Harvey v Facey [1893] A.C. 552.

Facts: Harvey sends telegram to Facey asking 1) will F sell him Bumper Hall Pen (real estate) 2) telegraph lowest cash price. F replies only 2nd question, and when H accepts the price. F refuses to sell.Issue: Is a statement of the minimum price at which a seller would sell an offer?Rule: A mere statement of the minimum selling price is an invitation to treat and not an offer to sellA: since F only replied the 2nd question responding H about the minimum selling price, this response does not make up an offer and so there is no offer to which H is accepting. Conclusion: Court holds that there has been no breach of contract for F refusing to sell to H.

Gibson v Manchester City CouncilF: Conservative ruling party of Manchester City Council has policy of selling council houses to tenants. Labour party then gained control of the council after elections, repealing selling policy, but agrees to honour all previous agreements. G appeared to be in negotiating stage, give letter from council that they “may be prepared to sell at a price of 2,725 less 20% freehold” and the letter was not a firm offer of a mortgage. G was invited to make formal application for purchase and to fill in form. Completes and returns form, leaving price blank due to repairs needed on house. Council says they took repairs into fixing the price, G asks for process to continue.I: do the words “may be willing to sell” consist of a contract?R: may be prepared to sell did not constitue an offer from the council, and so no binding contract had yet been formed. The processes of negotiations must be distinguished from the actual establishment of a contractA: since the council’s reply did not consist of an affirmative statement declaring a contract, and instead uses the wording of “may be willing to sell”, no contract was established.C: no contract was held since the traditional approach of offer and acceptance is preferred.

A.G. v Humphreys EstateF:HK gov and local property company entered into agreement for land exchange where a number of apartments were to be used as government accommodation. Agreement was expressed to be “subject to contract”. Gov was fully aware and intended tht either party could at any time, without reason, withdraw from the agreement in principle. Gov demolished old headquarters, but comp refused to transfer apartments. I: Does the words “subject to contract” build a contract?R:a voluntary agreement in principle, expressly made “subject to contract” and therefore not binding; especially since the gov was sure and understood that the subject to contract clause was expressed, it would be rare for any form of contract to be developed from this clause. C: the government failed in its action in the privy council

Butler Machine Tool Ltd. V Ex-cell-O Corp LtdF: Sellers offered to sell a machine tool to buyers for a price, with delivery in ten mths. This offer includes a price variation clause. Buyers replied on their own standard form accepting the offer, but terms and conditions in this form made no provision for a price variation clause. Buyer’s standard form had a tear off strip which sellers returned containing “we accept you order on the terms and conditions thereon”. Sellers returned slip with letter stating the buyer’s order was entered into in accordance with the original offer. Sellers eventually delivered machine, claiming an extra price under price variation clause. Buyers refuse to pay. I: Which form prevails over the other?R: the returning of the form’s slip resembles an acceptance of a counteroffer , the attached letter is simply a confirmation of the price and description of the machine.A: since the form that the sellers returned to the buyers agreed to the terms and conditions of the buyers, their signature is equivalent to an acceptance of the buyers counter offer, therefore there is no room for arguments as to whether or not there is a price variation clause.C: The difference in the cost for the price variation clause was not an action that could be carried out.

Dickinson v DoddsF: def. gave written offer to plaintiff to sell a house. Offer made on 10 june and was “to be left open until 12 June”. On 11 June, the def sold the house to someone else, the same evening a 4th

party acting for the plaintiff, told the plaintiff of the sale. On the morning of 12 June, the plaintiff hands the def. a formal letter of acceptance. Plaintiff then claims specific performance of the agreement.I: is the promise to keep the offer open a nudum pactum?Was it valid for the promise to be withdrawn before the deadline?R: nudum pactum: without consideration and could be withdrawn at any time by the offeror before this deadline

Holding and Rule

No. An open offer to sell terminates when the offeree learns that the offeror has already agreed to sell to someone else.

The court stated that since Dickinson knew that Dodds’ offer had been implicitly withdrawn when he learned that he had sold the property to someone else, there was no meeting of the minds at the time acceptance was made and therefore a binding contract was not formed

Hillas & Co v Arcos Ltd

FactsL.J.Hillas and Co. (the plaintiff) contracted with business representatives of the Russian government, Arcos Ltd. (the defendant) for the purchase of 100 standards of Russian timber during the season of 1931. In 1930, the other English timber firms decided not to purchase Russian timber but the plaintiff continued to do business with the Russian companies and was thereby granted a substantial discount on the purchase price of timber. On May 21st, 1930, a document was signed to the effect that the plaintiff agreed to buy 22, 000 standards of Russian

timber for the 1930 season at a discounted price and that, if the plaintiff decided to buy more timber, the price would be discounted further. Clause 9 was included in the document, which stipulated that the plaintiff would be able to purchase 100,000 standards from Russia during the 1931 season at a price 5% below the official price of the standards at any time during 1931. On May 28th the Russian Wood Agency put out a revised price list giving buyers a much smaller discount that the plaintiff were to receive. On Nov. 20th, the defendant entered into a contract with a new ring of English timber buyers for them to purchase the entire production of shipment to the British Isles in 1931. The plaintiff brings an action for breach of contract.

Prior ProceedingsThe case was tried before the trial judge and a decision was found for the plaintiff. Both parties appealed; the defendants against the order that they were liable at all and the plaintiffs against the amount of damages that was awarded, which they say was too low.

