Comprehensive Caselaw Glossary for Contract Law PDF

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Glossary of Caselaw Privity of Contract Tweddle v Atkinson (1831) William Guy and John Tweddle made a contract with each other that upon the marriage of Mr Tweddle’s son to Mr Guy’s daughter, they would each pay the son (the claimant) a specified sum of money. The contract expressly stated that the claimant should be able to sue should either of the parties default on the promise. Mr Tweddle paid his money but Mr Guy dies before paying his money and the claimant sued the personal representatives of Mr Guy for the money. Held: The claimant could not sue on the contract because he did not make the contract. Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915) Dunlop sold car tyres to Dew & Co, dealers in motor accessories. In return for being given a 10% discount on the price, Dew & Co agreed they would obtain a written undertaking from anyone they resold tyres to that the tyres would not be sold below a certain price. Dew & Co resold the tyres to Selfridge & Co. Dew & Co gave Selfridge & Co a discount in return for their written agreement not to resell below the agreed price. Selfridge & Co did resell below the agreed price and Dunlop sued on the written agreement not to do this. Held: Dunlop could not sue Selfridge on the agreement as there was no contract between them. Dunlop had given no consideration to Selfridge & Co in return for the promise not to sell below the agreed price.

Offers Moran v University College Salford (No.2) [1993] Mr Moran had applied, in May 1993, through PCAS, the Polytechnic Central Admissions System, for a place on a physiotherapy course at UCS. He later received notification from PCAS of an unconditional offer of acceptance. He returned the reply slip on 29 June, accepting the offer. That meant he was not eligible to seek an alternative place in 1993 through PCAS. On 6 July, PCAS acknowledged his acceptance and enclosed a reply slip which Mr Moran completed and sent on 8 July to the college admissions officer at UCS confirming that he was taking up the offer. He later gave notice to leave his accommodation and to terminate his employment and did not attend a second interview for a job for which he had applied . But when, on 16 August, he telephoned the course leader at UCS, he was told he had never been offered a place on the course and there was no place for him. Following further correspondence with various officials at the college, it was explained that the offer was a clerical error. The error was on the form on which UCS had indicated its decision on Mr Moran's application to PCAS, and on which the wrong box, marked 'unconditional', had been filled. It was submitted, for UCS, that no binding agreement had been made. UCS did not make an offer of a place on the course; it merely issued an invitation to Mr Moran to enter into discussions which might lead to an agreement to accept him and provide a course of instruction, in return for his promise to arrange payment of his fees. No contract was to come into existence until he enrolled and agreed to pay the fees.

Held: In the Court’s judgment, however, the unconditional offer apparently made by UCS was, on the face of it, intended to create a legal relationship between the parties, and appeared to be an offer capable of acceptance. When Mr Moran did so, there was a strong and clear case for saying there was a binding agreement under which UCS agreed to offer him a place if he sought to enrol on the due date. The detriment to Mr Moran in giving up his eligibility to apply elsewhere provided consideration for the agreement.

Carlill v The Carbolic Smoke Ball Co [1893] The Carbolic Smoke Ball Company displayed an advertisement saying that £100 would be paid to anyone who could, inter alia, use their smoke ball product for 2 weeks and then contract influenza. The offer stated that £1000 had been deposited in a bank, and the address of that bank was given. Mrs Carlill followed the instructions exactly, then contracted influenza. The Carbolic Smoke Ball company refused to pay Mrs Carlill. Held: The advertisement was an offer of a unilateral contract (see below). The claimant had accepted this offer by using the smokeball in the correct way and catching flu. She was therefore entitled to the £100 reward.

