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ICAEW Law 01: Contract formation. > 01. CASES on Contract Formation > Flashcards

01. CASES on Contract Formation Flashcards

1
Q

Golden Ocean Group Ltd v Salgaocar Mining Industries PVT (2011)

A

An email trail ending with the typed name of a broker acting as an agent for a shipping company was deemed to be ‘written evidence’ of the existence of a contract.

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2
Q

Carlill v Carbolic Smoke Ball Co. (1893)

A

The Smoke Ball Company’s advertisement was deemed to be an offer capable of acceptance:

-an offer can be made to the world at large
-the offeror waives their right to communication of acceptance

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3
Q

Gibson v Manchester City Council (1979)

A

A letter from Manchester City Council stating a price was nevertheless deemed NOT to be an offer capable of acceptance.

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4
Q

Hyde v Wrench (1840)

A

The making of a counter-offer of £950 for a farm automatically rejected the vendor’s original offer of £1,000. When the counter-offer was also declined no offer capable of acceptance remained open.

-The making of a counter offer rejects the original offer.

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5
Q

Stevenson v McLean (1880)

A

An offeree’s request to have delivery of some iron spread over a period of time was deemed NOT to be a rejection or counter offer.

The original offer therefore remained open and capable of acceptance.

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6
Q

Ramsgate Victoria Hotel v Montefiore (1866)

A

An offer regarding the purchase of shares was deemed to have expired after a period of 5 months, this being more than a ‘reasonable’ time.

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7
Q

Brogden v Metropolitan Railway Co (1877)

A

The conduct of a railway company (acceptance of deliveries of coal for several years) was deemed to constitute the acceptance of an offer. A contract therefore existed despite no final written draft having been signed.

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8
Q

Clarke v Dunraven (1897)

A

Participants in a regatta were deemed to have entered into a binding contract with each other via their conduct (entry into the regatta and acceptance of the club’s rules).

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9
Q

Edwards v Skyways (1964)

A

The words ‘ex gratia’ in what was intended to be a non-binding agreement regarding a redundancy payment to a pilot were deemed insufficient to rebut the presumption that a commercial contract (here one regarding employment) IS made with the intention to create legal relations.

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10
Q

RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH (2010)

A

A letter of intent signed by both parties contained a draft contract. Work commenced on the installation of production lines despite a formal contract never being signed. The court determined that a contract had been accepted by conduct and that it was made with the intention to create legal relations.

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11
Q

Branca v Cobarro (1947)

A

An agreement including the words “a personal agreement until a fully legalised agreement drawn up by a solicitor and embodying all the considerations herewith stated, is signed” was nevertheless deemed to have been entered into with the intention of creating legal relations.

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12
Q

Felthouse v Bindley (1862)

A

An uncle’s offer to buy his nephew’s horse contained the phrase “if I hear no more about him, I consider the horse mine.”

Such a presumption that an offer could be accepted by silence was deemed invalid.

Silence can not constitute acceptance. The offeree must make a positive act of acceptance.

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13
Q

re McArdle (1951)

A

Improvements made to a property were done BEFORE an agreement was made. Consequently they did not constitute valid consideration in support of that agreement.

Past consideration is no consideration.

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14
Q

Thomas v Thomas (1842)

A

Established that a ‘Peppercorn rent’ constituted valid consideration.

Consideration need only be adequate to merit the title of consideration, NOT sufficient to the value of the consideration given by the other party.

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15
Q

Williams v Roffey Bros & Nicholls (Contractors) Ltd (1990)

A

Established the modern view that provided that there is no duress or fraud, an ‘additional practical benefit’ constitutes valid consideration.

In this case a subcontractor was given additional payments in order that work was completed on time (according to the terms of the original contract). These payments were deemed to be in return for the practical benefits to the main contractor of avoiding the need to find an alternative subcontractor and of avoiding a penalty clause in his own contract.

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16
Q

Foakes v Beer (1884)

A

A debtor was required to pay the outstanding interest on a loan, his creditor not having recieved any additional consideration for the waiver of that interest.

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17
Q

Welby v Drake (1825)

A

Established that payment of a lesser sum by a third party is sufficient consideration to discharge a debt.

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18
Q

Combe v Combe (1951)

A

A woman was unable to enforce maintenance payments from her husband because she had given no consideration and therefore no contract existed.

The doctrine of promissory estoppel was deemed not to apply; the husband’s promise to pay maintenance not being supported by any consideration.

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19
Q

D&C Builders v Rees (1965)

A

A builder’s reluctant agreement to accept part of a debt in full settlement was deemed not to be legally binding. The householder had offered no additional consideration and in fact placed the builder under duress to agree to the arrangement.

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20
Q

Chappell v Nestle (1959)

A

Chocolate bar wrappers were deemed sufficient consideration.

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21
Q

Stilk v Myrick (1809)

A

Sailors doing a small amount of extra work after a small number of desertions were NOT giving additional consideration to support a contract for additional remuneration.

