Offer and Acceptance
Pharmaceutical Society of Great Britain v Boots Cash Chemists
Held that the display of drugs on open shelves was merely an inducement to the buyer to make an offer to buy, not an offer to sell capable of acceptance.
Hyde v Wrench
An offer to sell at ?1,000 was met with a counter offer at ?950. This was rejected. The subsequent acceptance at the original price was legally ineffective as that offer had been terminated by the counter offer.
Neale v Merrett
An offer to sell land at ?280 was accepted at the full price, enclosing ?80 and an undertaking to pay the balance by instalment. This conditional acceptance of the offer had terminated it so no legal contract existed.
Stevenson v Maclean
M offered to sell iron „at ?2.00 net cash per ton till Monday‟. Monday: S telegraphed to ask if M would accept ?2.00 for delivery over 2 months or, if not, longest limit M would give. 10.01: M receives telegram. 1.34pm: S accepts by telegram. M had sold to someone else. Advised S by telegram sent at 1.25pm which arrived at 1.46pm. Court held S‟s first telegram was a request for information not a counter offer which did not terminate the original offer. A valid contract existed.
Byrne v Van Tienhoven
1 October offer letter posted in Cardiff
8 October revocation letter posted in Cardiff
11 October offer letter received in New York. Telegram of acceptance sent. 15 October letter confirming acceptance posted in New York
20 October revocation letter received in New York
Held: the letter of revocation could not take effect until actually communicated on 20 October. There was a binding contract.
Carlill v Carbolic Smoke Ball Co.
The Carbolic Smoke Ball Co advertised their product during an influenza epidemic as being able to stave off the flu. If anybody used their smoke ball in accordance with the printed instructions and caught the flu they would pay the individual ?100. To show their good faith they deposited a sum of money with their bank. Mrs. Carlill caught flu after having use the product very carefully and claimed her ?100. The company refuse to pay, saying that their advert was a invitation to treat only.
The Court held that this was in fact an offer to the whole world, the deposit of money showed intention to be legally bound and consideration was provided by the act of the customer using the product as instructed.
Household Fire Insurance v Grant
Letter applying for shares sent via an agent from Glamorgan to London. A deposit had been paid to the company‟s bankers. Company recorded him in share register. Post office
lost the company‟s letter of acceptance. Company failed and full payment for the shares was required. Court held G was required to pay in full, as a valid contract had been formed.
Entores Ltd v Miles Far East Corporation
E Ltd, in London, send offer to MFE, in Amsterdam, by teleprinter. Acceptance sent by MFE in
Amsterdam by teleprinter to E Ltd in London. MFE later in breach and question arose as to where contract was made and where litigation should begin.
Held that contract was made where acceptance actually communicated to E Ltd, therefore
Holwell Securities v Hughes
H gave HS an option to buy premises to be exercised 'by notice in writing'. HS sent a letter which was not received by H.
Held that there was no contract as 'notice' meant the letter must actually be received.
Adams v Lindsell
L Made an offer requiring acceptance in 'course of post' A accepted the offer 'in course of post' on 5/9 L received the reply on 9/9 but had already sold the goods It was held that the acceptance was effective when posted.
Dickinson v Dodds
10/6 defendant offered property for sale– offer to be open for 2 days 11/6 property sold to
another buyer reliable 3rd party informed plaintiff of the sale plaintiff then accepted the offer
It was held that the defendant was free to revoke offer and had done so. Claimant could not therefore accept the offer.
Fisher v Bell
Flick knife exhibited in shop window. Prosecuted for offering an offensive weapon for sale. It was help that display of an item in a shop window is an invitation to treat.
Partridge v Crittenden
P placed ad regarding rare birds. RSPCA brought a court action for offering birds for sale. It was held that the ad was an invitation to treat and not an offer for sale.
Ramsgate Victoria Hotel v Montefiore
M applied to buy share in June. Nov Co accepted his offer and requested balance. M said offer had expired.
It was held that the offer was for a reasonable time only. Five months was much more than reasonable and so the offer had lapsed.
Routledge v Grant
G offered to buy horse requiring acceptance in 6 weeks. Within the 6 weeks he withdrew his offer.
It was held G could revoke his offer within the 6-week period as it was prior to acceptance. There was no consideration given by R to keep the offer open.
Yates Building Co v Pulleyn
Offer called for acceptance by registered delivery letter. Offeree sent ordinary letter which arrived without delay.
It was held that no disadvantage had been suffered and as such the offer was valid.
