Cases

Question 1

(Offer) What are the facts in R v Clarke (1927)?

Answer 1

The Crown offered a reward for information leading to the conviction of a murderer.
Clarke saw this offer for a reward, but when he gave information he said it was ‘to clear himself’ and didn’t mention the reward.
The Crown refused to give the reward to Clarke.
Clarke appealed, but this was dismissed as it was argued that the reward could only be claimed if that was their intention when giving the information. No contract was formed and so he could not claim the reward.
(The offer must be fully communicated to the offeree to be effective)

Question 2

(Offer) What are the facts in Scammell v Ouston (1941)?

Answer 2

The parties entered an agreement whereby Scammell was to supply a van on hire purchase terms.
Ouston was meant to trade in his van in return for the new van.
A disagreement occurred and Scammell refused to supply the van.
As there was uncertainty within the terms, it was found that there was no contract between the parties.
(If uncertainties are present it isn’t an offer)

Question 3

(Offer) What are the facts in Harvey v Facey (1893)?

Answer 3

Harvey was interested in buying a property that Facey owned.
Harvey asked how much he would sell the property for and Facey responded with £900.
Facey then clarified that he did not want to sell his property.
Harvey sued stating that Facey had offered and he had accepted.
The HOL said that Facey’s response was merely answering a question - it was not an offer so couldn’t be accepted.
(If a person is asked for information and replies with that information, it does not constitute an offer as there is no intention to be legally bound)

Question 4

(ITT) What are the facts in Fisher v Bell (1961)?

Answer 4

Bell had a flick knife displayed in his shop window with a price tag on it.
It was illegal at the time to sell such flick knives.
The court held that the display of the flick knife was not an offer but an ITT, so Bell hadn’t broken any law.
(Displaying goods in a shop is an ITT)

Question 5

(ITT) What are the facts in PSoGB v Boots (1953)?

Answer 5

Defendant ran a self service shop which sold many substances that were listed as needing a registered pharmacist to supervise the sale.
The claimant claimed that the defendant had breached this requirement.
The court held that the defendant had not breached the requirement as a registered pharmacist was present at the till.
The contract was completed at the till so there was no breach as the items on the shelves were ITTs, not offers.
(Display of goods in a shop is an ITT)

Question 6

(ITT) What are the facts in Partridge v Crittenden (1968)?

Answer 6

The defendant placed an advert in a magazine offering bramble finches for sale.
It was illegal at the time to offer these birds for sale.
He was charged and convicted, and appealed the conviction.
It was agreed in court that the advert was an ITT not an offer so the conviction was quashed.
(Most adverts are ITTs)

Question 7

(ITT) What are the facts in Harris v Nickerson (1873)?

Answer 7

The defendant was an auctioneer who placed an advert in a newspaper for his auction.
The plaintiff was a commission broker who attended the auction on the last day.
On this day, lots of the items up for sale were withdrawn.
The plaintiff attempted to recover his expenses by arguing that the withdrawal of items was a breach of contract.
He claimed that the advert was an offer and the attendance to the auction was an acceptance.
The court held that the advert was an ITT so there was no breach of contract.
(Adverts for auction are ITTs)

Question 8

(Counter-offer) What are the facts in Hyde v Wrench (1840)?

Answer 8

Wrench offered to sell his farm to Hyde.
His offer was declined by Hyde, so Wrench sent him another offer.
Hyde sent a counter-offer to Wrench, and Wrench refused this offer.
Hyde then attempted to accept Wrench’s previous offer, but Wrench still refused to sell the farm.
Hyde then sued, claiming that Wrench breached the contract.
The court dismissed this stating that there was no contract between Hyde and Wrench as a counter-offer destroys the original offer.
(Counter-offers extinguish the original offer)

Question 9

(Withdrawal) What are the facts in Routledge v Grant (1828)?

Answer 9

The defendant wrote to the claimant offering to buy his house - the letter stated that the offer would be open for 6 weeks.
During this period, and before the claimant had accepted, the defendant changed his mind and revoked the offer by sending another letter.
After receiving the revocation letter, and still within the 6 week period, the claimant sent a letter to the defendant agreeing to sell the house to him.
The court held that the original letter did not obligate the defendant to keep the offer open for that period of time, especially as he had revoked the offer before the end of that period.
(A contract is extinguished if the offer is withdrawn / revoked by the offeror)

Question 10

(Withdrawal) What are the facts in Dickinson v Dodds (1876)?

