ACCA F4

A selection of popular cases

CONTRACT

Offer and acceptance

Case Reminder Point of law

Partridge v Crittenden Advert selling wild birds Advert is an ITT not an offer

Carlill v Carbolic Smoke Ball Co

Newspaper ad “Use smoke ball, catch flu, get £100

Advert may be on offer to the world (rarely)

Fisher v Bell Flick knife in shop window Shop display an ITT not an offer.

Pharmaceutical Society of GB v Boots

Medicines on shop shelves Display is an ITT. Point of sale is at counter

Harvey v Facey “Lowest price for Bumper Hall Pen £900”

Supply of information re selling price is not an offer

Harris v Nickerson Auction cancelled – sued for expenses

Advert re auction was ITT to an offer – hence no contract

Errington v Errington Father bought house for couple. Promised to transfer if they paid mortgage. Widow refused

Unilateral offer could not be revoked while consideration was executory

Hyde v Wrench Sale of farm – buyer tried to get price reduction

Counter offer revokes original offer

Felthouse v Bindley Trying to buy a horse. “Assume it’s mine if I don’t hear from you”

Silence cannot be acceptance

Entores v Miles Far Eastern

Acceptance faxed from Amsterdam to London

Valid when received and read in London

Byrne v Van Tienhoven Acceptance and revocation letters crossing in post

Revocation of offer only effective when received and read. Acceptance valid when posted.

Consideration

Case Reminder Point of law

Re McArdle Tenant decorating house Past consideration is no good

Collins v Godefroy Witness promised money to give evidence – already subpoena’d

No consideration – promise was already legal obligation

Glasbrook Brothers v Glamorgan CC

Police requested to subdue picketing strikers

Police had done more than normal obligation – consideration was supplied

Stilk v Myrick Sailors mutinied – others offered a rise to stay

No consideration – rise was not enforceable

Hartley v Ponsonby More sailors mutinied – others offered a rise to stay

Extra duties were consideration – rise was enforceable

Williams v Roffey Brothers

Sub-contractor offered a bonus to finish on time

Avoidance of penalty for the main contractor was consideration for the bonus

Foakes v Beer Lender agreed delayed repayment schedule with no interest

No consideration for variation of contract. Interest was due

Central London Property Trust v High Trees House

Landlord offered to reduce rent on high rise flats in WW2

Promissory estoppel. Variation freely offered with no coercion – could not go back on offer

Intention

Balfour v Balfour Husband went to Ceylon – promised to support wife

Domestic agreement – presumed no intention to create legal relations

Jones v Vernon Pools “Contract binding in honour only” Presumption in commercial contracts is that legal relations are intended – but it can be rebutted.

Contract terms and exclusion clauses

Poussard v Spiers & Pond

Opera singer ill at start of run. Producers put in replacement

Failing to attend was breach of condition – gave right to rescind

Bettini v Gye Opera singer 3 days late for rehearsals

Attendance at all rehearsals was a warranty – breach gives right to damages, not rescission

Curtis v Chemical Cleaning Co

Employee said exclusion clause only applied to beads and sequins

Misrepresentation rendered the exclusion invalid

Thompson v LMS Railway

Rail ticket referred to standard conditions. They excluded liability for everything. Train too long for platform – woman fell off

Exclusion clause was adequately communicated

Olley v Marlborough Court

Notice in hotel bedroom denied liability for loss

Not effective – communicated after contract was made

Photo Productions v Securicor

Securicor night watchman set fire to building

Exclusion clause was effective

Misrepresentation

Leaf v International Gallery

Sale of fake Constable Mistake was not operative. Misrepresentation was innocent so rescission was only possible remedy. Sale was 5 years ago – too late – delay defeats equity

Performance

Cutter v Powell Sailor died part way into journey. Captain refused to pay wages

No wages due – part performance is no good

Sumpter v Hedges House part built. Builder went bust. Asked for quantum meruit

No amount payable for building. Acceptance could not be freely given.

Hoenig v Isaacs House refurb largely completed but not exactly to spec. Homeowner refused to pay

Had to pay as performance substantially completed. Could deduct cost to finish to spec

Discharge by breach

Sumpter v Hedges Builder half built house. Asked for part of price

No quantum meruit as customer had no choice about accepting

Hochster v de la Tour Tour courier cancelled trip well in advance.

Immediate action for anticipatory breach was allowed

White and Carter (Councils) v McGregor

Names on bins. Client cancelled order before work done

Injured party can carry on regardless and sue for full price

Avery v Bowden Shipping contract cancelled in advance. Wronged party opted to continue and sue for full price. War broke out

War frustrated contract. Lost right to sue

Omnium D’Enterprise v Sutherland

Ship chartered out then sold before start of charter

Anticipatory breach - not frustration. The events were avoidable by the owner

Remedies for breach of contract

Case Reminder Point of law

Hadley v Baxendale Broken mill shaft. Delay in fixing lead to great loss of business

Remoteness of damage – not foreseeable – couldn’t sue.

Victoria Laundry v Newman Industries

Delay in completing contract led to huge cost from lost business

Only liable for reasonably foreseeable damages

Chaplin v Hicks Beauty contestant wrongly excluded from contest

Difficult to assess damages but plaintiff still entitled

Cellulose Acetate Silk v Widnes Foundry

Loss much bigger than contract allowed for

Damages fixed at level proscribed in contract.