Decorating was done in the family home by a daughter in law and on the subsequent death of the motherin- law the remainder of the family promised to pay the cost of the decorating to the daughter in law when the estate was settled. This promise was not enforceable as the consideration to “buy” the promise was provided in the past.
Chappell v Nestle
Chocolate bar wrappers provided in exchange for a record offered by Nestle were part of the
consideration despite having little or no commercial value. It was not cash alone which entitled you to the record.
Stilk v Myrick
Two deserters on a sea voyage led to a promise from the captain to the crew to divide the deserters‟ wages between them if they sailed the ship home. It was held that the promise
to pay extra was unenforceable as their contract already obliged them to meet normal emergencies and no consideration was provided.
Hartley v Ponsonby
More money was promised to sailors if they sailed the ship home when the level of deserters rendered the ship unseaworthy. This promise was enforceable as the sailors provided consideration by going beyond their duty.
Williams v Roffey Bros and Nicholls (Contractors) Ltd
Roffey Bros. were main contractors in the refurbishment of a block of flats. In the contract
between Roffey Bros. and the employer there was a penalty clause which provided that Roffey Bros would have to pay damages if the work was not completed on time. Roffey Bros. had sub-contracted the carpentry work to Williams and became concerned that Williams would not be able to finish on time. Roffey Bros. therefore offered Williams an extra ?10,300 to finish the work on time. They then refused to pay the money. It was held where that there was no evidence of fraud or economic duress and there was a benefit to both parties, a promise backed up by consideration may be enforceable. Hence Roffey Bros. were ordered to pay the ?10,300.
D & C Builders v Rees
Builders reluctantly accepted part payment of a debt as they had financial difficulties Later sued for the balance.
It was held they were entitled to sue as estoppel only applies to promises freely given.
Dunlop v Selfridge
D imposed a resale price on customers Sold tyres to dealer
Dealer sold tyres on to Selfridge with same price restriction
S sold tyres at below price
D sued S
It was held that D could not recover damages under a contract to which it was not privy.
High Trees House v Central London Property Trust
During war, CLPT made a promise not to increase the rent they charged HT HT as a result reduced the rent they charged their tenants After the war CLPT claimed the back rent from HT
It was held that even though HT had given no consideration to CLPT for the promise, CLPT were ESTOPPED from going back on the promise. They had entered into the promise freely with the intention that HT relied on it and HT had done so.
Lampleigh v Braithwait
B killed a man and later asked L to obtain a Royal pardon
L obtained the pardon at personal expense
B then promised to pay
B then failed to pay and L sued
It was held that B's request implied a promise to pay and therefore this later actual promise merely fixed the amount.
Co agreed with tax collector to pay tax liability by instalments
Co made some payments but Inland Revenue then demanded payment in full or they would wind up the company
S argued they had provided consideration for the agreement by stopping the IR from having to go to court
It was held there was an existing obligation to pay and as such there had been no
consideration to support the instalments.
Rose and Frank v Crompton
Even in a commercial contract legal intention can be expressly excluded by the use of an 'Honourable Pledge Clause'.
Balfour v Balfour
An informal agreement between husband and wide (who had not broken up) was held not to be legally binding.
Merritt v Merritt
A husband and wife separated. The husband agreed to pay the wife ?40 per month out of which she agreed to keep up the mortgage payments. The husband signed a note to this effect and in addition agreed to transfer the house to his wife once the mortgage had been paid. On the discharge of the mortgage the husband refused to effect a transfer. The court held that all the circumstances of the case gave rise to an inference of legal intention and hence the agreement was legally binding.
Simpkins v Pays
Agreement to share competition winnings can be enforceable if there is 'mutuality in the arrangements between the parties'.
Edwards v Skyways
In commercial arrangements there is a presumption of intention to create legal relations which will have to be discharged by the person seeking to avoid liability.
Poussard v Spiers
Failure to appear at performances when engaged as the lead role in an opera constituted a breach of condition entitling the opera company to repudiate the contract and potentially to claim damages.
Bettini v Gye
Failure to appear at preliminary rehearsals only constituted a breach of warranty. Opera company entitled to damages but not to repudiate the contract.
HongKong Fir Shipping Company v Kawasaki Kisen Kaisha
The defendants chartered a ship from the claimants. A term in the contract stated that the claimants would provide a ship which was 'in every way fitted for ordinary cargo service'.
