Concepts and Cases Flashcards
Adams v Lindsell
Facts: Transaction by post, the acceptance letter was misdirected to the wrong Broomsgrove, and delayed 2 days. In the interim, seller sold the goods to a third person. Held that the contract had been accepted by Post Office rule, and that the contract was breached by seller.
Significance: Post Office rule
Alec Lobb v Total Oil
Facts: Lobb ran a petrol station which Total Oil supplied. Lobb was operating at a loss, decides to enter into a sale and leaseback agreement with Total Oil. Total Oil warned that their offer wouldn’t be very competitive, Lobb said that’s okay. Lobb accepts his lowball offer (which bound them to only offer Total Oil petrol) after his solicitor advised him not to, and even Total Oil had asked “are you sure”? Lobb sues for duress.
Significance: Duress - if acting against legal advice, or if the other party was reluctant, then no pressure was exerted.
Attwood v Small
Facts: Sale of a goldmine. Buyer investigated amount of gold. Sale went through. Then the mine ran out of gold. Sued for misrepresentation, seller argued that they were fully induced by their own investigation, so no misrepresentation.
Significance: Misrep - no inducement if relied on own investigation
Avon Insurance v Swire Fraser
Facts: Claimant (Avon) was a stop loss insurance company, defendant (Swire Fraser) was an insurance broker. Defendant had claimed that each individual insurance claim would be assessed by their lead underwriter. In truth, claims were assessed by individuals overseen by lead underwriter. Claim unsuccessful because statement was substantially true, also no proof of inducement.
Significance: Misrep - it’s not a misrep/false statement if it is substantially correct
B&S Contracts v Victor Green Publications
Facts: Victor Green had a stand at a trade expo, B&S were contracted to build the stand. A few days before the event, B&S had an internal dispute and asked Victor Green to pay in advance plus an additional £4k. Victor Green agreed, then sued for duress as there was no time to find someone else or sue.
Significance: Duress - lack of practical choice
Balfour v Balfour
Facts: The Balfours were a married couple. Husband, while away from home, promised to send his wife £30/month maintenance. When he stopped, his wife sued. Court denied the claim as it was a domestic situation, so no ICLR and not for courts to adjudicate.
Significance: Assumed no ICLR in domestic/familial situations.
Barton v Armstrong
Facts: Barton claimed he contracted an assassin to take out Armstrong if Armstrong didn’t enter into contract.
Significance: Example of duress to person.
Bisset v Wilkinson
Facts: Wilkinson was buying farmland from Bisset for sheep-rearing. Bisset had said that it could sustain 2000 sheep. Buyers struggled to maintain that number of sheep (but note they were less experienced sheep farmers).
Significance: Misrep - statement of opinion vs fact. Statement was ruled opinion, and not misleading, as a reasonable person would understand there are caveats implied (e.g. management of farm).
Bowerman v ABTA
Facts: Bowerman booked a ski trip through a travel agent that was a member of the ABTA. The travel agent became insolvent before the trip, but ABTA’s marketing materials had promised a money back guarantee. Bowerman sued for breach of contract, but ABTA argued that there was no contract between them. They also argued that paying out was policy, not contract. CoA held that ABTA’s marketing materials were a unilateral offer that was accepted when Bowerman chose to book through an ABTA member. Also held that ABTA was bound by their representation of the financial guarantee.
Significance: ICLR assumed in commercial relationships. Also example of unilateral offer. Collateral contract as well?
Bunn v Rees
Facts: R had sufficient business experience to understand the natural meaning of and the effect of signing a document entitled “agreement to purchase” and thus he failed to show that he had not intended to create a binding contract for the sale and purchase of his company’s share capital.
Significance: ICLR - Commercial relationships presume ICLR
Butler Machines v Ex-Cell-O
Facts: The plaintiff sellers offered to deliver a machine tool on condition that orders were only to be accepted on the terms set out in the quotation. The sellers’ terms included a price variation clause. The defendant buyers replied with an order containing different terms and no price variation clause. The order had a tear-off slip of acknowledgment on those terms, which acknowledgment was duly signed by the sellers. Due to the buyers’ delay in accepting delivery the sellers invoked the price variation clause. The sellers were successful at first instance but on appeal, held, allowing the appeal, that the buyers’ reply was a counter offer which the sellers had accepted by their acknowledgment.
Significance: Example of Battle of Forms. Most recent form is the offer on the table, rejects previous drafts.
