Gilbert Steel Case SummaryGilbert Steel Ltd. v. University Construction Ltd., 1976 CanLII 672 (ON CA)
Facts: Gilbert Steel ("GS") and University Construction ("UC") entered into a contract where GS would provide UC with steel to be used in the construction at three separate building sites. The delivery to the first two sites was completed at the agreed-upon price. Price of steel at the mill increased and GS thus asked UC to pay for for the third shipment of steel. UC agreed and they entered into a second written contract. The price increased again and GS asked once more for UC to pay more. This was now an oral agreement and when GS delivered the steel UC paid the original price agreed upon. GS eventually sued for breach of contract.
Issue: Did GS provide fresh consideration to UC in exchange for an agreement to pay more than obliged to under the second contract?
Holding: Appeal dismissed; judgement for defendant.
Reasoning: There was no consideration in the alleged mutual agreement to rescind the written contract and assume obligations under the oral contract. No consideration in the agreement to provide a "good price" for a future agreement. GS provided nothing to UC that they were not already obligated to provide under the initial contract. UC's promise to pay more is unsupported by fresh consideration and thus the contractual variation is unenforceable. Plaintiffs cannot utilize estoppel because estoppel can only be used as a shield not a sword.
Ratio: In a contractual variation, there must be fresh consideration. Promising to do what one is already obligated to do does not constitute adequate consideration in the eyes of the law.