It is also there in the
Restatement Second s. 345 (a)
https://opencasebook.org/casebooks/11568-contracts/resources/6.1.1.2-r2k-345/
But I don’t think it could
be said that the Restatement’s text makes the distinction clear.
For myself, I don’t believe
that a US court would allow in, or embark upon, a counterfactual enquiry if a
sum of money is owed, as it would and should if the claim were one for damages
for loss.
“I no longer have to pay you
because if I had not breached my contractual obligation to pay you last week,
you would have lost the money gambling as you did with all the rest of your
wealth.”
The reason, I suspect, the
action for the price in sales law gets less academic airtime than the
quantification of damages, is that there isn’t very much to say. If the payment
is due, you can claim it.
Maybe, less charitably, US
lawyers are, without knowing it, more enthral to the old forms of action? I’m
no historian, but “debt” as a form of action was replaced by indebitatus
assumpsit, which involved pleading a fictional promise to pay the debt, which
was then breached. In England, this mumbo jumbo disappeared with the Judicature
Acts. The Field Code was 1848, but that was just New York.
My impression is that the practice of debt collection in
the US is similar to that in the rest of the common law world though debtors
have less legal protection than they do elsewhere. My interest in the
disappearance of the action of debt (or for a sum certain) grew out of
conversations long ago with Stephen Smith (blessed be his memory). As a
practical matter the disappearance of the action in the US had no impact
because almost invariably a debtor in default has no contract law defenses.
Almost invariably, the creditor will get a judgment on the pleadings. The
one significant substantive area of difference involves claims where the
claimant has not yet performed their part of the bargain when the defendant
repudiates. In the U.S. a creditor who proceeds to perform and sues to collect
the price can be met with a defense of failure to mitigate. But even here
the practical difference is narrow because typically a creditor who proceeds to
perform after repudiation has a good reason do so, and so they will overcome
the mitigation defense and recover the price. And creditors who anticipate this
issue and don’t want to have to deal with a mitigation defense can use a
liquidated damage clause. But the disappearance of the action has had a baleful
effect on legal theory and how contract law and remedies are taught in the U.S.
As for the issue of contributory fault in contract law, I
am surprised to hear Canadian courts may be moving in this direction. As Smith
argues cogently in his book on remedies (and Fuller argued much earlier but
less cogently), when a contract action is for consequential damages contract
law already has tools to fairly apportion the loss resulting from the breach
between the claimant and the defendant, including a rule that casts all losses
that cannot be proven with a reasonable degree of certainty on the claimant as
well as the requirements of foreseeability and mitigation.
Similarly proof of debt in
corporate insolvency, though subject to stay/moratorium, would be really
different than an action for damages.
Surely the relevant statutes
(Ch 11 etc?) would make the distinction…
I don't understand how receivables financing could work in
a world where the only action available is damages, requiring a full trial to
determine quantum.
Do US practitioners (not academics) really not think in
terms of an action for the price if a seller isn't paid? What is the action if
I borrow money and don't pay it back? Just damages?!?
From: Jason W Neyers <jneyers@uwo.ca>
Sent: Thursday, July 17,
2025 3:55:53 PM
To: obligations <obligations@uwo.ca>
Subject: ODG:
Contributory Fault in Contract Law at the SCC
Here are the facts as prepared by the court:
4342 Queen St. Niagara Holdings Inc. owns commercial property and Avison
Young Real Estate Management Services LP is its property manager. Following a
power outage at the property, Arcamm Electrical Services Ltd. provided
emergency services to temporarily restore power and then further services to
permanently restore power. 4342 Queen St. Niagara Holdings Inc. paid Arcamm
Electrical Services Ltd.’s invoices for the emergency services but refused to
pay any further invoices. Arcamm Electrical Services Ltd. commenced a claim for
breach of contract. 4342 Queen St. Niagara Holdings Inc. claimed contributory
fault and sought an apportionment of damages. Arcamm Electrical Services Ltd.
was awarded summary judgment without any apportionment. The Court of Appeal allowed
an appeal and set aside the summary judgment in part. It held the claim against
Queen St. Niagara Holdings Inc. should proceed to trial and Arcamm Electrical
Services Ltd. can seek apportionment based on the alleged contributory fault.
