f4 cases

Case

Case

Facts

Held

An advert placed for 'smoke balls' to prevent influenza. offered to pay £100 if anyone contracted influenza after using the ball. Deposited £1,000 with the Alliance Bank to show their sincerity in the matter. The plaintiff bought one of the balls but contracted influenza

she was entitled to recover as (a) The deposit of money showed an intention to be bound, therefore the advert was an offer; (b) It was possible to make an offer to the world at large, which is accepted by anyone who buys a smoke-ball; (c) The offer of protection would cover the period of use; and (d) The buying and using of the smoke-ball amounted to acceptance.

The Government offered a reward for information leading to the arrest of certain murderers and a pardon to an accomplice who gave the information. Clarke saw the proclamation. He gave information which led to the conviction of the murderers. He admitted that his only object in doing so was to clear himself of a charge of murder and that he had no intention of claiming the reward at that time. He sued the Crown for the reward

The court dismissed the case. There cannot be assent without knowledge of the offer; and ignorance of the offer is the same thing whether it is due to never hearing of it or

Result

An advertisement with element of reward is a

Carlill v Carbolic Smoke Ball Co [1893]

public offer

.

Acceptance of R v Clarke offer has to be [1927] communicated.

Case

Case

Facts

forgetting it after hearing."

Held

http://www.myaccablog.tk

ACCA F4 CASES 1

Result

Revocation has Byrne V to be Leon Van communicated. [1880]

. Revocation can be communicated by a reliable source.

Offer does not laps with death of offeree and remains valid if consideration is being made.

Dickinson v Dodds [1876]

Errington v Errington [1952]

Case

Case

An offer made on 1st October (In Cardiff). Claimant (in New York) received it on 11th & send acceptance at once. In the main time the defendant change his mind and sent a letter of revocation on 8th Oct. Revocation letter reached on 15th Oct.

The revocation was not complete until it had been communicated to the offeree. This was on 15th October. In the main time, however the offer had been accepted. As a result the revocation was ineffective & the contract did exist. The defendant was therefore liable under the contract.

Dodds offered to sell his As the Claimant knew that the house to Dickinson, the defendant was no longer in a offer position being open until 9am to sell the property to him the Friday. defendant had drawn his offer On Thursday, Dodds sold validly. It was impossible, the therefore, house to Allan. Dickinson to say there was ever that existence was told of the sale by of the same mind between the two Berry, parties which is essential in point of the estate agent, and he law to the making of an agreement. delivered an acceptance before 9am Friday.

A father bought a house on The father's promise was a mortgage for his son and unilateral daughter-in-law and contract - a promise of the house in promised them that if they return for their act of paying the paid off the mortgage, they installments. It could not be could have the revoked house. They began to do by him once the couple entered on this but before they had performance of the act. The couple finished paying, the father was entitled to continue paying the died. His widow claimed installments and claim the house the house. when the mortgage has been fully paid off.

Facts

Held


ACCA F4 CASES 2

Result

A Counter Offer Revokes the original offer.

Hyde v Wrench [1840]

.6 June W offered to sell his estate to H for £1000; H offered £950 27 June W rejected H's offer 29 June H offered £1000. W refused to sell and H sued for breach of contract

Held that if the defendant's offer to sell for £1,000 had been unconditionally accepted, there would have been a binding contract; instead the plaintiff made an offer of his own of £950, and thereby rejected the offer previously made by the defendant. It was not afterwards competent for the plaintiff to revive the proposal of the defendant, by tendering an acceptance of it; and that, therefore, there existed no obligation of any sort between the parties.

Products on display are only an invitation to treat and not an offer.

Fisher v Bell [1960]

A shopkeeper displayed a flick knife with a price tag in the window. The Restriction of Offensive Weapons Act 1959 made it an offence to 'offer for sale' a 'flick knife'. The shopkeeper was prosecuted in the magistrates' court

The knife had not, in law, been 'offered for sale. According to the 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 of which constitutes a contract.

An Offer must be distinguished from a mere supply of information

Harvey v Facey [1893]

The plaintiff sent a telegram to the defendant to sell property. Telegraph lowest cash price. The defendant reply was “lowest cash price is £900”. The plaintiff telegraphed “we agree to buy ….. for £900 asked by you”.

