Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
89 Cards in this Set
- Front
- Back
|
Legal obligation |
Anything a person is bound by law to do. |
|
|
Legal Duty |
owed to everybody |
|
|
Legal Obligation |
owed to a specific person |
|
|
Sources of the Law Obligations |
Originally from principles of Roman Law |
|
|
Unilateral Volunteral Obligations GENUINE PROMISE GRAY v JOHNSTON 1928 SC 569 |
Gray claimed that Johnston had proposed to him that, if he went to live withJohnston and looked after him, he wouldmake Gray his heir. Gray did so but Johnston died without leaving Gray his property. Thecourt dismissed Gray’s claim, saying that what Johnston had said was nothing more thanan expression of intention. There was no enforceable promise. |
|
|
PROMISE MUST BE COMMUNICATED TO THE OTHER PERSON Burr v Bo-ness Commissioners 1896 24R 148 |
At a meeting of the Commissioners it wasresolved that the salary of Burr, the burgh sanitary inspector, should beincreased from £10 to £20 a year. Burr was not officially told of this, but he did hear of itfrom someone else. At another meeting a month later the Commissioners cancelled theresolution. Held: Burr was not entitled tothe increased salary. He could not rely on the resolution because it had not beenproperly intimated to him. |
|
|
Must be possible to prove the existence of the promise Smith v Oliver 1911SC 103 |
Trustees for a church brought an action against the executors of Mrs Oliver forpayment of the cost of structuralalterations to the church. They claimed that Mrs Oliver had urged them to have the work done andhad promised to leave a bequest in her will to pay for it, but she had failed to do so. Held: The promise of thebequest could only be proved by Mrs Oliver's writ. Lord President Dunedin said: “Thereis in truth no contract at all averred here, merely a promise to pay. And if that is so, Isuppose that it is well settled law that a gratuitous promise to pay can be proved only bywrit.” |
|
|
Persons of Unsound Mind Where no curator bonis - must be proved J Loudon & Co v Elder’s Curator Bonis 1923 SLT 226 (OH) |
Elder, a Dundee merchant, ordered goods fromLoudon on March 23 and 28. On March 31, before any of the goodswere delivered, Elder was certified insane and on April 1 Loudon were informed that thecontracts were cancelled. The company sued Elder’s curator bonis for damages forbreach of contract. Elder was proved to have been insane at the time the orders weregiven. Held: There was no liabilityfor breach of contract as the orders were null and void. |
|
|
Persons Incapable Though Drink or Drugs Taylor v Provan (1864) 2 M 1226 |
Provan went to Taylor’s farm and offered to buy31 cattle at £14 per head, but Taylor refused to accept less than£15. After trying unsuccessfully to purchase cattle elsewhere, Provan returned to Taylor’sfarm the worse for drink and offered £15 per head, which was accepted by Taylor. Taylorlater brought an action against Provan for the price of the cattle, and Provan claimedthat he had been incapable, through intoxication, of entering into the contract. Held: There was no evidence tosuggest that Provan was totally incapacitated through drink, to the extent that hewas unable to understand what he was doing. The contract was valid. |
|
|
Persons Incapable Though Drink or Drugs Pollock v Burns (1875) 2 R 497 |
Pollock, described as an “habitual drunkard”,brought an action to try to suspend a charge on a bill of exchange healleged he had signed when incapable through drink. Held: Pollock could notsuccessfully challenge the bill, as he had waited until six months after the bill became due. |
|
|
Formation of a Contract Offer Distinguished from willingness to negotiate Fisher v Bell [1961]1 QB 394 |
The Restriction of OffensiveWeapons Act 1959 made it an offence to sell, hire or offer for sale knives such as flickknives. Bell had a flick knife with a price ticket attached to it displayed in the window ofhis shop and he was prosecuted under the Act. Held: Bell was not guilty ofan offence. the display was an invitation to treat and did not amount to an offer to sell. |
|
|
Pharmaceutical Societyof Great Britain v Boots Cash Chemists [1953]1 All ER 482 |
Held: The display of drugs on the shelves was not an offer but an invitation totreat. The contract was made when theassistant at the cash desk accepted the customer’s offer to buy what had been chosen. Thepresence of the pharmacist at the cash desk fulfilled the requirements for supervisionunder the Act. |
|
|
Reply to a request for information is not usually as an offer. Harvey v Facey [1893]AC 552 |
Harvey sent a telegram to Facey: “Will you sell Bumper Hall Pen, telegraphlowest cash price.” Facey replied with atelegram: “Lowest cash price Bumper Hall Pen £900.” Harvey purported to accept this offerbut Facey did not respond. Harvey sued. Held: There was no contract.Facey’s telegram was not an offer but a reply to an inquiry. |
|
|
General Offer (made to everyone) Carlill v CarbolicSmokeball Co [1893] 1 QB 256 |
100 pounds if used 3 times a day for two weeks Held: There was a binding contract. Theadvertisement was an offer to the whole world, which was accepted by thosewho fulfilled the conditions. Mrs Carlill had fulfilled the conditions, and was thusentitled to be paid the £100. |
|
|
Offer does not remain open for acceptance forever. Lapse of Time: Glasgow, Newcastle andMiddlesborough Steam Shipping Co v Watson (18731 R 189 |
Watson offered to supply coal to the pursuers onAugust 5 1871. The supply was to be for one year at 7s per ton.The parties subsequently entered into negotiations and onOctober 13 1871 the shippingcompany purported to accept the offer. The price of coal had then risen by 2s per tonand Watson refused to recognise the existence of a contract. The shipping company sued fordamages for breach of contract. Held: There was no contract.The offer of August 5 was no longer open for acceptance on October 13, but had lapsedthrough passage of time. |
|
|
ACCEPTANCE COUNTER-OFFER 15. Wolf & Wolf v ForfarPotato Co 1984 SLT 100 |
Held: The defenders could not be liable for breach of contract as there was no contract. The terms of the pursuer’s original “acceptance” did not meet the terms of the offer and therefore constituted a counter-offer. This had the effect of making the original offer lapse. The time limit, which was part of that orginal offer, lapsed at the same time. |
