Case Summaries

Question 1

What is Mathieson Gee v Quigley about?

Answer 1

OBJECTIVITY:
House of Lords said there was no contract, but parties believed there were, and had argued accordingly.
Objective approach – judge (?) looks at exchange of letters.
House of lords ruled that it didn’t actually show an agreement.
The two sides failed to match on their agreement of what each other thought were the terms.
Matheson Gee were insolvent, and therefore could not afford to pay Quigley’s damage.
The conduct of the parties was never examined.
Parties’ subjective belief that they had a contract, Courts’ objective approach said they didn’t.

Question 2

What is Muirhead & Turnbull v Dickson about?

Answer 2

OBJECTIVITY:
Hire purchase – hybrid contract created in 19th century to allow consumers to buy goods on credit. ‘Hire charges’ paid as installments to purchase. Followed by one optional installment after the hire charges to transfer ownership.
Dickson claimed it was a contract of sale.
The court, looking at the contract objectively, held that it was a contract of sale and that despite the mental difference between the two parties, there was a contract of sale. Thus Muirhead and Turnbull could not retain the piano.

Question 3

What is Avintair v Ryder Airline Services about?

Answer 3

CERTAINTY:
Avintair was going to introduce Ryder to Pakistan International Airlines.
Avintair did a lot of work to help Ryder. But the work was going forward while the two parties were still arguing about the terms of the contract – how much ryder would pay avintair for a successful introduction.
Disencus between the parties.
The court fixed a ‘reasonable price’ based on market conditions. However, it was criticized on the basis that the court was going beyond its powers. It was not the court’s place to decide the value of services, only whether or not a contract existed.
Some say the court should have said ‘no contract’ because of dispute regarding one of the crucial terms – the price.
It can be argued that Ryder are enriched at the expense of avintair. Ryder should pay avintair for services provided to bring both parties back to par.

Question 4

What is W S Karoulias v Drambuie Liquer Co about?

Answer 4

INTENTION TO CREATE LEGAL RELATIONS:
Parties had reached a full written agreement.
Drambuie sent agreement to Karoulias, with the intention that the contract would be active once the transaction had been signed.
Drambuie were stringing along Karoulias, as they were dealing with a bigger company.

Question 5

What is Harvey v Facey about?

Answer 5

OFFER ACCEPTANCE:
Harvey interested in buying Bumper Hall Pen. Facey is the owner.
Did a contract result from the exchange of telegrams or not? Harvey believed so, Facey disagrees.
Is there an offer anywhere in the statement? (because no offer, no contract)
- No statement of price in statement 1. Therefore no offer. Merely an invitation to treat.
- Next statement also invitation to treat.
- Implied willing to sell. Viewed objectively, implied Facey asking for Harvey’s best offer.
- We now have an offer, as we know Harvey’s price.
- But no acceptance, so no contract.
- Alternative decision?
- ‘Lowest cash price’ = pivotal phrase. Originally came from Harvey’s telegram. Harvey interested at buying at that price. Facey appears to echo Harvey. In that context, reasonable for Harvey to interpret that Facey interested at selling at lowest cash price. Case failed.

Question 6

What is Carlill v Carbolic Smoke Ball co about?

Answer 6

INVITATION TO TREAT (English case):

• Inhaling fumes of the smokeball = allegedly immunized from flu.
• £100 reward to anyone who caught flu.
• Carlill = grand Victorian lady. Uses ball for 11 days before getting flu.
• Company unwilling to pay.
• Advertisements like that in newspapers are merely invitations to treat, and they claimed Carlill had not accepted the offer.
• Court held this advertisement was an exception, and was an offer.
• The statement converts the invitation into an offer (‘showing our sincerity’).

Question 7

What is Wolf & Wolf v Forfar Potato Co about?

Answer 7

QUALIFIED ACCEPTANCE:
‘we accept’ potatoes. Therefore producing contract. HOWEVER, questions arose about potato transport, payment etc. Wolf said they accept.
- Court held no contract.
- Can you, having initially not accepted an offer, go on to accept the offer? Court said no – qualified acceptance at best.
- ‘We accept BUT…’ = ‘no’.
- The law regards a qualified acceptance as a ‘counter-offer’.
- Up to the offeree to either accept or reject the counter offer.
- Stage by stage analysis is key.

