Contract of law - definition and formation Flashcards
Spellman v Spellman (1961)
A husband bought his wife a car. The marriage had been under strain and the husband’s purpose in buying the car was to try save the marriage. unfortunately it was a doomed gesture and the couple later split up and went their separate ways. However, the husband took the car - his argument being that he had paid for the car he had every right to it now that the marriage was over. The wife argued that the husband was bound by his agreement to let her use the car. The court disagreed stating that the husband and wife had made a domestic agreement not a contract. Therefore, the wife could mot enforce the agreement before the courts
Jones v Vernons Pools (1938)
Mr. Jones filled in two winning entries on coupons for a sales promotion and sent it to Vernon Pools. The coupons contained the words of “binding in honour only” and that the entry of the coupon “shall not give rise to any legal relations.” The company claimed to only have received one of the coupons and not the other. However, Mr. Jones claimed that the coupon entry was a contractually binding arrangement and that he was entitled to the prize money. The primary question arose as to whether the coupons legally-bound the company to pay Mr. Jones the winning prize money.
HELD: The Court held that the existence of the terms “binding in honour only” and that the entry of the coupons “shall not give rise to any legal relations” on the coupons themselves demonstrated that the parties did not have the intention to be legally bound. The express provision was held to have the effect of expressly precluding and preventing the existence of a legally binding arrangement. This rebutted the presumption that the coupons would be binding at law. On this basis, Court held that the agreement was an agreement in “honour” and not a contract creating legal relations between the parties. Thus, Mr. Jones’ claim for the prize money was not an enforceable legal contract, and his claim was dismissed.
Robertson v Anderson (2002)
both women were friends who regularly attended bingo sessions together. On one occasion, the women travelled to the Mecca bingo Hall in Drumchapel from their homes in Dunoon. That particular evening, Anderson enjoyed a huge win of over £100,000. Robertson claimed that was owed half of the national prize - a claim that Anderson disputed. Evidence was heard that established that Robertson and Anderson had an agreement that they would share equally any money that they might win during a game of Bingo. As this case occurred before the introduction of the Gambling Act 2005, the inner house accepted that if one of the parties had attempted to sue Mecca for payment of winnings this action would have been unsuccessful. Was the agreement between Robertson and Anderson was a collateral contract and therefore enforceable despite the fact that it was slightly tainted by association with the main gambling contract between Anderson and Mecca.
HELD: by the inner house that Robertson could enforce the collateral contract that she had with Anderson. Collateral contracts are linked to another contract and they often give rise to a completely separate set of rights and duties. Their contract related to gaming, but it was not itself a gaming contract. The issue before the court - whether Anderson was under obligation to share with Robertson the winnings she received - did not involve the enforcement of a gaming contract.
Morton’s Trustees v Aged Christian Friend Society in Scotland (1899)
Morton had written to the Society agreeing to pay the pensions of 50 individuals selected by the Society for the remainder of their lives. Unfortunately, Morton died and the executors of his estate were unwilling to continue paying out the pensions of the 50 individuals. The Society claimed that Morton’s promise had bound his estate, even in death.
HELD: Morton had made an enforceable unilateral promise that continued to have legal effect after his death. His executors would have to continue to pay the life pensions until every one of the 50 individuals died. This could mean that a considerable period of time might pass before the consequences of the promise were fulfilled.
Carlil v Carbolic Smokeball Co (1893)
Mrs Carlil impliedly accepted purchasing the product and following the instructions to the letter. The manufacturers of the carbolic smokeball were so confident of its properties that they stated in the advertisements that they would pay £100 to anyone who bought the smokeball, used it according to strict instructions and still caught flu. They added that they had deposited £1000 in the alliance bank to show sincerity in the matter. Mrs Carlil bought the product, followed the instructions but still got the flu.
HELD: by the english court of appeal that the wording of the advert was such it amounted to an offer. there was a clear intention that the company intended to be bound by the offer. Mrs Carlil accepted the offer by performing the actions required by the advert. Mrs Carlil was therefore entitled to the money. This case illustrations that there can be implied acceptance of an offer. It also emphasises the importance of communication of the offer. If Mrs Carlil changed to buy a smokeball without having seen the advert, she would not have been entitled to claim the payment of £100. Her actions constituted implied acceptance of the offer because it was in response to the offer. Offers must be definite, capable of being accepted and the offeror must intend to be bound by the consequences of it being accepted.
Spencer v Harding (1870)
The defendants advertised a sale by tender of the stock in trade belonging Eilbeck & co. The advertisement specified where the goods could be viewed, the time of opening for tenders and that the goods must be paid for in cash. No reserve was stated. The claimant submitted the highest tender, but the defendant refused to sell to him.
HELD: Unless the advertisement specifies that the highest tender would be accepted there was no obligation to sell to the person submitting the highest tender. The advert amounted to an invitation to treat, the tender was an offer, the defendant could choose whether to accept the offer or not.
Powell v Lee (1908)
Powell applied for the post of Head Master of the Cranford School. The managers of the school considered Powell’s offer and decided to appoint him by three votes to two. The managers did not decide to how the results of the selection process were going to be communicated to the successful applicant. Dismore, one of the managers informed Powell that his application had been successful – this was completely truthful – however Dismore had no actual or ostensible authority to release this information to Powell. The managers later changed their earlier decision to select Powell as Head Master and decided to appoint one of the previously unsuccessful candidates in his place. Powell sued the managers for breach of contract.
HELD: By the King’s Bench Division of the English High Court that Powell’s claim for breach of contract should be dismissed. At no time had Dismore been given authority to inform Powell of the management’s decision. The statement that Powell had been accepted for the position of Head Master was, therefore, completely unauthorised and did not bind the managers into a contract with him.
Thomson v James (1855)
James contacted Thomson by letter on 26th November offering to sell him a piece of land. Thomson sent a letter of acceptance to James on 1st December. In the meantime, James had had second thoughts about his original offer of 26th November and on 1st December he sent a letter to Thomson which contained a withdrawal of his earlier offer. James’ letter and Thomson’s letters crossed in the post. Both letters arrived on 2 December. Did James have a contract with Thomson?
HELD: In order for James’ letter of withdrawal to be effective, it would have to have reached Thomson before Thomson posted his letter of acceptance. Unfortunately for James, it arrived 2nd December after Thomson had posted his acceptance on 1st December, and therefore a contract had been formed.
