Agreement

Smith v Hughes [1871] LR 6 QB 597

Facts

• Hughes wished to purchase old oats for his horses.
• Smith offered oats for sale.
• Smith did not expressly state whether the oats were old or new.
• Hughes inspected the oats and agreed to buy them.
• The oats were actually new oats.
• Hughes refused to pay, arguing that he believed he was purchasing old oats.

Judgment

• The contract was valid.
• Hughes was required to pay for the oats.

Legal Principle

• Agreement is determined objectively.
• The court will consider what a reasonable person would understand from the parties’ words and conduct.
• A party cannot rely on a private intention or misunderstanding if their outward actions indicate agreement.

Application

• Essential authority for proving that contractual agreement depends on objective consent.
• Frequently cited where one party claims they misunderstood the agreement.

Gibson v Manchester City Council [1979] 1 WLR 294

Facts

• The council wrote to Gibson stating that it “may be prepared to sell” his council house.
• Gibson completed an application form.
• Before contracts were exchanged, political control of the council changed.
• The council refused to proceed with the sale.

Judgment

• No contract existed.

Legal Principle

• The phrase “may be prepared to sell” was not sufficiently definite to constitute an offer.
• Without an offer there can be no acceptance and therefore no agreement.

Application

• Demonstrates the necessity of a clear offer before an agreement can arise.
• Frequently contrasted with Storer v Manchester City Council.

Storer v Manchester City Council [1974] 1 WLR 1403

Facts

• The council sent Storer a formal agreement and stated that if he signed and returned it, the property would be sold.
• Storer signed and returned the agreement.
• The council later attempted to withdraw.

Judgment

• A contract existed.

Legal Principle

• Clear and certain language may amount to an offer.
• Acceptance of that offer creates a binding agreement.

Application

• Demonstrates when negotiations become a legally enforceable agreement.
• Often examined alongside Gibson.

RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH [2010] UKSC 14

Facts

• The parties negotiated a substantial commercial agreement.
• Formal documents were never completely executed.
• Despite this, both parties performed the obligations expected under the contract.

Judgment

• A contract existed.

Legal Principle

• Agreement may be inferred from conduct.
• Courts examine the entire course of dealings objectively.

Application

• Important modern authority showing that agreement can arise without a signed contract.

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Unilateral Contracts

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Facts

• Carbolic Smoke Ball Co advertised that it would pay £100 to anyone who used its smoke ball as instructed and still contracted influenza.
• The advertisement stated that £1000 had been deposited in a bank to show sincerity.
• Mrs Carlill used the smoke ball according to the instructions.
• She subsequently contracted influenza.

Judgment

• Mrs Carlill succeeded.
• The company was required to pay the reward.

Legal Principle

• A unilateral offer can be made to the world at large.
• Acceptance occurs through performance of the required act.
• Notification of acceptance is unnecessary unless specifically required.

Application

• Leading authority on unilateral contracts.
• Frequently cited where rewards, competitions or public offers are involved.

Williams v Carwardine [1833] 4 B & Ad 621

Facts

• A reward was offered for information leading to the conviction of a murderer.
• The claimant provided information.
• She acted partly because of conscience rather than the reward.

Judgment

• Reward payable.

Legal Principle

• The motive for acceptance is irrelevant.
• Knowledge of the offer and performance of its conditions is sufficient.

Application

• Clarifies that performance rather than motive creates acceptance.

Gibbons v Proctor [1891] 64 LT 594

Facts

• A reward was offered for information relating to a criminal.
• A police officer supplied information.
• The information reached the authorities through another person.

Judgment

• Reward awarded.

Legal Principle

• Acceptance occurs where the required conditions have effectively been performed.

Application

• Demonstrates flexible judicial treatment of reward contracts.

Errington v Errington and Woods [1952] 1 KB 290

Facts

• A father promised that ownership of a house would pass to his son and daughter-in-law if they paid all mortgage instalments.
• The couple began making payments.
• The father died.
• His widow attempted to revoke the arrangement.

