Bowerman v ABTA

The claimant was to take part in a school skiing trip. The first operator was a member of the
defendant association, and ceased trading through insolvency.
Held: The ABTA notice displayed in the travel agents offices created a contract between
ABTA and the client. The advert ABTA arranges re-imbursement constituted a unilateral
offer to contract in this context. The notice would be seen to create legal relations, and
satisfied the criterion in Carlill. The promises covered ABTA tour operators against any failure
of ABTA travel agents who had taken money from the public and not passed it on to the tour
operator.
Fischer v Bell
A shopkeeper displayed a flick-knife in his window for sale. A price was also displayed. He
was charged with offering it for sale, an offence under the Act. The words offer for sale were
not defined in the Act, and therefore the magistrates construed them as under the general law
of contract, in which case the shopkeeper had merely issued an invitation to treat.

Held: The display of the knife in the window was indeed only an invitation to treat, and the
knife had not been offered for sale. In the Keating and Wiles cases the Acts in question
allowed a conviction where an item was exposed for sale. That did not apply here. The appeal
was dismissed.

Lord Justice Parker said: It is perfectly clear that according to the ordinary 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.
Pharmaceuticals Society Of Great Britain v Boots Cash Chemist
The defendant was charged with selling controlled pharmaceutical products other than under
the supervision of a pharmacist. The shop operated on a self-service basis. The Society
appealed.

Held: The acquittal was confirmed. Somervell LJ said: Whether the view contended for by
the plaintiffs is a right view depends on what are the legal implications of this layout the
invitation to the customer, is a contract to be regarded as being completed when the article is
put into the receptacle, or is this to be regarded as a more organized way of doing what is
already done in many types of shops and a bookseller is perhaps the best example namely,
enabling customers to have free access to what is in the shop, to look at the different articles,
and then, ultimately, having got the ones which they wish to buy, to come up to the assistant
stating I want this? . . In the case of an ordinary shop, although goods are displayed and it is
intended that customers should go and choose what they want, the contract is not completed
until, the customer having indicated the articles which he needs, the shopkeeper . . accepts that
offer. Then the contract is completed. I can see no reason at all, that being clearly the normal
position, for drawing any different implication as a result of this layout.
Harris v Nickerson
The defendant advertised that an auction of certain goods would take place at a stated time and
place. The plaintiff travelled to the auction only to find that items that he was interested in had
been withdrawn. He claimed compensation for breach of contract, arguing that the
advertisement constituted an offer, and his travelling to the auction, an acceptance by conduct.
Held: The advertisement was not an offer, merely a declaration of intention.

Gibson v Manchester City Council

The plaintiff sought specific performance of what he said was a contract for the sale of land.
Held: The appeal succeeded. In a case where a contract is alleged to have been made by an
exchange of correspondence between the parties, in which the successive communications
other than the first are in reply to one another, the normal analysis of a contract as being
constituted by offer and acceptance falls to be applied. It may not be necessary where a
contract is alleged to have come into existence through performance. My Lords, there may be
certain types of contract, though I think they are exceptional, which do not fit easily into the
normal analysis of a contract as being constituted by offer and acceptance; but a contract
alleged to have been made by an exchange of correspondence between the parties in which the
successive communications other than the first are in reply to one another is not one of these. I
2

can see no reason in the instant case for departing from the conventional approach of looking
at the handful of documents relied upon as constituting the contract sued upon and seeing
whether upon their true construction there is to be found in them a contractual offer by the
corporation to sell the house to Mr. Gibson and an acceptance of that offer by Mr. Gibson.
Cited Storer -v- Manchester City Council

Harvey v Facey
Harvey sent a Telegram to Facey which stated:
"Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid;"
Facey replied by telegram:"Lowest price for Bumper Hall Pen 900."
Harvey then replied:"We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please
send us your title deed in order that we may get early possession."
Held:The Privy Council held that there was no contract concluded between the parties. Facey
had not directly answered the first question as to whether they would sell and the lowest price
stated was merely responding to a request for information not an offer. There was thus no
evidence of an intention that the telegram sent by Facey was to be an offer.
Warlow v Harrison
A public auction of a horse, without reserve, was advertised by the defendant, an auctioneer.
The plaintiff bid 60 guineas and the owner of the horse bid 61 guineas. There were no further
bids and the defendant put down his hammer on the bid for 61 guineas. The plaintiff claimed
the horse should be his as he was the highest bona fide bidder.
Was there a contract for sale?
Held : The advertisement , as it included the words without reserve, was an offer to sell to the
highest bona fide bidder. The defendant was in breach of that promise. It was an offer of a
unilateral contract as the defendant bound himself to sell to the highest bidder.

The plaintiff had performed the required act (made the highest bid). However, because the
hammer had not been put down on the plaintiff's bid there was no acceptance of his offer.
Therefore, there was no contract for the sale.
The plaintiff was only entitled to sue the defendant for the loss of the opportunity to buy the
horse.
The defendant offered to sell a farm to the claimant for 1,000. The claimant in reply offered
950 which the defendant refused. The claimant then sought to accept the original offer of
1,000. The defendant refused to sell to the claimant and the claimant brought an action for
specific performance.
Held : There was no contract. Where a counter offer is made this destroys the original offer so
that it is no longer open to the offeree to accept.
Stevenson, Jacques & Co v Mclean
The defendant offered to sell the plaintiff iron for 40s, net cash, open till Monday.
On Monday morning, the plaintiff sent a telegram: Please wire whether you would accept
forty for delivery over two months, or if not, longest limit you would give.
The defendant did not respond to the telegram. The defendant sold to another party and did not
inform the plaintiff.
On Monday afternoon, the plaintiff sent a telegram stating he accepted the offer.
Had the palintiff rejected the offer, meaning that there was binding agreement?
Held: The plaintiff was making a mere query. Therefore, the offer was still valid and could be
accepted.
Lush J: It is not 'I offer forty for delivery over two months' which would have likened the case to Hyde
v. Wrench... Here there is no counter proposal... There is nothing specific by way of offer or
rejection....

Ramsgate Victoria Hotel Ltd v Monte Fiori

The plaintiff purported to accept the defendant's offer to sell shares five months after the offer
was made .
Was the acceptance too late?
Held: The court found that a five month delay had made the offer ineffective.
Taylor v Caldwell
Plaintiff and Defendant entered into a contract, in which, Defendant agreed to let the Plaintiff
use The Surrey Gardens and Music Hall on four certain days. After the signing of the contract,
but before the first contract, the concert hall was destroyed by fire. The destruction was
without fault of either party and was so extensive that the concerts could not be given.
Whether the loss suffered by Plaintiffs, is recoverable from the Defendant?
Held : The Defendant was discharged from performing, and his failure to perform was not a
breach of the contract. When the contract is absolute, the contractor must perform it or pay
damages for nonperformance although in consequence of unforeseen events the performance
of the contract has become impossible. However, that occurs only where the contract is
absolute. The contract here is subject to an implied condition that the parties shall be excused
if performance becomes impossible from the perishing of the thing without fault of the
contractor. The parties regarded the continuing existence of the hall as the foundation of the
contract, and the contract contained an implied condition that both parties would be excused if
the hall did not exist. Therefore, the destruction of the hall without fault of either party excuses
both parties, the Plaintiff from taking the gardens and paying the money and the Defendant
from performing their promise to give the use of the hall.
Carlill v Carbolic Smoke Ball Co
A Newspaper advert placed by the defendant stated:100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts
the influenza after having used the ball three times daily for two weeks according to the
printed directions supplied with each ball...
1000 is deposited with the Alliance Bank, shewing our sincerity in the matter."