IssueWere the terms of agreement sufficiently clear to constitute a legally binding contract?

Ratio DecidendiThe terms of the document, in particular clause 9, are not sufficiently clear to allow the courts to enforce a legally binding contract. The parties had not specified the subject-matter that was to be included in the option or the date, location or quantities of goods to be delivered. The court decided that, if there remain essential terms of the contract to be assented to, there is no contract. In this case, the option included in the document was not an agreement but "an agreement to make an agreement", which is not an enforceable contract.

Obiter DictaCommercial men carry on business using a rolling method of contract, by which the exact terms of agreement are often negotiated after the actual formation of the contract. Under contract law however, this presents a lack of consideration and the courts are unable to find these contracts to be legally binding, regardless as to the intentions of the parties.

HeldAppeal for the defendant allowed and the appeal for the plaintiff dismissed.

May v ButcherF: Parties made an agreement for the supply of the whole stock of the defendant`s material (tentage) with prices and dates of payment to be “agreed from time to time”. I: The contract provided for the reference of any disputes “with reference to and arising out of” the agreement, to go to arbitration. The petition of the “suppliants”, May and Butcher, that there was a binding contract, was finally rejected by the House of Lords on the basis that the terms as to prices and dates of payment were too vague. R: An agreement contained the provision - price and date of payment - ‘shall be agreed upon from time to time’.

A: since the wording “agreed from time to time”C: Held: this was not a contract. An agreement between two parties to enter into an agreement in which some critical part of the contract matter is left undetermined is no contract at all.’

Entores Ltd v Miles Far East CorporationF: Plaintiffs in London made offer by telex to def in Netherlands which defs accepted by telex sent from Neth received in Eng. P sued D for breach of cont. DI: where was the contract formed? London or Amsterdam? If deal had been done by post, then the contract would have been formed in Amsterdam, and would be ubject to Dutch law R: . acceptance on receipt of notice principleHowever, it was ruled that it would make no sense for an instantaneous reply to an offer to be deemed to be accepted at the place of origination of acceptance, because this would conflict with the law as regards acceptance by telephone, etc.A: Since the acceptance was only final after it was received in London, therefore it was held that the contract was completed in England and not in the Netherlands.C: The acceptance was deemed to have been made in London, when the telex was read.

Hyundai Engineering

Sudbrook Trading Estate v Eggleton

FactsThe lessor gave the lessee an option to purchase the leased premises. The option stated that the price was to be not less than £12,000 and was to be agreed upon by two valuers, one appointed by each party. The lessee exercised the option to purchase but the lessor refused to appoint a valuer. The lessee sued for specific performance of the option.IssueDoes the price fixing mechanism in the option indicate that it is merely an agreement to agree or is it a contract with a non-essential term to completeRatio (Lord Scarman)The common law has viewed the method of determining the price to be an essential term of the contract. If the method failed, the contract would fail. However, in this case, the parties' intention was to make a contract for a fair price to be ascertained by valuers at the time the option was exercised. The method for fixing the price was a non-essential part of the contract. The court will give effect to the intention and determine a fair price based on the expert evidence of valuers.C: Appeal allowed. Specific performance of contract ordered.

Anstalt Nybro v Hong Kong Resort Co Ltd

New World Development v Sun hung Kai Secu

World Food Fair v HK Island Development

Manchester Diocesan Council for Education v Commercial & General Investments Ltd It may be that the offeror, who by the terms of his offer insists upon acceptance in a particular manner, is entitled to insist that he is not bound unless acceptance is effected or communicated in that precise way, although it seems probable that, even so, if the other party communicates his acceptance in some other way, the offeror may by conduct or otherwise waive his right to insist upon the prescribed method of acceptance. Where, however, the offeror has prescribed a particular method of acceptance, but not in terms insisting that only acceptance in that mode shall be binding, I am of the opinion that acceptance communicated to the offeror by any other mode which is no less advantageous to him will conclude the contract.

Stevenson v McLean F: Def offered to sell warrants for iron for forward delivery at 40s net cash. Plaint then replied: “Please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give.” I: Whether the enquiry of details consists of a counteroffer, which invalidates the original offer and acceptance?R: the enquiry of details is not a counteroffer and therefore the offer was heldA: Since Plaintiff has already given an acceptance, the further enquiry was not a substituting alternative term, but simply an enquiry as to possibilities.C: Court held that the plaintiff’s reply was only a mere enquiry which did not terminate the offer.

Capacious Investments Ltd v Secretary for Justice

Blackpool & Fylde Aeroclub Ltd v Blackpool Borough Council F: def wrote to P and other inviting tenders, specifying procedures for submitting tenders and fixing a clear deadline of 12 noon on 17 March 1983, after which no tenders would be accepted. P submitted tender to box at 11am on the deadline date. Box was not cleared by staff at noon as should have been therefore the tender was recorded as late. Club sued for breach of an alleged collateral contract that a tender received by the deadline would be considered.I: is there a breach of contract for not giving a tender any ‘due consideration’?R: all tenders are entitled to have their tender considered in conjunction with all other conforming tenders or at least that his tender will be considered if others are submitted in conjunction. A: since P gave the tender in at the correct time but the staff were at fault for checking the box at the wrong time, P’s tender should be considered equally to the other tenders. There is not contractual obligation for the def to take P’s tender, but definitely a duty for D to consider P’s tender. C: P succeeded.