It was held that the defendant’s telegram was not an offer but simply an indication of minimum price the defendant would want.

Case Result

Case

Facts

Held


ACCA F4 CASES 3

An advertisement is only an invitation to treat and not an offer.

Harris v Nickerson [1873]

Auction of sale of furniture was advertised in a newspaper London broker saw the advertisement and travel to London to attend the sale the items had been withdrawn from the sale before he arrived he claimed that his action of attending the auction amounted to an acceptance of an offer as result he claimed that contract has been breeched and sued for damages.

Acceptance is valid if sent in time by any more unless exclusively specified. .

Yates Offeror asked for the offer buildings v to be accepted by registered post the offeree accepted the RJ by an ordinary letter which Pulleyn & Sons arrived promptly [1975]

Silence does not amount to

Felthouse v

F wrote to his nephew offering to buy the nephews horse for £30.15

It was not an offer as it was not clear definite or unequivocal from the advertisement that the auctioneer wanted to sell the items of furniture to the broker the auctioneer had no intention to be bound to this broker it was a mere statement of intention. The offeror had suffered no disadvantage in a way that the offer had been accepted as the offeror did not put a condition specifying that the acceptance could only be made by registered post the acceptance was valid.

It was held that there was no


ACCA F4 CASES 4

acceptance.

and adding “if I hear no more about him, I will consider the horse mine. The nephew never replied.

contract the uncle had no right to impose upon the nephew to sell his horse. The nephew had not given any written proof.

Powell v Acceptance must be Lee [1908] communicated through authorized person.

The plaintiff applied for a job as headmaster & the school managers decided to appoint him. One of them, acting without authority, told the plaintiff he had been accepted. Later the managers appointed someone else. The plaintiff sued alleging that by breach of a contract to employ him

There was no contract as there had been no authorised communication of intention to contract on the part of the body, that is, the managers, alleged to be a party to the contract.

Postal Rule: A letter of

2 Sept. The defendant wrote to the plaintiff

A binding contract was

Bindley [1863]

Adams v Lindsell


ACCA F4 CASES 5

acceptance once posted is deemed accepted.

(1818)

Case Result

Case

offering to sell goods asking for a reply "in the course of post" 5 Sept. The plaintiff received the letter and sent a letter of acceptance. 9 Sept. The defendant received the plaintiff's acceptance but on 8 Sept had sold the goods to a third party.

Facts

made when the plaintiff posted the letter of acceptance on 5 Sept, so the defendant was in breach of contract. The Postal Rule – If acceptance by post has been requested or where it is an appropriate and reasonable means of communication between parties, acceptance is complete as soon as the acceptance is posted, even if the letter is delayed, destroyed or lost in the post so that it never reaches the offeror.

Held


ACCA F4 CASES 6

Consideratio Currie v Misa [1875] n: Price paid by each party to the contract for the other party’s promise.

Consideratio Thomas v n need not Thomas [1842] be adequate (satisfactory) but must be valuable (beneficial).

A promise to convey a house to a widow on her promise to pay £1.00 rent p.a. and keep the house in repair was binding

Performance of existing legal obligation does not amount to consideratio n.

Collins v Godefory [1831]

A witness legally required to attend the court was promised payment if he would attend the court and give evidence. He attended court and sued for the promise

He had not provided consideration as he was legally obliged to attend under the summon (Written command to a person to appear in court.)

Performance of existing

Stilk v Myrick

Two out of eleven sailors deserted a ship. The

As the sailors were already bound by their contract to sail http://www.myaccablog.tk

ACCA F4 CASES 7

duty doest not amount to consideratio n.

[1809]

captain promised to pay the remaining crew extra money if they sailed the ship back, but later refused to pay

back and to meet such emergencies of the voyage, promising to sail back was not valid consideration. Thus the captain did not have to pay the extra money.

Contract holds if work is done in time and both parties take practical benefit from it.

