Forming Contract Agreements cases

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Adams v Lindsell (1818) 106 ER 250

Facts: The defendant offered the plaintiff (i.e. claimant) some wool by post and asked for a reply “in course of post”. The defendant sent the letter to the wrong address so got to the plaintiff later than expected. The plaintiff, as soon as receiving the letter, replied accepting the defendant's offer. But, due to the delay, the defendant thought the plaintiff didn't want the wool so sold it to someone else. The plaintiff sued the defendant for breach of contract

Held: It was held that acceptance happens at the time the letter is posted, so the defendant was in breach of contract (the postal rule).

Branca v Cobarro [1947] KB 854

Facts: The defendant contracted with the plaintiff to sell his farm. The defendant wrote that it "was a provisional agreement". So, the question for the court was whether or not this is a valid contract

Held: It was held that there was a contract because there were terms which could be formalised later

Brogden v Metropolitan Railway (1877) 2 App Cas 666

Facts: The plaintiff (i.e. claimant) supplied the defendant (Metropolitan Railway) with coal. They had done business together for years without the use of any contract. They then decided a contract would be a good idea so the defendant drafted one and send it to the plaintiff. The plaintiff made some changes and sent it back to the defendant. The defendant then simply put it away without any formal acceptance. A dispute later arose, but it was questioned whether the contract was actually valid (as it was argued there had been no acceptance)

Held: The contract was valid because the contract had been performed; so acceptance had been made by the defendant's conduct

Butler Machine Tool v Ex-Cell-O Corporation [1979] 1 WLR 401

Facts: Butler offered a machine to Ex-Cell-O for £75,535. The sellers used their terms in the offer. A price variation clause was also included (allowing Butler to change the price of the machine if they need to). The buyers replied with their own terms (without a price variation clause) and a slip stating “We accept your order on the Terms and Conditions stated therein”. The purchase was agreed and, later, Butler tried to use the price variation clause. However, the buyers said they couldn’t (as they said the contract had been agreeed on their terms, which omitted the price variation clause)

Held: The Court of Appeal held in favour of the buyers as they had made a counter offer which was accepted

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Facts: This case involved the advertisment of some smoke balls. The ad claimed that the smoke ball could cure influenza. It also said if one was to buy a smolke ball and got influenza they would be given £100. Carlill bought one of the smoke balls and subsequently got influenza, so he tried to claim the money. The company said that their claim meant nothing, however, this was hard to believe as they had put on the ad that "£1000 is deposited with the Alliance Bank, showing our sincerity in this matter" (so they did appear to be serious about the £100 if someone got influenza).

Held: The Court of Appeal said Carlill should get the money as the reasonable person would think it was a serious offer. The advert constituted an offer of a unilateral contract which Carlill had accepted by performing the conditions stated in the offer

Datec Electronic Holdings Ltd v United Parcels Service Ltd [2007] 1 WLR 1325

Facts: If a package exceeds a certain value United Parcels had the right to not carry the package. Here the package did exceed that value, but they decided to carry the package anyway. Subsequently, the package got lost so the owner of the package sued. The company said that the owner could not sue because their company policy dictates that they do not carry packages over a certain value

Held: It was held that United Parcels had impliedly offered to carry the package anyway so were liable for damages for the lost package

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Dickinson v Dodds (1876) 2 Ch D 463

Facts: Dodds offered Dickinson his house for sale on 10th June and that offer was to remain open for 2 days. On 11th June a third party informed Dickinson that Dodds was offering the house for sale to someone else. Dickinson quickly tried to accept the offer but discovered it had already been sold. Dickinson sued for breach of contract

Held: The Court of Appeal held that Dickinson could not accept the offer because it was clear Dodds had withdrawn his offer despite the fact he had not said it (a third party had)

Entores v Miles Far East Corp [1955] 2 QB 327

Facts: In this case a telex machine was used for communication. The court had to determine when acceptance occurs where the telex is sent in country A and received in country B.

Held: At the Court of Appeal, Dennine said a contract would only be made if communicated. Thus, acceptance only occurs when the telex has been received. This judgement is widely accepted

Errington v Errington (1952) 1 KB 290

Facts: A man promised his children that if they paid the mortgage on his house then the could have it. The children began to pay some of the mortgage, but the man died. A representative of the dead father said there had been no agreement to do this and, therefore, he could withdraw his offer as performance had only partially been performed/accepted (i.e. only part of the mortgage had been paid)

Held: The Court of Appeal did not think that the offer had been withdrawn. Thus, partial performance of the contract (i.e. partial payment of the mortgage) could equate to acceptance here.

