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Cases from Contract Law - Agreement I
Cases from Contract Law - Agreement I
Undergraduate 1

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Rowland v Diwali [1923]
Nemo dat quod non habet
The C purchased a car off of the D. C subsequently sold the car on to a third party
After 4 months the car was repossessed from the third party on the realisation that the car had initially been stolen by the D
C had to re-imburse the third party for the car.
C proceeded to claim back the money he had paid to the D, on the grounds of ‘total failure of consideration’ (claimed he had received nothing of what he was entitled to receive under the contract of sale)
D’s defence was that C was entitled to the car for four months
D failed
Ratio decidendi - it was decided that under the contract, C was not merely entitled to ‘use of car’, but also to ‘legal title’, which he could not have possessed, as the D did not have to legal title to sell to him in the first instance.
Nemo dat quod non habet
Hartog v Colin Shields
D offered to sell hare skins which were incorrectly priced
C accepted the offer, knowing that they were incorrectly priced
D realised error and refused to sell
JUDGEMENT - An offeree cannot ‘snap up’ an offer which he knows or ought to have known was made in error
‘there really was no contract, because you knew that the document which went forward to you, in the form of an offer, contained a mistake... I am satisfied that anyone with any knowledge of the trade must have realised that there was a mistake... the plaintiff could not reasonably have supposed that that offer contained the offerors’ real intention’
Smith v Hughes [1871]
‘if, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to that party’s terms’
Gibson v Manchester City Council [1979]
D sent the C a letter stating that the council ‘may be prepared to sell the house to you at the purchase price of £2,725... if you would like to make a formal application to buy your council house please complete the form and return it to me as soon as possible’
The C completed and returned the form
The D then changed its policy on the sale of council houses
The C was advised that the Council (D) was unable to proceed with his application
C brought the action claiming that the Council’s letter was an offer which he had accepted by returning the application form
The House of Lords/Supreme Court found in favour of the D’s
Ratio decidendi – the letter sent to C said ‘may be prepared to’, therefore it lacked clarity and certainty, and was deemed not to be an offer
Storer v Manchester City Council
D’s sent C a letter stating ‘I enclose the agreement for sale. If you will sign the agreement and send it to me I will send you the agreement signed on behalf of the council’
C signed the agreement and returned it to the council
Before the council (D’s) had signed their agreement, their policy had changed and therefore, they were no longer willing/able to sell the house to C
D claimed that agreement had not been made because they had not yet signed it
Court found in favour of C
Ratio decidendi – the D made the offer to the C, and the C accepted it within the conditions laid out... the council not signing the form was irrelevant, the clear & precise offer had already been made and upon acceptance by C, the contract was made.
Furthermore... ‘Manchester city council argued that they did not intend to be bound by their offer’... However...the court still found against them
Ratio decidendi - ‘a contract is formed when there is, to all outward appearance, a contract’ – Rational man!!! (Smith v Hughes)
Fisher v Bell
D displayed flick knives for sale, in contravention with the ‘Restriction of Offensive Weapons Act 1959 s1(1)’
Judge ruled that – ‘it is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat’
‘not only is that so, but it is to be observed that in many statutes and orders which prohibit selling and offering for sale of goods it is very common when it is so desired to insert the words “offering or exposing for sale”, “exposing for sale” ...
Pharmaceutical Society of GB v Boots Cash Chemists
D’s operated a self service shop, in which certain drugs (which could ONLY be sold under the supervision of a registered pharmacist) were on the shelves with prices on them
C’s contended that the priced items on the shelves acted as on ‘offer’ and that the sale contract took place when customers took the items off of the shelves and put them in their baskets
Court of Appeal decided in favour of D’s
Ratio decidendi – Display of goods on the shelves was an invitation to treat. An offer was made when customer presented goods at the cash desk (which was supervised by a pharmacist and at this point, the customer’s offer could be accepted or rejected)
Partridge v Crittenden [1968]
C placed an advert offering to sell a live wild bird (contrary to the Protection of Birds Act)
It was held that the advertisement was merely an invitation to treat
Ratio decidendi – advertisements are invitations to treat
OBITER DICTUM – Grainger = advert cannot = offer, as supplier would be inundated with orders which he couldn’t fulfil
OBITER DICTUM – Partridge = ‘Lord Parker CJ, in Partridge v Crittenden expands on this comment (Grainger comment) and suggests that, if the seller is the manufacturer, then perhaps this justification for the rule does not apply (as manufacturer could potentially make loads). Consequently, if the seller is the manufacturer, it is arguable that the advertisement may constitute an offer’
Carlill v Carbolic Smoke Ball Co.
