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88 Cards in this Set

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Errington v Errington
Once you’ve started the acts of acceptance the offeror cannot revoke the offer
Father bought house for couple.
Promised to transfer if they paid
mortgage. Widow refused
Thomas v Thomas
Consideration must have some value
The facts: By his will the claimant's husband expressed the wish that his widow should have the use of his house during her life. The defendants, his executors, allowed the
widow to occupy the house (a) in accordance with her husband's wishes and (b) in return for her undertaking to pay a rent of £1 per annum.
They later said that their promise to let her occupy the house was not supported by consideration.
Decision: Compliance with the husband's wishes was not valuable consideration (no economic value attached to it), but the nominal rent was sufficient consideration.
Ward v Byham
Consideration is sufficient If over and above a natural duty
A man promised to give maintenance to the woman if she alone keeps their child happy and when he would be grown up to give him a chance to choose with which parent to live further
Pharmaceutical Society of GB v Boots Cash Chemists
Goods in a supermarket are invitations
The facts: Certain drugs could only be sold under the supervision of a registered pharmacist. The claimant
claimed this rule had been broken by Boots who displayed these drugs in a self-service shop. Boots
contended that there was no sale until a customer brought the goods to the cash desk and offered to buy
them. A registered pharmacist was stationed at this point.
Decision: The court found for Boots and commented that if it were true that a customer accepted an offer
to sell by removing goods from the shelf, he could not then change his mind and put them back as this
would constitute breach of contract.
Fisher v Bell
Goods in a shop window are invitations
The facts: A shopkeeper was prosecuted for offering for sale an offensive weapon by exhibiting a flick
knife in his shop window.
Decision: The display of an article with a price on it in a shop window is merely an invitation to treat.
Partridge v Crittenden
Adverts are normally invitations
The facts: Mr Partridge placed an advertisement for 'Bramblefinch cocks, bramblefinch hens, 25s each'. The
RSPCA brought a prosecution against him for offering for sale a brambling in contravention of the Protection
of Birds Act 1954. The justices convicted Partridge and he appealed.
Decision: The conviction was quashed. Although there had been a sale in contravention of the Act, the
prosecution could not rely on the offence of 'offering for sale', as the advertisement only constituted an
invitation to treat.
Carlill v Carbolic
* Very occasionally, adverts
may be taken to be offers.
* May be made to the world at large.
* Acceptance must be communicated to the offeror, but offeror may waive the right of communication.
The facts: The manufacturers of a patent medicine published an advertisement by which they undertook to
pay '£100 reward .... to any person who contracts .... influenza .... after having used the smoke ball three
times daily for two weeks'. The advertisement added that £1,000 had been deposited at a bank 'showing
our sincerity in this matter'. The claimant read the advertisement, purchased the smoke ball and used it as
directed. She contracted influenza and claimed her £100 reward. In their defence the manufacturers
argued against this.
(a) The offer was so vague that it could not form the basis of a contract, as no time limit was specified.
(b) It was not an offer which could be accepted since it was offered to the whole world.
Decision: The court disagreed.
(a) The smoke ball must protect the user during the period of use – the offer was not vague.
(b) Such an offer was possible, as it could be compared to reward cases.
Grainger v Gough
Mail catalogues are invitations
Williams v Carwardine
An advert offering a reward is an offer, not an invitation. Motivation behind an act which entitles for an reward is not relevant.
May be made to the world at large
The facts: A reward was offered to bring criminals to book. The claimant, an accomplice in the crime,
supplied the information, with knowledge of the reward.
Decision: As the information was given with knowledge, the acceptance was related to the offer.
R v Clark
An advert offering a reward is an offer, not an invitation. The important thing is that when making a reward earning
act a person should be aware of the reward.
May be made to the world at large
The facts: A reward was offered for information leading to the arrest and conviction of a murderer. If the
information was provided by an accomplice, he would receive a free pardon. C claimed the reward,
admitting that he had acted to save his own skin and that all thought of the reward had passed out his
mind.
Decision: There could not be acceptance without knowledge of the offer.
Ramsgate Victoria Hotel v Montefiori
* Offer may be terminated because of lapse of time.
* Acceptance must be made within a reasonable time.
The facts: The defendant applied to the company in June for shares and paid a deposit. At the end of November the company sent him an acceptance by issue of a
letter of allotment and requested payment of the balance due. The defendant contended that his offer had expired and could no longer be accepted.
Decision: The offer was valid for a reasonable time only and five months was too long.
Hyde v Wrench
* Offer may be terminated because of rejection.