Mrs Carlill purchased some smoke balls and used them according to the directions and caught
flu. She sought to claim the stated 100 reward.
The defendant raised the following arguments to demonstrate the advertisement was a mere
invitation to treat rather than an offer:
The advert was a sales puff and lacked intent to be an offer.
It is not possible to make an offer to the world.
There was no notification of acceptance.
The wording was too vague to constitute an offer since there was no stated time limit as to
catching the flu.
There was no consideration provided since the 'offer' did not specify that the user of the balls
must have purchased them.
Held : The Court of Appeal held that Mrs Carlill was entitled to the reward as the advert
constituted an offer of a unilateral contract which she had accepted by performing the
conditions stated in the offer. The court rejected all the arguments put forward by the
defendants for the following reasons:
The statement referring to the deposit of 1,000 demonstrated intent and therefore it was not a
mere sales puff.
It is quite possible to make an offer to the world.
In unilateral contracts there is no requirement that the offeree communicates an intention to
accept, since acceptance is through full performance.
Whilst there may be some ambiguity in the wording this was capable of being resolved by
applying a reasonable time limit or confining it to only those who caught flu whilst still using
the balls.
The defendants would have value in people using the balls even if they had not been
purchased by them directly.
6

Partridge v Crittenden
The defendant placed an advert in a classified section of a magazine offering some bramble
finches for sale. S.6 of the Protection of Birds Act 1954 made it an offence to offer such birds
for sale. He was charged and convicted of the offence and appealed against his conviction.
Held : The defendant's conviction was quashed. The advert was an invitation to treat not an
offer. The literal rule of statutory interpretation was applied.

Dickinson v Dodds (1876)

The defendant offered to sell his house to the claimant and promised to keep the offer open
until Friday. On the Thursday the defendant accepted an offer from a third party to purchase
the house. The defendant then asked a friend to tell the claimant that the offer was withdrawn.
On hearing the news, the claimant went round to the claimant's house first thing Friday
morning purporting to accept the offer. He then brought an action seeking specific
performance of the contract.
Held:The offer had been effectively revoked. Therefore no contract existed between the
parties. There was no obligation to keep the offer open until Friday since the claimant had
provided no consideration in exchange for the promise.
The offeror is free to withdraw the offer at any time before acceptance takes place unless a
deposit has been paid.
Errington v Errington Woods [1952]
A father-in-law purchased a house for his son and daughter-in-law to live in. The house was
put in the father's name alone. He paid the deposit as a wedding gift and promised the couple
that if they paid the mortgage instalments, the father would transfer the house to them. The
father then became ill and died. The mother inherited the house. After the father's death the
son went to live with his mother but the wife refused to live with the mother and continued to
pay the mortgage instalments. The mother brought an action to remove the wife from the
house.
Held:The wife was entitled to remain in the house. The father had made the couple a
unilateral offer. The wife was in course of performing the acceptance of the offer by
7

continuing to meet the mortgage payments. Under normal contract principles an offer may be
revoked at any time before acceptance takes place, however, with unilateral contracts
acceptance takes place only on full performance. Lord Denning held that once performance
had commenced the Mother was estopped from revoking the offer since it would be
unconscionable for her to do so. Furthermore there was an intention to create legal relations
despite it being a family agreement.
LUXOR (EASTBOURNE) -V- COOPER
Coram: Lord Wright, Viscount Simon LC, Lord Russell
The vendor company had instructed agents to sell properties on its behalf and had agreed to
pay commission on completion of the sale. The sale was agreed with a prospective purchaser
introduced by the agents. Before the sale was completed, the vendor company withdrew from
the sale because of an objection by one of its directors. The vendor company later sold to
someone who had not been introduced by the agents. The agents claimed their commission
.
Held: A property owner was under no implied obligation not to deal with his property in such
a way that the estate agent was deprived of the opportunity of earning the agreed commission.
The House considered the use of implied terms.
Lord Wright said: The expression implied term is used in different senses. Sometimes it
denotes some term which does not depend on the actual intention of the parties but on a rule of
law, such as the terms, warranties or conditions which, if not expressly excluded, the law
imports, as for instance under the Sale of Goods Act and the Marine Insurance Act. . But a
case like the present is different because what it is sought to imply is based on an intention
imputed to the parties from their actual circumstances.
Viscount Simon LC said: in contracts made with commission agents there is no justification
for introducing an implied term unless it is necessary to do so for the purpose of giving to the
contract the business effect which both parties to it intended it should have.
Lord Russell said: As to the claim for damages, this rests upon the implication of some
provision in the commission contract, the exact terms of which were variously stated in the
course of argument, the object always being to bind the principal not to refuse to complete the
sale to the client whom the agent has introduced.
I can find no safe ground on which to base the introduction of any such implied term. Implied
terms, as we all know, can only be justified under the compulsion of some necessity. No such
compulsion or necessity exists in the case under consideration. The agent is promised a
commission if he introduces a purchaser at a specified or minimum price. The owner is
desirous of selling. The chances are largely in favour of the deal going through, if a purchaser
introduced. The agent takes the risk in the hope of a substantial remuneration for
comparatively small exertion . . There is no lack of business efficacy in such a contract, even
8

though the principal is free to refuse to sell to the agents client. and
in my opinion there is no necessity in these contracts for any implication; and the legal
position can be stated thus:- If according to the true construction of the contract the event has
happened upon the happening of which the agent has acquired a vested right to the
commission . . then no act or omission by the principal or anyone else can deprive the agent of
that right; but until that event has happened, the agent cannot complain if the principal refuses
to proceed with, or carry to completion, the transaction with the agents client.
Brogden v Metropolitan Railway (1877)
The claimants were the suppliers of coal to the defendant railway company. They had been
dealing for some years on an informal basis with no written contract. The parties agreed that it
would be wise to have a formal contract written. The defendant drew up a draft contract and
sent it to the claimant. The claimant made some minor amendments and filled in some blanks
and sent it back to the defendant. The defendant then simply filed the document and never
communicated their acceptance to the contract. Throughout this period the claimants
continued to supply the coal. Subsequently a dispute arose and it was questioned whether in
fact the written agreement was valid.
Held:The written contract was valid despite no communication of the acceptance. The
acceptance took place by performing the contract without any objection as to the terms.
Denton v Great North Railway
Facts:
P consulted D train timetable. Went to train station to buy ticket. D told P that the train did not
exist. Because there was no train P missed meeting and incurred loss of 5 pounds
Issue(s):
Is the advertisement an offer for which the plaintiff could have considered and accepted?
Ratio:
If people are doing what they are encouraged to do by another party then that is sufficient
exchange of values, therefore a contract is created.
Analysis:
Fraudulent misrepresentation = Where person makes an untrue statement, knowing it to be
untrue, to another who is induced to act on it (rely upon the statement), an action lies.
Company promised to give tickets to anyone who came into particular place this was a an
offer
Holding:
9

There was a contract, there was some sort of exchange of values

Thornton v Shoe Lane Parking [1971]
The claimant was injured in a car park partly due to the defendant's negligence. The claimant
was given a ticket on entering the car park after putting money into a machine. The ticket
stated the contract of parking was subject to terms and conditions which were displayed on the
inside of the car park. One of the terms excluded liability for personal injuries arising through
negligence. The question for the court was whether the term was incorporated into the contract
ie had the defendant brought it to the attention of the claimant before or at the time the
contract was made. This question depended upon where the offer and acceptance took place in
relation to the machine.

Held:The machine itself constituted the offer. The acceptance was by putting the money into
the machine. The ticket was dispensed after the acceptance took place and therefore the clause
was not incorporated into the contract.

