Contract Law Case List Semester 1 PDF

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Contract Law CaseList (Semester 1) FORMATION & ENFORCEABILITY 1. OFFER 1.1 Objectivity and mistaken offers  Protect honest and reasonable man  If mistake, no intention to create contract in first place/ no nexus  Hard to identify subjective intentions, therefore, objectively ascertained Smith v Hughes [1871] 1 LR 6 QB 597  Buyer thought was old oats, seller was selling new oats.  If seller knew of mistake of buyer? = no contract  If seller did not know buyer wanted old oats = contract exists Hartog v Colin & Shields [1939] 3 All ER 566  Buyer ‘must have known’ of seller’s mistake of ‘per piece’ vs ‘per pound’  Objectivity applied here Tribune Investment Trust Inc v Soosan Trading Co Ltd [2000] 3 SLR 405  Dicta ‘to ensure reasonable expectation of honest men not disappointed, test of inferring ad idem is objective. Thus, the language used by one party, whtever his real intention may be, is to be construed in the sense in which it would reasonably be understood by the other’ Chwee Kin Keong and Others v Digilandmall.com Pte Ltd [2004] 2 SLR 594  Buyers ‘must have known’. Objective approach requires imputed knowledge of mistake. Actual knowledge of mistake is irrelevant. Scriven Bros v Hindley [1913] 3 KB 564  If buyers misled sellers, no contract.  Confusion of shipping mark of crate, hemp v tow.  No nexus. Different goods in mind of two parties. Raffles v Wichelhaus (1864) 2 H & C 906  Latent ambiguity, no contract. Same name ship case  Objectivity had ‘run out’ 1.2 Offers and invitations to treat  To distinguish between offer and ITT, consider: o Protection of reasonable expectations of parties o Certainty o Protect consumers o Space to negotiate w/o being locked in Harvey v. Facey (1893)  Request for info is not an offer Storer v. Manchester City Council [1974] 1 WLR 1403  ITT = willingness to embark on negotiations  Offer = willingness to be bound  Df’s instruction was seen ‘objectively’ to denote an intention to be bound by terms of agreement. Therefore, considered as offer and not ITT. Gibson v. Manchester City Council [1978] 1 WLR] 520  Df only invited Pf to make ‘formal application’, no ‘intention to be bound’.  Df’s letter classified as ITT Spencer v. Harding (1869-70) LR 5 CP 561  Advertisement for tenders is not a contract for sale to highest bidder  Bid = offer. Pharmaceutical Society of GB v. Boots Cash Chemists [1952] 2 QB 795

 Display of goods/advertisements = ITT  Customers make offer at cashier, cashier accepts o To prevent customers being bound the moment they pick up item o Allows seller to retain freedom, place for bargain, not compulsory sale o Prevent seller from incurring obligation to sell even if out of stock Fisher v Bell [1961] 1 QB 394  Display of goods = ITT  Illegal knife for sale Partridge v Cittenden [1968] 1 WLR 1204  Illegal birds advertised as for sale  Merely ITT, did not break statute Chapelton v. Barry UDC [1940] 1KB 532  Display taken to be an offer due to policy reasons o There was intention for Df to be bound o Df could not reject money Pf gave once he picked deck chair and demonstrated intention to hire it  Treating display as offer allowed court to accelerate point of contract formation in order to keep out a harsh exclusion clause which was introduced later Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256  Advertisement taken to be an offer due to policy reasons  $1000 shows intention to be bound, treated as unilateral contract Chwee Kin Keong and Others v Digilandmall.com Pte Ltd [2005] 1 SLR 502.  Dicta: Online shopping/advertisements are treated as ITT  Supported by Electronic Transactions act Thornton v. Shoe Lane Parking Ltd [1971] 2QB 163.  Machine makes a standing offer  Acceptance takes place when user prompts machine to issue a ticket  Terms cannot be added after acceptance Blackpool & Fylde Aero Club v Blackpool Borough Council [1990] 3 All ER 25  By default, invitation to tender = ITT, submission of tender = Offer, Acceptance of tender = Acceptance  In this case, apply 2 contact analyses. o Implied offer to consider each tender submitted as long as submissions were made on time (unilateral contract) o Failing to consider Pf’s tender, Df breached unilateral contract Hiap Huat Pottery (S) Pte Ltd v TV Media Pte Ltd [1999] 1 SLR 14  A collateral contract exists only when a main transaction had been entered into. Ang Sin Hock v Khoo Eng Lim [2010] 3SLR 179  Presence of collateral contract. Although leads to uncertainty but will result in ‘just’ outcome The Barranduna [1985] 2 Lloyd’s Rep 419  Quotations are merely ITT