Denning: “The father’s promise was a unilateral contract – a promise of the house in return for their act of paying the instalments. It could not be revoked by him once the couple entered on performance of the act, but it would cease to bind him if they left it incomplete and unperformed”

Felthouse v Bindley (1862) EWHC CP J35

Facts: A man negotiated to buy his nephew’s horse. He offered a price and said if he hears nothing back he will presume the horse is his. The nephew did not reply, but he did tell an auctioneer to take the horse off an auction it was being sold on. The auctioneer did not do so and it was subsequently sold to someone else. The man sued the auctioneer believing he had a contract to buy the horse from the nephew

Held: It was held that there was no contract because acceptance had not been communicated to the man → you have to manifest your acceptance in some way

Financings Ltd v Stimson [1962] 1 WLR 1184

Facts: A man was looking to buy a car from a car dealer, but there was a condition that required the consent of a finance company for it to go ahead. Two days after getting his car it was stolen. The question for the court was who owned the contract?

Held: There was no contract due to a falure of the condition (i.e. the consent of the finance company for it to go ahead)

Fisher v Bell [1961] 1 QB 394

Facts: The defendant had a knife in his shop window with a price on it. He was charged under s1(1) Restriction of Offensive Weapons Act 1959, because it was a criminal offence to 'offer' such flick knives for sale

Held: It was held there was no offence because there was no offer; it was an invitation to treat. Lord Parker said “the display of an article with a price on it in a shop window is merely an invitation to treat”

Forman & Co. Proprietary. Ltd v Ship Liddesdale [1900] AC 190

Facts: The [arties agreed on the repairs of a ship. The repairers continued with a load of repairs which were not covered by the initial agreement

Held: It was held that no offer had been comunicated to the ship owners regarding the additional repairs, so there was nothing for them to accept. Therefore, there was no binding contract. For there to be a valid offer there needs to be a communication of promise from the offeror to the offeree

Gibbons v Proctor (1891) 64 LT 594

Facts: A reward was promised to anyone who provided certain information. The person who ended up supplying the information was not aware of the reward available

Held: It was held that the person was still entitled to the reward. So, despite there being no communication of the offer to the person, he was still able to 'accept' it. This appears to go against the principle that an offer must be communicated.

Gibson v Manchester City Council [1979] 1 ALL ER 972

Facts: In this case it appeared as though there was an offer, but it was held to have been an invitation to treat. Gibson lived in a house owned by the Conservative council. The Council offered Gibson the chance to buy the house: the Council offered a price saying they "may be prepared to sell the house" to him and he must fill out a "formal application" to purchase it (which he did). A Council electio occurred and Labour got voted in, replacing the Conservative council.

Held: The House of Lords held there was no contract. The Conservative council had not actually made an offer to Gibson to buy the house, but had made an invitation to treat i.e. they were simply showing their willingness for Gibson to make an offer to the Council to buy the house

Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2012]

Facts: There were a series of emails between the parties saying they will have a written contract at some point.

Held: It was held that the emails were legal documents and constituted a contract. The emails were a provisional contract which could have been superseded by a subsequent contract

Harris v Nickerson (1873) LR 8 QB 286

Facts: The defendant advertised that a furniture auction was to be held on a set date. The plaintiff (i.e. claimant) came to the auction, on that date, only to discover that the furniture he wanted had been removed from the auction without being told. He wanted his expenses recovered.

Held: His claim for expenses was rejected: just because an item is advertised does not mean it must be for sale. It was simply an invitation to treat.

Harvela Investments Ltd v Royal Trust Co. of Canada [1986] AC 207

Facts: Two companies (Harvela and Outerbridge) were requested to submit tenders for the purchase of some shares. The defendants stated that the highest bid will be binding. Harvela bid $2.175m and Outerbridge bid $2.1m or $101k more than any other offer (a referential bid). The defendant accepted Outerbridge and Harvela sued

Held: It was held that the referential bid could not be allowed, so Harvela were successful. As the defendants were bound to accept the highest bid, the referential bid did not have a fixed ammount attached to it and as such could not be accepted or even submitted

Haughland Tankers AS v RMK Marine [2005] 1 Lloyd's Rep 573

Facts: The offer, in this case, indicated that for there to be acceptance a notice must be given in 6 months, and a commitment fee must be paid within these 6 months. The claimant gave a notice but no commitment fee

Held: It was held there was no acceptance by the claimant because they didn’t accept in the manner prescribed by the offer

Hyde v Wrench (1840) 3 Beav 334

Facts: The defendant offered the plaintiff (i.e. claimant) his farm for £1000. The plaintiff offered £900 but the defendant rejected that sum. The plaintiff then wanted to accept the original offer of £1000. The defendant, at that point, no longer wanted to sell his farm, so the plaintiff brought an action against the defendant.

Held: It was held that if an offer has been rejected then it cannot later be accepted. So the plaintiff's claim failed.