Question 8

What is Stevenson v McLean about?

Answer 8

REQUEST FOR CLARIFICATION:
Offeree responds to offer to sell iron as follows: “Please wire whether you would accept 40 for delivery over 2 months, or if not, longest limit you would give.” Offeror does not answer and sells iron elsewhere. Offeree sends telegram accepting offer, then sues offeror for breach of contract. Held that offeree’s response not a rejection of the offer but an inquiry (background of unsettled state of the market important to this conclusion).

Question 9

What is Tinn v Hoffman about?

Answer 9

• Two parties wrote to each other on the same day, about the same goods at the same price, one offering to buy, one offering to sell. But the court held there was no contract – there were 2 offers but no acceptance on either side.

Question 10

What is Thomson v James about?

Answer 10

POSTAL ACCEPTANCE RULE:
Mr Thomson posted letter of acceptance. Mr James posted a letter saying he wants to withdraw his offer. Both at the same time. Is there a contract or not? The parties were never in agreement. Court favoured Mr Thomson, however. Withdrawal did not take effect till it arrived. Acceptance took effect as soon as it was posted, which was earlier.

Question 11

What is Countess of Dunmore v Alexander about?

Answer 11

POSTAL ACCEPTANCE RULE:

• Lower courts held there was a contract as countess’ change of mind came too late.
• The Court of Session finally held there was no contract because they said the withdrawal letter was effective in preventing the acceptance taking place.
• Gloag said case is postal offer not postal acceptance, therefore she is entitled to withdraw the offer.

Question 12

What is Smith v Oliver about?

Answer 12

PROMISE/ACQUIESCENCE:
Elderly lady promised to leave money to her church in her will, to enable church to carry out building works. The works were executed to the lady’s knowledge and with her acquiescence, but when she died, it was found she had made no bequest in her will. The church claimed against her estate.

The obligations we make in life survive our death.
Arose before 1995 act.
Would not have the same conclusion today.

Question 13

What is Liverpool City Council v Irwin about?

Answer 13

TERMS IMPLIED IN FACT:
Council flat leases – one-sided express contract with no obligations on the council: held there was an implied obligation to carry out reasonable repairs.

Question 14

What is Buchanan-Jardine v Hamilink about?

Answer 14

IMPLIED TERMS IN THE COURSE OF A BUSINESS:
Does it imply the seller’s business is an ongoing one?
Farmer selling cows as was giving up business.
Sale of livestock was last act of business.
Cows were thought not to be satisfactory.
Was the sale in the course of a business?
The court of session said yes.

Question 15

What is M/S Aswan Engineering v Lupdine about?

Answer 15

IMPLIED TERMS OF FIT FOR PURPOSE:
Melting containers in Kuwait, stacked six high for some days in intense sunshine and temperatures reaching 60-70 degrees Celsius. Held pails fit for purpose, since stacking of this kind was not a common purpose for such pails.
Significant loss of both containers and goods within.

Question 16

What is Rogers v Parish about?

Answer 16

IMPLIED TERMS OF APPEARANCE AND FINISH:

Small blemishes in the paintwork of a new Range Rover: held unsatisfactory

Question 17

What is Thain v Anniesland Trade Centre about?

Answer 17

IMPLIED TERMS OF DURABILITY:
Gearbox fault develops in second-hand car 2 weeks after sale. Held no breach of the implied term: “people who buy second-hand cars get them at less than their original price in a large part because second-hand cars have attached to them an increased risk of expensive repairs.”

Question 18

What is Douglas v Glenvarigill Motors about?

Answer 18

SALE OF CONSUMER GOODS REMEDIES

Question 19

What is Morrisson v Robertson about?

Answer 19

VALIDITY OF CONTRACTS (VOID AND VOIDABLE):
About a transaction that took place in a cattle market.
Morrisson had cattle up for sale. Met a man who told Morrisson he was to son of Wilson of Bonnyrig. Was in fact a man called Telford. Morrisson gave cows on credit. Telford finds Robertson who buys the cows. Dispute about who is entitled to the cows. Robertson will lose if Morrisson gets the cows back, because he will have paid Telford. Dispute between 2 innocent parties who acted in good faith. Court decided that contract between Morrisson and Telford was VOID. Court says Morrisson made an ERROR as to the identity of Telford. Contract was a nullity. Handing over the cows to telford had no particular legal effect, as Morrisson believed he was transferring cows to Wilson of Bonnyrig. The court said Morrisson was always owner of cows and could reclaim them from Robertson. In M v R, there wasn’t any consent to T having ownership of the cows. No transfer of ownership. Case about error, for which contract is void.