Williams v Roffey (1990)

Roffey had a contract to refurbish a block of flats sub-contracted the work to Williams - work begun - Williams realized the fact that he underestimated the cost of the work and was in financial difficulties. Roffey (to avoid foul of a penalty clause in his main contract with the owner), agreed to pay Williams an extra payment per flat. William did not receive full payment – Work stopped Roffey argued that Williams was only doing what he was contractually bound to do and so had not provided consideration.

Held that where a party to an existing contract later agrees to pay an extra "bonus" in order to ensure that the other party performs his obligations under the contract, then that agreement is binding if the party agreeing to pay the bonus has thereby obtained some new practical advantage or avoided a disadvantage.

Performance beyond existing duty amounts to consideratio n.

Hartley v Ponsonby [1857]

A high number of desertions from a merchant ship rendered the vessel unseeworthy, undermanned since extra pay was offer to the crew if they remain loyal

The promise of extra money was recoverable by seaman who remained loyal since they were now working in a dangerous situation (they were doing more than required in there original contract)

Past consideratio

Re McArdle [1951]

A wife and her three grown-up children lived

It was held that the promise was unenforceable as all the http://www.myaccablog.tk

ACCA F4 CASES 8

n is no consideratio n.

together in a house. The wife of one of the children did some decorating and later the children promised to pay her £488 and they signed a document to this effect.

work had been done before the promise was made and was therefore past consideration

Privity of contract: Only parties to the contract can sue each other.

Tweddle v Atkinson [1861]

The claimant’s father and father-in-law agreed with each other to pay the claimant £100 and £200 in consideration of his then intended marriage and after the marriage had taken place they confirm their agreement in writing. £200 was not paid and the claimant sued his father-in-law

Son-in-law could not sue because he had not provided consideration.

Performance of an existing contractual obligation is sufficient consideratio n to support a promise from a third party.

Shadwell v Shadwell [1860]

C promised his nephew, A, an allowance if he would marry his fiancée, B (In those days an agreement to marry was legally binding).

The promise was binding, even though A was already obliged to marry B. A had provided consideration for the uncle’s promise as he was initially under a duty to fiancée not to uncle, but by entering into the agreement with the uncle he had put himself under an obligation to him too.

Pinnel’s case:

Foakes v Beer [1884]

Mrs Beer had obtained judgment for a debt of £

The interest was recoverable. Payment & satisfaction of a http://www.myaccablog.tk

ACCA F4 CASES 9

A lesser sum is not a good consideratio n for a higher sum.

2090/- against Dr Foakes with interest, who subsequently asked for time to pay. She agreed that she

smaller sum was not consideration for the promise to accept this amount in satisfaction of a debt, interest and cost a greater sum.

Payment by cheque gives no benefit over and above payment in cash ( a lesser sum is not a good consideratio n for a higher sum).

D&C Buildings Rees [1965]

The Ps, a small building It was held that the company was company, had completed entitled to succeed. The judge was some work for Mr. Rees for of the view that it was not unfair which he owed the company for the creditors to go back on £482. For months the their word and claim the balance company, which was in as the debtor had acted unjustly severe financial difficulties, by exerting improper pressure. pressed for payment. Eventually, Mrs. Rees, who had become aware of the company's problems, contacted the company and offered £300 in full settlement. She added that if the company refused this offer they would get nothing. The company reluctantly accepted a cheque for £300 "in completion of the account" and later sued for the balance.

Doctrine of promissory

Central London

In 1937 the Ps granted a 99 year lease on a block of flats

It was held that they were entitled to recover this money as their


ACCA F4 CASES 10

is estoppel: You cannot exploit the situation by going back against your own words

Property Trust Ltd. v High Trees House Ltd [1947]

in London to the Ds at an promise to accept only half was annual rent of £2500. intended to apply during war Because of the outbreak of conditions. Ps were estopped war in 1939, the Ds could from going back on their promise not get enough tenants and and could not claim the full rent in 1940 the Ps agreed in for 1940-45. writing to reduce the rent to £1250. After the war in 1945 all the flats were occupied and the Ps sued to recover the arrears of rent as fixed by the 1937 agreement for the last two quarters of 1945.

The doctrice of promissory estoppel does not create a new cause of action where non existed before.

