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Gilbert Steel Ltd. v. University Construction Ltd. [1973] 3 O.R. 268

Facts:

P to supply steel to D. Entered another contract with price increase. During contract, price of steel increased. P and D orally decided to a increase in price

Issue(s):

Was the oral agreement legally binding, or does it fail for want of consideration?

Ratio:

Variation of the original contract will be judged objectively by the parties’ intentions, and new consideration is required to validate the variation
**Must be some indication that the parties actually intended to rescind the old agreement and enter into a new agreement

Analysis:

Oral variation of written agreement was an implied rescission of the written contract and the creation of a new one.
**The consideration for this new oral agreement was the mutual agreement to abandon the old contract

Holding:

Oral agreement void for want of consideration


Discussion

  1. Fiat Justitia Ruat Caelum 32

    An oral agreement could throw out or nullify a written agreement, but the written agreement cannot be amended by an oral agreement.

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