Question 20

What is Macleod v Kerr about?

Answer 20

VALIDITY OF CONTRACTS (VOID AND VOIDABLE):
Kerr is selling his car, by private deal (paper advertismenet). Craig turns up with a chequebook. He signs a cheque to pay for the car and leaves with it. The buyer was not who he said he was. He was Galloway, who had stolen Craig’s chequebook. He sold the car to Gibson (in good faith). Kerr told the police and found the car in possession of Gibson. Macleod is chief constable who raises an action of multiple pinding. Court decided that this was different to M v R case. They held that the contract was not void, but VOIDABLE. There was a contract between Kerr and Galloway and a transfer of ownership to Galloway. Gibson became the owner. Kerr loses ownership. In M v K, Kerr consented to G having ownership of the car. Transfer of ownership. Case about fraud, for which contract is voidable.

Question 21

What is Hislop v Dickson Motors about?

Answer 21

GROUNDS OF INVALIDITY - FORCE & FEAR:
Assistant accused of theft by bosses, who require her to repay money under threat of going to the police. There is then a second incident of her being pressurised in this way. Held first extraction of money the result of legitimate pressure but not the second.

Question 22

What is Boyd & Forrest v Glasgow & SW Railway Co about?

Answer 22

GROUNDS OF INVALIDITY - FRAUD:
Construction of a railway from Glasgow to Kilmarnock, built by Glasgow and southwestern company using Boyed & Forrest as contractors. Glasgow had commissioned a surveyor to test the potential line – test boars. Surveyor made list of readings along the line. Boyd find that surveyor’s journal is very misleading. Boyd and Forrest end up spending a lot more money than expected. They sue. Argued surveyor’s behavior amounted to fraud as he had been so bad. This failed because it wasn’t fraud, he was negligent (in present day). At the time of cause, negligence wasn’t a thing. Does the railway have to be deconstructed? Court says restitution in integrum is not practical. Boyd & Forrest failed in 3 successive actions in the House of Lords.

Question 23

What is Anderson v The Beacon Fellowship about?

Answer 23

GROUNDS OF INVALIDITY - FACILITY & CIRCUMVENTION:
Depressed person made donations to religious group on which he had become heavily dependent.
Mr Anderson handing over lots of money to fellowship, and once he recovered he wanted some of it back.
Had transactions struck down.

Question 24

What is Honeyman’s Exrs v Sharp about?

Answer 24

UNDUE INFLUENCE:
Widow and art adviser.
Undue influence had previously been held to certain relationships.
Woman ends up giving her dealer lots of her paintings.
Moral response to a situation and relationship.

Question 25

What is Stuart v Kennedy about?

Answer 25

MUTUAL ERROR:
Sale of stone coping, price stated “1/9d per foot”. S believed price to be per superficial foot, K per lineal foot. Held contract void.

Question 26

What is Angus v Bryden about?

Answer 26

ERROR IN TRANSACTION:
Sale of fishing rights. B offered to buy all of A’s fishing rights. A accepted the offer to buy “all the whole [certain fishing rights] in the River Ayr”, and this was accepted by B, who thought the phrase included both river and sea fishings. B also knew that A thought only the river fishings were being sold. Held, only the river fishings were to be conveyed. But the court said that, had the sea fishings also been included, then A would have been labouring under an error in transaction about the subject matter of the contract, known to and not corrected by B, and this would have made the contract reducible at A’s instance.

Question 27

What is Spook Erection v Kaye about?

Answer 27

ERROR IN TRANSACTION:
Sale of land. Sellers thought wrongly that the land was burdened with a 990 year lease, while the buyers knew that the lease was only for 99 years and about to expire (affected sale value). Held, contract not to be reduced. Seller’s error in motive only (nothing in the contract about the lease) and there was no misrepresentation.

