Claus & Contracts: Podcast 028

We all know the deal: kids are good, Santa gives them presents. But is this a contract? And if it is... who's contracting with who? Law 201/701 and 204/704 course developer, and contracts expert, Peter Kissick weighs in on this holiday tradition.

Content warning: not for children who don't know certain things about Santa yet!

If you're interested in contracts and contract law, we have a great primer in Law 201/701: Introduction to Canadian Law. Peter also brushes up against contracts in his Corporate Law module in that course. For the deep dive, follow Peter down the business-law rabbit hole with Law 204/704: Corporate Law.

Sign up for our mailing list on the Certificate in Law site, and subscribe to this show on any of the major podcast platforms: Apple, Stitcher, Spotify and Google Play. Search for "Fundamentals" in your app of choice!

Theme music for Fundamentals by Megan Hamilton. Art for the podcast by Valérie Desrochers.  

 

 

Transcript:

 

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00:03 Matt Shepherd: Welcome to Fundamentals of Canadian Law. I'm Matt Shepherd. A while back I wrote Peter Kissick an email with the subject line, "Let's ruin the holidays forever." Peter is the creator and instructor of our corporate law course, law 204/704 and the related module in law 201/701 introduction to Canadian law. He's also a fun guy to explore some weird territory with. What I wanted to talk about with Peter was Santa Claus. Santa is not part of everyone's holiday tradition but is a cultural figure at this point. And even people that don't have a holiday tradition that involve Santa Claus are probably aware of the deal, be good and get toys. We threw that idea through a legal lens to see what comes out the other side. This podcast is not legal advice and is being presented for informational purposes only. It's also for audiences that have come to a certain understanding about Santa Claus. So it might not be for younger listeners. Fundamentals of Canadian Law is brought to you by the Queen's Certificate in Law, the only online certificate in law offered by a law faculty in Canada. You can find it more at takelaw.ca.

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01:23 MS: Peter, the holidays are for everyone, we know that. Everyone, everyone's got their own takes on the holiday, but today we're gonna be looking at a particular angle American phenomenon, which is Santa Claus. And the thing I'm curious about, I wanna ask you about is, I've grown up under the understanding that there's a promise, there's a compact, there's an idea where if you are a good boy or a good girl, you can write a letter to Santa and Santa will bring you gifts, and not knowing that much about the law, but knowing that there's this whole structure of things called contracts that you talk about in your corporate law course. What's going on? Spoiler Alert, if you have any small children maybe move them away from the computer. We might be discussing things about Santa that they may not be aware of yet, but putting that aside, let's assume that there's a jolly old elf and he lives in the north pole, and he will give you gifts if you're a good little boy or a girl, and you write him a letter and etcetera, etcetera. Is there a contract in there?

02:31 Peter Kissick: I'm sensing that that maybe you had unfulfilled expectations earlier in life and you need to know whether there might be a lawsuit here or just curious about that.

02:40 MS: There's a Starsky and Hutch car, in the late '70s, there might be some unresolved issue.

02:47 PK: Fair enough, fair enough, I' statute limitations as probably passed, but let's just deal with your core premise here.

02:54 MS: Right.

02:55 PK: Can Santa breach a contract? Or put another way, can the child who writes that letter actually form a contract? Well, to get to the boring part of definition of law, a contract is a set of promises the law will enforce, which is about a circular definition as you can get, the law is full of circular definitions, but it of course begs the question, "Okay, what promises are enforceable?" So if I say to you Matt, "I promise to buy your car for $5000," and you agree with me, we've each promised to do something, you've promised to give me your car and I promised to pay you $5000, that's simple.

03:37 MS: Okay, yeah.

03:38 PK: Fair enough, that's easy. Okay. So let's say it's little Mathew is writing to Santa, and Matthew is asking Santa to bring certain gifts. And in return, what are you promising?

03:55 MS: I'm promising good behavior, I guess. Just say, "I have been a good boy all year and in return I would like something." Oh okay.

04:05 PK: Okay, there's a quid pro quo there 'cause you wouldn't be good other than if you were promised to get some stuff.

04:13 MS: I think we're getting into the cultural premise of Santa. But yeah, I think so, I think it's not uncommon for children to be on their best behavior. The Elf on the shelf thing, coming up to the holidays.

04:26 PK: Alright, so you would alter how you behave in exchange for the promise of getting things back?