* The offer must still be ‘open’ at the time of acceptance
The facts: The defendant offered to sell property to the claimant for £1,000 on 6 June. Two days later, the claimant made a counter-offer of £950 which the defendant
rejected on 27 June. The claimant then informed the defendant on 29 June that he accepted the original offer of £1,000.
Decision: The original offer of £1,000 had been terminated by the counter-offer of £950.
Bradbury v Morgan
Offer may be terminated because of notification of death
The facts: X offered to guarantee payment by Y in respect of goods to be supplied by the claimant. X died and the claimant, in ignorance of his death, continued to
supply goods to Y. The claimant then sued X's executors on the guarantee.
Decision: X's offer was a continuing commercial offer which the claimant had accepted by supply of goods after X's death. The guarantee stood.
Dickinson v Dodds
Notice of revocation may be communicated through a reliable third party
The facts: The defendant, on 10 June, wrote to the claimant to offer property for sale at £800, adding 'this offer to be left open until
Friday 12 June, 9.00 am.' On 11 June the defendant sold the property to another buyer, A. B, who had been an intermediary between
Dickinson and Dodds, informed Dickinson that the defendant had sold to someone else. On Friday 12 June, before 9.00 am, the
claimant handed to the defendant a formal letter of acceptance.
Decision: The defendant was free to revoke his offer and had done so by sale to a third party; the claimant could not accept the offer
after he had learnt from a reliable informant of the revocation of the offer to him.
Option period cannot be insisted upon as no consideration is given
Gunthing v Lynn
Offer must be certain
The facts: The offeror offered to pay a further sum for a horse if it was 'lucky'.
Decision: The offer was too vague and no contract could be formed.
Harris v Nickerson
* Must still exist when ‘accepted’
* Must be distinguished from invitations
* Must be distinguished from statements of intent
Harvey v Facey
A response to a request for information is not an offer
The facts: The claimant telegraphed to the defendant 'Will you sell us Bumper Hall Pen? Telegraph lowest cash price'. The defendant telegraphed in reply
'Lowest price for Bumper Hall Pen, £900'. The claimant telegraphed to accept what he regarded as an offer; the defendant made no further reply.
Decision: The defendant's telegram was merely a statement of his minimum price if a sale were to be agreed. It was not an offer which the claimant could
Stevenson v McLean
A request for information is not a counter offer
The facts: The defendant offered to sell iron at '40s net cash per ton, open till Monday'. The claimant enquired whether he would agree to delivery spread over two months.
The defendant did not reply and (within the stated time limit), the claimant accepted the original offer. Meanwhile the defendant had sold the iron to a third party.
Decision: There was a contract since the claimant had merely enquired as to a variation of terms.
Byrne v Van Tienhoven
Revocation must actually be communicated to the offeree
Byrne v Van Tienhoven 1880
The facts: The defendants were in Cardiff; the claimants in New York. The sequence of events was as follows.
1 October Letter posted in Cardiff, offering to sell 1,000 boxes of tinplates.
8 October Letter of revocation of offer posted in Cardiff.
11 October Letter of offer received in New York and telegram of acceptance sent.
15 October Letter confirming acceptance posted in New York.
20 October Letter of revocation received in New York. The offeree had meanwhile resold the contract goods.
Decision: The letter of revocation could not take effect until received (20 October); it could not revoke the contract made by the telegram acceptance of the
offer on 11 October.
Northland Airlines v Dennis
Ferranti Meters
Acceptance cannot vary the original offer. That would be a counter-offer
Powell v Lee
Acceptance may be communicated by a reliable third party
Felthouse v Bindley
Silence cannot be acceptance
Brogden v Metropolitan Railways
Acceptance may be by conduct
The facts: For many years the claimant supplied coal to the defendant. He suggested that they should enter into a written agreement and the defendant's agent sent a draft to him for
consideration. The parties applied to their dealings the terms of the draft agreement, but they never signed a final version. The claimant later denied that there was any agreement between him
and the defendant.
Decision: The conduct of the parties was only explicable on the assumption that they both agreed to the terms of the draft.
Household Fire Insurance Co v Grant
Postal rule applies to acceptance
The facts: The defendant handed a letter of application for shares to the claimant company's agent in Swansea for posting to the company in London. The company posted an acceptance
which never arrived. The defendant was called upon to pay the amount outstanding on his shares.
Decision: The defendant had to pay. The contract had been formed when the acceptance was posted, regardless of the fact that it was lost.
