Tag: Law Resources

Contract Law, Contract law key cases

Baird Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274

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Court: Court of Appeal (Civil Division)

This case is one of the key cases in English Contract Law and is about the possibility of an implied contract after a course of dealings between two businesses.

Fact:

Marks & Spencer (M&S) had been in a relationship with Baird Textiles Holdings (BTH) for more than 30 years. On 19th October 1999 M&S without notice, ended all supply arrangement between them with effect from the end of current production season. BTH sued M&S on the grounds that the arrangement could only be terminated on reasonable notice of 3 years based on an allegation that there was an implied contract between them which M&S ‘would acquire garments from BTH in quantities and at prices which in all the circumstances were reasonable’. The problem was there was no express contract under which such a term could be said to have arisen.

Issue

Whether a contract could be implied based on the parties’ business relationships?

Judgment

The appeal was dismissed.

The Court of Appeal found that the terms would be too uncertain to be part of a valid contract. Furthermore, an argument of estoppel could not succeed pointing out that promissory estoppel is not capable of creating its own cause of action where one did not already exist.

Note:

In the present case both parties had a good long commercial relationship M&S had no intention to be bound by a contract so that they had maximum flexibility and BTH accepted the absence of any express contract but believed that the continuation of their long-term good relationship with M&S nevertheless implied a contract that would be terminable only after reasonable notice.

For the Court to be able to implied a contract at least two facts must be present. An intention to be legally bound, and an agreement with a sufficient certainty regarding the details. In addition, contracts are only implied when it is necessary which were not presented in this case.

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Contracts underpin an auction process

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1- Contract between bidders inter se. (Clark v Dunraven, The Satanita (1897)

If the yacht was damaged as a result of negligence the negligent party must pay all the damages. 

Held: By entering the race, the competitors entered into contract with each other on Yacht Racing Association terms. (All damages to be paid by the person disobeying the rules).

Note: When a bidder attends an auction and acquires and auction catalogue which contains the auction house terms and conditions, each bidders individually enter into contract with all the other bidders.       

2. Contract between the auction house and each bidder

In terms of consideration the auction house enters into a separate auction contract with each of its fellow bidder. 

When a bidder take part in auction he will provide a more competitive environment which helps force up the price and provides the auction house the opportunity to earn its commissions. 

3- seller/bidder sale contract

Contract between seller and the successful bidder.

4.Collateral contract between auctioneer and highest bidder

In an auction without reserve the auctioneer makes an offer to sell the lot and that offer is accepted by the bidder who makes a highest bid at the auction. 

In Warlow v Harrison (1859)

It has been held that obiter, no contract of sale can materialise between the owner and of the goods and the highest bidder where the auctioneer refuses the sale or for any reason fails to accept the bid of the highest bona fide bidder but a collateral contract is created between the highest bona fide bidder and the auctioneer himself.

Source: Brown, J. and PAWLOWSKI, M. HOW MANY CONTRACTS IN AN AUCTION SALE

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Hartog v Colin & Shields [1939] 3 All ER 566

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 English Contract Law , Subjective approach, Mistake 

Court: High Court 

Case Opinion: Singleton J 

Fact: 

The defendant agreed to sell 30000 Argentine rabbit skin to the claimant per price which is £1250, but by mistake offered them at a price per pound (by weight). In the pre-sale negotiations, reference had always been made to the price per price and normally this type of skin were sold at price per price.The defendant refused to sell the plaintiff the skins per pound and the claimant sued for the breach of contract. 

Issue:

Where the contract binding?

Held: 

Since the claimant could not reasonably have supposed that the offer contained the offeror’s real intention, there was no binding contract. 

Note: 

Subjective approach may be relevant under the snap up doctrine. 

There is duty to correct a mistake that is known to not be the real intention of the person making it. People cannot simply take advantage and ‘Snap up’ the offer.

Under the snap up doctrine an offeree does not allowed to accept an offer which he knows is mistaken as to its terms.

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Smith V Hughes (1871) LR 6 QB 597

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English Contract Law Case

Court: Queen’s Bench

Case opinions: Cockburn CJ, Blackburn J, and Hannen J

 Fact:

Defendant purchased 40-50 quarters of what he thought were old oats for horse feed based on a sample he had received; the purchase was, in fact, new oats; the defendant refused to pay for the delivery of remaining order and claimant sued for breach of contract.

Issue

Could the contract be avoided as Hughes had delivered the wrong type of oats

 Held: 

The claimant’s passive acquiescence to sell the oats did not amount to a misrepresentation.

It was held that there was a binding contract between parties. An objective test revealed that a reasonable person would expect the sale of good quality oats in a similar contract since there was no express discussion of old oats.

The sample gave him the chance to inspect the oats; If a buyer has a chance to inspect goods, and purchase those goods based on his own judgment then the rule of Caveat Emptor (buyer beware) applies.

Note: 

Affirmation of the principle of buyer beware, and that contractual agreements are objectively judged. More recently the same point on objective approach was made by Lord Clark in the judgment of the Supreme Court in RTS Flexible System Ltd v Molkerei Alois Müller GmbH & Co (UK Production) [2010] UKSC 14; [2010] 1 WLR 753, [45]

Auction, Contract Law

Contract Law / Auction

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Contracts that underpin an auction process…

There are four contracts in an auction sale process.

  • Contracts between individual bidders.
  • Contracts between the Auction house and each individual bidders.
  • Contracts between seller and successful bidder.
  • Contractual contract between auctioneer and the highest bidder.