Cases Law

ELEMENT EXPLAINATION COURT CASES CONSEQUENCES OF CASES COURT HELD
Invitation To Goods exhibited in a Pharmaceutical Society The defendants were charged under the Pharmacy The display of goods on shelf
Treat- Not An shop window or Of Great Britain V and Poisons Act 1933, which made it unlawful to sell was only invitation to treat.
Offer inside a shop with a Boots Cash Chemists certain poisons unless a registered pharmacist The agreement or contract
price attached – held (Southern) Ltd (1953) supervised the sale. They had stationed a registered was formed once cashier
not an offer but an one at the cashier’s desk. However it was alleged accepted the payment from
invitation to treat that there was a contract when the customers the buyer
only selected those poisons and put it into the shopping
baskets.
Invitation to The contractor, Peter Lind & Co v The contractors submitted two alternatives tenders There was no contract since
tender- Not an whether successful Mersey Docks & for the construction of a freight terminal. The it was impossible to say
offer tenderer or not, bears Harbour Board (1972) employer purpoted to accept “your tender” but not which offer had been
the cost of tendering specified which one. acceptance.
unless contractor
performs additional
services at the
employer’s request-
entitled to quantum
meruit
Invitation to William Lacey William Lacey, after submitting its tender, was led to It was held that the estimates
tender- (Quantum (Hounslow) v Davis believe it would be awarded the contract. On this were outside the normal
Meruit) (1957) basis, it carried out estimates (prepared various tendering process, and Davis
further estimates and even order some materials) at had to pay a reasonable sum
Davis’s request but later did not proceed with the for the work carried out on a
project. quantum meruit.
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Invitation to If the invitation to Blackpool & Fylde Aero The tender had a clause stating that tenders would The court dismissed the
tender- Unilateral tenders is made to Club Ltd v Blackpool not be considered if they missed the time and date defendant’s appeal. They
offer specified parties and Borough Council (1990) deadline stipulated. The town’s clerk failed to empty found that the invitation to
it is stated that the letterbox on time and as such, the plaintiff’s submit a tender was usually
consideration will be tender missed the deadline and the defendant no more than an offer to
given to specified accepted a lower proposal. The plaintiffs brought an receive bids but in this
parties which is action for damages against the defendant for circumstance, examining the
properly submitted, negligence and for breaching their contract. At an behaviour of the parties
then this will be initial hearing, the judge held that the request for created clear intention to
binding as a unilateral tenders by the defendant required them to consider create a contract and
offer all the tenders received and on this basis, they were therefore the failure to
liable to the plaintiff. The defendants appealed this consider the plaintiff’s
decision. application made them liable.
Invitation to treat Carlill v Carbolic Smoke Carbolic Smoke Ball Co. (D) manufactured and sold The court held the essential
– Unilateral offer Ball Co. (1893) the Carbolic Smoke Ball. The company placed elements of the contract
advertisement in various newspapers offering a were all present, including
reward of 100 pounds to any person who used the offer acceptance,
smoke ball three times per day as directed and consideration and an
contracted influenza, colds or any other disease. intention to create legal
After seeing the advertisement, Carlill(P) purchased relations.
a ball and used it as directed. Carlill contracted
influenza and made a claim for the reward. Carbolic
Smoke Ball refused to pay and carlill sued for
damages arising from breach of contract.
Invitation to If the invitation to Harvela Investments The defendants had made it clear that they were The court held that this was
tender- Implied tenders is made to Ltd v Royal Trust Co of going to accept highest tender. Harvela bid an offer which was accepted
Unilateral offer specified parties and Canada (1986) $2.175M. Sir Leonard Outerbridge bid $2.1M or by the person who made the
it is stated that the $101,000 in access of any other offer, expressed as a highest tender.
contract will be fixed monetary amout, whichever is higher. The
awarded to the Royal Trust accepted Sir Leonard’s bid as being
lowest (or the $2.276M
highest) bidder, then
this will be binding as
a unilateral offer.