Answer 10

Dodds wrote to Dickinson offering to sell him his house, and said he would keep the offer open until Friday.
On the Thursday, Dodds accepted an offer from a third party and sold his house to them.
Dickinson claimed that he was going to accept the offer but had not said anything to Dodds because he thought he had until Friday.
Dodds claimed that he had revoked the offer by getting a third party to tell Dickinson.
Dickinson sued for breach of contract.
The court held that Dodds’s word about keeping the offer open until Friday was not legally binding - revocation by a third party was also allowed and would be treated as if it came from the person themselves.
(Withdrawal must be communicated to the offeree, even if by a reliable third party)

Question 11

(Second offer) What are the facts in Pickfords v Celestica (2003)?

Answer 11

Defendants approached Pickfords and asked for a removal quote.
Pickfords sent an offer, but then sent another more specific offer.
The courts held that the second offer revoked the initial offer, and that was the offer the contract was based on.
(An offer is withdrawn if the offeror makes a second offer which is different to the first)

Question 12

(Time periods) What are the facts in Ramsgate Victoria Hotel v Montefiore (1866)?

Answer 12

Montefiore wanted to purchase shares in the claimants hotel, he made an offer but did not hear anything for 6 months.
By this time the value of the shares had decreased and Montefiore was no longer interested.
The court held that the hotel’s action for specific performance was unsuccessful - the offer made by the defendant was no longer valid as a reasonable time had passed and the offer had lapsed.
(Contract is extinguished if a reasonable time period has passed)

Question 13

(Unilateral contracts) What are the facts in Carlill v Carbolic Smoke Ball Co (1893)?

Answer 13

Defendants placed an advert in the newspaper saying that if someone were to catch the flu after using their smoke ball 3 times a day for 2 weeks then they would pay them £100.
Carlill followed the instructions and still caught flu, so sued for the money.
Court agreed that Carlill was entitled to the money as she had completed the conditions and still caught the flu.

Question 14

(Revocation) What are the facts in Shuey v United States (1875)?

Answer 14

Following President Lincoln’s assassination, an offer of $25000 for the apprehension of one of the accomplices.
The plaintiff aided in the capture of the accomplice.
The reward had been withdrawn months before in the newspaper.
For helping, the plaintiff was rewarded $10000 but he sued for the full amount.
The court found that the US adequately compensated the plaintiff for his help so did not need to pay any more than what they had already paid.
(Revocation of unilateral offers must be as notorious as the original offer)

Question 15

(Acceptance) What are the facts in Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd (1979)?

Answer 15

Sellers offered to sell a machine for £X (with a price variation clause)
The buyers responded with their own price (no variation clause)
Sellers signed and returned a slip to say that their order had been accepted
Machine was delivered and Butler attempted to reinforce the price clause by asking for an extra £2893
Ex-Cell-O refused to pay
The court held that the offer by the buyers extinguished the previous offer so the price variation clause couldn’t be upheld

Question 16

(Instantaneous communication) What are the facts in Entores v Miles Far East Corporation (1955)?

Answer 16

Entores was based in London
MFEC was based in Amsterdam
Entores made an offer to buy 100 tonnes of copper cathodes via telex machine
MFEC sent an acceptance via telex also, but when the contract wasn’t fulfilled Entores attempted to sue
Unsure whether the action for damages should be in English law or Dutch law so the court had to establish the moment of acceptance
Court held that acceptance occurred where the acceptance was received, therefore the damages should be pursued in English law

Question 17

(Postal rule) What are the facts in Adams v Linsell (1818)?

Answer 17

Linsell posted a letter on Tuesday offering to sell wool at a certain price to Adams, indicating that Adams should accept in due course of post
Adams only received this letter on Friday evening because Linsell had incorrectly addressed the letter
Adams sent his acceptance letter that same evening
By Sunday, Linsell thought he would have received a letter if Adams had accepted, so he sold the wool the next day to someone else
After the sale, he received Adams’ acceptance letter
The courts held that there was a contract between them as it was Linsell’s fault that Adams received the letter late - postal rule states that acceptance occurs when the acceptance is SENT if it is not instantaneous

Question 18

(Postal rule absurdity) What are the facts in Holwell Securities v Hughes (1974)?