Here is what the ONCA said on this issue:
… I understand this submission to rest on the assumption that
contributory fault cannot be raised as a defence to a claim in contract.
[41] I reject this
submission and the assumption which underlies it. There has been a
long-standing debate about whether the courts can apportion damages in a breach
of contract case based on a consideration of the “contributory negligence” of
the parties. While recognizing that the Negligence Act, R. S.O.
1990, c. N.1 does not apply to actions in contract, a number of first instance
decisions in Ontario, beginning with Tompkins Hardware Ltd. v. North
Western Flying Services Ltd. (1982), 1982 CanLII 3160 (ON SC), 139 D.L.R. (3d) 329,
22 C.C.L.T. 1 (Ont. H.C.J.), have applied the principle that damages in
contract can be apportioned based on the degree of fault of the plaintiff and
defendant. See, for example, Ribic v. Weinstein (1982), 1982 CanLII 3170 (ON SC), 140 D.L.R. (3d) 258
(Ont. H.C.), aff’d (1984), 1984 CanLII 1869 (ON CA), 47 O.R. (2d) 126
(C.A.); Treaty Group Inc. v. Drake International Inc. (2005), 2005 CanLII 45406 (ON SC), 36 C.C.L.T. (3d)
265, 15 B.L.R. (4th) 83 (Ont. S.C.), aff’d on other grounds, 2007 ONCA 450[2]; K-Line Maintenance &
Construction Ltd. v. Scepter Corp., 2009 CarswellOnt 7398, 91 C.L.R.
(3d) 73 (Ont. S.C.), at para. 161; Atos v. Sapient, 2016 ONSC 6852, at para. 389; and Parkhill Excavating Limited
v. Robert E. Young Construction Limited, 2017 ONSC 6903, at para. 212. Appellate courts elsewhere in Canada have
similarly held that damages in contract cases can be apportioned based on
fault. See, for example, Coopers & Lybrand v. H.E. Kane Agencies
Ltd. (1985), 1985 CanLII 125 (NB CA), 62 N.B.R. (2d) 1,
(N.B. C.A.), at pp. 707-708; and Doiron v. Caisse populaire d'Inkerman
Ltée (1985), 1985 CanLII 95 (NB CA), 17 D.L.R. (4th) 660,
61 N.B.R. (2d) 123 (N.B. C.A.), at p. 273.
[42] In Tompkins,
Saunders J. gave compelling reasons for holding that the courts should allow
for the apportionment of contract damages. He said that negligence on the part
of a plaintiff should have the same effect in reducing damages regardless of
whether the claim is brought in tort or contract. In his view, the principle in
tort cases that where a person is part author of their own injury, the person
cannot call upon the other party to compensate them in full, applies equally in
contract cases: at para. 34.
[43] In Treaty
Group, Ducharme J. thoroughly canvassed the caselaw and academic writing on
the subject and applied the reasoning in Tompkins. At para. 70
of Treaty Group, Ducharme J. concluded that not only could he
apportion damages in a contract action to recognize conduct on the part of the
plaintiff that had increased their damages but, in appropriate cases,
apportionment was “required by fairness, equity and justice”. I agree.
[44] Finally, I
note that in Cosyns v. Smith (1983), 1983 CanLII 1750 (ON CA), 146 D.L.R. (3d) 622,
25 C.C.L.T. 54 (Ont. C.A.) Lacourciere J.A., writing for this court, considered
the contributory fault defence, describing it as “analogous to contributory
negligence” but where the Court holds the basis of recovery against the defendants
to be contract, not tort: at para. 1. He reviewed the reasoning of Saunders J.
in Tompkins, but concluded that it was not necessary to pronounce
on the “attractive conclusion” that Saunders J. had reached because the
plaintiff’s conduct did not amount to contributory negligence.
[45] I agree with
the Ontario first instance courts that damages in contract cases can be
apportioned based on fault. Accordingly, in my view, Queen was entitled to
defend the Arcamm Action on the basis of contributory fault, and to seek to
have the contractual damages Arcamm claimed reduced to recognize Arcamm’s
alleged conduct in increasing those damages.
Jason Neyers
Professor of Law
Faculty of Law
Western University
Law Building Rm 26
e. jneyers@uwo.ca
t. 519.661.2111 (x88435)
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