British Steel v Cleveland Bridge and Engineering Company [1984] - BS was supplying steel notes for construction company, but no-one had agreed on price, or what was to happen if the goods were supplied too slowly or in the wrong order. CB did not pay, and the latter happened - BS claimed for £230,000 and CB counter-claimed for £870,000. Judge ruled that no contract had been made due to lack of provision for the above conditions and that the plaintiff be refunded the market value of the steel. The defendant would be unjustly enriched if some payment was not enforced.
Cable & Wireless PLC V IBM UK [2002] - When two large companies come together to form a contract, a multi-level dispute clause is required. CW brought an action in the commercial high court, but IMB claimed that they had skipped section 3. As there had been a breach of the mediation agreement, and as such, premature litigation, the parties were issued with a 'stay' (case not dismissed, but suspending in case of reactivation being needed) to return to mediation. As such, a resolution clause has to be specific enough that it can be upheld in court. Civil Procedure Rules 1998 emphasize the civil courts' responsibility, when appropriate, to encourage 'alternative dispute resolution'.
Watford v Miles [1992] - M agreed to negotiate with W for the sale of a business. They also agreed to terminate negotiations for the sale of a business to any other purchaser (which they did) provided W confirmed they were financially able to proceed with a purchase (which they did). However, M eventually sold to a third party. W sued for breach of contract and succeeded at trial, but M won in an appeal. An agreement to negotiate reasonably in order to reach the main contract is invalid under English law as it is regarded as uncertain. Any undertaking to bargain 'reasonably' has no objective criteria with which to establish when it has been breached.
Associated Provincial Picture Houses v Wednesbury Corporation [1948] - APPH were granted a licence by the defendant local authority to operate a cinema on condition that no children under 15 were admitted to the cinema on Sundays. The claimants sought a declaration that such a condition was unacceptable, and outside the power of the Wednesbury Corporation to impose.
The court held that it could not intervene to overturn the decision of the defendant corporation simply because the court disagreed with it. To have the right to intervene, the court would have to form the conclusion that:
- the corporation, in making that decision, took into account factors that ought not to have been taken into account, or
- the corporation failed to take account factors that ought to have been taken into account, or
- the decision was so unreasonable that no reasonable authority would ever consider imposing it.
The court held that the condition did not fall into any of these categories. Therefore, the claim failed and the decision of the Wednesbury Corporation was upheld.
London Regional Investment Ltd v TBI [2002] - Held that an obligation to "use reasonable endeavours to agree the terms of a joint venture regarding Cardiff and Belfast Airports" was no more than an agreement to agree. It was therefore unenforceable.
Little v Courage [1994] - LJ Millett, in the CoA emphasised that adding the phrase "best endeavours" to the obligation to agree made no difference, it was still unenforceable. An undertaking to use best endeavours to obtain planning permission or an export licence was sufficiently certain and was capable of being enforced. An undertaking to use one's best endeavours to agree, however, was no different from an undertaking to agree, to try to agree, or to negotiate with a view to reaching agreement. All were equally uncertain and incapable of giving rise to an enforceable legal obligation.
Pitt v PHH Asset Management [1994] - If period is specified, then there is a lock-out agreement that exists. A 'reasonable' fixed period (how is this established in terms of length?) means that if negotiations break down, one party can claim that it was not long enough, therefore this is not valid.
Rhodia International Holdings v Huntsman International [2007] - R agreed to sell a business to H, or to H's designated purchaser, a special purpose company set up by it. This included transferring all the third party contracts to H, one of which was an energy supply contract. The sale contract required R and H to use reasonable endeavours to obtain the necessary consents for the transfer of all the third party contracts. H was also obliged to provide financial information and also, if reasonably required by the third party, to provide a parent company guarantee (or some equivalent measure). H declined to provide this, and the financial figures for the special purpose company were unsatisfactory, leading the energy supplier to decline its consent to an assignment. The judge found that H was positively required by the contract to provide some sort of guarantee and so there was no need to find that it had failed to use reasonable endeavours.
Berkeley Community Villages Ltd v Pullen [2007] - P owned land and wished to develop it. The consultancy was given to BCV to get planning permission (a difficult and drawn out process). If they were successful, they would receive a commission. Before BCV had obtained permission, but after they had incurred considerable sums in the process, P agreed to sell part of the land to a third party. BCV obtained an injunction from the Chancery division to prevent P from the sale, and so that they could get their commission. It was held that 'good faith' was an obligation, and so BCV won. As such 'good faith' is linked to a performance obligation, not just a negotionary one. Individuals can be ordered to desist from behaviour which is against this, and also to perform in a way which fulfils it.
Spencer v Harding [1870] - Defendants sent out a circular offering to sell the stock to the highest bidder for cash. The claimants sent a tender to the defendants which, following the submission of all tenders, was the highest tender. D refused to sell the stock to C. D said that the circular was not intended to be a binding offer capable of acceptance. Rather, it was merely a circular inviting others to make offers. C said that the circular did constitute a valid offer and that the C had, by submitting the highest tender and attending all the necessary meetings, accepted that offer. Court held that the circular was not an offer, but merely an invitation to gather tenders, upon which D was entitled to act. Willes, J. held that the absence of any specific wording such as "and we undertake to sell to the highest bidder" rebutted any presumption that D had intended to be bound by a contract and distinguished the present circumstances from instances of reward contract offers or an offer to the world. As such, there is no duty on an invitor to accept the best tender; they have commercial discretion to reject all if they so choose.
William Lacey (Hounslow) v Davis [1957] - A submitted a tender for the re-building of war damaged properties. The tender was not accepted, but under the belief that it would be, A subsequently prepared further estimates, ordered materials etc, which B, the offeror, made use of. However, B did not place a contract with him, and ultimately sold the property to someone else. Although there was no contract in place, A was entitled to a reasonable sum for the work carried out on a quantum meruit ('as much as he deserves' - unjust enrichment) basis -the measure of damages where an express contract is mutually modified by the implied agreement of the parties, or not completed.
Blackpool and Fylde Aero Club v Blackpool Borough Council [1990] - Requests to tender are invitations to treat, not offers, but may imply a contract to consider the tender. CoA awarded in favour of plaintif, as there was an implied collateral contract (a contract where the consideration is the entry into another contract, and exists side by side with the main one) regulating management of the tendering process. Ruled that BBC had not considered all valid tenders (including BFAC's).
Harvela v Royal Trust Co. of Canada [1986] - RTC owned shares in a company, and invited bids for them. H bid $2,175,000 and X bid "$2,100,000 or $101,000 in excess of any other offer… expressed as a fixed monetary amount, whichever is higher". RTC accepted Sir Leonard's bid as being $2,276,000. H sued for breach of contract, saying a referential bid was invalid. CoA held in favour of RTC, in that expressing a fixed amount made the referential bid good, but HoL reversed this in favour of H. Templeman said that making a referential bid was unfair, as the other party was not aware. If both had made referential bides, there would've been an impasse, unless a maximum sum was imposed. Diplock said that the successful party is the one in a bilateral contract. However, to get here you must first pass through a unilateral one.
Gibson v Manchester County Council [1979] - G wished to purchase his council property. MCC provided a price of sale. The plaintiff made a counter-offer. At the time of the counter-offer, a change in political control of the council (from the Conservative Party to the Labour Party) resulted in the council's decision to take the council property off the market. G sued, arguing that he had accepted the offer of sale and that the council had breached the contract by withdrawing the property from the market. HoL unanimously upheld the Council's appeal, so G did not get his house. The court held that G's initial response was not a clear and unconditional acceptance of the defendant's offer. No contract had been formed and by extension the council had not been in breach.
New Zealand Shipping v Satterthwaite [1975] - A drilling machine was to be shipped from Liverpool to Wellington; the bill of lading stipulated the limited liability of the carrier, further stating the clause would extend to servants, agents and any independant contractors. The carrier company was a subsidiary of the company that owned the unloading company who handled the drill. Due to negligence, they damaged the drill whilst unloading it, and claimed protection of the immunity clause. Privy Council said that the services provided by the shipper in unloading the drill was consieration for an unilateral contract agreing to protect those who are doing the unloading. A contract between two parties cannot be sued on by a third party, even if the contract is for that person's benefit.
PG v United Kingdom [2001] - Reliance upon evidence in court that had been obtained by means which infringed upon private life, and the right to a fair trial. It is trite law that specific statutory or other express legal authority is required for more invasive measures (Costa).
Gibson v Proctor [1891] - On May 29, D instructed his printers to print handbills, offering a reward of £25 to the person who should give information to a superintendent of police, named P, leading to the conviction of a criminal. The plaintiff, a police officer, on the same morning, before the instructions to print the handbills had been given by D, had communicated the desired information to a fellow police officer named C, with instructions to forward it to P, and C had communicated this (following the rules of the force) to his own superior officer, Inspector L, who sent it on the same evening to P, whom it reached the following morning, May 30, after the time when the handbills had been delivered to neighbouring police stations. It was held that the plaintiff was entitled to the reward; the messengers C and L, through whom the information was conveyed, being the plaintiff's agents to convey, and not P's agent to receive said message.
R v Clarke [1927] - An offer of a reward for £1000 and a pardon was made to anyone who gave information leading to the arrest and conviction of some murderers. One of the murderers gave information to clear his name, and then later tried to claim the reward. The court held that he was not entitled to this, as at the time he gave the information he did not think of the reward (must be aware of an offer to accept it).
Williams v Cawardine [1833] - A by public advertisement stated that whosoever should give information which would lead to the discovery of the murderer of B should, on conviction, receive a reward of £20. It was held that C, who had given such information, was entitled to receive the £20, even though she was led to inform not be the reward, but for other motives.
Tinn v Hoffman & Co [1873] - Two persons, each in ignorance at the time of what the other had done, wrote a letter to each other on the same day; one offering to buy a certain article at a certain price, and the other offering to sell the same article at the same price. The letters crossed each other in the post. It was held that such cross offers would not make a binding contract, and the offer in one of such letters could not amount to an acceptance of the offer contained in the other. As such, there were 'too many' offers, and therefore none were accepted.
Entores v Miles Far East Corporation [1955] - The contract is made at the place where the offer is received, and when it is received by the offeror (when concerning 'instantaneous' communication).
Brinkibon v Stahag Stahl [1983] - Acceptance is effective when placed in control of the post-office, but not the postal carrier (i.e. postman). 'Instantaneous' communication must be received to be effective; courts cannot make general rules about the effect of technology on communications.
Dickinson v Dodds [1876] - D gave P a written offer to sell a house for £800, 'to be left over until 12 June, 9am'. On 11 June, D sold the house for £800 to A, and P was informed of this by B. Before 9am on the 12, P gave D a formal letter of acceptance. CoA held that P knew clearly that in attempting to accept, D was no longer minded to sell the property to him - D had validly withdrawn his offer and the purported acceptance was too late.
Hyde v Wrench [1840] - D offered to sell an estate to P for £1000. P made an offer of £950 which was refused; finally P wrote to say he would pay £1000. It was held that no contract existed, as P had rejected the original offer, and in offering £950, this was seen as a counter-offer. Therefore this was not an 'acceptance' (with new terms).
Livingstone v Evans [1925] - The offeror replied to the counter-offer with the response "cannot reduce price", which was enough to keep the original offer alive.
Re Cowan v Boyd [1921] - The offeror said "I will call on you to discuss the matter further".
Henthorn v Fraser [1892] - Offer was handed in writing to the offeree as the parties were face to face at the time. The subsequent acceptance was posted; this was deemed reasonable because the parties were situated at a distance from each other. As such, acceptance does not have to mirror the original delivery of the offer.
Holwell Securities v Hughes [1974] - D granted P an option to purchase some premises. The agreement, dated 19 Oct 1971, said that this could be exercised by notice in writing addressed to D at any time within six months from that date. P posted a letter on the 14 April 1972, but it was not received. P sought specific performance in that the option had not been validly exercised. Action was dismissed in that there was no room for application of the postal rule, since the agreement expressly stipulated what had to be done to exercise the option.
Henthorn v Fraser [1892] - If acceptance is by post, it may be deemed not to occur on posting if postal acceptance was not contemplated by the offeror.
Household Fire Insurance Co v Grant [1879] - G applied for shares in HFI, which he was allotted by the company and posted a letter containing a notice asking him to pay money for their value. However, the letter never arrived. HFI went bust, and liquidators called on G to pay for the shares. Was an effective acceptance established, and hence was there a binding contract? CoA said that the acceptance of the contract was effective when posting, even if G did not know it. Bramwell points out that binding someone by something which never reaches him would not be possible if done by hand, therefore the 'postal rule' is simply arbitrary.
Byrne v Van Tienhoven [1880] - An offer can be revoked, but revocation must be received by the offeree to be effective.
The Brimnes [1975] - D hired a ship from P, who were shipowners. P then compained of a breach of contract and sent a message by Telex between 1700 and 1800h withdrawing the ship from service. However, it was not until the following day that D saw the message on their machine. It was ruled that the withdrawal was sent during ordinary business hours and that if staff had not seen it, they had either not been there, or had neglected to check. It was concluded that Telex messages sent to the business within office hours were actually communicated when received by the machine; they did not have to be read.
Grainger & Sons v Gough [1896] -
Partridge v Crittenden [1968] - Advertisements are generally not offers for the purpose of the offer-and-acceptance formula.
Fisher v Bell [1961] - Exposure of goods is not an offer.
Pharmaceutical Society of GB v Boots [1953] - B adapted one of their shops to a 'self-service' system in that customers could select items from the shelves that they required and take them to the desk. Near the desk there was a registered pharmacist who was authorised, if necessary, to stop a customer from removing any drug from the store. The issue was whether B had broken the provisions of s.18 of the Pharmacy and Poisons Act 1933 which made it unlawful to sell poison 'unless the sale is effected under the supervision of a registered pharmacist'. Both the QBD and CoA held that the display of goods was not an offer; in placing the goods into the basket, it was the customer who did this, which could then be accepted or rejected by the pharmacist at the desk.