|
|
Findlater v Maan 1990 SC 150 |
Held: There was a contract. The letters of March29 and March 30 amounted to two co- existing offers. Findlater’sletter of April 6 was an acceptance of Maan’s offer of March 30 and a withdrawal of his ownoffer of March 29. |
|
|
Standard FORMS DECIDE WHOSE TERMS PREVAIL Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd 1979 1 WLR 401 |
Held: Butler could not alter the contract price. The conditions on the orderform amounted to a counter-offerwhich rejected Butler’s original offer. The counter-offer had been accepted by Butler whenthe acknowledgement was returned. |
|
|
POSTAL RULE Jacobsen Sons & Co v Underwood & Son Ltd (1894) 21 R 654 |
On March 2 Underwood offered to buy straw from Jacobsen, the offer stating thatit was to remain open until 6March. On 6 March, Jacobsen wrote and posted an acceptance of the offer, but this wasnot delivered to Underwood until March 7. Underwood claimed there was no contract becausethe acceptance had not reached them until after the stated date and they refused toaccept the straw when Jacobsen tried to deliver it. Held: Because the acceptancewas concluded at the time it was posted, the offer had been accepted in time and there wasa contract. |
|
|
Thomson v James (1855)18 D 1 |
On November 26, 1853, James posted an offer toThomson to purchase the estate of Renniston for £6,400. OnDecember 1 Thomson posted a letter of acceptance, but on the same day James had posted aletter withdrawing the offer. Both letters were delivered on December 2. Held: A binding contract hadbeen formed. |
|
|
Implied Acceptance not possible to impose acceptance by silence Felthouse v Bindley (1862) 11 CB (NS) 869 |
Felthouse had been negotiating with his nephewJohn for the purchase of John’s horse, but there had been somemisunderstanding about the price. Eventually, Felthouse wrote to his nephew saying: “If Ihear no more I shall consider him mine at £30 15s. The nephew did not reply, but wishing tosell the horse to his uncle, told the defendant, an auctioneer who was selling farm stock forhim, not to sell the horse as it had already been sold. Theauctioneer accidentally putthe horse up for auction with the rest of the stock and sold it. Felthouse now sued theauctioneer on the basis that he had sold a horse which belonged to Felthouse. |
|
|
Domestic Agreements not legally binding unless there is evidence Balfour v Balfour [1919]2 KB 571 The defendant was a civil servant stationed in Ceylon. In November 1915 he came to England on leave with his wife, the plaintiff in the action. In August 1916 he returned to Ceylon without his wife, who had been advised by her doctor to stay in England. The plaintiff claimed that, before he returned, |
her husband had agreed to give her £30 a month as maintenance and she wassuing on the basis that he had failed to abide by the agreement. Held: There was no enforceablecontract because in this sort of situation it must be assumed that the parties didnot intend to create legal relations. In any case, the provision for a flat payment of £30 permonth for an indefinite period without any provision to take into account changes in thecircumstances of the parties did not suggest a binding agreement. This was purely adomestic agreement. |
|
|
Domestic Agreements not legally binding unless there is evidence Merritt v Merritt [1970] 2 All ER 760 A husband left his wife for another woman and, during a meeting which took place in his car, he agreed to pay his wife £40 a month. |
He also wrote out and signed a documentwhich stated that, if his wifepaid the mortgage on their jointly owned house, he would transfer the property to hersole ownership. The wife paid off the mortgage but the husband did not transfer hisshare of the property to her, so she sought a court order tomake him do so. The husband’sdefence was that this was a domestic arrangement which was not intended to be legallybinding. Held: The agreement wasenforceable. |
|
|
Agreements not involving Patrimonial Interests Forbes v Eden (1867) 5 M (HL) 36 |
Forbes was minister of the Episcopal church at Burntisland. He brought anaction against the Synod of the church,claiming that certain canons recently enacted by them should be set aside. He averred that thenew canons were in violation of ones in force when he was ordained and were thereforeinjurious to him. Held: The action wasirrelevant. Forbes had no patrimonial interest to protect and had made no averment of damage. |
|
|
Agreements not involving Patrimonial Interests Murdison v Scottish Football Union (1896) 23 R 449 |
Player case Thefootball union passed a resolution to suspend an amateur, unpaid footballerfrom playing. The pursuerappealed to the court to overturn the decision. Held: The pursuer had nolegally enforceable rights because there was no patrimonial interest involved. |
|
|
Commercial Agreements parteis to commercial contracts do intend to be legally bound, unless there is clear evidence it is not a case Rose & Frank vCrompton [1925] AC 445 |
The parties had a written agreement which gaveRose & Frank the exclusive right to sell Crompton’s products in theUSA. The agreement expressly stated that it was not intended to be legally enforceable ineither the USA or UK, and claimed to be merely an “honourable pledge” ofintention. After 6 years, Crompton terminated the arrangement without giving the agreednotice period and Rose & Frank sued for damages. Held: As the agreement clearlyexpressed that it was not intended to be legally binding, Crompton was not liable indamages. |
|
|
Commercial Agreements parteis to commercial contracts do intend to be legally bound, unless there is clear evidence it is not a case Kleinwort Bensen Ltd v Malaysia Mining Corporation [1989] 1 WLR 379 |
Held: The letters contained a statement of policy and intention and did not intend to be legally bound to honour the debt. The bank had been asked to formally guarantee the debt but had refused to do so, and this indicated that it did not intend to be legally bound. |
|
|
Wills Morrison-Low v Paterson 1985SLT 255 |