FINANCINGS LTD -V- STIMSON

Coram: Lord Denning MR, Donovan, Pearson LJJ
A purchaser signed a hire purchase agreement for a motor vehicle in early March 1961. A
clause in the agreement provided that when the form was signed by the purchaser it would
become binding upon acceptance by signature of an officer of the finance company. An
officer of the finance company did not sign the agreement until late March 1961 and in the
intervening period the purchaser returned the vehicle due to dissatisfaction with its condition
and performance and the vehicle was subsequently stolen resulting in damage.
Held: The purchasers signature on the hire purchase agreement form was in law not an
agreement, but only an offer by [the purchaser] to enter into a hire purchase agreement with a .
. Finance Company. There was implied a condition into the offer that the subject matter of the
offer must remain in substantially the same condition it was in at the time of the offer, failing
which the offer lapses.
Pearson LJ said: The judge found in terms that this car suffered severe damage before the
acceptance and that there was substantial depreciation as the result. On that basis it seems to
me that we should by implication read into this offer, in order to give the transaction that
business efficacy which the parties must have intended it to have, an implied condition that
this offer was capable of acceptance only if the car remained in substantially the same
10

condition with substantially the same value. That condition in this case was not fulfilled
because the car was severely damaged and its value was substantially depreciated. Therefore,
when the [plaintiffs] purported to accept it . . it was an offer which was no longer capable of
acceptance, and therefore no agreement was concluded.
Donovan LJ agreed, and said: Who would offer to purchase a car on terms that if it were
severely damaged before the offer was accepted, he, the offeror, would pay the bill? . . The
county court judge held that there must, therefore, be implied a term that until acceptance the
goods would remain in substantially the same state as at the date of the offer; and I think that
this is both good sense and good law.
Lord Denning MR held that it was not necessary for any particular action to be taken to
manifest a revocation of an offer, so long as the intention is clear.

ROUTLEDGE V GRANT (1828)

FACTS:
defendant (D) offered to buy plaintiff's (P) house for a specific price with a definite answer to
be given within six weeks
ISSUE:
was D bound to keep the offer open for the six weeks?
HELD:D was not bound to keep the offer open
Best CJ: .. if six weeks are given on one side to accept an offer, the other has six weeks to put
an end to it. One party cannot be bound without the other...

PAYNE -V- CAVE

The defendants bid for a worm-tub, and a pewter worm was highest at the auction, but
withdrew his bid before the hammer fell. The auction was under standard conditions.
Held: No contract had been made. The bid was an offer which could be withdrawn at any time
before acceptance by the auctioneers hammer. The auctioneers request for bids is not an offer
which can be accepted by the highest bidder.
BYRNE -V- VAN TIENHOVEN & CO

11

Coram: Lindley J
The defendant offered by a letter to the plaintiffs to sell them goods at a certain price. They
later wrote to the plaintiffs to withdraw the offer. Before they knew of the revocation, the
plaintiffs accepted the offer by telegram. The defendants denied that any contract had been
made.
Held: The contract was made. The revocation would only became effective when it was
received by the plaintiffs, by which time, the contract had been made.

Lindley LJ said: It may be taken as now settled that where an offer is made and accepted by
letters sent through the post, the contract is completed the moment the letter accepting the
offer is posted: Harris Case (1872) LR 7 Ch 587; Dunlop -v- Higgins (1848) 1 HLC 381, even
although it never reaches its destination. When, however these authorities are looked at, it will
be seen that they are based upon the principle that the writer of the offer has expressly or
impliedly assented to treat an answer to him by a letter duly posted as as sufficient acceptance
and notification to himself, or, in other words, he has made the post office his agent to receive
the acceptance and notification of it. But this principle appears to me to be inapplicable to the
case of the withdrawal of an offer. In this particular case I can find no evidence of any
authority in fact given by the plaintiffs to the defendants to notify a withdrawal of their offer
by merely posting a letter; and there is no legal principle or decision which compels me to
hold, contrary to the fact, that the letter of the 8th of October is to be treated as communicated
to the plinatiff on that day or on any day before the 20th, when the letter reached them. But
before that letter had reached the plaintiffs they had accepted the offer, both by telegram and
by post; and they had themselves resold the tin plates at a profit. In my opinion the withdrawal
by the defendants on the 8th October of their offer of the 1st was inoperative; and a complete
contract binding on both parties entered into on the 11th of October, when the plaintiffs
accepted the offer of the 1st, which they had no reason to suppose had been withdrawn. Before
leaving this part of the case it may be as well to point out the extreme injustice and
inconvenience which any other conclusion would produce. If the defendants contention were
to prevail no person who had received an offer by post and had accepted it would know his
position until he had waited such a time as to be quite sure that a letter withdrawing the offer
had not been posted before his acceptance of it. It appears to me that a letter withdrawing the
offer had not been posted before his acceptance of it. It appears to me that both legal
principles, and practical convenience require that a person who has accepted an offer not
known to him to have been revoked, shall be in a position safely to act upon the footing that
the offer and acceptance constitute a contract binding on both parties.
Entorres v Miles Far East [1955]

12

The claimant sent a telex message from England offering to purchase 100 tons of Cathodes
from the defendants in Holland. The defendant sent back a telex from Holland to the London
office accepting that offer. The question for the court was at what point the contract came into
existence. If the acceptance was effective from the time the telex was sent the contract was
made in Holland and Dutch law would apply. If the acceptance took place when the telex was
received in London then the contract would be governed by English law.
Held:To amount to an effective acceptance the acceptance needed to be communicated to the
offeree. Therefore the contract was made in England.

Adams v Lindsell (1818)

The defendant wrote to the claimant offering to sell them some wool and asking for a reply 'in
the course of post'. The letter was delayed in the post. On receiving the letter the claimant
posted a letter of acceptance the same day. However, due to the delay the defendant's had
assumed the claimant was not interested in the wool and sold it on to a third party. The
claimant sued for breach of contract.
Held:There was a valid contract which came in to existence the moment the letter of
acceptance was placed in the post box.
This case established the postal rule. This applies where post is the agreed form of
communication between the parties and the letter of acceptance is correctly addressed and
carries the right postage stamp. The acceptance then becomes effective when the letter is
posted.
HENTHORN -V- FRASER
Coram: Lord Herschell, Lindley LJ, Kay LJ
The parties had discussed the sale of properties to the plaintiff. The defendant wrote out an
offer to sell and handed it to the buyer, who took it away to consider it. A new buyer turned up
and a contract was conlcuded, the defendant writing to the buyer to withdraw the offer. Before
that letter was recived, the defendant had, through his solicitor written back to accept the first
offer. The plantiff sought specific performance.
Held: Lord Herschell set out the postal rule in contract situations: Where the circumstances
are such that it must have been within the contemplation of the parties that, according to the
ordinary usages of mankind, the post might be used as a means of communicating the
acceptance of an offer, the acceptance is complete as soon as it is posted.
Holwell Securities v Hughes [1974]

13

Dr Hughes granted Holwell Securities an option to purchase his house for 45,000. The option
was to be exercisable 'by notice in writing' within 6 months. Five days before the expiry,
Holwell posted a letter exercising the option. This letter was never received by Hughes.
Holwell sought to enforce the option relying on the postal rule stating the acceptance took
place before the expiry of the option.
Held: By requiring 'notice in writing', Dr Hughes had specified that he had to actually receive
the communication and had therefore excluded the postal rule.