Chappell & Co Ltd v The Nestle Co Ltd

This was not a case directly on contract - it was in fact a copyright case. Nestles advertised that they would provide customers with a copy of a record "Rockin Shoes" if they sent in 1/6d together with three wrappers from bars of Nestles' chocolate. The owners of the copyright in the record were entitled to 6.25% of the normal selling price. They argued that the value was to be calculated on the 1/6d plus the value of the wrappers. Nestles said the wrappers had no value.

HELD

By 3:2 majority in the House of Lords that the wrappers were part of the consideration price, and an injunction was granted.

Lord Reid: it is unrealistic to divorce the buying of the chocolate from the supply of the records. The consideration has two parts: (a) the buying of the chocolate bars for the wrappers; and (b) the payment of money. Clearly both are of value to Nestles.

It was said that the provision of wrappers was merely a condition prior to purchase. But if the qualification is of value to the vendor and must be re-acquired on each occasion, then it is hard not to see this as part of the consideration. Acquiring the wrappers might well involve expenditure which would not otherwise have been incurred.

Viscount Simonds (dissenting): The wrappers are valueless, and not really evidence of sale of chocolate bars to the purchaser of the record. Hence the acquisition of the wrappers was not really part of the record transaction.

Lord Somervell: A peppercorn does not cease to be a good consideration if it is established that the promisee [promisor?] does not like pepper and will throw away the corn.

Lu Shang Chang v Kingroup Ltd

Pao On v Lau Yiu Long

Principle- Privy Council laid down the three conditions which must be satisfied to invoke the doctrine ofLampleigh v Braithwait.The act must have been done at the request of the promisor; It must have been understood that a payment was to be made for the service when it was requested;the contract (had it been made in the normal way) must have been a legally enforceable one.

UBC (Construction) Ltd v Sung Foo Kee LtdF: P are sub contractors that are claiming sums that are allegedly due to them by the defs

Foakes v BeerF: Beer obtained a judgment debt against Foakes. Agreed if he paid part of debt immediately and rest by instalments, she takes no further action. Interest is normally payable on judgments debts and when he had paid all the debt she decided to sue for interest. Held that even if there was an implied promise on her part not to sue for interest, no consideration had been given in return. I:R: Pinnel rule (doctrine)A:

Lee Sui Fong Mary v Ngai Yee Chai LEE SIU FONG MARY v NGAI YEE CHAI [2006] 1 HKC 157

Court of Appeal Civil Appeal No 125 of 2005 Cheung, Yeung JJA and Chung J 8, 15 December 2005

Plaintiff appeared in person. Damian Wong (Benny Kong & Peter Tang) for the defendant.

The plaintiff claimed that eight loans were made to the defendant between 1994 and 1995 but the defendant had only made partial payment to settle the loans. The defendant admitted that only four loans were made and denied liability as to the others. The plaintiff commenced the present action in 2002 against the defendant seeking repayment of the outstanding loans. The defendant contended that he was not liable to repay the loans on the ground that the claim was barred by limitation.

The trial judge found that the plaintiff had only given four loans to the defendant. In response to the plaintiff’s request for settling the loans, the defendant offered in 1995 to repay in six years. The plaintiff rejected the offer. It was not until 2001 when the plaintiff instructed her lawyer to issue a letter of demand on the defendant. The trial judge concluded that the plaintiff’s action was consistent with her relying on the defendant’s representation and as a result the defendant was estopped from relying on the limitation period. The trial judge found for the plaintiff and the defendant appealed against that decision.

Held, allowing the defendant’s appeal:

The common law position was that where the date of repayment of a loan was not agreed upon, it would be due immediately and the cause of action accrued at that time. The position would be the same even if the loan was said to be repaid on demand. The cause of action for repayment of the loan would still accrue once the loan was made. In the instant case, the plaintiff’s cause of action accrued on the dates when the four loans were made in 1994 and would be barred on the respective dates in 2000.

An offer was an expression of willingness to contract made with the intention that it was to become binding on the person making it as soon as it was accepted by the person to whom it was addressed. In this case, on rejecting the offer to postpone the repayment, there was no further offer or proposal from the defendant for the plaintiff to accept later on. There was no evidence that the defendant had intended to leave this offer open so that it might be accepted by the plaintiff at some later time. There was no evidence that the parties had discussed the time of repayment again after the offer was rejected by the plaintiff. Accordingly, once an offer was rejected by the plaintiff, she could not unilaterally revive it by saying that she had later accepted it. There was nothing for the plaintiff to rely upon which could form the basis of an estoppel.

Stilk v Myrick Facts: Stilk (P) was to be paid 5 pounds per month during a voyage at sea. Two seamen deserted and the Captain agreed that the wages of the two deserters would be divided equally among the remaining hands if the two seamen could not be replaced at Gottenburgh. Myrick (D) refused to honor the agreement and Stilk sued.Issue: May a contract for services be modified without consideration?Holding and Rule: No. A contract for services may not be modified without consideration.The court held that under these facts, the seamen who remained with the ship had the obligation to do all that they could under all emergencies during the voyage. They had sold all of their services until the voyage was completed. The agreement would have been proper if the seamen had had the liberty to depart sooner and chose to remain on the voyage longer in exchange for greater compensation.