1.3 Termination of offer Dickinson v Dodds [1876] 2 Ch D 463

 Revocation through 3P is valid.  Mellish Lj: “once the person to whom the offer was made knows that the property has been sold to someone else, it is too late for him to accept the offer” Financings Ltd v Stimson [1962] 1 WLR 1184  Courts can imply a condition into the offer such that the offer will lapse if it is not, at the time of the acceptance, in substantially the same condition as it was when the offer was made  Car stolen and damaged before Pf signed agreement  Pf not in position to accept because the condition on which it was made no longer held Dysart Timbers Limited v Roderick William Nielsen [2009] NZSC 43  NZSC held that offer can lapse if there was fundamental change in basis of offer  Same principle as Stimson Norwest Holdings Pte Ltd (in liquidation) v Newport Mining Ltd [2010] SGHC 144  Courts can imply a condition into the offer such that the offer will lapse if it is not, at the time of the acceptance, in substantially the same condition as it was when the offer was made  Pf agreed 2hrs after EQ w/o knowledge of EQ occurring  In this case, Pf agreed before the supervening event; contrast with Stimson  Courts still held that change in conditions terminated the offer. (policy) 2. ACCEPTANCE Inland Revenue Commissioners v Fry [2001] STC 1715  Df sent cheque with note that he paid his taxes in full (cheque was less than owed balance)  Pf cashed cheque. No acceptance, Pf succeeded in claiming the balance.  No meeting of minds, cashing of cheque did not amount to acceptance of Df’s note 2.1 Correspondence of acceptance with offer Hyde v. Wrench (1840) 3 Beau 334  Counter-offer kills original offer. Initial offer cannot be accepted again  However need to distinguish counter offer from request for info Stevenson, Jaques &Co v. McLean [1880] 5 QBD 346  Request of info does not kill original offer Brogden v. Metropolitan Railway Co (1876-77) LR 2App Cas 666  Battle of Forms – last shot approach. Acceptance by conduct  Pf’s amendment to contract was counter offer. Df accepted by conduct  Can argue Df trying to wriggle out of bad contract? Butler v. Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401  Battle of Forms – last shot approach. Acceptance by conduct  Accompanying letter not deemed as counter offer, simply a means of identifying the order  Policy here, Courts interpreted accompanying letter to not be counter offer  No nexus here! Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209, [2009] All ER (D) 208 (Nov)  Dicta: It always depends on an assessment of what the parties must objectively

be taken to have intended…traditional offer and acceptance analysis is to be applied in battle of the forms cases. 2.2 Nexus (causal connection) between offer and acceptance  Acceptance must be made in response to a known offer and not to any other incentive. No acceptance if performance in ignorance of the offer. Tinn v. Hoffman (1893) 29 LT 271  Cross-offers do not amount to a valid contract where there was no nexus  2 exactly same offers does not equate to contract R v. Clarke (1927) 40 CLR 227  No nexus if one’s performance was done not as a result of the reward  Pf gave information to absolve himself instead of for the reward Gibbons v. Proctor (1891) 4 LT 594  Pf did not know of reward when he supplied info to fellow officer  Pf knew of the reward before it reached the superintendent  Arguably no nexus, but policy allows claim  Pf was meritorious claimant Williams v. Carwardine (1833) 5 C & P 566  Pf signed statement to “ease conscience”  Court found that Pf ‘must have known’ of the reward.  Arguably no nexus, but claimant was meritorious 2.3 Method of acceptance Manchester Diocesan Council for Education v. Commercial and General Investments Ltd [1970] 1 WLR 242  Mode of acceptance other than that prescribed by parties permitted  Mode of acceptance specificd in tender form not sole permitted means of acceptance  Df not disadvantaged by notification from surveyor  Pf made the prescription and therefore can waive compliance to it Felthouse v. Bindley (1862) 11 CBNS 869  No acceptance by silence Compare with acceptance by conduct Brogden v. Metropolitan Railway Co (1876-77) LR 2App Cas 666  Dicta: when an offer is made to another party, [where] there is a request express or implied that he must signify his acceptance by doing some particular thing, then as soon as he does that thing, he is bound

2.4 Communication of acceptance Adams v. Lindsell [1818] 1 B and Ald 681  Postal acceptance rule: Offeror is bound when offeree posts his acceptance Household Fire & Carriage Accident Insurance Co Ltd v. Grant [1879] 4 Ex.D 216

