Spring v Guardian Assurance

Q : Can you be held liable for economic loss suffered because of your reference?

(ie, if you give bad statement (reference) about an employee of yours, and because of that, he isn't hired by other companies, can you be held liable)

- D made a statement that implied the CL is of no integrity and a dishonest person.




HELD : D owes a duty of care to his employee because of his negligent misstatement. 

Dutton v Bognor Regis UDC

Pure Economic Loss

Usually, courts would allow claims on consequential economic loss rather than pure economic loss.


- Mrs Dutton, the claimant suffered a financial loss because of the 'defect' in the foundations of the property due to the negligent inspections carried out by the inspector of Bognor Regis UDC.


- After appealing, Mrs Dutton won the case because: 
1) There was a threat of injury to health & safety


Q: If the defective property was merely of low quality, and not dangerous to health, would there be liablity?
No

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Thomas v Thomas [1842]

Consideration only need to be sufficient, it does not need to be adequate (enough)

The story of John Thomas

On the day of John Thomas's death, he told the witnesses that he wanted his wife to have one of his house for life, although it is not written in his will.


After his death, his executors gave one of the houses to his wife, if and only if she paid a rent of 1 pound per year and kept the house in good condition.


The wife paid the rent and kept the house in good condition.
Later, the executor tried to dispossess the house, but they failed.





Held : Contract was enforceable, not because it was the death wish of the husband BUT, merely because of the fact that the wife had paid rent.




Paying the rent shows consideration, therefore the contract was binding and the executors failed.

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Ward v Byham [1956]

A story about a father who abandoned the child.

1. A dad promised to pay the mother of his illegitimate child £1 per week if she ensured the child   was happy and looked after properly.


2. The mother looked after the child and kept the child happy.


3. Later then, the mother remarried and the father who abandoned the child refused to pay her under the argument that it was her legal duty to look after the child.




Held : The contract was binding. 

It was the mother's duty to look after the child, but it wasn't her duty to keep the child happy.

Consideration was found in this case when the mother kept the child happy.

Wise words by Lord Denning :
" I have always thought that a promise to perform an existing duty, or the performance of it, should be regarded as good consideration, because it is a benefit to the person whom it is given. "

[Tort] Z v UK (Case to refer to : Osman v UK)

Article 3 -  Prohibition of torture.

- No one shall be subjected to torture or to inhuman or degrading treatment or punishment

bedraggled - dirty and disheveled

disheveled - of a person's hair/appearance untidy 

inter alia - among all other things

inextricably - impossible to disentangle/seperate

Facts :- 

A local authority failed to separate four children from their mother even though it was clear that the children were being abused and neglected over a four-year period. 

The Court found that the authority had a positive obligation to remove the children as soon as they became aware of abuse that might amount to inhuman or degrading treatment.

All four children suffered psychological and physical damage resulting from the abuse and neglect of their parents over a period of more than four years. 

Whilst the Court noted the Government’s submission that there was no finding that the children should have been taken into care immediately, the severity of the damage was inextricably linked the long period of time over which the abuse persisted. 

Awards would be made as follows for medical treatment and loss of employment opportunities.

Held : Z's rights were breached because of the local authority's failure to prevent abuse, also constituted inhuman treatment. 

Henthorn v Fraser (1892) Mailbox Postal Rule.

Based on Adams v Lindsell (Misdirection of letter)

7th July 

Henthorn from Birkenhead, called office of land society in Liverpool.

Henthorn negotiated to buy some houses belonging to the land society.


Secretary agreed to sell to him, giving him an option of purchase for 14days at £750.

8th July

Morning : Another person called, offered £760 for the property, offer accepted.

12 - 1 pm : Secretary withdrawed the offer made to Henthorn.


3.50 pm : Claimant delivered letter accepting the offer, but letter arrived at 8.30 pm, after the office was closed.


5pm + : Withdrawal offer arrived at Birkenhead.
Secretary opened the letter on the next morning.
Claimant sued for specific performance.


Held : Specific performance granted, Postal Rule applies as acceptance occurred before  . Defendant was told to sell the land.


**The offeree in Henthorn, on the other hand, certainly knew of the offeror’s
promise to give him an option “for fourteen days” and quite possibly relied
on it. Arguably, therefore, the “mailbox” rule should work in favor of offerees
but not against them. But this might allow offerees to speculate at the offeror’s
expense, using the telephone or telegraph to overtake a letter of acceptance
in transit when the market shifts.



