Contract Law Key Case Summaries PDF

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Contract Law Module Case Notes, case facts, issues and judgments...

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Contract Law Key Case Summaries Communicating an Offer Taylor v Laird {1856} 25 LJ Ex 329 To whom can the offer be made? To an individual, a specific group or the world – Carlill v Carbolic Smokeball Co. But it must be communicated to whom it was made – R v Clarke and Gibbons v Proctor

An invitation to treat Spencer v Harding (1879) LR 5 CP 561 Fisher v Bell {1961} 1 QB 394 Tenders Spencer v Harding (1870) Law Rep. 5 C. P.561. - A statement that goods are to be sold by tender or services are to be secured by tender is not normally regarded as an offer to sell to the person making the highest tender - The offer comes from the parties submitting the tender and there is no agreement until the party inviting tenders accepts one of them. The Postal Rule Adams v Lindsell (1818) 1 B & Ald 681

The Doctrine of Consideration Thomas v Thomas (1842) 2 QB 851, per Patterson J “Consideration means something which is of some value in the eye of the law, moving from the Plaintiff; it may be some detriment to P or some benefit to D, but all events it must be moving from the Plaintiff” Scotson v Pegg {1861} EWHC Exch J2 Part-payment of a debt can never be satisfaction for the whole, because there is no consideration (no consideration is provided for the promise to pay less).

Intention to Create Legal Relations

Rose & Frank Co. v Crompton {1925} AC 445 Entered into an agreement for the supply of tissue paper, claimant was supposed to be the main suppliers, in the contract there was an honourable agreement clause where no legal agreement and should not be subject to the jurisdiction of the courts. This was enough to rebut the presumption which normally exists in commercial agreements, it was not contractual and so a claim of breach of agreement could not be brought.

Balfour v Balfour {1919} 2 KB 571 Husband agreed to support his wife with money each month, court agreed there was no ICLR. Simpkins v Pays {1955} 1 WLR 975 Entered a newspaper competition every week, coupon was made out in grandmothers name, there was an ICLR grandmother had to share the winnings.

Discharge by breach

Hochster v DeLaTour(1853)2E&B678 

If two parties enter into a contract to be performed at a designated time in the future and one party refuses to perform the contract before the designated time, the innocent party may sue before the contract was to be performed. The innocent party need not wait until the time for performance has passed.

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Innocent party can elect or affirm... This can be beneficial or risky.

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It can also take into account various economic and practical factors like preparation, specialist purchases and pre-contractual commitment.

White & Carter v McGregor [1961] UKHL 5,3AllER1178 

If there is a legitimate interest, other than immediate financial interest, to perform the contract, then the party is entitled to recover damages.

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Considerations: Preparation?... Secured Business?... Ongoing Business? Ability to renegotiate with another party? Time?

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Majority - Where one party repudiates the other party has an option. May accept and sue for damages for breach, whether or not the time for performance has come. May disregard it and contract remains in full effect.

Avery v Bowden (1856) 5 E & B 714.

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A charterparty provided that a ship should proceed to Odessa and there take a cargo from the charterer's agent. The ship arrived at Odessa and the master demanded a cargo, but the agent could not provide one. The ship's master continued to ask for one. (thereby essentially affirming the contract). the Crimean war broke out. The charterer sued.

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The court held, inter alia, that if the agent's conduct amounted to an anticipatory repudiation of the contract, the master had elected to keep the contract alive until it was discharged by frustration on the outbreak of war.

Breach of a Warranty Bettini v Gye (1876) 1 QB 183 - Gye was not entitled to end the contract: Rehearsals did not go to the root of the contract and, as such, Gye was not entitled to repudiate the contract, but could seek damages. Breach of a Condition Poussard v Spiers & Pond (1876)1 QB 410 -

Poussard was in breach of a condition due to the importance of opening night and because the contract was clearly not just for any opera singer, but rather for only Poussard. Spiers was entitled to repudiate AND sue for damages.

Breach of an innominate term Hong Kong Fir Shipping v Kawasaki Kisen Keisha [1962] 2 QB 26 -

Court assesses the consequences of the breach to assess the available remedies – is the main purpose of the contract still capable of performance?

