Case Summary - Re Selectmove Ltd (1993) CA
Except in rare circumstances, silence on the side of the offeree does not constitute acceptance, as stated in Re Selectmove Ltd (1993) CA. In contrast to these cases, see the dicta of Lord Steyn in Vitol v Norelf Facts Under Pay As You Earn, the company owed the Inland Revenue almost £20,000 in taxes. The company promised to pay the debts in £1,000 monthly payments commencing on February 1, 1992, during a meeting. The Tax Collector stated that he would need to get approval from his superiors, but that if the offer was not acceptable, he would return to the corporation. He did not do so, and on March 3, 1992, the corporation paid the first and second instalments. The business had reached a decision. When the Inland Revenue launched winding-up proceedings based on the remaining arrears in September 1992, there were seven such payments. The corporation fought the insolvency on the basis of its payment-by-instalment plan. Decision The Court of Appeal ruled that the company had no substantive grounds to challenge the winding up. (I) The offer to pay in instalments was not accepted. (i)The Inland Revenue's silence did not rule out the prospect of acceptance. After referring to the dicta of Robert Goff LJ in Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA (above), Peter Gibson LJ, with whom Stuart-Smith and Balcombe LJJ agreed, said: ‘When 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. But, it is unnecessary to express a concluded view on this point.’ (ii) However, because the Collector of Taxes lacked the authority to oblige his superiors to accept the offer, they were not obligated to do so until they did so themselves, which they never did. (II) If the offer had been accepted, the Inland Revenue's acceptance of instalments would not have been sufficient consideration. Williams v Roffey Bros and Nicholls (Contractors) Ltd, is the case where the company asserted, should be applied in this case. Per Peter Gibson LJ: ‘I see the force of the argument, but the difficulty that I feel with it is that if the principle of the Williams case is to be extended to an obligation to make payment, it would in effect leave the principle in Foakes v Beer without any application. When a creditor and a debtor who are at arm’s length reach agreement on the payment of the debt by instalments to accommodate the debtor, the creditor will no doubt always see a practical benefit to himself in so doing. In the absence of authority, there would be much to be said for the enforceability of such a contract. But, that was a matter expressly considered in Foakes v Beer yet held not to constitute good consideration in law. Foakes v Beer was not even referred to in the Williams case, and it is in my judgment impossible, consistently with the doctrine of precedent, for this court to extend the principle of the Williams case to any circumstances governed by the principle of Foakes v Beer.’ (III) The doctrine of promissory estoppel could not apply because: (I) the Inland Revenue did not make the promise to accept instalments because the Collector of Taxes did not have or claim the authority to do so; and (ii) the Inland Revenue's enforcement of the debt was not unfair or inequitable because the company made some of the payments late.
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Case Summary - Bindley vs. Felthouse (1862) CCP
Bindley vs. Felthouse (1862) CCP: The offeree's silence is not an indication of acceptance. Facts The defendant, an auctioneer, planned to sell the plaintiff's nephew's farmed stock, including a particular horse, at an auction to be held in Tamworth. The plaintiff intended to buy the horse and spoke with his nephew orally about it. As a result of a misunderstanding regarding the 'As there may be a mistake about him, I will split the difference – £30 15s – I paying all the expenses from Tamworth,' the plaintiff uncle wrote to his nephew on January 2, 1862. You can send him whenever you want between now and March 25. If I don't hear anything else about him, I'll take the horse for £30 15s.' The nephew did not reply, and the defendant sold the horse at auction for £33 on February 25. The defendant wrote to the plaintiff on February 26th, apologising for his error, and the nephew wrote on February 27th, alluding to the horse 'I sold to you'. The plaintiff filed a conversion action, claiming that the horse belonged to him when the defendant sold it on February 25. Decision The plaintiff did not own the horse, according to the court, and had no genuine claim. '... it is... clear that the uncle had no right to compel the nephew to sell his horse for £30 15s unless he chose to comply with the condition of writing to reject the offer,' writes Willes J. When the horse in question was catalogued among the rest of the herd, the auctioneer (the defendant) was informed that it had already been sold. It is apparent that the nephew wanted for his uncle to have the horse at the price that he (the uncle) had indicated - £30 15s – in his own mind, but he had not expressed this intention