Question 28

What is Hamilton v Main about?

Answer 28

CONTRACTS PROMOTING SEXUAL IMMORALITY:

Orgy in a pub for a week – landlord’s bill unenforceable.

Question 29

What is Quantum Claims Compensation Specialists Ltd v Powell about?

Answer 29

CONTRACTS CONTRARY TO PUBLIC POLICY:
P suffered an injury through A’s negligence; contracted with Q/C for share of his damages if claim successful; Q/C then instructed solicitors. Held agreement of P and Q/C enforceable. (Note also contrast between contingency fee [under which lawyer gets specific percentage of award – unenforceable] and speculative action [under which lawyer gets paid only if successful – enforceable; also if it includes a percentage-based increase in the fee].)

Question 30

What is Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co about?

Answer 30

RESTRICTIVE COVENANTS:
(Contracts where the seller of a business undertakes not to compete with the purchaser)
Sale of business - world-wide, 25-year restriction, reasonable.

Question 31

What is Bluebell apparel v Dickinson about?

Answer 31

RESTRICTIVE COVENANTS:
(Contracts where an employee agrees with his employer not to join a rival business or not to set up a similar business in competition with the employer when he leaves his employment)
Trainee manager; for 2 years not to work for Levi’s competitor anywhere in the world. Upheld.cTrainee manager taken vow for 2 years not to work for levi’s competitor anywhere in the world. In his training, he had acquired knowledge of levi. Restraint designed to prevent Dickinson taking knowledge.

Question 32

What is Esso Petroleum v Harper’s Garage about?

Answer 32

RESTRICTIVE COVENANTS:
(Contracts whereby manufacturers restrict the trading of a distributor - “solus” agreements)
Petrol company and “tied” garages – 4½ years reasonable, 21 years too long.
Wanted more petrol than was getting under the contract, as business was developing. Garage starts to look to taking supplies from elsewhere, and are sued by Esso.
Contract contrary to public policy as contract in restraint of trade.
Goes to house of lords – does the restraint of trade doctrine apply beyond the classical 3 of partnership sale of business and employment and reach into this?
HoL said yes there was restraint of trade here.
What had to be decided then was, is the restraint reasonable to protect the interests of the covenantor? Who would find it difficult to do business without the support of at least of the companies. Was it reasonable in the interests of convenantee? Yes conclusive to the efficient distribution of petrol.
Question of public interest came into it – efficient distribution of petrol.
Not served by the fact that competition was precluded.
Court took into account public interest in a healthy market.

Question 33

What is Scottish Widows Fund v Buist about?

Answer 33

ASSIGNATION:
M took out a life assurance policy with SWF. He then assigned it to B. M died aged 30. He had told SWF untruths about his health in the life assurance policy (Excellent health). Held that SWF could plead against B the defences it would have had against M.
He was actually an alcoholic.
Misrepresentation by the cedent.

Question 34

What is Carmichael v Carmichael’s Exx about?

Answer 34

Jus Quaesitum Tertio
(Requirement that a copy of the contract must be delivered to C)
Insurance contract which Mr Carmichael, engineer in Hong Kong, takes out with a life insurance company over the life of his four year old son. Meant to be a savings policy. Dad will pay premiums until boy is 21 and then the now grown up boy will continue paying and will end up with a nice sum.
1916 - aircraft being used in WWI to de reconnaissance work. Boy Carmichael aged 20 is keen on flying and joins the new royal air force. Unfortunately he dies in training. He has turned 21 by this point. He hadn’t started to pay first premium on policy however. The boy and father had fallen out and boy had gone to live with his aunt. Did the money which was to be paid, go to the father or to the son’s estate, the aunt? House of lords said in favour of the aunt as the boy had a third party right under the contract. He didn’t just have that right because the father and insurance company said there was the right, there had to be more than just a term. HOL said it had to be clear that contract could not be revoked by original contracting parties before third party right could exist – irrevocability.
Father could have cancelled insurance policy at any time, father argued he still had that right, therefore his son had no right under the contract.
Contract was still revocable despite third party term.

Question 35

What is Bank of East Asia v Scottish Enterprise about?