Combe v Combe [ 1951]

A husband entered into a contract promising his wife to pay £ 100.00, free of income tax, after their divorce. The wife did not apply to the court for a maintenance order, but when the husband failed to implement his promise she sued to enforce the agreement relying on his promise and the doctrine of promissory estoppel.

The wife was not a in apposition to enforce the agreement as she lacked consideration on her part. The equitable doctrine did not create a new cause of action where none existed before.

Agreements between

Merritt v Merritt

A husband separated from his wife wrote and signed a

Husband promise was enforceable the agreement having been made


ACCA F4 CASES 11

spouses about to or already separated are legally binding.

[1970]

document stating that in consideration of the wife paying off the outstanding mortgage debt of £180 on their matrimonial home he would transfer the house into her sole ownership. The wife implemented her promise but husband did not. He alleged that his promise was a domestic relation not giving rise to a legal relation.

when the parties were not living together courteously. A legal relation is assumed where a husband deserts his wife and an agreement is concluded of the ownership of the matrimonial home occupied by the wife and children.

A statement of quality based upon which a contract is made as far as buyer is concerned, considered a term.

Bannerman v white [1977]

A buyer of hops asked by the seller whether sulphur had been used in the treatment and added that if it had he will not buy. The seller assured him that sulphur had not been used. Sulphur had been used.

The court decided that the sulphur was a vital part of the contract. con tract. Around which the whole deal revolved it was a term.

An assertion made by person who is a layman for those goods being sold is not considered a term.

Oscar Chess Ltd. v Williams [1957]

William on selling a car to The statement was in innocent the claimant company of car misrepresentation but not a term dealers asserted that it was a of the contract. The seller who 1948 model. The was not a car dealer with registration book appeared experience knowledge did not to confirm this statement intend to be bound contractually but it had been altered by by his statement concerning the some previous owner and age of the vehicle. the car was infect a 1939 model

The Moorcock

A wharf (dock) owner made an agreement to permit a

The court implied a term into the agreement that the river bottom


ACCA F4 CASES 12

case [1889]

ship owner to unload his ship at the dock the ship was damaged when at low tied it was grounded at the bottom of the river on a hard ridge.

would be reasonably safe. Such implied terms are based on the presumed but unexpressed intention of the parties.

Contract is termed void on breach of a condition.

Poussard v Spiers [1876]

A soprano, Madame Poussard agreed to sign a series of opera for Spiers, she failed to appear on the opening night and was refused for her services for her subsequent nights she sued for the breach of contract.

The obligation to appear on the opening night was a condition and since madame Poussard was in breach of this condition Spiers was entitled to treat the contract has at an end.

Breach of a warranty does not make the contract void.

Bitteni v Gye [1876]

A tanner Bitteni who added to sign in a series of concerts and to attend 6 days of rehearsals beforehand failed to appear for the first 4 days of rehearsal Gye in consequence refused Bitteni services for the balance of the rehearsal and performances Bitteni sued for the breach of contract.

The obligation to appear in the rehearsal was a mere warranty and Bitteni breach could not be treated as an end of the contract. Gye was accordingly in the breach of contract when he refused Betteni services for the remainder of the contract.

A non serious breach of an innominate term can only result in claim for damages.

Hansa Nord [1976]

An exclusion clause

Olley v Marlborou

A notice in a hotel room excluded liability for loss or

This was ineffective because the contract for accommodation had


ACCA F4 CASES 13

cannot be introduced into contract after it has been made.

g h court [1949]

dama damage ge to gues guestt prop proper erty ty..

been been made made at the the rece recept ptio ion n des desk. k.

Only natural losses reasonably foreseeable by a bystander can be claimed for.

Hadley v Baxendale [1854]

A carrier was given a mill-shaft to deliver to a plant manufacturer as a model for making a new shaft the carrier delayed in delivery and unknown to him the mill stood idle during the period of delay.

He was not liable for the loss of profit and the rule was formulated as follows: The loss should be such as may fairly and reasonably be considered either arising naturally, from the breach of contract, or as may reasonably be supposed to have been in contemplation of both parties at the time they made the contract. There are two types of loss for which damages may be recovered: General damage - normal loss. Special damages - abnormal loss.

A company is a separate legal entity having its own assets and liabilities.

