Written by: Alfonso Chen (Litigation Associate) and Isabella Wang (Articled Student)
Rosas v. Toca, 2018 BCCA 191 (“Rosas”) is a British Columbia Court of Appeal decision relating to agreements to vary contractual terms that should be fascinating for lawyers, articled students, law students, and the general public in British Columbia.
In Rosas, a lottery-winner (the “lender”) lent $600,000 with no interest to her friend for repayment after one year. Then, for several years, the lender agreed to extend the time for loan repayment for another year. After seven years have passed since the lender first lent her friend the money, the lender still had not recovered any money lent to her friend. Thus, the lender sued her friend for the amount of the loan. However, each time the lender agreed to extend the time for loan repayment for another year, the lender did not receive anything in return from her friend. Unfortunate to the lender, the British Columbia Supreme Court decided that such variations to the existing contractual terms were unenforceable for lack of consideration from the lender’s friend. Accordingly, the Supreme Court decided that the limitation period, which is the period after which a court proceeding must not be brought with respect to a claim, already passed by the time the lender sued and dismissed the lender’s claim.
The lender then appealed to the Court of Appeal, which overturned the Supreme Court decision.
Mr. Chief Justice Bauman, writing for the Court of Appeal, provides on para 183 of Rosas:
When parties to a contract agree to vary its terms, the variation should be enforceable without fresh consideration, absent duress, unconscionability, or other public policy concerns, which would render an otherwise valid term unenforceable.
In Rosas, as the variations were enforceable even though the lender did not receive consideration for her extension of time for her friend to repay the loan, the Court of Appeal found that the lender’s cause of action arose when her friend failed to pay on the repayment date of the last extension that the lender provided to her friend. Therefore, the action was not precluded by the limitation period.
Articled student, Isabella Wang, thinks highly of the decision and trusts that the case will soon be canvassed in great detail by courts of other jurisdictions. Looking toward the future, litigants and legal representatives can expect to find more fascinating cases if courts in British Columbia and elsewhere do discuss Rosas in the context of various types of contracts.
Contracts and limitation periods are often more complicated areas of our legal system that litigants require legal representation and advice on. Our firm has several lawyers who can review your contracts or represent you in court regarding litigation involving contracts. If you seek the assistance of lawyers on your file, we welcome you to meet with our lawyers to discuss your case.
Alfonso Chen is a litigation associate of Henderson & Lee. His practice mainly involves civil litigation and criminal defence matters. Isabella Wang is an articled student of Henderson & Lee and mostly represents clients in the areas of corporate law, real estate law and general litigation. She is expected to become a lawyer in early 2020.