The Santa Clara [1996] - "An act of acceptance of a repudiation requires no particular form: a communication does not have to be couched in the language of acceptance. It is sufficient that the communication or conduct clearly and unequivocally conveys to the repudiating party that the aggrieved party is treating the contract as at an end...the aggrieved party need not personally notify...it is sufficient that the fact of the election comes to the repudiating party's notice."
Felthouse v Bindley [1862] - P wrote to A offering to buy his horse, adding "if I hear no more...I consider the horse mine". A made no reply to this letter but intimated to D, an auctioneer who was to sell his stock, that the horse should be kept out of the sale. D inadvertantly sold the horse at auction, and P sued him. The court dismissed the action as there had been no acceptance of P's offer before, and P had no title upon which to maintain conversion (impose a right of sale upon the person). Silence is usually equivocal as to consent, and P's letter did not render A's failure to respond unequivocal.
Nissan UK Ltd v Nissan Motor Manufacturing UK Ltd [1994] - NUK had suggested a fairly solid pattern of delivery dates after an exchange of emails. NMUK then began to deliver in a way which matched this pattern, even though they had not properly agreed to it. It was held that NMUK's conduct was a natural inference of acceptance of NUK's offer.
Butler Machine Tool v Ex-Cell-O Corporation [1979] - B offered to sell a machine tool to EC, in which as part of the written offer, the offeror was given precedence over any terms in the buyer's order. In reply to this, EC made an offer for the machine on a different set of terms, writing that they accepted the order 'on the Terms and Conditions stated' which denied the price variation clause inserted by B. B replied, writing that the order was to be delivered 'in accordance with our revised quotation'. EC experienced some delay and could not accept the machine on time, as to which B invoked the price increase clause. EC refused to pay and B sued for breach of contract. EC argued that the price clause was not part of the contract and the CoA found in their favour.
However, if A signs on B's terms, why should we try and help A? Denning advocates the 'picking and choosing' approach, because it always results in a bargain, and courts should be striving to produce a compromise. However, this steamrollers offer and acceptance, and introduces unpredictability.
Carlill v Carbolic Smoke Ball Co [1893] - CSB, who manufactured the smoke ball, issued an advert in which they offered to pay £100 to any person who caught influenza after having used one of their balls in the specified manner, and they deposited £1000 in the bank to show their good faith. C sued for the £100 after using the ball correctly, and contracting influenza. It was held that the advertisement was not an invitation to treat, but a general offer, and a contract was made with those persons who performed the condition 'on the faith of the advertisement'. C was therefore entitled to recover £100.
Errington v Errington & Woods [1952] - A father bought a house for his son and daughter-in-law. He paid 1/3 of the purchase price in cash and borrowed the balance on a building society mortgage. He told the son and daughter-in-law that if they paid the weekly installments on the mortgage, he would convey the house to them when they were completed. They duly did this, although they were never contracted to do so. The father died, and the couple separated, but the daughter-in-law continued to live in the house. The wife of the deceased then sued for the return of the house. CoA ruled that the father had issued a unilateral offer, and the couple had accepted by beginning payments. The consideration of the agreement remained executory until the mortgage was repaid; therefore the offer could not be revoked as long as it remained outstanding. For as long as the daughter-in-law was performing, the wife could not evict.
Soulsbury v Soulsbury [2007] - An ex-husband promised to leave his ex-wife £1000 in his will if she agreed to waive maintenance payments in his lifetime. She agree, and did so, but before he died, he remarried, which rendered his first will null. Ward LJ concluded that the matter could be decided on the narrow basis that, as the wife had not attempted to pursue any ancillary relief through the courts, there was no possibility that the jurisdiction of the court was being usurped. The respondent was therefore entitled to her damages as the estate was subject to a binding agreement.
McCutcheon v David MacBrayne Ltd [1964] - Exclusion clause incorporated by course of dealing requires a measure of consistency.
Moran v University College Salford [1993] - Through a clerical error, M thought he had been offered a place on the course that he applied to, which in response to he left his job and sold his flat. However, by the time the mistake was discovered, Clearing had already closed which effectively forced him to take a gap year. The university had breached the contract which had been set up (even in error by telling him not to come, as he had no reason to expect that he should not have.
Centrovincial Estates plc v Merchant Investers Assurance Co [1983] - Was B aware of A's error concerning the amount of rent in a new lease? Parties' intentions must be assessed objectively.
Hartog v Colin & Shields [1939] - A offered his goods to B at a mistakenly much lower price. It was clear in the trade that goods were offered by process Y, and not process Z which A had done. B cannot 'snap up' A's offer if he knows that A is manifestly mistaken as to price. A party cannot enforce a contract if he knew that the other party was under a misapprehension as to its terms.
OT Africa Lines v Vickers plc [1996] - Suggestion that B should have realised A was 'obviously mistaken'.
Scriven Bros v Hindley [1913] - Objective principle displaced where B (via auctioneer, B's agent) has misrepresented (even innocently, and perhaps by 'conduct' rather than oral/written statement) the nature of subject matter which causes A to bid too much for 'tow' (an inferior commodity) thinking that it is 'hemp'. However, these were distinct commercial commodities, and it was not a mere mistake as to quality. Although the tow was knocked down to A at auction, he was not obliged to pay because he had been misled, albeit innocently, into buying the wrong subject-matter. To enforce specific performance here is at the discretion of the court.
Daulia v Four Millbank Nominees [1978] - P were told that if they could produce a bank draft for a certain amount of money by 10am the next day, that they could buy a property. When they tried to hand the draft over before the deadline, D changed their minds and refused to accept it or complete the deal. It was held that there is an implied obligation for the offeror not to prevent the condition from being satisfied. This arises as soon as the offeree begins to perform; until then, the offeror can revoke, but once this has started, they cannot.
Smith v Hughes [1871] - H was a racehorse trainer. S brought him a sample of oats, and H ordered forty to fifty quarters of oats at 34 shillings a quarter. Sixteen quarters were sent to start with. But when they arrived, H said they were not the oats they thought they were. He had apparently wanted old oats (which are the only ones racehorses can eat), and he was getting new, green oats. In fact, S's sample was of green oats. H refused to pay and S sued for breach of contract, for the amount delivered and for damages for the amount for oats that were still to be delivered. Ruled that S had no responsibility for another person's misconception, unless there is a warranty supporting in terms of quality. There is no duty to disabuse 'opponent' of economic misconception, as contracting parties should look after themselves.
Thake v Maurice [1986] - X tried to sue a surgeon for an unsuccessful vasectomy on the grounds that the surgeon had predicted irreversible 'success'. Held that this was not contractually binding, as even though the surgeon had made a promise, only a fool would have believed it. Reasonbleness trumps literalism.
May and Butcher v R [1929] - HoL decision in the sale of a large quality of remnant WWII tents. Held there was no contract as they had reserved to themselves the discussion for price, this meant that the court could not impose a reasonable price. It was a wholly executory arrangement; neither party had done anything, no goods were supplied - they had just exchanged promises. An arbitration clause was present, but as there was no contract, this was irrelevant.
Foley v Classique Coaches [1934] - Concerning an agreement for a supply of petrol from F "at a price to be agreed by the parties in writing from time to time". This arrangement worked successfully for three years, but then CC suggested that the contract was void because of incompleteness (wanted to escape contract for a better deal elsewhere). It was held that a reasonable price could be imposed as goods had already been delivered and accepted by CC. As such, part performance is sufficient to generate a contractual claim for the goods supplied.
Scammell v Ouston [1941] - The parties entered into an agreement to buy goods on 'hire-purchase'. It was ruled too vague as there were too many different types of hire-purchase agreements to use, and it was not clear which type was envisaged.
Raffles v Wichelhaus [1864] - The parties had a contract to bring cotton from Bombay to Liverpool on 'The Peerless'. However, both didn't know that at the time, there were 2 ships in the same port called this, but that each was leaving at a greatly different time. The buyer refused to accept the cotton that came on the later ship, arguing that he had meant the first 'Peerless' to leave port. It was held that there was no objective means to sort ambiguity out, and therefore no contract.
Nicolene v Simmons [1953] - Demonstrates how a court may choose to allow a contract to stand, even if parts of it are meaningless, if the alternative would be to set a precedent that is contrary to public policy. Here a contract contained the words "subject to the usual conditions of acceptance", but the parties had not done business before, so it was impossible to tell what the "usual conditions" were. However, the court ruled that this phrase should simply be ignored, and the rest of the contract left to stand. Otherwise, it was argued, anyone who wanted to renege on a contract could have it voided on a technicality.
Hillas v Arcos [1932] - Demonstrates that a court has the option to infer terms in a contract from the parties' previous dealings, rather than allow a contract to be voided. Courts do not usually like to do this if the wording or intention is vague, but it may be better than to allow a party to renege on a contract on a technicality. The contract was to buy "22,000 standards of softwood of fair specification". The court ruled that "fair specification" was not sufficiently vague to void the contract, as the companies had done business before and each would have known the others' intentions.
Co-Op Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] - 35 year lease for a supermarket site in a Sheffield shopping mall was granted in 1979 and included a clause that the tenant would continue trading for the same period, whilst another clause required the tenant to offer a 'full range of grocery provisions'. There was a breach of the lease and the tenant supermarket company returned the keys prematurely. A higher degree of precision is required for specific performance or an injunction, compared with a claim for damages or debt. In this case, it was unclear when it came to this remedy as to how you could compel someone to run a business, so the landlord had to claim damages.
Courtney & Fairbairn Ltd v Tolaini Bros (Hotels) Ltd [1975] - TB was a landowner, and found C&F to develop a site for them. It was agreed that if C&F found a financier then they would get a building contract. C&F found one, but then negotiations between them and TB broke down, and TB found a third party instead. C&F sued for an alleged contract and loss of profit; however, they lost because they had explicitly negotiated freedom of contract in finding a price this was fatal to the courts' intervention.
Dunlop v Selfridge [1915] - D sold types to Dew Co., with a term in the agreement that Dew would not sell more cheaply to anyone else, and that Dew would not enter into a contract with anyone else except on the same terms. Dew sold tyres to S at the stipulated terms, but S sold them more cheaply. D brought an action against S, which failed on the basis that D had no contract with Selfridge, and was not a party to the contract which had allegedly been breached. Presumably D could have taken an action against Dew, who could certainly have taken action against S.
Combe v Combe [1951] - D, who was the husband of P, promised to pay her an annual amount for maintenance. However, after they divorced he declined to do so. P sued D for an order to enfroce the promise. However, as there was no consideration that would support it as a contract, P's defence was on the basis of estoppel. Her argument was that she had acted on his promise by not seeking the maintenance payments, and that had been to her detrment. CoA said that this could not work as P was using estoppel as a sword, not a shield.
Pitts v Jones [2007] - C and D had shared in a company. D had found a prospective buyer for all of these shares and wanted to persuade C to sell their shares too. It was going well until D felt that C was having second thoughts; to induce C into selling, D gave an oral assurance that if C agreed to do so, but the third party became insolvene,t D would indemnify them. The third party did become insolvent, and C sued D on the basis of the guarantee. However in retrospect, C had not been having second thoughts and therefore there was no need for the guarantee. D's defence was that there had been no consideration. This was dismissed as the guarantee was viewe as an overally part of the transaction. However, for C, this was just a bonus; nothing was given in return and so it was gratuitous. C won on consideration, but lost on formality. Guarantees have to be in writing and as it was not, the assurance was unenforceable under s.4 of the SFA 1677.
Callisher v Bischoffsheim [1870] - P threatened to sue the Govt. of Honduras for an alleged debt. D promised to provide bonds to the value of £600 if P promised not to sue for an agreed time. When the bonds were not delivered, P claimed damages for breach of that agreement. D claimed that as no money had been due in the first place there was no consideration for the promise to give the bonds. If D's claim were accepted, no agreement to compromise a doubtful claim could be enforced. If a party to an action believes bona fide that there is a 1)chance of success, then there is 2)reasonable ground for suing and 3)the forbearance will constitute good consideration. The other party obtains an advantage - being free from the necessity to defend the action. On the other hand if a party made a claim which they knew to be unfounded - then an attempt to derive an advantage by compromise would be fraudulent.
Eastwood v Kenyon [1840] - E was the executor of the will of L's father, and L's guardian; in his capacity as the latter, E spent money educating and 'advertising' L in a search for a husband. L then married H who promised to reimburse E for his pains. However, he never did. It was held that E could not have expected to be reimbursed, and there was no consideration on these facts.
Pao On v Lau Yiu Long [1980] - P owned shares in a private company which had one principle asset, this being a building under construction, which D wished to acquire. The proposed method of thus was that a public company in which D were the majority shareholders should buy from P their shares in the aforementioned company, the price to be paid by the issue of shares from P to D. In order not to depress the market for the shares, P agreed at D's request to retain 60% of the shares until 1974. A subsidiary agreement was made between P and D whereby P was protected against a fall in the value of shares pending the handover date, but this also had the effect of denying P any advantage should share value rise. As a result P refused to complete the main agreement, unless D agreed to cancel the subsidiary clause and replace it with a guarantee by way of indemnity should the value of shares fall. D, fearing the delays of litigation and the possible adverse effects on the company, did, but only after taking legal advice. The value of shares did fall, and P sought to enforce the guarantee. The Privy Council held that although D had been subject to commercial pressure, they had not been coerced into giving the guarantee, which meant that the contract could not be found void on the grounds of duress.
Glasbrook Bros Ltd v Glamorgan [1925] - A mineowner promised to pay the police if they would protect his colliery from trade union pickets. The police formed a garrison and became stationed at the colliery. As they were acting above their duties, they were therefore entitled to payment as these 'special services' had been requested.
Harris v Sheffield United FC Ltd [1988] - s.25(1) of the Police Act 1996 allowed the police (pursuant to an agreement) to charge for policing inside a football ground.