Answer 18

An offer was made to HS and was said to be exercisable ‘by notice in writing to Hughes within 6 months’
A week before the deadline a properly addressed letter containing the notice was posted by HS but was never received by Hughes
The court agreed that the offer required ‘notice to Hughes’ and because he had never received the notice, it bypasses the postal rule

Question 19

(Postal rule revocation of offers) What are the facts in Henthorn v Fraser (1892)?

Answer 19

The offeror attempted to revoke his offer by post
The postal rule was decided not to apply for revocations or modifications
A posted acceptance will be binding upon posting as long as a revocation hasn’t been received by the offeree

Question 20

(Consideration) What are the facts in Roscorla v Thomas?

Answer 20

Contract for the sale of a horse
After the contract was made, the seller made a promise to the buyer that the horse was ‘sound’
The horse ended up being vicious, but the contract could not be cancelled as the promise that the horse was sound was made after the contract had been made

Question 21

(Consideration) What are the facts in Re McArdle?

Answer 21

A daughter-in-law did some upkeep work in her mother-in-law’s property
The family agreed to pay her a specified amount for the work she completed
The court refused to enforce the contract as there was no sufficient consideration

Question 22

(Implied promise) What are the facts in Lampleigh v Braithwaite?

Answer 22

A man was sent to prison for something he claimed he didn’t do
A man offered to help him by petitioning the King
The pardon was secured
The man who was released from prison offered to pay for the efforts to secure the pardon
This was found to be an implied promise as the cost of the ordeal was so great

Question 23

(Consideration) What are the facts in Tweddle v Atkinson?

Answer 23

An agreement occurred between the fathers of a married couple to be
The two fathers each offered to give a sum of money to their children to help pay for the wedding
The son / son-in-law was the beneficiary of the money
The bride’s father did not pay the money he agreed to
The son couldn’t sue for the money as it was the father who provided consideration, rather than him
The consideration didn’t move from the promisee
You can only enforce a contract if you provide consideration for it

Question 24

(Consideration) What are the facts in White v Bluett (1852)?

Answer 24

A son complained about his father’s distribution of property amongst his children
The father agreed that he would forgive a debt that the son owed him if he stopped complaining
The court held that ceasing to complain would not be good consideration because the son did not have the right to complain in the first place
Giving up rights can be legally sufficient but giving up something you didn’t have the right to do in the first place that is not legally sufficient
(It could be seen now that the son had the right to complain due to free speech)

Question 25

(Consideration) What are the facts in Combe v Combe (1951)?

Answer 25

Mr Combe promised his ex wife £100 per annum
There was no consideration besides Mrs Combe incurring a benefit (money) and a detriment (not applying to the courts for maintenance)
There was no evidence that the husband requested the ex wife not to apply for maintenance
Therefore there was no bargain as the wife abstained from the court of her own accord

Question 26

(Intention) What are the facts in Balfour v Balfour (1919)?

Answer 26

While married, the husband promised to pay his wife £30 a month while he was working abroad
They separated, the wife tried to sue for the monthly allowance
CoA said there was no legally binding agreement as it was a domestic agreement
There was no consideration and no intention
If it was agreed that there was an agreement then the courts would be flooded with similar cases

Question 27

(Intention) What are the facts in Merritt v Merritt (1970)?

Answer 27

Husband left his wife for another woman
Promised to pay ex-wife £40 a month and transfer his share of the hours to her when the mortgage was paid off
Presumption was rebutted as they were separated and no longer married - he owed his ex wife the money as it was no longer a domestic agreement

Question 28

(Intention) What are the facts in Parker v Clark?

Answer 28

Mrs Parker was the niece of the Clarks, an elderly couple
Mrs Parker and her husband agreed to sell their home and move into the Clark’s home
In return, the Clarks would leave their house to the Parkers in the will
Mr Clark sent a letter stating his intentions to leave the house to the Parker’s
The Parker’s moved in, relationship between the Parkers and the Clarks broke down
Clarks asked Parkers to leave their house
Parkers sued for breach of contract
Court rebutted the normal presumption, the letter from Mr Clark clearly showed intention to be bound

Question 29

(Capacity) What are the facts in Chapple v Cooper?