Held: In allowing the sons to remain on the farm and accepting rent from them, Morrison- Low was personally barred from denying the existence of a new lease, even though nothing was formally written. |
|
|
Agreement Improperly Obtained Circumvention Anderson v The Beacon Fellowship 1992 SLT 111 |
The Fellowship, a religious association, renteda hall from Anderson and in 1985 entered into missives to purchase it.Representatives of the organisation visited Anderson and allegedly pressed theirreligious upon him. Anderson gave a number of donations to the association and he nowsought to have them repaid, on the basis that they had been obtained by fraud andcircumvention while he was in a weak condition. He claimed that, at the time, hehad been suffering from serious illness and depression, andthat the fellowship had putconsiderable pressure on him.Held: This pressure wassufficient to amount to circumvention |
|
|
Agreement Improperly ObtainedCircumvention McGilvary v Gilmartin 1986 SLT 89 |
The pursuer disponed to the defender, her daughter, a house which she, thepursuer, had inherited from her own fatherand which she had always intended to give to her son. Mrs McGilvary averred that in1980, her daughter had come to stay with her and her husband, who died shortly afterwards.The death left Mrs McGilvary in a weak physical and mental state. She claimed that, whileshe was in this condition, her daughter took her to asolicitor’s office andpersuaded her to sign over the property. Held: This was sufficient toamount to circumvention. There was no need to prove actual fraud. |
|
|
Undude Influence voidable where undude influence is proved Gray v Binny (1879) 7 R 332 |
Gray, who was aged 24 and heir under a deed ofentail, executed a deed by which he parted with his rights in anestate for very much less than the true value. He was persuaded to enter theagreement by his mother and her legal advisor Binny, to whom she was deeply in debt. The motherdied soon afterwards and Gray brought an action for reduction. The court reducedthe agreement on the basis that Gray had been unduly influenced by his mother. |
|
|
FORCE, FEAR and Duress Earl of Orkney vVinfra (1606) Mor.16,481 |
The Earl brought a claim against Vinfra forpayment of 2,000 merks on the basis of a written contract signedby Vinfra. Vinfra contended that the contract was null and void because his signaturehad been induced by force and fear. He claimed that he had been summoned to the Earl’s castleand that the Earl had ordered him to sign the contract, which had already been signedby the Earl. Vinfra refused, whereupon the Earl drew hissword and threatened to killVinfra if he did not sign. Held: The contract was voidhaving been induced by fear of force. |
|
|
COMMON ERROR where both parties have made the same mistake Dawson v Muir (1851) 13 D 843 |
Dawson enteredinto a contract to buy from Muir some vats which were sunk into the ground. Both parties thoughtthe vats were empty and Dawson paid around £2 for them. In fact, the vats were laterdiscovered to contain white lead which was worth around £300. The seller tried to havethe contract reduced on the grounds of error. Held: This was common errorand the contract was valid. |
|
|
MUTUAL ERROR where parties are at cross-purposes, thinking different thing Muirhead &Turnbull v Dickson (1905) 13 SLT 151 |
Held: Muirhead and Turnbull had intended to make a contract of hire-purchaseand Dickson had intended to make acontract of purchase paid by instalments, but on the evidence Dickson was justifiedin his understanding of the contract. The pursuer’s action for redelivery of the pianofailed, the correct remedy being for the unpaid instalments. |
|
|
MUTUAL ERROR, if no preferred interpretation, the four will hold there is no contract Raffles v Wichelhaus (1864) 2 H&C 906 |
The defendant agreed to buy cotton from theplaintiff, the contract providing that it wasto arrive “ex Peerless“. Infact, there were two ships of that name, both sailing fro Bombay with a cargo of cotton,one sailing in October and one in December. The buyerthought his cotton was to beshipped in October, but the seller intended to ship the cottonon the Peerless sailing inDecember. Held: There was no contractbecause there was no consensus in idem. This was mutual error and the court could findno reason for preferring one party’s interpretation to the others. |
|
|
Uninduced Unilateral Error (one party makes a mistake) Royal Bank of Scotlandv Purvis 1990 SLT 262 |
The bank sued the defender as guarantor of her husband’s debts to the bank. Shetried to have the guarantee reduced onthe grounds that she had signed it at her husband’s request, she had not read the documentor had it explained to her and she had no formal education and was unfamiliar withcommercial documents. The bank claimed that her error wasunilateral and had not beeninduced by the bank. She claimed the guarantee was void as she had been in error aboutthe nature of the document she was signing. Held: The contract was valid.The bank had not induced the error. |
|
|
Misrepresentation A false statement of fact Flynn v Scott 1949SC 442 (OH) |
Flynn bought a second-hand Bedford van fromScott, which Scott stated to be in good running order. The van brokedown a week later and Flynn told Scott he was rejecting the van and repudiating thecontract on the grounds that he had been induced to enter it because of Scott’smisrepresentation.. Held: Scott’s statement was anexpression of opinion and not a misrepresentation entitling Flynn to repudiate thecontract. |
|
|
MisrepresentationA false statement of fact Smith v Land and House Property Corporation (1885) 28 Ch D 7 |
Held: Specific performance would not be granted. The description of Fleck as adesirable tenant implied that Smith knewnothing to suggest that he was not. In fact Smith knew he was not a desirable tenant andthis was a misrepresentation. |
|
|
MISREPRESENTATION concealing defects may be misrepresentation Gibson v National CashRegister Co Ltd 1925 SC 500 |
Gibson brought an action against NCR on the ground that the company had soldhim two cash registers andfraudulently concealed the fact that they were not new. Gibson was able to prove that he had wished tobuy new machines and the company had held itself out as manufacturing and selling newmachines. He also showed that the machines he was supplied with were secondhandbut made to look like new by reconditioning. Held: Gibson had made out aprima-facie case of fraudulent concealment. |