BRINKIBON LTD -V- STAHAG STAHL UND

STAHLWARENHANDELSGESELLSCHAFT MBH
Coram: Lord Wilberforce
Brinkibon, based in London wanted to buy steel from the defendants who were in Austria.
They accepted Stahags offer by Telex to Vienna. Brinkibon wanted to sue Stahag and in order
to have leave to serve out of the jurisdiction, had to establish that the contract had been formed
in England.
Held: The contract had been formed in Austria. In the case of instantaneous communication,
which included telex, the contract is normally formed in the jurisdiction where the acceptance
is received.
Lord Wilberforce said: Since 1955 the use of Telex communication has been greatly
expanded, and there are many variants on it. The senders and recipients may not be the
principals to the contemplated contract. They may be servants or agents with limited authority.
The message may not reach, or be intended to reach, the designated recipient immediately:
messages may be sent out of office hours, or at night, with the intention, or on the assumption
that they will be read at a later time. There may be some error or default at the recipients end
which prevents receipt at the time contemplated and believed in by the sender. The message
may have been sent and/or received through machines operated by third persons. And many
other variants may occur. No universal rule can cover all such cases; they must be resolved by
reference to the intentions of the parties, by sound business practice and in some cases by a
judgement where the risks should lie.
Household Fire and Carriage Insurance Co v Grant (1879)
14

Facts:
Notice sent to P by post. Letter never made it to D
Issue(s):
What is the time of acceptance regarding the post?
Ratio:
Whatever medium the parties themselves chose to communicate will be used to assess when
acceptance occurs.
Postal Acceptance Rule the offer is accepted when the acceptance is placed in the mail
(posted), not when the offeror receives the acceptance

Analysis:
An acceptance to an agent of the offeror is considered acceptance directly to the offeror. (ex If
C is the agent of B, and A accepts Bs offer by communication to C, then A and B are in a
contract).
Treat post office as an agent this way can have meeting of mind.
Recognized law that the minds of the two parties must be brought together by mutual
communication
Holding:
Time of acceptance is when was posted in the mail
HOUSEHOLD FIRE & CARRIAGE ACCIDENT INSURANCE CO. V GRANT (1879)

FACTS:
D offered to buy shares in P's company
P allotted shares to D and sent him a confirmation letter, which was lost in the post
P's company went bankrupt and liquidator requested D make outstanding payments on his
shares, D refused stating there was no binding contract
ISSUE:
had D's offer been accepted?

15

HELD:
was a binding contract, postal rule applied: irrelevant acceptance was lost because a binding
contract formed once posted
Thesiger LJ: .. if the post office be such common agent then it seems to me to follow that as
soon as the letter of acceptance is delivered to the post office, the contract is made as complete
and binding as if the acceptor had put his letter into the hands of a messenger sent by the
offeror himself as his agent to deliver the offer and receive the acceptance...
Thesiger LJ: ..it is impossible... to adjust conflicting rights between innocent parties, so as to
make the consequences of mistake on the part of a mutual agent fall equally on the shoulders
of both...
Bramwell LJ noted offeror could avoid postal rule by stating Your answer by post is only to
bind if it reaches me...
HOLWELL SECURITIES LTD V HUGHES [1974]

FACTS:
D issued a grant to sell a property to P, containing clause stipulating option must be exercised
by notice in writing to the Intending Vendor within six months
P sent letter exercising the option, within the time limit, it was lost in the post and never
received by D
ISSUE:
did the postal rule apply?
HELD:
postal rule did not apply: post was suitable method of acceptance but language of offer
implied D required receipt of written acceptance
Lawton LJ: .. the requirement of 'notice ... to', in my judgment, is language which should be
taken expressly to assert the ordinary situation in law that acceptance requires to be
communicated or notified to the offeror, and is inconsistent with the theory that acceptance
can be constituted by the act of posting...
additionally, to allow the acceptance to be effective, without communication would produce
manifest inconvenience and absurdity
Lawton LJ: In my judgment, the factors of inconvenience and absurdity are but illustrations of
a wider principle, namely, that the rule does not apply if, having regard to all the
circumstances, including the nature of the subject-matter under consideration, the negotiating
parties cannot have intended that there should be a binding agreement until the party accepting
16

an offer or exercising an option had in fact communicated the acceptance or exercise to the
other. In my judgment, when this principle is applied to the facts of this case it becomes clear
that the parties cannot have intended that the posting of a letter should constitute the exercise
of the option...
Gibbons v. Proctor, [1891]
Facts:
Plaintiff (P), a police officer, brought action against Defendant (D) for 25 being D's offer of
reward for anybody who provides information leading to the conviction of a person who
criminally assaulted a young girl.
Offer was made in the afternoon, P obtained the information in the morning of same day (May
29).
At the time P gave the information to a fellow police officer he was unaware of the offer of the
reward.
P had also told a 3rd party (Coffin) who told a 4th party, a superior officer (Penn), to take the
information to the relevant authority.
When Penn got the information and passed it onto the relevant authority, Penn was already
aware of the reward being offered.
Issue(s):
Was there a contract whereby D was required to pay the P 25?
Ratio:
When a party has knowledge of a reward and act on behalf of an individual that meets the
necessary conditions of the reward but have no knowledge of a reward, the latter individual
can claim the reward being offered.
Analysis:
The condition of the D's offer was fulfilled after the publication of the handbill and not before.
Sub Issue:
Is the court suggesting that knowledge of offer is not required of persons who perform/accept
its terms?

17

No. Court seemed to input the knowledge of the superior officer Penn as sufficient to fulfill
the contract (as an agent of the P).
Holding:
Plaintiff success.
Williams v. Carwardine, [1833]
Facts:
Walter Carwardine was murdered in Hereford. The plaintiff, Mrs Williams, gave evidence at
the Hereford Courts of Assize against two suspects, but withheld information. The suspects
were subsequently acquitted. On April 25, 1831, the victim's brother and defendant, Mr
Carwardine, published a handbill stating there would be a 20 for whoever would give such
information as would lead to the conviction of the murderer of his brother,.
It was apparent that after the first murder trial, Mrs Williams had been savagely beaten by Mr
Williams. Mrs. Williams believed that she did not have long to live and in order to ease her
conscience, she gave a statement that led to conviction of Mr. Williams for the murder of
Walter. Afterwards, she tried to claim the reward but Mr Carwardine refused to pay.
Issue(s):
Was there a contract whereby D was obligated to pay P the money promised?
Ratio:
There can be a contract with any person who performed the necessary condition(s) in a
advertisement.
All that was necessary to fulfill the contract was that she knew of the reward before giving the
information (even if her only motive to give the information was for the reward).
Analysis:
At the trial Mrs. Williams motives were examined. It was found that she knew about the
reward, but that she did not give information specifically to get the reward.
Anyone who brought themselves within the terms of the advertisement was entitled to recover.
It was an offer to the whole world.
Where a party is apprised of an offer of a reward, it goes to no account that she performed the
requested act (acceptance) for some motive other than for gaining the reward
18

See: Carlill v Carbolic Smoke Ball: Mrs. Carlill in sniffing the smoke ball was essentially to
avoid catching influenza, NOT the reward in offer. But the court held that she was entitled to
the reward because she was aware that it was promised/offered by the smoke Ball Co.
Holding:
Plaintiff successful.
Comments:
Does this mean that one can be party to contract, i.e. accept an offer even though one has no
knowledge of the offer?
Not necessarily so. In one report Denman, C.J. asked if she knew of the advertisement/offer at
the time of giving the information and it was said (presumed) that she must have known
because the poster was printed all over the place where she lived
R v Clarke [1972]
Mrs Clarke, a 58 year old woman, absent-mindedly placed a jar of mincemeat, a jar of coffee
and some butter into her bag whilst shopping in a supermarket. She had no recollection of
placing the items in her bag. Medical evidence was given at her trial which stated that she was
suffering from depression and was diabetic. The trial judge ruled that this raised the defence of
insanity. At this point Mrs Clarke changed her plea to guilty and then appealed against the
judge's finding of insanity.
Held:Short periods of absent-mindedness fell far short of amounting to a defect of reason.
RE SELECTMOVE [1995]
FACTS:
a dispute over tax
ISSUE:
question of whether silence could constitute acceptance featured but was not essential to
decision
HELD:
Gibson LJ obiter: Where the offeree himself indicates that an offer is to be taken as accepted if
he does not indicate to the contrary by an ascertainable time, he is undertaking to speak if he
does not want an agreement to be concluded. I see no reason in principle why that should not
be an exceptional circumstance such that the offer can be accepted by silence...
19

Merritt v Merritt [1970]

A husband left his wife and went to live with another woman. There was 180 left owing on
the house which was jointly owned by the couple. The husband signed an agreement whereby
he would pay the wife 40 per month to enable her to meet the mortgage payments and if she
paid all the charges in connection with the mortgage until it was paid off he would transfer his
share of the house to her. When the mortgage was fully paid she brought an action for a
declaration that the house belonged to her.
Held:The agreement was binding. The Court of Appeal distinguished the case of Balfour v
Balfour on the grounds that the parties were separated. Where spouses have separated it is
generally considered that they do intend to be bound by their agreements. The written
agreement signed was further evidence of an intention to be bound.