Quotations and A quotation is an Croshaw v Pritchard The contractor responded to an invitation to tender Notwithstanding the heading
estimates- valid if offer. Whether an and Renwick (1899) by writing a letter headed “estimate”. The letter estimate. The circumstances
described as estimate may also stated that ‘ our estimate to carry out the…. shows that the letter in effect
estimate amount to an offer or alterations to the above premises according to the amounted to an offer.
a quotation, will drawings and specifications amount to $1230. The Therefore, the contractor
depends on the employer accepted this figure. However, the was liable for breach of
intention of the contractor then purported to withdraw the contract.
parties estimate.
The employer sued the contractor for the extra cost
involved in having to engaged another contractor to
carry out the works.
Counter offer – If A requests a quotation Hyde v. Wrench (1840) An offer was made to sell at £1000. The buyer refused this, A counter offer negates the
Destroy the original from B, B’s quotation is but offered to pay £950. When this was not accepted by the original offer. Thus, when the
offer the offer. seller, the buyer then tried to insist on buying at £1000, but plaintiff made an offer of his
*If A accept the offer BUT the seller had decided not to sell to him. It was held that he own, to purchase the property
subject to his own was not obligated to do so, since in making a counter-offer for £950, and he thereby
contract terms, there is a of £950 the buyer had at the same time refused the original rejected the offer previously
counter offer offer, thereby terminating it. made by the defendant.
*A counter-offer is not an
acceptance, and
actually kills the original
offer
*Can only leading to a
contract if it is then
accepted by the other
party
Battle of the forms the view taken by the Sauter Automation Ltd The subcontractor submitted a quotation expressed to be Held that amounted to an
courts is that the last party v Goodman subject to their standard conditions (contain a retention of acceptance of the main
to send a piece of paper (Mechnical Services) title clause). The main contractor sent an order stating: contractor counter offer, and
containing such terms, Ltd (1986) ‘terms and condition accordance with the main contract’ therefore the main contract
before the actual (did not contain a retention of title clause). When the terms and condition applied
performance takes place subcontractor sent the equipment to the site, the court was rather than the subcontractor’s
(often delivering goods), asked which terms & condition were applicable. standard terms.
lays down the terms.
Acceptance by An offer may be accepted Davies & Co Contractor placed an order for the work to subcontractor The subcontractor did not
conduct by conduct- where a Shopfitters Ltd v with the term on the back that the subcontractor will not be protest, but started the work.
contractor starts work on William Old (1969) paid until the main contractor was himself paid. The subcontractor accepted the
receipt of an order counter offer by conduct
(implied)
Acceptance- subject The use of the phrase Chillingworth v Esche C and D signed an agreement for C to sell the house to D. There was no contract as the
to contract “subject to contract” (1924) The agreement stated that it was subject to a proper agreement was conditional.
usually prevents a contract to be prepared by C’s solicitors. Eventually, C’s
document from being solicitors prepared a contract, but D refused to sign it.
treated as either an offer
or an acceptance. Its mean,
the parties do not wish to
be bound until a formal
contract has been drawn
up
Exceptionally, however, Ayer Hitam Tin  Contractor had negotiated to carry out turnkey  Court held that no
where it is clear that the Dredging v YC Chin project for the client. contract existed
parties had already agreed Enterprise(1994)  The client had issued the letter accepting their  Subject to contract
to all the terms and were proposal, subject to certain terms and conditions. would mean the parties
awaiting the embodiment  Relying upon the letter, contractor carried out are still negotiating and
of the terms into a formal preliminary works (earthworks) although no normal they are not bound until
document, the phrase written agreement had been executed. a formal contract is
would not prevent the  Subsequently, a dispute arose between them and signed
agreement form giving rise the client refused to proceed with the contract and  The client who make a
to a contract contended that the contract was not yet formed. request will have to pay
a reasonable sum,
quantum meriut for the
preliminary works
executed.
Lewiss v Brass (1877) The contractor’s tender was accepted by the employer in a There was already a binding
letter which stated: the contractors….will be ready for the contract, and it was too late to
signature in the course of a few days. withdraw the tender
The contractor discovered a mistake in the tender and
sought to withdraw it.