The court held that a desertion is considered to be an emergency the same as a death among the crew. The court found in favor of D on the grounds that there were not changed circumstances sufficient to compel a change in the contract.

Disposition: For D; P’s recovery limited to 5 pounds per month.

Williams v Roffey Bros & Nicholls (Contractors) Ltd

This highly contentious case (Williams v Roffey Bros. and Nicholls (Contractors) Ltd [1991] 1 QB 1) is

taken to demonstrate that, in some cases, the performance of an existing contractual obligation can be

taken as consideration (see: Consideration) in a new agreement. The traditional view has always been

that it does not represent a benefit to the party whose duties are already fulfulled to have the other party

offer to do something he has to do anyway. This principle is similar in effect to that in Collins v Godefroy

(1831), where a statutory duty could not be seen as consideration Collins v godefroy 1831).

Roffey at al. were a firm of builders contracted to rennovate a block of flats. Their own contract contained

a penalty clause for late completion, so it was in their interests to finish the work on time. Part of this work

they sub-contracted to Williams. As work progressed, Williams fell behind schedule because, they

claimed, they had not set an adequate price for the work. They negotiated a new deal with Roffey, that an

additional sum was to be payed on the completion of each building. When the next building was

complete, Roffey refused to pay.

In defence, Roffey claimed that the new agreement with Williams was void, as there was no sufficient

consideration from Williams. The Court considered the case of Stilk v Myrick and decided that it was

robust and should stand: an agreement cannot be enforced without consideration. However, the Court

held that in this case there was consideration: the new agreement conferred additional `practical benefit'

on Roffey, in particular an early completion would allow them to avoid the exercise of the penalty clause.

Although this case could be seen as overturning the traditional narrow view of consideration, in practice it

has not been widely followed in subsequent cases. For example, in the case of Re select move 1994 the

Court of Appeal decided that the House of Lords ruling in Foakes v Beer (1884) prevented the notion of

`practical benefit' being used to support the idea of part-payment of debt being used as consideration

Foakes v beer 1884.

D & C Builders v Rees

The builders, after completing building work sent an account for £432 which was left outstanding for some time. Eventually, D's wife agreed to pay £300 provided it was accepted in full satisfaction. As the builders were in a difficult financial position, they rather reluctantly agreed to accept the money. D's wife knew that they needed the money to avoid being made bankrupt. They accepted a cheque in return for a receipt which stated "in completion of the account" which was written at the insistence of the wife. Later, they sued for the balance.

HELD Denning MR

Pinnel's case states that a settlement for less will not satisfy the claim for the whole amount. This was ridiculed by Lord Jessel in Couldery v Bartrum.The recent cases have mitigated the harshness of the common law. Now a creditor can be precluded from insisting upon the legal right to the wholewhere it would be inequitable for the party to do so. However, the creditor is not bound, unless there has truly been an accord. Here there was no true accord. D's wife used pressure. She threatened to break the contract unless the other party did as she insisted. There was no equity in the D to enable her to take advantage of the equitable rule.

City University of Hong Kong v Blue Cross

Lobley Co Ltd v Tsang Yuk Kiu The case of Lobley Co Ltd & Another v Tsang Yuk Kiu was decided by theJudicial Committee of Privy Council in 1997.

FOR EDUCATIONAL USE ONLY1997 WL 1911122 (Privy Council), [1997] HKLRD 863LOBLEY CO LTD & ANOTHER v TSANG YUK KIU3 and 25 June 1997Privy CouncilPC(Privy Council Appeal No 8 of 1997)Presiding Judges :Lord Goff of Chieveley, Lord Lloyd of Berwick, Lord Nicholls of Birkenhead, Lord Steyn and Lord Hopeof CraigheadCounsel In The Case :Mr R. Neville Thomas, QC and Mr Christopher Smith, instructed by Wilde Sapte, for the appellants.Mr Peter Goldsmith, QC, Miss Maria Yuen and Mr Eugene Fung, instructed by Baker & McKenzie, forthe respondent.Cases Cited in the Judgement :Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd & Others [1986] AC 207Phrases :Contract - breach - offer and acceptance - private companies - resolution by board of directorsinviting offers to bid for properties - whether resolution took effect as a contract - offers submittedconforming with terms of resolution - higher non-conforming offers accepted - breach of contractFacts :A1 and A2 appealed against a judgment of the Court of Appeal (Wincheer Investments Ltd &Others v Lobley Co Ltd & Another, Civ App No 82 of 1996; [1996] HKLY 252) dismissing their appeal

from a judgment holding them liable to R for breach of contract.

A1 and A2 were private companies incorporated in Hong Kong with common directors. They eachowned one property. As two directors, R and S, wanted to disengage their interests in the companiesit was decided this could best be achieved by selling the properties.At a meeting of the directors of A1 and A2 on 2 September 1991, it was resolved to adjourn to 9September 1991 and meanwhile the directors or other parties would be invited to submit offer bidsfor each property. Bids submitted were to be irrevocable and accompanied by a cashier order for 10per cent of the purchase price payable to A1 and A2. Each property would be sold to the highestbidder.

Various bids were received. At the resumed meeting the highest bids were accepted despite thoseoffers not being accompanied by cashier's orders in favour of A1 and A2 but by certified chequespayable to S's solicitor. The highest bids complying with the 2 September 1991 resolution came fromtwo companies controlled by R.

