This was held in Cox vs Hickman 1860. In this case, two person carried on business in partnership.

Due to financial crisis they obtained loans. Having unable to repay the loans they executed a trust deed of properties in favor of the creditors. Some of the creditors were made trustees of the business. This included Cox and Wheatcroft. They were empowered to enter into contracts and execute instruments to carry on business and to divide the profits among the creditors. After the recovery of debts, the property was to be restored to the two original partners. Cox never acted as trustee and retired, while Wheat croft acted as a trustee for some time and retired. Other trustee then became indebted to Hickman and executed a bill of exchange, which was not accepted and paid. Hickman sued the trustees for recovery of the money for materials supplied. The trustees could be held liable if they were partners. However, it was held that they were not partners. They observed that in partnership every partner is an agent of another and in this case this element was absent.

Balfour v Balfour [1919] 2 KB 571 is a popular English Contract law case related to social agreement which is not a contract. It held that there is a rebuttable presumption against an intention to create a legally enforceable agreement when the agreement is domestic in nature. Intention to create legal relation is an essential element of a contract and in this case, there is no intention to create a legal relation. It may also be noted that since the offer made in this case is a social agreement, it is not a valid offer.
Contents [hide]

1 Facts of the Case 2 Questions to be answered 3 Court decision 4 Related Cases / Recent Cases / Case Law 5 Related Topics 6 Related Acts

Facts of the Case

Mr. Balfour is the Defendant and Mrs. Balfour is the Plaintiff in the given case. The two lived in Ceylon and visited England on a vacation. The plaintiff remained in England for medical treatment. The defendant has agreed to send her a specific amount of money each month until she could return. The defendant later asked to remain separated. Mrs. Balfour sued for restitution of her conjugal rights and for alimony equal to the amount her husband had agreed to send. Mrs. Balfour obtained a decree nisi and five months later was granted an order for alimony. The lower court entered judgment in favor of the plaintiff and held that the defendants promise to send money was enforceable. The court held that Mrs. Balfours consent was sufficient consideration to render the contract enforceable and the defendant appealed.

Questions to be answered
The case has raised two important questions. 1. Is it necessary that both the parties intend that an agreement be legally binding so as to be an enforceable contract? 2. What are the circumstances in which a court can decline to enforce an agreement between spouses?

Court decision
The court said that: 1. It is essential that both the parties should intend that an agreement be legally binding so at to become enforceable. 2. The courts will not interfere between the spouses in their day to day affairs.

Rose and Frank Co. v J.R. Crompton and Bros. Ltd.

Edit
Comments0

447
THIS WIKI

PAGES ON

Rose and Frank Co. v J.R. Crompton and Bros. Ltd.

Citation Appellant Respondent Year Court

Rose and Frank Co. v J.R. Crompton and Bros. Ltd., [1923] 2 KB 261 J.R. Crompton and Bros. Ltd. Rose and Frank Co. 1923 Court of Appeal of England and Wales

Judges Country Area of law

Scrutton, Bankes, and Atkin LJJ United Kingdom Commercial arrangements,Enforcement of promises Can a clause be put in a contract saying that it is not legally binding, or is there a contract anyway?

Issue

Contents
[show]

Facts

Edit

Rose and Frank Co. were the exclusive American distributor for J.R. Crompton's new paper product. In their agreement there was a clause included stating that the arrangement was not intended to be a formal legal agreement and would not be subject to legal jurisdiction of either the US or the UK. J.R Crompton cancelled the agreement because they were unhappy with Rose and Frank Co.'s proceedings and Rose and Frank Co. sued for breach. They were successful at trial, which J.R. Crompton appealed.

Issue

Edit

1. Can a clause be put in a contract saying that it is not legally binding, or is there a contract anyway?

Decision
Appeal allowed.

Edit

Reasons

Edit

Scrutton, writing for the majority, stated that although in business relations it is generally assumed that a contract has been intended, here there is a specific clause stating the intention of the parties not to be bound in a legal contract. In contract law it is the intentions of the parties that matters, and here they are clearly stated. As the parties did not intend to be bound, there is no legally enforceable contract. Atkin, in the dissent, agreed that the document did not form a legally binding contract, but held that the orders and responses between the parties in the process of business constituted enforceable contracts of sale.