Answer 35

RETENTION:
Demonstrates that mutuality of contract is crucial in order to exercise the remedy of retention. Where a contract is regarded as operating in stages, then the right of retention may only be exercised separately at each stage.
Demonstrates the emphasis on the requirement of interdependence.
A case of construction contracts. The typical situation in a construction contract will be that you will have an employer (Scottish Development Agency) and a contractor (Millers) carrying out construction for a period of time. This was a contract for the construction of commercial buildings.
We are talking about long-term relationships. The contractor will often argue that they will not spend all of this money doing all of this work over a long stretch of time, only to be paid at the very end. Often, payment is continuous throughout the life of the contract for this very reason.
In this case, there was a question as to whether the employer could retain one of the stage payments because some of the work at the particular stage had been done defectively.
But there are complications with this.
Millers are in financial difficulty, so they need to borrow, and they do. They borrow from the Bank of East Asia. The Bank of East Asia asks Miller how they will repay the loan. To get the loan, Miller assign their rights to receive payments from the Scottish Development Agency, to the Bank of East Asia. The problem is that Millers are in breach of their contract by doing this, and they finally go bust.
What SDA does, is to retain the payments that were due. On the 15th of May, SDA were due to pay £416, 974.72, but didn’t, because in this period from the 15th of May they claimed that there had been breaches by Miller that were worth £168,512.40. From the 29th of May onwards (date of bankruptcy), Millers were in further breach of their contract because they went bust. SDA suffered further loss after the 29th of May through having to remedy the defects and complete the works using another, more expensive contractor, and through delay in letting the finished works.
SDA are arguing that they can retain the payments, against the damages of defective work carried out by Millers, AND further damages for Millers’ bankruptcy.
Could the SDA retain or withhold the payment due on 15th of May in respect of the breaches of contract by Millers both before and after the 15th May?
HOL held that while SDA could retain the £416,964 in respect of breaches up to the 15th of May, the defence was not available for breaches after that date i.e. the bulk of the consequential losses.
HELD: The Bank of East Asia was therefore entitled to payment of the sum due on 15th May with a deduction for the damage suffered at that date.
Here the obligation to pay was the counterpart of the work already completed at the earlier stage. It was not the counterpart of the builders’ obligations under any later stage of the contract.
The losses arsing after 29th May did not depend upon the breaches in existence at 15th May, hence why SDA was not entitled to damages after the 29th.

Question 36

What is Macari v Celtic FC about?

Answer 36

CONTEMPORANEITY:
Club was bought by businessman Fergus mccaann. Emigrated. He came in with a 5 year plan to sort celtic’s mess. He found that it wasn’t run as a business, it was run as a football club, eg. Spending money to keep the fans happy. Lou macari’s idea of managing club was not have mccaann wanted. He tried to get rid of macari as a business decision. Eventually settled on a clause within his contract that said he should live within a certain radius of parkhead. Generally accepted that this is not necessary as can be quite dangerous due to rivalry from the opposing team. A wide range was accepted. Macari continued to live in swindon and didn’t come to the ground or conduct training sessions very often. Mccann and co decided to seize on the clause of residence. Because it was absolutely clear that there was a breach of contract.
In court, macari defends that he was exercising the remedy of retention. Withholding performance of the residence clause because mccann etc were in breach of their implied term of mutual trust and confidence because he had been conspiring against him as soon as he arrived.
Claims of breach on both sides.
Court of session decided macari was in breach, and his withholding performance was not an exercise of the remedy of retention.
Court did not think breach of mutual trust and confidence, because if so, no employer would ever have to rid themselves of a troublesome employee.

Question 37

What is Wade v Waldon about?

Answer 37

CONTEMPORANEITY:
A music hall artist traded under the stage name of George Robey. The other contracting party was the manager of the Palace and Pavillion Theatres, Glasgow. The contract between Robey and the manager – a few weeks before the show to go forward – there was an issue regarding bill matter. The bill matter should be sent to the theatre before the show so that there could be more advertising.
Robey decided not to comply with this term in the contract – breach
The response of the manager was to sack Robey.
Robey brought an action against the manager for breach of contract – argued that the contract had been unjustly terminated.
Robey’s action succeeded on the basis of the test that Lord Dunedin made in the aforementioned dictum. Dunedin argued that the bill matter did not go to the root of the contract – that the contract was essentially about someone appearing on stage and performing in exchange for a monetary sum.
Robey recovered damages for breach of contract.
This case demonstrates the risk with self-help remedies.
But it also begs a question. It could be argued that what matters to the manager is not just the show – but the bill matter is required to get people to actually see the show. Perhaps Lord Dunedin overlooked some of the commercial elements in the contract.

