01. CASES on Contract Formation Flashcards
Golden Ocean Group Ltd v Salgaocar Mining Industries PVT (2011)
An email trail ending with the typed name of a broker acting as an agent for a shipping company was deemed to be ‘written evidence’ of the existence of a contract.
Carlill v Carbolic Smoke Ball Co. (1893)
The Smoke Ball Company’s advertisement was deemed to be an offer capable of acceptance:
-an offer can be made to the world at large
-the offeror waives their right to communication of acceptance
Gibson v Manchester City Council (1979)
A letter from Manchester City Council stating a price was nevertheless deemed NOT to be an offer capable of acceptance.
Hyde v Wrench (1840)
The making of a counter-offer of £950 for a farm automatically rejected the vendor’s original offer of £1,000. When the counter-offer was also declined no offer capable of acceptance remained open.
-The making of a counter offer rejects the original offer.
Stevenson v McLean (1880)
An offeree’s request to have delivery of some iron spread over a period of time was deemed NOT to be a rejection or counter offer.
The original offer therefore remained open and capable of acceptance.
Ramsgate Victoria Hotel v Montefiore (1866)
An offer regarding the purchase of shares was deemed to have expired after a period of 5 months, this being more than a ‘reasonable’ time.
Brogden v Metropolitan Railway Co (1877)
The conduct of a railway company (acceptance of deliveries of coal for several years) was deemed to constitute the acceptance of an offer. A contract therefore existed despite no final written draft having been signed.
Clarke v Dunraven (1897)
Participants in a regatta were deemed to have entered into a binding contract with each other via their conduct (entry into the regatta and acceptance of the club’s rules).
Edwards v Skyways (1964)
The words ‘ex gratia’ in what was intended to be a non-binding agreement regarding a redundancy payment to a pilot were deemed insufficient to rebut the presumption that a commercial contract (here one regarding employment) IS made with the intention to create legal relations.
RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH (2010)
A letter of intent signed by both parties contained a draft contract. Work commenced on the installation of production lines despite a formal contract never being signed. The court determined that a contract had been accepted by conduct and that it was made with the intention to create legal relations.
Branca v Cobarro (1947)
An agreement including the words “a personal agreement until a fully legalised agreement drawn up by a solicitor and embodying all the considerations herewith stated, is signed” was nevertheless deemed to have been entered into with the intention of creating legal relations.
Felthouse v Bindley (1862)
An uncle’s offer to buy his nephew’s horse contained the phrase “if I hear no more about him, I consider the horse mine.”
Such a presumption that an offer could be accepted by silence was deemed invalid.
Silence can not constitute acceptance. The offeree must make a positive act of acceptance.
re McArdle (1951)
Improvements made to a property were done BEFORE an agreement was made. Consequently they did not constitute valid consideration in support of that agreement.
Past consideration is no consideration.
Thomas v Thomas (1842)
Established that a ‘Peppercorn rent’ constituted valid consideration.
Consideration need only be adequate to merit the title of consideration, NOT sufficient to the value of the consideration given by the other party.
Williams v Roffey Bros & Nicholls (Contractors) Ltd (1990)
Established the modern view that provided that there is no duress or fraud, an ‘additional practical benefit’ constitutes valid consideration.
In this case a subcontractor was given additional payments in order that work was completed on time (according to the terms of the original contract). These payments were deemed to be in return for the practical benefits to the main contractor of avoiding the need to find an alternative subcontractor and of avoiding a penalty clause in his own contract.
Foakes v Beer (1884)
A debtor was required to pay the outstanding interest on a loan, his creditor not having recieved any additional consideration for the waiver of that interest.
Welby v Drake (1825)
Established that payment of a lesser sum by a third party is sufficient consideration to discharge a debt.
Combe v Combe (1951)
A woman was unable to enforce maintenance payments from her husband because she had given no consideration and therefore no contract existed.
The doctrine of promissory estoppel was deemed not to apply; the husband’s promise to pay maintenance not being supported by any consideration.
D&C Builders v Rees (1965)
A builder’s reluctant agreement to accept part of a debt in full settlement was deemed not to be legally binding. The householder had offered no additional consideration and in fact placed the builder under duress to agree to the arrangement.
Chappell v Nestle (1959)
Chocolate bar wrappers were deemed sufficient consideration.
Stilk v Myrick (1809)
Sailors doing a small amount of extra work after a small number of desertions were NOT giving additional consideration to support a contract for additional remuneration.
It was already owed as part of an existing contractual duty.
Hartley v Ponsonby (1857)
Sailors doing a significant amount of extra work after a large number of desertions WERE giving additional consideration to support a contract for additional remuneration.
It was over and above an existing contractual duty.
Glasbrook v Glamorgan (1925)
A police authority were entitled to additional payment for defending a colliery during a strike.
Thhe provision of additional protection over and above that required by an existing duty was sufficient consideration to support a contract.
Collins v Godefroy (1831)
A court witness was not entitled to use their appearance as consideration to support a contract for payment.
They were subpoenaed anyway and so did not do anything over and above their existing legal duty.
White v Bluett (1853)
A son’s offer to stop bad mouthing his late father was not deemed to be sufficient consideration for the discharge of a debt.
To do so was not over and above that required by an existing natural duty.
Ward v Byham (1956)
A mother’s agreement to ensure that an illegitimate child was “well looked after and happy” was deemed to be sufficient consideration to support a maintenance contract.
At the time, this was considered over and above an existing natural duty.
Lampleigh v Braithwaite (1615)
A man riding to petition the King for a pardon was deemed to have a valid contract for reward because the pardonee implied that there would be one before he undertook the journey.
Roscorla v Thomas (1842)
A contract was made for the sale of a horse.
Following this, the seller offered a warranty that the horse was “free from vice,” under which the buyer tried to claim.
This subsequent warranty was deemed a new contract but one for which there had been no additional consideration from the buyer.
(The consideration in respect of the original contract was past consideration, and therefore invalid in respect of the new contract.)