D’s Issued an advertisement in which they offered to pay £100 to any person who purchased their Carbolic Smoke Ball, used it in a prescribed manner, and still managed to catch influenza
To show their sincerity, they also advertised that they had deposited £1000 in a named bank
C purchased the Ball, used it appropriately and nevertheless, managed to contract influenza
D’s then refused to pay the £100 ‘reward’
The court found in favour of C
Ratio decidendi - ‘I think it was intended to be understood by the public as an offer which was to acted upon... the advertisement says that £1000 is lodged at the bank for that purpose’...because the advertisement was so clear in prescribing actions, and there was a clear ‘intention to be bound’ through the depositing of £1000, it was identified as a unilateral contract, and a unilateral advertisement amounts to an offer, not an invitation to treat (a bit like a reward sign for a lost pet)
Although it was addressed to the world (and you cannot make a contract with the world)... ‘although the offer is made to the world, the contract is made with that limited portion of the public who come forward and perform the condition on the faith of the advertisement’
Payne v Cave [1798]
D made the highest bid for C’s item at an auction, however, D changed his mind and withdrew his bid before the auctioneer brought down his hammer
The court ruled in favour of D, as D had made an offer which was withdrawn before the auctioneer had accepted it
This rule has since been codified in s57 of the Sale of Goods Act 1979
Barry v Davies [2000]
Auction with no reserve
C was the highest bidder (bid £200 for items valued at £28000)
Auctioneer (D) withdrew the lot on the basis that the highest bid was too low
C sued for breach of contract
Appeal found in favour of C
Ratio decidendi - it was true that a bi-lateral contract (defence’s argument) existed and auctioneer’s request for bids = ‘invitation to treat’, thus allowing for the removal of the lot before the acceptance of the offer. HOWEVER, alongside the bilateral contract existed a unilateral contract. As, in offering a lot with ‘no reserve’ amounts to a unilateral contract ‘to sell the item to the highest bidder’. Thus, in not selling to the highest bidder, the unilateral contract was broken. As the unilateral contract had been made by the auctioneer, C was not entitled to the item as remedy, instead he was awarded damages (£28000 - £400 = £27600)
Spencer v Harding [1870]
D issued a circular stating that stock of a certain trader was to be sold
Circular stated a deadline by which any tenders for the stock had to be submitted
C’s submitted the highest tender, but the stock was not sold to them
The judge ruled that the request for tenders did not amount to an offer to sell to the highest bidder, and instead acted as an invitation to tender
Ratio decidendi – ‘there is a total absence of any words to intimate that the highest bidder is to be the purchaser. It is a mere attempt to ascertain whether an offer can be obtained within such a margin as the sellers are willing to adopt’
Obiter dictum – ‘in advertisements for tenders for buildings it is not usual to say that the contract is made with the lowest bidder’
Harvela Investments Ltd v Royal Trust Co. [1985]
Two firms were invited to submit sealed bids
A commitment to accept the highest bid was made...
3rd Party bidder stated – ‘we will pay £10,000.00 more than any other bid.
D’s accepted 3rd party’s offer
C’s brought a claim, on the basis that D’s had committed to accepting the highest offer
Court ruled that 3rd Party’s offer didn’t amount to an offer / the highest offer – AN OFFER MUST BE CLEAR AND CERTAIN
The court held that there was an obligation to accept the highest bidder (C)
Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council
D had invited 7 parties to tender for a concession to operate pleasure flights from the airport
D’s invitation ‘prescribed a clear, orderly and familiar procedure for tendering’, also indicated that ‘we will consider all offer made before a specified date & ‘late tenders will not be considered’
C’s submitted tender in accordance with D’s regulations
However, D’s designated box into which C’s tender was placed (within the deadline), was not emptied until after the deadline, therefore, C’s tender was not considered
Judge found in favour of C’s
Ratio decidendi – procedure used to invite tenders contained so many ‘hints’ that all tenders which met the requirements would be considered, that ‘if he submits a conforming tender before the deadline he is entitled, not as a matter of mere expectation but of contractual right... to have his tender considered’ Remember... rational man!!!