Answer 29

A woman (a minor) was held liable for the funeral costs of her late husband 
The law at the time allowed minors to marry 
Funeral costs are classed as 'necessaries' and are the responsibility of the surviving spouse

Question 30

(Capacity) What are the facts in Ryder v Wombwell?

Answer 30

Between a seller and a minor
The seller was selling diamond encrusted cufflinks
The minor entered into the contract, but it was deemed that the cufflinks were not ‘necessaries’
The contract therefore could not be upheld

Question 31

(Terms of a contract) What are the facts in Scott v Hanson (1829)?

Answer 31

A water meadow that was being sold was described in the advert as an ‘uncommonly rich water meadow’
The water meadow was actually of a particularly bad quality
The court held that the description of the water meadow was a mere puff so was not legally actionable

Question 32

(Implied terms by custom) What are the facts in Hutton v Warren (1836)?

Answer 32

A tenant of farmland decided to quit working on the farm
He relied on a custom of the local area which allowed him to claim an allowance for the seeds and the work he put in before he quit
As this was a customary practice for the locality, it was upheld and the man could receive an allowance

Question 33

(Implied terms which are part of the trade) What are the facts in British Crane Corp Ltd v Ipswich Plant Hire (1975)?

Answer 33

When a crane is hired in the UK, everyone uses a standard contract
The parties didn’t sign the agreement, but the court accepted that the contract still existed

Question 34

(Implied terms which give business efficacy) What are the facts in The Moorcock (1889)?

Answer 34

A boat was contracted to be tied to a jetty on the River Thames
The tide went out, and the boat hit the river bed and was damaged
This was determined to be an implied term as it would be ridiculous to have a contract if the boat was to be damaged every time it were to be tied to the jetty

Question 35

(Innominate terms) What are the facts in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd?

Answer 35

A ship was chartered to the defendants for 2 years
The agreement included a term that the ship would be seaworthy throughout the period of hire
Problems developed with the engine of the ship and this caused the ship to be out of service for 20 weeks in total
Defendants repudiated the contract as a result of a ‘breach’
Claimants sued for wrongful repudiation, claiming that the seaworthiness term was not a condition of the contract
The defendants were liable for wrongful repudiation
Court introduced the idea of an innominate term - 20 weeks out of a 2 year period did not substantially deprive the defendants of the whole benefit of the contract so they were not entitled to repudiate

Question 36

(Discharge of a contract) What are the facts in Cutter v Powell (1795)?

Answer 36

Employment contract
C (sailor) agreed to sail with a ship on a particular voyage and bring the ship back to England
On completion, the captain would pay him 30 guineas
Part way through the voyage, C died
His widow brought a claim against the captain for part of the wages proportional to the amount of the voyage her husband had completed before his death
This was denied - the payment was only due when the contract was entirely complete

Question 37

(Discharge of a contract) What are the facts in Re Moore & Co v Laundauer & Co (1921)?

Answer 37

Contract for 3000 tins of fruit
Condition stated that they should be packed in cases of 30
Half of the tins were stacked in cases of 24 - this broke the contract
The buyer was able to repudiate the contract and not pay for the fruit
(Issue with this is that the buyer could repudiate for such small differences)

Question 38

(Discharge of a contract) What are the facts in Arcos Ltd v ER Ronaarsen & Son (1933)?

Answer 38

Contract for wooded staves to make barrels
A term of the contract was that the staves were to be half an inch thick
Almost all of the staves were thicker than half an inch thick (even if only be a tiny bit)
The staves were still perfectly suitable to make barrels with, but the court said the buyer could repudiate the contract
(Issue with this is that the buyer could repudiate for such small differences)

Question 39

(Discharge of a contract - exceptions to the strict performance rule - De minimis non curat lex) What are the facts in Reardon Smith Line Ltd v Yngvar Hansen-Tangen (1976)?

Answer 39

The law does not concern itself with trivial matters
Contract for charter of a tanker which hadn’t been built yet
Contract identified specifications for the tanker and the hull number
The port where the ship was supposed to be built was busy so the tanker was sent to be built at another port - this led to a different hull number
The tanker matched all specifications besides the hull number, and the claimant tried to repudiate the contract because of the difference in hull number
Such a minuscule detail, the court wouldn’t allow them to repudiate

Question 40

(Discharge of a contract - exceptions to the strict performance rule - divisible contracts) What are the facts in Maple Flock Co v Universal Furniture Products (Wembley) Ltd (1934)?