Car & Universal Finance v Caldwell
Facts: Car was bought with counterfeit check, check bounced. New owner had disappeared, seller contacted AA and police, but thief was never found. Car was later sold on, new buyer went to register the car, original owner got a notice about a sale of the car. Brought it to court, and original owner was able to recover car as he rescinded the agreement when he contacted AA and police to recover the car.
Significance: Must inform defendant of rescission. Also example of not affirming contract (TAIL).
Carillion Construction v Felix
Facts: Carillion were buildings, Felix was cladding subcontractor. Cladding deliveries were running behind. Felix told Carillion that further deliveries would be delayed unless they paid the full amount. Carillion considered applying for injunctive relief but would take too long, as the project was due for completion shortly and was behind due to delayed cladding. Carillion paid the sum but also made a written complaint, mentioning duress. Felix completed deliveries; Carillion applied for rescission due to duress. Was successful - ruled duress due to lack of practical choice, coupled with Felix’s original delay.
Significance: Example of duress - illegitimate pressure
Carlill v Carbolic Smoke Ball
Facts: Defendants were proprietors of the “medical device” called a Carbolic Smoke Ball. Their newspaper advert said £100 would be awarded to any person who contracted influenza after having used one of the balls in a specified manner for a specified period. Plaintiff used the device in accordance with instructions and contracted influenza within the specified period. Defendants attempted to argue (i) that no contract existed between the parties and (ii) if a contract did exist, it was a wagering contract which was void. Court ruled it a binding unilateral offer.
Significance: Unilateral offer
Central London Property Trust v Higher Trees House
Facts: Owner was letting the property via a subleasor. Struggling to find tenants, they halved the monthly rent. Once tenants came back, they wanted to put the rent back up. Court ruled rent could be raised back up, but no clawbacks would be permitted during the reduced period.
Significance: Example of promissory estoppel
Chapelle v Nestle
Facts: Nestle offered to sell Chapelle records at a discount if presented with 3 chocolate bars upon sale. Chapelle (plaintiffs) sought an injunction restraining the manufacture and sale of the records because they breached copyright. Argued no consideration in the promotion.
Significance: Consideration doesn’t require an objective economic value. The value of the wrappers didn’t have to equate to the value of the discount.
Clarke v Dickson
Facts: Company sold, had a particular structure. Then was restructured, and it was impossible to revert back, so rescission was impossible.
Significance: Example of Imposssibility being a bar to rescission.
Collins v Godefray
Facts: A lawyer was subpoena’d to be a witness, tried to recover money for his loss of time. Claim rejected, as he was required by the subpoena to attend (public duty), so can’t claim renumeration.
Significance: No consideration if the act was already part of public duty.
Commercial Banking of Sydney v RH Brown
Facts: Two companies, needed to know about the financial status of the other. Had the banks inquire to each other – info came back incorrect. D said we didn’t disclose to C, we disclosed to C’s bank. This is an indirect misrepresentation, still a misrepresentation.
Significance: Misrep - addressed to claimant. Example of indirect misrep.
Contracts (Rights of Third Parties) Act 1999
Third party still cannot be subject to burden of a contract
Can benefit if contracts expressly provides or purports to confer a benefit
Certain contracts excluded by section 6
Common law exceptions still apply by section 7
Cooper v Phibbs
Facts: Owner of a fishery died. Prior to death, his nephew had been running the fishery. At the time of death, arranged to purchase the fishery from his aunt. Turns out, the nephew already owned an ownership interest in the fishery, so was buying something he already owned.
Significance: Example of res sua - mistake of ownership.
Courturier v Hastie
Facts: Corn shipping to Greece. Purchase of the cargo while in transit. Unknown to buyer and seller, the cargo had fermented. Captain had stopped the ship and sold what he could, in order to retain what value was possible. At the time of the contract, the corn essentially didn’t exist.
Significance: Example of res extincta (mistake of subject matter).
CTN Cash & Carry v Gallagher
Facts: CTN Cash and Carry were the supplier of cigarettes to Gallagher on a sale or return basis. Lorry full of cigarettes was stolen, neither party insured. Dispute over who had the suffer the loss. No one could find the contract. CTN said that if Gallagher refused to suffer the loss, they would end the contract forever. Gallagher agreed to suffer the loss. Then, the contract was found, and stated the supplier was to suffer the loss.
Significance: Example of good faith pressure, since the supplier genuinely believed the contract said something else.
Cundy v Lindsay
Facts: Mail order handkerchiefs. Buyer wrote on note paper and signed his name to look like something slightly different, looking like a company across the street. Handkerchief company thought they were dealing with the company across the street, which was reputable. Handkerchiefs get sold on, middle man disappears.
