CONTRACT LAW CASES
LAW FIRM
VOL I
 Author: Onsent J. Mwale
 Publisher: Color Filter & PGD Skins LTD
 Copy write: 2020
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CONTRACT LAW
OFFER INTRODUCTION
Case: Smith v Hughes (1871) LR 6 QB 597
The case stands for the narrow proposition that in a commercial sale by sample (following sample) where
the goods conform to the sample shown, the court will mindful of the principle of caveat emptor look
more to objective than subjective consensus ad idem.
Facts:
Mr. Hughes was a racehorse trainer. Mr. Smith, who was a farmer, brought him a sample of his oats, of
which Hughes then ordered forty to fifty quarters at a fixed price. Sixteen quarters were sent to start with.
But when they arrived, Hughes said they were not the oats he thought they would be. He had wanted old
oats (which are the only ones racehorses can eat), and he was getting new oats (also known as green oats).
In fact, Smith's sample was of green oats. Hughes refused to pay and Smith sued for damages for breach
of contract, for the amount of oats delivered and still to be delivered.
Judgment:
The buyer persuaded himself they were old oats, when they were not so; but the seller neither said nor did
anything to contribute to his deception. He has himself to blame. The question is not what a man of
scrupulous morality or nice honour would do under such circumstances.
The case put of the purchase of an estate, in which there is a mine under the surface, but the fact is
unknown to the seller, is one in which a man of tender conscience or high honour would be unwilling to
take advantage of the ignorance of the seller; but there can be no doubt that the contract for the sale of the
estate would be binding.
It only remains to deal with an argument which was pressed upon us, that the defendant in the present
case intended to buy old oats, and the plaintiff to sell new, so the two minds were not ad idem; and that
consequently there was no contract.
Then, Blackburn J. Gave his decision on the issue. I apprehend that if one of the parties intends to make a
contract on one set of terms, and the other intends to make a contract on another set of terms, or, as it is
sometimes expressed, if the parties are not ad idem, there is no contract, unless the circumstances are such
as to preclude one of the parties from denying that he has agreed to the terms of the other.
The rule of law is that stated in Freeman v Cooke. If, whatever a man's real intention may be, he so
conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the
other party, and that other party upon that belief enters into the contract with him, the man thus
conducting himself would be equally bound as if he had intended to agree to the other party's terms.
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CONTRACT LAW
OFFER INTRODUCTION
Case: Storer v Manchester City Council [1974] 1 WLR 1403
Facts:
The defendant City Council refused to proceed with the sale of a council property to the claimant under
an arrangement which had been agreed with its predecessor. All of the terms of the contract had been
agreed but for the date on which the lease was to end and the mortgage payments were to begin, which
had been left blank on the form returned to the defendant by the claimant. The claimant alleged that the
contract was completely concluded and sought specific performance of the agreement.
● The question was whether the contract had been concluded, despite the fact that the date on which the
claimant became a purchaser rather than a tenant was still to be determined.
Judgment:
The Court of Appeal held that the contract was complete despite the absence of this term. In
distinguishing between an offer and an invitation to treat, it is necessary to look, not to the subjective
intentions or beliefs of the parties, but rather on what their words and conduct might reasonably and
objectively be understood to mean. In this case the defendant had made clear by their conduct and
language that they intended to be bound upon the acceptance of the offer despite the fact that some terms
remained to be agreed.
Lord Denning MR said: ‘In contracts you do not look into the actual intent in a man’s mind. You look at
what he said and did. A contract is formed when there is, to all outward appearances, a contract. A man
cannot get out of a contract by saying ‘I did not intend to contract’ if by his words he has done so. His
intention is to be found only in the outward expression which his letters convey. It they show a concluded
contract, that is enough.
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CONTRACT LAW
OFFER: OFFER AND INVITATION TO TREAT
Case: Gibson v Manchester City Council [1979]
Facts:
Manchester City Council was being run by the Conservative Party, which was operating a policy of
selling council houses to the occupants. A Mr Gibson applied, on a form of the council, for details of his
house price and mortgage terms. In February 1971, the Treasurer replied:
The corporation may be prepared to sell the house to you at the purchase price of £2,725 less 20% =
£2,180 (freehold)… This letter should not be regarded as a firm offer of a mortgage. If you would like to
make formal application to buy your Council house please complete the enclosed application form and
return it to me as soon as possible.
In March 1971, Mr Gibson completed the application form with the exception of the date on which his
lease was to end, and returned it to the council. The Labour Party returned to power in Manchester in
May, and halted new sales. Mr Gibson was told that he could not complete the purchase. He then sued the
council, arguing that a binding contract had already come into force.
Judgment:
The House of Lords unanimously upheld the council's appeal, so Mr Gibson did not get his house. The
court held that the council's letter was not an offer, for the letter stated that "The Corporation may be
prepared to sell the house to you" and that "If you would like to make formal application to buy your
Council house, please complete the enclosed application form and return it to me as soon as possible." As
there was never an offer available to be accepted, no contract had been formed and by extension the
Council had not been in breach.