Crabb v Arun District Council F: In 1965 Mr Victor Crabb bought two acres of land in the sea-side village of Pagham, nearBognor

Regis. His neighbours on three and a half acres to the west were Arun District Council (formerly

Chichester Rural District Council). The north part of Mr Crabb's land faced Hook Lane, and the West side

was Mill Park Road, which also the east side of the council's land. There were two access points to Mill

Park Road, which led up to Hook Lane, and out of the village, point "A" and point "B". The access point

"A" was open by virtue of a formalised easement, granted when the previous owner of the whole five and

a half acres had sold the property on to both. But access point "B" was only open because the council

was letting Mr Crabb use it. In February 1968 the council put up gates at point "A" and "B". Believing that

he had the assurance that he could use both gates, Mr Crabb sold off the northern half of his land, where

access point "A" was. Thus, for the southern half of his land, he relied on having access point "B" open. In

January 1969 he put a padlock on the inside of the gate there. This made the council angry. They

responded by taking down the gate and putting in fences. Mr Crabb asked that it be opened again. The

council said they would in return for £3000. Mr Crabb sued the council, alleging that he had been given an

assurance that the gate would remain open.

The judge found that Mr Crabb had received no firm assurance, but more importantly, if there was, Mr

Crabb had given no consideration in return for it, and it was not enforceable. Mr Crabb appealed.

Waltons Stores (Interstate) Ltd v Maher

FactsWaltons Stores negotiated with Mahers for a lease of land owned by the Mahers. Waltons proposed the demolition and replacement of an existing building. There was a sense of urgency, as construction according to target date required immediate demolition. Waltons solicitor indicated he had received verbal instructions to accept amendments proposed by Mahers, and followed up with a letter indicating that he believed approval would be forthcoming and they would be notified if any amendments were not agreed to. The Mahers were not notified of any objections and proceeded with demolition and partial construction. During this time they sent a new copy of the amended proposed lease, which was returned at a later date indicating Waltons no longer intended to enter the leasing arrangement. The Mahers sued for a declaration that a binding contract existed, specific performance or damages in the alternative.

IssueWas Waltons entitled to remain silent knowing that the Mahers were proceeding with demolition and construction on the understanding that they had an agreement and that the completion of the exchange was a mere formality?

RatioWaltons is estopped from escaping the implied promise to complete the contract. While the mere exercise of the legal right not to contract with the Mahers was not unconscionable on its own, two additional factors were considered. First, the urgency of the situation was considered. Waltons was fully aware of the need for an immediate response, but nonetheless chose to reserve a response until two months later. Secondly, the Mahers were given the impression that the necessary exchange was a mere formality. Thus, Waltons had an obligation to communicate their intentions after the initial correspondence, and even more so after receiving the executed counterpart deed on 10 December.

HeldAppeal dismissed. Judgment for Maher. Prior judgments upheld.

Polorace Investments Ltd v Director of Lands

Unruh v Seeberger

Balfour v BalfourFacts

Mr. Balfour (D) and Mrs. Balfour (P) lived in Ceylon and visited England on a vacation. The plaintiff remained in England for medical treatment and the defendant agreed to send her a specific amount of money each month until she could return. The defendant later asked to remain separated and Mrs. Balfour sued for restitution of her conjugal rights and for alimony equal to the amount her husband had agreed to send.

Mrs. Balfour obtained a decree nisi and five months later was granted an order for alimony. The lower court entered judgment in favor of the plaintiff and held that the defendant’s promise to send money was enforceable. The court held that Mrs. Balfour’s consent was sufficient consideration to render the contract enforceable and the defendant appealed.

Issues

1. Must both parties intend that an agreement be legally binding in order to be an enforceable contract?

2. Under what circumstances will a court decline to enforce an agreement between spouses?

Holding and Rule

1. Yes. Both parties must intend that an agreement be legally binding in order to be an enforceable contract.

2. The court will not enforce agreements between spouses that involve daily life.

Agreements between husband and wife over matters that affect their daily lives are not subject to contractual interpretation, even when consideration is present. Spouses normally intend that the terms of their agreements can be varied as situations develop. The court held that it was presumed that the parties made the agreement as husband and wife and did not intend that it could be sued upon. The court held that as a matter of public policy it could not resolve disputes between spouses.

Disposition

Judgment for plaintiff Mrs. Balfour reversed.

Parker v Clarke F: This case (Parker v Clark [1960] 1 NLR 286) demonstrates that although domestic

arrangements are assumed not to create legally-binding obligations (see: BalfourVBalfour1919, JonesVPadavatton1969), in some cases this assumption may be overruled by the facts. In this case the arrangement had a significant effect on the lives of the affected parties, and some would have been significantly disadvantaged if the arrangement had not been enforced.Mrs and Mrs C invited their niece and her husband (Mr and Mrs P) to live in their house free

of rent, in return for domestic support. The Ps sold their house and moved in. Later, the Cs tried to evict the Ps, and the Ps took legal action to prevent this. The court held that in this case the severity of the situation allowed the agreement between the Ps and the Cs as a contract.

Rose and Frank Co v JR Crompton and Brothers Ltd.

The defendant manufactured carbon paper in England. The plaintiff bought the defendant's paper and sold it in New York. After dealing with each other for a number of years they entered into a written agreement as to the plaintiff having exclusive rights to buy and sell the defendant's goods. The agreement said inter alia:

"this agreement is not a formal or legal agreement. It will not be subject to the jurisdiction of either the British or American courts. It is a record of the intention of the parties to which they honourably pledge themselves and is to be carried out with mutual loyalty and friendly co-operation."