Reading Festival [2006] - Police services that were rendered offsite had been neither explicitly or impliedly requested, therefore no payment was due. If there is no agreement, then there is no obligation for the promoter to pay them.
Ward v Byham [1956] - The sole burden of maintaining legitimate children statutorily is on the mother. However, Child Support legislation from 1991 and 1995 also requires financially solvent fathers to contribute. Here, the father had agreed to pay £1 a week to ensure that the child was "happy and looked after". The request to make the child 'happy' (which was judged an extra duty), was judged to be consideration.
Williams v Roffey & Nicholls (Contractors) [1991] - W hired R&N to refurbish a block of flats. R&N subcontracted the carpentry work for £20,000 to X. X was very slow in delivering and R&N became nervous as in his contract with W there was a penalty clause for late completion. R&N asked X what could be done to help speed them up, and they agreed on the payment of an extra £575 per completed flat. X was not guilty of coercion. X completed eight flats then discovered there were better wages somewhere else, and so left. This was a breach of contract and so R&N refused to pay the bonus on the flats. It was held that the bonus should be enforced even though the carpenters had incurred no detriment as they were still doing the same job. However, benefit was given to R&N from X at R&N's request, therefore this was enough basis to uphold the incentive. It is important to remember that consideration has two faces, either of which will do to establish it.
It was said that R&N incurred practical benefits such as 1)not having to find new sub-contractors, 2)R&N were reassured by not having the penalty clause invoked, 3)the parties evolved a new system of regular payments and 4)the carpenters agreed to focus on one flat at a time - this was rational as then other workers (electricians, plumbers etc) could work on the other flats.
Stilk v Myrick [1809] - Some seamen agreed for £5 a month to work on a sailing ship. However, the wages were only payable on return to London. Halfway through the voyage, two of them absconded. In order to keep up spirits, the captain agreed that those two sailors' wages would be split between the remainder of the crew, but on return to London, he went back on this. ESPINASSE said that the ratio was all to do with public policy - there was a need to protect ships' masters from coercion to pay more during the perilous stages of a voyage. CAMPBELL said that the reason the sailors lost was because they had not done anything extra. The rate of pay initially included all maritime hazards such as death or injury mid-voyage. CAMPBELL's report won.
Hartley v Ponsonby [1857] - Distinguished STILK as a large proportion of men had deserted or perished, and as such the remaining crew's task had become radically different.
Hanson v Royden [1867] - A sailor was promoted mid-voyage, and so was entitled to a bonus in recognition of the move to a higher rank.
Pinnel's case [1602] - C sued D for £8. The defence was based on the fact that D had, at C's request, tendered £5 before the debt was due, which D had accepted in full satisfaction for the debt. The judgement was ruled in favour of C as the payment of a lesser sum on the day in satisfaction of a greater one cannot be any satisfaction for the whole. A promise to accept part payment of a debt in discharge of the entire debt is not supported by consideration. The debtor is already contractually obliged to repay the entire debt, and so provides no consideration for the creditor's promise to accept part payment.
Foakes v Beer [1884] - D owed C £3000; C agreed that she would not take any action against D if he would sign an agreement promising to pay an initial sum of £500 and pay £150 twice yearly until the whole amount was paid back. D was in financial difficulty, so C waived any interest on the money owed. D made the payments as agreed, then C sued him for the interest. CoA and HoL ruled in C's favour as the agreement did not contemplate the interest owed, but it could still be implied as enforceable. However, the promise to pay a debt was deemed not to be sufficient consideration as there was no additional benefit moving from D to C that was not already owed to her. The rule here is when a party accepts part payment of a debt in satisfaction of the whole, they will not be barred from suing for the remainder.
D&C Builders v Rees [1966] - D&C were a small firm that did some work for R at the cost of £482. For months they pressed for payment, and at last, R's wife, acting for her husband and knowing he was in financial difficulties, offered them £300 in settlement. If they refused this offer, she said they would get nothing. D&C reluctantly agreed, and were given a cheque for this amount, but they then sued for the remainder. CoA found for D&C as a creditor is not bound by a settlement to forego suing for remainder of amount.
Re Selectmove [1995] - D was a company that owed C, the Inland Revenue, substantial amounts of tax. A representative of D met with a representative of C and suggested that D should pay the tax and national insurance contributions as they fell due, and would repay the arrears at a rate of £1000 per month. D claimed that C said he would have to seek the advice of his supervisors, and he would contact the company in due course. D heard nothing from C until the IR demanded payment of the arrears in full. CoA ruled in favour of C, as no agreement had been reached seeing as there was no consideration. Even if there had been, D had not kept their side of it as they failed to keep up the payments.
Hirachand Punamchand v Temple [1911] - A father made a part payment to alleviate a son's debt. The creditor accepted this as the full payment, then attempted to go after the son for the balance. This cannot happen.
Collier v P & MJ Wright [2007] - Where a debtor offered to pay part only of the amount he owed and the evidence showed the creditor voluntarily accepted that offer, and relying on that acceptance the debtor paid that part of the amount he owed in full, the creditor would be bound to accept that sum in full and final satisfaction of the whole debt by virtue of the doctrine of promissory estoppel.
Alan v El Nasr [1972] - A contract was set up for 3 shipments of coffee, to be paid for in Kenyan shillings. However, for the first 2 payments, the seller accepted payment in Sterling. By the 3rd shipment, Sterling was significantly devalued, and so the seller wanted to enforce the original currency. CoA said that waiver had occurred, and therefore the creditor was no longer entitled to this claim.
Hughes v Metropolitan Railway [1877] - A landlord was entitled, under the terms of a lease, to compel a leaseholder to carry out repairs to the property, given an adequate period of notice. The landlord gave a six month notice period but, during this time the landlord and leaseholder entered into negotiations over the sale of the land. The leaseholder was given to understand that the repairs need not be carried out if he was going to purchase the land. When the negotiations broke down, the landlord attempted to enforce the original six-month period and evict the tenant. The court ruled that the negotions over the sale constituted a promise not to enforce the repair order, and that the tenant had acted on that promise to his detriment. The principle of promissory estoppel could therefore be used to estop the landlord enforcing his strict rights. In this case the suspension of the landlords' strict rights were merely suspended, and a new notice period introduced.
Central London Property Trust Ltd v High Trees House Ltd [1947] - In 1937, HTH leased a block of flats from CLPT; due to the war, the number of people occupying them was drastically lower than usual. In Jan 1940, the parties made an agreement in writing to reduce the rent by half. However, neither stipulated the period for which this reduced amount was to apply. For the next five years, HTH paid the reduced rate, and by 1945, the flats were back to full occupancy. CLPT then sued for payment of the full rental costs from June 1945, as per the original agreement, claiming that there was no consideration from HTH to support the reduced rate agreement. Although there was an absence of consideration, Denning ruled that the agreement to reduced rate was a promise which HTH had acted on. If CLPT was allowed to enforce their rights, then the fact that HTH had acted on the promise would have been to its detriment (becaues they would have to pay full price when most of the flats were unlet), and CLPT could be subject to promissory estoppel.
Cobbe v Yeoman's Row Management [2008] - A (YRML) owned flats, and R (C) was a property developer. In 2002, an oral agreement that was 'binding in honour' was made that R (at his own expense) would apply for planning permission, and if this was granted then A would sell to R for £12m, and R would then develop the property and pay A 50% of the amount when the proceeds had exceeded £24m. R succeeded in gaining planning permission after having spent time and money on doing so, when A then sought to renegotiate, in particular by increasing the value of the sale to £20m. R succeeded at first instance on proprietary estoppel, and A's appeal was dismissed in the CoA.
Baird Textile Holdings v Marks & Spencer plc [2002] - BTH had been a principal supplier of garments to M&S for 30 odd years. Large orders were placed, predominantly twice a year - these obviously gave rise to contracts, but nothing had ever been written down about the long term position. In 1999, with no prior notice, M&S told BTH that the relationship was ending at the finish of the current production season. BTH claimed that they were entitled to this notice due to their being an implied contract. M&S cross-appealed on the issue of whether they should be estopped. Cross-appeal was allowed, and BTH's appeal was dismissed due to that the alleged obligation of M&S to acquire clothing from BTH was insufficiently certain to find either a contractual obligation or one based on estoppel.
Shah v Shah [2002] - D gave a deed to pay £1.5 million to C; C was initially happy to receive this, but it then turned out that it was defective as it had not been properly witnessed. It was held that the deed was actually valid, as the act of handing over gives an implication by the covenantor that it was good, and the covenantee believed this. Promissory estoppel therefore 'cures' imperfect deeds, as it is used by, and works in favour of the claimant.
Balfour v Balfour [1919] - Wife sought to enforce promise by husband to pay £30 per month while he worked abroad. Action failed because firstly she provided no consideration and secondly, held that the parties did not intend their agreement to 'be attended by legal consequences'. In domestic cases, there has to be more than mere mutual promises to establish a legal relationship.
Jones v Padavatton [1969] - C was the mother of D, and promised to maintain her if she gave up her US job to study law in the UK. The promise was first in the form of a monthly allowance, but then a house was bought for D on the understanding that she could live there rent free, rent rooms to lodgers etc. D began her studies in 1962, but by 1968 she had still not completed them. In 1967, C claimed possession of the house, but D resisted this attempt on the grounds that she had a contractual entitlement to reside there. CoA ruled that again there had been no intent to enter into a contract but rather it had been a familial arrangement, as well as the fact that the terms specified were vague.
Parker v Clark [1960] - Couple C had agreed with Couple D that they would sell their house and come to share with D. D promised to accommodate them and leave them 1/3 of their estate when they died, even though they were not related. After a happy period, D eventually evicted C, who then sued them for damages (loss of baragain) and won damages for loss of rent-free accomodation, and other things. This was valued at £300 for 4 years, and they also got money for the 1/3 share of the estate. This only happened because it was removed from BALFOUR.
Kleinwort Benson v Malaysian Mining [1989] - C agreed to make available to a subsidiary company of D's a £10 million credit facility. D refused to act as guarantors, but provided a 'letter of comfort' which stated that "it is our policy to ensure that the business of [subsidiary company] is at all times in a position to meet its liabilities to you under the above arrangements". However, the company failed when D was indebted to the amount of £10 million. CoA held that this letter was not a contractual promise; it was simply a representation of fact as to D's policy at the time of its production.
Tweddle v Atkinson [1861] - Father and father-in-law made separate promises of money to C. When the father-in-law did not pay, C tried to sue him; however, he failed because he had provided no consideration for this promise.
Re Schebsman [1944] - JS (debtor) worked for a Swiss company and its subsidiary, an English one, until his contract was terminated in 1940. In Sep of that year, he entered into an agreement with the two companies under which, in consideration of the termination of his employment, they agreed to pay him £5,500 in six installments. The agreement provided that, in the event that he died before they had all been made, that the money would be paid to his wife, and if she died, his daughter. JS was declared bankrupt in March 1942, and died in May. His trustee in bankruptcy sought a declaration that the sums payable to his widow formed part of JS's estate with the result that they should be gathered by the trustee, and distributed amongst JS's creditors. The basis on which this was sought was the submission that JS had a right to intercept the money payable to his widow, and that this right now resided in the trustee. The CoA said that JS had no such right of interception, and the trustee was not entitled to it either.
Walford's case [1919] - A owned a ship which was hired by B, a charterer. B was introduced to A by a broker, C. According to mercantile custom, B holds a rpomise by A to pay permission to C on trust, and C can hold B accountable if he fails to sue A on his behalf. HoL held that without finding an explicit trust of a promise, that one can be found in these circumstances which is pre RE SCHEBSMAN.
Beswick v Beswick [1968] - B owned a coal business and transferred it to A, his nephew. A promised B to pay £5 a week to C, B's wife. B died, and A paid one £5 to C before he said he would not pay anymore. As C was the widow, and B died in testate (without a will) C becomes the administratix (owner of his estate) and has power over A. HoL doesn't recognise rights of third parties, but as she is suing on behalf of B she can. However, C could not sue for the £5 weekly payments as that was for her as a third party. She could not because the estate has lost nothing and so common law rememdies do not work; specific performance was needed to force A to pay the sum for the rest of C's lifetime. However, this only came out because C was the administratrix; after the 1999 Act, C could also obtain performance under her own name, not that of B's.
Woodar v Wimpey [1980] - Purchasers of land agreed to pay £850,000 to the vendors, and £150,000 to a third party on completion of the contract. One question which arose as whether, if the purchasers were in breach of contract, the vendors could recover damages in respect of the £150,000 payable to the third party. HoL did not stop this recovery - it was justified on the grounds that the damages awared did represent the claimant's loss, but they established that English law does not allow a claimant to recover damages on behalf of a third party. There was a slight exception made in that a contracting party could recover damages on behalf of a group (i.e. contracting for family holidays, meals in restaurants) but this 'special treatment' has never been used.
Panatown case [2001] - A agreed with B to build an office block for £10 million. The site was always owned by C (reason was VAT avoidanec) and B was a subsidiary. B supplied the money, and C gave it. In contract there was a liquidated damages clause and there was also a collateral deed between A and C (as far as this was concerned, A and C were in privity). It required A to exercise reasonable care to try and build well. This deed was inserted in the occurrence that C might want to sell to a 4th party; it lasted 12 years and could be assigned to any potential purchasers down the line. However, the building work was so bad that B brought a breach of contract against A for cost of cure (to get new builders) and loss of profit as the building could not be let to tenants.
HoL said that B could not recover damages from A due to the A-C deed. C had a direct right of action against A, which means that B should not be able to obtain damages on behalf of C (authority for this was ALBAZERO). The A-C deed precluded B's action on behalf of C.
The Albazero [1977] - HoL held that the DUNLOP rule allows B to obtain damages on X's behalf only if X has no direct claim against A.
Avraamides v Colwill [2006] - Courts are not prepared to engage in a process of construction or implication - identification of third parties must be explicit.