Ratio

Edit

It is generally assumed that parties in business relationships intend to be bound.

If parties expressly state in an agreement that they do not wish to be bound, the courts must respect their actual intentions. Edit

Notes

The House of Lords, on appeal, reversed this judgment agreeing with the reasoning of Atkin.

Rules Regarding sharing of Loss between Solvent and Insolvent Partners

Garner v. Murray, (1904) 1 Ch 57

In 1900 three partners started a business of partnership viz. Garner, Murray and Wikkins with the agreement of sharing profits and losses equally. In 1930 Wikkins became insolvent. The conflict started regarding the share of loss proportionately between these three partners. The major difficulty arose as one partner became insolvent and was unable to contribute his equal share of loss of capital. The solvent partners were not bound to contribute for him and accordingly there was deficiency in the capital available for distribution. The Chancery Division of England ruled that the deficiency would be shared between the partners in the rate of their capital contribution but not equally and also not as per agreement of proportion of sharing the profits or losses.
The article looks how the ruling on the dissolution of partnership case Garner versus Murray has been misunderstood by accountants for more than 70 years. The case concerned three partners: Garner, Murray and Wilkins. In 1900, the three agreed to form a partnership to trade as cloth merchants. They agreed to make certain capital contributions, however, it seems that not all amounts were paid. They made no specific as to how profits were to be shared, therefore, s 44 of the English Partnership Act 1890 required them to share profits equally. After only a few months of trading, Garner became dissatisfied and wanted to cease operations and dissolve the partnership. He took a legal action to do and this was not defended by either Murray or Wilkins. The firm was dissolved at June 30, 1990 and Murray and Wilkins were ordered to pay Garner a total 2,600. Murray challenged this order. There followed a series of claims and counter-claims. The exact financial circumstances of the partnership become difficult to follow among these various allegations. Using the data from original case it has been demonstrated that accountants have misapplied the case by excluding the uncollectable debt of an insolvent partner from the deficiency of the assets and including it in the ultimate deficit. Mohori Bibee v. Dharmodas Ghose2. (1903) 30 Cal. 539 (Minor Agreements)

FACTS: Agent of defendant advanced money to plaintiff, an infant, fully knowing his incompetency to contract, against mortgage of property belonging to latter. Plaintiff commenced this action to get the mortgage declared as void u/s 2, 10 and 11 of ICA and repossession of property thereunder conveyed to defendant.` ISSUES:

Whether the mortgage was void u/s 2, 10, 11 of ICA? Whether plaintiff to return the money received by him under such mortgage?

HELD: Laying emphasis on true literal construction of Indian Contract Act, notwithstanding the rules as to enforceability of contracts entered into by minors, Supreme Court held that unless the parties are competent to contract as u/s 11, no agreement is contract as u/s 10 and hence, is not enforceable by law u/s 2(h) and is void u/s 2(g). Since minor is not competent to contract u/s 11, hence every such agreement entered into by a minor is void ab initio (void from the very inception). Even u/s 68, a minor is deemed as incompetent to contract and is not to be personally liable for any necessaries supplied to him, albeit a statutory claim is created against his property.