Discharge by frustration Taylor v Caldwell (1863) 3 b & S 826 Held that the claimant’s action for breach of contract failed. The contract had been frustrated as the fire meant the contract was impossible to perform. This may also included partial destruction of the subject matter, in Taylor v Caldwell they had contracted to hire ‘Surrey Gardens’ but as the music hall has been destroyed it was held to be sufficient impossibility for frustration to be found. Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 Held the contract was frustrated as it was no longer possible to perform the contract because of the supervening illegality. Krell v Henry {1903} 2 KB 740

Defendants chose not to use a flat they had hired, defendant argues the contract had been frustrated because they could not use the flat for the purpose they wished, it was held the contract was frustrated. Herne Bay Steamship co. v Hutton {1903} 2 KB 683

Davis Contractors v Fareham UDC [1956] AC 969 Held: The contract was not frustrated. The fact that a contract becomes more difficult to perform or not so profitable is not sufficient to amount to frustration. It was still possible to perform the contract. Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 524 Held: The contract was not frustrated since the claimant had chosen to keep the three licences granted for himself rather than using one to fulfil his contractual obligation. He had therefore induced the frustrating event and was therefore in breach of contract. Jackson v The Union Marine Insurance Co. Ltd (1874) LR 10 CP 125 Held: The time was so long as to put an end in a commercial sense to the commercial speculation entered upon by the shipowner and the charterers. The express exceptions were not intended to cover an accident causing such extensive damage. The contract was to be considered frustrated. Walton Harvey Ltd v Walker & Homfrays Ltd [1931] 1 Ch 274 Held: The contract was not frustrated as the hotel owners were aware that the Local Authority were looking to purchase the hotel at the time they entered the contract. They should have foreseen the fact that this could happen in the life time of the contract and made provision in the contract for such an eventuality. They were therefore liable to pay damages for breach of contract.

Peter Cassidy Seed Co Ltd v Osuustukkuk-Auppa Ltd [1957] 1 WLR 273 Held: The defendant should have foreseen the possibility of the licence being refused and therefore the contract was not frustrated. Law Reform (Frustrated Contracts) Act 1943 s1(2): All money payable under the contract ceases to be payable and any money already paid may be recovered. Where expenses have been incurred this may be deducted from the amounts payable or paid.

Damages Surrey CC & Another v Bredero Homes {1993}

In this case restrictive covenant was breached which said only 72 homes could be built on a site that was sold, the plaintiff then applied for planning permission and built an extra 5 homes. The court of appeal held despite the fact the contract had been breached the loss suffered was nominal and had no impact on the claimant and so therefore there was nominal damages.

Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1993] Lord Griffiths suggested that damages could be awarded on the basis that the performance bargained for has not been supplied – even where there has been no, or little loss sustained by the innocent party. Most of the H of L in Alfred McAlpine [2000] agreed with this but did not apply the principle in that particular case. Lord Griffiths’ broader approach did get some recognition in Giedo van der Garde BV v Force India Formula One Team Ltd [2010] The classic statement of the rules relating to remoteness of damage in contract is to be found in the Court of Exchequer's judgment in Hadley v Baxendale per Alderson B: "Where 2 parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach, of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it."

Doctrine of Privity -

Tweedle v Atkinson {1861} 121 ER 762 The grooms father and the brides agreed in writing that they would pay money to the son in the marriage, unfortunately the father in law passed away before he made the payment. As a result of his death the son in law tried to sue the estate, the court stated the son is not a party to the contract despite it benefitting him and Tweedle had not provided any consideration. The court ruled a third party cannot bring in action because they have not supplied consideration for the promise. Wightman J – ‘It is now established that no stranger to the consideration can take advantage of a contract, although made for his benefit.

Darlington Borough Council v Wiltshier Northern Ltd [1995] 1 WLR 68, Steyn LJ 76 ‘The case for recognising a contract for the benefit of a third party is simple and straightforward. The autonomy of the will of the parties should be respected. The law should give effect to the reasonable expectations of contracting parties...[T]here is no doctrinal, logical, or policy reason why the law should deny effectiveness to a contract for the benefit of a third party where that is the expressed intention of the parties.’

Nisshin Shipping Co Ltd v Cleaves & Co Ltd [2004] 1 Lloyd’s Rep 38 The Act creates a rebuttable presumption in favour of third-party enforceability.

The Eurymedon upheld in The New York Star [1981] 1 WLR 138 and The Mahkutai [1996] AC 650 -

Lord Goff alluded to the adoption of more general exceptions to Privity in the common law but the direct approach taken by the CRTPA 1999 means the courts will be more reluctant to create such broad common law exceptions.

The Eurymedon upheld in The New York Star [1981] 1 WLR 138 and The Mahkutai [1996] AC 650 -

Lord Goff alluded to the adoption of more general exceptions to Privity in the common law but the direct approach taken by the CRTPA 1999 means the courts will be more reluctant to create such broad common law exceptions....