Invitations to Treat Pharmaceutical Society of GB v Boots Cash Chemist (Southern) Ltd [1953] It was an offence to sell prescribed drugs without the presence of a qualified pharmacist. The defendants displayed these drugs on a store shelf in an area of their store where no pharmacist was present although a pharmacist was present near the till. It therefore had to be decided where the drugs were sold, that is to say where the contract to sell the drugs was made. The prosecution argued that the display of the goods was an offer and the offer was accepted when the customer selected the goods and placed them in their basket. Held: The display of goods on shop shelves amounts only to an invitation to treat. The offer is made when the goods are taken to the till where the cashier can choose to accept or reject the offer. Partridge v Crittenden [1968] The defendant placed an advert in a classified section of a magazine offering some bramble finches for sale. S.6 of the Protection of Birds Act 1954 made it an offence to offer such birds for sale. He was charged and convicted of the offence and appealed against his conviction. Held: The defendant's conviction was quashed. The advert was an invitation to treat not an offer. The literal rule of statutory interpretation was applied.

Acceptance Felthouse v Bindley (1862) Claimant offered to buy a horse from his nephew, John, who was selling up all his farm stock. Claimant said that he would assume John’s acceptance unless told otherwise. Intending to accept,

John instructed the auctioneer to withdraw the horse from the sale, but by mistake the auctioneer sold it. The claimant sued the auctioneer in Tort. Held: claimant’s action failed because he was unable to prove that he was the horse’s owner. As John had not communicated his intention to accept, there was no contract under which ownership of the horse could pass, so when the sale took place, the horse still belonged to John. The auctioneer had not disposed of the claimant’s property

Adams v Lindsell [1818] 2nd Sept defendant’s sent a letter of an offer to sell wool to the claimant and stated any acceptance must be made by return of post. The letter was delayed because it was wrongly addressed and did not arrive until the 5th September. The claimants posted their acceptance immediately and it finally arrived on 9th September. On 8th September the defendant, believing that the claimant was not interested sold the wool to a third party. Claimant sued for breach of contract. Held: Claim would succeed. The claimant had complied with the terms of the offer by posting their acceptance immediately. Once a letter of acceptance is posted, a contract comes into existence immediately. Entores v Miles Far East Corp [1955] The claimant sent a telex message from England offering to purchase 100 tons of Cathodes from the defendants in Holland. The defendant sent back a telex from Holland to the London office accepting that offer. The question for the court was at what point the contract came into existence. If the acceptance was effective from the time the telex was sent the contract was made in Holland and Dutch law would apply. If the acceptance took place when the telex was received in London then the contract would be governed by English law. Held: To amount to an effective acceptance the acceptance needed to be communicated to the offeree. Therefore the contract was made in England.

Intention to create legal relations Hadley v Kemp Singer Tony Hadley and other members of Spandau Ballet sued the songwriter, Gary Kemp, for a bigger and continued share in the profits (once he discontinued paying them) based on alleged breach of an oral agreement. Held: The claimants had failed to establish either the existence of such an agreement or joint authorship of the songs. He also found that any contributions by them, such as additional instrumental fills or riffs, did not entitle them to a share in the copyright. Balfour v Balfour [1919] This case involved a husband and wife. The husband was due to return to Ceylon where he had employment and had been living with his wife, but the wife, on medical advice was to remain in England. The husband promised to pay the wife £30-00 per month until she was able to join him in Ceylon whereupon he would send her the price of her ticket. Later the parties became estranged

and the husband failed to send her the fare or pay the monthly ‘allowance’. The wife sued her husband for the money he had promised to pay to her. Held: Within a family there is a rebuttable presumption against an intention to form legal relations. No sufficient evidence had been shown by Mrs Balfour to counter that presumption. Merritt v Merritt [1970] A husband left his wife and went to live with another woman. There was £180 left owing on the house which was jointly owned by the couple. The husband signed an agreement whereby he would pay the wife £40 per month to enable her to meet the mortgage payments and if she paid all the charges in connection with the mortgage until it was paid off he would transfer his share of the house to her. When the mortgage was fully paid she brought an action for a declaration that the house belonged to her. Held: The agreement was binding. The Court of Appeal distinguished the case of Balfour v Balfour on the grounds that the parties were separated. Where spouses have separated it is generally considered that they do intend to be bound by their agreements. The written agreement signed was further evidence of an intention to be bound.