|
|
MISREPRESENTATION Non-disclosure The “Spathari” 1925 SC (HL) 6 |
intention of selling her to aGreek syndicate in Samos. Demetriades made arrangements with a Glasgow shipbrokercalled Borthwick that the ship should be transferred to Borthwick and registered and insuredin his name, then sailed to Samos and there transferred to Demetriades. Atthe time Borthwick insured the ship, Greek ships were regarded as uninsurable, oronly insurable for high premiums. Borthwick did not disclose to the insurance companyDemetriades interest in the ship. The ship sank off the coast of Portugal and the insurersrefused to pay. Held: The insurance contractwas void because of Borthwick’s failure to disclose a material fact. |
|
|
MISREPRESENTATION If misrepresentation had no influence (must induce party to entry the contract), contract cannot be reduced. Horsfall v Thomas (1862) 1 H&C 90 |
The seller of a gun concealed the fact that it had a serious manufacturingdefect by plugging the barrel. He failedto disclose this to the purchaser, who later tried to have the contract set aside on thebasis of misrepresentation by fraudulent concealment. Held: The contract was valid.Although the actions of the seller amounted to fraudulent concealment, the buyer had notexamined the gun before purchasing it, so the seller’s misrepresentation had notinduced the contract. |
|
|
MISREPRESENTATION Innocent: when person makes incorrect statement believing it to be true Boyd & Forrest vGlasgow and South Western Railway Co 1912SC (HL) 93; 1915 SC(HL) 20 |
The railway company invited tenders for construction of part of a railway line,and they showed to intending offerors ajournal of bores supposedly taken along the proposed route. Boyd & Forrest wonthe tender, but when the work was in progress they discovered more rock and hardground than had been indicated by the journal of bores. The data in the journal hadbeen altered by one of the railway company’s engineers, in the honest belief that some of theinformation supplied by the borers was incorrect. |
|
|
After completing the work, Boyd & Forrest sued the railway company for more than £100,000, the extra costs they had incurred on the contract, on the basis that they had been induced to enter the contract through the engineer’s fraudulent misrepresentation. |
Held: There was no fraud - the engineer had only altered the information wherehehonestly believed it to beincorrect. The railway company then suedfor the extra cost in damages, on the grounds that they had entered into the contractunder essential error induced by innocent misrepresention. Held: There had been nomisrepresentation. |
|
|
MISREPRESENTATNION NEGLIGENT: where person does not intend Esso Petroleum vMardon |
The parties were negotiating the lease of a petrol station. In the course ofthe negotiations, one of Esso’s employees, with40 years experience of the trade, negligently misrepresented the likely saleof petrol from the station as 200,000 gallons per year.Mardon relied on this inentering the contract, which proved financially disastrous for him, with petrol sales reachingonly 78,000 gallons in the first 15 months. Mardon claimed for negligentmisrepresentation, while Esso argued that the statement had only been the expression of anopinion. Held: Esso had the necessaryknowledge and skill to make such a statement. hey were liable. |
|
|
MISREPRESENTATION FRAUDULENT: where person did so with deliberate intent Morrisson v Robertson 1908SC 332 |
Morrisson had taken two cows to market for sale. He was approached by a mancalled Telford, who falsely claimedto be the son of Wilson, a farmer with whom Morrisson had business dealings on anumber of occasions. Telford claimed that he wished to buy the cows on behalf of hisfather and Morrisson let him take the cows on credit. Telfordthen sold the cows toRobertson, who bought them in good faith. Morrisson brought an action against Robertson in anattempt to recover the cows. |
|
|
Morrisson v Robertson 1908 SC 332 |
Held: The contract between Morrisson and Telford was void ab initioowing to Morrisson’s essential error as to the identity of the person with whom he was contracting. Telford could not therefore give title to the cows to Robertson, and Morrisson was entitled to reclaim them. |
|
|
MISREPRESENTATIONFRAUDULENT: where person did so with deliberate intent Macleod v Kerr 1965 SC 253 |
Kerr advertised his Vauxhall car for sale. A man called Galloway answered the advertisement, giving his nameas Craig, and he wrote a cheque in the name of Craig to pay for the car. The next dayKerr discovered that the cheque came from a stolen chequebook and he informed thepolice. In the meantime, Galloway, giving his name as Kerr, sold the car to Gibson,who owned a garage. The police took possession of the car from Gibson and Galloway wasconvicted of theft and fraud. The procurator fiscal brought an action of multiplepoinding to determine who was entitled to the car. |
|
|
Macleod v Kerr 1965 SC 253 |
Held: The contract between Kerr and Galloway was not void through essential error but was voidable. As it had not actually been avoided at the time of the sale to Gibson, Gibson got good title to the car. |
|
|
Illegal Contracts PACTRA ILLICITA CONTRACT ILLEGAL AT COMMON LAW Barr v Crawford 1983SLT 481 (OH) |
Mr and Mrs Barr owned a bar in Falkirk. Owing toMr Barr’s ill-health they put the bar up for sale. The bar licencewas up for renewal by the local licensing board. Crawford, then provost of Falkirk andanother person indicated to Mrs Barr that the licence would be refused for a year. She wasalarmed, as sale of the bar was imminent. Mrs Barr claimed that she was told by thedefender that 10 people would have to be “bought” at a cost of £10,000. She stated that shehad handed over £8,000 in banknotes to the defenders. When she claimed for the return ofthe alleged payments, the defenders argued that the relationship was tainted withillegality and that the action was irrelevant. |
|
|
Barr v Crawford 1983 SLT 481 (OH) |
Held: The action should be dismissed. The sum paid was a bribe and not recoverable. |