Nisshin Shipping Co v Cleaves & Co [2004] - Held that the effect of s.1(2) was to put the onus on the party seeking to allege that s.1(b) has been disapplied. Therefore, if the contract is neutral (i.e. silent on this issue), s.1(b) won't be disapplied and the third party would get the right. Parties also argued that the claimants can't claim under the Act because they already had a claim under a common law exception to Privity. Held that it cannot be inferred from the existence of an alternative cause of action that the parties intended to exclude the application of the 1999 Act.
Laemthong International Lines Co Ltd v Abdullah Mohammed Fahem & Co [2007] - Owners of a vessel chartered it to charterers. Cargo was loaded onboard and consigned to the receivers. The vessel arrived at its destination before the bill of lading, and so an arrangement was made to deliver the cargo to the receivers in return for letters of indemnity. The charterers issued a letter of indemnity in favour of the owners and the receivers in turn issued one which was addressed to the charterers. The central issue between the parties was whether the owners were entitled to enforce the letter of indemnity against the receivers. The receivers sought to prove that the contracting parties did not intend the terms of the receivers' letter of indemnity to be enforceable by the owners in relying upon the 'chain' of indemnities which the parties had created. They were claiming that the owners could not jump the chain of contracts and enforce the letter of indemnity given by the receivers.
The CoA rejected this and held that there was no established practice of the type found by the Law Commission to exist in the construction industry which negated the existence of a third party right of action. Where contracts are linked sequentially, but there is no proven understanding that the sequence of contracts prevents recourse to a third party rights of actions, the linked nature of the contracts will not itself preclude the existence of a third party right of action.
White v Jones [1995] - Contract between a solicitor and a client for the amendment of client's will. The solicitor went on holiday and by the time he had come back the client was dead, so the solicitor could not create provision for the inheritors. 1999 Act would not confer upon the inheritors a direct right of action because the inheritors are not direct beneficiaries of the contract, but indirect ones.
Scruttons v Midland Silicones [1962] - C, who were owners of a drum of chemicals, entered into a contract with a firm of carriers for transportation of the drum. Under the contract the carriers limited their liability to C for $500. X, who was employed by the carriers to discharge the drum, negligently dropped it, and C brought an action in tort against them. X sought to rely on the limitation clause contained in the contract between C and the carriers, and in the contract between themselves and the carriers, but it was held that they could not do so as they were not privy to the same contract. HoL said they knew of no doctrine of vicarious immunity (which would have enabled X, as agents, to claim the benefit of immunity which had been negotiated by the carriers), and as such, the limitation clause only applied to the carriers, and could not protect X. This makes it extremely difficult for an employer to give his employees and agents the benefit of an exclusion clause negotiated by the employer, even when it is a legitimate method of allocating the risks under the contract between the employee and C.
The effect of this case means the insurance risk is transferred by A's insurer to X's - A, the cargo-owner would be aware of his goods' value and have taken out insurance to cover them; X is then exposed to any claims by A in negligence, with no shelter.
The Mahkutai [1996] - Indonesian shipowners had chartered their vessel to an Indonesia corporation (X, the carriers) who in turn sub-chartered it to an Indonesia timber merchants (Y, the shippers) for the carriage of a cargo of plywood. The master of the vessel authorised the carrier's agents to sign a bill of lading which provided that every servant, agent or subcontractor of the carrier was to have the benefit of all things that were linked to the carrier, as if they had been expressly made for their benefit. The contract or any dispute over it would be governed by Indonesian law. When the vessel arrived, it was discovered that the plywood had been damaged by sea water. The vessel then proceeded to Hong Kong for the process of discharging other cargo. On the arrival of the vessel here, the cargo owners issued a writ against the shipowners claiming damages in breach of contract, and breach of duty/negligence. The shipowners sought to stay the proceedings on the ground of the jurisdictional clause.
It was held that they were entitled to invoke this, and the proceedings were stayed. The cargo owners appealed to the CoA who allowed the appeal, and the shipowners then appealed to the PC. PC held that the shipowners were not entitled to invoke this clause, that the cargoowners were entitled to bring the action in Hong Kong, and that the stay had been properly set aside.
Oscar Chess Ltd v Williams [1957] - D sold a car to C for £290. D had sold it in good faith as a 1948 model, having taken the date from the logbook. However, the logbook was found to be a forgery, and the car worth significantly less. It was held that D's statement as to the age of the car was not a term of the contract but a mere representation. C, who were car dealers, were in at lesat a good a position as D to know the true age of the car.
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] - C asked D who were car dealers to find him a 'well vetted' Bentley car. D found a car which they sold to C, which they stated had only done 20,000 miles since a replacement engine had been fitted. It had infact done 100,000. It was held that D's statement as to the car mileage was a term of the contract; D, being car dealers, were in a better position than C to know whether their statement was true.
Bannerman v White [1861] - C was buying hops and wanted to know whether sulphur had been used, and if he said, he did not want to buy them. D lied and said that it hadn't. C subsequently brought an action for breach of contract; it was held that even though the undertaking was pre-contractual, he could sue as he had specified he didn't want sulpherised hops, therefore it was a term of the contract.
Routledge v McKay - A fraudster changed log of motorbike to newer model and sold it to someone who discovered this. Was the mention of the year of the bike a contractual term of not? The fact that a week had elapsed between when that was claimed and when the contract was signed, it was ruled that they had intended to agree on the terms in the written contract - whether it omitted that statement or not.
Ecay v Godfrey [1947] - The seller of a boat stated that it was sound but advised the buyer to have it surveyed. His statement was held to be a mere representation. The stronger you assert things, the more ilkely it is to be a term of the contract.
Dawson v Yeoward - Vendor told X that it wasn't worth checking the hull of a yacht that turned out to be actually damaged. Should the statement made by V prior to the sale be held to be promises integral to the contract or just misrepresentations? CoA said that it was merely a representation, and V had no contractual liability.
De Lasalle v Guildford [1901] - X and Y negotiate a tease. Terms are settled but then X, the prospective tenant, said he wouldn't exchange contracts unless the drains were in good order. Y said they were and obviously they weren't. As such this had nothing to do with the main contract, but court held that this was collateral to the main one, and such Y was liable contractually.
Barry v Davies (Trading as Heathcote Ball & Co) [2000] - Had the auctioneer breached a promise to the bidder? The contract when you bid is an offer, but is A bound by it? If it is with no reserve, then yes. A must knock it down as there is a collateral promise. There is consideration because there is both detriment and benefit. B's bid can be accepted until it is withdrawn; A's benefit is that the bidding is driven up as when there is no reserve, attendance of the auction is likely to be higher.
Shanklin Pier Ltd v Detel Products Ltd [1951] - Owner of a pier wanted to get it painted. DP was asked if their product was suitable for piers and said yes. The paint proved to be unsuitable, and X, whose pier had been damaged sued under a collateral contract. There was a contract which was parasitic upon the main one to paint the pier. Getting a third party to paint with the manufacturer's paint was consideration for the manufacturer's promise.
Turner v Green [1895] - The parties were seeking to arrange a compromise of an action. One party received a telegram saying that the action had been resolved in their favour. They did not tell this to the other party - was there an obligation to? No, as there is a distinction between supression or concealment, and silence.
Spice Girls Ltd v Aprilia World Service [2001] - The conduct of SG in approving and using promotional materials depicting all five of them for use until March 1999, and participating in a commercial shoot in May 1998 was found by the CoA to be a series of misrepresentations by conduct to AWS in saying that SG had no idea or any reasonable grounds to believe that any of the group wanted to leave before March 1999. As such, AWS won - each episode of misrepresentation gave added force to the earlier ones.
With v O'Flanagan [1936] - Negotiations of sale of medical practice began at time when it was worth £2000. But by time sale concluded, because ill-health of vendor in the intervening period, it had become worthless. Held that there was an obligation of the vendor to disclose the change of circumstances to the buyer.
Schneider v Heath [1813] - Concealing the state of a ship's hull as it was hard hard to inspect where it was moored was classed as a mispresentation.
Notts Patent Brick and Tile Co. v Butler [1866] - There was a contract for the sale of land, and the purchaser inquired as to whether there were any restrictive covenants. The solicitor said there were none 'as far as he was aware', but he had not bothered to read the papers. Although this was usage of ambiguous language, the court still ruled that it was misleading.
Carter v Boehm [1766] - Must disclose anything to an insurer that would affect the risk that the insurer is taking.
Woolcutt v Sun Alliance & London [1978] - Did the failure to disclose criminal record to the insurer render the insurance void? Yes - he should have disclosed this freely. It was a 'moral hazard' and as such this could void the policy. To disclose does not mean you have to be asked the question.
Smith v Land & House Property Corporation [1884] - "Desirable tenant" was treated as a statement of existing fact. However, when the landlord said this, he knew that X was in arrears, and therefore there was an implication of fact in this opinion.
Dimmock v Hallett [1866] - A number of statements were made during a no reserve auction - were these facts or opinions? 1)Land was described as 'fertile and improveable' - court said that this was a mere puff to encourage people to take interest. 2)That it had been improved by a new draining syste, at moderate cost - again this was a puff. 3)The land was rented for £290 p/a - although one tenant was paying this, the rest were paying much less. This was therefore a misrepresentation. To deduce fact from opinion one must look below the surface.
Fordy v Harwood [1999] - Classic car enthusiast who built a replica kit car and wanted to sell it. He succeeded in this, but when the buyer took it for MOT, he found there were problems. Seller refused to take it back; had there been a misrepresentation with what the seller said? CoA said that saying the car was 'in mint condition' was fact. As such, each separate statement must be interpreted carefully.
Bissett v Wilkinson [1927] - D sought rescission on grounds of misrepresentation. The person selling the land knew nothing about sheep, but the buyers wanted to purchase the land to do so. The seller was asked whether it would take 2000 sheep; the seller said it would, but when it was purchased, it was clear it wouldn't. Was the question about how many sheep the land would take support an inducement in itself? The PC said that the seller's comment was not a misrepresentation, as all the expertise was on the side of the buyers.
Edgington v Fitzmaurice [1885] - Directors of a company issued a brochure to potential investors saying what the money was going to be used for. However, this was not the reason that this money was needed. This brochure was held to be a fradulent misrepresentation.
New Brunswick v Muggeridge [1860] - Similar to EDGINGTON, except in this case, the brochure was not inaccurate, just obscure. Because the language was merely obscure, and therefore misrepresentational, the company could not enforce the contract.
JEB Fasteners Ltd v Marks, Bloom & Co [1983] - Before C took over a company, the company was asked to prepare some accounts for him - these were prepared negligently. However, C had not wanted the company, he had wanted the management team, so the wrongly prepared accounts had not induced him into the contract.
Attwood v Small [1838] - D was trying to sell a mine to C, and in doing so, exaggerated its productivity. C employed a specialist to verify this, who agreed with what D had said. As such, if you rely on your own informants, you will be unable to show reliance.
Redgrave v Hurd [1881] - C acquired a solicitors' practice on the word of D that it was worth a considerable amount, and to prove this that C could look through his accounts. C did not, but then realised it was worth much less. C was not deprived of remedy based upon reliance here merely because he had failed to take an opportunity to verify correctness of information.
Dart v Ely and Addishire Ltd [2000] - There was the acquisition of a property to erect a leisure development. D negligently failed to tell C of a dispute concerning a right of way before C bought the property. D's defence was that C would've bought it anyway. It goes without saying that one should not naturally equate the misrepresentee's enthusiasm to enter into the deal with an absence of reliance.
Peekay Intermark Ltd v ANZ Banking Corporation [2006] - An investor cannot argue that he has been induced to enter into a contract to make an investment by a misrepresentation as to the nature of that investment when the true nature of the transaction had been communicated to him in the final terms and conditions of the contract, which he had signed without actually reading.
LPMG Ltd v Stapleford Commercials Ltd [2006] - Where a serious allegation of dishonesty has been made, a court will start from the basis that it is inherently improabable that such an act occured, and cogent evidence will be required to persuade the court fraud took place. LPMG brought proceedings against S alleging that it had been cheated out of the true profit made under a joint venture agreement. Court held that the factors militating against the notion S had cheated LPMG was made more improbable by the fact that their relationship was based on years of friendship and trust, the nature of the deal was based on equality, the purchase and resale price was beneficial to both parties, and had been achieved. The evidence provided by LPMG was also unreliable.
Royscot Trust Ltd v Rogerson [1991] - X wanted to buy 28 million shares in a company, Ferranti, as D had created the idea that there were other people wishing to acquire them. Where is the clock stopped? It is the difference between the amount paid and the value of the shares. Y within Ferranti had acquired a worthless company in order to say that they had a massive acquisition; when this was found out, the share value dropped massively. The court ruled that D was liable for all these losses, as X would not have been embroiled in this if it wasn't for D. However, treating it as fraud distorts it in other ways - why should someone who was only lightly at fault be grouped with fraudsters?
Car & Universal Finance Co. Ltd v Caldwell [1961] - X was induced to sell a car what turned out to be a bad cheque; although X could not notify the fraudulent purchaser as to the rescission, he could notify the police, which was doing everything reasonable to give the intention of rescission.
Erlanger v New Sombrero Phosphate Co [1878] - A mine which was sold was used for a while before misrepresentation as to its quality was discovered. Part of the requirement is that there cannot be rescission unless it is in the whole but you may have partial rescission when it is not opssible to return the goods in perfect condition.
Whittington v Seale-Hayne [1900] - A bred prize chickens and rented ground from B who ensured him that the ground was good. Under the lease A covenanted to do anything the LA said. However, the first thing that happened was that the water supply was contaminated, meaning the family became sick and the chickens died. The LA ordered that they see to the drains and make the house habitable. Held that they were entitled to indemnity for the drains because this was expenditure on their part which actually benefited the defendant(which, if not claimed, would be unjust enrichment). But death of chickens and loss of profit not claimable because they did not result in a benefit to the defendant.
