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Trentham Ltd v Archital Luxfer Ltd (1992) CA
The plaintiffs, T, were the major contractors in the building of various industrial units. The defendants, A, carried out some of the work on windows etc for T as sub-contractors. The parameters of the agreement between A and T were negotiated in a lengthy procedure starting on 12 January 1984. Although a contract was agreed on 2 February 1984, negotiations concerning specific elements (including whether the contract comprised T’s standard conditions or A’s) continued into April 1984. The negotiations involved multiple separate points and no finally approved paper was ever even created. Work by A had started in February and payments from T began in early March. When a dispute occurred, A contended that there was no contract.
Held (by Steyn LJ with whom Ralph Gibson and Neill LJJ agreed) there was a contract. His Lordship’s reasons comprised the following: (I) Following Brogden v Metropolitan Railway (1.2.3) ‘a contract can be concluded by conduct’. (II) ‘The contemporary exchanges and the carrying out of what was agreed in those exchanges support the conclusion that there was a course of dealing which on [T]’s side generated a right to performance of the work by [A], and on [A]’s side it created a right to be paid on an agreed basis’.
The coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But, it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance… The judge analysed the matter in terms of offer and acceptance. I agree with his conclusion. But I am, in any event, satisfied that in this fully executed transaction a contract came into existence during performance even if it cannot be precisely analysed in terms of offer and acceptance. [IV] It does not matter that a contract came into existence after part of the work had been carried out and paid for. The conclusion must be that when the contract came into existence it impliedly governed pre-contractual performance.
The plaintiffs, T, were the major contractors in the building of various industrial units. The defendants, A, carried out some of the work on windows etc for T as sub-contractors. The parameters of the agreement between A and T were negotiated in a lengthy procedure starting on 12 January 1984. Although a contract was agreed on 2 February 1984, negotiations concerning specific elements (including whether the contract comprised T’s standard conditions or A’s) continued into April 1984. The negotiations involved multiple separate points and no finally approved paper was ever even created. Work by A had started in February and payments from T began in early March. When a dispute occurred, A contended that there was no contract.
Held (by Steyn LJ with whom Ralph Gibson and Neill LJJ agreed) there was a contract. His Lordship’s reasons comprised the following: (I) Following Brogden v Metropolitan Railway (1.2.3) ‘a contract can be concluded by conduct’. (II) ‘The contemporary exchanges and the carrying out of what was agreed in those exchanges support the conclusion that there was a course of dealing which on [T]’s side generated a right to performance of the work by [A], and on [A]’s side it created a right to be paid on an agreed basis’.
The coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But, it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance… The judge analysed the matter in terms of offer and acceptance. I agree with his conclusion. But I am, in any event, satisfied that in this fully executed transaction a contract came into existence during performance even if it cannot be precisely analysed in terms of offer and acceptance. [IV] It does not matter that a contract came into existence after part of the work had been carried out and paid for. The conclusion must be that when the contract came into existence it impliedly governed pre-contractual performance.
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Felthouse v. Bindley, 1862 CCP
The plaintiff's nephew intended to use the defendant, an auctioneer, to arrange an auction in Tamworth to get rid of his farming stock, which included a particular horse. The plaintiff and his nephew had an oral negotiation in order to purchase the horse. On January 2, 1862, the plaintiff uncle wrote to his nephew after they had a disagreement on the horse's purchase. He said, "As there may be a mistake about him, I will split the difference—£30 15s—1 paying all the expenses from Tamworth." You can send him whenever it's most convenient for you, up until March 25. I'll consider the horse mine for £30 15s if I hear nothing more about him. When the nephew failed to respond, the defendant sold the horse at auction for £33, on February 25. The defendant sent a letter to the plaintiff on February 26 apologizing for his error, and the nephew followed up on February 27 with a letter mentioning the error with the horse I sold you. The plaintiff filed a conversion action, stating that the defendant had sold the horse on February 25th, it was decided that the plaintiff had no right to the horse and was not the owner. Per Willes J.
…it is…clear that the uncle had no right to impose upon the nephew a sale of his horse for £30 15s unless he chose to comply with the condition of writing to repudiate the offer… The horse in question being catalogued with the rest of the stock, the auctioneer (the defendant) was told that it was already sold. It is clear therefore that the nephew in his own mind intended his uncle to have the horse at the price which he (the uncle) had named—£30 15s: but he had not communicated such an intention to his uncle, or done anything to bind himself.
