CASE SUMMARIES

 Fisher v Bell

Issue: Whether a ‘flick knife’ was indeed offered for sale

Facts: A flick knife was displayed in a shop window and behind it was a ticket reading
‘ejector knife – 4s’ At that time it was an offense to inter alia offer for sale such a knife and
the shop-keeper was acquitted of this offense. The prosecutor was appealed.

Held: The Appeal would be dismissed.

*Lord Parker C.J – “It is clear that according to the ordinary law of contract, the display
of an article with a price on it in a shop window is merely an invitation to treat. It is in no
sense an offer for sale the acceptance for which constitutes a contract. This is clearly the
general law of the country.”

 Carlill v Carbolic Smokeball Co

Issue: Offer to the world /acceptance

Facts: The defendants issued a newspaper advertisement in which they said they would pay
£100 to any person who contracted influenza after using one od their smokeballs in a
specified manner for a specified period. They also stated that they had deposited £1,000 with
a named bank to show their sincerity in the manner. The plaintiff (Ms.Carlill) believing the
accuracy of the advertisement purchased one of the balls and used it as directed but she
caught ‘flu’ nevertheless. She sued to recover the £100.

*N.B- The deposit made in the bank by the Smokeball Co. shows proof of sincerity in the
manner.
*NB- The deposit shows the company’s intention to pay the £100 in the event specified in
their advertisement.
*N.B- In this case, the offer was made to anyone who accepted it.
  Gibson v Manchester City Council

The trial judge and the Court of Appeal held that a contract had been concluded between the
parties. Lord Denning, in a broad and sweeping judgment, held that a contract had been
concluded because there was agreement between the parties on all material points, even
thought the precise formalities had not been completed in this case. The House of Lords took
a different view and held that no contract had been concluded. It was held that the letter
written by the treasurer, which stated that the Council may be prepared to sell, was not an
offer as it did not finally commit the council to selling the house. It was simply an
expression of their willingness to enter into negotiations for the sale of the house and was
not an offer which was capable of being accepted.

*Commentary: The difficulty in a case such as Gibson arises from the fact that it is not
easy to ascertain when the preliminary negotiations end and a definite offer is made.
*Invitation to treat is not an offer but is an act in negotiation.

 Storer v Manchester City Council

Issue: Was there an agreement?

Facts: Manchester City Council decided to sell council houses to tenants and told its town
clerk to create a simple form to create quick agreements which dispensed with the legal
formalities. Mr. Storer applied to buy his council house, and on March 9th 1971, the town
clerk wrote to him stating ‘I understand you wish to buy your council house and I enclose the
Agreement for Sale. If you will sign the Agreement and return it to me, I will send you the
Agreement signed on behalf of the Council, in exchange.’ The Agreement for sale had been
completed with details including the purchased price, the amount of the mortgage and the
monthly repayments, although the date on the tenancy was to cease and the mortgage
repayment begin had been left blank. On March 20th, Mr. Storer signed and returned the
Agreement for the Council, the Council changed political control and discontinued sales
unless contracts had already been exchanged. Mr. Storer sought specific performance
alleging a binding contract. (Sued for breach of contract)
Held: The Court held that a binding contract had been concluded. The Council’s intention
was to become contractually bound when Storer had signed the Agreement and returned it,
particularly as there was definite language used in the correspondence and there was a clear
offer and acceptance. *There was a binding obligation on D to sell.

 Patridge v Crittenden

Issue: Invitation to treat is not an offer / Was D ‘offering for sale’ a wild bird contrary to the
Protection of Birds Act 1954?

Facts: This is another example in how an offer is distinct from an invitation to treat in
contract law. The facts of the case are quite similar to the case of Fisher v Bell (1967)
- Mr Patridge, the defendant, advertised in a magazine that he had Bramblefinch cocks and
hens to sell. The price he quoted for each bird was 25s. The Bramblefinch was a
protected bird category under the Protection of Birds Act 1954 and he was consequently
charged with offering to sale a protected birds species.

Held: The conviction was quashed on the appeal and it was held that the advertisement to
sell the bird was an invitation to treat and did not constitute an offer.
*Advertisement was invitation to treat, not an offer.

 Pharmaceutical Society of Great Britain v Boots Cash Chemists

(Southern) Ltd.

Issue: At which point did the contract of sale come into existence?

Facts: On April 13th 1951, two customers took drugs from a shelf in a pharmacy, put it in
their basket and paid at the cash register at the exit. The pharmacist station was near the
poisons section so they were able to oversee all transactions but the pharmacist took no part
in the transaction. The Pharmaceutical Society, as the organization responsible for enforcing
provisions of the Pharmacy and Poisons Act 1933, brought this action as a test case against
this type of retailing. At the lower court, they found this type of retailing was not in
contravention of the Act and the Society appealed.
Boots Cash Chemists introduced a new method of purchasing drugs from their store. The
drugs would be on display, shoppers would pick them from the shelves and pay for them at
the till. The Pharmaceutical Society of Great Britain objected to this method, claiming that
Section 18 (1) of The Pharmacy and Poisons Act 1933 mandated the presence of a pharmacist
during the sale of a product listed under the Act’s schedule of posion.
The Society alleged that the display of goods constituted an offer and a customer upon
choosing a product/drug, had accepted the offer. Due to lack of supervision of a pharmacist,
The Boots Cash Chemists had, according to the Pharmaceutical Society, violated the terms of
the Pharmacy and Poisons Act of 1933. Matter was taken to court.