Significance: Court ruled that if dealing by correspondence, you are entitled to believe you’re dealing with the person identified by the documents, so in this case the contract was void for mistake.
Derry v Peak
Facts: Company ran trams. Wanted to raise funds, said they had the right granted by board of trade to use steam to run their trams. Had been told by board of trade they may be allowed to use steam, subject to further requirements. Told their shareholders they had this right. Share purchasers sued for misrepresentation. HoL came up with the below test. Initial trial: no fraud. Appeal: fraud found. HoL: no fraud
Significance: Test for fraudulent misrep, motive irrelevant. False rep is made 1) knowing it’s untrue, 2) without belief in its truth, or 3) reckless as to its truth.
Dimmock v Hallett
Facts: Sale of farm, claimed the land was fertile and improvable (puff), land was let out to paying tenants, implying purchaser could benefit from this (half truth). However the tenants had already given notice – this assertion was found to be more substantial. It was strictly true, but intentionally implied something untrue. The half truth was ruled a misrepresentation.
Significance: Example of mere puff not affecting a contract/ half truth ruled as a misrep
Does the misrep have to be the only inducement?
No, must be an inducement (JEB Fasteners v Marks Bloom) but need not be only inducement (Edgington v Fitzmaurice)
Doyle v Olby Ironmongers
Facts: The plaintiff purchased an ironmongers’ business from X. He did so on the strength of X’s representations (a) as to the size of the weekly wages bill and (b) that all the trade was conducted from the shop. In fact both representations were false to the knowledge of X inasmuch as a part-time traveller was employed whose wages were not disclosed to the plaintiff and by whom half the trade of the business was conducted (ie, outside the shop). The plaintiff sued for damages for fraudulent misrepresentation and for conspiracy. He succeeded, and on his counsel’s submission the judge awarded GBP 1,500 damages, this sum being based on the cost of the services of a part-time traveller. On appeal by the plaintiff, held, allowing the appeal, (1) that the damages awarded had been calculated, erroneously, on the basis that they were damages for breach of contract; (2) that the damages ought to extend to the whole of the plaintiff’s loss; and (3) that, on the facts, the sum of GBP 5,500 would be awarded.
Significance: Fraudulent misrep - damages extend to all losses directly flowing from transaction, including actual losses and loss of profits.
DSND Subsea v Petroleum Geo Services
Facts: Commercial divers were hired to work on an oil rig. Spec changed mid-job, which was within the scope of the contract. However, the new spec was not covered by insurance. The divers asked for more money and insurance. Customer agreed and paid, later sued the divers for duress. Was ruled not duress, as divers stopped work in good faith.
Significance: Example of good faith stoppage, not duress.
Dunlop v Selfridge
Facts: Dunlop was a tyre manufacturer, sold tyres to Dew & Co with min retail price, Dew sold them to Selfridge. Selfridge agreed to the minimum resale price in exchange for a discount on the tyres they purchased from Dew & Co. Selfridge subsequently sold some of the tyres below the minimum resale price. Dunlop sued Selfridge for breach of contract, claiming that Selfridge was bound by the minimum resale price agreement between Dunlop and Dew & Co, even though Selfridge was not a party to that agreement. Dunlop could not enforce the minimum resale price agreement against Selfridge, no privity. Selfridge and Dunlop had no written contract. No implied contract as Dunlop gave no consideration to Selfridge for min RRP, and Selfridge was not an agent of Dunlop or Dew when agreeing to m RRP.
Significance: Consideration can’t move from promisee. Example of privity - burden couldn’t be imposed on Selfridge.
East v Maurer
Facts: D ran two hairdressing salons in neighbouring areas. P purchased one of the salons. During negotiations, D had falsely represented that he personally would not be working at his other salon. P failed to make a profit, and discovered that D was working full time at his salon. P was unable to sell the salon for three years. P was awarded damages including lost profits.
Significance: Fraudulent misrep damages include loss of profits.
Eastwood v Kenyon
Facts: Daughter placed under guardianship. Guardian borrowed money for the daughter’s keep and education. Upon her marriage, her husband offered to pay off the guardian’s debt. Later changed his mind, guardian sued. Ruled that the promise to pay the debt was made after education and upbringing, so the education was not done in consideration of the payment.
Significance: Consideration - act can’t come before consideration/no consideration if you were doing the act anyways.