Rule in Claytons Case

May 8, 2009 by Muhammad Haidar Filed under Banking, Business, Finance, Investing, Liquidity, Loans,Muhammad Haidar Introduction: It is one of the most important legal decisions relating to Banking laws, that established the principle of the order of application of credits against debits, in running accounts, like Overdraft, etc. The Case: The Claytons case refers to the case of Devaynes Vs Noble in the year 1816. Mr. Clayton had an account with a Banking firm, of which Mr.Devaynes was a partner. As it so happened, Mr. Clayton withdrew more than the available balance in his account, thereby creating a overdraft. Subsequently, he repaid the same, and then deposited further amounts in his account, as part of his operations in the said account. In the meantime, Mr.Devaynes died, but the Banking firm, in which he was one of the partners, continued to operate as usual. Later on, the firm was declared bankrupt. At that point of time, Mr.Clayton sought to withdraw money from his account, which was declined, in view of the declared bankruptcy of the firm. The matter then went to court, with Mr. Clayton laying claim to his monies from the estate of the deceased partner of the Banking firm, Mr. Devaynes. The Court, however ruled against him, laying down, what came to be known as, the Rule in Claytons Case. The Court held that the first credit in a account would go towards adjusting the first debit in the said account, and so on. In the case of a Banking firm, under partnership constitution, upon the death of one partner, credits made by a customer in his account would become the responsibility of the remaining partners, and could not be repaid out of the estate of the deceased partner. This principle of first in first out, uphelf by the English Court in 1816, is still in vogue, despite criticism from certain quarters about its fairness and relevance. However, there are certain exemptions to the rule. For instance, a case where the Claytons rule does not apply, relates to a Trust Account, wherein the Trustee commits breach of trust, by mixing up his personal funds with those of the Trust, and proceeds to utilize such funds for his personal expenses. In a case like this, it is assumed that the amount deposited by the fraudulent trustee would go towards adjusting the withdrawal made by him for his personal benefit, irrespective of the order of such credits and debits. The Trustee holds a fiduciary position in a transaction of this nature. The Rule in Claytons Case is a landmark judgement in the application of Banki ng laws, and is extremely useful in tracing claims whera fraud is commited in an account by a person, in a fiduciary position, and also where an account is used for stashing away ill-gotten wealth. For example, a thief deposits various sums of monies he stole, into his Bank account, on different dates, and then withdraws certain amounts on different dates. The thief is caught, and the Police receive five claims for the balance of credit lying in the thiefs account. In a case like this, the Court would apply the Claytons rule, in settling the rights of the five claimants. Banks scrupulously follow this rule in dealing with cases of insolvency, bankruptcy, death etc., of their borrowers, and other account holders, especially in partnership accounts. Banks follow a simple procedure of stopping the operations in such accounts, where the Claytons rule is applicable. And in case of joint accounts, a seperate account is opened in the names of the surviving account holders.

Summary of Carlill v. Carbolic Smoke Ball Co. [1893] Q.B. 256 (C.A.).

Facts
Carbolic Smoke Ball Co. (D) manufactured and sold The Carbolic Smoke Ball. The company placed ads in various newspapers offering a reward of 100 pounds to any person who used the smoke ball three times per day as directed and contracted influenza, colds, or any other disease. After seeing the ad Carlill (P) purchased a ball and used it as directed. Carlill contracted influenza and made a claim for the reward. Carbolic Smoke Ball refused to pay and Carlill sued for damages arising from breach of contract. Judgment for 100 pounds was entered for Carlill and Carbolic Smoke Ball appealed.

Issue

Does one who makes a unilateral offer for the sale of goods by means of an advertisement impliedly waive notification of acceptance, if his purpose is to sell as much product as possible?

Holding and Rule (Lindley)

Yes. One who makes a unilateral offer for the sale of goods by means of an advertisement impliedly waives notification of acceptance if his purpose is to sell as much product as possible.

The court held that a person who makes an offer may decline to require notice of acceptance if he or she wishes. One who makes an offer dispenses with the requirement of notice of acceptance if the form of the offer shows that notice of acceptance is not required. To accept an offer, a person need only follow the indicated method of acceptance. If the offeror either expressly or impliedly intimates in his offer that it will be sufficient to act without giving notice of acceptance, performance is sufficient acceptance without notification. The court held that an advertisement is considered to be an offer when it specifies the quantity of persons who are eligible to accept its terms. If such an advertisement requires performance, the offeree is not required to give notice of his performance. The court addressed the issue of whether the ad was intended to be a promise or whether it was merely puffing. The court pointed to Carbolic Smoke Balls claim in the advertisement that it had deposited 1000 pounds with Alliance Bank, which the court decided was intended to demonstrate the companys sincerity in paying the reward.