|
|
PACTA ILLICITA Pearce v Brooks (1866)LR 1 Exch 213 The plaintiffs were coachbuilders who agreed to sell a carriage to Brooks on hire terms, with an option to purchase after payment of the final instalment. The defendant was a prostitute and the carriage, which was of an attractive design, was intended to assist her in obtaining clients. |
She paidone instalment and then returned the carriage in a damaged condition, but she refused topay the agreed penalty for the damage. One of the plaintiffs agreed that he knew thedefendant was a prostitute, but not that the carriage was intended for use for the purposes ofprostitution. The evidence showed the contrary. The jury found that the plaintiff knewthe purpose for which the carriage would be used and their claim for the sun due failedfor illegality. |
|
|
PACTA ILLICITA CONTACTS ILLEGAL UNDER STATUTE Archbolds FreightageLtd v Spanglett [1961] 1 QB 374 |
Spanglett were furniture manufacturers who held “C” licences issued under theRoad and Rail Traffic Act 1933. Thelicences allowed them to use their own vans to carry their own goods, but did not permit themto carry the goods of others for reward. Archbold were road hauliers who, under their“A” licences, were permitted to carry other’s goods for reward. Archbolds, believingthat Spanglett held “A” licences, hired Spanglett to carry part of a load for them. Owingto the driver’s negligence, 200 cases of whisky were stolen. Archbold claimeddamages for the loss of the whisky; Spanglett claimed that the ontract was void throughillegality because they did not hold an “A” licence for the vehicle. |
|
|
Archbolds Freightage Ltd v Spanglett [1961] 1 QB 374 |
Held: Spanglett was liable. The statute imposed penalties for failure to complywith licence conditions, but thiswas not aimed at the owner of the goods. The contract itself was not forbidden by thestatute. |
|
|
CONTRACTS IN RESTRAINT OF TRADE The interest to be protected Bluebell Apparel Ltd v Dickinson 1978 SC 16 |
Bluebell manufactured Wrangler jeans, selling them in around 120 countries.Dickinson trained with Bluebell andbecame a manager at one of their factories. While there he acquired knowledge ofBluebell’s methods which were unknown to their competitors. Dickinson’s contract ofemployment contained conditions which stated that he would not disclose or use any ofBluebell’s trade secrets, and that he would not enter into emplyment with any competitor ofBluebell for a period of two years after the end of his employment. Six months after joiningBluebell, Dickinson left the company to take up employment with a manufacturer of Levi jeans. |
|
|
Bluebell Apparel Ltd v Dickinson 1978 SC 16 |
Held: The restriction was reasonable in its scope and, as Bluebell had alegitimate interest in protecting its tradesecrets, the restriction would be enforced. |
|
|
CONTRACTS IN RESTRAINT OF TRADE The extent of the restriction Dumbarton Steamboat Co Ltd v Macfarlane (1899) 1 F 993 MacFarlane was a partner in a firm of carriers which was sold to Dumbartom Steamboat Co. The partners, including MacFarlane, were to be employed by the company and |
undertook (a) to try to obtainthe firm’s customers for the company and, (b) not to carry on or be concerned with anycompeting business in the UK for ten years. Three years later MacFarlane, who had beendismissed from the company, began business on his own account in Dumbarton. Held: The defender could beinterdicted from canvassing the customers of the former firm, but the restriction againstcarrying on business anywhere in the UK was unreasonable and therefore unenforceable, andthe court would not rewrite the clause to confine it to a reasonable area. |
|
|
51. Nordenfelt v MaximNordenfelt Guns and Ammunition Co [1894] AC 535 |
Nordenfelt sold his guns and ammunition business to a company which he set up.He agreed in writing that hewould not compete with the Nordenfelt company. Under the agreement, he received£237,000 in cash, £50,000 in shares and remained managing director of the company for 7years at a salary of £2,000 per year and a share of the profits. |
|
|
51. Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535 Two years later, the company combined with theMaxim Gun and Ammunition Company. Nordenfelt entered into a newcovenant which provided he would not engage in the business of manufacturingguns, or in any business competing with the company, anywhere in the world for aperiod of 25 years. Nordenfelt later entered into an agreement with another arms manufacturerand the company sought an injunction to prevent him. |
Held: Although the restriction was unusually wide, the nature of the businessand the limited number of customers(government agencies), meant that it was necessary for the protection of the company’sgoodwill. Nordenfelt had received a considerable sum for the business and there were nopublic policy reasons for refusing to uphold the restriction. |
|
|
CONTRACTS IN RESTRAINT OF TRADE The public interest Mulvein v Murray 1908 SC 528 Mulvein, a boot and shoe seller, hired Murray as a salesman under an agreement by which Murray was bound not to sell to or canvass any of Mulvein’s |
customers or to sell or travel in any of the areas traded inby Mulvein for twelve months after his employment was terminated. Murray left hisemployment with Mulvein and took up a job as a salesman for a boot and shoe manufacturerin Ayr. Mulvein brought an action for interdict. Held: The restriction onselling to or canvassing Mulvein’s customers was reasonable and valid. The other part of theclause was too wide and invalid, but as the agreement was severable, the courts wouldenforce the reasonable restriction. |
|
|
TECHNICAL INTERPRETATION Inglis v Buttery & Co (1878)5R (HL) 87 |
Buttery & Co entered into a contract with Inglis under which Inglis was tocarry out alterations and repairs to asteamship. The agreement was put into writing and signed by both parties. The writtendocument stated that “The plating of the hull to be carefully overhauled and repaired, butif any new plating is required, the same to be paid for extra“. The words in italicswere deleted by having a line drawn through them, though they could still be read. While carrying out the work,Inglis discovered that the hull plating was so badly worn that it had to be replaced. Heclaimed that Buttery & Co should have to pay extra for the new plating. |
