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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