The Courts said that this term was not capable of being construed as either a condition or a warranty from mere reading and so the Court would have to look at the actual effect of the breach. If the effect was to deprive the injured party of most of the benefit of the contract it would be a condition if not a warranty. The defect that occurred rendered the ship unavailable for 17 months out of a 24 month contract. On the facts the Court held that the term was a warranty.
Implied in a contract for anchorage of a ship that the place of anchorage should be safe.
Office Angel Ltd v Rainer –Thomas
If any element of a restraint of trade clause is unreasonable the whole clause will fail. The Court will not rewrite an excessive restraint by limiting it to that part which might be reasonable.
Home Counties Dairies v Skilton
If the Court concludes that the parties did not intend the clause to operate as widely as it does it may be possible to save the clause by striking out the words that are too wide. This is known as the 'blue pencil rule' of deletion.
Chapleton v Barry UDC
C hired a deckchair paid and received a ticket
Deckchair collapsed and C was injured
Notice disclaiming liability was on the back of the ticket
The court held that the council was liable. The notice advertising deckchairs made no mention of the exclusion clause and it was not reasonable for them to communicate the exclusions on a receipt.
Curtis v Chemical Cleaning Co
Curtis took wedding dress to be cleaned
Was asked to sign some conditions and when asked what they covered, was told that they excluded liability for damage to beads and sequins.
The clause actually disclaimed liability for any damage to the dress
When the dress returned it was badly stained.
To Co could not rely on their exclusion clause as they had misled Curtis as to it effect.
Hollier v Ramber Motors
H had his care repaired several times over a 3 year period at a garage
Each time, except for the last, H had signed a form containing an exclusion clause On the last occasion the car had been damaged by fire.
The garage was liable. H had not signed a form and there was no evidence that H had
agreed to the term through his dealings with the garage.
L'Estrange v Graucob
G purchased a slot machine from L
Contract excluded normal rights under the sale of goods act at the time L signed the contract.
It was held conditions were binding on L as she has signed them.
Olley v Marlborough Court
O paid for a hotel room in advance in reception
A notice disclaiming liability for loss of valuables was in the bedroom Valuable furs were stolen from O's room
It was held the contract had been made when the room was paid for and the disclaimer came after. As such it was too late and the hotel could not place any reliance on it.
Photo Productions v Securicor Transport
S were engaged to guard P's premises
Contract contained an exclusion clause for dame caused by S's employees S's employee deliberately started a fire which burnt the whole factory down P argued that S could not rely on the clause as they had failed to perform their contracts to guard the premises.
It was held that total failure to perform a contract will not stop a party from relying on an exclusion clause
– providing the clause is wide enough to cover the acts in question. In this case it was felt to be so.
St Albans City and District Council v International Computers Ltd
St A employed ICL to assess the population of the city to base community charge Clause in contract limited liability to ?100K – although ICL has insurance cover of ?50m.
The database created by ICL was however inaccurate and St A lost ?1.3m in revenue. The clause was deemed unreasonable given the insurance held by ICL.
Discharge and Remedies
White and Carter (Councils) Ltd v McGregor
Contract entered into to advertise M‟s garage on litter bins for 3 years.
Contract repudiated by M. W & C refused to cancel and carried contract out. Court held W & C was entitled to recover the contract price as were not obliged to accept the repudiation.
Cutter v Powell
P employed C as a sailor on a voyage
Contract was for the complete voyage
C died at sea part way through the voyage
C's widow sued for part payment
It was held C had not completed the contract and so C's widow was not entitled to sue.
Hadley v Baxendale
H, the owners of a flour mill, contracted with B who were carriers to deliver to a crash shaft to Greenwich where it was to be used as a template for a new one. It was delivered late, so that the new one was also delayed. H claimed loss of profits during the period of the delay and it was held that this loss was not recoverable. Damages would only compensate for losses which may fairly and reasonably be considered as arising naturally from the breach or might reasonably be expected to be in the contemplation of both parties at the time they made the contract as the probable result of breach.
Victoria Laundry v Newman Industries
The defendants contracted to sell a boiler to the plaintiffs „for immediate use‟. The defendants were late in delivering the boiler. The plaintiffs claimed:
(1) Normal loss of ?16 per week.
(2) Loss of a particularly lucrative contract worth ?262 that the plaintiff would have entered into if the boiler has been delivered on time.
The court held that the profits of ?16 per week were recoverable as they arose naturally. The profit on the lucrative contract could not be recovered as it was not in the reasonable contemplation of the defendants when the contract was made.