Q : When the rule applies?

Warlow v Harrison [1859]

1) The defendant Harrison,  who's an auctioneer advertised the sale 'without reserve' of a mare by public auction.

2) Plaintiff, Warlow attended the auction and bid 60G.

3) Horse owner attended too, and bid 61G.

4) Plaintiff knew that it was the horse owner who bid 61G, so he didn't bother bidding any higher.

5) Auctioneer, Harrison, knocked down the hammer 3 times to the horse owner.


Plaintiff : Held that it was the auctioneer was the plaintiff's agent to complete the contract but
failed to claim against defendant as there was no agency relationship.
(someone who represents your interest in real estate and owes you a duty)

Without Reserve - Owner could not bid on it's own property.
And the property will be sold to the highest bona fide (honest purchaser) bidder, whether the bid is equivalent to the real value of the property or not.

Held : Highest bona fide bidder at the auction may sue the auctioneer if a sale was without reserve.
There was a breach of contract between auctioneer and highest bona fide bidder, therefore the plaintiff has the right of action against the auctioneer.
Claim successful.

Holwell Securities Ltd v Hughes [Postal Rule] 1974

Holwell Securities Ltd v Hughes

Court of Appeal

On 19 October 1971
Hughes gave the claimants an option to purchase his house for £45,000. 
Clause 2 of the agreement stated that the option was to be exercised ‘by notice in writing’ within six months from the date hereof.

On 14 April 1972
The claimants posted a letter of acceptance but letter was never delivered. 
After the option had expired the claimants sued for specific performance.
The claimants argued that the postal rule applied and that a contract had therefore been made as soon as the letter of acceptance was posted.



Courts held : Defendant not liable.

The postal rule did not apply because the offer, by asking for ‘notice in writing’, it stated that an acceptance had to reach the offeror.
The postal rule would not apply where all the circumstances of the case indicated that the
parties did not intend there to be a binding contract until an acceptance was actually
received.
Furthermore, the court stated that the rule would never apply where its application would produce ‘manifest inconvenience and absurdity’.


Despite the decision in Holwell Securities Ltd v Hughes, the postal rule is still very much
alive and can still apply. It is, however, important to remember that the rule can apply only
when acceptance is made by posting a letter.



Q : What is specific performance in this case?
A court order requiring Dr Hughes to honour the contract and sell the house to them. 

The Postal Rule

Case - Adams v Lindsell.

In the postal rule ;

1 ) Acceptance is communicated when the offeree has posted his letter of acceptance.

2 ) Acceptance is communicated without taking into account whether the letter is delayed or lost, in  the post.

Q: Reasons for the Postal Rule ?

Courts were faced with 2 problems :


1) Communication between contracting parties

2) Travelling between cities

Issue : How do parties effectively communicate when they're far apart?
Solution : British Postal Services

Adams v Lindsell [1818]

Established the postal rule.

Plaintiff - Adams [ Woollen manufacturers ]

Defendant - Lindsell [ Dealers in wool ]

1. Sale of wool.

2. [Sept2] Lindsell wrote to Adams, offering to sell wool, requiring them to reply in post.


3. Lindsell misdirected the letter to Bromsgrove Leceister, instead of Bromsgrove Worcestershire so; plaintiff only received the letter it on [Sept5] 7.00pm."


4. Adams wrote a letter accepting the offer on the same day [Sept5] but letter wasn't received by D till [Sept9]


5. Lindsell sold the wool on [Sept8] as they expected an answer by [Sept7] but did not receive any.




Defendant held liable ; because it was his fault that he misdirected the letter, or else the plaintiff may have been able to reply them by September 7th.




*Lindsell wrote in the letter : "We now offer you eight hundred tons of wether fleeces, of a good fair quality of our country wool, at 35s. 6d. per ton, to be delivered at Leicester, and to be paid for by two months bill in two months, and to be weighed up by your agent within fourteen days, receiving your answer in course of post."



Q: Was a contract of sale entered into before [Sept8] when the wool was sold ?
Yes, a valid contract came into existence the moment the letter of acceptance was put into the post box.

Hyde v Wrench

Wrench - sell farm - Hyde - £1200

Hyde - decline - Wrench - sell - Hyde £1000 - final offer

Hyde - offer - £950 (June8) - Wrench refused - inform - Hyde (June27)

June29 - Hyde - agree to buy - £1000 - w/o additional agreement

Wrench - refused to sell - Hyde sued

Hyde did not succeed, as there was no binding contract.