It was already owed as part of an existing contractual duty.

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22
Q

Hartley v Ponsonby (1857)

A

Sailors doing a significant amount of extra work after a large number of desertions WERE giving additional consideration to support a contract for additional remuneration.

It was over and above an existing contractual duty.

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23
Q

Glasbrook v Glamorgan (1925)

A

A police authority were entitled to additional payment for defending a colliery during a strike.

Thhe provision of additional protection over and above that required by an existing duty was sufficient consideration to support a contract.

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24
Q

Collins v Godefroy (1831)

A

A court witness was not entitled to use their appearance as consideration to support a contract for payment.

They were subpoenaed anyway and so did not do anything over and above their existing legal duty.

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25
Q

White v Bluett (1853)

A

A son’s offer to stop bad mouthing his late father was not deemed to be sufficient consideration for the discharge of a debt.

To do so was not over and above that required by an existing natural duty.

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26
Q

Ward v Byham (1956)

A

A mother’s agreement to ensure that an illegitimate child was “well looked after and happy” was deemed to be sufficient consideration to support a maintenance contract.

At the time, this was considered over and above an existing natural duty.

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27
Q

Lampleigh v Braithwaite (1615)

A

A man riding to petition the King for a pardon was deemed to have a valid contract for reward because the pardonee implied that there would be one before he undertook the journey.

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28
Q

Roscorla v Thomas (1842)

A

A contract was made for the sale of a horse.

Following this, the seller offered a warranty that the horse was “free from vice,” under which the buyer tried to claim.

This subsequent warranty was deemed a new contract but one for which there had been no additional consideration from the buyer.

(The consideration in respect of the original contract was past consideration, and therefore invalid in respect of the new contract.)

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29
Q

A warranty offered AFTER the completion of a contract of sale requires …

A

additional consideration.

(The consideration within the original contract of sale is past consideration from the point of view of the warranty.)

30
Q

Errington v Errington (1951)

A

A father in law offered his son and daughter in law a house on condition that they paid the mortgage.

Once the payments had commenced, the contract had begun and was therefore legally binding.

An offer cannot be revoked once the acts of acceptance have started.

31
Q

Household Fire v Grant (1879)

A

Grant subscribed for shares by post but never received a reply. When the company went into liquidation the liquidator sued him for his contribution.

Placing an acceptance of an offer into the postal system makes it valid.

32
Q

Powell v Lee (1908)

A

A chair of school governors made an acceptance of a candidate for headship’s offer without the approval of his board. The acceptance was deemed invalid.

33
Q

Nortland Airlines v Dennis Ferranti Meters (1970)

A

An attempt to materially vary the terms of an offer is a counter offer.

34
Q

Pharmaceutical Society of GB v Boots Cash Chemists (Southern) Ltd (1953)

A

Goods on a shelf in a self service store are invitations to treat, not offers.

35
Q

Fisher v Bell (1960)

A

A flick knife displayed in a shop window was deemed an invitation to treat, not an offer.

36
Q

Partridge v Crittenden (1968)

A

An advertisement for the sale of bramblefinches was deemed an invitation, not an offer.

37
Q

Grainger v Gough (1896)

A

An advertisement for wine was deemed an invitation, not an offer.

38
Q

Williams V Carwadine (1833)

A

A woman’s motives for the acceptance of a reward offer were deemed irrelevant.

39
Q

Dickinson v Dodds (1876)

A

Communication of revocation of the offer to sell some houses was deemed good when coming from a reliable third party.

40
Q

Gunthing V Lynn (1831)

A

A contractual term involving additional payment if a horse were ‘lucky’ was deemed vague and therefore unenforceable.

41
Q

Harris v Nickerson (1873)

A

An advertisement for the holding of an auction was deemed to be a statement of intent, not an offer.

42
Q

Harvey v Facey (1893)

A

A telegraphed request to an enqiry regarding the lowest acceptable price for ‘Bumper Hall Pen’ was not deemed to be an offer capable of acceptance.

43
Q

Byrne v Van Tienoven (1880)

A

The seller failed to rely on the postal rule in order to revoke an offer for the sale of tinplates which subsequently rose in value. The original offer therefore remained open and capable of acceptance.

The postal rule applies only to acceptance, not to revocation.

44
Q

Balfour v Balfour (1819)

A

A husband’s offer of maintenance was deemed NOT to be a legally binding contract.

An agreement made between husband and wife while living together is presumed to be made WITHOUT the intention to create legal relations.

45
Q

Spellman v Spellman (1961)

A

An agreement under which a husband gifted the benefit of a hire purchase car to his wife was NOT deemed to be a legally binding contract.

Despite their marriage going through a bad patch, the presumption that domestic agreements are made WITHOUT the intention to create legal relations was not rebutted.

46
Q

Merritt v Merrit (1970)

A

An agreement regarding the distribution of a family home by a separated couple WAS deemed to be a binding contract.