Judgment

• Revocation was not permitted.

Legal Principle

• Once performance has commenced, a unilateral offer may become irrevocable.

Application

• Important authority concerning revocation of unilateral offers.

Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231

Facts

• The defendant promised to sell property if the claimant attended with the purchase money before a specified time.
• The claimant complied.
• The defendant refused to proceed.

Judgment

• Claimant successful.

Legal Principle

• Once the offeree has embarked upon performance, the offeror may be prevented from revoking the offer.

Application

• Supports the principle established in Errington.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Bilateral Contracts

Brogden v Metropolitan Railway Co [1877] 2 App Cas 666

Facts

• Brogden supplied coal to the railway company for many years.
• A draft written agreement was exchanged and amended.
• The document was never formally executed.
• The parties nevertheless continued trading.

Judgment

• Contract existed.

Legal Principle

• Mutual promises and conduct may demonstrate acceptance.
• Bilateral obligations can arise without formal execution.

Application

• Classic authority on bilateral contracts formed through conduct.

RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH [2010]

Facts

• Complex commercial negotiations took place.
• Formal contractual documentation remained incomplete.
• Performance nevertheless commenced.

Judgment

• Contract existed.

Legal Principle

• Bilateral obligations may arise through objective conduct.

Application

• Frequently used in modern commercial contract disputes.

Butler Machine Tool Co Ltd v Ex-Cell-O Corporation [1979] 1 WLR 401

Facts

• Seller offered machinery on specific contractual terms.
• Buyer responded with different terms.
• Parties later proceeded with the transaction.

Judgment

• Contract formed on the buyer’s terms.

Legal Principle

• Bilateral contracts are created through offer and acceptance analysis.

Application

• Important battle of forms authority.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Collateral Contracts

De Lassalle v Guildford [1901] 2 KB 215

Facts

• Tenant wished to lease a property.
• Landlord assured him that the drains were in good condition.
• Tenant relied upon the assurance and entered the lease.
• The drains were defective.

Judgment

• Landlord liable.

Legal Principle

• A promise inducing entry into a main contract may itself become a collateral contract.

Application

• One of the earliest collateral contract authorities.

Shanklin Pier Ltd v Detel Products Ltd [1951] 2 KB 854

Facts

• Pier owners instructed contractors to purchase paint manufactured by Detel.
• Detel stated that the paint would last seven years.
• Contractors purchased the paint.
• The paint deteriorated within months.

Judgment

• Manufacturer liable.

Legal Principle

• A collateral contract may arise where a promise induces entry into another contract.
• Consideration existed because the paint was purchased in reliance upon the promise.

Application

• Leading authority on collateral contracts.

Evans & Son Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078

Facts

• Carrier assured customer that goods would continue to be transported below deck.
• Customer relied on that assurance.
• Goods were later transported on deck and lost.

Judgment

• Carrier liable.

Legal Principle

• Oral assurances may form collateral contractual obligations.

Application

• Demonstrates enforceability of pre-contractual promises.

City and Westminster Properties Ltd v Mudd [1959] Ch 129

Facts

• Lease prohibited residential occupation.
• Landlord assured tenant that he could continue sleeping on the premises.
• Tenant relied on the assurance.

Judgment

• Tenant successful.

Legal Principle

• A collateral contract may coexist alongside a written contract.
• A pre-contractual promise may remain enforceable despite conflicting written terms.

Application

• Important authority concerning oral assurances.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Statutory Position

Key Examination Point

• There are no major statutory provisions governing:
  • Agreements
  • Unilateral contracts
  • Bilateral contracts
  • Collateral contracts
• These concepts are overwhelmingly governed by common law precedent.
• Examination answers should therefore focus primarily on judicial authorities rather than legislation.

Essential Examination Authorities

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course