The plaintiff's nephew intended to use the defendant, an auctioneer, to arrange an auction in Tamworth to get rid of his farming stock, which included a particular horse. The plaintiff and his nephew had an oral negotiation in order to purchase the horse. On January 2, 1862, the plaintiff uncle wrote to his nephew after they had a disagreement on the horse's purchase. He said, "As there may be a mistake about him, I will split the difference—£30 15s—1 paying all the expenses from Tamworth." You can send him whenever it's most convenient for you, up until March 25. I'll consider the horse mine for £30 15s if I hear nothing more about him. When the nephew failed to respond, the defendant sold the horse at auction for £33, on February 25. The defendant sent a letter to the plaintiff on February 26 apologizing for his error, and the nephew followed up on February 27 with a letter mentioning the error with the horse I sold you. The plaintiff filed a conversion action, stating that the defendant had sold the horse on February 25th, it was decided that the plaintiff had no right to the horse and was not the owner. Per Willes J.
…it is…clear that the uncle had no right to impose upon the nephew a sale of his horse for £30 15s unless he chose to comply with the condition of writing to repudiate the offer… The horse in question being catalogued with the rest of the stock, the auctioneer (the defendant) was told that it was already sold. It is clear therefore that the nephew in his own mind intended his uncle to have the horse at the price which he (the uncle) had named—£30 15s: but he had not communicated such an intention to his uncle, or done anything to bind himself.
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Nickerson v. Harris (1873) CQB
The defendant lawfully advertised that on August 12, 13, and 14, 1872, in Bury St. Edmunds, there would be an auction of plant, office furniture, and brewing supplies. On August 12, the plaintiff arrived from London with a commission to buy office supplies. The defendant announced on August 14 that it would not be selling the office furniture. The plaintiff sought two days' worth of lost wages, a third-class train ticket, and two days' worth of board and lodging.
Held:
The plaintiff had no claim against the defendant since the advertisement was seen to be "a mere declaration of intention" by Archibald J. rather than a contractual offer.
The defendant lawfully advertised that on August 12, 13, and 14, 1872, in Bury St. Edmunds, there would be an auction of plant, office furniture, and brewing supplies. On August 12, the plaintiff arrived from London with a commission to buy office supplies. The defendant announced on August 14 that it would not be selling the office furniture. The plaintiff sought two days' worth of lost wages, a third-class train ticket, and two days' worth of board and lodging.
Held:
The plaintiff had no claim against the defendant since the advertisement was seen to be "a mere declaration of intention" by Archibald J. rather than a contractual offer.
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Rooke v Dawson (1895) Ch.
The accused oversaw a scholarship fund as trustees. The trust agreement called for a prize to be given to a Mill Hill School graduate who attended University College London or New College London and performed very well on a test administered by the trustees. The plaintiff and one other candidate took the examination, which the defendants promoted and administered. Despite having the best grades, the plaintiff was not given the scholarship by the defendants.
According to Chitty J., the advertisement was "nothing more than a declaration that an examination for a scholarship will be held, and there is no announcement that the scholar who obtains the highest number of marks will receive the scholarship." According to Spencer v. Harding (above), there was no contract between the parties to this case since the court declined to import the conditions of the trust deed into the advertisement.
The accused oversaw a scholarship fund as trustees. The trust agreement called for a prize to be given to a Mill Hill School graduate who attended University College London or New College London and performed very well on a test administered by the trustees. The plaintiff and one other candidate took the examination, which the defendants promoted and administered. Despite having the best grades, the plaintiff was not given the scholarship by the defendants.
According to Chitty J., the advertisement was "nothing more than a declaration that an examination for a scholarship will be held, and there is no announcement that the scholar who obtains the highest number of marks will receive the scholarship." According to Spencer v. Harding (above), there was no contract between the parties to this case since the court declined to import the conditions of the trust deed into the advertisement.
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Grainger & Son v. Gough (1896) HL
The appellants were French wine and Champagne merchant Louis Roederer's agents and wine merchants. A pricing list for Roederer's wine was distributed by the appellants, who also received orders and forwarded them to Roederer, who shipped the wine from France. For every bottle of wine sold in this manner, Roederer paid a commission to the appellants. The appellants were to be taxed by the respondent tax inspector as though they were engaged in a Roederer's wine trade in the United Kingdom.