Following a series of disputes the plaintiff claimed that the defendant was in breach of the agreement and the trial judge held that it was legally binding. The defendant appealed.

HELD Bankes LJ

An intention to be legally bound is essential. With business arrangements it usually follows as a matter of course that legal relations are intended. With social arrangements the reverse is the case. It is most improbable that firms engaged in international business arrangements, which are intended to take place over a period of years, should not have intended legal consequences. But there is no legal obstacle to prevent them from doing so. There is no law or issue of public policy against it. Once one reads the agreement in its ordinary meaning, then it is manifest that no action can be maintained on the basis of it.

HELD Scrutton LJ

If the parties clearly express themselves so as to avoid legal relations, then no reason in public policy why they should not do so.

HELD Atkin LJ

The normal presumption may be offset by implication and if that is so then it may surely be offset expressly. I have never seen a clause whereby business people would enter into a written agreement which was not intended to be legally binding - but it is

not necessarily absurd to do so. I do not agree with the judge that the clause should be rejected on the basis of repugnancy. It is a dominant and operative clause.

[NB. It is worth noting, that for all this, the court took the view that once the plaintiff actually ordered goods from the defendant, there would be a contract of sale in regard to that transaction. It could be argued then that this makes the "agreement" here rather like a "tender to supply" which does not have any contractual effect until an order is actually placed].

Union Insurance Society of Canton Ltd. v The Hong Kong Land Co Ltd

Bouygues SA v Shanghai Links Executive Community Ltd.

Ming Shiu Chung v Ming Shiu Sum

Wing On Properties and Securities Co Ltd v Wave Front Enterprise Ltd

Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd. nterfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ 6 is an English contract law case on onerous clauses and the rule of common law that reasonable notice of them must be given to a contracting party in order that they be effective. It also addressed, but did not decide, the position of onerous clauses as disguised penalties (which are ineffective at common law).

Facts

Interfoto delivered 47 photographic transparencies to Stiletto in a jiffy bag. Stiletto was planning to use

them for a presentation, but in the event it did not. It never opened the transparency bag or read

Interfoto's standard terms and conditions, which were inside the bag. Condition 2 said there was a holding

fee of £5 for each day over fourteen days. After around a month, Interfoto sent a bill for £3,783.50.

[edit]Judgment

The Court of Appeal held that the holding fee was ineffective. Dillon LJ said that a ‘particularly onerous or

unusual’ term must have special notice. However, Interfoto was entitled to a small restitutionary charge of

£3.50 per transparency per week for their holding.

Bingham LJ held that the clause was not valid. It was ‘a venial period of delay [for] an inordinate liability.’

The issue was, he said,

“ whether it would in all the circumstances be fair (or reasonable) to hold a party bound by any conditions… of an unusual and stringent nature... The defendants are not to be relieved of that liability because they did not read the condition, although doubtless they did not; but in my judgment they are to be relieved because the plaintiffs did not do what was necessary to draw this unreasonable and extortionate clause fairly to their attention. ”

He advocated embracing good faith - ‘showing up your cards’, ‘fair dealing’, and so on. On penalty

clauses, Bingham LJ noted at the end of his decision,[1]

“ In reaching the conclusion I have expressed I would not wish to be taken as deciding that condition 2 was not challengeable as a disguised penalty clause. This point was not argued before the judge nor raised in the notice of appeal. It was accordingly not argued before us. I have accordingly felt bound to assume, somewhat reluctantly, that condition 2 would be enforceable if fully and fairly brought to the defendants' attention.

Dick Bentley Productions Ltd. v Harold Smith (Motors) Ltd Harold sold Dick a car saying that it only had 20,000 miles since major repair. Harold bought the car. Turns out the

car had done much more then 20,000 since the last major repair. The court said: "An affirmation at the time of sale is

a warranty, provided it appear on evidence to be so intended.... The question whether a warranty was intended

depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent

bystander would reasonably infer that a warranty was intended, that would suffice." In this case the representation

was made for the purposes of inducing the sale. The court said that it was thus prima facie ground for inferring that

the representation was intended as a warranty. It is not necessary to speak of it as "collateral."

The court went on to say that the defendant could rebut this presumption by showing that his representation was

innocent. In this case, the vendor made the statements without checking them out and so the representations were

not innocent.

Lam Tun Ming v Hu Chun Leung

BP Refinery (Westernport) Pty. Ltd v President, Councillors and Ratepayers of the Shire of Hastings

Liverpool City Council v Irwin

The LCC owned a large block of flats and they brought action against some tenants for possession for non payment of rent. The tenants claimed that the LCC was in breach of its duty to repair and maintain. There was no formal lease to govern the arrangement, just a document called "conditions of tenancy" which was signed by the tenants, but not the LCC. This document listed the duties of the tenants but said nothing about the duties of the LCC.

HELD Lord Wilberforce

It is not uncommon in Council lettings for there to be no formal lease - given that this document states only the obligations of the tenant, we have an agreement which is only partly in writing. To complete its bilateral character, it is necessary to take into account the actions of the parties and the circumstances - the actions such as the landlord giving possession and reserving the common parts - stairs, lifts, etc. We also take into account the circumstances such as the type of premises - in this case a maisonette on the 9th floor with there being many other tenants dependent upon them and none of them having obligations to maintain or repair the common parts.

