Contract Law

Question 1

Blackpool Club Ltd. v Blackpool Council

Answer 1

The Council which managed the airport invited tenders for the right to a concession to operate pleasure flights from the airport. The terms of submission of the bids stated that they should be submitted by 12 noon on 17 March 1983 but that the Council would not bind itself to accept all tenders. The Club left a tender in the Council’s post box at 11 am. A notice affixed to the post box indicated that it was emptied at 12 noon each day. The Council did not consider the bid and awarded the concession to a third party. The Court of Appeal held that a contract was formed when the Council awarded the concession to the third party. However, it also held that the Council’s invitation to tender constituted an offer (unilateral) to consider all conforming tenders which was accepted by any party submitting such a tender. The obligation to consider confirming tenders was implied from the circumstances

Question 2

Pharmaceutical Society of Great Britain v Boots

Answer 2

Invitation to treat

Question 3

Carlill v Carbolic Smokeball Co

Answer 3

Unilateral Offer

Question 4

Leonard v PepsiCo

Answer 4

Not Unilateral offer

Question 5

Lefkowitz v Great Minneapolis Surplus Store

Answer 5

Unilateral Offer

Question 6

Thornton v Shoe Lane Parking Ltd

Answer 6

Unilateral offer

Question 7

Brodgen v Metropolitan Rlwy Co

Answer 7

The plaintiff had supplied coal to the defendant for a number of years and suggested entering a formal contract. The defendant submitted a draft and the plaintiff completed certain details including the name of an arbitrator. He signed it and wrote “approved” at the end and returned it. The defendant’s agent put the contract in a drawer. Then parties proceeded to act in accordance with the contract.

Question 8

R v Clark

Answer 8

An Offer of reward for information leading to the arrest of a person for a particular crime was published. Clark, a jailed accomplice, gave information but admitted he had forgotten about the reward when he did. The Court rejected his claim for the reward

Question 9

Williams v Carwardine

Answer 9

The defendant offered a reward to anyone giving information leading to the capture of the person who murdered his relation. The plaintiff gave the relevant information believing herself to be dying and wishing to clear her conscience.

Question 10

Wheeler v Jeffrey

Answer 10

The plaintiff manufactured aerated water in Belfast for export. The defendant, a Scottish brewery, wrote appointing the plaintiff as sole agent for its beers in Africa. No commencement date was mentioned. The letter said that the defendant expected to receive the plaintiff’s acceptance. The plaintiff wrote back accepting and specifying a commencement date. This was deemed to be the final offer. The defendant wrote back acknowledging receipt of the letter. This was deemed to be acceptance.

Question 11

Powell v Lee

Answer 11

the plaintiff applied for a job as headmaster and the board of managers passed a resolution to accept him. One of them told the plaintiff about the decision but subsequently, the decision was revoked. The Court held that there was no contract as there was no authorised communication from the whole board.

Question 12

Paul Felthouse v Bindley

Answer 12

An uncle and his nephew were in negotiations in respect of the sale of the nephew’s horse. There was some confusion as to whether the price discussed was £30 or 30 guineas. The uncle (offeror) wrote stating that they would split the difference and that if he heard no more he would consider the horse his for £30 and 15s. No money passed hands and no response was sent by the nephew. However, the nephew told the auctioneer who was responsible for selling property not to sell the horse. The auctioneer sold it by accident to a third party.

Question 13

Adams v Lindsell

Answer 13

The defendant offered to sell wool to the plaintiff requesting a reply by return of post. The defendant misdirected the letter and this offer was late in arriving. Although the plaintiff replied by return of post, the defendant had already sold the wool to someone else. The Court held that there was a contract upon posting.

Question 14

Holwell Securities v Hughes

Answer 14

The defendant offered the plaintiff a six months option to buy property exercisable “by notice in writing to” the defendant. The plaintiff posted an acceptance but it was lost. The plaintiff claimed that a contract existed anyway.

Question 15

Entores Ltd v Miles Far East Corp

Answer 15

The plaintiff, an English company, offered to buy goods from the defendant’s Dutch agents by telex. The offer was accepted by telex (which was classified as instantaneous). The Court held that instantaneous means of communications follow the general rule

Question 16

Brinkibon

Answer 16

Lord Wilberforce obiter considered cases where the messages of acceptance may be sent out of office hours or some problems may occur in delivery. For these variations “no universal rule can cover all such cases: they must be resolved by reference to the intention of the parties, by sound business practice and in some cases by a judgment where the risks should lie”.