Concurring (Bowen)
Notification of acceptance is required under our law. The person who makes the offer may dispense with notice to himself if he thinks it desirable to do so. He may expressly or impliedly create any method of acceptance for his offer. An offeree need only follow the method indicated for acceptance. The requirement of notice of acceptance to the offeror must be determined by an objective reasonable person standard. In the advertisement case, it seems to me that an inference may be drawn from the transaction itself that a person is not to notify his acceptance of the offer before he performs the condition, but that if he performs the condition notification is dispensed with. We must look to the essence of the transaction and what the offeror is bargaining for under the circumstances. Under these facts, the defendant impliedly indicated that it did not require notification of acceptance of the offer.

Disposition
Appeal dismissed.

Harris v Nickerson
(1873) 42 LJQB 171 Queen's Bench Nickerson advertised in the London newspapers that a public auction of certain goods and office fittings would take place in Bury St Edmunds on 14 August 1872. On the faith of the advertisement Harris attended the auction and 'was ready to purchase in pursuance of such request and public notification' but Nickerson 'suddenly and without notice withdrew the goods and office fittings from the sale'. Harris sued for 2 16s 6d (two days' lost time, railway fare and two days' board and lodging). The issue before the court was whether the advertisement amounted to an offer which Harris had accepted by attending the auction. Blackburn, J ... It appears that a sale by auction had been advertised, and catalogues distributed, in which it was stated that certain classes of articles would be offered for sale. The plaintiff attended the sale, but it seems that the seller changed his mind, and that certain of the articles were withdrawn from the auction. The plaintiff now says, 'As I attended the sale, I am entitled to recover damages for being deprived of the opportunity of purchasing these articles '. It has been contended that there was a contract that they should actually be put up for sale, and that the plaintiff should have an opportunity of buying them. But it would be intolerably inconvenient if the law were that any shopkeeper who closed his shop without giving notice, or the proprietor of a theatre who closed the theatre, should be liable to an action at the suit of anyone who had been disappointed. It would be most inconvenient, and there is no authority to lead us to think that it is the law. As for the case of Warlow v Harrison, I give no opinion as to whether the decision was right or wrong. It may plausibly be argued that where a sale has been advertised 'without reserve' and the auctioneer says, in spite of the advertisement, 'I will knock down the articles to their owner, notwithstanding your remonstrance's,' it may plausibly, I repeat, be argued that in such a case an action is maintainable. But this would not support the present action, unless we go further and extend the decision to a case where the sale is not 'without reserve'...

Harvey v. Facey, [1893] A.C. 552. (Privy Council of Jamaica) Facts: Facey (D) was in negotiations with the Mayor and Council of Kingston regarding the sale of his store. Harvey (P) sent Facey a telegram stating: Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid. On the same day, Facey sent Harvey a reply by telegram stating: Lowest price for Bumper Hall Pen 900. Harvey sent Facey another telegram agreeing to purchase the property at the asking price. D refused to sell and P sued for specific performance and an injunction to prevent Kingston

from taking the property. The trial court dismissed on the grounds that an enforceable contract had not been formed and P appealed. The Supreme Court of Jamaica reversed and D appealed. Issue: Is a statement of the minimum price at which a seller would sell an offer? Holding and Rule: No. A mere statement of the minimum selling price is an invitation to treat and not an offer to sell. The court held that by replying to Ps question regarding the lowest price of the property, D did not make an affirmative answer to the first question regarding his willingness to sell. The court held that D had made an invitation to trade and not an offer. Disposition: Reversed, judgment of trial court restored.

Parker v South Eastern Railway (1877) 2 CPD 416 The plaintiff deposited a bag in a cloak-room at the defendants' railway station. He received a paper ticket which read 'See back'. On the other side were printed several clauses including "The company will not be responsible for any package exceeding the value of 10." The plaintiff presented his ticket on the same day, but his bag could not be found. He claimed 24 10s. as the value of his bag, and the company pleaded the limitation clause in defence. In the Court of Appeal, Mellish LJ gave the following opinion:

If the person receiving the ticket did not see or know that there was any writing on the ticket, he is not bound by the conditions; If he knew there was writing, and knew or believed that the writing contained conditions, then he is bound by the conditions; If he knew there was writing on the ticket, but did not know or believe that the writing contained conditions, nevertheless he would be bound, if the delivering of the ticket to him in such a manner that he could see there was writing upon it, was reasonable notice that the writing contained conditions