Lord Diplock said the following:
“
Lord Justice Geoffrey Lane in a dissenting judgment, which for my part I find convincing,
adopted the conventional approach. He found that upon the true construction of the
documents relied upon as constituting the contract, there never was an offer by the
corporation acceptance of which by Mr. Gibson was capable in law of constituting a legally
enforceable contract. It was but a step in the negotiations for a contract which, owing to the
change in the political complexion of the council, never reached fruition.
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CONTRACT LAW
OFFER: OFFER AND INVITATION TO TREAT
Case: Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Facts:
The Carbolic Smoke Ball Co. made a product called the "smoke ball" and claimed it to be a cure
for influenza and a number of other diseases. (The 1889–1890 flu pandemic was estimated to have
killed 1 million people.) The smoke ball was a rubber ball with a tube attached. It was filled
with carbolic acid (or phenol). The tube would be inserted into a user's nose and squeezed at the
bottom to release the vapours. The nose would run, ostensibly flushing out viral infections.
The Company published advertisements in the Pall Mall Gazette and other newspapers on
November 13, 1891, claiming that it would pay £100 (equivalent to £11,000 in 2018) to anyone who
got sick with influenza after using its product according to the instructions provided with it.
“
£100[1] reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the
increasing epidemic influenza colds, or any disease caused by taking cold, 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, Regent Street, showing our sincerity in the matter.
During the last epidemic of influenza many thousand carbolic smoke balls were sold as
preventives against this disease, and in no ascertained case was the disease contracted by
those using the carbolic smoke ball.
One carbolic smoke ball will last a family several months, making it the cheapest remedy in the
world at the price, 10s. post free. The ball can be refilled at a cost of 5s. Address: “Carbolic
Smoke Ball Company”, 27, Princes Street, Hanover Square, London.
”
Mrs. Louisa Elizabeth Carlill saw the advertisement, bought one of the balls and used it three times
daily for nearly two months until she contracted the flu on 17 January 1892. She claimed £100 from
the Carbolic Smoke Ball Company. They ignored two letters from her husband, a solicitor. On a third
request for her reward, they replied with an anonymous letter that if it is used properly the company
had complete confidence in the smoke ball's efficacy, but "to protect themselves against all
fraudulent claims", they would need her to come to their office to use the ball each day and be
checked by the secretary. Mrs. Carlill brought a claim to court. The barristers representing her
argued that the advertisement and her reliance on it was a contract between the company and her,
so the company ought to pay. The company argued it was not a serious contract.
Judgment:
•
It was held that the advertisement was not an invitation to treat but was an offer to the whole
world and that a contract was made with those persons who performed the condition ‘on the faith
of the advertisement’. The plaintiff was therefore entitled to recover £100.
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CONTRACT LAW
OFFER: GOODS DISPAYED FOR SALE IN SHOPS
 Case: Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953]
EWCA
Fact: Boots Cash Chemists had just instituted a new way for its customers to buy certain medicines.
Shoppers could now pick drugs off the shelves in the chemist and then pay for them at the till. Before
then, all medicines were stored behind a counter meaning a shop employee would get what was
requested. The Pharmaceutical Society of Great Britain objected and argued that under the Pharmacy
and Poisons Act 1933, that was an unlawful practice. Under s 18(1), a pharmacist needed to supervise
at the point where "the sale is effected" when the product was one listed on the 1933 Act's schedule of
poisons. The Society argued that displays of goods were an "offer" and when a shopper selected and
put the drugs into their shopping basket, that was an "acceptance", the point when the "sale is
effected"; as no pharmacist had supervised the transaction at this point, Boots was in breach of the
Act. Boots argued that the sale was effected only at the tills.
Judgment: It seems to me therefore, applying common sense to this class of transaction, there is no
difference merely because a self-service is advertised. It is no different really from the normal
transaction in a shop. I am quite satisfied it would be wrong to say the shopkeeper is making an offer
to sell every article in the shop to any person who might come in and that he can insist by saying 'I
accept your offer. Therefore, in my opinion, the mere fact that a customer picks up a bottle of
medicine from the shelves in this case does not amount to an acceptance of an offer to sell. It is an
offer by the customer to buy. I daresay this case is one of great importance, it is quite a proper case
for the Pharmaceutical Society to bring, but I think I am bound to say in this case the sale was made
under the supervision of a pharmacist. By using the words 'The sale is effected by, or under the
supervision of, a registered pharmacist', it seems to me the sale might be effected by somebody not a
pharmacist. If it be under the supervision of a pharmacist, the pharmacist can say 'You cannot have
that. That contains poison'. In this case I decide, first that there is no sale effected merely by the
purchaser taking up the article. There is no sale until the buyer's offer to buy is accepted by the
acceptance of the money, and that takes place under the supervision of a pharmacist. And in any case,
I think, even if I am wrong in the view I have taken of when the offer is accepted, the sale is by or
under the supervision of a pharmacist.
 It was held that; the sale took place at the cash desk and not when the goods were
taken from the shelves. The display of the goods was simply an invitation to treat and
therefore had been no breach of the Act.