|
|
Inglis v Buttery & Co (1878) 5R (HL) 87 |
Held: On an interpretation of the terms, Inglis had to supply the new platingunder the contract price, and the courtcould not look at the deleted words or at any letters which had passed between the partiesprior to execution of the written document in order to ascertain the intentions ofthe parties. |
|
|
IMPORTED TERMS Before or at the time contract is made Olley v Marlborough Court Ltd [1949] 1 All A husband and wife arrived at a hotel as guests and paid for a room in advance. One one of the walls of their room was a notice: “The proprietors will not hold themselves ER 127 |
responsible for articles lostor stolen unless handed to the manageress for safe custody.” The wife closed theself-locking door of the bedroom and took the key down to the reception desk. Owing toinadequate supervision of the keyboard, a third party took the key and stole the wife’s furs.When sued, the hotel tried to rely on the notice as a term of the contract. Held: Thecontract had been completed at the reception desk and no subsequent notices couldimport terms into it. |
|
|
Thornton v Shoe Lane Parking[1971] 2 QB 163 |
A notice outside a car park stated that carswere parked at owner’s risk. Thornton, who had not parked at the car parkbefore, took a ticket from the machine at the entrance and parked his car. The ticket,which Thornton did not read, stated in small print that it was issued subject to conditions.The conditions, displayed on a pillar opposite the ticket machine, exempted the companyfrom liability for any injury to the customer. Thornton was injured when a concreteblock fell on his car. |
|
|
Thornton v Shoe Lane Parking [1971] 2 QB 163 |
Held: (a) The contract was concluded when thecustomer put his money in the machine, and the customer could not bebound by terms contained on the ticket, because the contract had already beenconcluded at that point. (b) Notice of the particular condition on which the defendants soughtto rely had not been sufficiently brought to the attention of the customer, and thereforehe was not bound by it. |
|
|
Spurling v Bradshaw [1956]2 All ER 121 |
Spurling received goods he had ordered from Bradshaw, the goods beingaccompanied by a sales receipt whichcontained terms and conditions, one of which was an exemption of liability clause. The twoparties had frequently dealt with each other in the past and Spurling had received manysimilar documents, but had never bothered to read them. Held: The terms and conditionson the receipt had been imported into the contract through a course of dealingbetween the parties. It made no difference if Spurling had actually read them. |
|
|
IMPORTED TERMS documents must be regarded as a contractual document Taylor v GlasgowCorporation 1952 SC 440 |
Mrs Taylor went to public baths in Glasgow.Having paid the price, she was given a ticket which she was required to handover to the bath attendant. Printed on the front of the ticket were the words: “Forconditions see other side” and on the back was printed: “The Corporation of Glasgow are notresponsible for any loss injury or damage sustained by persons entering or using thisestablishment or its equipment.” Mrs Taylor knew there was printing on the ticket but didnot read the condition. She fell and was badly injured, and brought an action for damagesagainst the Corporation. |
|
|
Taylor v Glasgow Corporation 1952 SC 440 |
Held: The ticket was merely a voucher which the pursuer would not have beenexpected to study for conditions; theconditions did not therefore form part of the contract. |
|
|
IMPORTED TERMS Terms must have been brought to the other party . Hood v The Anchor Line (Henderson Brothers) Ltd 1918 SC (HL)143 |
Hood was a passenger on “The SS California”, owned by the Anchor Line, on avoyage from New York to Glasgow. Hewas injured when being hoisted from a lifeboat after the ship ran aground off the Irishcoast. The defenders claimed their liability was limited to £10 by a condition in thecontract of carriage. The conditions were printed on part of the ticket retained by thepassenger. Both the top and the foot of the document warned the passenger to read the termsand conditions, as did the envelope in which the ticket was given to the passenger. |
|
|
Mr Hood had travelled with the Anchor Line on several occasions, but had never read the conditions, or noticed that conditions were attached. |
Held: The company had taken sufficient care to bring the conditions to thenotice of the passenger. It did not matterthat Hood had not actually read them, only that they had adequately been brought to hisnotice. |
|
|
Williamson v North ofScotland and Orkney Steam Navigation Co 1916SC 554 |
Tickets issued for a steamer had terms excluding liability printed on theirface, but in very small type. This was held notto be sufficient to bring the terms to the notice of a customer injured by negligence:“Nothing was done to direct attention to the condition printed on the face of the ticket insmall type, which for any passenger must have been difficult to read, and for many passengersimpossible to read without artificial assistance and very favourable surroundings.” |
|
|
Interfoto Picture Library Ltd v Stilletto Visual Programs [1988] 1 All ER 348 |
Stilletto required photographs from the 1950s for an advertising promotion andthey requested Interfoto to supplythese. Interfoto delivered 47 transparencies, together with a delivery note which statedthe date by which the photos had to be returned. The note also contained a term whichstated that a fee of £5 for each transparency would be payable for each day that they wereretained after the return date. Stilletto forgot about thetransparencies and did not return them until well after the deadline. Interfoto nowclaimed £3,783.50 under the clause in the conditions. |
|
|
Interfoto Picture Library Ltd v Stilletto Visual Programs [1988] 1 All ER 348 |
Held: The clausewas not imported into the contract because Interfoto had not done enough to bring it to theattention of Stilletto. Where a clause was very onerous, greater effort must be made to ensureit is brought to the notice of the other party. |