Acceptance- Where work has Trollope & Colls Ltd v P tendered for work which contain provisions for both The contract had retrospective
Retrospective commenced before a Atomic Power variations and fluctuations. P commenced work at D’s effect. The parties had intended
Agreement contract is concluded, but Construction Ltd. request while negotiations was still taking place. Substantial entering into a contract which
the parties later agree on (1962) changes were made to the scheme and ten months later a would apply to work done
terms, the terms agreed formal contract wan entered into. before as well as after the
will have retrospective The questions was whether terms of the contract, especially agreement. (A “retroactivity”
effect. the variation clause, applied to work done prior to the terms is implied). Thus P has to
agreement. The work and the price to be paid if there was a complete and accepted
contract differed from the work and price referred to in the payment as in the contract and
offer. not claim payment on a
quantum meruit.
Acceptance- Letter A contractor who carries British Steel The employers sent a letter of intent to the contractor The vital terms of the alleged
of Intent out works on the basis such corporation v proposing to use their own standard form of contract. The contract remain unresolved,
a letter will nevertheless be Cleveland Bridge & contractor did not agree. The price and delivery dates also and no contract had been
entitled to be paid a Engineering Co Ltd could not be agreed upon. Nevertheless the contractor created between the parties.
reasonable amount (1984) proceed to carry out the works. When the contractors sued Nevertheless the contractor
(quantum meruit) for the the payment, the employer counter claimed for late was entitled to be paid a
work carried out. delivery. The employer argued that a contract had come reasonable sum ( quantum
into place when the contractor proceed with the works meruit)
Acceptance- Letter Exceptionally, the letter of Turriff Construction The contractor tendered successfully for the design and The contractor had made it
of Intent (collateral intent may be treated as a Ltd v Regalia Knitting construction of a factory. They sought form the employers sufficiently that they wanted an
contract) contract, provided Mills Ltd (1971) “an early letter of intent….to cover us the work we will assurance that they would be
defendant ‘assumed now be undertaking”. They received such a letter, paid and employer’s letter
liability to pay’- assurance concluded that “the whole to be subjected to agreement on amounted to acceptance of
to pay an acceptable contract”. The contractor then carried out the contractor’s offer. The letter of
design work, which was necessary before planning intent constituted that
permissions and estimates could be obtained for the assurance, and contract.
project. Six months later the employer abandoned the
project.
Revocation/ An offer may generally be Routledge v Grant The defendant offered to buy a house giving the plaintiff six It was held that the defendant
Withdrawal of offer- revoked at any time before (1828) weeks to give a definite answer. was free to withdraw at any
May be withdrawn it has been accepted, time before acceptance event
at any time before provided that though the six week periods had
acceptance not expired.
Cook Islands Shipping D (main contractor), having obtained a written estimates of The absence of a binding
v Colson Builders transport charges from P relied on this in pricing their contractual obligation P were
(1975) tender for certain work. D’s tender was accepted by the quite entitled to withdraw,
client, but then P announced that they were increasing their which, of course, left D with an
price (which, in effect, meant that they were withdrawing uneconomic contract to fulfil.
their original offer)

Consideration Williams v Roffey Bros. D (main contractor) is concerned that P, (a This promises was
(1990) sub-contractor) might not be able to complete enforceable. The
on time which will expose D to liabilities for consideration being the
liquidated damages to the client. D promised practical benefit obtained by
additional payments to P if the work was D (D did not have to pay a
complete on time. When D failed to pay, P penalty for late completion).
stopped working P was entitled to their
payment.
Express term Where a contract has Chandler Bros v Boswell A main con empowered the employer to order It was held by the court of
been reduced to a (1963) the main con to remove a sub con, who was appeal that he was guilty of
writing, the terms will guilty for delay, but then the main con did not a breach of the sub con.
normally be the allow for this in the sub con. The sub con undertaking to
statements Following an order from the employer under carry out the work in
incorporated into the the main con, the main con purported to accordance with the terms
writing contract. remove a defaulting sub con of the main con was not
enough to incorporate the
power to removal for delay
Implied term Are, which are not Trollope & Colls v The parties had made a contract for Court held that, no such
expressly stated( in NWMRHB (1973) construction work to be carried out in phases, terms can be applied. The
writing or verbally) at but had omitted to make any provisions for contract was clear and
the time the contract the consequences of the first phase unambiguous in fixing the
was made but are overrunning. date for completion of phase
implied by law. Delay in completing Phase 1 effectively III. The parties must live with
reduced the period for phase III from 30 to 16 the agreement which they
months. had made.