04:32 MS: Yes.

04:32 PK: Okay.

04:33 MS: I will stop being a terrible child because I want my Starsky and Hutch car.

04:36 PK: I can't imagine you were ever a terrible child, but there you go. Generally speaking, when we're talking about contracts you've gotta give up something to get something that's the essence of a contract. And Professor Pratt, one of our illustrious professors here who teaches Contract Law I think at a law 201 course, will often refer to David Hume, the Scottish philosopher, and talk about the parable of the rational farmers, and why they would actually... Why two farmers would actually promise to give something to one another when they don't even know each other. And basically it's mutual benefit.

05:15 MS: Yeah.

05:16 PK: Okay, so you promised to be a good boy if Santa brings you stuff. Does that benefit Santa?

05:24 MS: It benefits society so indirectly benefits Santa, 'cause Santa's gotta live in the world.

05:30 PK: Okay. One thing about contracts are, they're referable to specific people, and you've gotta be promising something to a specific person.

05:39 MS: Okay.

05:39 PK: Okay, and so Santa in and of themselves does not really benefit from your promise, so that might be difficulty number one with your lawsuit.

05:48 MS: Okay.

05:49 PK: Okay. Second thing about contracts, are they tend to be looked at as economic events. So these promises have to have value. Now, by value we have to be able to quantify them. Some sage English judge once upon a time said, "The value could be a mere peppercorn." So I promised to wash your car if you give me a peppercorn, could be a contract.

06:15 MS: Okay.

06:15 PK: Okay, the promises don't have to be of equal value.

06:20 MS: Okay.

06:21 PK: Now is their economic value in Matt being a good boy?

06:26 MS: I mean compared to the... I think there might be an economic lack of value in me being a bad boy, in terms of destruction.

06:35 PK: Fair enough. Although society assumes that you will already fulfill your societal obligations.

06:42 MS: Okay.

06:42 PK: So they're not gonna assume that you not breaking... Not breaking stuff, not breaking your civic duties, that's not really the benefit.

06:53 MS: So the absence of positive behavior or the absence of negative behavior isn't positive behavior, it's just neutral.

07:00 PK: That's correct. It would be like saying if you don't enter into this contract with me, I will break my contract with you. That is not a positive benefit that contract law would recognize. And this concept that we're talking about here is the contract law term is Consideration. You have to provide consideration to the other party for their promise.

07:24 MS: So, consideration is the exchange of value.

07:26 PK: Right. It's the price I'm gonna pay so that you promise something back.

07:32 MS: Okay.

07:33 PK: And it's that you will pay back to me. So again, it can't be to all of society, it's gotta be specifically to Santa, and it has to have some sense, someone to value.

07:44 MS: Okay.

07:45 PK: So your case is looking a little bit weaker.

07:47 MS: Right. Because I am not giving something that is of explicit value to Santa just by being a good kid.

07:53 PK: Correct. Yeah, yeah.

07:55 MS: Okay.

07:55 PK: Furthermore, there's a little bit of uncertainty and vagueness about that. Let's say that that could be quantified and given value and Santa really, really treasured that Matt was going to be good.

08:06 MS: Right.

08:07 PK: How would we assess the performance of that promise? How much good do you have to be?

08:13 MS: Okay, that's a great question. I don't know.

08:15 PK: Exactly.

08:16 MS: How good is good?

08:17 PK: Well, so that's...

08:18 MS: Who... Do my parents decide? Do my siblings, my teachers?

08:21 PK: And really the only person who can decide that is the other party of the contract.

08:26 MS: Okay.

08:26 PK: So again we have another bit of a difficulty as well.

08:29 MS: Right.

08:29 PK: There's an interesting analogy here if I can digress for a moment. One of the things that I often ask my class is when we're trying to figure out what is and is not a contract? Inevitably, what I do is I marry off and I'm using quotes here, two members of my class.

08:47 MS: Okay.

08:48 PK: And then, of course, I play around with the facts and one of them breaks it off with the other one and I ask the class, "Did he just... " and it's always the guy. Did he just break that contract?

09:01 MS: Right.

09:01 PK: He proposed to this person, he or she accepted that, and then before the wedding, he calls it off. Is that a breach of contract? And you get all sorts of twisted logic about why this is or is not, but one of the things that the law says is how we perform... How can we assess the performance of that promise. That promise is just so vague. What would be a good performance of that, being a good spouse.