Jones v Padavatton [1969]

A mother promised to pay her daughter $200 per month if she gave up her job in the US and
went to London to study for the bar. The daughter was reluctant to do so at first as she had a
well paid job with the Indian embassy in Washington and was quite happy and settled,
however, the mother persuaded her that it would be in her interest to do so. The mother's idea
was that the daughter could then join her in Trinidad as a lawyer. This initial agreement wasn't
working out as the daughter believed the $200 was US dollars whereas the mother meant
Trinidad dollars which was about less than half what she was expecting. This meant the
daughter could only afford to rent one room for her and her son to live in. The Mother then
agreed to purchase a house for the daughter to live in. She purchased a large house so that the
daughter could rent out other rooms and use the income as her maintenance. The daughter then
married and did not complete her studies. The mother sought possession of the house. The
question for the court was whether there existed a legally binding agreement between the
mother and daughter or whether the agreement was merely a family agreement not intended to
be binding.
Held: The agreement was purely a domestic agreement which raises a presumption that the
parties do not intend to be legally bound by the agreement. There was no evidence to rebut this
presumption.
Simpkins v Pays [1955]
A Grandmother, granddaughter and a lodger entered into a weekly competition run by the
Sunday Empire News. The coupon was sent in the Grandmothers name each week and all
three made forecasts and they took it in turns to pay. They had agreed that if any of them won
they would share the winnings between them. The grandmother received 250 in prize money
and refused to share it with the other two. The lodger brought the action to claim one third of
20

the prize money.

Held:There was a binding contract despite the family connection as the lodger was also party
to the contract. This rebutted the presumption of no intention to create legal relations.
Esso Petroleum v Customs & Excise [1976]
Esso ran a promotion whereby any person purchasing four gallons of petrol would get a free
coin from their World Cup Coins Collection. The question for the court was whether these
coins were 'produced in quantity for general resale' if so they would be subject to tax and Esso
would be liable to pay 200,000. Esso argued that the coins were simply a free gift and the
promotion was not intended to have legal effect and also that there was no resale.
Held: 3:2 There was an intention to create legal relations. The coins were offered in a
commercial context which raised a presumption that they did intend to be bound. However,
the coins were not exchanged for a money consideration and therefore the coins were not for
resale.
Felthouse v Bindley [1862]
A nephew discussed buying a horse from his uncle. He offered to purchase the horse and said
if I don't hear from you by the weekend I will consider him mine. The horse was then sold by
mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The
uncle commenced proceedings against the auctioneer for conversion. The action depended
upon whether a valid contract existed between the nephew and the uncle.
Held:There was no contract. You cannot have silence as acceptance.
CURRIE V MISA (1875)

Lush J: A valuable consideration, in the sense of the law, may consist either in some right,
interest, profit or benefit accruing to the party or some forbearance, detriment, loss or
responsibility, given, suffered or undertaken by the other....

Roscorla v Thomas, (1842)

Facts:
P bought horse for 30. After sale D said horse was free from vice. Later horse was aggressive
Issue(s):
Would the consideration support and express promise?
Ratio:
21

Past consideration is not valid consideration (are limited exceptions where subsequent promise
would be binding).
Consideration must be given to the actual promise D makes.
Consideration must be contemporaneous with the contract
Analysis:
Exceptions arise where there will be good consideration:
If you promise to pay and agree to decide the terms later.
Services performed at the request of the promisor, in circumstances that raise an
implication that they are to be paid for.
Subsequent promise may become binding in a minors contract.
Holding:
Plaintiff had given no consideration for the subsequent promise, and thus it was not
enforceable
Re McArdle (1951)
Majorie McArdle carried out certain improvements and repairs on a bungalow. The bungalow
formed part of the estate of her husband's father who had died leaving the property to his wife
for life and then on trust for Majorie's husband and his four siblings. After the work had been
carried out the brothers and sisters signed a document stating in consideration of you carrying
out the repairs we agree that the executors pay you 480 from the proceeds of sale. However,
the payment was never made.
Held:The promise to make payment came after the consideration had been performed
therefore the promise to make payment was not binding. Past consideration is not valid.
Lampleigh v Braithwaite [1615]
The defendant had killed a man and was due to be hung for murder. He asked the claimant to
do everything in his power to obtain a pardon from the King. The claimant went to great
efforts and managed to get the pardon requested. The defendant then promised to pay him
100 for his efforts but never paid up.
Held:Whilst the promise to make payment came after the performance and was thus past
consideration, the consideration was proceeded by a request from the defendant which meant
the consideration was valid. The defendant was obliged to pay the claimant 100.
Re Caseys Patents [1892]
Facts
The claimant promoted the defendants patents
22

After most of the work was completed, the defendant promised to pay. He subsequently didnt
pay

Issue
Could the past consideration make the promise to pay binding
Decision
Yes, claim succeeded

Reasoning
As there was an understanding of renumeration, there was an obligation to pay; the
consideration was sufficient
Thomas v Thomas, 1842
Facts:
Executors of deceased's estate allowed his widow to live in one of his houses as long as she
remained a widow, in consideration of the testator's wishes.
Subject to the widow paying $1 annually as ground rent and keeping the house in tenantable
repair.
Issue(s):
Was there consideration?
Ratio:
Mere motive need not be stated and we are not obliged to look for the legal consideration in
any particular part of the instrument, we may look to any part.
Consideration must have value in the eyes of the law.
(2) Motive is not sufficient consideration.
Analysis:
In consideration of such desire and of the premises, 'the executors would convey the dwelling
house, etc. to the plaintiff and her assigns during her life, or for so long a time as she should
continue as a widow and unmarried: Provided [the plaintiff] shall and will at all times...pay the
sum of $1 yearly...
Executors claimed that there was no consideration between her and the estate: nothing in
return for allowing her to live in the house.
23

Courts are not going to look at the adequacy of the consideration or the equality of the
exchange, but they are going require value above a nominal amount. The bargained for
requirement was not a major consideration of the requirement.
Holding:
Consideration - and therefore a contract was made. Mere motive need not be stated and we are
not obliged to look for the legal consideration in any particular part of the instrument, we may
look to any part.
The stipulation for ground rent was not a mere proviso, but was an express agreement. In this
case, the consideration was not stated in the usual place. However, in another part the court
found express agreement to pay an annual sum and a distinct agreement to repair.
Comments:
Some would argue that the window merely agreeing to remain a widow is sufficient to
constitute as consideration.
Denman: No. A court will not look into the adequacy of consideration or the reasons for the
bargain if there is a real bargain between the parties.
In this case there is an express agreement, the terms of which show a sufficient legal
consideration independent of the moral feeling which led the executors to enter into the
agreement. The payment of the ground rent is but part of an express agreement and the moral
aspect of this contract merely pertains to the reasons for entering into the contract. We cannot
be concerned with the means or reasons that one enters into a bargain if there is valid
consideration.
Patteson: It would not be proper to adopt the view urged by D. We cannot mix motive with
consideration. Motive is not the same thing as consideration. Consideration exists if there is
some benefit to P or some detriment to D. The contract includes provisions requiring P to pay
ground rent and make repairs.
Coleridge: It is conceded that mere motive need not be stated. We are not obliged to look for
legal consideration in any particular part of an instrument. Merely from the fact that
consideration is usually stated in some particular part, ut res magis valeat, we may look to any
part. In the usual location for consideration, all that is stated is the desire to fulfill the
intentions of the testator. But in another we find an express agreement to pay ground rent and
repair. I cannot agree with D that this was a voluntary conveyance as the payment of 1 pound
annually is valuable consideration.
Chappel v Nestle [1960]
Nestle ran a sales promotion whereby if persons sent in 3 chocolate bar wrappers and a postal
24