Currie v Misa
Consideration is some right, interest or benefit occurring to one party or some loss, detriment, responsibility of
forebearance given / suffered or undertaken by the other
Dunlop v Selfridges
An act of forbearance by one party or the promise thereof is the price for which the
promise of the other is given. And thus a promise given for value is enforceable.
re McArdle
Past consideration is no consideration
The facts: Under a will the testator's children were entitled to a house after their mother's death. In the mother's lifetime one of the children and his wife lived in the house with the
mother. The wife made improvements to the house. The children later agreed in writing to repay the wife 'in consideration of your carrying out certain alterations and
improvements'. But at the mother's death they refused to do so.
Decision: The work on the house had all been completed before the documents were signed. At the time of the promise the improvements were past consideration and so the
promise was not binding.
Roscorla v Thomas
Past consideration is no consideration
The facts: The claimant agreed to buy a horse from the defendant at a given price. When negotiations were over and the contract was formed, the defendant told the claimant that
the horse was 'sound and free from vice'. The horse turned out to be vicious and the claimant brought an action on the warranty.
Decision: The express promise was made after the sale was over and was unsupported by fresh consideration.
Lampleigh v Braithwait
Courts may imply an implied promise to pay a reasonable sum
The facts: The defendant had killed a man and had asked the claimant to obtain for him a royal pardon. The claimant did so at his own expense. The defendant then promised to
pay him £100. He failed to pay it and was sued.
Decision: The defendant's request was regarded as containing an implied promise to pay, and the subsequent promise merely fixed the amount.
Chappell v Nestle
Consideration must have some value ( sufficient )
Collins v Godefroy
Consideration is Not sufficient if in accordance with a legal duty already owed
The facts: The claimant had been subpoenaed to give evidence on behalf of the defendant in another case.
He alleged that the defendant had promised to pay him six guineas for appearing.
Decision: There was no consideration for this promise.
Stilk v Myrick
Consieration is Not sufficient if in accordance with a contractual duty already owed
The facts: Two members of the crew of a ship deserted in a foreign port. The master was unable to recruit substitutes and promised the rest of the crew that they would
share the wages of the deserters if they would complete the voyage home short-handed. The shipowners however repudiated the promise.
Decision: In performing their existing contractual duties the crew gave no consideration for the promise of extra pay and the promise was not binding.
White v Bluett
Consideration is Not sufficient if in accordance with a natural duty already owed
Glasbrook v Glamorgan
Consideration is sufficient If over and above a legal duty
The facts: At a time of industrial unrest, colliery owners, rejecting the view of the police that a mobile force was enough, agreed to pay for a special guard on the
mine. Later they repudiated liability saying that the police had done no more than perform their public duty of maintaining order, and that no consideration was
given.
Decision: The police had done more than perform their general duties. The extra services given, beyond what the police in their discretion deemed necessary, were
consideration for the promise to pay.
Hartley v Ponsonby
Consideration is sufficient If over and above a contractual duty
The facts: 17 men out of a crew of 36 deserted. The remainder were promised an extra £40 each to work the ship to Bombay. The claimant, one of the remaining crewmembers,
sued to recover this amount.
Decision: The large number of desertions made the voyage exceptionally hazardous, and this had the effect of discharging the original contract. The claimant's promise to
complete the voyage formed consideration for the promise to pay an additional £40.
Williams v Roffey
Extra practical benefit from the performance of the existing contractual duty is sufficient consideration
The facts: The claimants agreed to do carpentry work for the defendants, who were engaged as contractors to refurbish a block of flats, at a fixed price of £20,000. The work
ran late and so the defendants, concerned that the job might not be finished on time and that they would have to pay money under a penalty clause, agreed to pay the
claimants an extra £10,300 to ensure the work was completed on time. They later refused to pay the extra amount.
Decision: The fact that there was no apparent consideration for the promise to pay the extra was not held to be important, as in the court's view both parties derived a
practical benefit from the promise. The telling point was that the defendants' promise had not been extracted by duress or fraud: it was therefore binding. The defendant had
avoided the possible penalty.
Beswick v Beswick
Where a special relationship exists; for example, an executor may sue to enforce a contract entered into by
the deceased
The facts: X transferred his business to the defendant, his nephew, in consideration for a pension of £6.10s per week and, after his death, a weekly annuity to X's widow. Only one such annuity
payment was made. The widow brought an action against the nephew, asking for an order of specific performance. She sued both as administratrix of her husband's estate and in her personal
capacity as recipient.
