famous cases in contract law introduction · published by articulate® engage™ carlill v carbolic...

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Famous cases in Contract law

Introduction

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Here are some well know cases in the law of Contract. It is not a complete guide to the law of contract - there are thousands and thousands of cases. I have just chosen some of the more famous decisions (mostly the older decisions) which helped to shape the subject. They will give you a flavour of how it all works. I also give the BAILII or other online reference where I can (Wikipedia have a surprising number of legal reports), but it is NOT necessary for you to read the full report (unless you want to)!


Carlill v Carbolic Smoke Ball Company

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This is a very famous case indeed. It took place in 1893 when the Carbolic Smoke Ball company placed an advertisement for their influenza remedy called a 'carbolic smoke ball' saying that if anyone caught flu after using it they could claim £100, a considerable sum in those days. Mrs Carhill used the ball, caught flu and claimed her £100. When the company failed to pay she sued. The Court of Appeal held in her favour saying that the advert was an unlimited offer to the whole world, which Mrs Carhill had accepted by buying and using the smoke ball. You will find an account of the case on and a BAILII report. (Pic)


Pharmaceutical Society of Great Britain v Boots

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This case is from 1953 when self service stores were new. The Pharmaceutical Society of Great Britain objected to self service for medicines as, they said, the offer was accepted when the goods were taken off the shelf. This was illegal as no pharmacist had supervised the transaction. This case went to the Court of Appeal who agreed with the case put forward by Boots. This was that placing the goods on the shelves was an 'invitation to treat'. When the shopper put then in her bag and took them to the till this was the offer. This offer could be accepted or rejected by the pharmacist at the till, at which stage (if the offer was accepted) the contract was completed. See the reports on Wikipedia and BAILII report. ( )


Errington v Errington / Wood

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In this case from 1951, a father promised his son that if he and his wife paid off the mortgage on a house he owned, he would give it to them. The couple started to pay off the mortgage but then split up, the daughter-in-law remaining in the property. The father then died and his widow brought an action to eject the daughter-in-law from the property. However the court held that the fathers offer could not be revoked once the she had started to pay. The daughter-in-law could only be ejected from the property if she stopped paying off the mortgage. There is a brief report on Wikipedia and a full report on BAILII


Chappell & Co Ltd v Nestle Co Ltd

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This case from 1960 is about what is consideration. Nestle Co Ltd offered to give away records of Rockin' shoes by the King Brothers to anyone who sent in £1 6d and three wrappers from their chocolate bars. Chappel & Co owned the copyright of the record and were entitled to a 6.25% royalty on the 'ordinary retail selling price'. They applied for an injunction. Therefore in this case the court had to decide whether the wrappers were part of the consideration. The case went up to the House of Lords who held that the wrappers were part of the consideration and Nestle were therefore in breach, Lord Somervell saying "A contracting party can stipulate for what consideration he chooses". See a report on Wikipedia (pic)


Foakes v. Beer

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This is a leading case in 1884 from the House of Lords which confirms a very early case called Pinnels case from 1602. Pennels case states that part payment of a debt cannot extinguish the obligation to pay the rest. In this case Dr Foakes owed Julia Beer £2,090.00. Beer agreed that she would not take any action against Dr Foakes if he paid the debt off by installments and would waive the interest. The debt was duly paid and she then sued for the interest. The case when to the House of Lords where the majority ruled that Beers was not bound by the agreement not to claim interest as Foakes was already bound to pay the debt to her. There was no consideration for the agreement to waive interest. See the report on Wikipedia. (Pic)


Central London Property Trust Ltd v High Trees House Ltd

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This is a famous 1947 High Court case (known as the High Trees case). It involved some flats where were let at a lower rent from 1940 during the war as there was lower occupancy. The period of the low rent let was never stipulated. By 1945 however the flats were fully occupied and the landlords, Central London sued for payment of the full rental. Lord Denning held that the rent was payable from about mid 1945 when the flats became fully occupied. However he also said (conveniently ignoring Foakes v. Beer) that had the company tried to claim earlier rent they would have failed, on the basis that if a party leads another party to believe that he will not enforce his strict legal rights, then the Courts will prevent him from doing so at a later stage. He based this on a little known 1878 case Hughes v. Metropolitan Railway Co. Although this was an 'obiter' statement it is generally held to have created the doctrine of promissory estoppel.