The contractor contended that a term for
extending the date for completion should be
implied
Mistake 1.Common mistake: 3. Roberts & Co. Ltd v P (contractor) submitted a tender which P was entitled to have the
Leicestershire CC (1961) specified a completion of 18 months. D contract period altered to 18
2.Mutual mistake: altered this to 30 months in the formal months(rectified) on the
contract and P signed this without noticing grounds that D was
3. Unilateral mistake: about the alteration. Before D signed the estopped by their conduct
contract, there were two meetings at which P from saying there was no
preferred to their plans to complete in 18 mistake. The mistake was
months and produce a progress schedule on known to the other party at
the basis. Despite this, D simply signed the time of agreement.
contract without the comment.
If the contractor makes W Higgins v Northampton P contracted to erect 58 semi-detached P was bound by his mistake-
a unilateral mistake in Corp (1927) houses. P completed the tender incorrectly. careless; the contract could
his tender price or As a result, of these errors p’s tender price not be set aside or rectified.
there are individual was $1613 per pair instead of $1670. On The mistake in formulating
errors in pricing discovering this, P sought to be released from those terms is legally quite
multiplication or the contract. irrelevant.
addition, he is bound
by such errors.
If the employer McMaster University v The employer purported to accept a tender The contractor was not
discovers an error in Wilchar Construction Ltd knowing that the contractor had omitted the liable. The mistake is known
the contractor’s (1971) entire first page of his bid. That page included to the other party at time of
tender, he cannot price fluctuations clause. agreement.
accept the mistake
tender so as to create
a contract if he knew
that its terms were not
intended by the
contractor.
MISREPRESENTATIVE
Fraudulent The person making the S.Pearson v Dublin D furnished P drawings, plans & specifications A party may not avoid
statement knew the Corporation (1907) relating to construction of sewer work. P liability for his own
statement to be untrue contracted (signed) to undertake this work fraudulent
or was reckless based on this information. Some of the statements by inserting a
whether it is true or information was false causing P to incur extra clause in the contract that
false. expense. P performed contract but sought the other
damages. D claimed they were protected from party shall not rely on them.
liability due to clause in contract which stated Plaintiff succeeded in his
that P must not rely on any representation claim
made in the plans or elsewhere but must
verify and determine the facts for themselves.
Negligent False statement made Hedley Byrne v Heller Hedley Byrne were a firm of advertising The court found that Heller
innocently without any (1964) agents. A customer, Easipower Ltd, put in a disclaimer was sufficient to
dishonesty where the large order. Hedley Byrne wanted to check protect them
maker owed a duty of their financial position, and creditworthiness, from liability and Hedley
care to the and subsequently asked a report from Byrne's claim failed.
representee Easipower’s bank, Heller & Partners Ltd. Heller
replied “without responsibility on the part
of this bank” that Easipower considered good
for its ordinary business engagements.
Easipower went into liquidation, and Hedley
Byrne lost £17,000 on contracts. Hedley Byrne
sued Heller for negligence, claiming that the
information was given negligently and was
misleading. Heller argued there was no duty
of care owed regarding the statements, and,
in any case, liability was excluded.
Innocent False statement made Howard Marine & Dredging Odgen, hired two dredging barges from There was a
unknowingly v Odgen (1977) Howard Marine (HM), for £1,800 per week to misrepresentation as a
carry out certain excavation works. Ogden matter of fact. HM was
asked HM the capacity of the barge. HM liable in damages on the
checked Lloyds Register and stated 850 cubic ground that they had not
metres. In fact the entry in Lloyds register was established
wrong. The capacity was in fact much lower. that they had reasonable
Ogden brought an action for negligent ground for believing the fact
misrepresentation. HM argued that they had to be
reasonable grounds for believing the true
statement to be true as they had checked
Lloyds register.
BREACH OF CONTRACT & REMEDIES : occurs when a party fails to perform obligation under the contract without valid reasons.