Clarke v Dickinson [1858] - There was the purchase of a share in a partnership. However, by the time rescission was considered, the partnership had changed to something else. It could not be rescinded, as the condition of the object had changed.
William Sindall plc v Cambs County Council [1994] - X wanted to purchase land for building, but the purchase took a long time. In this interrim there was a collapse in the property market and X ended up paying two times the building's value. It was then discovered that there was a drain on the land which had not been disclosed in the contract. If there is a contract where there is a breach of warranty (a term of the contract not kept up), however much you award in lieu of rescission must not go beyond what you would have awared in damages.
Government of Zanzibar v British Aerospace (Lancaster House) Ltd [2000] - GZ contracted with BA to buy a plane. They then pervated the contract so as to allow the Bank of Zanzibar to buy the plane, and for GZ to lease it from them. However, the plane developed faults and GZ stopped paying, so BZ resold the plane. GZ could not sue BZ as there had been no warranties or guarantees between them. They then sued BA udner s.2(1) MRA (negligent misstatement) and there was also an argument under s.2(2). This was held to be contentious due to delay and the impossibility of restitution. GZ had not been hard done by. s.2(2) was to give the court an alternative to rescission where a right to rescission had been established, but the court considered damages a more equitable solution.
Peyman v Langani [1985] - Suspicion is not enough to rescind a contract - you must give notice with full knowledge of the facts; as such, 'lapse of time' only begins to run when all this has been discovered and the 'right to rescind' ripens.
Long v Lloyd [1958] - D advertised a lorry for sale which was in exceptional conditon and did 40mph. X took out the lorry for a test drive and discovered that the speedometer was broken and the spring missing from the accelerator pedal. D assured X that he had told him everything that was wrong. X paid 1/2 the amount due to these problems. However, whilst driving the lorry he discovered more faults. He telephoned D and D suggested that he would pay for the repair of one fault, but as he didn't know about the others he wouldn't. X agreed to this, but eventually the lorry broke down completely. It was held that there could be no rescission as X had continued to drive it and accepted D's offers. Rescission had become barred by his own hand.
Leaf v International Galleries [1950] - L bought a picture from IG for £85. At the time, the gallery said that the picture was by Constable. Five years later L discovered that it was not. He returned to the gallery because he wanted his money back. CoA said that he could not have rescission as the action had become time-barred. If it were to be allowed, there would be no finality at all, so it is the injured party's responsibility to take action earlier. It also made no sense why L had not sued for breach of contract instead, as there was another remedy available outside of misrepresentation.
Lewis v Averay [1972] - A sold a car to B who was pretending to be a film actor. The agreement was paid for by a cheque which A wanted to wait for to clear before he handed the keys over. However B produced documentation which supposedly proved he was the actor. A then let B take the car, but the cheque bounced. B then sold the car to C, from whom A sought recovery of his mistake. However, in the case of rescission, as B had already sold the car to C, it was impossible.
Smith New Court Securities v Scrimgeour Vickers [1996] - Where misrepresentation is fraudulent, damages may be recovered in the tort of deceit. The aim of an award of damages under this measure is to award the claimant his reliance interest. The defendant is also liable for all damage directly flowing from the fraudulent inducement which is not rendered too remote by the claimant's own conduct, whether or not the defendant could have foreseen such consequential loss.
Clef Acquitaine SARL v Laporte Materials (Barrow) Ltd [2000] - There is no absolute rule that a transaction into which C was induced to enter into by fradulent misrepresentation has to have turned out loss-making.
Avon Insurance plc v Swire Fraser Ltd [2000] - When looking at the measure of damages for negligent misrepresentation, a court may hesitate to find the existence of misrepresentation under s2(1) because of the draconian consequences flowing from the finding of liability.
Couchman v Hill [1947] - A scenario where statements by a vendor and auctioneer at a cattle auction that a heifer was 'unserved' were held to override the written conditions of sale apparently excluding liability for such statements. The parol evidence rule was punctured somewhat.
Cremdean Properties v Nash [1977] - Exclusion clauses that deny the very existence of a representation do not escape MRA s.3.
Watford Electronics Ltd v Sanderson CFL Ltd [2001] - Where a contract has been negotiated between experienced business-people representing interests of equal bargaining power, the inclusion of an entire agreement term, even if it excludes liability for pre-contractual representations may be fair and reasonable.
Shark meat case [1920] - X and Y wanted a contract over whale-meat, but instead of the German term they wanted to use Swedish. However, they accidentally used the word for shark-meat, which the seller then tried to insist upon. The court had no problem applying subjectivity and ruling as to the parties' initial intentions.
Caraman May v Aperghis [1923] - X and Y exchanged bought/sold notes for sultanas, but there was no force majeure clause. In the trade it was very unusual for this not to be included. The fact that it was proved that this was usual practice allowed the court to rectify the contract and insert the term.
Joscelyne v Nissen [1970] - Father agreed to transfer business to his daughter in agreement for her paying towards general maintenance on his house. The solicitor pointed out to the daughter that she did not actually have to make these payments based on the contract. However, this was not accepted in court, as they had meant to put this into the contract and they were in agreement up until the execution of the formal instrument. As such, this was no obstacle to rectification. Where a contract is NOT void for mistake the court may exercise its equitable jurisdiction and rectify the written contract because it does not give effect to an antecedent agreement.
Thomas Bates v Wyndham's [1981] - Where a contract is not void for unilateral mistake, the court may exercise its equitable jurisdiction and rectify the written agreement.
Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] - If you have agreed something, then it is wrong to go back on it - even if the written contract is wrong - if it would be unfair or unjust to do so.
Rose v Pim [1953] - R received order for 'moroccan horsebeans described here
as feveroles'. R didn't know what feveroles were and asked P who said that they were just horsebeans so R orally contracted to buy from P feveroles, and the subsequent written agreement also said feveroles. But feveroles turned out to be a different bean and R wanted to rectify the written agreement. Held that R could not because the oral and written contracts were for horsebeans, and there was no literal
disparity; the only mistake was in the minds of the party.
Oceanic Village Ltd v Shirayama Shokusan Co Ltd [1999] - You cannot get rectification purely for being 'hard done by'. A lot of cases have this lurking at the back of their reasoning for coming to court. Normally contracts are treated as sacrosanct, therefore it is very difficult to persuade the court to issue rectification.
Robinson Fisher v Behar [1927] - A similar auction scenario to SCRIVEN. D accidentally bid for the wrong lot, and C sought to enforce the contract. In this case C was successful as he was not at fault.
Centrovincial Estates v Merchant Investors [1983] - C set price at £65k, asked
D to agree. D accepted but upon receiving the acceptance, C said it was a mistake and
they had meant £126k instead. CoA said that the agreement of £65k was valid. 'Merely because he has made a mistake which the offeree neither knew nor could reasonably have known when he accepted it' cannot possibly vitiate the
unambiguous offer.
Webster v Cecil [1861] - If one of the parties contracting under a mistake which would render it inequitable for the other to enforce the contract, this would be a good defence to an action for specific performance. C cannot try to take advantage of D's mistake.
Roberts v Leicestershire County Council [1961] - A sold the goods at the wrong price to B; however, when he pointed this out B had already signed the contract. Even if B had no idea of the real price, he had made an earlier offer which was higher than the contractual (incorrect) price which had been rejected. As such earlier negotiations can create objective knowledge which meant that B should have known the offer was probably wrong.
Statoil A.S.A. v Louis Dreyfus Energy Services L.P [2008] - Although parties may appear objectively to have agreed terms, if it is clear that they are not in agreement, then there can be no contract, because the parties have not truly agreed on the terms. As such, the contract is not void, but there was never a conttract at all.
Sherrington v Berwin Leighton Paisner [2008] - BL negotiated an agreement on legal fees for work done for S. BL offered to settle for £45,000 which S rejected. BL wrote to S again saying "I should perhaps add that our offer to accept the sum of £35,000 remains open". S accepted this, but then BL denied having agreed to the £35,000 settlement. There is no need for mistake here; the question is simply one of construction. The letters cannot be read properly together, and as such there is no contract. Self-contradictory offers will not make a contract.
Carlisle & Cumberland Bank v Bragg [1911] - A was tricked into signing a paper that they thought was one thing but turned out to be another. However, if the nature of the transaction is the same, although the form may differ, non est factum does not apply.
Gallie v Lee [1971] - G signed a deed but instead of signing it over to A, she signed it over to B. On the strength of the document the bank had given £x. In the CoA, they reluctantly said non est factum could not apply as it was not a document of a different character. She had intended to divest herself of her interest in the property, and she had done so, regardless of if the process she had planned for A was not what happened with B.
Burbank Securities Ltd v Wong et al [1971] - A was a cerebral palsy sufferer who had never worked or received much of an education. Her boyfriend, B, instigated her to use her property to make a number of payments. She became deeply in debt and was about to los her home. Pleaded the defence of non est factum in that she had not understood the transactions she was undertaking. This failed, although she did not understand the agreements beyond the fact that this would "get money out of her house". Had she been negligent in signing these documents knowing that she did not understand? However, there was a case of undue influence here as she had put her trust completely in B who had exploted her; similarly, solicitors who had advised her and helped her carry out the transactions were also in breach.
Credit Lyonnais v Barnard [1976] - X signed something which was in French which he thought meant one thing, but actually turned out to be another. If you are judged to have been negligent in signing a document (even if it is radically different from what you thought) there is no remedy.
Lloyd's Bank v Waterhouse [1991] - D's son was purchasing a farm and D got a large loan from the bank on the farms' security. When the son defaulted, D refused to pay in that the guarantee was much wider than he had first though. Was D liable? It was held to be the same kind of transaction, and therefore there was no non est factum. Was there fault on the part of D, and did this fall within GALLIE? D was illiterate.
Bell v Lever Bros Ltd [1932] - Pactum sus servanda (entering into a contract means you must abide by it) -- if there is a written contract, it is very hard to persuade court you want to change it. Two directors employed to run LB in Africa contracted not to run business on their own behalf whilst they were with the company. Eventually they were going to be made redundant with very good packages. However, LB did not know the directors had acted on their own behalf whilst employed - if this was known, LB could sack them without paying them anything. Was the redundancy contract now in mistake? At common law, both parties must be mistaken. The jury found the directors were not fraudulent as in signing their new redundancy contract they had honestly believed themselves to not be in breach. The HoL said that the new contract should be upheld. Establishing mistake at common law requires something very serious. Common mistake does not lead to a void contract unless the mistake is fundamental to the legitimacy of the contract. Here the parties got exactly what they bargained for.
Associated Japanese Bank (International) Ltd v Credit du Nord [1989] - B made a number of representations that he owned four large machines. AJB then entered into an agreement to purchase them from B and lease them back. AJB agreed with CDN a guarantee to protect themselves if B defaulted. However, it turned out there was no machines, and B never made a single payment. Here the existence of the machines was fundamental to the contract as they formed the prime security for the guarantee, as such because both parties were mistaken, the contract could be void.
Graves v Graves [2007] - Following divorce, A was granted a tenancy agreement over a property owned by her ex-husband, B. Agreement had initially been entered into because it was believed that 90% of the rest would be funded through housing benefit. However, this proved false. At first instance, the agreement was declared vitiated by mistake, but on appeal it was held that an implied term should be read into the agreement to the effect if the housing benefit was not payable, the tenancy terminated.
Kyle Bay Ltd (t/a Astons Nightclub) v Underwriters [2007] - The parties were mistaken about the basis for calculating an insurance claim (they assumed it was on a gross profits basis rather than on the declaration-linked basis) resulting in a settlement which was £100,000 (33%) less than the insured was entitled to. CoA held that the mistake had neither rendered the agreement impossible of performance, nor made the subject-matter of the contract 'essentially and radically different' from what the parties believed it to be, although the reduction in its entitlement was 'significant' and even 'substantial'.
Galloway v Galloway [1914] - Parties agreed to enter into a separation deed, believing themselves to be married. However, they were in fact not, and so the contract was void.
Couturier v Hastie [1856] - A sought to recover the price of some corn sold to B, but before the contract had been signed, the corn had perished. Under the Sale of Goods Act 1979 s.6, the situation is void. Does this have any impact on the doctrine of mistake?
McRae v Commonwealth Disposals Commission [1951] - CDC could invite tenders to the rights to salvage an oil tanker which had hit a reef. M tendered for this and won. A contract was made which established there was no warranty for quality of goods. However, when M looked on maps for this reef, it did not exist, as neither did the tanker. High Court said this was a failure of consideration. In situations like this, you must look at the contract (a specified item at a specified place, sold with all faults). The court asked whether the contract relied upon the fact that this item existed; they felt the contract had excluded this and the buyer had relied upon the seller. If you could show that both parties agreed the tanker had to exist, there would've been a case, but here the only promise by the Commission was that there was a tanker there.
Was there an implied condition precedent that the tanker was in existence? One can only conclude that CDC promised that the tanker was in the position specified. In situations where both parties were able to check the situation out, courts are less reluctant to find that matter warranted. As such, the terms of the contract establish what the parties actually contracted for.
A) Promise there was a tanker.
B) Breach of contract if wrong (although exclusion clauses)
C) Therefore suitable remedy might be misrepresentation
Sheikh Brothers Ltd v Oschner [1957] - The common assumption upon which the contract had been entered into was void (the land was physically incapable of growing the amount of crop envisaged by the contract) and therefore the contract was avoidable.
Cooper v Phibbs [1867] - An uncle told his nephew, not intending to misrepresent anything, but being in fact in error, that he (the uncle) was entitled to a fishery. The nephew, after the uncle's death, acting in the belief of the truth of what the uncle had told him, entered into an agreement to rent the fishery from the uncle's daughters. However, the fishery actually belonged to the nephew himself. HoL held that the mistake was only such as to make the contract voidable. Lord Westbury said "If parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is that that agreement is liable to be set aside as having proceeded upon a common mistake" on such terms as the court thought fit to impose; and it was so set aside. It was a legal impossibility for an owner to take lease of his own property.