Edgington v Fitzmaurice
Facts: Edgington lent money to Fitzmaurice’s company based on statements made in a prospectus. Prospectus stated the company had acquired a valuable company and the loan was needed for renovations.Money was actually to pay off pressing liabilities. Statements in prospectus were false and Fitzmaurice knew them to be false. Edgington had relied on those statements when making his decision, but had also assumed he would get a first charge on company property, which was incorrect.
Significance: Misrep - inducement. False statement doesn’t have to be the only inducement (as Edgington was also induced by his own mistake about charges).
Entores v Miles Far East Corporation
Facts: English and Dutch company were communicating by Telex (fax typewriters). Dutch company made an offer, English company counteroffered, Dutch company accepted. As the acceptance was communicated in England, English jurisdiction applies.
Significance: “The contract is only complete when the acceptance is received by the offeror: and the contract is made at the place where the acceptance is received.” Post Office rule.
Erlanger v New Sombrero Phosphate
Erlanger bought an island for phosphate mining, then separately established a company, and sold the island to the company for double. Investors found out and sued for rescission based on non-disclosure. HoL held that Erlanger was in a fiduciary relationship to the investors, so had a duty of disclosure. Contract was rescinded.
Significance: Misrep - Duty to disclose in fiduciary relationships
Errington v Errington & Woods
Facts: Father bought a house for his son and daughter-in-law to live in. He paid the down payment and took out a mortgage, but the daughter-in-law was responsible (informally) for paying the mortgage. Father said he would transfer the ownership of the house to them once fully paid off. Once the mortgage was nearly paid off, father died and son left daughter to live with widowed mother. Widow sued daughter-in-law for possession of the house. She was unsuccessful, as she was bound by the unilateral offer made by the father (that the couple would own the house once they paid off the mortgage) which was only partially performed.
Significance: Offer recovation - can’t revoke if performance has commenced and it would be inequitable to revoke. Offeree must be given opportunity to complete.
Esso v Mardon
Facts: Esso offered to lease a petrol station to Mardon, quoting a particular annual throughput. Mardon relied on this estimate and entered into the lease. Actual throughput was much lower, and Mardon suffered financial losses. Mardon sued for misrepresentation. Esso argued that their statement was just an estimate, and Mardon should not have relied on it. CoA held that Esso owed a duty of care to Mardon to provide an accurate estimate. Reasoned that Esso had special knowledge and expertise, which Mardon relied upon. Ruled that Esso had made a negligent misstatement.
Significance: Negligent misrepresentation - if defendant had special knowledge/expertise, more likely to be negligent.
Fisher v Bell
Facts: Flick knives on offer in shop window. Selling flick knives is illegal, but defendant argued he wasn’t in the act of selling them, so wasn’t guilty yet. It was an invitation to treat, not an offer of sale.
Significance: Adverts are an invitation to treat. The offer is made and accepted when goods are brought to the counter and money is handed over.
Foakes v Beer
Facts: Agreed to pay £X up front and the remainder in instalments, which were paid. Loaner later claimed for interest. Statute enabled her to claim interest, question here is whether there was due consideration for the interest. There was no due consideration from the defendant for the interest (i.e. she didn’t give up anything in order for it to be forgiven) and as such she couldn’t get out of it.
Significance: Part payment doesn’t settle a debt as no consideration for the gap.
Foster v MacKinnon
Facts: Signatory was senile, couldn’t recognise their own signature, and was only shown the back of the document. This was intentionally done by other party, so it was fraud.
Significance: Example of valid non est factum due to fraud.
Gibson v Manchester City Council
Facts: Council treasurer wrote to council tenant informing Mr Gibson that the council “may be prepared to sell” the council house to him, inviting the tenant to make a formal application. Gibson made the application, but then the council didn’t go through with the sale. Gibson sued, unsucessfully. As the original letter offering the property for sale said we may be prepared to sell, it was an invitation to treat and not final upon acceptance, i.e. not an offer, no legal status.
Significance: Offers must be clear, certain, final upon acceptance. Also example of council having no ICLR.
Great Northern Railway v Witham
Facts: Parties had a framework agreement, subject to specific orders from time to time. GNR made an order, Witham refused to supply. Found to be in breach of contract, as GNR had met their conditions.
Significance: An offer can be revoked if not all conditions have yet been met.
Hartley v Ponsonby
Facts: Sailors on a ship, some deserted, and wages were promised to be redistributed to remaining crew. When the wages weren’t distributed, sailors sued. Question was on consideration, and found that since there were many deserters, the journey was significantly harder with a smaller crew, so the additional work was good consideration for the additional payment.
Significance: Consideration - change in effort.