Lord Langadale :
Under the circumstances stated in this bill, I think there exists no valid binding contract between the parties for the purchase of this property. The defendant offered to sell it for £1000, and if that had been at once unconditionally accepted there would undoubtedly have been a perfect binding contract; instead of that, the plaintiff made an offer of his own, to purchase the property for £950, and he thereby rejected the offer previously made by the defendant. I think that it was not afterwards competent for him to revive the proposal of the defendant, by tendering an acceptance of it; and that, therefore, there exists no obligation of any sort between the parties

[1826] Bradbury v Morgan - Death of Offeror

JM Leigh wrote to Bradbury (plaintiff), to give credit to his brother, HJ Leigh.


JM Leigh guaranteed his brother's account till 100 pounds.
JM Leigh died and the plaintiffs, continued supplying credit to HJ
Plaintiff did not know the death of JM Leigh.



-!! Plaintiffs sued Morgan (executor of JM Leigh) on the guarantee, 
As Morgan didn't want to pay, arguing that they were not liable as the debts were contracted and incurred after the death of JM Leigh.


**Defendants held liable by judge Pollock CB ;



*An executor is a person who carry out the will of a testator

Ramsgate Victoria Hotel v Montefiore

Offer terminated by time lapse.

Montefiore wanted to buy shares of Ramsgate on June,
Ramsgate allotted shares to Montefiore in November.
By that time, share prices of Ramsgate dropped, and so Montefiore didn't want it anymore.


Ramsgate sought for but specific performance ; failed, as delay was too long.

Clifton v Palumbo

Facts

1) Palumbo was negotiating to buy Clinton's estate.

2) Clifton(plaintiff) offered his land (Estate) to Palumbo for  600,000 sterlings.

Clifton wrote to Palumbo ; June 7,1943
“I…am prepared to offer you…my Lytham estate for£ 600,000…I also agree that a reasonable and sufficient time shall be granted to you for the examination and consideration of all the data and details necessary for the preparation of the Schedule of Completion."


Palumbo sued Clifton when he didn't want to sell for that price.
Clifton appealed to the Court of Appeal as he sought a declaration that there was no contract.

Lord Greene in CA Held : Not a contract, merely an ITT.

Biggs v Boyd Gibbins

P : Biggs
D: Boyd

Defendant :
I offer 20,000 to buy your house

Plaintiff :
For a quick sale, I would accept  £26,000

Defendant :

I accept your offer 

Defendant didn't want to sell the house later on, Courts ordered specific performance 

as it was held the words ' I accept your offer ' was an acceptance of the offer.

Binding contract formed.

First letter - Offer

Reply to letter - Acceptance

Offer + Acceptance = Contract.

Gibson v Manchester City Council

- Gibson filed a lawsuit against MCC for not wanting to sell him the house after negotiations took place.

- Council sent letter to Gibson, saying 

"The corporation may be prepared to sell the house to you at 2,725, less 20% which would be 2,180.

If you would like to make a formal application to buy your council house, please complete your application form and return it to me asap. 

- Gibson completed application form, sent it back.

- Gibson waited for awhile, then there was a change in the gov. to the Labour Party from Conservative party.

- Then labour party didn't want to sell the house to Mr Gibson, due to policy changes.

- Gibson filed a lawsuit, claiming that a contract had already came into force.

- MCC appealed to CA, won, as the word "may" suggested that it is an invitation to treat. 

And MCC did not make any offer to sell to Gibson.

** When Gibson completed the application, he was making an offer, and not the council accepting the offer.

Fisher v Bell [ITT or Contract?]

 Prosecutor brought the case up to Court of Appeal. 

Shopkeeper was prosecuted for displaying flick knifes by the window for sale.

[Offensive Weapons Act 1959]

Acquitted (freed from criminal charge) as the display of goods were merely an invitation to treat.

Amendment of act in 1961 now states that ; if a person expresses or has in his possession for purposes of sale a flick-knife, this will be an offence. 

Courtesy of Darsh.

Privity of Contract
 - An individual cannot sue on a contract to which he or she was not a party

 - A consumer buys a product from the retailer, product turns out faulty, consumer cannot sue  manufacturer because consumer has no contract with manufacturer but retailer.

However, in Donoghue v Stevenson, Mrs D brought action under the duty of care , since she couldn't sue under contract.
Awarded damages.
Ginger beer defective ; contained decomposed snails.

A levels '12