Errington v Errington & Woods [1952]
D’s father agreed to give his house to ‘D & wife’ if they agreed to pay off the mortgage
D’s began paying off the mortgage
Father died and left his house to his widow (C)
D’s separated, and D(son) went to live with his mother in law (C)
D(daughter-in-law) continued to pay off the mortgage
C brought an action for recovery of the property
Judge found in favour of D’s (although D’s were no longer ‘together’, the offer had been made to both of them, therefore, son = on D side)
Ratio decidendi – ‘the father’s promise was a unilateral contract... it could not be revoked by him once the couple entered on performance of the act’ – if they hadn’t ‘part-performed’ the act, the promise could have been revoked
Shuey v United States [1875]
United States posted an award of $25,000 for information leading to the apprehension of a particular criminal
7 months later, a notice revoking the offer was published
4 months later, C, unaware that the offer had been revoked, provided information on the criminal
The court found in favour of the defendant (United States)
Ratio decidendi – a) the offeree had not begun ‘part-performance’ before the offer was revoked. B) the revocation was given the same notoriety as the offer(had been done in the same way)
Hyde v Wrench
D offered to sell C a farm for £1000
C made a counter offer of £950 (thus rejecting the first offer)
D rejected the counter offer
C then tried to accept the original offer – and upon D refusing, C sought an order for ‘specific performance of contract’
The court found in favour of D
Ratio decidendi – ‘the defendant offered to sell it for £1000, and if that had been at once unconditionally accepted, there would undoubtedly have been a perfect binding contract; instead of that, the plaintiff made an offer of his own, to purchase the property for £950, and he thereby rejected the offer previously made by the defendant’
Stevenson, Jacques & Co. V McLean
D wrote to the C’s and stated that he would sell Iron to them for 40s per ton
C’s responded by asking if D would accept payment in instalments
Having not heard back from the D, the C’s decided to accept the original offer
In the mean time, the D had sold the iron to someone else
The court ruled that the C’s correspondence had not been a counter offer, but had instead been a ‘request for information’
Ratio decidendi – ‘the form of the communication was an enquiry... there is nothing specific by way of offer or rejection, but a mere inquiry’
Dickinson v Dodds [1876]
D made an offer to sell his property to C, stating that ‘this offer is to be left over until Friday 9o’clock’
C heard a rumour that D had been offering/agreeing to sell the property to a 3rd party (COMMUNICATION OF REVOCATION)
C delivered an acceptance to D on Friday
However, D had sold the property to 3rd party on Thursday
The court found in favour of D
Ratio decidendi – ‘there was no consideration given for the undertaking or promise, to whatever extent is may be considered binding, to keep the property unsold until 9o’clock on Friday morning... this promise, being a mere nudum pactum, was not binding, and that at any moment before a complete acceptance by C of the offer, D was as free as C himself’
In the absence of any consideration for the promise to keep the offer open, that promise was unenforceable. If consideration had been given by C in return for D’s promise to keep the offer open, then that would have been binding; an option contract... e.g. if C had paid him some money to keep the offer open...
Byrne v Van Tienhoven [1880]
D posted an offer to C (01/10)
D posted a revocation of the offer (08/10)
C sent a telegram accepting the offer (11/10)
C received the revocation dated 8th October (20/10)
The court found in favour of C
Ratio decidendi – revocation is only effective on communication
Despite the fact that w.r.t accepting an offer, the offer is accepted as soon as the letter is posted... ‘if the defendants’ contention were to prevail, no person who had received an offer by post and had accepted it would know his position until he had waited such a time as to be quite sure that a letter withdrawing the offer had not been posted before his acceptance’
Financings Ltd v Stimson [1962]
A customer’s offer to take a motor car under hire purchase was subject to an implied term that the car remained in the same condition up to the time of acceptance of the customer’s offer
The car was stolen from the dealer’s premises and damaged before the finance company had accepted the offer
Consequently, the customer was not bound by any agreement, due to ‘non-fulfilment’ of a condition (car being in same condition when offer accepted)
The Society of Lloyd’s v Twinn [2000]
D’s completed an acceptance for an offer made by C’s, in accordance with framework laid out by C’s (completing an application form)
D’s attached a covering letter with completed acceptance, asserting that they would not be able to pay the sums that would be due under the terms of the settlement
D’s later claimed that contract was invalid as they had not accepted the settlement agreement (e.g. through the addition of their qualifying covering letter)
HOL rejected this argument and concluded there was unconditional acceptance in the form of the completed application form
Covering letter was identified as a collateral contract which sought to obtain a concession, rather than a condition of the acceptance
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