Decision: As her husband's representative, the widow was successful in enforcing the contract for a third party's (her own) benefit. In her personal capacity she had no right of action.
Shamia v Joory
A beneficiary may sue a trustee
Donohue v Stevenson
A manufacturer of goods may be sued by the ultimate consumer
Mersey Docks v
Coggins
An employer may be sued for the negligent acts ( tort, not contract ) of its employees
The facts: Stevedores (dockworkers) hired a crane with its driver from the harbour board under a contract which provided that the driver (appointed and paid by the harbour board) should be the
employee of the stevedores. Owing to the driver's negligence a checker was injured. The case was concerned with whether the stevedores or the harbour board were vicariously liable as employers.
Decision: It was decided that the issue must be settled on the facts and not on the terms of the contract. The stevedores could only be treated as employers of the driver if they could control in
detail how he did his work. But although they could instruct him what to do, they could not control him in how he operated the crane. The harbour board (as 'general employer') was therefore
still the driver's employer.
Tulk v Moxhay
Restrictive covenants on land apply to subsequent owners
The facts: The claimant owned several plots of land in Leicester Square. He sold one to X, who agreed not to build on it, but to preserve it in its existing condition. It was sold on, eventually
being purchased by the defendant, who, although he was aware of the restriction, proposed to build on it. The claimant sought an injunction.
Decision: The injunction was granted.
Shanklin Pier v Detel Products
In collateral contracts, an injured party can sue even though the other party is not a party to the contract
The claimant entered into a contract to have his pier repainted. The painters used a particular paint produced by the defendant as required by the
claimant. The paint was unsatisfactory. The defendant fought an action by the claimant on the basis that it had only entered into a contract of supply
with the painters and since the claimant was not a party to that contract he could not enforce it.
The court held that there was a collateral contract between the claimant and the defendant by which the defendant guaranteed the suitability of the
paint in return for the claimant requiring the painters to use it.
Pinnell’s case
General principle – part payment of a debt does not achieve full settlement
Foakes v Beer
Exception to Pinnell's case
The facts: The defendant had obtained judgement against the claimant. Judgement debts bear interest from the date of the judgement. By a written agreement the defendant agreed to accept
payment by instalments, no mention being made of the interest. Once the claimant had paid the amount of the debt in full, the defendant claimed interest, claiming that the agreement was not
supported by consideration.
Decision: She was entitled to the debt with interest. No consideration had been given by the claimant for waiver of any part of her rights against him
Welby v Drake
Payment by someone other than the debtor is full settlement of debt
Central London Property Trust v High Trees House
Doctrine of promissory estoppel
The facts: In September 1939, the claimants let a block of flats to the defendants at an annual rent of
£2,500 pa. It was difficult to let the individual flats in wartime, so in January 1940 the claimants agreed
in writing to accept a reduced rent of £1,250 pa. Note, no consideration passed from the defendants in
return for the reduced rent. There was no time limit set on the arrangement but it was clearly related to
wartime conditions. The reduced rent was paid from 1940 to 1945 and the defendants sublet flats during
the period on the basis of their expected liability to pay rent under the head lease at £1,250 only. In 1945
the flats were fully let. The claimants demanded a full rent of £2,500 pa, both retrospectively and for the
future.
Decision: The agreement of January 1940 ceased to operate early in 1945. The claim for full rent after the
war was upheld. However, the 1940 agreement had estopped any claim for the period 1940 to 1945
Combe v Combe
Promissory estoppel 'does not create new causes of action where none existed before
The facts: A wife obtained a divorce decree nisi against her husband. He then promised her that he would
make maintenance payments of £100 per annum. The wife did not apply to the court for an order for
maintenance but this forbearance was not at the husband's request. The decree was made absolute; the
husband paid no maintenance; the wife sued him on his promise. In the High Court the wife obtained
judgement on the basis of the principle of promissory estoppel.
Decision: Promissory estoppel 'does not create new causes of action where none existed before. It only
prevents a party from insisting on his strict legal rights when it would be unjust to allow him to enforce
them'. The wife's claim failed.
D & C Builders v Rees
Promissory estoppel only applies to a promise voluntarily given
The facts: The defendants owed £482 to the claimants who were in acute financial difficulties. The
claimants reluctantly agreed to accept £300 in full settlement. They later claimed the balance.
Decision: The debt must be paid in full. Promissory estoppel only applies to a promise voluntarily given.
The defendants had been aware of and had exploited the claimants' difficulties.