Because the clients' contracts were formed with Roederer in France rather than the appellants in England, it was decided that there was no trade in the UK. The "price list does not amount to an offer to supply an unlimited quantity of the wine described at the price named," according to Lord Herschell LC. Ordering clients made offers, and Roederer accepted them, while it was still within its rights to reject any order.
The appellants were French wine and Champagne merchant Louis Roederer's agents and wine merchants. A pricing list for Roederer's wine was distributed by the appellants, who also received orders and forwarded them to Roederer, who shipped the wine from France. For every bottle of wine sold in this manner, Roederer paid a commission to the appellants. The appellants were to be taxed by the respondent tax inspector as though they were engaged in a Roederer's wine trade in the United Kingdom.
Because the clients' contracts were formed with Roederer in France rather than the appellants in England, it was decided that there was no trade in the UK. The "price list does not amount to an offer to supply an unlimited quantity of the wine described at the price named," according to Lord Herschell LC. Ordering clients made offers, and Roederer accepted them, while it was still within its rights to reject any order.
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Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953) CA
The defendants ran a self-service store where patrons pulled items off the shelf, handed them to a cashier, and then left. Among the products were some medications that had to be sold by a pharmacist or under their supervision in accordance with the Pharmacy and Poisons Act of 1933.
The pharmacist kept a watchful eye on the cash desk and oversaw any transactions involving the relevant drugs as long as they happened there. The plaintiffs questioned whether the sale was overseen as required by the Act, namely if the sale agreement was finalized at the cash desk or at a different location.
Held
Since the sale was conducted at the cash desk, the necessary supervision was provided. When a consumer in a supermarket points out the products he needs, the shopkeeper or cashier accepts the offer.
The defendants ran a self-service store where patrons pulled items off the shelf, handed them to a cashier, and then left. Among the products were some medications that had to be sold by a pharmacist or under their supervision in accordance with the Pharmacy and Poisons Act of 1933.
The pharmacist kept a watchful eye on the cash desk and oversaw any transactions involving the relevant drugs as long as they happened there. The plaintiffs questioned whether the sale was overseen as required by the Act, namely if the sale agreement was finalized at the cash desk or at a different location.
Held
Since the sale was conducted at the cash desk, the necessary supervision was provided. When a consumer in a supermarket points out the products he needs, the shopkeeper or cashier accepts the offer.
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Fisher v Bell (1961) QBDC
One of the flick knives in the defendant's shop window exhibit was labeled "Ejector knife 4s." "Offering for sale" such a knife was illegal under the Restriction of Offensive Weapons Act of 1959.
It is held that standard contract law must be applied to interpret the term "offer for sale" as it appears in this statute. A shop window display of products does not constitute an offer to sell under contract law. A window display is nothing more than a sweet invitation.
One of the flick knives in the defendant's shop window exhibit was labeled "Ejector knife 4s." "Offering for sale" such a knife was illegal under the Restriction of Offensive Weapons Act of 1959.
It is held that standard contract law must be applied to interpret the term "offer for sale" as it appears in this statute. A shop window display of products does not constitute an offer to sell under contract law. A window display is nothing more than a sweet invitation.
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Crittenden v. Partridge (1968) QBDC
The defendant, Mr. Partridge, advertised bramblefinches for 25 shillings each in a classified ad published in the journal "Cage and Aviary Birds." Offering live birds for sale, especially bramblefinches, was prohibited by the Protection of Birds Act 1954. The defendant filed an appeal against Chester magistrates' decision to find him guilty of that crime.
For the following grounds, it was held that the advertisement was not an offer to sell.
(I) Fisher v. Bell must be adhered to, according Ashworth and Blain JJ. (II).
According to Lord Parker CJ, an advertising or circular cannot be deemed to be meant to obligate its creator to sell an infinite quantity of a particular product to any individual who responds to it.
The defendant, Mr. Partridge, advertised bramblefinches for 25 shillings each in a classified ad published in the journal "Cage and Aviary Birds." Offering live birds for sale, especially bramblefinches, was prohibited by the Protection of Birds Act 1954. The defendant filed an appeal against Chester magistrates' decision to find him guilty of that crime.
For the following grounds, it was held that the advertisement was not an offer to sell.
(I) Fisher v. Bell must be adhered to, according Ashworth and Blain JJ. (II).
According to Lord Parker CJ, an advertising or circular cannot be deemed to be meant to obligate its creator to sell an infinite quantity of a particular product to any individual who responds to it.