Question 38

What is Graham v United Turkey Red about?

Answer 38

Where recession entails restitution but does not affect accrued rights.
Commission agent – gets paid for each sale.
Provision that graham is to give company his exclusive services.
However he starts selling goods of a rival company as well – in breach of contract.
Takes some while for turkey to find out.
2 years after breach began, they terminate contract.
No dispute about entitlement of turkey to rescind contract.
Question is, is mr graham entitled to commission on the sales that he has made on behalf of turkey.
Yes, but only up to the point in 1916 when he went into breach.
Principle of mutuality.
Mr graham can sue in unjustified enrichment – turkey have benefited from post breach sales.

Question 39

What is White & Carter v McGregor about?

Answer 39

Where there is anticipatory breach but one of the parties performs their obligations.
Advertising agency and garage business who had had a contract for many years, drawing attention to garage via advertisement.
Parties got together and discussed renewal, and it was agreed it would be renewed.
Garage had changed mind by afternoon changing its mind.
That is anticipatory breach as agency wasn’t due to start performing till later.
Doesn’t terminate – performs its side of the bargain by posting first lot of advertisement, then claiming payment.
Another term in the contract said if garage refused to pay, the whole sum payable of totality of contract would immediately become payable.
Went to house of lords, but 3:2, court holds in favour of advertising agency’s entitlement to be paid. Even though it was acknowledged their performance was unwanted.
Case is enormously controversial, particularly in England, as English courts have never applied it.

Question 40

What are Highland & Universal Properties Ltd v Safeway Properties, Retail Parks Investments Ltd v Royal Bank of Scotland plc and Co-operative insurance society ltd v Argyll Stores (ENG) about?

Answer 40

SPECIFIC IMPLEMENT:
These are about commercial leases. Tenants under these leases were operating retail premises in shopping centres. The tenants were trading at a loss in these shopping centres.
In each case, the lease between the landlord and the tenant contained a clause that required the tenant to remain in the property and conduct business from the property (known as a “keep-open” clause).
In all of these cases, the tenant with many years still to go on the lease, simply left.
Response of the landlords was to go to court to order the tenant to come back in – empty lots in a shopping centre look bad. Landlords invoked provisions in the contract meaning that the tenants had to keep the shops open.
Courts in the Scottish cases granted the landlord an order for specific implement, and the basis for it was that the contract is to be performed. It was for the defender to show considerations such as hardship – if the courts were not persuaded, the order would be granted. The starting point for such cases in Scotland was that the individual was seen to have an initial right to specific implement – the courts would uphold this unless persuaded otherwise.
Similar cases going on in England at the same time.
In the HOL (co-operative insurance ENGLISH case decided here), it was decided that specific implement would not be granted. The reason for this was a different starting point. Specific performance is an inequitable remedy; it’s always at the discretion of the court. In England, no one has a starting right to anything, the court has discretion from the start.
In Scotland, the Court of Session decided that the keep-open clause was enforceable. The Scottish cases were never appealed.
Basically, in each of the Scottish cases, the order was granted.
In the English case, it was not.

Question 41

What is Ruxley Electronics & Construction v Forsyth about?

Answer 41

LOSS:
A contract for the installation of a swimming pool in Forsyth’s back garden. He wants the pool so that he can practise his high diving. The pool is to be installed as a price of £17,800.
Pool was built BUT it wasn’t as deep as it needed to be, it wasn’t in line with the specifications that he set out.
Forsyth brought an action for damage based on cost of cure (usual measure). To fix the pool would cost more than the contract price (it would cost £21,500) – the end result would be that Forsyth would get a sum of damages that would offset the initial price of the pool – should he get damages, he would effectively get a swimming pool for free.
A further problem in that Forsyth appeared in the witness box providing controversial evidence – he initially said that he would spend the damages on fixing the pool BUT later said that he would keep the pool as it was and would use the money to go on holiday.
Case went to HOL – he wouldn’t get any damages at all on the grounds that cost of cure damages would be unreasonable.
Court found that there was no difference in value of the pool – it didn’t matter how deep it should be. The value of the initial swimming pool, and the one that would be provided by the cost of cure damages would be the exact same.
BUT there was a sum awarded to Forsyth on a completely different basis. The judge at first instance awarded him £2,500 for disappointment. This built on a long line of decisions which ultimately went down to a Scottish case Diesen v Samson.