to his uncle or done anything to bind himself. Case Summary - Adams v Lindsell (1818) CKB. Where the post is utilised, transmission of acceptance occurs at the time of posting, according to Adams v Lindsell (1818) CKB. Facts The defendants wrote to the plaintiffs on September 2, 1817, offering to sell them "800 tonnes of wether fleeces" and requesting a "response in course of post." The plaintiffs only got the defendants' letter on September 5th because it was misdirected by the defendants. The plaintiffs responded that night, and the defendants received it on September 9th. Assuming there was no deception, the defendants knew they would get a response on September 7, so they sold the wool to someone else on September 8. Decision Contracts by mail would be impossible, according to the court, if acceptance was contingent on the offeror's receipt. Because the defendants were to blame for the delay, 'it must be taken against them that the plaintiffs' answer was received in the mail.' Comment This decision gave rise to the 'postal rule,' which states that if posting is a fair method of accepting an offer, the acceptance takes effect immediately. The postal rule is expressly prohibited in many commercial contracts. Case Summary -Carlton Communications Plc and Granada Media Plc v The Football League [2002]1/1/2022 Carlton Communications Plc and Granada Media Plc v The Football League [2002]
Facts of the Case In June 2020, ITV digital and the defendant entered into a written agreement where the defendant agreed to license ITV Digital the rights to broadcast its football matches for three seasons. Based on the contract, ITV digital must make a payment to the defendant of 135 millions gbp. However in March 2002, ITV digital when into administration before paying further sums due under the contract. The defendant, argued that the financial liabilities faced by ITV digital were guaranteed by the claimants. The claimants were the sole shareholders of ITV digital. It is based on the initial bid document for the broadcasting rights, the claimants had declared that ITV digitals and its shareholders will guarantee all funding to the football league. The bid document however was marked with ‘subject to contract’ and the contract in June 2000 made no mention of the guarantee by the claimants. Held The claimants were held not liable. Langley J stated that the initial bid document did not contain a unilateral offer from the claimants to guarantee ITV digital’s responsibility due under the June 2000 contract. It was based on the fact that the document was expressed to be subject to contract. ITV digital had no authority to act on the claimants’ behalf. The purported guarantee was also not effective as it was contrary to s4 of the Statute of Frauds 1677 where the guarantee must be in writing and signed by the party charged. Conclusions A guarantee contained in a bid document which was marked subject to contract was not binding. Trentham Ltd v Archital Luxfer Ltd [1993]
Facts of the case The claimant were the main contractors in the building of some industrial units. The defendants, subcontractors carried out some works on the windows. The claimants and defendants entered into an agreement. The terms of the agreement were negotiated in a complex process and commenced on the 12th of January 1984. The contract was concluded in the 2nd of February 1984. However there were certain things which still under negotiation such as the incorporation of the claimants’ standard of terms or defendants’ standard of terms. The negotiations were still continued until April 1984 and no agreed document was ever drafted. Claimant had started to work in February and payments from defendant began in early March. When there was a dispute , claimant argued that there was no contract. Held Steyn LJ stated that there was a contract. The reasoning was based on the case of Brogden v Metropolitan Railway where a contract can be concluded by conduct. The contemporary exchanges and carrying out of what was agreed in those exchanges support the view that there was a course of dealing which on the claimants’ side created a right to performance of the work by the defendants and on defendants’ side created a right to be paid on an agreed basics. The coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. Based on this case, the exchange correspondence alleged to have led to contract formation. However, it is not necessarily so in the case of contract, alleged to have come into existence due to performance. The judge analysed the matter in terms of offer and acceptance. The view of Steyn LJ was differed where in this case, he did not express a firm view as to whether this contract could be analysed into offer and acceptance. He considered therefore the whole correspondence approach to contract formation. It is also does not matter whether the contract came into existence after part of the work had been carried out and paid for. The conclusion is based on the fact that when the contract came into existence it impliedly governed pre contractual performance. Conclusion Contract can be concluded by conduct. Case Summary – Confetti Records v Warner Music UK ltd [2003]