Ford Motor Co v Armstrong

Contract proscribed fixed damages for trivial breaches

Penalty clauses not upheld. Only sue for actual loss

Jarvis v Swan Tours Holiday not as good as described in brochure

Could sue for disappointment and distress

Warner Bros v Nelson Contract stopped Bette Davis working for other film companies

Injunction illustration

AGENCY

Watteau v Fenwick Pub manager ordered cigars despite specific orders not to. Pub owner refused to pay

Implied agency. Owner bound on contract.

GNR v Swaffield Lonely, unaccompanied horse in station. GNR arranged stabling. Owner refused to pay

Agency by necessity. Owner had to pay.

Kelner v Baxter Promoters bought wine on behalf of company not yet formed.

Company not liable on contract as did not exist when contract made. Promoters personally liable

Yonge v Toynbee Solicitors acted for client who had gone insane.

Insanity ended agency. Solicitors liable for breach of warranty of authority.

TORT

Donoghue v Stevenson Decomposed snail in ginger beer. Great upset after drinking

Duty of care despite no contract. Case established negligence.

Bourhill v Young Woman heard crash – looked out at messy accident - miscarried

No duty of care; too remote.

Hedley Byrne v Heller Ad agency gets positive reference from banker of potential client. Client then goes bust owing money

Negligent mis-statement. Liable if reasonably expect others to rely on your statement

Caparo Inds v Dickman Caparo took over Fidelity relying on info in audited accounts. These turned out to be in error

Auditors normally only liable to those to whom their opinion is directly communicated.

Haley v LEB Blind person falling down marked hole in road

LEB negligent. Must take into account potential susceptibility.

Watt v Herts CC Fireman injured while dashing off to blaze.

Less care required if urgent objective. Authority not liable

Paris v Stepney BC One eyed mechanic – no goggles supplied. Blinded by freak shard.

Employer liable. More care required given potential seriousness

Bolton v Stone Freak cricket shot hit ball out of ground injuring passer by.

Club not liable. Highly unlikely accident.

ADT v Binder Hamlyn Partner gave verbal assurance to buyer that accounts were OK. Bought and lost money.

Firm liable for negligent mis-statement due to direct comment.

ICI v Shatwell Explosive brothers. Willingly playing with explosives – blown up

Volenti non fit injuria. Employer not liable.

EMPLOYMENT

Pepper v Hart Teacher sent child to school at reduced fee. Revenue tried to assess benefit at average cost

“Cost” in legislation interpreted as average cost. House of Lords used Hansard to help

Hall v Lorimer Vision mixer worked for many employers for short time

Self employed

COMPANY

Salomon v Salomon Company financed by owner mainly by secured debt. Company insolvent. Owner claimed security

Allowed. Company separate legal person. Shareholder could also be secured creditor

DHN Food Distributors v Tower Hamlets

Group company traded from premises owned by other group company. Compulsorily demolished

Compensation payable both for building and loss of trade. Whole group viewed as owner

Gilford Motor Co v Horne

Mechanic’s contract banned approaches to old customers after leaving job. Wrote out from new limited company instead

Not allowed. Company a “sham” merely to avoid contract obligation

Daimler v Continental Tyre and Rubber

1916 contract between 2 British companies – one with German shareholders. English company withdrew

No breach. Veil lifted to reveal other company as enemy

Ebrahimi v Westbourne Galleries

2 shareholders (60%) expelled other shareholder as director

Court agreed just and equitable winding up as quasi partnership

Hickman v Kent Sheepbreeders

Articles said disputes must go to arbitration. Shareholder sued company over dispute

Articles binding on shareholder. Had to go to arbitration

Pender v Lushington Articles allowed 1 vote per share up to max of 100. Large holder passed some shares to nominee. Chairman wouldn’t count votes

Articles binding on company. Had to count votes

Rayfield v Hands Articles said that selling shareholders must offer to directors who would buy at fair price.

Articles binding shareholder v shareholder. Directors obliged to buy

Eley v Positive Life Articles said “Eley Co solicitor for life”. Sacked. Sued for breach

Articles don’t make contracts between company and 3rd party. Could not sue

Re New British Iron Articles stated directors to be paid £1,000pa. Not paid

Articles can be used to flesh out existing contract. £1,000 binding

Dafen Tinplate v Llanelli Steel

Proposed change of articles to allow directors to buy out any shareholder

Not allowed. Not for benefit for company as whole

Sidebottom v Kershaw Leese

Proposed change of articles to allow directors to buy out any shareholder competing with co

Allowed. Although bad for 1 shareholder, would benefit co as a whole

Bushell v Faith 3 equal shareholder / directors. Articles said attacked director got treble votes. 2 tried to sack 3rd

Couldn’t sack him. Any vote would fail 2:3

Freeman & Lockyer v Buckhurst Park

Director described himself as MD. Made contract. Co refused to pay.

Director held out as MD has apparent authority to bind co. Co must pay.

Panorama Developments v Fidelis Furnishings

Co secretary hired cars claiming for co use. Used them personally. Co refused to pay

Secretary has apparent authority to bind co in admin contracts. Co had to pay.

Dorchester Finance v Stebbing

Experienced accountant / director signed blank cheques. Colleague stole large sum.

Liable for breach of duty to use skill and care. Accountant should have known better.

Percival v Wright Shareholder selling. Directors bought knowing share price would rise soon

Directors OK. Duty owed to co as whole not to individual shareholders

Foss v Harbottle Minority shareholders bringing action against director / majority shareholder who defrauded co

They failed. If wrong is done to a co, the proper plaintiff is the co