|
|
IMPLIED TERMS The Moorcock (1889)16 PD 64 A firm which owned a wharf charged a fee on cargo loaded onto or dischargedfrom ships moored at their wharf on theThames. Ships moored at the wharf had to lie on the river bed at low tide and the ownersof the Moorcock were made aware of this when the contract between them |
and the wharf owners was made. While theMoorcock was discharging cargo at thejetty, the tide went out. The ship settled on a ridge of hard, uneven ground on the river bedand was badly damaged. Held: As the parties knew theship would ground when the tide was low, and could be presumed to know that unlessthe ground was safe the ship would be in danger, there was an implied term that the ownerof the wharf had a responsibility to ensure that the ground was safe. |
|
|
PRIVITY OF CONTRACT Blumer & Co v Scott & Sons (1874) 1 R 379 |
The pursuers were shipbuilders who sold an unfinished ship to Ellis and Sons.The contract provided thatdelivery was not to be later than February 1872 “delays of engineers and every otherunavoidable cause excepted. The pursuers then contracted with Scott and Sons, engineers, forthe supply of engines for the ship; this contract provided that the engines were to befinished to the satisfaction of the pursuer’s overseer. The engines were not delivereduntil October 1872. Both Blumer & Co and Ellis and Sons sued Scott for damages. |
|
|
Blumer & Co v Scott & Sons (1874) 1 R 379 |
Held: Blumer& Co were protected from liability to Ellis because of the exclusion clause in their contract. They weretherefore not entitled to damages because they had suffered no loss. Ellis and Sons, onthe other hand, had no claim against Scott because they were not a party to the contractfor supplying the engines and the terms of that contract were not such as to confer a jusquaesitum tertio on them. |
|
|
ASSIGNATION Scottish Widows Fund v Buist (1876) 3 R 1078 In 1871 a life policy was taken out for £1000, the policy containing the usualstipulations that it would be void if anyuntrue statements had been made concerning the assured’s state of health or age. |
In 1872 thepolicy was assigned to Buist and others, and the assignation was intimated tothe insurance company. In 1875 the assured died and the assignees of the policyclaimed for payment of the £1000. The insurance company raised an action of reduction on thegrounds that the assured had knowingly misrepresented his state of health. Held: The assignees weresubject to any exceptions and defences which could have been pleaded against the assured.The false statements were a relevant ground of reduction against the assignees of thepolicy. |
|
|
Material and Non-Material breach Wade v Waldon 1909 SC 571 Wade, a music hall comedian, contracted with Waldon to appear at the GlasgowPavilion and Palace Theatres for aweek. The contract stated that all performers must give 14 days notice prior to the engagement beginning |
and must accompany this with advertising matter. Wade noticed that hisname did not appear in the theatre’s advertisments a wekk before his performance wasdue, but, when he queried this, he was told that his failure to send notice and publicity wasa breach of contract and that he would not be allowed to perform. He sued for breach ofcontract. Held: Wade’s breach ofcontract was not material enough to justify Waldon in rescinding the contract. Waldon wastherefore liable to Wade for damages for breach of contract. |
|
|
Anticipatory Breach Avery v Bowden (1855) 5 E & B 714 The defendants chartered the plaintiff’s ship “Lebanon” and agreed to load her with cargo at Odessa within 45 days. The ship went to Odessa and remained there for most of the 45 day period. The defendant told the captain of the ship that he did not intend to load cargo and that the captain would do well to leave, |
but the captain stayed on at Odessa in the hope that he would change hismind. Before the 45 day period was ended the Crimean war broke out so that performanceof the contract would have been illegal as trading with the enemy. Held: The plaintiff might havetreated the defendant’s refusal to load cargo as an anticipatory breach andclaimed damages, but his agent, the captain, had waived that right by staying on in Odessa andthe contract had now been discharged by something beyond the control of either party. |
|
|
ANTICIPATORY BREACH . Hoechsterv De La Tour (1853) 2 EB 678 |
Hoechster was engaged by De La Tour in April act as a courier in charge of atour of the Alps in June, but in May hereceived a letter telling him his services would no longer be required. He sued for damages,but De La Tour argued there had been no breach of contract until the date forperformance of the contract arrived. Held: Hoechster was entitledto an immediate remedy. There was a breach of contract as soon as his expectations ofperformance were destroyed. |
|
|
White & Carter (Councils) Ltd v McGregor 1962 SC (HL) 1 In 1954 McGregor, who owned a garage in Clydebank, contracted with White &Carter, a firm of advertisingcontractors, that they would display advertisements of the garage on litter bins which White &Carter supplied to local authorities. In 1957 McGregor’s sales manager entered into a furthercontract to continue the advertising. He had no express authority to enter into thiscontract and, the same day, McGregor wrote cancelling the contract. |
White & Carter refused to accept thecancellation and continued to display the advertising in accordance withthe contract. They then claimed payment for three years advertising. Held: White & Carter wereentitled to perform the contract and claim the contract price and were not obliged to acceptMcGregor’s repudiation and sue for damages. There was no duty to mitigate lossunless the plaintiffs had accepted the breach and they had not done so in this case. |
|
|
MITIGATION OF LOSS Gunther & Co v Lauritzen (1894) 31 SLR 359 (OH) The defender, a Danish merchant, had contracted to supply hay and straw to thepursuers in Aberdeen. The defender wasaware that the goods were being bought for resale. On delivery, the hay and strawwas disconform to contract and was rejected by the pursuers, who brought an action fordamages for breach of contract, claiming as part of the damage the loss of profit on thesubsale. |