The claimant is an independent record company and the defendant wanted to use the track on a complication album produced by the record company with a payment in advanced. The claimant wanted to sue the defendant for the infringement of copyright in a music track. The defendant faxed the claimant with revised terms of the deal that were marked subject to contract. The claimant faxed back the defendant with a signed copy of the deal memo followed by an invoice for the advanced payment and label copy as well as the compact disc of the original mix of the track. However, later, the claimant wanted the defendant to withdraw the track from the album. The track incorporated in the album had been produced with considerable expense. Defendant in a defence stated that there was no infringement of copyright as there was a binding contract between the parties based on the basis that the deal memo amounted to a binding contract where the defendant had been licensed to reproduce the track or on the basis that the claimant sending of the track and the invoice constituted an offer which the defendant had accepted by using the track. Held The judge held that the inclusion of the track on the album was not an actionable infringement of copyright. The claimant sending of the track and the invoice was an offer capable of acceptance by the defendant even though the use of the phrase ‘subject to contract’ on the deal memo should not be binding. Once the defendant had accepted the offer by conduct, the defendant cannot withdraw the offer as a contract has come into existence. Conclusion Contract can be concluded by conduct Brogden and others v Metropolitan Railway Co. [1877]
Facts of the case The defendants had been supplying coal to the plaintiffs since 1870. On November 1871, there was a suggestion by the defendants to increase the price of the coal and to enter a new contract. On 19 December 1871, at a meeting, the plaintiffs handed to defendants a draft contract. The draft contract also contained the blank spaces for date and the name of the arbitrator. The defendants that filled the gaps with small changes and signed the draft contract. On 21 December 1871, the defendants’ agent returned the contract to the plaintiffs with the a letter which states that ‘ if you have anything further to communicate letters addressed to “Tondu” will find me’. This reached the defendants’ office and placed in the drawer which is used for storing contracts. It remained until a dispute arose on 7th November 1872. During 1872, from the date of the commencement of the draft contract which was 1 January 1872 the plaintiffs supplied coal to defendants at the new price as specified in the draft contract often up to but not exceeding 350 tons per week, which was the max authorized by the draft contract. Lord Cairns LC commented based on the various letters which passed between the plaintiffs and defendants ‘ having read with great care the whole of this correspondence, there appears to me clearly to be pervading the whole of its the expression of a feeling on one side and on the other that those who were ordering the coals were ordering them and those who were supplying them, under some course of dealing which created on the one side a right to give order an obligation to comply with the order’ However, the plaintiffs argued that in the absence of the acceptance by defendants of the plaintiff’s offer, there was no contract. Held The was a binding contract based on the terms of the uncompleted draft in the plaintiffs’ drawer. Per Lord Cairn’s ‘there having been clearly a consensus between these parties, arrived at and expressed by the document signed by the defendants subject only to approbation, on the part of the company of the additional term… With regards to an arbitrator, that approbation was clearly given when the company commenced a course of dealing which is referable in my mind only to the contract, and when that course of dealing was accepted and acted upon by the defendants in the supply of the coals’. Per Lord Hatherley ‘ the agreement was complete when the first coals …were invoiced at the differing price and when the differing price was accepted and paid ‘. Neither plaintiffs silence in response to the defendants agent’s letter nor any mental or private acceptance would have completed the contract. Per Lord Blackburn ‘ when you come to the general proposition….that a simple acceptance in your own mind, without any intimation to the other party and expressed by a mere private act, such as putting a letter into a drawer, completes a contract, I must say I differ from that’. Conclusion A contract can be concluded by a conduct. Jacques Stevenson & Co v McLean [1880]