Question 17

The Brimnes Tenax Steamship Co v The Brimnes

Answer 17

The owners of a ship, the Brimnes, hired it out pursuant to a time charterparty which stipulated that the hire fee was to be paid in advance in cash every month and that the owners would have the right to withdraw the vessel “failing … punctual … payment.” A notice of withdrawal was sent before 6pm on April 2nd but not seen by staff until the next day. This was deemed effective by the High Court when it was received on the machine and not when it was read.

Question 18

Mondial Shipping and Chartering BV v Astarte Shipping Ltd

Answer 18

A telex was sent at 23.42 hrs on Friday 2nd December by the owner of the ship to the charterer purporting to withdraw a ship from a charter for non-payment.

Question 19

Ryanair Ltd v Billigfluege.de GMBH

Answer 19

The defendants ran an airline price comparison website by taking information from Ryanair’s site (“screen-scraping”). Ryanair claimed that this breached their website’s Terms of Use which was part of the valid and legally binding contract which was entered into by the defendant’s through their use of the website.

Question 20

Bernuth Lines Limited v High Seas Shipping Ltd

Answer 20

A notice of arbitration was considered validly served by email notwithstanding that it may not have reached the relevant managerial or legal staff in the recipient company. Clarke J stated:

“That is not to say that clicking on the “send” icon automatically amounts to good service. The e-mail must, of course, be despatched to what is, in fact, the e-mail address of the intended recipient. It must not be rejected by the system. If the sender does not require confirmation of receipt he may not be able to show that receipt has occurred. There may be circumstances where, for instance, there are several e-mail addresses for a number of different divisions of the same company, possibly in different countries, where despatch to a particular e-mail address is not effective service.

Question 21

Thomas v BPE Solicitors

Answer 21

The defendant firm of solicitors was being sued by two former clients for negligence in respect of a share sale transaction and one of the issues to be determined was whether the transaction had completed. In applying the receipt rule then, the question then was whether the email was received for legal purposes when it arrived on the addressee’s computer at 6pm on a the Friday of a bank holiday weekend or when it was read the following Tuesday

Question 22

Henthorn v Fraser

Answer 22

The plaintiff was given an option to buy property for £750 open for 14 days. The following day, the vendor’s secretary posted a revocation. Subsequently and before this letter arrived, the plaintiff posted a letter of acceptance. The Court held that the contract was formed when the acceptance letter was posted, but the revocation letter was not effective until it was received.

Question 23

Dickinson v Dodds

Answer 23

The defendant offered to sell property to the plaintiff for £800 stating that the offer would be open until Friday 12th. On Thursday, the plaintiff was informed by a stranger that the property had been sold to a third party.

Question 24

Errington v Errington

Answer 24

A father bought a house subject to mortgage and allowed his son and daughter in law to live there. He said that if they paid the instalments the house would be theirs when they completed. The couple moved into the house and commenced payments. The father died and the mother, acting as personal representative of her late husband, tried to evict them. Denning LJ noted that had they acted on the promise and neither the father nor his widow would have been entitled to eject them in disregard of it. What they were doing were strictly related to the promise.

Question 25

Thomas v Thomas

Answer 25

A testator before he died said he would like to allow his widow to have his house or £100. When he died, his executors “in consideration of such desire” promised to convey the house to her for as long as she remained a widow and provided she paid £1 per annum towards its upkeep and repair. She sued for breach of this contract.

Question 26

Hammer v Sidway

Answer 26

An uncle promised his nephew £5000 when he was 21 if he refrained from “drinking alcohol, smoking, swearing, playing cards or playing billiards” until he was 21. The uncle died and his executor claimed that the promise was unenforceable for lack of consideration. Parker J. stated that “It is sufficient that he restricted his lawful freedom of action within certain prescribed limits upon faith of his uncle’s agreement”

Question 27

Roscorla v Thomas

Answer 27

The plaintiff bought a horse from the defendant. The defendant warranted that the horse was sound and free from any vice. When this proved untrue, the plaintiff sued for breach of warranty. The Court held that the warranty was unenforceable as it was not supported by consideration.

Question 28

Re Caseys Patent

Answer 28

The owners of a patent promised to give their manager a share “in consideration of your services as the practical manager in working our patents.” They later claimed that this was unenforceable as past consideration.