Action for damages Purpose of damages in Hadley v Baxendale (1854) P contracted with D to carry broken The claim failed since D did
a contract: restore the crankshaft to makers at Greenwich. The not know that the mill would
plaintiff the benefits or transit delayed causing mill remaining idle. P be idle until the new shaft
profits if the contract claimed for profit. was delivered, and it was not
had been performed, a natural consequence of
and compensate him delay in transport of a
for expenses caused by broken shaft that the mill
the breach. would be out of action.
Victoria Laundry v Newman P ordered a new boiler from the defendant for P could recover the normal
Ltd. (1854) the purpose of taking on certain lucrative new losses to be expected from
work. D’s delay resulted P losing the new the breach, but not for the
work. P sued for loss of normal profits, and special losses since D were
loss of profit from a special lucrative contract. not aware, at the time the
contract was entered into, of
the proposed new work.
Damages are Balfour Beatty Construction B were the main con for the construction of a Court held were, that the
recoverable in respect v Scottish Power (1994) bypass. They needed a continuous supply of loss incurred were to
of losses of a type electricity to make concrete and install remote. There was no
which at the time the concrete batching plant nearby. They evidence that D knew that
contract is form, is contracted for electricity supplies with S. the concrete plant needed a
reasonably foreseeable During the works, the supply failed and a continuous supply of
would result in the bridge under a construction could not be electricity.
event of breach. completed and had to be demolished. B It might have been foreseen
sought the cost of demolition and that the supply of the
construction. concrete would be interrupt
but S did not know that
there must be a continuous
pour for this particular
operation or otherwise the
whole operation is
condemned.
For a simple activity, the
parties may be presumed to
have reasonable knowledge
of the other’s business, but
not in the case of
complicated construction as
this. The demolition and
reconstruction was not
within the reasonable
contemplation of S
CONTRACTUAL CLAIMS & DAMAGES
FRUSTRATION 1. Unavailability of Condor v Barron Knights A 17 year old drummer collapsed and was In a business scene,
party (1966) admitted to a psychiatric hospital. Medical impossible for the drummer
 Death or opinion was that he would only be fit to work to perform contract and for
incapacity. four nights a week. The band had that reason the contract was
 The principle engagements for seven night a week a so the discharge for frustration.
applies where defendant decided to dismiss the drummer.
either party is
permanently
incapacitated
from
performing the
contract
2. Subsequences Avery v Bowden (1856) A ship supposed to pick up some cargo at The contract therefor
change of law Odessa. With the outbreak of Crimean War, frustrated.
 Making the government make it illegal to load cargo at
performance enemy port, so the ship couldn’t perform its
illegal contract without breaking the law
 Since the
contract was
made, a new
law has made
it illegal to
carry it out.
3. Failure of event -not stated- In 1901, a coronation procession was The court said that he was
occurring on which the organised for King Edward VIII, but it had to be right, whole point of hiring a
contract relies cancelled at last minute because the king was room was to watch the
ill. procession. If the procession
Someone had hired a flat for the day which to wasn’t going to happen, then
view the procession. He refused to pay the there was no benefits to be
day’s rent, because he said the contract has gained from hiring the room.
been frustrated.
4. Destruction of the Effect of frustration:
subject matter  Money paid before frustration is
 The subject of recoverable
the contract  Money payable before frustration
had been ceases to be payable
destroyed.  Money to be paid after frustration
 Example: I ceases to be discharge – relieved from
agree to sell the further payment obligations
my house, but
then my house
burns down.
PRIVITY OF A Generally only parties George E Taylor v G. Percey D were main contractors and P were sub- The contract between the
CONTRACT to a contract can sue Trentham (1980) contractors. P also had a direct contract with employer and P did not
or be sued. the employer warranting performance of the affect D and could not give
• In construction sub-contract works rise to a set-off against D’s
contracts, E-C-SC The architect issued an interim certificate claim. Thus, D was entitled
relationship is always a from which the employer deducted the to be paid in full.
question of privity in amount which D will not be obliged to pay P,
contract on the ground that the employer had a claim
• Therefore, collateral against the sub-con under the direct contract
warranty and collateral between them.
contract concept is
introduced

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ELEMENT EXPLAINATION COURT CASES CONSEQUENCES OF CASES COURT HELD

ELEMENT EXPLAINATION COURT CASES CONSEQUENCES OF CASES COURT HELD

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