Hartog v Collin & Shields
Facts: Negotiations were made on a price per product. Final document mistakenly read as “price per pound”, roughly a 5x reduction in price. Buyer signed it.
Significance: Can’t snatch a bargain. Example of unilateral mistake about expression of intent.
Horsfall v Thomas
Facts: Sale of a cannon. D (seller) was aware there was a hole in the cannon. Painted over it and hid the hole so it wasn’t visible. Purchaser didn’t examine the gun, just bought it. Then it blew up after the transaction. Court ruled attempted concealement. However, because claimant didn’t examine the guy, they weren’t induced.
Significance: Misrep - failure to investigate/didn’t perceive the misrep.
Howard Marine v Ogden
Facts: HM got a register of all commercial ships, looked the vessel up to see weight allowance for cargo. Was significantly wrong, barge overloaded, then sank. Defendants argued that they had reasonable grounds for belief as they referenced a well-known, well-trusted register. Court ruled not reasonable grounds – HM had original documents for the ship, but they were in German, and no one spoke German in the office. Court argued that the reasonable action would have been to have the documents translated.
Significance: Example of difficulty to prove reasonable grounds for belief. Negligent misrep - fiction of fraud, burden on defendant to show reasonable grounds for belief
Huyton v Victor Cremer
Facts: Argument over payment of wheat presented with documents that weren’t in the agreed form. Parties started to make motions to sue, but then settled. Cremer argued not to be bound by the settlement agreement due to economic duress. However, he could not demonstrate illegitimate pressure caused him to enter into the agreement, i.e. he wouldn’t have compromised but for the pressure.
Significance: Economic duress - was the pressure a significant cause of the victim’s decision to enter into contract?
Hyde v Wrench
Facts: Someone selling a farm. Seller offered £1000, buyer offered £950, seller declined. Buyer then offered £1000, no response. While there was no explicit withdrawal of the original offer, the buyer had rejected it by countering. No contract was between them as the buyer’s final offer was a separate offer from the initial offer, and the seller did not accept.
Significance: Making a counter offer rejects the initial offer – can’t go back to it. Also, acceptance must be communicated.
Ingram v Little
Facts: Old ladies lived together, shared a car, sold the car. Buyer gave them a name to be looked up in the phone book, confirmed it was a real person, accepted a check, rogue buyer disappears. Court ruled that since they investigated the identity, they demonstrated that the identity is important (rebutting Phillips v Brooks).
Significance: Unilateral mistake - face-to-face sales, can make identity fundamental if investigated
J Evans v Merzario
Facts: Merzario (D) were the shippers of machines from Italy for JE (C). Claimant asked that, going forwards, machines be packed in containers (instead of crates) and shipped under deck. D agreed. C and D agreed a new written contract, missing this detail. Containers were shipped on deck. C claimed damages for breach of contract. D said this wasn’t in breach of the written contract, and any other promise was not contractual. On appeal, was found that the verbal promise formed part of/superseded any conflicting terms of the contract, as it was the reason C entered into the contract.
Significance: Terms - overriding oral assurances can be enforceable contractual promises, and can override written terms.
Jackson v Horizon Holidays
Facts: The Jackson family bought a prepaid holiday package. At the last minute, Horizon Holidays changed the hotel – rooms were dirty, fewer amenities, etc. Mr Jackson sued for the family’s losses, and was only awarded ¼ of the value as the rest of the family were 3rd parties. On appeal, judges ruled he was contracting on behalf of the group.
Significance: Judicial activism - reading into the situation an assignment of obligations (privity).
JEB Fasteners v Marks Bloom
Facts: JEB took over a company of which MBC were the auditors. The primary motive for the take-over was that JEB should thereby acquire the services of the two directors of the company. At the time of the take-over JEB appreciated that the audited accounts contained some inaccuracies, but did not realise just how inaccurate they were. At all times the auditors, MBC, were fully aware that JEB were taking into account the figures that they had produced of the company’s position. Held, that the judge had been entitled to dismiss JEB’s claim for damages. There was ample evidence to justify his finding of fact that JEB had formed its own judgment of the worth of the company. The judge had been incorrect in separating out the issues of whether JEB relied upon the accounts and whether they suffered loss by so doing, because both were really different aspects of the question of causation.
Significance: Misrep - inducement. Weren’t inducedn by the accounts because JEB knew they were somewhat inaccurate and would have acquired the company anyways for the directors.
Jones v Padavattan
Facts: Mother agreed to pay for daughter’s legal studies. She bought a house for her daughter to live in until she passes the Bar. 5 years go by, the daughter doesn’t complete her studies. Mother wants the house back and tries to evict her daughter. Daughter argues that a binding contract didn’t exist.