Question 42

What is Malik v Bank of Commerce & Credit International about?

Answer 42

DAMAGES FOR STIGMA:
Malik was the employee of a Bank that was eventually found to have been involved in drug trafficking and money laundering. Malik had not been involved in any of the illegal activities of the bank BUT found it impossible to get another job in the financial sector given his involvement with BCCI
He claimed damages against BCCI
Awarded damages which in part provided compensation for the stigma attached to him because of his previous job.
IT wasn’t a claim for damages for distress – more a recognition that he wouldn’t get another job in the financial sector, therefore it was accounting for his loss/depletion of earnings should he find another (lower paid) job.
Again compares the position that the parties would have been in before the contract was breached.

Question 43

What is Balfour Beatty v Scottish Power about?

Answer 43

REASONABLE FORSEEABLITY:
Regards the first limb.
Contract carrying water. If the water gets into the concrete, it won’t react well with it.
Balfour Beatty are in contract with Scottish Govt to produce the dual carriageway around Edinburgh. With the union canal aqueduct, the decision is made that the concrete pouring to create it will haveb to be done in a single, continuous operation. The concrete will have to keep coming from the source of supply.
For continuous concrete supply, you need a continuous supply of power. Balfour Beatty entered into a contract with Scottish Power for this purpose.
Breach of contract was that the generators failed halfway through the concrete pour.
Decision is that what was there would have to be demolished and the whole operation began again new. There was cost in providing the new aqueduct.
HOL argued that it was too remote on the basis of the notion that this was not a usual loss – it was a special loss that would require to Scottish Power – they knew nothing about the concrete pouring operation to which the contract related to.
Balfour Beatty suffered significant loss, but it was held to be completely irrecoverable. Scottish Power’s breach went unpunished.

Question 44

What is Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) about?

Answer 44

REASONABLE FORSEEABILITY:
Contracts for hire of a ship – charter parties.
Term in the case is simply a contract for hire of a ship.
Ships are exploited from an economic point of view.
2 contracts in this.
First represented by O and C1, first charterer.
Charterer still at sea when ship due to be returned – breach of contract by charterer.
Owner has entered another party meant to start shortly after ship returned from C1.
Under C2 contract, right to terminate if ship unavailable.
Owner anxious and realizes he will have to bring down charter price – hire payments due.
Originally 39500 dollars per day.
Renegotiates with C2 and gets it down to 31500 per day.
Boat is at sea with C2 for around 190 days.
Lost £8000 dollars a day for 191 days of C2 contract.
Claims damages for breach of contract – loss clearly caused by breach.
Damages claim is 8000x191.
Resisted.
Ultimate decision says that owner gets the lateness period covered for 8000 per day.
For majority of judgement in HOL, due to reasonable foreseeability.
Loss will flow from delay.
Majority of HOL said period of delay provides what is forseeable loss as far as what C1 and owner are contracting at the time.
Lord Hoffman tried to provide new basis – reasonable foreseeability is anything the judge thinks ought to be covered.
… an unforeseeably large loss may still be recoverable if the loss was of a foreseeable type.
Proposes new test, helped by fact that case began as arbitration in city of London.
Conducted partly by a lawyer and others in shipping industry, whose view was that hirer in breach would only pay damages for period of its own delay.
Reasonable foreseeability is code for parties sitting making contract about what is going to happen.
Similar to implied terms – what would parties have agreed and contracted for if question had been put to their attention before?
Commercial understanding was that C1 would only by liable for own delay period.
When judges do this, 2 things are possible.
1 – everyone appreciates it.
2 – other judges refuse it.
Effectively what majority did.
Worth considering even as a way of informing test of reasonable foreseeability: putting yourself into parties position at time of contracting.
Hoffman retired shortly after.