To construct the complete contract from these elements requires "implications" - the supplying of what is not expressed. Not all implications are the same. Sometimes there may be a completed bilateral contract where the courts add terms as implied terms - in mercantile contracts where there is an established usage - the courts spell out what the parties know and would if asked have agreed to. Sometimes the court will add to the completed contract a term without which the contract will not work - The Moorcock. This is a strict test which may vary from time to time. Another variety of implication is that of reasonable terms - but the principle expressed by Lord Denning in the Court of Appeal goes beyond sound authority. In this case we have a fourth type or shade on the spectrum. Here the court is trying to establish what the contract is where the parties have not stated it.

Presumably there must be implied a letting of the premises with a right of exclusive possession and a covenant of quiet enjoyment. With this lease it is useless unless there is access to the common staircase and given the height of the block a lift service and the right to use the rubbish chutes. There must be implied easements to use the stairs, lifts and chutes. The LCC argues that such easement brings with it only the obligations under the Occupiers Liability Act 1957 - re the safety of those using the facilities and liability in tort. The alternative is for some easement with some maintenance obligation. I do not find it difficult to define the test to be applied - no more than the nature of the contract requires - the matter is one of necessity. These facilities are essential to life in the dwellings.

For the landlord to be subject to only political or administrative pressures is totally inconsistent with the nature of this relationship. I do not think that this requires any innovations regarding the law of contract. The necessity to have regard to the inherent nature of a contract was established in Lister v Romford Ice [1957]. Miller v Hancock [1893] dealt with this type of multi-occupation dwelling where it was argued that the person who benefits from the easement has to do the repairs - but for this type of building, without such an implication of duty upon the grantor of the easement, the whole transaction would be futile.

The standard must be that of necessity. An absolute obligation would go beyond what is necessary and would be unreasonable - reasonable care to keep in reasonable repair fits the requirements of the case. This recognises that the tenants have their responsibility - what is reasonable to expect of the landlord depends on what the tenants should do for themselves.

Twinkle Step Investment Ltd v Smart International Industrial Ltd.

L Schuler AG v Wickman Machine Tool Sales LtdWickman, was given the sole selling rights for the German co. panel presses for 4 1/2 years. Clause 7 (b) of the distributorship contract provided that “ It shall be a condition of the agreement that Wickman shall send it’s representative to visit (the 6 largest motor manufacturers) at least once in every week” to solicit orders. Wickman failed to make a number of these visits and Schuler terminated the agreement under clause 11 (a) on the basis that Wickman had committed a material breach of its obligations which it failed to remedy within 60 days of being required to do so. Wickman claimed damages for wrongful repudiation. Held: Clause 7 (b) was not a condition in the sense that a single breach however trivial would entitle the innocent party to terminate the contract.

Union Eagle Ltd v Golden Achievement Ltd

Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd. “...... the shipowners’ undertaking to tender a seaworthy ship, has as a result of numerous decisions as to what can amount to ‘unseaworthiness’, become one of the most complex of contractual undertakings. It embraces obligations with respect to every part of the hull and machinery, stores and equipment and the crew itself. It can be broken by the presence of trivial defects easily and rapidly remedial, as well as by defects which must inevitably result in a total loss of the vessel.” per Diplock LJ in The Hong Kong Fir Shipping case [1962] 2 QB 26 (CA). In the Hong Kong Fir Shipping Co.,Ltd v. Kawasaki Kisen Kaisha Ltd case the

principals were indeed fundamental. The plaintiffs (owners) had chartered the Hong Kong Fir to the defendants (charterers) for twenty-four months from delivery to the charterers in Liverpool. The vessel was delivered in Liverpool on February 13th 1957. The vessel then started it voyage to America to get a cargo of coal. It then left for Osaka and was delayed by five weeks due to the repairs needed on the engine. On arrival to Osaka the vessel was found to need more repairs due to the vessel being in very bad condition, and 

The Hong Kong Fir case had its effect on consumer law also. On the other hand the owner was making vast money compared to the present freight rates. The other information to do with this case was that there was a steep fall in freight rates from 47s in June to 13s. It can be seen that Diplock LJ , saw the potential of this happening every time the charterer saw an opportunity elsewhere. The Law Commission recommended that the consumers right to reject for any breach of a term implied by ss13 to 15. "tm If a contract is broken and one party claims to be entitled to terminate, the first thing that must be established is the breach a breach of condition. Repudiation is a remedy, and its effect is to terminate the contract. instead the elected to terminate the contract. This term can be broken in many different ways from the trivial to the serious and it is impractical to to attempt to asses the seriousness of the breach without first paying attention to the way in which it has been broken. "tmThis could have been why it was considered a breach of warranty, to protect the shipowners. This clearly indicated that the charterer could be paying less if they started another time charter. The buyer had to give 15 days notice of the readiness of the vessel, but only gave notice on the 17 June. It could be said that this is exactly what the charterers did, because they could have not accepted the vessel in the condition it was in when it arrived at Liverpool, they had a week before the contract began. Diplock LJ  during the HongKong Fir case opened up the way for modifications of remedies for breach of implied terms. This was believed because one of the clauses in a time charter contract is that the ship has to be "�seaworthy.