order for 1 shilling 6d they would be sent a record. Chappel owned the copyright in one of the
records offered and disputed the right of Nestle to offer the records and sought an injunction to
prevent the sales of the records which normally retailed at 6 shillings 8d. Under s.8 of the
Copyright Act 1956 retailers were protected from breach of copyright if they gave notice to
the copyright holders of the ordinary retail selling price and paid them 6.25% of this. Nestle
gave notice stating the ordinary selling price was the 1 shilling 6d and three chocolate bar
wrappers. The question for the court was whether the chocolate bar wrappers formed part of
the consideration. If they did it was impossible to ascertain the value they represented and
therefore Nestle would not have complied with their obligation to give notice of the ordinary
retail selling price. If the wrappers were a mere token or condition of sale rather than
constituting consideration, then the notice would be valid and Nestle could sell the records.
Held:The wrappers did form part of the consideration as the object was to increase sales and
therefore provided value. The fact that the wrappers were simply to be thrown away did not
detract from this. Therefore Chappel were granted the injunction and Nestle could not sell the
records as they had not complied with the notice requirements under s.8.
White v Bluett (1853)
Facts:
D complained about not getting as much money as siblings to father. F agreed and said if he
didnt complain anymore he would discharge D of liability in a promissory note
Issue(s):
Was this a contract? Was their valid consideration?
Ratio:
There must be valid consideration for a contract. Reciprocal exchange is a necessary element
of consideration.
Analysis:
No consideration he is not giving anything in return for something the father was giving
him.
Reciprocal exchange is necessary for consideration.
Consideration is giving up something you are able to do and there is no prohibition against it.
If you give up a freedom that you have that does have value and should be considered
consideration
No consideration when you give up something that you arent legally entitled to do
ALLIANCE BANK LTD -V- BROOM
Coram: Sir Richard Kindersley V-C

25

The bank demanded security for its loan in circumstances in which it would otherwise have
enforced payment. It made no promise not to demand payment but: the [bank] did in effect
give, and the defendant received, the benefit of some degree of forbearance; not, indeed, for
any definite time, but, at all events, some extent of forbearance.

Combe v Combe [1951]

A husband promised to make maintenance payments to his estranged wife but failed to do so.
The wife brought an action to enforce the promise invoking promissory estoppel.
Held:Her action failed. There was no pre-existing agreement which was later modified by a
promise. The wife sought to use promissory estoppel as sword and not a shield.
Collins v Godefrey (1831)
The claimant, Collins, had been subpoenaed to attend court as a witness in separate court case
involving the defendant, Godefrey. Godefrey had sued his attorney for malpractice and Collins
was required by the court to attend as an expert witness. In fact Collins never gave evidence
but was required to be on standby for six days in case he was called. After the trial Collins
gave Godefrey an invoice to cover his time spent at court and demanded payment by the next
day. Without giving him the full day to pay, Collins commenced an action to enforce payment.
Held:Collins was under a public duty to attend court due to the subpoena. Where there exists
an existing public duty this can not be used as consideration for a new promise. Godefrey was
not required to pay him.
Glasbrook Bros v Glamorgan County Council [1925]
The defendant owners of a colliery asked the police to provide protection during a miner's
strike. The police provided the protection as requested and provided the man power as directed
by the defendants although they disputed the level of protection required to keep the peace. At
the end of the strike the police submitted an invoice to cover the extra costs of providing the
protection. The defendants refused to pay arguing that the police were under an existing public
duty to provide protection and keep the peace.
Held :3:2 decision:

26

In providing additional officers to that required, the police had gone beyond their existing
duty. They were therefore entitled to payment.
Ward v Byham [1956]
An unmarried couple had a child together and lived together for five years. The father then
turned the mother out of the house and sent the child to live with a neighbour and the father
paid the neighbour 1 per week. The mother then got a job as a live in house keeper and
wished to have the daughter live with her. The father agreed to allow the daughter live with the
mother and agreed to pay her 1 per week provided she ensured the child was well looked
after and happy. The father made payments but then when the mother remarried he stopped
making payments. The mother brought an action to enforce the agreement. The father argued
that the Mother was under an existing legal duty to look after and maintain the child and
therefore was not providing any consideration for the promise to make payment.
Held:By promising to ensure the child was well looked after and happy she had gone beyond
her existing legal duty and therefore had provided consideration. She was entitled to the
payment.
Stilk v Myrick [1809]
The claimant was a seaman on a voyage from London to the Baltic and back. He was to be
paid 5 per month. During the voyage two of the 12 crew deserted. The captain promised the
remaining crew members that if they worked the ship undermanned as it was back to London
he would divide the wages due to the deserters between them. The claimant agreed. The
captain never made the extra payment promised.
Held:The claimant was under an existing duty to work the ship back to London and undertook
to submit to all the emergencies that entailed. Therefore he had not provided any consideration
for the promise for extra money. Consequently he was entitled to nothing.
Hartley v Ponsonby [1857]
Half of a ship's crew deserted on a voyage. The captain promised the remaining crew members
extra money if they worked the ship and completed the voyage. The captain then refused to
pay up.
Held:The crew were entitled to the extra payment promised on the grounds that either they
had gone beyond their existing contractual duty or that the voyage had become too dangerous
frustrating the original contract and leaving the crew free to negotiate a new contract.
Williams v Roffey Bros [1990]
The defendants were building contractors who entered an agreement with Shepherds Bush
Housing Association to refurbish a block of 27 flats. This contract was subject to a liquidated
27

damages clause if they did not complete the contract on time. The defendants engaged the
claimant to do the carpentry work for an agreed price of 20,000. 6 months after commencing
the work, the claimant realised he had priced the job too low and would be unable to complete
at the originally agreed price. He approached the defendant who had recognised that the price
was particularly low and was concerned about completing the contract on time. The defendant
agreed to pay the claimant an additional 575 per flat. The claimant continued work on the
flats for a further 6 weeks but only received an additional 500. He then ran out of money and
refused to continue unless payment was made. The defendant engaged another carpenter to
complete the contract and refused to pay the claimant the further sums promised arguing that
the claimant had not provided any consideration as he was already under an existing
contractual duty to complete the work.
Held:Consideration was provided by the claimant conferring a benefit on the defendant by
helping them to avoid the penalty clause. Therefore the defendant was liable to make the extra
payments promised.
Dunlop v Selfridge [1915]
Facts
Dunlop sold tyres to a distributor, under the agreement that they would not be sold to
consumers at a price below their list price
A retailer, who purchased from the distributor, sold the tyres at a price below the list price
Issue
Could Dunlop enforce the selling at or above the list price with the retailer
Decision
No enforcement
Reasoning
Dunlop was a third party to the contract between the retailer and the distributor, therefore there
could be no enforcement
Pinnel's Case 1602
The claimant was owed 8 10 shillings. The defendant paid 5 2 shillings and 2p. The
claimant sued for the amount outstanding.
Held:The claimant was entitled to the full amount even if they agreed to accept less. Part
payment of a debt is not valid consideration for a promise to forebear the balance unless at the
promisor's request part payment is made either:
28

a). before the due date or

b). with a chattel or
c). to a different destination

Foakes v Beer (1883-84)