Question 29

Pao On v Lau case

Answer 29

Lord Scarman stated “An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisors’ request: the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.”

Question 30

White v Bluett

Answer 30

A father promised to discharge his son from a debt due if the son promised “not to bore” his father with his complaints was not deemed to be supported by consideration

Question 31

O'Neill v Murphy

Answer 31

A builder executed work for his neighbouring parish in return for prayers being said for him and his family.

Question 32

Chappel & Co v Nestle Co Ltd

Answer 32

The defendant offered a record to the public for sale for 7½ p plus 3 chocolate bar wrappers. The plaintiff owned the copyright in this record and claimed he was not paid sufficient royalties. He was paid a percentage of the price (if it was a pure cash consideration) but he claimed that 7½ p was not the ordinary selling price as the wrappers should be included as part of the consideration. The House of Lords held that the wrappers constituted consideration, despite there being no monetary value

Question 33

O’Keeffe v Ryanair Holdings

Answer 33

A Ryanair passenger was promised free flights on the basis that she was the one millionth customer, Kelly J stated “Certainly, the participation of the plaintiff in the publicity generated on the day in question was regarded as being of value by the defendant and I see no reason why the law should not regard it as likewise being of value. The surrender by the plaintiff of her anonymity and privacy and her active participation in the generation of the publicity that was created on the day in question in my view amounted to a real consideration and is sufficient to support a valid contract.” Paying for a flight and being a customer was not considered good consideration because she was not aware of the offer.

Question 34

Ward v Byham

Answer 34

The plaintiff separated from the defendant who was the father of her child, Carol. He looked after Carol whilst she found a housekeeping job. At this time existing legislation stated that it was the unmarried mother’s obligation to look after her child. The defendant promised to give her a weekly allowance of £1 to support Carol if she could prove that Carol was “well looked after and happy” and if the daughter was given her choice whether to stay or go. Carol went to live with the plaintiff and but the payments stopped when the plaintiff married someone else. The plaintiff sued him for breach of contract. The majority of the Court held that the plaintiff provided valuable consideration beyond her statutory duty in undertaking that the child would be well looked after and happy.

Question 35

Williams v Williams

Answer 35

A husband promised to pay his wife £1,10s a week despite the fact that she had no legal entitlement to support as she had left him. In return, the wife agreed to use the money to maintain herself and not to pledge his credit. The husband subsequently claimed the agreement was unenforceable as she had provided no consideration because she had a duty to maintain herself and no legal entitlement to use his name to obtain things on credit. The Court of Appeal determined the promise was supported by consideration. The majority considered that the wife’s legal right to maintenance was only suspended and that if she offered to return and her husband refused to have her back, she would be entitled to support. Therefore, in return for his promise of payment, she was setting aside her potential legal right to be maintained by him and this was a benefit to him

Question 36

Revenue Commissioners v Moroney

Answer 36

A father purported to sell a pub to his two sons for a fixed price. The evidence indicated that this consideration was not paid and was never intended to be paid. It was made up for the sake of having consideration

Question 37

Arrale v Costain Civil Engineering Co

Answer 37

Lane LJ noted that “it is no consideration to refrain from a course of action which it was never intended to pursue”.

Question 38

Alliance Bank v Broom

Answer 38

The defendants owed money to the plaintiff and were asked for security. They promised to assign the documents of title of certain goods. When they did not meet this promise, the plaintiff sought specific performance of this promise. The defendants argued that the plaintiff had not undertaken to forebear from enforcing the debt and thus had not provided any consideration. The Court held that although no promise to refrain from suing was expressly made by the bank, the effect of the defendant’s promise was that the plaintiff did in effect give, and the defendants received, the benefit of some degree of forbearance on account of the promise.

Question 39

Combe v Combe

Answer 39

The Court held that a wife’s forbearance from suing her husband was not consideration for his promise to pay her an allowance as there was no express or implied request

Question 40

Commodity Broking Co v Meehan

Answer 40

The defendant incurred a debt in the plaintiff’s bank in his company’s name. He promised to pay off the debt personally on a monthly basis. The plaintiff sued when he did not make these payments and claimed that its forbearance to sue was good consideration. The Court held that there was no express or implied request to forbear from suing. The reason the plaintiff did not sue was not the promise but because the company was insolvent and to do so would have been pointless.