Dunlop v New Garage
A contract for the sale of tyres imposed a minimum resale price. The contract included a fixed payment in the event of breach, at ?5 per tyre. NG sold at less than the minimum resale price and, when D sought to recover the fixed sum, argued it was a penalty. It was held that this amount was a genuine attempt at preestimate of loss and would be upheld.
Jarvis v Swan Tours
Damages were awarded both for the cost of a holiday and disappointment following a discrepancy between the holiday and the brochure description. Subsequent case law appears to confine this element of damages to holiday cases only.
Warner Bros v Nelson
Nelson was Bette Davis
N agreed not to work for any other studio – only WB
Worked for a British film producer in the UK
Court imposed an injunction on N from working for the British producer.
Ruxley Electronics v Forsyth
Courts stated that where the cost of restitution is disproportionate damages for lost enjoyment may be substituted.
Payzu v Saunders
Parties had entered into a contract to supply goods to be paid in instalments. P failed to pay for the first instalment consequently S refused to make any further deliveries unless P paid in cash in advance of the delivery.
P refused to accept delivery on S‟s terms.
Court held S had no right to repudiate the contract, but also that P should have mitigated their loss by paying cash in advance. Damages were limited to the amount of loss if P had paid in advance.
Agency and partnerships
The owners of a hotel expressly forbade the manager of the hotel to buy certain articles including cigars. In breach of this restriction the manager bought cigars for the hotel from a third party. The third party later sued the hotel owners for payment. It was held that the purchase of cigars was in the usual activity of a hotel manager. Hence owners were liable.
Salomon v Salomon and Co.
S transferred his business as a sole trader into a company legally incorporated with the correct number of shareholders. Sale of assets to the company meant S was owed money by S and Co, which was secured by a debenture. On subsequent liquidation this took priority over unsecured trade creditors who argued it was invalid as the creditor – S – and
the debtor – S and Co – were technically one and the same. It was held that this was
incorrect. The company, being validly constituted, was a separate legal entity to S and the debt was upheld.
Gilford Motor Co v Horne
The use of a limited company to act in contravention of personal contractual obligations will not be permitted by the court, who will lift the veil of incorporation to expose the true nature of the company. It was held it was set up as a facade or sham and was wound up by the court.
Ebrahimi v Westborne Galleries
E and friend N set up a gallery in Holland Park. Initially it was a partnership and then N suggested setting up a Ltd Co. to attain limited liability. Shares allocated on a 50/50 basis with equal management rights.
N then introduced his son to the company, effectively reducing E‟s shares to 49%. N and his son passed an ordinary resolution sacking E as a director and then paid bonuses to the directors and declared nil dividend. E applied to court for just and equitable winding up. It was held that the company was in legal effect a partnership based on a relationship of
mutual trust and confidence which had clearly broken down. The court wound the company up.
DHN Food Distributors v Tower Hamlets LBC
Veil was lifted to recognise that subsidiaries of a company which were in occupation of premises which were the subject of a CPO were one and the same as the holding company. As a result the money could be paid to the holding company because the group of companies was viewed as „one economic entity‟.
This case was subsequently held to be applicable only in specific circumstances. The general rule is the one followed in Adams v Cape Industries below.
Adams v Cape Industries
Cape, an English company, was head of a group including wholly owned subsidiaries. In the States plaintiffs had been awarded damages for asbestosis against a marketing company NAAC, a subsidiary of Cape.
Court of Appeal held that the judgement could not be enforced against Cape, as the subsidiary was to be treated as a “separate legal entity with all the rights and liabilities which would normally attach to separate legal entities...”
R v OLL Ltd
Following the Lyme Bay canoeing disaster liability for corporate manslaughter fell on the shoulders of the ‟controlling mind‟ of the company. Its sole director was therefore identified as a culpable party and both fined and imprisoned accordingly.
Jubilee Cotton Mills v Lewis
The date on a company's certificate of incorporation is conclusive evidence of the company's existence.
Phonogram v Lane
The promoter was liable to repay moneys paid over when the contract was made.
Hickman v Kent or Romney Marsh Sheepbreeders Association
H is a shareholder in the S. Assoc. All disputes were to be referred to arbitration rather than the courts. A dispute arises with the S. Assoc. and H sues. It was held that the dispute must be first referred to arbitration. The clause in the articles was binding on H on a contractual basis and therefore enforceable by the company.
Pender v Lushington
Articles stated maximum votes to be attached to shareholdings. P transferred shares to nominee companies in order to increase his votes. Chairman of company at GM disallowed these votes. It was held that this was improper. P could enforce this provision