Dr Foakes owed Mrs Beer 2,000 after she had obtained judgment against him in an earlier
case. Dr Foakes offered to pay 500 immediately and the rest by instalments, Mrs Beer agreed
to this and agreed she would not seek enforcement of the payment provided he kept up the
instalments. No mention was made in this agreement of interest although judgment debts
generally incurred interest. Dr Foakes paid all the instalments as agreed and Mrs Beer then
brought an action for the interest.
Held:Dr Foakes was liable to pay the interest. The agreement reached amounted to part
payment of a debt and under the rule in Pinnel's case this was not good consideration for a
promise not to enforce the full amount due.
Scotson v Pegg [1861]
A purchaser of some coal paid the defendant to carry and to unload the coal. The claimant was
the supplier of the coal who had also paid the defendant to carry and unload the coal. The
claimant brought an action to recover the money paid arguing the defendant was already under
an existing duty to carry and unload the coal and thus provided no consideration.
Held: An existing contractual duty owed to a 3rd party to the contract can amount to valid
consideration for a new promise. Consequently the claimant could not recover the sums paid
and the defendant was entitled to get paid twice for doing the same thing.
Shadwell v Shadwell, [1860]
Facts:
D (P's uncle) promised P 150 yearly during D's life until P's annual income from P's
profession as chancery barrister reached 600 guineas.
In consideration (return) P was to marry one Ellen Nicholl.
P married EN (whom she has promised to marry anyway) and the uncle fulfilled his promise
until after his death.
After his death, his estate refused to continue the annual payments to P.

29

Issue(s):
Was there any consideration flowing from the P to D in accordance with the term of D's
promise?

Ratio:
Performance of an existing contractual duty owed to a 3rd party is a sufficient consideration
for a promise, it does not seem to matter if promisee cannot prove that s/he has suffered a
detriment or that the promisor has earned a benefit.
Analysis:
Marriage is a boon to a man
In a sense it also exposes a man to a loss; Pl may have made pecuniary adjustments in
expectation of the uncle?s promise which if not kept would result in embarrassment
The uncle, as the promisor is not totally without benefit; he has interest in the status of his
nephew
Holding:
Decision in favour of Plaintiff.
Comments:
Reaffirmed in Canada re. Heichman v. National Trust Co.
New Zealand Shipping v Satterthwaite [1975]
A contract for the carriage of a machine by ship to New Zealand provided that the owners of
the goods could not sue the carriers or stevedores unless any claim was brought within one
year of the action giving rise to the cause of action. The stevedores were independent
contractors who were engaged to load and unload the ship by the ship owner. A stevedore
damaged the machine whilst unloading it. The owner of the machine brought an action against
the stevedore after the limitation period specified in the contract. The stevedore sought to rely
upon the clause in order to escape liability. The owner of the machine argued that the
stevedores could not rely on the clause as they were not privy to the contract and had not
provided them with any consideration.
Held:The stevedores had provided consideration in the form of services of unloading the
machine. Relying on the case ofScotson v Pegg, there is nothing to prevent consideration
owed to a 3rd party being valid consideration for a new promise to another party. Therefore
30

the stevedores had protection from the limitation clause. The claimant's action was
unsuccessful.

Pao on v Lau Yiu Long [1979]

The claimant had threatened not to complete the main contract for the purchase of shares
unless subsidiary agreements were met including a guarantee and an indemnity. The defendant
was anxious to complete the main contract as there had been a public announcement of the
aquisition of shares and did not want to undermine public confidence in the company and the
consequent affect on share prices. The defendant could have sued for specific performance of
the agreement but this would have delayed matters and damaged the company's reputation.
The defendant had taken legal advice on all these matters before agreeing to the guarantee and
indemnity. The claimant then sought to enforce the guarantee and the defendant sought to have
the agreement set aside for economic duress.
Held: There was no economic duress. The Privy Council identified 4 factors to consider in
assessing whether economic duress was present:
Did the person claiming to be coerced protest?
Did that person have any other available course of action?
Were they independently advised?
After entering into the contract, did they take steps to avoid it?
In the present case the defendant did not protest at the time. He also could have enforced the
contract of sale through specific performance and thus had another avenue of redress available
to him. He had taken legal advice and took no steps to avoid the agreement prior to the
claimant seeking to enforce the guarantee. Therefore no economic duress could be established.
It was simply commercial pressure far short of duress.
Hughes v Metropolitan Railway (1876-77) LR
A landlord gave a tenant 6 months notice to carry out repairs failure to do so would result in
forfeiture of the lease. The landlord and tenant then entered into negotiations for the tenant to
purchase the freehold of the property. It was thought by both parties that a conveyance of the
property would take place. The tenant had not carried out the repairs as they believed they
would be purchasing the freehold and the repairs required by the landlord were not essential to
his use of the property. At the last minute negotiations broke down and the Landlord gave the
tenant notice to quit for failure to carry out the repairs.
Held:The time limit imposed for carrying out the repairs was suspended during the
negotiations.
Lord Cairns CJ:"It is the first principle upon which all Courts of Equity proceed, that if parties who have
31

entered into definite and distinct terms involving certain legal results - certain penalties or
legal forfeiture - afterwards by their own act or with their own consent enter upon a course of
negotiation which has the effect of leading one of the parties to suppose that the strict rights
arising under the contract will not be enforced, or will be kept in suspense, or held in
abeyance, the person who otherwise might have enforced those rights will not be allowed to
enforce them where it would be inequitable having regard to the dealings which have thus
taken place between the parties."
Central London Property Trust v High Trees House [1947]
High Trees leased a block of flats from CLP at a ground rent of 2,500. It was a new block of
flats at the time the lease was taken out in 1937. The defendant had difficulty in getting tenants
for all the flats and the ground rent left High Trees with no profit. In 1940 many of the flats
were still unoccupied and with the conditions of the war prevailing, it did not look as if there
was to be any change to this situation in the near future. CLP agreed to reduce the rent to
1,250 during the war years. The agreement was put in writing and High Trees paid the
reduced rent from 1941. When the war was over the flats became fully occupied and the
claimant sought to return to the originally agreed rent.
Held:The rent would be returned to the originally agreed price for the future only. CLP could
not claim back the arrears accrued during the war years. This case is important as Denning J
(as he then was) established the doctrine of promissory estoppel. Promissory estoppel
prevented CLP going back on their promise to accept a lower rent despite the fact that the
promise was unsupported by consideration.
Denning J "In my opinion, the time has now come for the validity of such a promise to be
recognised. The logical consequence, no doubt is that a promise to accept a smaller sum in
discharge of a larger sum, if acted upon, is binding notwithstanding the absence of
consideration"
Alan v El Nasr [1972]
By contract, the sellers agreed to sell 250 tons of coffee beans at 262 Kenyan shillings per cwt
to El Nasr payable on credit. At the time of the contract the value of Kenyan shillings and
pound sterling were of equal value. Whilst the contract stipulated the price payable in Kenyan
shillings, the credit account referred payment in pound sterling. There were a number of other
discrepancies between the credit agreement and contract such as date of shipping and the
quantity to be shipped. These other discrepancies were rectified in a revised agreement
however, the new agreement still referred to payment in pound sterling. The sellers accepted
the first instalment of 57,000 in pound sterling without objection, however, the value of the
pound dropped quite dramatically resulting in a loss of 165,530.45 shillings. The sellers then
sought to revert to Kenyan shillings and demanded the further payment. The buyers raised
promissory estoppel in their defence in that in accepting the instalment in pound sterling and
redrafting the credit agreement without changing the currency there was an implied promise
that they would not revert to Kenyan Shillings. The sellers argued that the buyers had not
acted to their detriment in reliance of this promise as they had gained a benefit.

32

Held:Detrimental reliance is not a requirement of promissory estoppel. It only needs to be

established that the promisor has changed their position

Combe v Combe [1951]

A husband promised to make maintenance payments to his estranged wife but failed to do so.
The wife brought an action to enforce the promise invoking promissory estoppel.
Held:Her action failed. There was no pre-existing agreement which was later modified by a
promise. The wife sought to use promissory estoppel as sword and not a shield.