Consideration Re McArdle [1951] McArdle left a house to his wife for life. On her death it was to be sold and the proceeds divided equally between the children of the marriage. The wife of one of the children paid for home improvements at a cost of £488. When the work had been done, all the children agreed that she should recover this sum from the proceeds of the eventual sale. After Mrs McArdle died the validity of this agreement was disputed. Held: No valid contract existed since the home improvements were past consideration, they had been carried out before any promise to pay had been made.

Mountford v Scott [1975] A promise to keep an offer open for a specified time is usually not binding but exceptions may apply if consideration is given for the offer. Claimant paid £1 for an option to buy the defendant’s house within 6 months. Held: the offer was irrevocable within the six month period because the claimant had given consideration (paying nominal £1) for D's promise to keep offer open

Collins v Godefroy (1831) The claimant, Collins, had been subpoenaed to attend court as a witness in a

separate court case involving the defendant, Godefrey. Godefrey had sued his attorney for malpractice and Collins was required by the court to attend as an expert witness. In fact Collins never gave evidence but was required to be on standby for six days in case he was called. After the trial Collins gave Godefrey an invoice to cover his time spent at court and demanded payment by the next day. Without giving him the full day to pay, Collins commenced an action to enforce payment. Held: Collins was under a public duty to attend court due to the subpoena. Where there exists an existing public duty this can not be used as consideration for a new promise. Godefrey was not required to pay him.

Innominate Terms Hong Kong Fir Shipping v Kawasaki Kisen Kaisha (1962) The claimants owned a ship and chartered it to the Defendants. A clause in the agreement guaranteed that the ship would be in good condition etc. The ship in fact was not in good condition, resulting in a spell in a dry dock to facilitate repairs, and causing delays for the Defendants. The Defendants notified the Claimants that the ‘condition’ of the ship being in a seaworthy state was breached and therefore they elected to repudiate the contract. Held: The defendants were liable for wrongful repudiation. The court introduced the innominate term approach. Rather than seeking to classify the term itself as a condition or warranty, the court should look to the effect of the breach and asked if the breach has substantially deprived the innocent party of the whole benefit of the contract. Only where this is answered affirmatively is it to be a breach of a condition. 20 weeks out of a 2 year contract period did not substantially deprive the defendants of whole benefit and therefore the term was held to be a warranty and they were thus not entitled to repudiate the contract. Poussard v Spiers (1863) Madame Poussard entered a contract to perform as an opera singer for three months. She became ill five days before the opening night and was not able to perform the first four nights. Spiers then replaced her with another opera singer. Held: Madame Poussard was in breach of condition and Spiers were entitled to end the contract. She missed the opening night which was the most important performance as all the critics and publicity would be based on this night. Bettini v Gye (1863) Bettini agreed by contract to perform as an opera singer for a three month period. He became ill and missed 6 days of rehearsals. The employer sacked him and replaced him with another opera singer. Held: Bettini was in breach of warranty and therefore the employer was not entitled to end the contract. Missing the rehearsals did not go to the root of the contract.

Contract Terms L’Estrange v Graucob (1934)

The claimant purchased a cigarette vending machine for use in her cafe. She signed an order form which stated in small print 'Any express or implied, condition, statement of warranty, statutory or otherwise is expressly excluded'. The vending machine did not work and the claimant sought to reject it under the Sale of Goods Act for not being of merchantable quality. Held: If the parties record their agreement in a document which they sign, then they will be bound by the written (express) terms even though they don’t know what they are. This is because, by signing a document a person indicates to the world that they agree to the terms contained therein The Moorcock (1889) The owner of a wharf agreed to provide mooring facilities for 'The Moorcock'. The ship was damaged when it hit a ridge of rock at low tide. Although the defendants had no legal control over the river-bed, they could ascertain its state but they had not done so. Held: The honesty of business required an implied undertaking on the part of the wharf owner that it was a reasonably safe place to moor a ship. The wharf owner had broken his implied undertaking and was, therefore, liable in damages to the ship owner.