 Offeror is bound before he knows of the acceptance, even if its arrival is delayed and even if he never accepts it Byrne v. Van Tienhoven [1880] 5 CPD 344  Offeror cannot revoke his offer after offeree’s acceptance is posted.  Postal Acceptance rule does not apply to revocations (revocations need to be received by offeree) Holwell Securities Ltd v. Hughes [1974] 1 All ER 161  Postal acceptance rule not applied  “option shall be exercisable by notice in writing to Df”  Pf posted acceptance but never arrived  Requirement of “notice in writing” was implied to require actual notice which was not satisfied  Possible to opt out of Postal Rule Brinkibon Ltd v. Stahag Stahl und Stahlwarenhandels GmbH [1982] 1 All ER 293  Dicta: “no universal rue can cover all such cases; they must be resolved by reference to an intention of the parties by sound business practice and in some cass by a judgement where the risks should lie” Entores v. Miles Far East Corp [1953] 2 QB 327  If face to face acceptance drowned out, offeree must repeat acceptance  If telephone goes dead before acceptance completed, offeree must telephone back to complete acceptance  If offeror does not catch clear and audible words of an acceptance but does not bother to ask for repeat, it is his own fault and he will be bound Tenax SS Co Ltd v. The Brimnes [1975] QB 929  Revocation must be brought to the mind of the person to whom the offer is made  Df sent revocation outside office hours  By the time Pf received revocation, contract has already been concluded  Df in position to bear risk of telex outside office hours 2.5 Unilateral contracts Carlill v. Carbolic Smoke Ball Co [1893] 1 QB 256  Advertisement amounted to a unilateral contract to customers of ball  Pf accept offer when she use ball as instructed  When she caught flu, she fulfilled the performance criteria of contract Errington v. Errington [1952] 1 KB 290  Upon offeree’s performance, offeror is not allowed to revoke offer of unilateral contract  Father’s promise was unilateral contract that can not be revoked once couple commenced performance provided that their performance was not left ‘incomplete and unperformed” Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231  General obligation on the offeror not to revoke the offer once the offeree has started performance Dickson Trading (S) Pte Ltd v Transmarco Ltd [1989] 2 MLJ 408 at 414  General obligation on the offeror not to revoke the offer once the offeree has started performance Luxor (Eastborne) Ltd v. Cooper [1941] AC 108  Offeror allowed to revoke offer of unilateral contract where offeree is

reasonably expected to contemplate such risk  Common understanding that estate agents that “the risk in the hope of a substantial remuneration for comparatively small exertion” Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd [1998] 205 FCA  Offeror allowed to revoke offer of unilateral contract where refusal to do so would result in the offeror being bound to the offer at all times (policy)  General rule of revocation of unilateral offers cannot be applied when the consequence is that the offeror is forever bound and unable to revoke the offer 2.7 Alternative approach to formation Gibson v. Manchester City Council (1978) at 523:  Dicta: It is a mistake to think that all contracts can be analysed into the form of offer and acceptance…  …you should look at the correspondence as a whole and at the conduct of the parties and see therefrom whether the parties have come to an agreement on everything that was material.” Butler v Ex-Cell-O Corporation at 404-5  Dicta: The better way is for the courts to determine reasonable compromise on the disputed terms if the parties are agreed on all material terms.  Even if terms used by parties are mutually contradictory, it should be possible for a court to ‘scrap’ the terms and replace them by a reasonable implication Projection Pte Ltd v The Tai Ping Insurance Co Ltd [2001] 1 SLR(R) 798  Approved Lord Denning in Gibson  ‘examine the whole of documents in the case and decide from them whether the parties did reach an agreement upon all material terms in such circumstances that the proper inference is that they agreed to be bound by those terms from that time onwards’  Ensure parties intentions. But to what extent? Raise question of Interpretation as well 3. CERTAINTY & COMPLETENESS 3.1 Vagueness and incompleteness Nicolene Ltd v. Simmonds [1953] 1QB 543  Vague clause severed to uphold remaining parts of the contract, as long as it does not ‘impair the sense or reasonableness of the contract as a whole’  If the parties clearly regard themselves a s bound, not fair to allow one party to claim ‘vague’ terms and escape ‘bad bargain’ May and Butcher v. R [1934] 2 KB 17  An agreement to enter into an agreement, if it involves a critical part of the contract, is not a contract and will be void for uncertainty  Df agreed to sell Pf tentage at a price to be agreed at another date  No contract since a ‘critical part’ of the contract, price, is left undetermined Hillas v. Arcos (1932) 147 LT 503h  Resolution of uncertainty by previous dealing, custom of trade and standard of reasonableness  Df tried to escape bad bargain by claiming no enforceable meaning could be deduced from ‘fair specification’  Uncertainty cured by reference to the parties previous dealing, the custom of the