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"Gibson v. Manchester City Council HL (1979) "
In a letter to the plaintiff, the defendant stated the following:
"The corporation may be prepared to sell the house to you at the purchase price of…£2,180… If you would like to make a formal application to buy your council house, please complete the enclosed application form and return it to me as soon as possible.
The defendant denied down the plaintiff's request for a reduced fee in a letter that she included with the form. The plaintiff then requested that the defendant "continue with the purchase as per my application." The Labour Party had taken over the defendant council in the meanwhile, and the defendant was now refusing to sell the plaintiff the house.
Held that the defendant was not required to sell to the plaintiff because they had not made an offer. By examining the "correspondence as a whole," Lord Denning MR of the Court of Appeal determined that the parties had a contract in place for the sale of the residence. However, Lord Diplock stated in the House of Lords:
"I can see no reason in the instant case for departing from the conventional approach of looking at the…documents…and seeing whether on their true construction there is to be found in them a contractual offer by the council to sell the house to Mr Gibson and an acceptance of that offer by Mr Gibson."
The House of Lords determined that there could not be a contract since the defendant council had not made a contractual offer to the plaintiff using the "conventional approach."
In a letter to the plaintiff, the defendant stated the following:
"The corporation may be prepared to sell the house to you at the purchase price of…£2,180… If you would like to make a formal application to buy your council house, please complete the enclosed application form and return it to me as soon as possible.
The defendant denied down the plaintiff's request for a reduced fee in a letter that she included with the form. The plaintiff then requested that the defendant "continue with the purchase as per my application." The Labour Party had taken over the defendant council in the meanwhile, and the defendant was now refusing to sell the plaintiff the house.
Held that the defendant was not required to sell to the plaintiff because they had not made an offer. By examining the "correspondence as a whole," Lord Denning MR of the Court of Appeal determined that the parties had a contract in place for the sale of the residence. However, Lord Diplock stated in the House of Lords:
"I can see no reason in the instant case for departing from the conventional approach of looking at the…documents…and seeing whether on their true construction there is to be found in them a contractual offer by the council to sell the house to Mr Gibson and an acceptance of that offer by Mr Gibson."
The House of Lords determined that there could not be a contract since the defendant council had not made a contractual offer to the plaintiff using the "conventional approach."
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Harvela Investments v Royal Trust Co of Canada (1985) HL
The first defendant, R, asked the plaintiff, H, and the second defendant, O, to submit sealed bids for particular shares and agreed to accept the highest price. H bid C$2,175,000 whereas O bid the higher of C$2,100,000 and ’C$101,000 in excess of any other offer…expressed as a set monetary amount’. R thought itself compelled to sell the shares to O for $2,276,000 and R’s solicitors wrote a telex to O and H saying
‘In the circumstances, our clients are compelled to accept and do hereby accept the offer received from [O]…’. H requested a declaration that R was bound to transfer the shares to it and an order for specified performance.
Held (I) On its true structure, R’s invitation to bid constituted a fixed bidding sale and it was not consistent with an aim to accept referential offers (those calculated by reference to other bids). Therefore, R was obliged to accept H’s bid as the highest valid bid submitted. (II) The telex accepting O’s bid was an attempt to execute existing obligations between R and O and so it was not an offer or acceptance of any new contract. It consequently did not give rise to any obligation to sell the shares to O.
The first defendant, R, asked the plaintiff, H, and the second defendant, O, to submit sealed bids for particular shares and agreed to accept the highest price. H bid C$2,175,000 whereas O bid the higher of C$2,100,000 and ’C$101,000 in excess of any other offer…expressed as a set monetary amount’. R thought itself compelled to sell the shares to O for $2,276,000 and R’s solicitors wrote a telex to O and H saying
‘In the circumstances, our clients are compelled to accept and do hereby accept the offer received from [O]…’. H requested a declaration that R was bound to transfer the shares to it and an order for specified performance.
Held (I) On its true structure, R’s invitation to bid constituted a fixed bidding sale and it was not consistent with an aim to accept referential offers (those calculated by reference to other bids). Therefore, R was obliged to accept H’s bid as the highest valid bid submitted. (II) The telex accepting O’s bid was an attempt to execute existing obligations between R and O and so it was not an offer or acceptance of any new contract. It consequently did not give rise to any obligation to sell the shares to O.