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Contract Law Cases Summary
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The notes provide a summary of relevant contract law cases. The cases are split according to the topics and includes analysis. I used these notes for my finals at Oxford.
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Formation● Gibson v Manchester City Council
○ Conditional words
■ It is inappropriate to use the conditional ‘may’ when making an offer.
○ Was there an offer and acceptance when the council proclaimed that the council
houses were for sale? But then subsequently took the houses off the market
once the labour government won the local election.
○ Reaffirmed that the vital elements for the formation of a contract are offer and
acceptance. Indeed, in Gibson v Manchester City Council, it was held that the
notion that the defendant council ‘may be prepared to sell’ in contingence with
the fact that the claimant had to make a formal application’ for the purchase of
the council house indicates that there was no offer.
○ There is no agreement due to the lack of an offer.
Displays and advertisements
● Displays and advertisements are regarded as invitations to treat rather than offers
(PSGB V Boots)
● PSGB v Boots
○ In PSGB v Boots, it was held that the system utilised by Boots whereby the
pharmaceutical products are left on display, unsupervised, until the customer
brings them to the respective checkout till did not contravene the Pharmacy and
Poisons Act 1933. Indeed, the display of the pharmaceutical products constituted
an invitation to treat rather than an offer- offer and potential acceptance only at
the till.
○ Policy considerations
■ If we were to regard a display as an offer, then acceptance would occur
the moment that the product was taken off the shelf.
■ A decision to the contrary would also significantly restrict the freedom of
the cashiers to refuse to supply a certain product. It also does not provide
for situations where a product on display is out of stock.
● Partridge v Crittenden
○ Advertisements = invitations to treat and do not constitute offers. Even if the price
is also advertised.
○ The RSPCA alleged that the defendant was selling live birds contrary to the
Protection of Birds Act 1954. However, advertising that the birds were for sale
was merely an invitation to treat rather than an offer, irrespective of the fact that
the price of the birds was also advertised
Tenders
● Harvela Investments v Royal Trust Co of Canada [1986] AC 207
○ Note that this was a sealed tender- might be important to distinguish in PQ cases
, ○ Invitation to tender in this case was an offer of unilateral contract once the
highest bid had been submitted
○ In Harvela Investments v Royal Trust, the submission of a sealed tender for the
shares, as requested by the defendants, constituted a unilateral contract. Thus,
the defendants could not accept the referential bid which purported to offer a
higher amount to the detriment of the claimant.
○ The rules concerning contract formation for tenders are as follows:
■ ‘Invitation to tender = invitation to treat’
■ ‘Submission of tender= offer’
■ ‘Decision by individuals who requested the tender= acceptance’
● Blackpool & Fylde Aero Club Ltd v Blackpool BC [1990] 3 All ER 25
○ Distinguished Spencer v Harding, where invitation to tender= invitation to treat
○ The timing of bids for unilateral contracts- if the bids are submitted in a timely
manner then there is a unilateral contract to examine the tender- this is the case
even if it has not been stated explicitly.
○ This case utilised a two-contract analysis, advancing the idea that there was a
‘unilateral offer to consider the submitted tenders’ and another contract between
the council and the winning tender.
○ In this case, the defendant council arranged a tender for leisure flights, fixing a
deadline of 12pm to submit the relevant tender. The claimant had submitted his
tender before the established time, but the tender was not considered due to
administrative issues with the letterbox. It was held that there was an
implication of a unilateral contract to consider the claimant’s tender if it
was submitted before the established time.
○ What are the factors that imply the existence of a unilateral contract to consider?
■ Small scale invitation
■ Process was ‘clear, orderly and familiar’
○ Also note that a public authority was involved so they already have a duty to act
‘fair, just and reasonably’
○ Lord Bingham
■ Advanced the idea that the whole notion of bidding is heavily weighted in
favour of the inviter given that they will likely receive multiple tenders to
consider. Thus, the individual who submits the tender needs to receive
some form of protection.
Acceptance of an offer
● Defined as an ‘unequivocal expression of consent to the proposal’- source?
● What are the elements of acceptance?
○ ‘Correspond with the offer’
○ Communication in the relevant form required
Correspondence with offer
, ● An acceptance must actually correspond with the terms of an offer.