Answer 40

Contract to supply 100 tonnes of rag flock - used to stuff furniture
Rag flock was to be sent in instalments of 1.5 tonnes each
All instalments were fine except for one, which had been contaminated
The buyer attempted to reject the entire contract
Court said they could refuse the defective instalment but not the whole contract

Question 41

(Discharge of a contract - exceptions to the strict performance rule - partial performance) What are the facts in Sumpter v Hedges (1898)?

Answer 41

Contract to build 2 houses on D’s land
Partway through, the builder abandoned the project
Had to employ a different builder to complete the houses
The first builder (C) tried to claim part payment for the work he completed before he abandoned the project
This was rejected - the owner of the land had no reasonable choice but to accept the work

Question 42

(Discharge of a contract - exceptions to the strict performance rule - substantial performance) What are the facts in Hoenig v Isaacs (1952)?

Answer 42

Contract to refurbish a flat for £750
When the decorator had finished, there was found to be some minor shortfalls
It would cost £56 to fix the shortfalls
The decorator was entitled to the full amount of money, minus the £56 it would cost to repair the shortfalls

Question 43

(Discharge of a contract - actual breach) What are the facts in Pilbrow v Pearless de Rougement (1999)?

Answer 43

Contract between a client and a solicitor’s firm
A term of the contact was that the legal work would be completed by a solicitor
The work was not done by a qualified solicitor, but was still of satisfactory quality
This was classed as an actual breach - an obvious break in the term

Question 44

(Discharge of a contract - anticipatory breach - affirm the contract) What are the facts in Avery v Bowden (1866)?

Answer 44

Contract for the charter of a ship
It was made clear in advance that they no longer wanted to carry on with the contract
The owners of the ship carried on with the contract hoping that it would go through
It became illegal for the ship to be kept at the port specified in the contract due to the Crimean War
The contract was frustrated - they were no longer able to sue for breach

Question 45

(Discharge of a contract - anticipatory breach - claim immediately) What are the facts in Hochster v de la Tour (1853)?

Answer 45

Contract for a courier service in June
The contract had been made in April
In May, D wrote to C saying they no longer needed the courier service
Court held that C was entitled to sue for breach immediately even though the due date had not passed

Question 46

(Discharge of a contract - anticipatory breach - completing the contract alone) What are the facts in White & Carter v McGregor (1961)?

Answer 46

Contract for an advertisement
C was to make metal plates advertising D’s garage
The metal plates were supposed to be fixed to several places for a 3 year period
On the same day that the contract was made, D repudiated it
C made the plates, fixed them to the specified places for 3 years and then sued for the entire contract
Court allowed this

Question 47

(Discharge of a contract - time terms) What are the facts in Union Eagle v Golden Achievement (1997)?

Answer 47

Contract for the sale of a flat in Hong Kong
Contract said that the completion of the sale must be by 5pm on a specific day as ‘time was of the essence’
Documents were received 10 minutes late
Courts said that the seller could repudiate the contract as the market for flats is volatile and the contract clearly stated the time

Question 48

(Discharge of a contract - time terms - previous breaches) What are the facts in Charles Rickards v Oppenheim (1950)?

Answer 48

Contract to build the body of a car
Failed to do so in the original time frame (6-7 months)
Given an extra 3 months, failed again
Given a final 4 weeks to complete the car, failed once again
C was able to repudiate the contract because of the constant failure to complete

Question 49

(Damages) What are the facts in C&P Haulage v Middleton?

Answer 49

C hired a garage on a rolling 6 month contract (contract runs for 6 months, either party can terminate it after that period or the contract can run for another 6 months)
C hired the garage so that they could run a business from the premises
The breach was that the owner terminated the contract early - there was no reason for the termination
The loss that was trying to be recovered was the cost to install certain specialist equipment on the property - he argued that the loss was due to the early termination
Refused to allow recovery - losses were not caused by the breach, even if the contract had continued they could not claim for the specialist equipment
No causal link established

Question 50

(Damages) What are the facts in Stansbie v Troman?