Facts
The defendant (Bindley) was an auctioneer. The plaintiff's nephew, John Felthouse, spoke with his uncle about the purchase of a horse and subsequently wrote to him regarding the price for the horse. The plaintiff (Paul Felthouse) replied that he would not pay the 30 guineas sought by his nephew for the horse, but would pay 30l 15s and stated that 'If I hear no more about him, I consider the horse mine at 30l. 15s.' John Felthouse did not reply and the horse was later sold with other stock, fetching more than the uncle had offered. The auctioneer subsequently became aware of his mistake in selling the horse and wrote the the plaintiff apologising for the error and stating, in part, that: 'Instructions were given me to reserve the horse ...'

John Felthouse also wrote to his uncle, stating that he was annoyed by the sale, as he had advised Bindley that the horse had already been sold, and that he would try to recover the horse from the purchaser.

At trial
The plaintiff succeeded.

Held on appeal
Justice Willes
There was no complete bargain at the time of the conversation between uncle and nephew. NOr was there a complete bargain when the uncle wrote to the nephew stating, in part, 'If I hear no more about him, I consider the horse mine at 30l. 15s.' The uncle had 'no right to impose upon the nephew a sale of his horse for 30l. 15s. unless he chose to comply with the condition of writing to repudiate the offer.' The offer remained open at the date of the sale. On that date the auctioneer was told by the nephew that the horse had already been sold and it was therefore clear that 'the nephew in his own mind intended his uncle to have the horse at the price which he (the uncle) had named'. But this intention had not been communicated to his uncle and he had done nothing to bind himself. As a result, at this time nothing had been done to 'vest the property in the horse in the plaintiff' at the time the horse was sold. The subsequent correspondence has no legal effect.

Long v Lloyd [1958] 1 WLR 753 The claimant purchased a lorry from the defendant. The lorry was advertised in a newspaper which described the lorry as being in exceptional condition. The claimant phoned the defendant to arrange a viewing and was told it was in first class condition. He went to view it the following day and was told it was capable of doing 40 mph and 11 miles to the gallon. The claimant test drove it and found that the speedometre was not working and he had to pull

a wire for the accelerator as this was not working also. The claimant still decided to purchase the lorry. On the first journey the claimant noted certain faults with the lorry and contacted the defendant who offered to pay half the repairs. The claimant accepted this. However, on a further journey the lorry broke down completely and the claimant wished to rescind the contract and brought an action against the defendant for innocent misrepresentation. Held: By accepting the offer of payment for half the repairs when he became aware of the defects, the defendant had lost his right to rescind as he had affirmed the contract. Cave v. Cave
(1880) 15 Ch D 639. Fry J. These notes were last updated 10 Aug 96. Summary , Facts , Decision New law: what is the case actually authority for? See also Back to list of cases , Back to home page
Summary

This case is a good illustration of the equitable notice doctrine, and also priorities as between successive equitable interests. But cases should not be seen only as illustrations, and it does actually advance the law also: new law.

Back to start of case , Back to list of cases , Back to home page

Facts

The sole trustee under a marriage settlement was also a solicitor. He and a member of the family fraudulently used the money to purchase the freehold in a house, upon which he raised a legal mortgage, followed by a number of equitable mortgages. When the fraud was discovered the house raised less money than all the claims on it, and the issue was the order in which claimants were to be paid. Back to start of case , Back to list of cases , Back to home page
Decision

The first mortgagee took first, having no notice of the interest of the beneficiaries under the marriage settlement, as a bona fide purchaser of the legal estate (in the house) for value without notice. This is an application of the equitable maxim: "Where there is equal equity, the law shall prevail." Because the first mortgagee had no notice, there was equal equity as between him and the beneficiaries. Subsequent mortgagees had only equitable estates, however, which (although they too had no notice of the beneficiaries' rights) took subject to those (prior) rights. This is an application of the equitable maxim: "Where the equities are equal, the first in time shall prevail." Indeed, Fry J. observed (at p.648): "As between persons having only equitable interests, if their equities are in all other respects equal, priority of time gives the better equity, or, 'Qui prior est tempore potior est jure.'"