Salmon v Salmon & company Ltd. [1897]

Salmon had been in the boot and leather business for some time together with other family members he sold the old business to his newly formed Ltd. company. Payment was in form of cash shares and debentures when the company was eventually winded up it was agreed that Salmon and the company was the same and he could not be the creditor of his own so his debentures would not have any effect.

House of lord held that since there was no fraud involved his debentures were valid the company was properly constituted and therefore it was a separate legal personality from Salmon.

A company is a separate

Lee v Lee’s Air

An aerial crops spraying business in which Mr. Lee

Although he was majority share holder and the sole working




ACCA F4 CASES 14

legal entity.

farming Ltd. [1960]

was a majority shareholder and was the sole working director was killed while piloting the air craft.

director of the company he and the company separate legal persons and therefore he could also be and employee of it for the purpose of relevant statute with rights against it when killed in an accident in the course of his employment.

A sham company is also liable along with the related violator.

Jones v Lipman [1962]

L agreed to sell some land to J, L than changed his mind and in order to evade specific performance sold the land to a company of which he was a controlling member.

The company was sham and specific performance extended not only to L but also to the company.

Court is not free to this regard the principle of Salomon v Salomon unless carefully watched.

Adams v Cape industries [1990]

Cape, an English registered company was involved in mining asbestos(a form of mineral) in south Africa and marketing it world wide to various subsidiaries one of its marketing subsidiaries, CPC, a company incorporated and carrying on business in the U.S had a court judgment against it.

It was unsuccessfully argued that the veil should be lifted between the companies so as to enabled the judgement to be enforced against cape.

Any contract not

Fortnum & The claimant, a well known Mason Ltd. store in Piccadilly, London v Fortnum bought an action in the tort Ltd. [1995] of passing off, against the defendant. The defendant carried on business as an importer of low price to goods from Hong Kong and China and then exported to Europe. The defendant did not apply its name to the goods themselves

There was no evidence that any costumer of the claimant store would buy the defendants good thinking they were the claimants therefore the action failed.

The objects clause of the company set out purpose of

The contract was ultra virus and beyond the capacity of the

Ashbury Railways


ACCA F4 CASES 15

authorized by the objects clause of a company is termed ultra virus.

Carriage v Riche [1875]

the company as the making and selling of railway carriages. The company entered into a contract to purchase a concession for constructing a railway.

company.

Failure of substratum may result in winding up of company.

German date coffee Co. [1882]

There was a failure to carry out the object of making coffee from dates by means of a German patent (although the company did manufacture it with a Swedish patent).

The company would be wound up.

The articles in all respects are enforceable by company against its members.

Hickman v Kent [1920]

The Co.’s articles included a clause to the effect that all disputes between the company & its members were to be referred to arbitration. A member brought court proceedings against the Co.

The proceedings were stayed. The Company could enforce the arbitration clause against a member.

An alteration of articles of association can be made in the best interest of the company.

Greenhalgh v Alderne Cinemas [1950]

The issue was the removal from the articles of the members’ right of first refusal of any shares which a member might wish to transfer; the majority wish to make the change in order to admit an outsider to membership in the interest of the company.

The benefit to the company as whole held to be a benefit which any individual hypothetical member of the company could enjoy directly or through the company & not merely a benefit to the majority of the members only.

An alteration of articles of

Sidebottom b Kershaw

The alteration was to expel a member who carried on a

The alteration was held valid.


ACCA F4 CASES 16

association to expel a member in the best interest of the company can be made with compensatio n.

leese & Co. [1920]

business completely with the company.

Company has the power to alter its AOA with a retrospective effect.

Aleen v Gold Reefs [1900]

Z held fully paid & partly paid-up capital in the company. The Co.’s articles provided for a lien (a (a right over another’s property to protect a debt charged on that property.) property.) for all debts & liabilities of any member upon all partly paid shares held by the member. The Co. by special resolution altered its articles so that the lien was available on fully paid-up shares as well.

It was held that the Co. had the power to alter its articles by extending the lien to fully paid shares. Alteration to the articles is only subject to the alteration by S9 CA 1985. Rights in the articles are limited as to their duration by the articles which confer them.

Claim can be made on breach of a service agreement due to alteration of the articles.