Significance: No ICLR in domestic/familial relationships.
Keates v The Earl of Kadogan
Facts: Sale of property. D (seller) made a statement about the nature of the property. They didn’t say that occupying tenancies were rubbish and had also given notice. Buyers bought the property, realised it wasn’t a good deal, sued on the basis that the seller had withhold information. Court rules you can’t have misrepresentation on silence alone. You should have asked.
Significance: Silence cannot be a misrepresentation.
King’s Norton Metal v Edridge
Facts: Rogue buyer used fancy stationary to make them look like a big fancy fictitious company, pulled the same con as Cundy v Lindsay.
Significance: Court ruled that the identity of a fictitious company can’t be important because you couldn’t possibly have been dealing due to previous reputation. Not sufficiently fundamental. “Credit-worthiness” is a mere attribute, and not fundamental. Misrep - distance sale - identity must be important to the innocent party.
Kleinwort Benson v Malaysia Mining Corp
Facts: KB lent a subsidiary of MMC money. MMC gave them a letter saying it was their policy at all times to ensure at all times subsidiaries can meet their liabilities. When KB was not paid back, they sued MMC on the basis the letter was false. Court said it was a statement of policy, not a statement of fact.
Significance: Misreps must be a statement of fact. Statements of policy can be true if no misrep was made as to compliance with the policy.
L’Estrange v Graucob
Facts: Café owner contracted to install a cigarette machine. Café owner signed the contract, which included clauses protecting the owner of the machine from liability for faults in the machine. Café owner sued when a fault developed, saying she hadn’t read the contract as she didn’t have her glasses with her. Court denied her claim for her negligence in failing to read a perfectly legible contract.
Significance: Mistake - no protection against your own negligence. Non est factum is not a defence if you were negligent. Incorporation - signature is (generally) binding.
Leaf v International Galleries
Facts: Sale of a painting by Constable. Later discovered to be a fake. Buyer sued for breach of contract but barred by time. Then sued for misrepresentation. Court could have granted, but argued that they waited too long. At the time, clock ticked from the sale.
Significance: Example of common mistake. Example of lapse being a bar to rescission.
Leonard v Pepsico
Facts: Pepsi Points case. Pepsi customers could earn loyalty points to be traded in for physical goods. TV ad featured a kid buying a jet with his Pepsi points. Leonard found you could purchase Pepsi points for 10c/point, so submitted a check for $700k/7M pepsi points. He sued to enforce the offer/acceptance of the unilateral offer, but was denied as it was clearly a joke.
Significance: ICLR is presumed in commercial situations, but can be refuted if offer is clearly a joke.
List the topics covered in class
Agreement
Consideration & Part Payment
Duress, Privity, & ICLR
Misrep
Mistake
Terms of a Contract
Exemption Clauses
Discharge of Contracts
Remedies
Long v Lloyd
Facts: Sale of a lorry, broke down due to misrepresentation. Buyer contacted seller, seller offered to fix it, buyer agreed, then it broke down again. Court ruled that agreeing to keep the lorry after the first breakdown affirmed the contract
Significance: Affirmation as a bar to rescission.
McInnerny v Lloyd’s Bank
Facts: M was selling companies. Asked the buyer’s bank for a letter of guarantee for payment. Bank wrote back that the “seller should be satisfied with the arrangements”. Then transaction went through, didn’t get paid, so M sued the bank. Statement was found to be too ambiguous to be actionable.
Significance: Misrep - must be an unambiguous statement.
Misrepresentation Act 1967
Defines misrep as a false statement, no reasonable grounds to believe its truth.
Governs damages.
Burden on statement-maker to prove reasonable grounds for belief in the truth of the statement.
Cannot exclude liabilites for misrep unless reasonable under UCTA/CRA.
Museprime Properties v Adhill Properties
Facts: Sale of 3 properties by auction. Auctioneer made representations that the new rents had yet to be agreed, but the specifics of the leases meant that the rents had already been agreed, lower than claimant would have liked. D tried to argue that it was an immaterial statement, but was found, regardless of materiality, to have induced the contract. C was permitted to rescind.
Significance: Misrep - subjective inducement when not objectively material.
MWB v Rock
Facts: Dispute between a tenant of serviced offices and the operator. Tenant accumulated arrears of licence fees, proposed a revised schedule of payments which deferred some payments and spread arrears over remaining license term. Tenant alleged that the operator had orally agreed to the variation schedule; operator said they had considered it merely a proposal. Tenant relied on the oral conversation, operator locked them out of premises for failing to pay. Contract included a no oral variation clause.