Answer 50

A decorator breached his responsibility to take reasonable care by leaving the door to the property unlocked when he left to buy more wallpaper
A thief got in and stole goods
The argument was whether the loss of the property was caused by the decorators breach or whether the causal link was broken by the thief
Held that the theft was reasonably foreseeable and the decorator could’ve taken reasonable steps to prevent it
The actions of the thief didn’t break the causal link because the theft was reasonably foreseeable
The decorator was liable for the theft

Question 51

(Damages) What are the facts in Weld Blundell v Stephens?

Answer 51

C employed a firm of accountants to investigate Company A
C wrote to the accountancy firm
The letter contained some derogatory statements about some of the directors of Company A
One of the partners of the accountancy firm left the letter on display in Company A’s office
One of the managers reported the letter to the directors who had been named in the letter
The breach was that the accountancy firm hadn’t treated the information in the letter as confidential as they left it on display
Loss was Company A’s directors suing the claimant for defamation and the claimant was ordered to pay damages
C tried to recover damages - court held that the defamation claim wasn’t caused by the breach, it was caused by the manager who reported the letter - unforeseeable
Only nominal damages were awarded, causation was broken

Question 52

(Remoteness of damages) What are the facts in Hadley v Baxendale?

Answer 52

C owned a mill
Mill broke down - broken shaft
The broken shaft was sent to the manufacturers as a model for the new shaft
C hired D to transport the shaft
D failed to deliver the shaft on time (breach)
As a result, the mill was shut down for much longer than expected because (unusually) there was no spare shaft at the mill
C sued D for loss of profits due to the delay
It was held that the loss cannot be recovered unless it arises naturally from the breach or it was in contemplation of both parties when the contract was formed
The loss of profits could not be regarded as a normal loss because the loss was not an inevitable consequence of the delay - it was common practice for mill owners to keep a spare shaft
D had no knowledge of the effect of the delay as they didn’t know that C didn’t have a spare shaft

Question 53

(Remoteness of damages) What are the facts in Victoria Laundry v Newman Industries?

Answer 53

C wanted to extend the business and entered into a contract for a new boiler
Delivery date for the boiler was set in June but the boiler wasn’t actually delivered until November (breach)
C lost out on general business and had to turn down government contracts which came unexpectedly
The lost profits between June and November would be recoverable under the objective limb of Hadley v Baxendale
The loss of government contracts were not recoverable - not foreseeable by the reasonable person, the boiler company was not aware of the contracts

Question 54

(Remoteness of damages) What are the facts in The Heron II?

Answer 54

D entered into a contract with C to transport sugar but there was a delay in transport
The delay was caused by D
The sugar was sold at a loss as a result of the delay
D knew that C was a sugar merchant and that there was a sugar market at the port that they were sailing to
D was not aware of C’s specific intention with the sugar
Held that D should’ve known that it wasn’t unlikely that the sugar was going to be sold on arrival
Also should’ve been aware of the fluctuating price of sugar
C could recover the losses suffered

Question 55

(Remoteness of damages) What are the facts in Balfour Beatty v Scottish Power?

Answer 55

C attempted to recover the costs of demolishing and rebuilding the Edinburgh bypass
C needed a continuous flow of concrete
Electricity failed - continuous concrete was stopped
Created financial liability as they had to redo the bypass
Held that the losses were too remote - nothing to suggest that the electricity company knew that there needed to be a constant flow of concrete

Question 56

(Remoteness of damages) What are the facts in H Parsons v Uttley Ingham?

Answer 56

Involves the supply of an animal feeder
When delivering the animal feeder, the ventilation hatch was closed
When the animal feeder was installed the ventilation hatch wasn’t opened
The food that was put in the feeder then became mouldy and dangerous to eat
D breached the contract by installing the feeder with the hatch closed
C was seeking losses to compensate for the large amount of pigs that died as a result of the mouldy food
Far more pigs died than what was expected
Court said that it doesn’t matter if the loss is much more than expected, but the type of loss was foreseeable so the losses could be claimed

Question 57

(Remoteness of damages) What are the facts in Jackson v RBS?