EVANS -V- AMICUS HEALTHCARE LTD & OTHERS

Coram: Lord Justice Sedley Lord Justice Thorpe Lady Justice Arden
The applicant challenged the decision of the court that the sperm donor who had fertilised her
eggs to create embryos stored by the respondent IVF clinic, could withdraw his consent to
their continued storage or use.
Held: The judge worked within a strict statutory framework. His task was to calculate the
application of that law, and then to check its compliance with Human Rights law. The 1990
Act said that the embryos could only be stored or used with the consent of both parties. Once
mutuality is required at the point where treatment services are being provided, the requirement
of continuing consent is inescapable. The refusal of treatment was an interference with the
right to private life of the applicant, but nevertheless it was proportionate. There are two
pillars in the 1990 Act, the interests of the child and the consent of the two persons who are to
be the parents of the child and consent to be treated together or to the use of their genetic
material. The appeal failed.
D & C Builders v Rees [1966]
Mr Rees instructed the claimant to do some building work at his home to the value of 746.
Mr Rees paid 250 on account and the claimant reduced the bill by 14 and there was a sum
owing of 482. The claimant wrote to the defendant several times pressing for payment but
was unsuccessful there had been no complaints as to the workmanship at this time. The
claimant at the time was in dire financial need and the business was verging on bankruptcy a
fact that Mrs Rees was aware of. The defendant telephoned the home and Mrs Rees answered
she made complaints about the work and said she would give them 300 in satisfaction of the
whole debt. The defendant refused and said he would take the 300 and give her a year to
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clear the balance. He called at the house to collect the money but Mrs Rees remained firm that
she would only pay 300 and demanded that the defendant wrote on the receipt 'in completion
of the account' otherwise she would pay him nothing. The defendant needed the money
immediately so reluctantly agreed to write this on the receipt but stated he fully intended to
pursue the balance as the money paid did not cover the costs he had incurred. He subsequently
brought an action to recover the balance. The defendant sought to rely on estoppel relying on
the written receipt as demonstrating a promise to accept the lesser sum.
Held:The claimants were successful. Mrs Rees could not rely on estoppel as there was no true
agreement to accept less and because Mrs Rees had taken advantage of the builder's position
and mislead them as to her financial position.
CHINA PACIFIC SA -V- FOOD CORPN OF INDIA (THE WINSON)
Coram: Diplock, Keith, Roskill and Brandon LL
A cargo of wheat was loaded in the US for delivery to Bombay. The ship was stranded on a
reef in the South China Sea. Salvors entered into a salvage agreement with the shipowners and
cargo owners on Lloyds open form. In performance of that contract the salvors lightened the
vessel by offloading part of the cargo into barges and carrying it to Manila as a place of safety.
There the salvors arranged for it to be stored under cover, in part on a vessel in the harbour
and in part in a bonded warehouse ashore. The salvors sought to recover the costs of such
storage from the cargo owners, being the stevedoring and charter costs of arranging storage on
the vessel in the harbour, and the warehouse charges they had to pay for the warehousing
ashore. The storage was both reasonable and necessary for the preservation of the cargo and to
prevent its deterioration. The claim had succeeded before Lloyd J, but overturned at the Court
of Appeal.
Held: The decision was re-instated. The case turned on the application of well known and
basic principles of the common law of salvage, of bailment and of lien. The bailee was left in
possession of the goods after the termination of the contract under which the bailment had
originally been made, and in the absence of any contrary instructions from the cargo-owner,
the warehousing of the goods was necessary for their preservation.
Lord Diplock noted that the case had been argued throughout on the basis that the salvage
contract had come to an end at the time the cargo arrived in Manila, whilst leaving open
whether that assumption was correct. The salvors were entitled to recover the storage costs
from cargo owners because as bailees they: the bailment which up to the conclusion of the
salvage services had been a bailment for valuable consideration became a gratuitous bailment;
and so long as that relationship of bailor and bailee continued to subsist the salvors, under the
ordinary principles of the law of bailment too well known and too well-established to call for
any citation of authority, owed a duty of care to the cargo owner to take such measures to
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preserve the salved wheat from deterioration by exposure to the elements as a man of ordinary
prudence would take for the preservation of his own property . . and if he fulfils that duty he
has, in my view, a correlative right to charge the owner of the goods with the expenses
reasonably incurred in doing so.
and It is, of course, true that in English law a mere stranger cannot compel an owner of goods
to pay for a benefit bestowed upon him against his will; but this latter principle does not apply
where there is a pre-existing legal relationship between the owner of the goods and the
bestower of the benefit, such as that of bailor and bailee, which imposes upon the bestower of
the benefit a legal duty of care in respect of the preservation of the goods that is owed by him
to their owner.
Lord Simon of Glaisdale, concurring, thought that to confine agency of necessity to cases
where the issue was the bailees authority to bind the bailor to contracts with third parties was
justified by the fact that the law of bailment will often resolve any issue between alleged
principal and agent of necessity, as it has done here.
Tool Metal Manufacturing v Tungsten [1955]
Tungsten had been infringing a patent right held by TMM. When TMM heard of this they
waived all infringements in return for Tungsten paying 10% Royalty and also 30%
'compensation' if sales exceeded 50KG in any month. These sums were excessive but
Tungsten agreed to pay them otherwise they would be faced with a claim for infringing the
copyright. Tungsten struggled to make payments. They got into arrears during the war times
and an agreement was reached to waive the 'compensation' payments during the war years.
Held: TMM could not enforce the compensation payments during the war years but could
enforce them on termination of the war. TMM were estopped from going back on their
promise to waive the payments in equity. Generally promissory estoppel will merely suspend
legal rights rather than extinguish them. However, where periodic payments are involved and a
promise has been made to reduce the payments because of pressing circumstances which are
not likely to persist, promissory estoppel can be used to extinguish legal rights.
Tweddle v Atkinson [1861]
A couple were getting married. The father of the bride entered an agreement with the father of
the groom that they would each pay the couple a sum of money. The father of the bride died
without having paid. The father of the son also died so was unable to sue on the agreement.
The groom made a claim against the executor of the will.
Held:The claim failed: The groom was not party to the agreement and the consideration did
not move from him. Therefore he was not entitled to enforce the contract.
Roscorla v Thomas, (1842)
Facts:
P bought horse for 30. After sale D said horse was free from vice. Later horse was aggressive
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Issue(s):
Would the consideration support and express promise?

Ratio:
Past consideration is not valid consideration (are limited exceptions where subsequent promise
would be binding).
Consideration must be given to the actual promise D makes.
Consideration must be contemporaneous with the contract
Analysis:
Exceptions arise where there will be good consideration:
If you promise to pay and agree to decide the terms later.
Services performed at the request of the promisor, in circumstances that raise an
implication that they are to be paid for.
Subsequent promise may become binding in a minors contract.
Holding:
Plaintiff had given no consideration for the subsequent promise, and thus it was not
enforceable
Ward v Byham [1956]
An unmarried couple had a child together and lived together for five years. The father then
turned the mother out of the house and sent the child to live with a neighbour and the father
paid the neighbour 1 per week. The mother then got a job as a live in house keeper and
wished to have the daughter live with her. The father agreed to allow the daughter live with the
mother and agreed to pay her 1 per week provided she ensured the child was well looked
after and happy. The father made payments but then when the mother remarried he stopped
making payments. The mother brought an action to enforce the agreement. The father argued
that the Mother was under an existing legal duty to look after and maintain the child and
therefore was not providing any consideration for the promise to make payment.
Held:By promising to ensure the child was well looked after and happy she had gone beyond
her existing legal duty and therefore had provided consideration. She was entitled to the
payment.

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