Question 45

What is Office of Fair Trading v Abbey National about?

Answer 45

The bank charges case relating to consolidation and reform of unfair contract terms.
Held (reversing the Court of Appeal) that the relevant charges constituted part of the price or remuneration for the banking services provided, and accordingly the provisions authorising them could not be challenged as unfair.
In early 2012 the UK Government requested the Law Commissions to review again the recommendations in the 2005 Report in the light of the Abbey National case. The Government had already indicated that it would not introduce any reform to protect small businesses like consumers.
About charges banks imposed on customers if, at any time, a customer went into overdraft.
Might have fluctuating account day to day as money is drawn in and out.
Charges were extremely high.
Contrary to good faith creating significant imbalance.
Could not be challenged because related to PRICE.

Question 46

What is Morgan Guaranty Trust co v Lothian Regional Council about?

Answer 46

RECEIPT OR ACQUISITION OF MONEY (UE):
A local authority – Lothian Regional Council, borrows money from Morgan Guaranty.
Not a simple loan arrangement – it was a swaps deal. Morgan Guaranty made payments to Lothian regional council, which would be repaid.
This contract was void because the transaction was beyond the powers of the local authority.
Lothian Regional Council had a lot of money from Morgan Guaranty – they had received money from Morgan Guaranty without any form of contractual basis.
Lothian Regional Council were obliged to give the moey back under the law of unjustified enrichment

Question 47

What is Newton v Newton about?

Answer 47

IMPROVEMENT OF ANOTHER’S PROPERTY (UE):
About a married couple whose marriage didn’t work out. Husband bought a house for himself but took out the title of the house in the name of his wife only. The parties lived in the house together, and the husband honestly believed despite what he had done; that he was the true owner of the house.
He was a home improver.
The wife throws him out of the house.
Wife doesn’t need to claim the house from the husband because she’s alreay the owner.
Husband brings a claim of unjustified enrichment with regards to the increased value of the home due to the improvements made by him.
Held that the wife was unjustly enriched.

Question 48

What is Shilliday v Smith about?

Answer 48

Condictio causa data causa non secuta.
Leading case.
A couple that cohabited. They moved in together – the woman had the idea that this was a trial run and eventually they would get married.
She began to do works on the house to enhance the value of the house in preparation of marriage.
Come Christmas, the policeman isn’t on duty as much and they’re at home together for the first time.
By the end of the Christmas holiday, the relationship is over. House belongs to the man and he throws the woman out.
The woman goes to her lawyer to make a claim for unjustified enrichment.
Treated as a case of transfer – illustrates the blurred line between transfer and imposition
Transfer because the man encouraged the woman to do the works on the house.
The man had no intention to marry.
The woman did. Her argument rested on the basis that she had paid the money over on the basis that they were going to marry – and the purpose failed to materialise.
Court held that the woman was entitled to unjustified enrichment.

Question 49

What is Cantiere San Rocco SA v Clyde Shipbuilding & Engineering Co about?

Answer 49

Frustration of contract = circumstances arise which make an otherwise valid either impossible to perform, or that the performance would be so radically different that the contract ceases to bind. Frustration brings a contract to a premature end.
According to the Cantiere case, the law of unjustified enrichment applies in the case of frustration.
HOL decided that the basis for this was the conditio causa data causa non secuta.
Scottish company entered into a contract with an Austrian company – Scottish company would build ships.
Rule which arose in this case was that a contract cannot be carried through if it is with an enemy alien – you’re not allowed to contract with the enemy.
Over the summer, the Austrian company had made a pre-payment to the Scottish workers who hadn’t yet started building the ships.
Contract became invalid because of war & rule that you couldn’t contract with the enemy.
When the war ends, the Austrian company wants its money back. Case went to HOL.
Decided in the end that the contract had been frustrated, and the performance had to be restored. Conditio causa data causa non secuta.
Remarkable case because the English courts had already decided that there should be no restoration – that the losses should be allowed to lie where they fell.

Question 50

What is Printing & Numerical registering co v Simpson about?

Answer 50

Sir George Jessel MR -
“If there is one thing more than another which public policy requires, it is that men of full age and competent understanding shall have the utmost liberty in contracting and that their contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by Courts of Justice.”