South Foundries ltd. v Shirlaw [1940]

A managing director was appointed under contract with a company for ten years but, after the articles had been changed empowering his removal as director, he was dismissed.

The court awarded them damages for wrongful dismissal since the alteration of the articles, although effective, constituted a breach of their contract of service; it was contrary to the agreement that he should serve for ten years, which became impossible when he lost their directorship.

Raising Share

Clemens v Clemens

P held 45% of the shares, d held 55%. D along with

The fact revealed that the director with majority shareholders were


ACCA F4 CASES 17

Capital to dilute a shareholder’ s voting right is an improper purpose & shall not be validated.

Bros. ltd [1976]

other directors decided to increase the nominal share capital. A general meeting was held for the issue. D favoured, P showed deterrence 7 alleged that the purpose of this was to dilute her voting control below to 25% & therefore deprive of her power to vote special resolution.

raising share capital not with the intension to favour all but, the reason was to dilute the minority voting control. The directors were miss using their power.

The directors owe no general duty to individual members.

Percival v Wright [1902]

Some Shareholders asked Co.’s secretary for any party interested to buy their shares – Shareholders then sold shares to Chairman. Later it was revealed that at the time of negotiation, directors were engaged with a party for sale of shares at a price which was considered to be high of the current deal. The shareholders wished to return back.

The director owe a fiduciary duty to company but not to individual shareholders, so under no duty does the director is liable to act for the best interest of an individual. Co. could have sued the director if any would have done.

Directors cannot attain any benefit from there office by breaching their fiduciary duties.

Cook v Deeks [ 1916]

Shares of the railway Co. (T) were equally divided on its directors. The company got a contract. Three directors of (T) were not willing the Co. to have the contract. They formed another company (D) just because of getting a new contract. These directors later sold a plant by majority voting to D. Others directors sued.

It was held that Directors could not retain benefits of the Co. (T) to themselves. The director could not use their voting control to bring a loss to the minority.

Director cannot make

Regal (hasting)

Regal (hasting) ltd. owed a cinema & wished to buy

It was held that Directors used their special knowledge to gain


ACCA F4 CASES 18

profit from there position as directors regardless of their motives or consequence s to the company.

ltd. v Gulliver [1942]

two more cinemas & later sell them all as going concern. But regal was not in financial position to buy the two cinemas. Some directors were not were not agree. Regal with some directors formed another company, real applied for majority shares, managed amount, sold cinemas as going concerns, regal got more profit portion where as co. got less.

hidden profits. It was a breach of duty. They were accountable for the profit made.

Fiduciary duties survive even after the directors leave the company.

IDC v Cooley [1972]

Colle was a director of IDC. A company wanted to give a contract to Colle not to IDC. Colle because of having interest in the contract, resigned & accepted the contract in his own capacity.

He was in a breach of fiduciary duty as he preferred to earn profit p rofit for his own sake and acted against the best interest of the company. Fiduciary duty exited even after his resign from the company.

A director should not be allowed to contract with his own company.

Aberdeen Railway v Blaikie [1854]

Co. Contracted for chair from a claimant partnership. (of which the director was a member). The director was interested at both sides but couldn’t bargain for the company.

Company was entitled for avoiding the contract. No question should be raised for fairness / unfairness of the contract.

A director is made personally liable for debts & liabilities if he has committed wrongful trading.

Company traded Produce Marketing successfully for 9 years, Consortiu built up an overdraft, had a continuing loss – Liabilities m Ltd. [ 1989] exceeded assets (between 1980 – 87). In Feb. 87, directors recognizing expected liquidation carried on trading. Suffered loss, directors were sued.

The court required the directors to contribute for £ 75000/- in Co.’s assets, because being aware of the going concern problem, trading was carried on. Wrongful attitude observed.

A Company secretary

Panorama Developme

Co.’s secretary of the defendant ordered a

The contract was binding, since hiring of cars was usual to the http://www.myaccablog.tk

ACCA F4 CASES 19

within his authority can make contracts with third parties on behalf of his company.

nt v Fidelis Furnishing [1971]

Limousine & stated that it was to be used in business, but used personally. Secretary usually hired cars in the past.

office of company’s secretary.

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