Griffith v Brymer [1903] - A Coronation case where the commercial object of the contract could not possibly be attained by the time the contract was concluded. As in COOPER, the fundamental assumption underlying their contract is wrong, and therefore it is avoidable.
Harrison & James Ltd v Bunten & Lancaster Ltd [1953] - The two parties were buying and selling kapok. They believed they were dealing in pure kapok, so could the contract be avoided when they realised they were not? Ruled that contract could not be avoided as it was only regarding the quality of the product which was not something the whole contract hinged on.
King's Norton Metal Co Ltd v Edridge, Merrett & Co Ltd [1897] - W ordered some goods, on notepaper headed "Hallam & Co", from KN. The goods were paid for by a cheque drawn by "Hallam & Co". KN received another letter purporting to come from Hallam & Co, containing a request for a quotation of prices for goods. In reply KN quoted prices, and Hallam then by letter ordered some goods, which were sent off to them. These goods were never paid for. W had fraudulently obtained these goods and sold them to EM, who bought them bona fide. KN brought an action to recover damages for the conversion of the goods. CoA held that if a person, induced by false pretences, contracted with a rogue to sell goods to him and the goods were delivered the rogue could until the contract was disaffirmed give a good title to a bona fide purchaser for value. The plaintiffs intended to contract with the writer of the letters. If it could have been shown that there was a separate entity called Hallam & Co and another entity called W then the case might have come within the decision in CUNDY.
Phillips v Brooks Ltd [1919] - N visited the plaintiff jeweller, and chose some pearls and a ring. While writing a cheque in payment, he represented to the plaintiff that he was Sir George Bullough, with an address in St James Sq, London. The plaintiff had heard of Sir George as a man of means, and on referring to the directory found that he lived at the address given by N. He therefore allowed N to take away the ring. In fact, the cheque was worthless and N was convicted of obtaining the ring from the plaintiff by false pretences. N had pawned the ring with the defendant pawnbrokers, who took it bona fide and without notice in the course of business, giving value for it. The plaintiff brought an action for the return of the ring. It was held that the plaintiff intended to contract with N although he would not have made the contract , but for the defendant's fraudulent misrepresentation, and therefore, the property in the ring passed to North who could give a good title to any third party acquiring it bona fide, without notice and for value, and the action failed.
Cundy v Lindsay [1878] - X, pretending to be Y, wrote to Z offering to buy goods. X signed the contract with a forged signature that appeared to be Y's. However, Y did actually exist and Z had a reason to contract with who he thought was him. Z sent the goods to X, who then sold them onto a third party. It was held that as Z knew nothing of X and intended to deal only with Y, a fact which was known to X, there was no common intention which could lead to any contract between the parties, and therefore, the property in the goods remained in Z and X had no title to them.
Ingram v Little [1961] - The joint owners of a car, two sisters and a third person, advertised it for sale. A swindler called on them and agreed to buy the car. When they refused to accept a cheque, he tried to convince them that he was a reputable person and said that he was a Mr Hutchinson of Stanstead House, Caterham. One sister went to the local post office and returned to say that she had checked the name and address in the telephone directory. They decided to accept the cheque. The cheque was dishonoured and the man, who was not Mr Hutchinson, disappeared having sold the car to L, who had bought it in good faith. The owners brought an action to recover the car or its value from L. CoA held that the offer to sell on payment by cheque was made only to the person whom the swindler had represented himself to be, and as the swindler knew this, the offer was not one which was capable of being accepted by him. Therefore, there had been no contract for the sale of the car by the plaintiffs and they were entitled to recover the car or damages from the defendant.
Lewis v Averay [1972] - L advertised his car for sale. A man, who turned out to be a rogue, called on L, tested the car and said that he liked it. He called himself "Richard Green" and made L believe that he was a well-known film actor of that name. They agreed a price and the rogue wrote out a cheque. He said he wanted to take the car at once. L asked for proof of identity and he was shown a studio pass which bore the name "Richard Green" and a photograph of the rogue. On seeing this L was satisfied and let the rogue have the car and log book. The cheque was dishonoured. Meanwhile the rogue had sold the car to A, who bought in good faith and without knowledge of the fraud. L brought an action for the conversion of the car. CoA, distinguishing and doubting INGRAM, that:
(1) the fraud perpetrated by the rogue rendered the contract between L and the rogue voidable and not void because-
(2) where a transaction had taken place between a seller and a person physically present before him there was a presumption that the seller was dealing with that person even though, because of the latter's fraud, the seller thought that he was dealing with another individual whom he believed to be the person physically present. In the present case there was nothing to rebut the presumption that L was dealing with the person present before him, ie. the rogue; and
(3) L failed to show that, at the time of offering to sell his car to the rogue, he regarded his identity as a matter of vital importance. It was merely a mistake as to the attributes of the rogue, ie his creditworthiness.
Accordingly, since L had failed to avoid the contract before the rogue parted with the property in the car to A, the latter, having bought the car bona fide and without notice of the fraud, had acquired a good title thereto and the action failed.
Citibank NA v Brown Shipley & Co [1991] - X pretended to be a signatory on a company account held with CB. X telephoned BS and asked to purchase some foreign currency which he would pay for by a banker's draft drawn on CB's account. X then telephoned CB requesting the banker's draft, which it handed to a 'messenger' whom CB thought was from BS. In exchange for the draft, a forged letter of authority was given. The draft was then paid to BS, who after confirming that the draft had in fact been issued by CB in the ordinary course of business, paid the money to X. When the fraud was discovered, CB brought an action to recover the draft from BS. The action was based on the allegation that title had never passed to BS as it could not derive a good title from X and there was no contract between the two banks. The Court held that the fact that CB had mistakenly dealt with X instead of BS did not prevent the formation of a contract between the two banks. They agreed that X had no title because of mistaken identity, but they found that he was a 'mere conduit'. Title did not pass from X to BS. The important factor was the identity of BS, the paying bank, and that there was no mistake here.
Shogun Finance v Hudson [2003] - Finance company agreed to sell car on hire purchase terms to fraudster who sold it to defendant. As proof of identity, fraudster produced genuine but not his, driving license of Mr Patel. Company checked Mr Patel's credit rating and sold car to fraudster who sold it to H. The effect of s.27 of the Hire Purchase Act 1964, as repeated in p.22 of Schedule 4 to the Consumer Credit Act 1974 was that a person, who in good faith bought a car from someone who turned out to have it on hire purchase, obtained a good title. H relied on this law to claim that he had good title to the vehicle. SF maintained that they were misled into believing that there was a contract between Patel and themselves. In fact he was not a party to the contract, therefore there was no contract. HoL supported the finance company, and stated that H could not win, because the debtor (supposedly Patel) had not disposed of the vehicle to him (as required by the 1964 Act). Held that hire purchase agreement was made between company and Mr Patel if anything, therefore fraudster did not obtain title to car. The innocent purchaser of a motor vehicle from a rogue, who had obtained it fraudulently by signing a hire-purchase agreement with a forged signature, did not obtain good title to it.
Solle v Butcher [1950] - In 1931 a dwelling house had been converted into five flats. In 1938 Flat No. 1 was let for three years at an annual rent of £140. In 1947 the defendant took a long lease of the building, intending to repair bomb damage and do substantial alterations. The plaintiff and defendant discussed the rents to be charged after the work had been completed. P told D that he could charge £250 for Flat 1. P paid rent at £250 per year for some time and then took proceedings for a declaration that the standard rent was £140. D contended that the flat had become a new and separate dwelling by reason of change of identity, and therefore not subject to the Rent Restriction Acts.
CoA held that: (i) the structural alterations and improvements were not such as to destroy the identity of the flat as let in 1939, and (ii) on the evidence, the parties had addressed their minds to the material issue of identity of the new flat, and their mistake or common misapprehension as to whether the flat had been so altered as to destroy its identity was a mistake of fact, and the landlord was entitled to have the lease set aside in equity on such terms as the court thought fit.
Grist v Bailey [1967] - D agreed to sell a house, subject to an existing tenant for £850, but then she refused to perform and alleged that the agreement had been entered into by her under mistake of fact. D believed that the property was occupied by a statutory tenant who had actually died. Its value when vacant would have been £2,250. The tenant's son occupied the flat, paying the rent at the office of solicitors, but left without having claimed to have a statutory tenancy under the Increase of Rent Act 1920. The plaintiff buyer brought an action for specific performance of the agreement. D counterclaimed for rescission of the sale agreement.
It was held that there was equitable jurisdiction to set aside the sale agreement for common mistake of fact and the sale agreement would be set aside because the mistake was fundamental, even on the footing that it had been open to the son to maintain a claim to protection as a statutory tenant, and any fault of the defendant vendor in not knowing who her tenant was not sufficient to disentitle her to relief, the defendant offering to submit to a condition that she would enter into a fresh contract to sell the property to the plaintiff at a proper vacant possession price.
Magee v Pennine Insurance [1967] - P signed a proposal form, filled in by his son, for the insurance of a motor car. There were a number of mis-statements in the proposal, in particular it was mis-stated that P held a driving licence. The proposal was accepted by the defendant insurance company. The car was accidentally damaged and P made a claim in respect of it. The insurance company offered £385 in settlement of the claim which P accepted. The insurance company then discovered the mis-statements in the proposal form and refused to pay. CoA held that on its true construction, the insurance company's letter was an offer of compromise and not merely an offer to quantify the claim, but judgment would be given for the defendant insurance company on the following grounds:
(a) (per Lord Denning MR) although the acceptance by P of the insurance company's offer constituted a contract of compromise binding at law, the parties were acting under a common and fundamental mistake in that they thought that the original policy was good and binding. The contract was therefore voidable in equity, and it would be set aside because in the circumstances it was not equitable to hold the insurance company to it;
(b) (per Fenton Atkinson LJ) the agreement to compromise was made on the basis of an essential contractual assumption, namely, that there was in existence a valid and enforceable policy of insurance. Since that assumption was false the insurance company was entitled to avoid the agreement on the ground of mutual mistake in a fundamental and vital matter.
Great Peace Shipping Limited v Tsavliris Salvage (International) Ltd [2002] - A ship which got into trouble made a contract with another one nearby to escort it into port. However when the contract was concluded it was found that the second ship was much further away than had been thought. This was not something which was void at common law, or avoidable at equity as the mistake was not fundamental enough. It has to be something radically and substantially different from what the parties thought.
Barton v Armstrong [1976] - A entered into a contract with B to him £x and buy his shares in the company - B was the chaiman. A and other wanted to get rid of him as their chair, but A had also put pressure on B to buy him out, as well as issuing threats. As such, should the contract be set aside for duress? No, as the proof was on B to prove that the threats were the thing that led him to signing the contract. However, threats need not be the sole reason for entering the contract, as long as one of the influencing factors. What does the law treat as legitimate pressure?
Maskell v Horner [1915] - The owner of a market demanded a toll from someone who used the market to sell. The person refused to pay but the owner seized his goods so he eventually did. Every time it was time to pay the person would protest, but always end up paying. During this case, another one came to light to show that this sort of behaviour was not acceptable. However, payment under duress is not duress, but if it is shown that the person pays only to resist his goods being stolen, then that may be sufficient. There may be circumstances into which we enter where we protest, but still pay that are not duress.
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd ('The Atlantic Baron') [1979] - A said that they would pay B, shipbuilders, more due to conversion rate fluctuations; they requested higher value reversion letters (guarantees) to cover this. However, after A received the ship they claimed for duress in that B would not have given them the ship if they had not paid - they literally had no option, as if they did not pay then they would not have got the ship.
Atlas Express Ltd v Kafko Ltd [1989] - A, a small company dealing in basketware, secured a contract with Woolworths. A needed to arrange transport of their baskets and agreed a contract with B on the basis of how many baskets the lorries could take. However, B grossly overestimated how much they could carry, and so they made a new contract, saying to A that if they didn't sign it they would not be able to use the lorries. A did sign, but later took this to court. This was economic duress, as A really had no option but to sign, seeing as there was not enough time to try and find alternative transport. Also, if they had refused to sign, Woolworths would probably have sued A.
Universe Tankships case - A had to pay B in order to let their ships out from the harbour. It was ruled that this payment was gained under economic duress a there was pressure amounting to compulsion on the victim. A had to intentially submit in a scenario where there was no other option.
R v H.M. Attorney-General for England and Wales [2003] - In the wake of 'Bravo Two Zero' and other books by ex-SAS members, the Ministry of Defence polled members of the regiment and introduced a policy that members had to sign a confidentiality contract. R, a member of the SAS, signed this, then repented his decision 2 weeks later. The PC held that there was no duress as the threat to return those who did not sign to their previous regiment, although a serious penalty in soldiers' eyes, was not unlawful, and the demand was not unreasonable. Although the choice may have been made under "overwhelming pressure" it was not an exercise of the MOD's legal powers over him.
CTN Cash & Carry Ltd v Gallagher Ltd [1994] - CTN bought cigarettes from G - even though there was no continuing contractual relationship, CTN used to buy in large quantities regularly, so G offered CTN credit on them, but with the freedom to withdraw this credit facility at any time. CTN placed an order with G, but G delivered it to the wrong warehouse; however, before this could be rectified, the cigarettes were stolen. G then wanted CTN to pay, but they refused. G said they would withdraw the credit facility, so CTN then paid. It was held that G was within their rights to withdraw this, although it was not exactly moral.
1)Was there an inequality of bargaining power here? One argument is that if there is then CTN should have been released from the contract. CoA rejected this.
2)Under the agreement, G were at liberty not to contract with CTN in the future. CoA said this was fair.
3)However, the idea that the risk (of the cigarettes being stolen) passed to CTN was not in the contract, but CTN's counsel conceded this to G's.
Halpern v Halpern [2006] - A party could not avoid a contract procured by duress in circumstances where he could not offer the other party restitutio in intergrum or counter restitution.
