ICAS TC Business Law Module 2 Flashcards
Harvey v Facey 1893
Facts: H sent a telegram to F that asked whether F would consider selling to H a
property in Jamaica and also asked F ‘to telegraph lowest cash price’. F replied
‘Lowest cash price for Bumper Hall Pen £900.’ H then sent a telegram that said ‘We
agree to buy Bumper Hall Pen for the sum of £900 asked by you.’
Held: This did not constitute a contract. The first telegram from H was a request for
information and the reply from F was no more than an indication of the lowest price
for which he would consider selling the property. It was not an offer to sell at that
price. Therefore, H’s second telegram could not be an acceptance.
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd 1952
Facts: Boots starting selling its goods by displaying goods on shelves rather than
over the counter. By law, the sale of certain medicines had to be supervised by a
registered pharmacist. The sale of these medicines was a contract so the court had
to decide at what point the contract was made. In other words, the court had to
identify the two parts of the contract – offer and acceptance.
If the goods on the shop shelves constituted the offer, the customer’s actions in
picking up the medicines and putting them into their basket would constitute
acceptance and the contract would be made there and then without a registered
pharmacist being present. On this analysis of events, Boots would be breaking the
law.
However, if Boots placing goods on the shop shelves merely constituted an invitation
to treat on their part, the customer would only be offering to buy the goods at the
checkout. Boots led evidence to show that there was always a registered pharmacist
present at the till point. On this analysis then, Boots would be complying with the
legislation.
Held: The latter analysis was correct. Goods on shop shelves were merely an
invitation to treat, and, therefore, there was no contract until the customer’s offer was
accepted at the till.
2.7.4 Advertisements
Carlill v Carbolic Smoke Ball Co 1893
Facts: The manufacturers of the carbolic smoke ball were so confident of its
properties that they placed adverts in newspapers stating that anyone who used their
product and still caught flu would be entitled to £100. Mrs C saw this advert, bought
the smoke ball, used it according to the instructions, and still caught flu. However,
the company refused to pay her £100, arguing that the advert was not an offer.
Held: Mrs C was entitled to the £100. The wording of the advert was such that it
amounted to an offer that Mrs C accepted by purchasing the smoke ball, using it
according to very specific instructions, catching flu, and claiming her £100.
Wolf & Wolf v Forfar Potato Company Ltd 1984
Facts: A Scottish company sent a telex to a Dutch company offering potatoes for
sale. A condition of the offer was that it had to be accepted by 5pm the next day.
The next morning the Dutch company sent back a telex which purported to be an
acceptance of the offer but which contained new conditions.
The Scottish company advised by telephone that these conditions were unacceptable
and the Dutch company sent another telex, still within the time limit, which purported
to accept the original offer but which asked the Scottish company to give
consideration to the conditions it had proposed. The Scottish company ignored the
second telex and did not supply the potatoes. The Dutch company raised an action
for breach of contract when the potatoes did not arrive.
Held: No contract had been formed. On the making of a counter-offer the original
offer falls and if the counter-offer is not accepted then the party cannot fall back and
accept the original offer.
Wylie and Lochhead v McElroy and Sons 1873
Facts: An offer to carry out ironwork on a new building was not accepted for five
weeks during which time the price of iron had increased.
Held: There was no acceptance within a reasonable time and therefore no contract
had been formed. The judge said that where such a fluctuating commodity as iron
was concerned, hours must suffice for a decision, not weeks or months.
Entores v Miles Far East Corporation 1955
Facts: The claimants sent an offer by telex from London to the defendants’
agent in Amsterdam and the latter sent an acceptance by telex to the plaintiffs
in London. The claimants alleged breach of contract and wished to serve a
writ. The legal issue was whether a contract had been made in London (within
the jurisdiction of the English court) or abroad (outside the jurisdiction of the
court).
Held: The acceptance took effect (and the contract was made) when the
acceptance was printed out on the claimants’ terminal in London. A writ could
therefore be issued.