Balfour v Balfour
It's preseumed that in domestic arrangements, husband and wife, living together there cannot be an intention to create legal intentions
The facts: The defendant was employed in Ceylon. He and his wife returned to the UK on leave but it was
agreed that for health reasons she would not return to Ceylon with him. He promised to pay her £30 a
month as maintenance. Later the marriage ended in divorce and the wife sued for the monthly allowance
which the husband no longer paid.
Decision: An informal agreement of indefinite duration made between husband and wife whose marriage
had not at the time broken up was not intended to be legally binding.
Spellman v Spellman
It's preseumed that in domestic arrangements, husband and wife, living together there cannot be an intention to create legal intentions
Merritt v Merritt
Domestic arrangements, husband and wife, living apart can create legal relations
woman. The spouses met and held a discussion, in the course of which he agreed to pay her £40 a month out of which she agreed to
keep up the mortgage payments. The wife made the husband sign a note of these terms and an undertaking to transfer the house into
her name when the mortgage had been paid off. The wife paid off the mortgage but the husband refused to transfer the house
to her.
Decision: In the circumstances, an intention to create legal relations was to be inferred and the wife could sue for breach of contract.
Simpkin v Pays
Domestic arrangements, other than husband and wife. Mutuality in the arrangements between the parties, amounting to a contract
The facts: The defendant, her granddaughter and the claimant, a paying boarder, took part together each week in a competition organised by
a Sunday newspaper. The arrangements over postage and other expenses were informal and the entries were made in the grandmother's
name. One week they won £750; the paying boarder claimed a third share, but the defendant refused to pay on the grounds that there was
no intention to create legal relations.
Decision: There was a 'mutuality in the arrangements between the parties', amounting to a contract.
Jones v Padavatton
Agreements between other family members
The facts: The claimant wanted her daughter to move to England to train as a barrister, and offered to pay
her a monthly allowance. The daughter did so in 1962. In 1964 the claimant bought a house in London;
part of the house was occupied by the daughter and the other part let to tenants whose rent was collected
by the daughter for herself. In 1967 the claimant and her daughter quarrelled and the claimant issued a
summons claiming possession of the house. The daughter sued for her allowance.
Decision: There were two agreements to consider: the daughter's agreement to read for the bar in
exchange for a monthly allowance, and the agreement by which the daughter lived in her mother's house
and collected the rent from tenants. Neither agreement was intended to create legal relations.
Rose & Frank v Crompton
When business people enter into commercial agreements it is presumed that there is an intention to enter
into legal relations unless this is expressly disclaimed or the circumstances indicate otherwise
The facts: A commercial agreement by which the defendants appointed the claimant to be its distributor in the USA contained a clause described as
'the Honourable Pledge Clause' which expressly stated that the arrangement was 'not subject to legal jurisdiction' in either country. The defendants
terminated the agreement without giving notice as required, and refused to deliver goods ordered by the claimants although they had accepted
these orders when placed.
Decision: The general agreement was not legally binding as there was no obligation to stand by any clause in it. However the orders for goods were
separate and binding contracts. The claim for damages for breach of the agreement failed, but the claim for damages for non-delivery of goods
ordered succeeded.
Jones v Vernon Pools
If the parties state that an agreement is 'binding in honour only', this amounts to an express denial of
intention to create legal relations.
The facts: The claimant argued that he had sent to the defendant a football pools coupon on which his predictions entitled him to a dividend. The
defendants denied having received the coupon. A clause on the coupon stated that the transaction should not 'give rise to any legal relationship
… but … be binding in honour only'.
Decision: This clause was a bar to an action in court.
Bisset v Wilkinson
Representations are
• Not terms of a contract
• Pre-contractual statements of some known or provable fact made with the intention of inducing another
person to enter a contract
• Not a statement of law
• Nor or opinion, unless...
• ... it is clearly not a genuine opinion
Poussard v Spiers and Pond
Breach of a term which is a condition allows the injured party to treat the contract as discharged and sue
for damages
The facts: Mme Poussard agreed to sing in an opera throughout a series of performances. Owing to illness she was
unable to appear on the opening night and the next few days. The producer engaged a substitute who insisted that she
should be engaged for the whole run. When Mme Poussard recovered, the producer declined to accept her services for
the remaining performances.
Decision: Failure to sing on the opening night was a breach of condition which entitled the producer to treat the
contract for the remaining performances as discharged.
Bettini v Gye
Breach of warranty allows the injured party to claim damages but the contract is not discharged
The facts: An opera singer was engaged for a series of performances under a contract by which he had to
be in London for rehearsals six days before the opening performance. Owing to illness he did not arrive
until the third day before the opening. The defendant refused to accept his services, treating the contract
as discharged.