Held: Time of sale at cashier is acceptance.

- Goods on the shelf constitute an invitation to treat not an offer. A customer takes the
goods to the till and makes an offer to purchase. The shop assistant then chooses whether
to accept the offer. The contract is therefore concluded at the till in the presence of the
pharmacist.

 Entores Ltd. v Miles Far East Corporation

Issue: 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 subject to Dutch Law.

Facts: The plaintiff traded from London and telexed an offer to purchase cathodes to a
company in Holland, who signified their acceptance by return, again by telex.
Entores later wanted to sure that defendant, the parents company of the Dutch party. It was
derived that a contract had come into existence within the UK jurisdiction.

Held: The resultant contract was made in, and was actionable, in London. For instantaneous
communications, such as by fax, there is acceptance at the place where the offeror receives
the acceptance of the offer, through in such case, Lord Denning said ‘The contract is only
complete when the acceptance is received by the offeror.
An agreement made in one country and amended in another should not be regarded as having
been made in the second country.
  Adams v Lindsell

Issue: This case considers when mutual assent to an agreement occurs in the particular
circumstance of mail contract / When is a postal contract made?

Facts: The defendant sent his offer of wool for sale to the plaintiff by post. The plaintiff’s
acceptance was at first misdirected. Before receiving the reply, the defendant had sold the
wool elsewhere, but this was only after he would have received the acceptance in the normal
course of post. The buyer claimed he had accepted the offer.

Held: The offer had not been accepted, and there was no contract. Lord Ellenborough said:
“The defendants who have proposed by letter to sell this wool are not to be held liable, even
though it be now admitted that the answer did not come back in due course of post. Till the
plaintiff’s answer was actually received, there could be no binding contract between the
parties; and before then, the defendants had retracted their offer by selling the wool to other
persons.

 Currie v Misa

The general principle is that an agreement alone does not make an enforceable contract. In
order to make claim for breach of contract, a party must have given consideration in return
for a promise. Consideration is not required if an agreement is made by deed.
The traditional approach is that consideration consist of a promise or act which is of
detriment to the promise or a benefit to the promisor and sometimes both will be present.
The principle of consideration was commented upon: ‘A valuable consideration, in the
sense of law, may consist either in some right, interest, profit or benefit accruing to the
one party, or some forbearance, detriment, loss or responsibility, given, suffered or
undertaken by the other.’
  Pao On v Lau Yiu Long

Issue: 1) Was there past consideration i.e insufficient consideration?

2) Was there economic duress on the part of Pao?

Facts: The claimant had threatened not to complete the main contract for the purchase of
shares unless subsidiary agreements were met including a guarantee and an indemnity
(security or protections against loss). The defendant was anxious to complete the main
contract as there had been a public announcement of the acquisition of shares and did not
want to undermine public confidence in the company and the consequent affect on share
prices. The defendant could have sued for specific performance of the agreement but this
would have delayed matters and damaged the company’s repetition. The defendant had taken
legal advice on all these matters before agreeing to the guarantee and indemnity. The
claimant then sought to enforce the guarantee and the defendant sought to have the agreement
set aside for economic duress.

Held: There was no economic duress. The Privy Council identified four (4) factors to
consider in assessing whether economic duress was present:
(1) Did the person claiming to be coerced protest?
(2) Did that person have any other available course of action?
(3) Were they independently advised?
(4) After entering into the contract, did they take steps to avoid it?

- In the present case the defendant did not protest at the time. He also could have enforced
the contract of sale through specific performance and thus had another avenue of redress
available to him. He had taken legal advice and took no steps to avoid the agreement
prior to the claimant seeking to enforce the guarantee. Therefore, no economic duress
could be established. It was simply of commercial pressure far short of duress.
  Balfour v Balfour

Issue: 1) Was Mr. Balfour’s offer intended to be legally binding?

2) Does the fact that they were husband and wife matter?

Facts: Husband (defendant) promised to pay his wife £30 per month whilst she remained in
England due to illness (he resided in Ceylon – Sri Lanka.) The parties subsequently divorced
and an issue arose as to whether agreement was enforceable (she had by this time, received
an order for alimony.) When agreement was made, the parties were on amicable terms. Mrs.
Balfour succeeded at first instance.

Held: Court of Appeal – Atkins L.J

The agreement was not enforceable because the parties did not intend to create legal
relations. This is so even though there may have been consideration. Agreements between
spouses are not contracts because the parties did not intend that they should be
attended by legal consequences. The parties, in the inception of the arrangement, never
intended that they should be sued upon. To permit them to be enforced would burden the
small courts with numerous claims. Domestic agreements of this nature (between spouses)
are outside the realm of contract altogether. Atkins L.J also noted that “the consideration that
really obtains for (spouses) is that natural love and affection which counts for so little in these
cold courts.” The onus was on the plaintiff to prove intent and she failed.