timber trade and the standard of reasonableness Foley v. Classique Coaches [1934] 2 KB 1  Resolution of uncertainty by previous dealing and standard of reasonableness  Pf had agreement with Df that it buys petrol ‘at a price to be agreed by the parties in writing from time to time’  Court enforced this agreement as one to buy fuel at a reasonable price G Percy Trentham Ltd v. Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25  Where sufficient intention to be bound can be inferred from reliance of the parties on the contract, it will be “difficult to submit the contract is void for vagueness or uncertainty. Specifically, the fact that the transaction is executed makes it easier to imply a term resolving the uncertainty, or, alternatively, it may make it possible to treat a matter not finalized in negotiations as inessential.” Scammell and Nephew Ltd v. Ouston [1941] AC 251  Contract void for uncertainty  ‘Hire purchase terms’ held to be too vague Sudbrook Trading Estate Ltd v. Eggleton [1983] 1AC 444  Court substituted own criteria in place of an agreed mechanism, where the mechanism was not essential to the contract  HL held that a workable criterion, neutral umpire, was not ‘essential’ to contract.  Substituted its own machinery by ordering an inquiry into the fair value of the premises Tan Yeow Khoon v Tan Yeow Tat [1998] 2 SLR(R) 19  ‘in a contract for sale at evaluation, the court can direct an inquiry to ascertain the price “not only where the parties fail to provide the machinery, but also when the machinery provided had broken down: provided of course that on the true construction of the contract, the agreed machinery was subsidiary to the ascertainment of the proper price and was not of the essence of the contract. The question whether the prescribed machinery was of the essence of the contract is a matter of construction.  Raises doubt on whether parties even need to agree on price for contract to even be ‘certain’. Contrast with May v Butcher. Walford v. Miles [1992] 1 All ER 453  Lock-in agreement void for uncertainty; agreeing to agree is too uncertain for courts to find an enforceable contract o Inconsistent with contract as self-interested activity o Difficult in determining when breach occurred; “good faith” vague? o Damages for brech hard to quantify  Lock-out agreement (not to negotiate with 3rd party) enforceable if there is a time limit Pitt v. PHH Asset Management Ltd [1993] 4 All ER 961  Lock-out agreement (not to negotiate with 3rd party) enforceable if there is a time limit Petromec Inc v Petroleo Brasileiro SA Petrobras [2006] EWCA Civ 1038  In dicta, Longmore LJ does not consider that Walford Miles binds the cpourt to hold that the express obligation to negotiate is completely without legal substance.

3.2 Conditional agreements: ‘subject to contract’  No binding contract if it is a precondition of the existence of the contract, so that one or both parties retain the power to refrain from taking the stipulated step and prevent the formation of the contract  Binding contract if it merely indicates the manner of performance of an already enforceable contract so that the parties’ expectations are protected even if one refuses to take the next step. A-G v Humphreys Estate [1987] HKLR 427  ‘it is invariably a question of construction whether the execution of a further contract is a condition or a term of the bargain or a mere expression of the parties’ desire as to how the transaction already agreed should in fact proceed to completion’ Teo Teo Lee v Ong Swee Lan [2002] 4 SLR 344, at [61]  Conditional agreement found to be binding  Pf sent offer of lease with ‘subject to tenancy agreement’ and deposit  Memo was binding, ‘subject of tenancy’ was an expression of desire to draw up a formal document. Deposit was significant amount too (construction) Storer v. Manchester CC (as above)  ‘court may be slow to assist a party who has deliberately discouraged the other from dealing elsewhere by encouraging the belief that contract has been conclude, while trying to retain its own discretion to back out’ RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG (2010) UKSC 14 (SC)  Letter of intent taken to be enforceable, where parties have commenced performance  Parties no sign contract, but commenced performance using a letter of intent (subject to contract)  Even if certain terms not finalized, an objective appraisal of words and conduct can lead to the conclusion that they had not intended agreement of such terms to be a precondition to a concluded and legally binding agreement 3.3 Restitutionary award in the absence of a contract  Where there is no valid contract but parties went ahead in their performance, the courts would find a claim in restitution to resolve disputes BSC v Cleveland [1984] 1 All ER 504; Ball 99 LQR 572  Parties commenced performance on agreement even though only ’letter of intent’  Claim in unjust enrichment allowed based on restitution

Regalian Properties Plc V London Docklands Development Corporation [1995] 1WLR 212.  Restiutionary award not found where work was done at the risk of the performing party  Fair risk allocation – preparatory work was done with such risks in mind, no restitutionary award granted 4. INTENTION TO CREATE LEGAL RELATIONS

4.1 Family and social agreements  Generally unenforceable o Floodgates o Courts supposed to promote market transactions o Freedom from contract – limit state intrusion into private lives of citizens Jones v. Padavatton [1969] 1 WLR 328  Presumption that parents and children do not inten...