Decision: The rehearsal clause was subsidiary to the main purpose of the contract.
Universal Furniture Products v Maple Flock Company
Innominate terms are those where it is not clear, until breached, whether they are fundamental or merely
superficial
The Moorcock
Judicially implied terms -business efficacy
The owners of a wharf agreed that a ship should be moored alongside to unload its cargo. It was well known that at low water the ship would ground on the
mud at the bottom. At ebb tide the ship settled on a ridge concealed beneath the mud and suffered damage.
Decision: It was an implied term, though not expressed, that the ground alongside the wharf was safe at low tide since both parties knew that the ship must rest on it.
Hutton v Warren
Judicially implied terms – trade custom
The facts: The defendant landlord gave the claimant, a tenant farmer, notice to quit the farm. He insisted that the tenant should continue to farm the land during the period
of notice. The tenant asked for 'a fair allowance' for seeds and labour from which he received no benefit because he was to leave the farm.
Decision: By custom he was bound to farm the land until the end of the tenancy; but he was also entitled to a fair allowance for seeds and labour incurred.
Hillas v Arcos
Judicially implied terms – course of trade
The facts: The claimants agreed to purchase from the defendants '22,000 standards of softwood goods of fair specification over the season 1930'. The agreement contained an
option to buy a further 100,000 standards in 1931, without terms as to the kind or size of timber being specified. The 1930 transaction took place, but the sellers refused to
supply any wood in 1931, saying that the agreement was too vague.
Decision: The missing terms of the agreement could be ascertained by reference to the previous transactions
Brown v Craiks
Statutorily implied terms:
* Fit for purpose
Sale of hessian
Frost v Aylesbury Dairies
Statutorily implied terms (eg Sale of Goods legislation)
• Title
• Satisfactory quality
• Fit for purpose
• Sample
• Description
cannot be excluded in a consumer contract
Chapelton v Barry UDC
Exclusion clauses should be brought to the attention of the other party
The facts: There was a pile of deck chairs and a notice stating 'Hire of chairs 2d per session of three
hours'. The claimant took two chairs, paid for them and received two tickets which were headed 'receipt'
which he put in his pocket. One of the chairs collapsed and he was injured. The defendant council relied on
a notice on the back of the tickets by which it disclaimed liability for injury.
Decision: The notice advertising chairs for hire gave no warning of limiting conditions and it was not
reasonable to communicate them on a receipt. The disclaimer of liability was not binding on the claimant.
Olley v Marlborough
Court Hotel
Exclusion clauses must be communicated to the other party at the time the contract is entered into
The facts: A husband and wife arrived at a hotel and paid for a room in advance. On reaching their bedroom they saw a notice on the wall by which the hotel disclaimed liability for loss of
valuables unless handed to the management for safe keeping. The wife locked the room and handed the key in at the reception desk. A thief obtained the key and stole the wife's furs from
the bedroom.
Decision: The hotel could not rely on the notice disclaiming liability since the contract had been made previously and the disclaimer was too late.
Thornton v Shoe Lane Parking
Exclusion clauses must be communicated to the other party at the time the contract is entered into
L’Estrange v Graucob
Where a document apparently has a legal affect, should make sure before you sign it
Curtis v Chemical
Cleaning Co
Oral statements by an employee can destroy the effectiveness of an exclusion clause
The facts: The claimant took her wedding dress to be cleaned. She was asked to sign a receipt on which there were conditions that restricted the cleaner's liability and in particular
placed on the claimant the risk of damage to beads and sequins on the dress. The document in fact contained a clause 'that the company is not liable for any damage however caused'.
The dress was badly stained in the course of cleaning.
Decision: The cleaners could not rely on their disclaimer since they had misled the claimant. She was entitled to assume that she was running the risk of damage to beads and sequins
only.
Spurling v Bradshaw
Where parties have a history of trade, other party may be deemed to be aware of the exclusion clause
The facts: Having dealt with a company of warehousemen for many years, the defendant gave it eight barrels of orange juice for storage. A document he received a few days later
acknowledged receipt and contained a clause excluding liability for damage caused by negligence. When he collected the barrels they were empty and he refused to pay.
Decision: It was a valid clause as it had also been present in the course of previous dealings, even though he had never read it.