Question 41

McDonnell v Ring

Answer 41

where personal guarantees by a director in respect of loans by the bank to the company induced the Bank’s forebearance to sue to recover the debt from the company. The Court of Appeal found that there was a benefit to the director in that it allowed more time to the company to meet its debt – “The benefit to [the director] may have been relatively small (and possibly greatly outweighed by the personal liability taken on by him), but adequacy of consideration is irrelevant.”

Question 42

Collins v Godefroy

Answer 42

The plaintiff was subpoenaed to give evidence at the defendant’s trial. In addition, the defendant promised to pay him for attending. There was found to be no consideration for this promise.

Question 43

Glasbrook Bros v Glamorgan

Answer 43

The police were asked to protect a coal mine during a strike and formed the opinion that a mobile force would be adequate. The mine manager wanted a guard stationed there and agreed to pay for this. The House of Lords determined that the promise was supported by consideration as the police were under a legal obligation only to provide the degree of protection, they deemed necessary.

Question 44

Williams v Roffey Bros

Answer 44

The defendants were building contractors who had a contract to refurbish a block of flats. The defendants subcontracted the carpentry work to the plaintiff for £20,000. After doing some of the work, the plaintiff experienced financial difficulties as a result of the initial underpricing of the work. The defendants were liable under a penalty clause if the work was not completed on time. As they were aware of the plaintiff’s difficulties they commenced renegotiation and promised to pay an extra £10,300 to ensure the plaintiff finished on time payable at £575 per flat. The plaintiff continued working but the defendants failed to keep up the payments. The plaintiff sued for breach of contract.

Question 45

Re Selectmove Ltd

Answer 45

The Court of Appeal, considering an agreement to allow a company in difficulty to pay its tax liability in instalments, distinguished Roffey Bros by restricting it to the context of extra payment for the originally agreed amount of the work ie a “promise to pay more” case.

Question 46

Shadwell v Shadwell

Answer 46

The plaintiff was under a contractual duty to marry Ellen Nicholl. At the same time his uncle learning of the forthcoming marriage promised him an annual payment. This constitutes good consideration as the uncle was gaining a fresh enforceable right against the nephew. The request to get married was inferred from promise to pay and the surrounding circumstances.

Question 47

The Eurymedon

Answer 47

The owner of goods promised not to sue a firm of Stevedores for goods which were damaged in unloading. The stevedore’s consideration for this promise was held to be unloading the cargo, despite the fact that they were already bound under a contract with the ship’s owners to unload. The Court held that ‘An agreement to do an act which the promisor is under an existing obligation to a third party to do, may quite well amount to valid consideration . . . the promisee obtains the benefit of a direct obligation

Question 48

In Pinnel’s Case

Answer 48

“Payment of a lesser sum on the day in satisfaction of a greater was no satisfaction of the whole.” “The gift of a horse, hawk or robe etc in satisfaction is good. For it shall be intended that a horse, hawk or robe etc might be more beneficial to the pl than the money in respect of some circumstance or otherwise the pl would not have accepted it in satisfaction”. “The payment and acceptance of parcel before the day in satisfaction of the whole would be a good satisfaction in regard of circumstance of time, for peradventure parcel of it before the day would be more beneficial to him than the whole at the day and the value of the satisfaction is not mutual.”

Question 49

D & C Builders v Rees

Answer 49

The plaintiff completed building work for the defendants and were owed £482 for this work. The plaintiff was in dire financial straits and pressed for payment for six months without success. Finally, the defendant’s wife, knowing of the plaintiff’s money problems, offered them £300 in full settlement stating that if they did not accept that they would get nothing. The plaintiff reluctantly agreed but once they got the £300 they sued for the rest. The Court of Appeal allowed their claim on the basis of Pinnels case.

Question 50

Foakes v Beer

Answer 50

Mrs Beer obtained a judgment against Dr Foakes for £2090 and he subsequently asked her for time to pay. The parties entered a written agreement whereby Dr Foakes agreed to pay £500 immediately and the rest in instalments (if taking into account time value of money it is a less amount). She agreed she wouldn’t take any proceedings whatsoever on the judgment. The parties forgot that interest is chargeable on such a judgment debt. Five years later he had paid it all off by she claimed £360 in interest was due and Dr Foakes refused to pay relying on their agreement. The House of Lords held that Mrs. Beer was entitled to the money on the basis of the rule in Pinnels case. The decision has been criticised on the basis it is said not to recognise the full benefit to the creditor in accepting a lesser sum of money.