Facts

Carbolic Smoke Ball Co. (D) manufactured and sold The Carbolic Smoke Ball. The company placed ads in various newspapers offering a reward of 100 pounds to any person who used the smoke ball three times per day as directed and contracted influenza, colds, or any other disease. After seeing the ad Carlill (P) purchased a ball and used it as directed. Carlill contracted

influenza and made a claim for the reward. Carbolic Smoke Ball refused to pay and Carlill sued for damages arising from breach of contract. Judgment for 100 pounds was entered for Carlill and Carbolic Smoke Ball appealed.

Issue

Does one who makes a unilateral offer for the sale of goods by means of an advertisement impliedly waive notification of acceptance, if his purpose is to sell as much product as possible?

Holding and Rule (Lindley)

Yes. One who makes a unilateral offer for the sale of goods by means of an advertisement impliedly waives notification of acceptance if his purpose is to sell as much product as possible.

The court held that a person who makes an offer may decline to require notice of acceptance if he or she wishes. One who makes an offer dispenses with the requirement of notice of acceptance if the form of the offer shows that notice of acceptance is not required. To accept an offer, a person need only follow the indicated method of acceptance. If the offeror either expressly or impliedly intimates in his offer that it will be sufficient to act without giving notice of acceptance, performance is sufficient acceptance without notification.

The court held that an advertisement is considered to be an offer when it specifies the quantity of persons who are eligible to accept its terms. If such an advertisement requires performance, the offeree is not required to give notice of his performance.

The court addressed the issue of whether the ad was intended to be a promise or whether it was merely “puffing”. The court pointed to Carbolic Smoke Ball’s claim in the advertisement that it had deposited 1000 pounds with Alliance Bank, which the court decided was intended to demonstrate the company’s sincerity in paying the reward.

Concurring (Bowen)

Notification of acceptance is required under our law. The person who makes the offer may dispense with notice to himself if he thinks it desirable to do so. He may expressly or impliedly create any method of acceptance for his offer. An offeree need only follow the method indicated for acceptance. The requirement of notice of acceptance to the offeror must be determined by an objective reasonable person standard.

In the advertisement case, it seems to me that an inference may be drawn from the transaction itself that a person is not to notify his acceptance of the offer before he performs the condition, but that if he performs the condition notification is dispensed with. We must look to the essence of the transaction and what the offeror is bargaining for under the circumstances. Under these facts, the defendant impliedly indicated that it did not require notification of acceptance of the offer.

Disposition

Appeal dismissed.

Summary of Leonard v. Pepsico, Inc., 88 F.Supp.2d 116 (S.D.N.Y. 1999), aff’d 210 F.3d 88 (2d Cir. 2000).

Facts

Pepsico (D) ran a promotional campaign in which consumers were invited to acquire “Pepsi Points” by purchasing Pepsi products, and exchange them for “Pepsi Stuff”. Leonard (P) received a catalog for use in redeeming “Pepsi Points”. Television advertisements featured merchandise available through the promotion including a Harrier Jet. Leonard saw the commercials and contended that the commercial constituted a valid offer to acquire the jet for 7,000,000 Pepsi Points.Leonard obtained a catalog and noticed that the order form did not include the Harrier Jet. The catalog stated that merchandise could only be ordered via original order form. The form also indicated that additional points could be purchased for ten cents each. Leonard raised $700,000 in order to purchase the 7,000,000 points needed to acquire the jet.

Leonard submitted a completed order form together with a check and wrote in “1 Harrier Jet” at the bottom of the form. Leonard indicated that the check was for the express purpose of purchasing the points needed to obtain a new Harrier jet as advertised in the commercial.

Pepsico rejected the submission and returned the check, noting in its rejection that the jet was not in the catalog and thus could not acquired through the promotion. Pepsico apologized for any misunderstanding and informed Leonard that the commercial was intended to be humorous and entertaining. Leonard sued when Pepsico refused a formal demand to honor its offer. Pepsico moved for summary judgment.

Issues

1. When is summary judgment proper in the context of contract formation?

2. What standard is applied in determining whether some communication constitutes an offer?

3. Is an advertisement an offer?

Holding and Rule

1. Summary judgment is proper when the words and actions that allegedly formed a contract are so clear that reasonable people could not differ over their meaning.

2. Whether something constitutes an offer is determined under the objective reasonable person standard.

3. No. The general rule is that an advertisement does not constitute an offer.

The court held that in this case no objective reasonable person could have concluded that the commercial constituted an offer for a Harrier jet. Whether an offer was made depends on the objective reasonableness of the alleged offeree’s belief that the advertisement or solicitation was intended to be an offer. The court held that it was clear that no serious offer for a Harrier jet was made. As per Lucy v. Zehmer, if there is no indication that an offer is in jest, and an

objective reasonable person would find that the offer is serious, there will be an offer under the law even if the person making the offer was acting subjectively in jest.The court rejected Leonard’s argument that the jury must decide whether his belief was reasonable. The court noted that the commercial itself was highly improbable because the youth featured could barely be trusted with the keys to his parents’ car, much less the prize aircraft of the United States Marine Corps. The court stated that the notion of traveling to school in a Harrier jet was exaggerated adolescent fantasy. Furthermore the actual cost of the jet exceeded $23 million and the offer was therefore unbelievable.

Disposition

Motion for summary judgment granted.

Pinnell

Toppan Printing

Folley

Walford v Miles

Parker and Clarke

F & G v Sykes

Merritt & Merritt