Facts of the case The defendant seller offered to sell a quantity of it on for 40s, nett cash to the plaintiff buyer until monday. On Monday at 9.42 am, the plaintiff buyer telegraphed to the defendant seller asking whether the defendant sell it would accept forty for delivery over 2 months or if not, the longest limit defendant seller would give. The telegram was received but did not reply by the defendant seller. The defendant seller later sold the iron to a third party. At 1.25 pm on monday, a telegram was dispatched by the seller to the buyer stating that the he had sold the iron. At 1.34 pm, the buyer said that he had secured the price for payment next monday. At 1.46 pm the telegram dispatched by the seller at 1.25 pm reached the buyer. Held The court held that the telegram dispatched by the buyer was a mere query. It was not a counteroffer. It is different from Hyde v Wrench. As a result, the original offer remained open for acceptance by the buyer until then revocation of offer by the seller was communicated when the telegram arrived at 1.46 pm. Conclusion The word , would you accept...? amounted to a query not a counter offer. Case Summaries - Butler Machine Tool Co.Ltd v Ex Cell O Corporation ( England) ltd [1979]10/15/2021 Butler Machine Tool Co.Ltd v Ex Cell O Corporation ( England) ltd [1979]
Facts of the case The plaintiff seller made an offer to cell a Butler Column Plane Miller machine on 23rd May 1969 to the defendant buyer. The seller’s standard terms were incorporated into the offer. The terms were printed on the reverse side. One of the terms read ‘all orders are accepted only upon and subject to the terms set out in our quotation and the following condition. These terms and conditions shall prevail over any terms and conditions in the buyer’s order.’ The order was placed by the buyer which included the buyer’s own standard terms and a slip that said ‘please sign and return to Ex- CELL – O. We accept your order on the terms and conditions stated there on’ On 5th June, the seller signed and returned the slip with a covering letter stated that’ please sign and return to Ex-Cell –O. We have pleasure in acknowledging receipt of your official order…This being delivered in accordance with out revised quotation on 23rd May ….. We returned herewith duly completed your acknowledgement of order form.’ Later the machine was made by the seller. The machine was later delivered to the buyer. The seller’s terms included a clause which allowed an increase in price while the buyer terms did not. The buyer refused to pay the higher price demanded by the seller. Held The buyer’s term prevailed. The lower price was paid. Lord Denning MR said…’in many of the cases, our traditional analysis of offer, counter offer, rejection, acceptance and so forth is out of date….The better way to look at all the documents passing between the parties and glean from them, or from the conduct of the parties, whether they have reached agreement on material on all material points.’ Tinn v Hoffman & Co. [1873]
Facts of the case The letter was written by the defendant to the plaintiff on 24th November 1871. It stated ‘we offer you 800 tons with 200 tons delivered per month of March, April May and June 1872 at the price of 69s per ton. Waiting your reply by return.’ The plaintiff failed to reply but on 27th November stated that the price is too high. The plaintiff stated that if the quantity of 1200 tons ordered and delivered (with 200 tons per month for the first six months next year,) will the defendant lower the price? The plaintiff asking for a reply from the defendant. On 28th November 1871, the defendant replied that he willing to make an offer for further 400 tons with 200 tons on January and another 200 tons being delivered on February with the same price as quoted originally on 24th November 1871. The defendant wanted a reply whether to accept the offer or not. On the same day, without receiving and reading the reply from the defendant, the plaintiff wrote a letter where it stated that the defendant can enter the 800s tons on the terms and conditions named in the defendant favour on the 24th November and believing that the defendant will enter the 400s ton making 1200 tons at the price of 68s per ton. The defendant gave the plaintiff one more chance to buy the pig irons at 69s per ton. The plaintiff replied later than was required. The defendant refused to sell him any iron since the market price for iron had risen. Held It was held that there was no binding contract. The offer on 24th November was rejected because the plaintiff failed to reply by return or because the plaintiff letter on 27th November was a rejection. The letter by the defendant on 28th November made a new offer of 1200 tons and it did not revive the old offer of 800 tons. It was not open for the plaintiff to accept 800 tons. In obiter, Keating, Brett and Blackburn JJ provided that even if the plaintiff’s letter at 28th November had been in the same terms as the defendant’s letter of the same day there would still be no contract. This is because per Blackburn J, the promise or offer being made on each side in ignorance of the offer on the other side neither of them can be construed as an acceptance of the other. Conclusion A counter offer constitutes a rejection to the original offer. |
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