Date: Mon, 19 Dec 2005 16:13:30

From: Jason Neyers

Subject: Snapping at an Offer

But don't I have to know that the other side has made a mistake or at least know the facts that would allow me to construct that they could not have meant what they said? For example, if one of us went to buy the shares without knowing what they usually trade for or the yen to dollar conversion or as part of a routine buy to match the index, I would think that the company would be bound.

As an aside, I don't remember Smith v. Hughes being quite as wide as John makes it out. For example, didn't the seller know that the other side was making a mistake as to the quality of what they were buying (the oats, old vs. new)? I remember the court saying that so long as the seller did not induce the mistake or know that the buyer was making a mistake about thinking that the seller had warranted that they were special oats then the contract stood.

Cheers,

----- Original Message -----
From: John Swan
Date: Monday, December 19, 2005 10:32 am
Subject: ODG: Snapping at an Offer

Smith v. Hughes does not support an argument that the contract for the purchase and sale of the shares is valid and enforceable. The common law would not let a buyer get away with purchasing shares for a tiny proportion of their value on the basis that the buyer could have had no reasonable expectation that the seller meant to sell at the price it offered.

McMaster University v. Wilchar Construction Ltd. [1971] 3 O.R. 801, 22 D.L.R. (3d) 9; aff'd, (1973), 12 O.R. (2d) 512n, 69 D.L.R. (3d) 400n, and Stepps Investments Ltd. v. Security Capital Corporation (1976), 14 O.R. (2d) 259, 73 D.L.R. (3d) 351, are Canadian examples where one party was not allowed to hold the other to a deal in circumstances where the first party knew that the other had made a mistake. Smith v. Hughes would support this result to the extent that it stands for the argument that one party cannot hold the other to a deal when the first party knows that the other is labouring under a mistake.

--
Jason Neyers
January Term Director
Assistant Professor of Law
Faculty of Law
University of Western Ontario
N6A 3K7
(519) 661-2111 x. 88435

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