Smith v Kay [1859] - A young man fell under the thrall of an older man and was introduced to a life of vice. He ran up large debts and was advised by the gentleman to take out loans in order to cover them. The will of the younger man had been overthrown, therefore these transactions could be set aside.
C.I.B.C. Mortgages Ltd v Pitt [1994] - Husband put pressure on wife to get mortgages.
Morley v Loughnan [1893] - Someone who became a member of a cult handed over £140k to them. He died, but his inheritors wished to prove that the gifts were made under influence.
Macklin v Dowsett [2004] - D obtained planning permission for a bungalow which he had to build and complete in three years. He sold his land to planners and was granted a life tenancy. However, he then agreed to surrender this for £5000provided he did not complete his bungalow. As such, he lost the right to live on what was his own land.
Tate v Williamson [1866] - X sold land to Y who knew it was worth more than it was being sold for. However, Y was taking advantage of X.
Re Craig [1971] - X gave his housekeeper gifts and pauperised himself. The judge felt that she had exercised influence over him and thus there was enough proof for undue influence, so that victimisation (not folly or lack of foresight) was prevented. It was her burden to prove that there was not undue influence.
O'Sullivan v Management Agency & Music Ltd [1985- X produced proof of undue influence over him by his manager, even though the transaction had been profitable for him.
Tufton v Sperni [1952] - "Extravagant liberality and immoderate folly do not of themselves provide a passport to equitable relief".
Markham v Karsten [2007] - A former couple began acting as solicitor and client to each other. However, after they broke up, one of them tried to claim that payments he had made to her (as his client) were merely loans. It was held that there wass a presumption of influence, due to the solicitor/client nature, even though the transactions were domestic in nature.
Allcard v Skinner [1887] - Claimant was a novice nun that gave away all her
property upon entering religious order. However, the Mother Superior did not ensure that she had access to independent advice before doing this. The ground was therefore on the excessive reliance on the Head nun, rather than any wrongdoing on her part.
Turkey v Awadh [2005] - A couple granted a tenancy to the wife's father. Later they said he could have the house if he paid off the mortgage and paid £93k up front. However, you also need to show manifest disadvantage as well, if there is no proof for suspicion.
Royal Bank of Scotland v Etridge [2001] - In 1998 Mr and Mrs Etridge decided to buy The Old Rectory in Laverstoke, Hampshire. They intended that the house be bought in Mrs Etridge’s name. The financing came from various sources including their former home. Mr Etridge was responsible for arranging this. Mrs Etridge took no part in the negotiations. The finance was secured by two mortgages, one to the Royal Bank of Scotland and the other to trustees. The Royal Bank of Scotland had its own solicitor. Mr and Mrs Etridge saw the banks’ solicitors together and Mrs Etridge signed all the papers without reading them or seeking any explanation of them. She did so, trusting her husband.
In due course the bank sought repayment of its loan and took proceedings for possession of The Old Rectory. Mrs Etridge relied on “undue influence by her husband”. The case went to court, but her appeal failed. The judges in the House of Lords ruled that there was no undue influence and she should have read the papers and taken separate legal advice.
Credit Lyonnais v Burch [1997] - B was working for a travel company and developed a relationship with its owner. The company needed an overdraft and the owner asked B whether she would mortgage her flat for this. The question here was whether it was possible to rebut undue influence - was it enough that he had recommended legal advice to her? It is only by showing that the plaintiff was free from influence and had been brought to the same decision by independant advice that it can be so. It is not just a question that legal advice was given, or even sought, but it must be proved that the person completely understood and then entered into the decision of their own free will.
Barclays Bank v O'Brien [1993] - The husband was a shareholder in a company and arranged an overdraft facility of £135,000 for the company. The husband's liability to the bank was to be secured by a second charge over the matrimonial home, jointly owned by the husband and his wife. The husband persuaded the wife to sign the security documents by misrepresenting the situation, saying the facility was short-term and the charge was limited to £60,000. When the company's debts increased, the bank brought proceedings against the O'Briens to enforce the guarantee.
The judge gave judgment for the bank, finding that (1) the husband had not unduly influenced the wife and (2) that the husband had misrepresented the effect of the charge but that the bank was not responsible for that misrepresentation. The Court of Appeal held that the bank was under a duty, which it had not satisfied, to take reasonable steps to ensure that the wife had an adequate understanding of the transaction so that it was not enforceable against her except to the extent of £60,000. The bank's appeal to the House of Lords was dismissed, and they set aside the charge.
The House of Lords held that a wife who stood surety for her husband's debt and who had been induced by undue influence, misrepresentation or similar wrong had a right to have the transaction set aside if the third party (in this case the bank) had actual or constructive knowledge. Unless reasonable steps were taken to ascertain a) whether the transaction was of financial advantage to the wife, and b) if there were reasons to suspect that the debtor had committed a legal or equitable wrong which had induced the wife into the transaction, then there would be, at least, constructive knowledge. The bank, having failed to take any such steps to verify the situation, had constructive knowledge of the husband's wrongful misrepresentation. The wife was entitled to have the charge set aside.
The House also extended the principles applicable to husband and wife to (1) all cases where there is an emotional relationship between the cohabitees (whether homosexual or heterosexual), provided that the creditor is aware that the surety is cohabiting with the principal debtor; and (2) to other relationships (for example, parent and child) in which the creditor is aware that the surety reposes trust and confidence in relation to his financial affairs.
Shaun Ryder v Nicholl [2000] - N wanted to represent SR (lead singer of The Happy Mondays) so they sent him some paperwork detailing a proposed contract. As SR was illiterate, he gave this to his solicitor to read. The solicitor sent it back to N as unacceptable and expected to hear nothing more. However, N knew where SR was recording so they decided to visit him. They also knew that he continually smoked marijuana whilst in the studio and were hoping he would be more open to their renewed offer. It turned out that SR was, and he ended up signing the contract. He then gave the signed contract to his solicitor again, and although it was not the best terms, the solicitor decided that it wasn't so bad as to take any action. However, it soon transpired that the contract was worse than it first appeared.
As SR could not read, was this not undue influence, as they had taken advantage of him in a vulnerable state? The court said that yes it was, but as he had sought legal advice, this meant that he had inadvertantly affirmed his acquiescing to the contract, even if the advice had been bad.
Fry v Lane [1888] - Two brothers in menial jobs sold their reversionary interest in a property they stood to inherit for substantial undervalue. Even though they had sought legal advice, the solicitor was inexperienced, as well as being employed by the buyer in the transaction! This was an obvious case of undue influence.
Blomley v Ryan [1954] - Is taking advantage of a madman during a transaction unconscionable? Yes.
Hart v O'Connor [1985] - In this case the seller was not aware of the fact that the person was mad.
Creswell v Potter [1968] - How do we decide what constitutes 'poor and ignorant'? A wife had left her husband, but she had a joint property with him. She decided she wanted to sever this and asked husband to release her from the mortgage in return for her half of the house. However, the house was worth much more than the mortgage, and the husband eventually sold the property for a large sum. It was determined that the claimant could ask for undue influence.
Portman Building Society v Dusangh [2000] - PBS granted D a 25y mortgage, but D was already 72, retired and illiterate in English. He was guaranteed in this by his son, who he had taken the mortgage out for so that he could be set up in business. However his son failed and PBS decided to foreclose. D then tried to claim that the scenario was an unconscionable bargain. Although the victim was in the category of this (poor and ignorant), the contract had not manifestly disadvantaged him. Even though the same solicitor had acted for both PBS and D, it was not something a solicitor would have hugely advised away from. The court said this wasn't an unconscionable bargain, as it made perfect sense for D to take out a mortgage. Although it was commercially unwise for PBS to accept him, it was not morally reprehensible. The transaction was improvident, but not immoral. Just because a bargain is strange does not make it unconscionable.
Lloyds Bank v Bundy [1975] - In this British case, an old farmer mortgaged his farm to the hilt to help out his son and soon enough, the bank moved in to foreclose. The court acknowledged that "in the vast majority of cases a customer who signs a bank guarantee or a charge cannot get out of it. There are many hard cases which are caught by this rule... Yet there are exceptions...where the parties have not met on equal terms". The court went on to mention that cases of duress of goods are voidable; when a party is taken advantage of because of a desperate need of the goods. And then there was the "unconscionable transaction... when a man comes into property - and then being in urgent need - another gives him ready cash for it, greatly below its true value... Even though there is no evidence of fraud or misrepresentation, nevertheless the transaction will be set aside". The third category is undue influence where a relationship gives some advantage. Then there are the cases of undue pressure and the salvage agreements (the latter when a vessel is in danger of sinking .. and the rescuer takes advantage of his position). The court suggested that all these instances "run on a single thread: inequality of bargaining power" and that "undue" does not mean wrongdoing nor "that every transaction will be saved by independent advice but the absence of it may be fatal". The court then concluded that the bank had a relationship of confidence with the farmer, a conflict of interest and by failing to suggest that he seek independent advice, the court disallowed the foreclosure action.
National Westminster Bank v Morgan [1985] - A husband and wife owned a home jointly. The husband was unable to meet his mortgage commitments and the building society threatened to seek possession for unpaid debts. The husband made refinancing arrangements with the bank secured by a mortgage in favour of the bank over the matrimonial home. The bank manager called at the home to get the wife to execute the charge. She did not wish the charge to cover her husband's business liabilities. The bank manager assured her, in good faith but incorrectly, that it did not. It was, in fact, unlimited in extent and could, therefore, extend to all the husband's liabilities to the bank, though it was the bank's intention to confine it to the amount needed to refinance the mortgage. The wife had not received independent legal advice before executing the mortgage.
The husband and wife fell into arrears with their payments, and the bank obtained an order for possession of the home. Shortly afterwards, the husband died without owing the bank any business debts. The wife argued that the bank manager exercised undue influence over her and that a special relationship existed between her and the bank which required it to ensure that she received independent legal advice before entering into a further mortgage. She also sought to rely upon BUNDY.
Lord Scarman came to the following conclusions:
1. A transaction would not be set aside on the grounds of undue influence unless it could be shown that it was manifestly disadvantageous to the party alleged to be influenced.
2. The basic principle was not a vague public policy (as formulated in ALLCARD), but the prevention of victimisation of one party by another.
3. The transaction in the instant case was not unfair to the wife.
4. Although the doctrine of undue influence could extend to commercial transactions, including those between banker and customer, it could not be maintained on the present facts that the relationship was one in which the banker had a dominating influence.
5. The bank, therefore, was not under a duty to ensure that the wife had independent advice.
Hong Kong Fir Shipping Ltd v Kisen Kaisha Ltd [1962] - The defendants had hired a ship for 24 months. There was a term in the charter whereby the owners promised that it was seaworthy. However, at the beginning of the contract it was found that the boat needed extreme repairs, and was therefore inoperational for 4 months, leaving only 20 months on the contract. During this period, the defendants grew tired of waiting and walked on the agreement - they claimed that the term of seaworthiness was a condition. However, the CoA did not agree as a breach of seaworthiness term encompasses a vast range of problems which vary hugely in seriousness. Therefore, it is not enough to only have a choice between condition and warranty. As such, Diplock revived the innominate term with this case.
However, although seaworthiness was innominate, as the ship had only been out of action for 4 months (which the charterers not having to pay for these repairs) they had not been deprived of their full expectations, and so the termination was deemed incorrect.
Arcos Ltd v A. Ronaasen & Son [1933] - The buyers made a contract to purchase timber staves from the sellers in order to make barrels for cement. Goods were sold by reference to description, and described as 1/2 an inch thick. However, when they arrived they were noticeably thinner (although the actual difference in the measurements was negligible) then they should've been, and the buyers rejected them. The sellers were upset because the staves were still perfectly good for making barrels, and because the market for them had fallen between the time of the contract and now, so they didn't want them back. However, the HoL the fact that they were fit for purpose didn't matter as any breach was enough to terminate the contract on the basis of the descriptions being a condition. Here, even a trivial breach was enough, although of course this would not have stood under an innominate term.
Reardon Smith Line Ltd v Hansen-Tangen [1976] - A ship was chartered before it had finished being built (common practice). However, it was so far off from being finished that it had no name but a serial number. Unfortunately, by the time the ship was completed, its number had been changed. There then was an oil crisis, and the the market for chartering slumped, so the charterers no longer wanted it. They tried to claim that as the serial numbers had changed it this was a breach. However, the HoL said that this did not work as it was a different type of description - the boat's attributes had remained the same (if this had changed, it would've been a breach) whilst only an identifying characteristic had been affected. This is a case that Chitty points to as excessively technical.
The Mihalis Angelos [1971] - Another case of chartering that contained a very common clause, an 'expected readiness to leave' time - this was where the shipowner promised the date that the ship would be ready for the charterer to load up. However, in this case the ship was late so the charterer cancelled. Was this term a condition or an innominate term? The court held it as a condition because of the commercial certainty that is needed and prized in these sorts of transactions (an innominate term would've forced the charterer to analyse how late was too late and to reassess) and also that it was influenced by earlier precedent in that it was regarded as a condition by that and the relevant practioners' textbooks.
Bunge Corporation v Tradex Export SA Panama [1981] - Concerning the international sale of goods by sea. The court was happy to apply what had been established in MIHALIS, but they pointed out that the difference between a timing stipulation (breach is due to lateness) vs. 'seaworthiness' (very unclear) was large.
Schuler AG v Wickman Machine Tool Sales Ltd [1973] - A German manufacturing company, S, agreed with a UK company W that they would be the sole seller of S's goods for a fixed period of 4 years. However, there were two clauses in their contract that were unusual - 7b: that it was a condition that W's representative would visit 6 motor manufacturers to attempt to sell S's goods once a week, and 11: that either party had a right to terminate the contract if the other committed a material breach with no attempt to remedy it. W did not manage to fulfil 7b so S sought to terminate, but W pointed to 11. The HoL decided that when this was drafted, they weren't using 'condition' as it is meant in terms of breach, but rather just as 'terms and conditions'. As such, S was not allowed to terminate on a breach of 7b.