Balfour v. Balfour

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This is a 1919 case regarding family agreements. It is authority for the proposition that there is a rebuttable presumption against an intention to create a legally enforceable agreement when the agreement is domestic or between family members. Mr Balfour was a civil engineer working in Ceylon (as it was known then). In 1915 Mrs Balfour got rheumatic arthritis and was advised to stay in England for her health. Mr Balfour promised to pay her £30 per month until she rejoined him. The couple drifted apart and eventually divorced. Mrs Balfour then sued for the £30 per month. At first instance she won, but the Court of Appeal Judges, for varying reasons, held that the agreement was unenforceable as it was made at a time when they were married. Reported on . A subsequent Lord Denning case in 1970, Merritt v. Merritt, said that if the parties were estranged when the contract was signed Balfour v. Balfour would not apply.


Routledge v. Mackay

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This 1954 case looks at the question of statements made pre contract and whether they will be contractual terms. Mr Routledge bought a motor cycle for £30. He had previously been told it was a 1942 model but in fact it was from 1936. When he purchased it one week later there was a written agreement which did not refer to its age. The agreement ended with the words "It is understood that when the £30 is paid over that this transaction is closed". When he discovered the true age of the motor bike and sued the court held that the previous statement was a 'representation' and not a term of the contract. So his claim failed.


The Moorcock

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This is a famous case from 1889 which introduced the concept of 'implied terms'. The case involved a ship, the Moorcock, which was damaged while in dock. Was there an implied term to say that the wharfingers were responsible for ensuring that the vessel would remain safe while docked? The court held that there was. The case provides that whether a term is implied will depend on the presumed intention of the parties. An implied term may be read into a contract for reasons of "business efficacy". See also (pic).


The Officious Bystander

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The 1926 case of Southern Foundries (1926) Ltd v Shirlaw (the facts of which are not really important) introduced one of the classic metaphorical figures in English law - the officious bystander. This is a test for determining whether a term should be implied into a contract. MacKinnon LJ described it thus: "if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common 'Oh, of course!'"


19th Century singing cases

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These two cases illustrate the difference between a condition in a contract and a warranty. Both are from 1876. (Pic) In , a singer was employed as the lead in an opera at the Criterion Theatre London. She was unable to take up the role though until well into the season. By this time the management had employed another singer. It was held that her promise to perform at the first performance was a condition and its breach entitled the management to treat the contract as discharged. Contrast this with Bettini v. Gye. Here Bettini agreed to be in London 'without fail' 6 days before for rehearsals, but only arrived three days before. Again a new singer had been employed. Here though the management lost as the court held that the rehearsal period was not a condition of the contract entitling them to terminate it.


Bell v. Lever Brothers Ltd

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This case from 1931 looks at when a contract can be void for mistake. The facts of the case involve a contract made by Lever Brothers with Mr Bell which they wanted rescinded as they had been unaware that he had been engaged in irregular conduct. However the House of Lords held that there was no mistake sufficient to justify rescission. In order for a contract to be void by common mistake, the mistake must involve the actual subject-matter of the agreement and must be of such a "fundamental character as to constitute an underlying assumption without which the parties would not have entered into the agreements". Here the mistake was not sufficiently fundamental. The case is reported on BAILII (pic)


Nash v. Inman

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This 1908 case dates back from the time when the age of majority was 21, not 18 as it is now. Minors can only be legally liable for good which are 'necessary'. Here a student purchased 11 silk waistcoats and then failed to pay for them. When sued by the outraged trader, the court held that silk waistcoats WERE suitable for life at Cambridge (and therefore capable of being necessaries), however they were not suitable for his actual needs as he already had a sufficient supply. Seems a very unfair decision on the trader - could any of the Judges have been Cambridge men?


Thornton v. Shoe Lane Parking

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This 1971 Lord Denning decision is about incorporating terms into a contract. In this case a excluding liability for damage and personal injury. A ticket given to the driver at the barrier said "This ticket is issued subject to the conditions of issue as displayed on the premises". The terms and conditions were then set out on a notice inside the car park. Lord Denning held that by then it was too late. The contract had been concluded at the barrier, before the driver had had an opportunity to read the terms and conditions. Reported on BAILII and Wikipedia.

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