Answer 57

Supplier based in Thailand supplied dog chews to an importer who then sold them to a UK distributor
Importer adds a premium to the price before the sale in the UK
The bank breached their contract by disclosing to the distributor what was actually charged by the supplier for the dog chews
The distributor decided to buy directly from the supplier instead of the importer to save money
The importer sued the bank for breaching the contract and to recover the damages
It was held that the opportunity to earn profits from future contracts with the distributor was a loss arising in the natural course of events
4 years of profit could be recovered

Question 58

(Remoteness of damages) What are the facts in Transfield Shipping v Mercator Shipping?

Answer 58

D hired a ship for 7 months and returned the ship 9 days late
Owners of the ship had arranged a different charter for 4-6 months and as a result of the delay the latter charter had to be renegotiated and this cost the owners £1.3 million
Losses were foreseeable but it was generally understood that in the industry that the damages recoverable would be based on the market price for the delayed days
The court allowed the recovery of the whole cost of the charter
D appealed
HOL unanimously allowed the appeal but differed in reasoning
2 judges said that the losses were foreseeable but there was no assumption of responsibility

Question 59

(Liquidated damages) What are the facts on Dunlop Pneumatic Tyres v New Garage?

Answer 59

Dunlop had a clause in its sales terms which imposed a minimum price on resales of its tires by NG
NG had to change a minimum amount of ever sale of tyres
Contract stated that if NG breached that term by going below the minimum price it would be liable to pay Dunlop £5 by way of liquidated damages for every tyre cover or tube
HOL held that this was a liquidated damages clause and that it was a genuine pre-estimate of the likely loss suffered by Dunlop if the term was breached
(THIS IS THE HISTORIC POSITION)

Question 60

(Liquidated damages) What are the facts in Makdessi v Cavendish Square Holdings?

Answer 60

Mr Makdessi was a shareholder - sold part of his shareholding of a group company to Cavendish
Price for the transfer of the shares was payable in instalments
In the contract there were restrictive covenants (provisions which set out what must not be done) and there was a clause which stated that certain things would happen if the restrictive covenants were breached
If the restrictive covenants were breached, Makdessi would lose his interim / final payment, and Cavendish would have the opportunity to buy the rest of the shares at the net asset value
Restrictive covenants were breached - CoA held that the clauses were not legitimate liquidated damages clauses so they were unenforceable
This goes against the guidelines of the Dunlop case
SC was not prepared to abolish or restrict the law
It was held that the true test is whether the clause imposes a detriment / deterrent on the contract breaker out of all proportion to any legitimate of the innocent party in the enforcement of the primary obligation
The clauses were commercially justified and the appeal was allowed

Question 61

(Unliquidated damages) What are the facts in Ruxley Electronics & Construction v Forsyth?

Answer 61

D asked for a swimming pool to be built at a specific depth
The pool ended up being shallower than what was agreed in the contract but it was still safe to swim and dive in
Courts struggled to find the expectation loss - going on the financial difference, D would receive nothing, only nominal damages
If the cost of cure was used, they would have to demolish and rebuild the pool which would cost £22,000
Trial judge awarded £2500 for loss of amenity
CoA overturned this and awarded £22,000
HOL said that awarding £22,000 was unreasonable as the pool was still perfectly useable
HOL said that C was liable for loss of amenity so D received £2500

Question 62

(Unliquidated damages) What are the facts in Farley v Skinner?

Answer 62

Damages awarded for mental distress / disappointment where a distinct and important part of the contract was to provide pleasure / peace etc
C purchased a house in Sussex
Surveyor said it was unlikely that the property would suffer greatly from the noise from planes on their way to Gatwick
C relied on the report and bought the house
The house was actually near a navigation beacon so planes queued above the house
There was no loss in the value of the house
C was awarded £10,000 for loss of enjoyment
It didn’t matter that it wasn’t the object of the contract as long as it was a major part of it

Question 63

(Mitigation of loss) What are the facts in British Westinghouse v Underground Electric Railways?

Answer 63

C agreed to supply machinery to D
D had insisted on a certain specification in the machinery that was not present in the machinery that was delivered
D had to buy new machines from a different supplier that met their specification
New machines were so efficient that they quickly paid for themselves
There was a breach but D had mitigated its losses so successfully, it wiped out the loss

Question 64

(Restitution interest) What are the facts in Attorney General v Blake?

Answer 64

A notorious spy and traitor published his autobiography in breach of his contract with the UK government
This led to full restitution
The man had to give up all of the profits he made from the book to the UK government