Hollier v Rambler
Motors
Where parties have a history of trade, other party may be deemed to be aware of the exclusion clause. But this course of trade should be more than 3 or 4 occasions in the previous 5 years
The facts: On three or four occasions over a period of five years the claimant had had repairs done at a garage. On each occasion he had signed a form by which the garage disclaimed
liability for damage caused by fire to customers' cars. The car was damaged by fire caused by negligence of garage employees. The garage contended that the disclaimer had by course of
dealing become an established term of any contract made between them and the claimant.
Decision: The garage was liable. There was no evidence to show that the claimant knew of and agreed to the condition as a continuing term of his contracts with the garage.
Hardwick v Suffolk
Where parties have a history of trade, other party may be deemed to be aware of the exclusion clause. But this course of trade should be more than 3 or 4 occasions in the previous 5 years
Andrews v Singer
Any ambiguity will be read strictly against the party seeking to rely on it
PhotoProductions v Securicor
Possible to exclude liability for fundamental breach
The facts: The defendants agreed to guard the claimants' factory under a contract by which the defendant were excluded from liability for damage caused by any of their employees. One of
the guards deliberately started a small fire which destroyed the factory and contents. It was contended that Securicor had entirely failed to perform their contract and so they could not rely
on any exclusion clause in the contract.
Decision: There is no principle that total failure to perform a contract deprives the party at fault of any exclusion from liability provided by the contract. In this case the exclusion clause
was drawn widely enough to cover the damage which had happened. As the fire occurred before the UCTA was in force, the Act could not apply here. But if it had done it would have been
necessary to consider whether the exclusion clause was reasonable.
Hochster v De La Tour
Anticipatory breach - one party gives notice, before the contract start date, that they will not go ahead with their
obligations. In that an injured party may sue immediately
The facts: The defendant engaged the claimant as a courier to accompany him on a
European tour commencing on 1 June. On 11 May he wrote to the claimant to say
that he no longer required his services. On 22 May the claimant commenced legal
proceedings for anticipatory breach of contract. The defendant objected that there
was no actionable breach until 1 June.
Decision: The claimant was entitled to sue as soon as the anticipatory breach
occurred on 11 May.
White and Carter Councils v MacGregor
In breach of contract an injured party can ignore it, go ahead with their obligations, and then sue
The facts: The claimants supplied litter bins to local councils, and were paid not by the councils but by traders who hired advertising space on the bins. The defendant contracted with them
for advertising of his business. He then wrote to cancel the contract but the claimants elected to advertise as agreed, even though they had at the time of cancellation taken no steps to
perform the contract. They performed the contract and claimed the agreed payment.
Decision: The contract continued in force and they were entitled to recover the agreed price for their services. Repudiation does not, of itself, bring the contract to an end. It gives the
innocent party the choice of affirmation or rejection.
Avery v Bowden
In breach of contract an injured party can wait, and hope the other party will change their minds. But if they choose to wait, they could lose their right to sue
The Mihalis Angelos
In breach of contract the injured party must have been in a position to complete their
obligation at the date the contract was due to start to be able to achieve full compensation,
The facts: The parties entered into an agreement for the charter of a ship to be 'ready to load at Haiphong'
(in Vietnam) on 1 July 1965. The charterers had the option to cancel if the ship was not ready to load by
20 July. On 17 July the charterers repudiated the contract believing (wrongly) that they were entitled to do
so. The shipowners accepted the repudiation and claimed damages. On 17 July the ship was still in Hong
Kong and could not have reached Haiphong by 20 July.
Decision: The shipowners were entitled only to nominal damages since they would have been unable to
perform the contract and the charterers could have cancelled it without liability on 20 July.
Hadley v Baxendale
Under the rule in Hadley v Baxendale damages may only be awarded in respect of loss as follows.
(a) (i) The loss must arise naturally from the breach.
(ii) The loss must arise in a manner which the parties may reasonably be supposed to have
contemplated, in making the contract, as the probable result of the breach of it.
(b) A loss outside the natural course of events will only be compensated if the exceptional
circumstances are within the defendant's knowledge when he made the contract.
The facts: The claimants owned a mill at Gloucester whose main crank shaft had broken. They made a
contract with the defendant for the transport of the broken shaft to Greenwich to serve as a pattern for
making a new shaft. Owing to neglect by the defendant, delivery was delayed and the mill was out of action
for a longer period. The defendant did not know that the mill would be idle during this interval. He was merely
aware that he had to transport a broken millshaft. The claimants claimed for loss of profits of the mill during
the period of delay.
Decision: Although the failure of the carrier to perform the contract promptly was the direct cause of the
stoppage of the mill for an unnecessarily long time, the claim must fail since the defendant did not know
that the mill would be idle until the new shaft was delivered. Moreover it was not a natural consequence of
delay in transport of a broken shaft that the mill would be out of action. The miller might have a spare.