The parties were separated at the time of the agreement and therefore there was sufficient evidence to rebut the presumption that arrangements between husband and wife are NOT generally deemed to be entered into with the intention to create legal relations.

47
Q

Rose and Frank v Crompton (1924)

A

Unusually, an agreement between commercial parties was NOT deemed to have been entered into with the intention to create legal relations, apparently by mutual agreement of the parties at the time.

48
Q

Jones v Vernons Pools (1938)

A

The use of the words ‘binding in honour only’ were deemed sufficient to rebut the presumption that a consumer contract was entered into with the intention to become legally binding.

49
Q

Simpkins v Pays (1955)

A

An agreement between a group of house sharers regarding the splitting of winnings from a gambling syndicate was deemed to be legally binding.

50
Q

Jones v Padavatton (1968)

A

A mother’s agreement regarding paying her daughter’s living cots if she gave up her career as a secretary and instead studied for the bar was NOT deemed to be legally binding.

51
Q

Parker v Clark (1960)

A

An agreement regarding the sharing of a house between aunt/uncle and niece WAS deemed to be legally binding.

52
Q

Bisset v Wilkinson (1927)

A

A statement that a plot of land would support 2,000 sheep was deemed NOT to be a representation since the vendor had no experience of trying.

53
Q

Scammell v Ouston (1941)

A

Terms in a contract regarding the hire purchase of a motor car were not specific.

The contract could not therefore be enforced.

54
Q

SS Ardennes (1951)

A

An oral statement that a ship would take a direct route was deemed to override a contractual term that an indirect route was permissible.

55
Q

Brown v Craiks (1970)

A

The purpose for which some purple rayon cloth was required was not specified. Sales of Goods legislation regarding ‘fitness for purpose’ was therefore deemed NOT to have been breached.

56
Q

Frost v Aylesbury Daires (1905)

A

The court determined that the ‘purpose’ for which milk was required did not need to be specified, there being an overwhelming implication that the milk was purchased for human consumption.

57
Q

Hillas v Arcos (1932)

A

A term was judicially implied into a contract regarding the sale of wood due to the course of trade; the written terms of the contract being interpreted so as to preserve the bargain between the parties.

58
Q

The Moorcock (1889)

A

A contract involving the unloading of a ship was deemed to include an implied term that it was safe to do so at low water.

Otherwise there would be no reason for the contract to exist.

59
Q

Liverpool City Council v Irwin (1977)

A

A term was implied within a rental contract regarding the accessiblity of the property.

The landlord was deemed to be in breach due to faulty lifts and dangerous stairways.

60
Q

Hutton v Warren (1836)

A

A departing tenant farmer was deemed entitled to compensation for work done prior to harvest since it was normal trade custom.

61
Q

GHSP Inc v A B Electronic (2010)

A

Since two parties had clearly not agreed to each other’s standard terms, a contract between them for the sale of pedal sensors was deemed to contain the terms implied by the Sale of Goods Act (1979).

62
Q

Beswick v Beswick (1968)

A

Widow of a one-legged coal merchant.

An executor or administrator of a will can sue to enforce a contract entered into by the deceased.

In this case, she also happened to benefit under the contract. However this is irrelevant to the point of law.

63
Q

Keech v Sandford (1726)

A

A minor beneficiary of the lease on Romford Market was able to sue the trustee for benefits which that person had acquired under a separate contract.

64
Q

Mersey Docks v Coggins (1947)

A

Established that an employer may be sued for the negligent acts of an employee.

65
Q

Donohue v Stevenson (1932)

A

Established that a manufacturer of goods may be sued by the ultimate consumer.

The manufacturer must have the final consumer in mind as a ‘legal neighbour’ and therefore owes them a duty of care in tort.

66
Q

Tulk v Moxhay (1848)

A

Established that restrictive covenants “run with the land.”

The land in this case being Leicester Square.

67
Q

Shanklin Pier v Detel Products (1951)

A

The entry into one contract was deemed sufficient consideration for another.

A pier owner was therefore able to sue the manufacturer of inferior paint for damages.

68
Q

Central London Property Trust v High Trees (1947)

A

A property company was NOT entitled to rent which it had promised not to demand. The doctrine of promisory estoppel being applied to make exception to the principles of Pinnel and Foakes v Beer.

This was in spite of there being no additional consideration in respect of the agreement by the tenant.

69
Q

Scotson v Pegg (1861)

A

Performance of a contractual duty not already owed is sufficient consideration, even if that same duty is already owed to a third party.

In this case a coal carrier was able to be paid by both the supplier AND the customer.

70
Q

Tweddle v Atkinson (1861)

A

The fathers of a couple agreed in writing to each pay £100. When one father died and his estate refused to pay the son unsuccessfully attempted to sue.

Privity of contract did not extend to the son. Consideration must move from the promisee.

ICAEW Law 01: Contract formation. (8 decks)

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