09:27 MS: Okay.

09:28 PK: And so there are certain things where the courts say, "You know what, we just don't wanna have anything to do with that. That is just too vague. That's sort of a social policy issue, that the law shouldn't even think about." So a marriage proposal and acceptance is just not considered to be a legal contract.

09:44 MS: Okay. And in the same vein, a child's promise to Santa is not a legal contract.

09:48 PK: Exactly.

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09:53 MS: Hey, it's Matt. Happy Holidays. If you wanna give yourself a pretty cool gift, write yourself a coupon good for one certificate in law. Starting in January, you can register for the certificate in law program at takelaw.ca for classes beginning in May. If you just take one course a semester online, you'll have the certificate in law from Queens University, one of the best law schools in the country by the end of 2021. We offer courses in corporate law, Aboriginal law, intellectual property, workplace law and more. No matter what you're doing in life, you can get a deeper, richer understanding of how the law affects you as a citizen and as a professional, through our program. Sign up in January and start your legal learning journey, this spring. Lots more information is available at takelaw.ca.

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10:48 MS: Now just to play around with the idea a bit more.

10:51 PK: Sure.

10:52 MS: I did take law 201 and Professor Pratt's module on contract law and he talks a bit about this case called Carbolic Smoke Ball where a company takes on an ad and it promises that it'll basically give people an X amount of dollars if they get sick after using their product and someone takes them to court, yadda yadda. But one of the things that came through from that is kind of this idea of a unilateral contract that you can... You can broadcast something out into the world saying, "We will do X if you do Y." So is there another angle on this where Santa through songs and movies and television and books is putting out into the universe, through his magical powers. He's putting out a contract that says, "If you perform some sort of arbitrary act of goodness, I will reward you with a gift."

11:38 PK: Right, right.

11:39 MS: Is there a unilateral contract idea there?

11:42 PK: Possibly, I still don't think it's firm enough for us to actually acknowledge it as a firm offer. The notion of, yeah, the notion of a unilateral contract, is there is a very firm set of conditions or a firm offer. I said it if you do X, Y, and Z, then I will do A, B and C.

12:02 MS: Okay.

12:03 PK: Okay. And I don't think we actually have that here. In the Carbolic Smoke Ball case which makes me feel nostalgic 'cause I think it was the second case I studied in law school.

12:12 MS: Right.

12:12 PK: All those decades ago. In the Carbolic Smoke Ball case, the company advertised this product saying that if you use our smoke ball that was supposed to prevent illness, and you contracted one of these illnesses, we would give you 100 pounds.

12:24 MS: Right.

12:24 PK: So there was a very easy to define set of principles there in that offer.

12:24 MS: Okay.

12:24 PK: Now the notion of unilateral contract is you make an offer, I don't have to accept it but by fully performing the obligations that, in your offer, I have accepted it by my actions. So, to analogize to our specific case, Santa says or implies, or maybe blatantly says, "If you behave well, I will give you toys."

12:24 MS: Right, and he's saying that all the time.

12:24 PK: Right. And yes, and every movie we've ever seen, seems to suggest that, right? But again we're back to the, well, how better is better?

13:10 MS: Right, okay.

13:12 PK: And so that is just, again, such a vague set of terms that I don't think we could possibly suggest that that would amount to a firm offer.

13:21 MS: I feel like we are moving sideways into a parenting strategy, which is having Santa right back and say, "These are the duties I need you to perform in order to execute on this contract."

13:32 PK: There you go. There you go, exactly.

13:34 MS: If you wash the car, mop the kitchen floor, do the dishes, brush your teeth and go to bed on time for a month, I will in exchange... Now that's a contract.

13:43 PK: Matt, where were you 15 years ago when my kids were small, writing letters to Santa?

13:48 MS: Telling you, I gotta go ahead and find some kids.

13:50 PK: You know what, you've morphed into now a parenting podcast.

13:54 MS: There we go.

13:54 PK: This is wonderful.

13:54 MS: It's excellent. So I think we've pretty... I mean there's sort of a, there's a whole other element to this where according to some of the movies and some of the stuff, Santa exists because children believe in him. It's a real Tinker Bell situation. So that does cast a different shade on it where Santa actually requires the children to believe in order to just continue being Santa. But I feel like we're getting into a law in Theology intersection might be too muddy to weigh into right now.

