Show Notes:

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Lecture Slides:

Welcome to YouCounsel.

If you are in a situation where you had signed up your child or children for a summer camp this summer and that summer camp has been canceled by the organizers due to Covid-19 or if you had planned a trip outside of Canada and your flight has been canceled by the airline and you are looking for the refund of monies paid to the camp provider or to the airline, how do you go about it? What are the legal principles that apply to that situation? This is the topic of our lecture today.

We begin with our usual disclaimer that this lecture is not legal advice.  If you have any specific questions, you should contact a lawyer or a paralegal or the Law Society of Ontario, if you are in Ontario or another provincial law society, if you are in another province or a territory of Canada.

This topic we will try to cover in five lectures. Today’s is Lecture 1. In this lecture we’ll talk about the underlying principles that apply to most contract breaches.  We want to cover this because this particular circumstance of legal principles may apply to different scenarios, right. We’re specifically covering summer camps and flights, but it may apply to any contract that you may have entered and the other party is now breaching the contract—the principles are fundamentally the same. You may have entered into an agreement of sale and purchase for the sale of your house and you may be having an issue where either the seller or the buyer is refusing to close and is breaching the contract. The same principles apply.  It is important to understand the underlying principles, so that if you’re faced with a different breach of contract you can apply those principles at least and understand the fundamental concepts. Obviously, this is not an exhaustive discussion but you will understand the fundamental principles of how the law would apply in these situations.

In Lecture 2, which will be the next lecture, we will talk about some of the defences to breaches of contract. The party—the non-performing party, what kind of defenses that party can raise to avoid liability or to avoid its obligations.

In Lecture 3, we will take those legal principles and then we will apply it to summer camps.  Specifically, we will apply to this one particular camp called ‘Stem camps’ which is in Ontario, because we have more information about what’s going on with that camp. It’s in the news and there’s a lot of information out in Facebook and media.  We will apply these principles to that in Lecture 3.

In Lecture 4, we’ll talk about how do you go about reversing your credit card payments, when you have a dispute with the merchant and the principles of that would apply to a large number of scenarios.  But, of course, we will discuss that process with respect to the summer camps and ‘Stem Camp’ specifically.  Then, finally, if all fails and you have to go to court how do you go about doing that.

We will explain today, you know the basic concepts of contract. We’ll talk about what constitutes a breach of contract? And then, what are the remedies for breach of contract?

The concept of a contract is pretty straightforward right—it is a transaction between two or more parties, where in that transaction parties are exchanging something of value.  You pay money for merchandise – you buy groceries, you buy shoes, you buy a car, you buy a house – you pay the money and you get the merchandise the product on the other hand. Or, you pay money and you get services – you hire a lawyer, you hire an accountant, a plumber, a contractor, whatever you pay money and in exchange you get certain services.

In our particular scenario, an airline ticket is the contract. Alex, for example, will pay $500 or certain amount of dollars to an airline. An airline will fly Alex to Florida on a specific date – that’s an example of a contract with an airline. Similarly, with respect to summer camps.  Alex will pay X amount of dollars to the camp and the camp will provide summer camp activity for Alex’s child. So these are sort of the examples.

All of these are basic contracts.  We know that a contract doesn’t have to be in writing.  Ideally a contract in writing is good but it doesn’t have to be in writing. When a party to a contract fails to perform its end of the deal, that means that party has breached the contract.  It’s as simple as that.

Let’s take an example.  When an airline cancels its flight or changes the date of flight—if it says to Alex we can’t take you to Florida this June but we’ll take you to Florida in June 2021.  That’s the fundamental breach of the contract.  In the case of summer camps, when the summer camp cancels the camp program then they are breaching the contract. The party that is not performing its side of the deal that is the party that is in breach of a contract. Now, why has the party breached a contract? At this stage, it’s not important.  We’ll talk about it later.  But, for now, just consider that if a party fails to perform its part of the deal, then the contract is breached. Now, why did the airline cancel its flight? Or, why did the camp cancel—we will discuss that it is relevant at some stage, but not at this stage.  It’s the contract that is breached. Let’s understand that first.

Let’s talk about once the contract is breached what kind of remedies does the performing party have against the non-performing parties? Fundamentally, in most contractual cases the performing party who has not done anything wrong is entitled to damages. In certain cases, they can be entitled to specific performance, but we’re not going to discuss that today. We’ll keep it simple.  In most cases, for example, this airline example or the summer camp example – the parties will be entitled to damages. Now what I want you to understand is that I’m using the word damages, I’m not using the word refund of money or return of advance payment or deposit.  Damages is a larger term. Your damages could exceed your refund. Damages could exceed the down payment you have made. Damages could exceed the deposit you have made.  Damages is a larger term and let me explain that by way of an example.

We’ll take the summer camp example, to explain to you why your damages could be more than the money you have paid to the other side. In an ordinary camp – let’s take the example of ‘stem camp’.  There are certain activities that the child is going to be involved in. There is certain companionship with other children in that camp and then of course there’s childcare. If the child is of an age that childcare is needed. Those are the automatic components of a camp. Now, if the camp provider has breached the contract – they’re not providing you the camp activities, then you have to replace those activities or at least the childcare or whatever you need to do. There, you will incur certain costs for replacing those things that were being performed or ought to have been performed by the summer camp.

Let’s say the original cost (camp cost) was five hundred dollars for a week-long camp.  Now you have to replace that because the other party has breached a contract and that costs you a $1,000. It could be that amount could be for childcare or could be for anything else but replacing the activities or the function of the camp that was supposed to be provided.  In that scenario your damages are not $500 – your damages are $1,000. They are exceeding the value of the money that you have paid or were supposed to pay for that contract. The point is important so I’m going to elaborate on it a little bit. 

In certain cases now you will see and it is happening already that some people have entered into contracts for the sale of their house, right and everything is final all the preconditions have been met and then because of Covid-19 and uncertain circumstances the buyer has refused to close.  In those cases the buyer is now in breach of contract.  You have to sell your house. So let’s say your deal was for a million dollars but you have to now sell the house and you get the money for $800,000.  You still have damages of $200,000 against the original buyer because that person, that party breached the contract.  The application of damages has larger implication. What I want you to understand is that the remedy for breach of contract is not just the refund of your money.  It could be more than that and in specific circumstances it could be more than the money that you have paid.

Now let’s recap what we have learned from this lecture. Most commercial transactions are contracts.  Non-performing party is in breach of contract when they refuse to perform the contract for whatever reason.  The other party is entitled to damages in most cases and damages could be more than just the refund of the money that has been paid.

Could the non-performing party avoid payment of damages, avoid liability?  The answer is yes.  In certain circumstances the non-performing party will be able to either, not pay damages or pay less damages and that is our topic of the next lecture.  Please stay tuned.

Thank-you for watching.