● There should be no
○ Additional conditions or
○ Counter offers
Communication of acceptance
● Felthouse v Bindley (1862) 11 CBNS 869
○ Silence precludes acceptance regardless of the intentions of the offeree
○ It was held that the defendant had no title to the horse, despite the offeree’s
intention to sell the horse to the claimant- his uncle who had declared that he’’
‘consider the horse his if he doesn’t hear back from the nephew’.
● Household Fire Insurance v Grant (1879) 4 Ex D 216
○ The postal rule advances that there was an acceptance of the defendant’s
offer to buy the shares once the claimant’s letter of acceptance had been
sent.
○ Indeed, in this case the claimant’s letter of acceptance for the defendant’s offer to
buy the shares was lost in the post. Nevertheless, there was a breach of contract
when the defendant failed to buy the shares after his offer having been accepted
by the claimant.
○ Policy reasons
■ The postal rule is an exception to the general rule of communication of
acceptance. The reason for this is that such a problem can easily be
evaded by requiring a communication of acceptance. It also helps to
preserve the sanctity of commercial relationships, allowing the offeree to
feel safe in the knowledge that they have accepted the offer.
● Byrne v Van Tienhoven (1880) 5 CPD 344
○ Postal rule does not apply for the revocation of an offer- the revocation of an offer
is only valid once it has reached the offeree
○ Indeed, in this case the defendant revoked the offer to the claimant to purchase
numerous tins by letter on the 8th. The letter was received a few days later- the
same day that the claimant had accepted the offer of a contract. As such, there
was a binding contract.
● Henthorn v Fraser [1892] 2 Ch 27
○ The postal rule effectively applies when it was ‘reasonable to expect that the
offer would be accepted by post.’- Lord Herschell
○ Here, the fact that the parties lived so far away from each other necessitated an
acceptance of offer by post. As such, there was a binding contract.
Instantaneous communications- e.g. telephone, email etc
● Entores v Miles Far East Corp [1955] 2 QB 327
○ There must be a reasonable effort from the offeree to ensure that the offeror is
aware of the acceptance.
, ○ Postal rule is irrelevant in cases concerning instantaneous communications
○ The following situations were considered by Lord Denning in this case:
■ Face-to-face acceptance- the offeror could not hear because of a noisy
aircraft- the acceptance must be repeated
■ Problems with phone line- acceptance must be communicated by calling
back
■ However, if the offeror fails to ask the offeree to repeat the offer despite
not clearly hearing the offeree’s acceptance then there is a binding
contract
■ There is also a binding contract if the offeror’s fax machine has run out of
ink
● Holwell Securities v Hughes [1974] 1 WLR 155
○ Here, the postal rule did not apply as such a method of acceptance was already
precluded by the offeror. Indeed, the relevant clause purported that an option to
purchase ‘shall be exercisable by notice in writing’. Thus, there was no binding
contract despite the fact that the claimant’s letter did not arrive as there needed
to be ‘actual notice’.
○ As per Lawton LJ, in this case, ‘the express terms of the offer specify that the
acceptance must reach the offeror’.
○ It was also established that the postal rule would be precluded if it was ‘absurd’
or ‘inconvenient’ in the circumstances- obiter
● The Brinkibon case [1983] 2 AC 34
○ Instantaneous communications
○ Affirmed Entores, holding that there was acceptance when the telex (a form of
instantaneous communication) was received by the relevant parties.
(a) Acceptance by Conduct
● Brogden v Metropolitan Railway (1877) 2 App Cas 666
○ Acceptance can stem from the conduct of the parties
○ The defendant was in breach of contract for stopping the supply of coal- supply
that had been ongoing for two years, leading to the claimant sending a draft
contract which was never formalised. It was held that the contract had been
accepted by the conduct of the defendant. There is a lot of uncertainty
surrounding this case.
(b) Acceptance in a prescribed way
● Manchester Diocesan Council for Education v Comm. & Gen. Investments [1970] 1
WLR 242
○ The letter of acceptance was still valid despite being sent to the surveyor rather
than the relevant address on the tender. This was because the term stating that
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