Signigicance: Promissory estoppel. Legal right to enforce the contract is only suspended while the situation is inequitable. Parol evidence - verbal variation wasn’t permitted by the contract, so unenforceable. Parol evidence trumps promissory estoppel if no words/conduct on both sides supported its validity. Also demonstrates time value of money, since the revised payment schedule was of less value to the operator despite being same numerical amount
New Zealand Shipping v Satterthwaite (The Eurymedon)
Facts: Stevedores loading goods onto a ship, damaged the goods. The shipper sued them, but the contract between the shipper and the carrier had a wide exemption clause absolving the carrier and any independent contractor from liability for damage. Carrier had employed the stevedores, so they were covered through an agency relationship.
Significance: Agency - third party taking the benefit of a contract.
Pan Atlantic v Pine Top Insurance
Facts: Dispute between a insurance policy writer and re-insurer. Policy writer failed to disclose full extent of losses in previous year prior to the re-insurance relationship being agreed. The failure to disclose was ruled material enough to be a misrep.
Significance: Misrep: For there to be inducement, the statement vs the truth must have been materially different. Established materiality can be established even if it would not have induced a reasonable person, and an objectively material statement can subjectively fail to induce someone. Also an example of duty to disclose in fiduciary relationships.
Pankhania v Hackney LBC
Facts: Car park being sold. Developers intended to turn it into flats. Council said the car park was currently occupied by someone under a “license” (as opposed to a “lease”). License doesn’t grant tenancy rights, just contractual rights. No legal right to stay. Widened the scope of “statement of fact” to include law/contractual terms.
Significance: Misrep can be a statement of law (as well as fact).
Pao On v Lau Yiu Long
Facts: Majority owners of Pao On sued a shareholder who had been looking to acquire the company. They had agreed to sell their shares to Lau Yiu Long for a certain price. Lau Yiu Long had also promised to give them a number of shares in a public company called World International. Pao On owners realised share price of World International would fall before transfer of ownership. Pao On owners then refused to sell their shares to Lau Yiu Long, breaching the contract, unless Lau Yiu Long indemnified them for the loss in value. Lau Yiu Long feared risking the whole agreement, so agreed. LYL refused to pay out the indemnity, arguing economic duress and past consideration for the indemnity. Court ruled the indemnity was binding and enforceable. The promised shares in World International were sufficient consideration for the Pao On shares. Share price falling was irrelevant, as hadn’t relied on the value of the shares in consideration of the contract. Consideration for the indemnity wasn’t past since the benefit obtained was progressing with the whole arrangement. Economic duress wasn’t valid because they had options - could have sued for breach of contract, but would have led to a delay/loss of shareholder value - was a calculated risk with legal advice.
Significance: Consideration - sufficient vs adequate. World Int’l shares were sufficient even at a lower value. Past consideration - an act done before a promise was made (original contract) was good consideration for that promise (the indemnity) if it was done at the promisor’s request and the parties understood the act was to be paid for at a later date, and the payment or benefit would have been enforceable had it been promised in advance. Duress - less likely to be duress if there was legal advice present and multiple options/calculated risk.
Paul Felthouse v Bindley
Facts: Verbal agreement to buy a horse, both parties walked away with a different price understanding. Seller wrote to buyer saying he’d been informed of a misunderstanding of the price, re-iterating a price of 30 guineas. Buyer wrote back offering to split the difference – “if I hear no more about him, I consider the horse mine at [price[]”. No reply sent. Six weeks later, seller’s auctioneer (who had been instructed to reserve the horse) mistakenly sold it. Seller writes to buyer acknowledging that he had sold the horse to him originally. Buyer couldn’t action against the auctioneer. Seller’s later letter failed the mirror test. Buyer didn’t own the horse when it was sold, as no written acceptance nor money had changed hands. There is only proof of intent to accept, not acceptance itself
Significance: No silent acceptance; acceptance not based on intent.
Payne v Cave
Facts: Sale at auction. Defendant offered £40 for the goods, then had a discussion with the auctioneer over how much it weighed, and rescinded his offer before the gavel went down.
Significance: An offer can be revoked any time prior to acceptance.
Peck v Lateu
Facts: Two women went to bingo together and agreed to pool their winnings. One won a bonus prize and claimed it wasn’t covered by the agreement.
Significance: ICLR - Previous conduct, had previously always shared all winnings.