Adams v Lindsell 1818
Facts: On 2 September 1817 the defendants wrote to the claimants offering to sell wool
and requiring an answer ‘in course of post’. The claimants did not receive the letter until
5 September. The same day, the claimants posted their acceptance that arrived with
the defendants on 9 September. If the offer had not been delayed then the defendants
could have expected a reply by 7 September ‘in course of post’. On 8 September, the
defendants sold the wool to someone else.
Held: A contract came into existence on 5 September when the claimants posted their
acceptance. This rule has remained in place ever since.
In
Thomson v James 1855
Facts: James offered by letter to buy land from Thomson. Thomson posted an
acceptance on 1 December. Also, on 1 December, James posted a letter withdrawing
his offer. The letters crossed in the post and each letter reached its destination on 2
December.
Held: There was a contract. The acceptance was effective when it was posted. The
revocation of offer could only take effect when it reached Thomson.
The Countess of Dunmore v Alexander 1830
Facts: Lady Agnew’s servant, Betty Alexander, was looking for a new job. The
Countess heard about this and wrote to Lady Agnew asking for a reference and
indicating the wages on offer. Lady Agnew replied recommending Betty and saying
that Betty would work for the wages offered. (This was viewed as an offer from
Betty to the Countess). On 5 November, the Countess posted an acceptance but
the next day she changed her mind and posted a letter withdrawing her acceptance.
Betty received the acceptance and the revocation of acceptance at the same time.
Held: There was no contract.
Re McArdle 1951
Facts: Under a will the testator’s children were entitled to a house after their mother’s
death. In the mother’s lifetime one of the children and his wife lived in the house with
the mother. The wife made improvements to the house. The children later agreed
in writing to repay the wife ‘in consideration of your carrying out certain alterations
and improvements’. But at the mother’s death they refused to do so.
Held: The work on the house had all been completed before the documents were
signed. At the time of the promise the improvements were past consideration and so
the promise was not binding.
Chappell & Co v Nestle Co 1960
Facts: As a sales promotion scheme, the defendants offered to supply a record to
anyone who sent in a postal order of 1s 6d and three wrappers from 6d bars of
chocolate made by them. The claimants owned the copyright of the tune. They sued
for infringement of copyright.
In the ensuing dispute over royalties the issue was whether the wrappers, which were
thrown away when received, were part of the consideration for the promise to supply
the record. The defendants offered to pay a royalty based on the price of 1s 6d per
record, but the claimants rejected this, claiming that the wrappers also represented
part of the consideration.
Held: The wrappers were part of the consideration as they had commercial value
to the defendants.
Earl of Orkney v Vinfra 1606
Facts: The Earl, with hand on dagger, had threatened to stab V through the head if
he did not sign.
Held: V had not consented voluntarily to the contract, and accordingly there was no
valid contract.
Merritt v Merritt 1971
Facts: A husband who had left his wife agreed to pay her £40 per month to help with
the mortgage payments. The husband signed a note stating that when the mortgage
had been paid off he would transfer the house to his wife.
The wife paid off the mortgage but the husband refused to transfer the house to her.
Held: In the circumstances of a separating couple, it was inferred that they intended
their agreement to be legally binding so the wife could sue her husband for breach of
contract.
Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd 1915
Facts: The claimant (Dunlop) supplied tyres to a distributor, Mr X, on terms that Mr
X would not resell the tyres at less than the prescribed retail price. If he sold the tyres
wholesale to trade customers, he also had to impose a similar condition on those
buyers to observe minimum retail prices. Mr X resold the tyres on the same
conditions to S. Under the terms of the contract between Mr X and S, S was to pay
Dunlop £5 per tyre if he sold tyres to customers below the minimum retail price.
S sold tyres to two customers at less than the minimum price and Dunlop sued to
recover £5 per tyre.
Held: Dunlop could not recover damages under a contract (between Mr X and S) to
which it was not a party as only parties under the contract have enforceable rights
and obligations under it.
