wafer seal with the result that the cautionary effect on the parties of the ceremonial aspects of sealing has been diminished. The doctrine of consideration is vulnerable to the criticism that it fails to capture and enforce a number of different types of undertakings that parties are likely to expect to be enforceable. The consideration rules thus create a significant risk the parties will injure themselves through reliance on agreements they mistakenly assume to be enforceable. As we have seen, the doctrine of consideration renders unenforceable, for example, firm offers, manufacturers’ warranties, unilateral contractual variations and agreements whereby a creditor agrees to accept partial payment of a debt as a complete discharge of the obligation.²⁵⁰Charitable subscriptions are also not enforceable for want of consideration even in cases where the charity in question has foreseeably and detrimentally relied on the making of the subscription. More generally, the doctrine of consideration may be considered to have become overly subtle in drawing distinctions between enforceable and unenforceable contracts in such contexts, for example, as the doctrine of past consideration. It is not surprising, then, that law reform bodies have considered the possibility of recommending statutory reform of both the doctrine of consideration and the rules relating to sealed instruments.²⁵¹

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Though obviously vulnerable to criticism, the rule that sealed instruments are enforceable has proven to be very resilient in Canadian common law jurisdictions. The Ontario Law Reform Commission, however, has argued persuasively that the ceremonial aspects of signing under seal are not likely of much significance in contemporary society.²⁵²Accordingly, the commission recommended that the seal could usefully be replaced by a requirement that formal agreements must be signed by the promisor in the presence of an attesting witness. In support of this proposal, it may be suggested that a signed and witnessed writing requirement would be more broadly understood by laypersons as signalling the creation of a legally binding arrangement. This proposal has not been implemented, however, and it seems unlikely that Canadian common law provinces will soon attempt this or any other reform of formality doctrine. The requirement of a seal in circumstances where deeds have been executed and delivered has, however, been abrogated in England.²⁵³To be enforceable as a deed, the instrument must merely be signed before an attesting witness and delivered. Extensive reforms have also been enacted in the United States. Many states have enacted legislation either abolishing the distinction between sealed and unsealed instruments or reforming, in some other fashion, the rules of formality.²⁵⁴Reform of the law of consideration has proven to be even more elusive in common law jurisdictions. Even the sharpest critics of current doctrine, however, do not counsel abolition.²⁵⁵It is widely accepted that bargains should be enforceable. Indeed, Fuller²⁵⁶has argued that the functions performed by the formality rules considered above - their value in performing evidentiary, cautionary and channelling functions - can also offer justification for the enforcement of bargains. At least in the context of a half-completed exchange²⁵⁷where consideration

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has been delivered to the promisor, the evidence of what has occurred provides some indication of the existence of an agreement, the passing of consideration signals the importance of the occasion to the parties and the fact of creating the bargain, as every legal professional well understands, provides a predictable device for ensuring enforceability. Indeed, Fuller would justify the enforcement of bargains in which the consideration on one side is merely nominal on the same ground.²⁵⁸The

enforcement of bargains can also be justified on the grounds of economic policy.²⁵⁹The obvious economic purpose and value of bargains is strengthened by their enforceability. To the extent that bargains are the unfair result of inequality of bargaining power, other doctrines can be fashioned and relied upon to meet the needs of justice in such cases.²⁶⁰

Thus, critics of the doctrine of consideration typically focus on particular aspects of the doctrine that produce unattractive results rather than on wholesale abolition of...