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Facts[]

Rosas loaned $600,000 of her lottery winnings to her friend, Ms. Toca for the purposes of buying a home on Jan. 10, 2007. The loan was supposed to be repaid without interest in one year’s time. In the ensuing years, Ms. Toca asked for more time to pay the loan “I will pay you next year.” Ms. Rosas patiently agreed more than once from year to year as she wasn’t really in dire need of the funds. However, when Ms. Rosas finally brought action against Ms. Toca to collect the money, on Jul. 17, 2014, Ms. Toca successfully resisted judgement on the debt at the trial court on the basis of a limitations defence – essentially, Ms. Rosas had waited too long (7 years had lapsed) and she was out of luck. Ms. Rosas appealed this decision to the British Columbia Court of Appeal.

Issues[]

1. Is fresh consideration required when parties to a contract agree to vary its terms?

Decision[]

1. No.

Appeal allowed; judgement for Ms. Rosas in the amount of $600,000 

Reasons[]

Bauman J. noted that 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 enforceable. A variation supported by valid consideration may continue to be enforceable for that reason, but a lack of fresh consideration will no longer be determinative. In this way, the legitimate expectations of the parties can be protected. To do otherwise would be to let the doctrine of consideration work an injustice… When those modifications are recognized, Ms. Rosas’ cause of action did not arise until Ms. Toca failed to pay by Jan. 10, 2013 (the end of the last extension granted by Ms. Rosas). Ms. Rosas’ statement of claim was filed on Jul. 17, 2014, which means it was well within the six-year limitation period under the former Limitations Act.

Ratio[]

When parties to a contract agree to vary its terms, the variation is enforceable without the need for fresh consideration, absent duress, unconscionability, or other public policy concerns, which would render an otherwise valid term unenforceable.

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