The Seaflower [2001] - A charter of an oil tanker in which the parties had drafted a document as if a particular term wasn't a condition. However, because the term was so crucial the CoA ruled that it was, even if the drafting suggested otherwise.
The Hansa Nord [1976] - There was an international sales contract for citrous pulp pellets to be used for animal food. The contract containe an express (not the one implied via the SGA, as this would not have worked here) that the pellets would be in good condition. However, when they arrived, some were slightly damaged but still fit for their purpose as feed. Still, the buyers sought to reject as the market had fallen and it would be cheaper to purchase them elsewhere. Was this term a condition or an innominate one? 'Good condition' is a very broad spectrum, so it was decided that it was an innominate term as the damage had not caused the buyer to lose all of their expectations, and the goods could still fulfil their purpose. As such, flexibility won.
Aerial Advertising Co v Batchelors Peas Ltd (Manchester) [1938] - BP created a contract with AA to advertise their product via plane banner. There was a term in the contract that AA promised to agree with BP the route that the plane would take each given day so that it would not fly over the same area. In most cases, breach of this term would not have particularly mattered, but as the route hadn't been agreed the plane flew over a poppy day silence in a certain town. This caused many people to boycott BP, and BP immediately cancelled the contract with AA. AA actually tried to sue, but failed as the judge found it an innominate term.
Holding and Management (Solitaire) Ltd v Ideal Homes North West Ltd [2004] - Builders had no obligation as to quality of work or repairs. A lessee tried to imply this term, but court refused as they could not go against the express terms.
Hutton v Warren [1836] - Farmer was a tenant of a farm. The landlord gave him notice to quit (terminated his lease) but there was nothing in it to compensate the farmer for seeds he had planted. Nonetheless getting an allowance for this was custom.
The Moorcock [1889] - Claimant's steamship was in the defendant's wharf and was damaged when the tide went out as it scraped on something sharf in the riverbed. There was nothing in the contract which said anything about this, but the claimant argued that the defendant should have taken reasonable care to avoid this. The court agree that this would be an implied term.
Shirlaw v Southern Foundries Ltd [1939] - If something is so obvious that it goes without saying, then it will be an implied term.
Easton v Hitchcock [1912] - Mrs H thought her husband was having an affiar so she hired a female detective, E, to spy on him. E in turn hired men to observe Mr H's activities. However, one of these men stopped working for E, and after a period of time disclosed to one of his friends his surveillances on Mr H. In turn, this friend then informed Mr H of what was going on. As such, all investigatory services on him after this point were useless as he knew what was going on. When E sent Mrs H the bill she refused to pay and tried to argue that there was an implied term that E's servants should have kept their activities confidential both during and after their employment. The court disagreed and said that this was too broad of a term to imply. However, this would probably be decided differently today. As such, the narrower a term that a claimant seeks to imply, the more likely a court is to agree to it, and vice-versa.
Silverman v Imperial London Hotels Ltd [1927] - Mr S visited the Imperial's turkish baths and spent the night in something called a 'relaxation cubicle'. However, when he awoke the next morning he was covered in insect bites and had to take two weeks off work. He then wanted to claim damages and arged that there was an implied term in the contract about cleanliness. The court applied the MOORCOCK principle and agreed that the company would have intended the place to be insect-free. The judge even went further than saying they should have exercised reasonable care, and said that there was a strict warranty on them doing so.
Spring v National Amalgamated Stevedores and Dockers Soc [1956] - Complicated negotiations between trade unions finally resulted in an agreement about certain things. S was expelled from his union under this as he was 'supposed' to belong to another one dependant on geography and other factors. He sued, and the unions tried to claim that there should be an implied term saying that the unions could do anything to adhere to this agreement. The judge disagreed as at the time that S joined this agreement had not existed, so 'the officious bystander' test couldn't work.
Gardner v Coutts & Co [1968] - X owned two pieces of land, and sold one piece to Mrs G as well as granting her the right of pre-emption (she had the right of first refusal if the land was ever sold) over the other. However, then X tried to defeat this by gifting the land to his sister. Mrs G then sued saying that there was an implied term which included it being 'given away'. The judge agreed with her under 'the officious bystander' test, and it also set a standard for land law (cannot defeat a right of pre-emption by giving the property away).
R Griggs Group Ltd v Evans [2005] - There was a contract between Dr Martens shoes and a freelance logo designer to create a new logo for DM. However, nothing was said about who the IP rights of the design would belong to in the contract. The designer then tried to claim that he had copyright over it and began to distribute it and sell it to others. The court said that it was obvious that this clause had meant to be implied.
Collidge v Freeport plc [2008] - Mr C was the person who founded Freeport outlet villages, but he came under suspicion for financial irregularities. As he was still the head of the company, F agreed to pay him off, but continued to investigate him. They found out that he had been doing illegal things, and so therefore refused to pay him. C then tried to claim that even though he had been found in the wrong, he should still get his money. He lost, as this would have been a highly unlikely implied term.
Liverpool City Council v Irwin [1977] - A tower block suffered with vandalism to the common lifts, stairwells and rubbish chutes. The tenants had leases of their individual flats, but these common areas were the responsibility of the landlord council. However the contract mentioned no such obligation for keeping these areas clean and repaired. As they degenerated more, the tenants stopped paying their rent in protest. The landlord then sought to repossess, and they counter-claimed saying that the landlord had covenanted to these responsibilities. In the CoA, Denning agreed, saying that he was implying the term due to reasonability (wrong!), however although the HoL agreed with his result, they disagreed with the reasoning.
As neither of the parties had actually negotiated the contract, there was no officious bystander, but in terms of fairness, it made more sense for the landlord to take care of these issues. However, the tenants still lost as the court said that the council had not breached this term (they had already been trying to deal with the problem and the situation had just gotten too bad).
Scally v Southern Health and Social Services Board [1992] - Concerning doctors' contracts of employment, the latter part being the main focus of implied terms at law - as such, it doesn't matter if work contracts are threadbare as much is implied already. Northern Irish doctors' pension rights were positively affected by an amendment to a statutory instrument which allowed the right to purchase extra pension rights if they had only just joined the health authority (i.e. moved from HA A to B). However, this had to be exercised within 12 months, and the claimant's authority neglected to make their employees aware of this before it was too late. S then sued saying there was an implied term that they should have brought this to his attention. HoL agreed that it was not 'in fact', but rather 'in law'. The health authority should have publicised the deal as they were the ones who had negotiated for it. It was eventually agreed on the basis of fairness and policy decisions that the term should be implied.
Crossley v Faithful & Gould Ltd [2004] - Tried to suggest a more general proposition based on SCALLY that all employers should take reasonable care for their employee's financial welfare. Court rejected this as it would be an unfair and unreasonable burden on employees.
L'Estrange v Graucob Ltd [1934] - Claimant ran a cafe in Wales and wanted to purchase a cigarette vending machine. She duly purchased one from the defendant, and when it was delivered she signed a complex document which involved her paying in installments without reading it. The document contained a number of exemption terms - one which said that the defendant was not liable if the machine was faulty or broke. This was all in very small print which the defendant had not read. The machine then developed a fault; C said that D had not explained the contract to her and D said that they had. D refused to help with fixing the machine. The CoA said that C was bound by the contract she'd signed. Lord Scrutton took a very commercial approach by saying that if a sane adult signed a non-misrepresentational document then regardless of if it has been read or not, they are bound by it. Commercial certainty is more important than fairness. However, Lord Denning (who was at the time the D's barrister) later regretted the court's decision and felt it was unfair.
Grogan v Robin Meredith Plant Hire [1966] - D owned a construction machine and hired this out to a civil engineering company. The agreement was made orally. At the end of the first week of hire, D gave C a time sheet to record how many hours the machine was in use for. However, at the bottom of this there was a reference to some standard industry terms and conditions - one which said that C promised to indemnify D if anyone was injured whilst using the machine. The court had to see whether this term had been incorporated into the contract or not, as it was not mentioned at the beginning. CoA thought it was not as you must ask whether the document is of a type that a person would expect, or should reasonably have known that it would contain those terms. A time sheet is not one of those.
McCutcheon v David MacBrayne Ltd [1964] - Shipping arrangements where sometimes the conditions were explicit and other times they weren't. This wasn't consistent enough to enforce past dealings.
Hollier v Rambler Motors (AMC) Ltd [1972] - Mr H took his car to RM's garage to repaired and made an oral contract with him. A fire broke out due to RM's negligence and H's car was damaged by fire. RM then tried to say that as H had had his car serviced her a couple of times in the past couple of years, and he had signed invoices before excluding liability for fire that this should also stand this time. The court disagreed as 'a couple of times in the past couple of years' was not a regular occurrence, and it was unlikely that Mr H had known about the terms objectively.
Scheps v Fine Art Logistic Ltd [2007] - Mr S had purchased a piece of modern art; he paid $35k for it, and then made an agreement with FA to store and take care of it before he could ship it to where he lived. However, somebody accidentally mistook it for rubbish and thew it out. By the time the case came to court the artist had won the Turner prize, so the piece was worth $600k. FA then tried to argue that there was a term whereby they would only pay compensation based on the weight of the piece, which would only amount to $500. However, they had not shown him these terms, or even provided him with a copy of them. As S was a well-known art dealer, FA then tried to argue that he was in the same trade as them and therefore should have known of this term. The court disagreed entirely, as they had not been reasonable in alerting S to these terms and conditions.
Thompson v London Midland & Southern Railway Co [1930] - An elderly lady couldn't read and was buying a ticket for a train. On the front of the ticket it said to refer to the back for terms and conditions, and on the back it said to refer to the train company's timetable to see them. However, she was injured by the negligence of the train company when she tried to alight the train and the driver moved off too quickly. The company then sought to rely on an exclusion clause in their terms (would fail today under UCTA), but there was no reasonable way that she could have read it. However, the court said that as the company had taken reasonable steps to alert her to its presence there, they were not liable. There was no slyness in their phrasing and it was up to the passenger if they wanted to read the clause or not.
Olley v Marlborough Court [1949] - Mr and Mrs O were booking into a hotel after having paid in advance. When they got to their room they found a notice exempting the hotel from liability of loss, damage or theft to customers' items. Later some jewellery, furs and a hatbox were stolen from the O's room - was the hotel liable? The court held that the notice was not incorporated as the contract had been made on booking in, whilst the first mention of these exemption terms had been in the room.
Jayaar Impex Ltd v Toaken Group Ltd [1996] - There was a contract made over the phone for the sale of some Nigerian arabic gum. Later the sellers sent some terms and conditions referring to standard industry ones on a form which was marked 'Important' and requested the buyers to sign and date it. However, the buyers did not. It was then found that there was something wrong with the goods so they sued. The sellers then tried to rely on two clauses in this document: i) an exclusion clause (substantive protection) and ii) a clause that required disputes go to arbitration before court (procedural protection). The court held that the terms were irrelevant and had not been incorporated as they had not been mentioned over the telephone, and the argument of them being an 'offer to vary' also failed as the buyers had never agreed to them by signing, precisely because they did not represent their agreement. As such, a variation of this kind will not be lightly enforced, particularly if it is worsening the buyers' position.
Chapelton v Barry UDC [1940] - C hired two deckchairs on a beach. There was a notice nearby the pile of chairs that said he should pay an attendant for them, but there was no mention of any terms and conditions. C paid and received two tickets that were very small and had printed on them an exclusion clause relieving the council of any tortious liability. However, when C sat on the chair the canvas broke and he injured himself; he then sued the council. They then tried to rely on the ticket, but the CoA rejected this, L.J. McKinnon drawing a clear distinction by saying that the ticket was not a contractual document but a mere receipt for monies paid. Any terms should have been mentioned in the notice before C paid -- there were also issues of timing here.
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] - S enquired of I over the phone about some prints; I sent them 47 transparencies which arrived with a delivery note containing the terms and conditions. There was no contract made over the phone. The offer was made when I sent them, and accepted by S when they began to use them. One condition was that a daily fee of £5 per photo would be payable after S had kept the photos for more than 2 weeks. However, S didn't notice this term and they forgot about the transparencies. When they finally remembered to send them back they were 16 days late, which meant they had incurred a fine of £3700. Was S bound by this? The CoA did not take an overly commercial approach even though they were both businesses; instead, they said that although English law does not have a general doctrine of good faith, it has several piecemeal ones which protect corporate fairness and ultimately add up to something similar.
Bingham said that as the term was onerous they had not drawn enough attention to it (agreed with Denning's 'red hand' postulate) and therefore I was only due a 'quantum meruit' payment, which was much less than the full fine. Was this actually fair for the court to set the amount, as surely I would have known how much money they would have lost by not having the photos? In any case, this was a different sort of clause that was not covered by UCTA.
Photolibrary Group Ltd v Burda Senator Verlag GmbH [2008] - A magazine ordered some photos from a library that they had used many times before, but the photos were lost, and there was a term saying that they should pay for this. BSV tried to use INTERFOTO in their defence, but failed as this term was an obvious and simple expectation of what would happen.
O'Brien v MGN Ltd [2002] - O bought a copy of the Daily Mirror and received one of their scratchcards, which when he had completed it, told him he had won £50,000. However, there had been a mistake at the printers which meant that a large number of people had received these winning cards. To rectify this, the DM invoked their rules for the event of there being more than one winner, which involved drawing lots. O did not win, so he sued; he claimed that these rules were not incorporated as they had not been printed in full in the newspaper on the day that he received his scratchcard (even though they had been on the first day the competition opened), instead they were merely referred to. O argued that the 'lots' term was onerous, and more should have been done to bring it to his attention.
The CoA rejected this and said that the DM had done enough (although they seemed reluctant to allow either party to win). There had been a clear set of rules mentioned, drawing lots was a standard industry procedure in these circumstances and the clause had not imposed either any extra burden on the claimant or attempted to exonerate the defendant from liability.
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