The pursuers proved that they could not havemitigated this loss by purchasing thegoods on the public market. The defenders averred that the pursuers might have obtainedthe goods in three separate lots from private sellers around the country. Held: Gunther was entitled toclaim the whole profit they would have obtained on a resale. The duty to mitigate loss didnot extend beyond taking ordinary measures to replace the goods from another source. |
|
|
REMOTENESS OF DAMAGE Hadley v Baxendale (1845) 9 Exch 341 The plaintiff was a miller in Gloucester. The driving shaft of the mill wasbroken and the defendant was engaged to carryit to the makers in Greenwich so they could use it as a pattern to make a new one. Thecarriers delayed delivery of the shaft beyond a reasonable time, so that the mill wasidle for longer than necessary. The plaintiff sued in respect of lost profits during the periodof delay. |
Held: The plaintiff could only succeed if he could prove that it was in thenormal course of things that the mill wouldbe unable to work because of the broken shaft or, alternatively, that he hadfully informed the carrier as to the special circumstances so that the defendant was aware of thepossible losses. As the defendant had not been informed, and the mill might well havehad a spare shaft, the loss was too remote and could not be recovered. |
|
|
Balfour BeattieConstruction Ltd v Scottish Power plc 1994SLT 807 The pursuers were constructing a road and an aquaduct. They contracted withScottish Power for the supply ofelectricity to a concrete batching plant. They were carrying out work which required acontinuous pour of concrete when the batching plant stopped working owing to aninterruption of the power supply. The pursuers had to demolish what they had already built andstart again. They claimed the cost of this from Scottish Power. |
Held: The loss was too remote. Scottish Power had not been told of the need fora continuous pour of concrete,or that demolition and rebuilding would be needed if there was an interruption. Theycould not be expected to be aware of this. |
|
|
DEFENSIVE MEASURES Lord Elphinstone vMonkland Iron and Coal Co Ltd (1886) 13 R (HL) 98 |
Tenants in a mineral lease undertook to level and soil over slag hills by acertain date under a “penalty” of £100 peracre for ground not restored by that date. Held: This was a liquidatedamages clause and not a penalty. The sum demanded was proportional to the extent ofthe failure of the defenders to implement the contract and it was not extortionate orunreasonable. |
|
|
Dingwall v Burnett 1912 SC 1097 In April 1911 Burnett, who owned a hotel, entered into an agreement withDingwall by which the latter was to leasethe hotel. The agreement provided that Dingwall was to take over the furniture and stockat valuation and was to deposit £200 in the bank to account of the valuation price. Theagreement also contained a clause providing that a penalty of £50 was to be payable byeither party in the event of their failing to perform the agreement. |
. In August 1911Dingwall intimated that he did not intend to fulfill his part of the bargain and he brought anaction against Burnett for return of the deposit receipt. Burnett counterclaimed for£300 damages for breach of contract. Dingwall argued that he was limited to £50 underthe contract. Held: The sum stipulated for(£50) was a penalty clause and not liquidate damages and was not enforceable. Burnett’sclaim for damages was therefore not limited to that sum. |
|
|
FRUSTRATION SUPERVENING IMPOSSIBILITY Taylor v Caldwell (1863) 3 B&S 826 |
Taylor contracted to let a music hall from Caldwell for four concerts in thesummer of 1861. Six days before thefirst concert was to be performed the hall caught fire and was totally destroyed. Taylor suedfor damages for breach of contract as the hall could not be used. Held: Caldwell was not liablein damages as the contract was frustrated by the fire. |
|
|
CONSTRUCTIVE TOTAL DESTRUCTION Tay Salmon Fisheries Ltd v Speedie 1929 SC 593 Tay were tenants of salmon fishings under a 1916 lease for 19 seasons. In 1925and 1928, under bye laws made understatutory powers, the Air Force took over the land on which the fishings were situated fortarget practice. |
Observance of the bye laws made the fishings incapable of possession for the purposes of the lease, even though target practice was not carried out all the time. Tay asked the court for a declarator that they were entitled to abandon the lease. Held: The court could apply the principles of rei interitus and avoid the lease,even though the subjects if the let werestill in existence, because the tenant’s enjoyment of the subjects had been wholly destroyed“beyond any immediate possibility of restoration”. |
|
|
77. James B Fraser & Co Ltd v Denny, Mott& Dickson Ltd 1944 SC (HL) 35 Fraser entered into an agreement with the defenders under which Fraser was tobuy all the red and white pine it requiredfrom DMD Ltd and DMD Ltd was to occupy Fraser’s timber yard. The agreement wasexpressed to be terminable by either party on giving notice and, in the event oftermination, |
DMD Ltd was to be given the option to purchase the yard. Wartime regulationsmade it impossible for DMD to supply Fraser with the required wood, and DMD gavenotice that it was terminating the agreement and intended to exercise the option topurchase. Held: The option had lapsed.The agreement had been terminated by because of the impossibility of trading(Frustration) and the option could be exercised only if termination was by notice. |
|
|
Cantiere San Rocco SAv Clydebank Shipbuilding & Engineering Co Ltd 1923SLT 624 Cantiere, an Austrian shipbuilding company, contracted to buy three marine engines from Clydebank Shipbuilding. The contract price was £11,550 to be paid in instalments. The first instalment was paid in May 1914, |
but war broke out in August 1914 and it became impossible to fulfil thecontract. Cantiere sued for the return of the instalment already paid. Held: The contract had beenfrustrated owing to a cause for which neither party was responsible. Clydebank wasobliged to return the instalment to Cantiere as it had been given in return for aconsideration which had failed |