*N.B – Arrangements made between husband & wife are not generally contracts as the
parties do not intend to be legally bound by the agreement.
*N.B - Court does not consider ‘domestic social agreements.’

 Derry v Peek

Issue: Whether it is deceit when a company forms a prospectus to solicit investors, which
later proves to be wrong

Facts: Henry William Peek (plaintiff) received a prospectus of a train company which
stated that due to a new law, the company could begin to use steam or mechanical power in
place of the typical horse drawn power. The prospectus predicted that this would result in
great savings and profitability for the company. After reading the prospectus, Peek bought
shares in the company, thinking the company had an absolute right to use steam and other
mechanical power. However, unbeknownst to any of the parties at the time, the Board of
Trade only permitted the company to use steam or mechanical power on certain portion of its
tracks. As a result, the company folded. Consequently, Peek brought suit against William
Derry, the chairman of the company and its four directors (defendants) for fraudulent
misrepresentation. The defendants testified that they believed that the company would be able
to obtain absolute rights to use steam or mechanical power. The trial court dismissed the
claim because of that testimony. The Court of Appeals reversed, holding that the defendants
did not have any reasonable grounds on which to base their beliefs. The defendants appealed.

Held: The statement was not fraudulent but made in the honest belief that approval was
forthcoming. Lord Herschell defined fraudulent misrepresentation as a statement which is
made either: i) Knowing it to be false, ii) Without belief in its truth or iii) Recklessly, careless
as to whether it be true or false.

 Jarvis v Swan Tours Ltd.

Issue: Can you get damages for mental distress?

Facts: Mr. Jarvis, solicitor, booked a 15-day skiing holiday over the Christmas period with
Swan Tours. The brochure in which the holiday was advertised made several claims about the
provision of enjoyment relating to house parties, a friendly welcome from English speaking
hotel owner, a variety of ski-runs, afternoon tea and cakes and a yodler evening. Many of
these did not go ahead or where not as described. Mr. Jarvis brought a claim for breach of
contract based on his disappointment. At trial, the judge awarded him £30 damages on the
basis that he had only been provided with half of what he had paid for and that no damages
could be recovered for disappointment. Mr. Jarvis appealed.

Held: Where a contract is entered for the specific purpose of the provision of enjoyment of
entertainment, damages may be awarded for the disappointment, distress, upset and
frustration caused by a breach of contract in failing to provide the enjoyment or
entertainment.

*N.B– You are entitled to get damages for mental distress in a breach of a contract when you
rely on an expection – when contract itself was for enjoyment and pleasure. You are entitled
to damages for breach of contract or entertainment and enjoyment.
  McManus v Fortescue

No contract results if the auctioneer accepts an offer lower than the reserved price.

Damages – Remedy for breach of contract

: Refers to monetary compensation rewarded by a court of law to an individual or entity as
compensation for property damage, a physical injury, or other loss caused by another
person’s actions. Damages that a court may award are two (2) different types: Compensatory
and Punitive.

 Hyde v Wrench

Facts: The defendant offered to sell some land to the claimant for £1,000 and the claimant
replied by offering to purchase the land for £950. The defendant refused to sell for £950. The
claimant then wrote to the defendant agreeing to pay the £1,000, but the defendant still
refused to sell.

Held: It was held that there was no contract between parties. The claimant’s offer of £950
was a counter-offer which killed off the defendant’s original offer so as to render it incapable
of subsequent acceptance.

*N.B – A purported acceptance which does not accept all the terms and conditions proposed
by the offeror but which in fact introduces new terms is not an acceptance but a counter-offer,
which is then treated as a new offer which is capable of acceptance/ rejection.
The effect of a counter-offer is to kill off the original offer so that it cannot be accepted
by the offeree.

It should be noted however that the counter-offer may be accepted by the original offeror.
This is a process which involves the exchange of terms over time until an act by one of the
parties can be regarded as an acceptance of the other party’s terms.
  Butler Machine Tool Co Ltd. v Ex-Cell-O Corp.

In this case, the sellers Butler, offered to sell a machine tool to the buyers, the offer being
made on Butlers standard terms of business which included inter alia, a price variation clause.
The buyer sends an order for the machine tool which, in turn, was on their own standard term
of business, which made no provision for a price variation clause and stated that the price of
the machine tool was to be fixed.
The buyers’ order form contained a tear-off acknowledgement slip which stated that ‘We the
sellers accept your order on the terms and conditions stated thereon.’ The seller signed and
returned the slip to the buyers, together with a letter stating that they were carrying out the
order on the terms of their original offer.
After constructing the machine tool, but before delivering it, the seller sought to involve the
price variation clause contained in their original offer and claimed the original offer of
£2,892. The buyers refused to pay this increase in price claiming that they were not
contractually bound to do so. The sellers accordingly then sued the buyers for £2,892 in
damages. The Court of Appeal held that they were not entitled to recover the sum claimed
because their contract had been concluded on the buyers terms which did not include a price
variation clause.