Question 51

MWB Business Exchange Centres Ltd v Rock Advertising Ltd

Answer 51

Rock entered into a licence with MWB to occupy office space for a fixed term of 12 months. It contained a clause requiring that any variation to the licence must be set out in writing and signed on behalf of both parties. Rock accumulated arrears under the licence and an oral agreement was reached between Rock and MWB to vary the payment schedule under the licence. The Court of Appeal accepted that while the licence was worth slightly less to MWB with the revised payment schedule, Rock was more likely to be able to make the payments under the licence. Additionally, by keeping Rock as a tenant, MWB would be less likely to have a period in which the property was left vacant. The Court of Appeal had to determine whether the practical benefits of the varied licence amounted to valid consideration. It distinguished the principles in Foakes v Beer and in re Selectmove and instead followed Roffey Bros.

Question 52

Jorden v Money

Answer 52

Mrs Jordan was owed a sum of money by Money. Mrs Jordan promised that she would not enforce the bond. Money relied on this and got married. Later he sought a declaration that the debt was abandoned on the basis of estoppel. Representation of intention, not of fact.

Question 53

McNeill v Miller

Answer 53

The plaintiff left his car in the defendant’s garage for repairs and informed the manager that he intended to insure his car against fire damage. The defendants said that this would not be necessary as they themselves had insured it. When the car was destroyed by fire, it materialised that the garage was not insured. The plaintiff sued to enforce their insurance.

Question 54

Central London Property Trust v High Trees House

Answer 54

The plaintiffs let a block of flats to the defendants in September 1937 for 99 years at £2,500 p.a. Due to wartime conditions, the flats were not fully let during the war. In 1940, the plaintiffs agreed to reduce the rent to £1250. No time limit was fixed for this arrangement. When the war ended, the flats were fully occupied. In 1946 the receiver who had been appointed to the plaintiff company sought to recover the back rent for the last two quarters of 1945.

Question 55

The Barge Inn Limited v Quinn Hospitality

Answer 55

The plaintiff was the tenant, the defendant was the landlord. There was an agreement to lease the property for 20 years at a yearly rent of €400,000, which was subject to review at five yearly intervals. Because of an agreement with the previous landlord there was an agreement to lower the rent to €251,454.52 because of an economic downturn until the next review date. The defendants cancelled the rent reduction and after the plaintiff had not paid the original rent the defendant issued a forfeiture notice of the property

Question 56

National Asset Loan Management v McMahon

Answer 56

Representation of promissory estoppel can be oral, written or even tacit assumption based on promisor’s conduct but not a bare assumption

Question 57

Woodhouse Ltd v Nigerian Produce Ltd

Answer 57

In order to be effective, the Court held “an estoppel has to be clear and unequivocal and be understood in the sense required as a question of construction in all the surrounding circumstances”

Question 58

JR, a Ward of Court

Answer 58

The ward has been living in a psychiatric hospital, unable to manage his own affairs. He had been living in the dwellinghouse with a lady who still resides in it and who now claims rights in relation to it. She claims these rights on the representations made to her at the time she went to live with the ward and subsequently the representations made on her birthday when he handed her a folder of his will, giving her rights to the estate This lady seeks an order for sale as the house in in a dilapidated state. The issues now for determination are the nature of the rights, if any, to which the respondent is entitled in the property, and the proper order to be made in the circumstances.

Question 59

Bank of Scotland v Kennedy

Answer 59

summary judgment was sought on foot of personal guarantees entered into for borrowings. The plaintiff served letters of demand. The defendant asserted that he had reached an arrangement through negotiations as to the debt. Held that the defendant had not and could not establish the defence of promissory estoppel. reliance on promissory estoppel does not have to be detrimental estoppel can only be raised if it would be inequitable to allow the representor to go back on his representation.

Question 60

Healy v Ulster Bank & Promontoria

Answer 60

Healy and Cullen secured a €3.4 million loan from Ulster Bank Ireland to develop a medical centre and both provided guarantees for the borrowings. They later agreed to terminate the arrangement on the basis of Healy receiving €2.2 million and Cullen taking over the assets and liabilities of the partnership. The bank claimed that Healy’s liability for the original loan was still in place and deducted €667,210 from the €2.2 million against the debit balance outstanding on the original €3.4 million loan. Healy claimed the bank had no right to do that and that he had only deposited the €2.2 million with his local branch after being assured at a meeting with its manager that he was “in the clear” in relation to his liability for the medical centre project.