Pharma Society v Boots Chemist
Facts: Self-service shop. Were medicines sold under supervision of a pharmacist?
Significance: In a self-service shop, the offer is the shopper bringing items to the desk for purchase, and the shopkeeper accepting money for the goods. Goods on shelves are invitations to treat.
Phillips v Brooks
Facts: Fraudster pretended to be Sir George of St James’ Square (who did exist), bought things via cheque to be delivered later from Phillips. Only took one ring with him, leaving the rest for “later collection”. Thief then sold the ring to Brooks. Jewellery seller pleaded mistake. Court ruled that the intent was to make the contract with the person in front of you, regardless of name. Contract wasn’t void for mistake, but was voidable for fraudulent misrepresentation. Entitled to rescind the contract, but can’t now that title had properly passed to Brooks.
Ratio: Third party rights as a bar to rescission - no rescission if the good or money is owed to an innocent third party. Mistake of identity in face to face sales - you are contracting with the person in front of you.
Pinnel’s Case
Facts: Pinnel lent Cole money, Cole paid back earlier in part (Pinnel agreed at the time), question as to whether Pinnel was owed the rest.
Significance: Terminating via agreement - consideration is the mutual waiver of obligations. Part payment can’t settle a debt, but part payment plus something else can settle a debt (including earlier payment).
Redgrave v Hurd
Facts: Selling a solicitor’s practice, seller said it did about £300 of business per year, but records only showed £200. Buyer asked how the difference was made up, and the seller produced some documents saying they referred to business not included in the summaries. Buyer didn’t read those documents over, but they showed only a very small amount of additional business. Sale documents were drawn up without reference to the amount of business. When the buyer found out the lower value of the business, he refused to complete. Seller sued for specific performance. Court ruled no general duty on claimant to investigate, so allowed the buyer to rescind. Innocent misrep, so no damages.
Significance: No general duty to investigate statements made.
Royscot Trust v Rogerson
Facts: Car dealer said to finance company that the customer had paid a higher deposit than truth (innocent misrep). Customer stopped paying finance, finance company sued the dealer. Finance company was entitled to all damages for all losses flowing from the misrep.
Significance: Clarifies that the calculation of damages is the same for fraudulent and innocent misrepresentation.
S Pearson v Dublin Corp
Facts: Pearson was contracted by the public authorities to build sewage works. Contract contained a clause stating the contractor can’t rely on any representations made in the plans or elsewhere. Pearson ran into issues due to inaccurate information provided by Dublin Corp. High Court and Court of Appeal held in favour of Dublin Corp, but HoL held in favour of Pearson. It’s unreasonable to expect a contractor to undertake major construction work without relying on misrepresentation by the authority. Also, since Dublin Corp had been fraudulent in their dealings, any investigation done by Pearson was beside the point.
Significance: Misrep - fraudulent misrep nullifies investigation
Scotson v Pegg
Facts: Buyer and seller both paid the same person to unload coal.
Significance: If multiple parties would have been able to sue, then they must also be made to pay in reverse circumstances. There can be consideration for a duty owed to a third party if you will also benefit from it.
Scruttons v Midlands Silicones
Facts: Scruttons the stevedores dropped barrels of chemicals, causing damages. Agreement between chemical company and shipping company included a limit of liability for damage to cargo. Scruttons argued it covered them as an agent. Court decided they weren’t an agent, so weren’t covered by the exemption.
Significance: Privity - third party can’t take the benefit from a contract. Agents must be granted authority, and the carrier hadn’t intended to make the stevedores agents.
Shanklin Pier v Detel
Facts: Shanklin Pier needed repainting. Detel, the paint company, told the Pier to instruct their painting contractors to use Detel paints. Paint didn’t last as advertised. Pier sued Detel, Detel argued that the sale was between them and the painting contractors. Judge ruled that Detel’s conversation with Pier about paint was a unilateral offer, thereby creating a contract which was collateral to that between the painters and Detel.
Significance: Example of collateral contract.
Shogun Finance v Hudson
Facts: Rogue had a stolen driver’s license, went to a Mitsu showroom, contracted to purchase a Mitsu car. Showroom contacted the finance company arranged the finance. Rogue sold the car to Mr Hudson. Finance company came after the car. Was the contract with finance company void for mistake? Judgement in HoL was not unilateral. Argued it was a distance sale as the finance company didn’t meet the rogue. Argued it could be thrown out by acceptance principles (offer made to owner of driver’s license, who did not accept). Also argued by mistake in accordance with Cundy v Lindsay. Found in favour of finance company.
Significance: Mistake - distance sales.