Victoria Laundry v Newman Industries
The defendant is liable only if he knew of the special circumstances from which the abnormal
consequence of breach could arise.
The facts: The defendants contracted to sell a large boiler to the claimants 'for immediate use' in their
business of launderers and dyers. Owing to an accident in dismantling the boiler at its previous site
delivery was delayed. The defendants were aware of the nature of the claimants' business and had been
informed that the claimants were most anxious to put the boiler into use in the shortest possible space of
time. The claimants claimed damages for normal loss of profits for the period of delay and for loss of
abnormal profits from losing 'highly lucrative' dyeing contracts to be undertaken if the boiler had been
delivered on time.
Decision: Damages for loss of normal profits were recoverable since in the circumstances failure to deliver
major industrial equipment ordered for immediate use would be expected to prevent operation of the
plant. The claim for loss of special profits failed because the defendants had no knowledge of the dyeing
contracts.
Re The Heron II
Contrast this ruling "the defendant is liable only if he knew of the special circumstances from which the abnormal
consequence of breach could arise."
The facts: K entered into a contract with C for the shipment of a cargo of sugar belonging to C to Basra. He was aware that C were sugar merchants but he did not know that C intended to sell the
cargo as soon as it reached Basra. The ship arrived nine days late and in that time the price of sugar on the market in Basra had fallen. C claimed damages for the loss due to the fall in market value.
Decision: The claim succeeded. It is common knowledge that market values of commodities fluctuate so that delay might cause loss.
C & P Haulage v Middleton
Courts determine how much award is necessary to put the injured party into the position they would have
achieved if there had been no breach
The facts: The claimants granted to the defendant a 6-month renewable licence to occupy premises as an
engineering workshop. He incurred expenditure in doing up the premises, although the contract provided
that he could not remove any fixtures he installed. He was ejected in breach of the licence agreement 10
weeks before the end of a 6-month term. He sued for damages.
Decision: The defendant could only recover nominal damages. He could not recover the cost of equipping
the premises (as reliance loss) as he would not have been able to do so if the contract had been lawfully
terminated.
Thompson v Robinson
When measuring damages court may take account of speculative loss
The facts: The defendants contracted to buy a Vanguard car from the
claimants. They refused to take delivery and the claimants sued for loss of
profit on the transaction. There was at the time a considerable excess of supply
of such cars over demand for them and the claimants were unable to sell the
car.
Decision: The market price rule, which the defendants argued should be
applied, was inappropriate in the current market as demand for such cars was
so low as to effectively mean that no market for them existed. The seller had
lost a sale and was entitled to the profit.
Anglia TV v Reed
When measuring damages courts may take account of speculative loss, but may not
The facts: The claimants engaged an actor to appear in a film they were making for television. He pulled
out at the last moment and the project was abandoned. The claimants claimed the preparatory
expenditure, such as hiring other actors and researching suitable locations.
Decision: Damages were awarded as claimed. It is impossible to tell whether an unmade film will be a
success or a failure and, had the claimants claimed for loss of profits, they would not have succeeded.
Jarvis v Swan Tours
When measuring damages courts may consider non-financial loss
Alexander v Rolls Royce
When measuring damages courts may consider non-financial loss
Ruxley Electronics v Forsyth
if the cost of ‘repair’ far outweighs the loss suffered, courts may make an award based on loss of amenity
The facts: A householder discovered that the swimming pool he had ordered to be built was shallower
than specified. He sued the builder for damages, including the cost of demolition of the pool and
construction of a new one. Despite its shortcomings, the pool as built was perfectly serviceable and safe
to dive into.
Decision: The expenditure involved in rectifying the breach was out of all proportion to the benefit of such
rectification. The claimant was awarded a small sum to cover loss of amenity.
The Wagon Mound
Even where causation is proved, a negligence claim can still fail if the damage caused is 'too remote'
The facts: A ship was taking on oil in Sydney harbour. Oil was spilled onto the water and it drifted to a
wharf 200 yards away where welding equipment was in use. The owner of the wharf carried on working
because he was advised that the sparks were unlikely to set fire to furnace oil. Safety precautions were
taken. A spark fell onto a piece of cotton waste floating in the oil, thereby starting a fire which damaged
the wharf. The owner of the wharf sued the charterers of the Wagon Mound.
Decision: The claim must fail. Pollution was the foreseeable risk: fire was not.