Statutory Implied Terms s.12 SoGA 1979 Rowland v Divall [1923] The defendant had unwittingly purchased a car from a thief which was sold on several times before being restored by the police to its original owner. The claimant wished sued for the return of the purchase price for the car. Held: The defendant was unable to pass title to the claimant as he did not hold title having acquired the car from a thief. Thus, the sale breached the statutory implied term relating to title which provides that the seller must have the right to sell to be able to pass good title. s.13 SoGA 1979 Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd (1991) The claimant purchased a painting from the defendant for £6,000. The painting was described in an auction catalogue as being by German impressionist artist Gabrielle Munter. Both the buyers and the sellers were London art dealers. The sellers were not experts on German paintings whilst the buyers specialised in German paintings. The purchasers sent their experts to inspect the painting before agreeing to purchase. After the sale the buyers discovered that the painting was a fake and worth less than £100. They brought an action based on s.13 Sale of Goods Act in that the painting was not as described. The claimants were unsuccessful with their claim as by sending their own experts to inspect the painting they could not show they had relied on the description, thus the sale was not by description s.14(2) SoGA 1979 Ward v MGM Marine Ltd (2012) Claimant bought a yacht for £296,000. It exploded on its maiden voyage, Defendant argued burden of proof was not satisfied as expert evidence could not identify cause of the explosion.

Held: Claimant received damages as expert witnesses were unable to find any other cause for the engine exploding thus it was not of satisfactory quality. s.14(3) SoGA 1979 Frost v Aylesbury Dairy Co [1905] Despite quality checks conducted on random batches of milk supplied, the claimant contracted typhoid and died from drinking milk purchased from the defendant. Held: The milk was not fit for its usual purpose of drinking thus a breach of the statutory implied term.

s.15 SoGA 1979 Godley v Perry [1960] Boy bought a plastic catapult from Perry, which broke and ended up injuring his eye. The catapult was from a batch purchased by Perry following his inspection of a sample model. Held: The catapult purchased was not as robust as the sample inspected thus breaching the statutory implied term that sample should match the remainder of the bulk.

Exemption Clauses Woodman v Photo Trade Processing (1981) The defendants were a photo processing business who lost pictures taken by the claimant at a wedding and brought to them to be developed. Defendant’s standard contract clause excluded liability for damages that exceeded the cost of material. Held: The defendant was liable, as no other shop was available and no service was offered without such a clause (e.g. insurance option).UCTA 1977 Schedule 2 Guidelines tests whether the strength of the relative bargaining positions of the parties, including the availability of alternative sources for the buyer is reasonable. Chesterhall Ltd v Finney Lock Seeds (1983) Claimant bought cabbage seed for £192. The seed delivered was defective and the crop of an expected value of £60,000 failed. A clause printed on reverse of delivery note limited liability to the price of the seed and the defendants sought to rely upon this limitation clause. Held: The clause was unreasonable, the buyer was unaware of the fault, yet the seller knew. Whether the buyer knew or reasonably should have known of the term and its implications (including previous dealings between the parties) was argued but found that the defendant had previously failed to rely upon their own clause. Effective incorporation of the term due to timing was also an issue.

Olley v Marlborough Court [1949] Claimant booked into a hotel, with the contract being made at reception without a mention of an exclusion clause. In the room on the back of the door there was a clause excluding liability for loss/theft/damage. Fur coat was stolen and hotel sought to rely on the exclusion clause.

Held: The notice behind the hotel bedroom door was ineffective as it was introduced too late to be incorporated.

Vicarious Liability Rose v Plenty [1976] Facts: A milkman was employed to deliver milk and as part of his employment contract, he was prohibited from having children help him. Nonetheless a young boy did help, and was injured. The Court had to decide if the employer could be held vicariously liable, even with the express prohibition. Held: Yes, because although it was a ‘frowned upon’ way of conducting business, it was conducting business nonetheless. The Judge commented… “In the present case it seems to me that the course of the milk roundsman’s employment was to distribute the milk, collect the money and to bring back the bottles to the van. He got or allowed this young boy to do part of that business which was the employers’ business. It seems to me that although prohibited, it was conduct which was within the course of the employment” Hilton v Thomas Burton (Rhodes) Ltd (1961) Facts: Workmen had taken an unauthorized break having completed their work for the ...