14:23 PK: But you are right. I think that the takeaway from this if we wanna talk about Santa or anything else, is that if you actually want somebody to do something specific for you, you have to promise them something specific in return and both parties should know what those specifics are in advance.

14:43 MS: I guess the last sort of territory we can cover in terms of Contract law and Santa is the idea of reliance.

14:50 PK: Right, good.

14:52 MS: That you can make a contract, kind of inadvertently by having someone become reliant on you to perform.

14:58 PK: Right, that's correct, yeah.

15:00 MS: So, a child doing something truly extraordinary on the reliance that they'll be rewarded, that there might be an angle there for the kid right?

15:08 PK: Yeah, and still I hate to disappoint all those children. You're trying hard and you're coming up with great arguments. I probably at least give you an A minus For these, [laughter] even if you may not actually be able to convince any judge.

15:22 MS: That's my gift this holidays.

15:24 PK: There you go.

15:25 MS: A minus for Peter.

15:27 PK: Yes, there is this notion of reliance and I mentioned that Contract Law's about enforcing promises. And generally speaking, the only promises the law will enforce are those that are reciprocated with this notion of consideration. What happens if you make a promise that any, it's quite clear that the other side would rely on, even if they've given you nothing in exchange? Okay, what's known as gratuitous promise.

15:51 MS: Can you give me a for instance?

15:52 PK: Sure. Matt, I promise since I enjoy doing this podcasts so much that I'm going to contribute $5,000 a year to Queen's Law, going forward.

16:04 MS: Oh sweet.

16:05 PK: Okay? There you go.

16:05 MS: Now Queen's Law is gonna buy a bunch of stuff because we know you'll gonna give us the money. This is great.

16:09 PK: Yeah, exactly, perfect. Now that would be known as a gratuitous promise. I have made a pledge but you haven't given me anything in exchange for that pledge. It was made gratuitously which ordinarily is not enforceable. Kinda like me promising to do a favor for you, okay, that's ordinarily not enforceable. But, if I know that Matt is in fact going to rely on that promise and go out and buy a whole bunch of more audio-visual equipment, he can say, "You knew or you ought to have known that I was gonna rely on that promise to my detriment, and so that should now be binding upon you Peter."

16:47 MS: Okay.

16:48 PK: Now there's some controversy in our law over whether or not you should be entitled to hold me to that promise or sue me for breach of that promise. The Americans take a slightly different approach than the Canadians and the Brits on this, but I think the law's moving to a point where, yeah I think there might be in the clearest cases, a case that you can make for the breach of that quite clear gratuitous promise where there is what's known as injurious reliance.

17:18 MS: Okay. But in Santa's case, it still doesn't quite hold water.

17:24 PK: This is an exception to the rule and common law does not like exceptions necessarily unless they're very, very clear cut. And I'm still thinking that, okay, what level of spectacular behavior is actually gonna be clear-cut?

17:40 MS: Okay, excellent.

17:42 PK: I think so. So again, you're trying hard. You're coming up with some great arguments but I think you're getting cut down by the consideration rule. The fact that there's gotta be value in your promises, that they've gotta be clear and then ordinarily, just promising something isn't enough.

18:01 MS: Okay, but hey, we got some parenting tips.

18:03 PK: There you go.

18:03 MS: Excellent.

18:04 PK: Excellent, very good.

18:05 MS: Thanks very much Peter.

18:06 PK: Oh my pleasure.

18:09 MS: Thanks and happy holidays to Peter Kissick. Contracts are everywhere, from your daily cup of coffee to multinational corporations. If you wanna learn more about contracts, we a have a great module in LAW 201/701: Introduction to Canadian Law. If you wanna dive into Corporate Law in-depth, Peter is the creator and instructor of our Corporate Law course, LAW 204/704. You can learn more at takelaw.ca. Fundamentals of Canadian Law is recorded at Queen's University, situated on traditional Anishinaabe and Haudenosaunee territory. Our theme music is by Megan Hamilton, who's also a staff member here at Queen's Law. You can find out more about her music at meganhamiltonmusic.wordpress.com. Original illustrations for this podcast are by Valerie Desrochers. You can find her work at vdesrochers.com. Thanks for listening.

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