OTM v Hydranautics [1981] 2 Lloyd’s Rep 211

Facts: The offeree told the offeror that he "intended to place an order"

Held: This was held not to be an acceptance of the offer as it was not final. Therefore, there was no contract.

Partridge v Crittenden [1968] 2 ALL ER 421

Facts: The defendant advertised the sale of some birds and was charged under the Protection of Birds Act 1954, s6(1) for offering the birds for sale

Held: It was held there was no offence because an advertisement is an invitation to treat and not an offer

Lord Parker says that ads, circulars and brochures are almost always “invitations to treat and not offers for sale”

However, the defendant selling birds could have been liable under the above act if the wording of the advertisement had been different e.g. if it had said the first person to give him 25 pounds will guarantee themselves a bird

Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401

Facts: The Pharmacy and Poisons Act 1933, S18(1), says that some medicines can only be sold if "effected by, or under the supervision of, a registered pharmacist". Boots allowed some of these medicines to be sold self-service, where there would be nobody supervising until the medicine taken to the till (where the person on the till could intervene if necessary i.e. stop the sale). The Pharmaceutical Society said that Boots was committing offence as they claimed the sale was done once the medicine was put into the basket (and, therefore, there had been no supervision in the sale)

Held: The Court of Appeal disagreed with the Pharmaceutical Society, holding that the offer was made by the customer and the cashier could accept/reject that offer. In other words, goods on display is an invitation to treat; the customer may then make an offer to the shop to purchase the good

Technically it could be said the court's ruling here was obiter, but it has become a generally accepted part of contract law

Stevenson v McLean (1880) 5 QBD 346

Facts: The parties agreed for the purchase and sale of a certain quantity of a product. The buyers asked whether they would accept a certain payment for the product.

Held: The court held that no contract had been formed, as the defendant had simply asked for more information (whether a certain payment would be accepted) and not accepted the offer.

Tekdata Interconnections Ltd v Amphenol Ltd [2010]

Facts: The Court of Appeal confirmed that the traditional offer and acceptance analysis applies in battle of forms (i.e. the court must find that one party has made an offer and another party has accepted that offer). In the case, the buyer (a company) sent an offer containing their own standard company terms. The sellers said they had received those terms but sent own terms back, which the buyer agreed. So there is a battle of the forms: which company's terms were the terms of the contract?

Held: It was held that the buyers were bound by the seller's terms/form because the sellers sent there own terms back and the buyers agreed to it. Thus, the 'last shot' approach was applied

Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163

Facts: The claimant was injured in a car park partly due to the defendant's negligence. The claimant was given a ticket on entering the car park after putting money into a machine. The ticket stated the contract of parking was subject to terms and conditions which were displayed on the inside of the car park. One of the terms excluded liability for personal injuries arising through negligence. The question for the court was whether the term was incorporated into the contract ie had the defendant brought it to the attention of the claimant before or at the time the contract was made. This question depended upon where the offer and acceptance took place in relation to the machine.

Held: It was held that the offer was made by the machine and paying for the ticket was accepting the offer (and, therefore, accepting the contract). Thus, anything happening after the ticket was paid for was not part of the contract (in this case the exclusion clause. So the exclusion clause was not incorporated into the contract)

Tinn v Hoffmann & Co. (1873) 29 LT 271

Facts: The plaintiff (i.e. claimant) wrote to the defendant asking for the price of 800 tons of iron. The defendant offered the iron to the plaintiff at 69 shillings per ton and asked for a reply "by return" (thus, that was a contractual term)

Held: It was held that since the offer was not in fact accepted "by return" (i.e. by return of post), there was no contract. In other words, there was no acceptance because it had not complied with the mirror image rule.

However, Honeyman J did say - obiter - that a telegram, verbal message, or any other means of return that was at least as fast as a letter written "by return" of post would have been sufficient

Trentham Ltd v Archital Luxfer [1993] 2 ALL ER 83

Facts: Trentham (the claiamant) were contractors on a building. They negotiated with Archital (the defendant) to subcontract the supply of certain parts of the building. When the work was complete the defendant tried to claim that there was no contract because although letters and phone calls had been sent there had been no formal offer and acceptance

Held: It was held there was a contract because the defendant had carried out the work so had accepted the claimant's conduct

Steyn LJ: “In this fully executed transaction, a contract came into existence during performance even if it cannot be precisely analysed in terms of offer and acceptance”

Warlow v Harrison (1859) 1 E & E 309

Facts: There was an auction to buy a horse without a reserve. The plaintiff (i.e. claimant) realised the horse owner was bidding, thus setting a minimum price he wanted to sell at. The plaintiff stopeed bidding and sued the auctioneer.

Held: Although the plaintiff did not succeed, it was said that he would have done if he claimed breach of contract by the auctioneer

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