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CONTRACT LAW
OFFER: GOODS DISPAYED FOR SALE IN SHOPS
 Case: Fisher v Bell [1961] 1 QB 394
The case established that, where goods are displayed in a shop together with a price label, such display is
treated as an invitation to treat by the seller, and not an offer. The offer is instead made when the customer
presents the item to the cashier together with payment. Acceptance occurs at the point the cashier takes
payment.
Facts: The defendant displayed a flick knife in the window of his shop next to a ticket bearing the words Ejector
knife – 4s, (i.e. four shillings).
Under section 1 of the Restriction of Offensive Weapons Act 1959 (which was expanded in 1961, after this case
finished, to deal with the gap in the law):
(1) Any person who manufactures, sells or hires or offers for sale or hire, or lends or gives to any other person—
(a) any knife which has a blade which opens automatically by hand pressure applied to a button, spring or other
device in or attached to the handle of the knife, sometimes known as a “flick knife” or “flick gun”; or
(b) any knife which has a blade which is released from the handle or sheath thereof by the force of gravity or the
application of centrifugal force and which, when released, is locked in place by means of a button, spring, lever, or
other device, sometimes known as a “gravity knife” shall be guilty of an offence ... and in the case of a second or
subsequent offence to imprisonment for a term not exceeding six months or to a fine not exceeding...or to both such
imprisonment and fine.[1]
(2) The importation of any such knife as is described in the foregoing subsection is hereby prohibited.
In late 1959, the claimant, a chief inspector of police, brought forward information against the defendant alleging he
contravened section 1(1) by offering the flick knife for sale.
Judgment: Lord Parker CJ in the Divisional Court held there was no offence because there was no "offer
for sale". Although the display of a knife in a window might at first appear to "lay people" to be an offer
inviting people to buy it, and that it would be "nonsense to say that [it] was not offering it for sale",
whether an item is offered for the purpose of the statute in question must be construed in the context of
the general law of the country. He stated that the general law of the country clearly established that
merely displaying an item constituted an invitation to treat. He also read the statute on an exclusive
construction (inclusio unius est exclusio alterius), noting that other legislation prohibiting the sale of
weapons referred to "offering or exposing for sale" (emphasis added). The lack of the words exposing for
sale in the Restriction of Offensive Weapons Act 1959 suggested that only a true offer would be
prohibited by the Act. The court dismissed the appeal. Goods displayed in a shop are merely an invitation
to treat or invitation to trade.
 He was found by the Court not to have committed the offence of offering for sale an
offensive weapon contrary to the Restriction of Offensive Weapons Act 1959.
 The Court held that the display of goods in a shop window was simply an invitation to treat
rather than an offer.
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CONTRACT LAW
OFFER: ADVERTISMENT
Case: Partridge v Crittenden [1968] 1 WLR 1204
Facts: On 13 April 1967 an advertisement by the appellant (Arthur Robert Partridge) appeared in
the periodical "Cage and Aviary Birds", under the general heading "Classified Advertisements" which
contained, amongst others, the words Quality British A.B.C.R... Bramblefinch cocks, Bramblefinch hens
25 s. each. In no place was there any direct use of the words "offer for sale". A Thomas Shaw Thompson
wrote to Partridge asking him to send him an ABCR Bramblefinch hen (a brambling) and enclosed
a cheque for 30s. On 1 May 1967, Partridge dispatched a brambling, which was wearing a closed-ring
around its leg, to Thompson in a box. Thompson received the box and was able to remove the ring from
the bird's leg without injuring it.
Partridge was charged by Anthony Ian Crittenden, on behalf of the RSPCA, with illegally offering for
sale a live wild bird which was not a close-ringed specimen, bred in captivity, against s. 6(1)* and Sch.
4* of the Protection of Birds Act 1954. The magistrates decided that the advertisement was an offer for
sale and that the ABCR Bramblefinch hen was not a close-ringed specimen bred in captivity, because it
was possible to remove the ring from the bird's leg.
Partridge was convicted, was fined £5 and ordered to pay £5 5 s advocate's fee and £4 9 s. 6 d. witnesses'
expenses.
Partridge appealed against conviction.
Judgment: The High Court had to answer whether the appellant's advertisement constituted a
legitimate offer for sale (as the prosecution chose to prosecute only for the weaker of the three possible
alleged facts), and whether the bird was not a close-ringed specimen bred in captivity under the Protection
of Birds Act 1954 if it were possible to remove the ring from its leg. It was held that the advertisement in
question constituted in law an invitation to treat and not an offer to sell; therefore the offence with which
the appellant was charged was not established. The judges also said that if the only issue were whether the
bird was a close-ringed specimen under the Protection of Birds Act 1954, the magistrates' judgment
would have been upheld. Ashworth J gave his judgment first.
Having been referred to the decision of this court in Fisher v. Bell the justices nonetheless took the view
that the advertisement did constitute an offer for sale; they went on further to find that the bird was not a
close-ringed specimen bred in captivity, because it was possible to remove the ring. Before this court Mr.
Pitchers for the appellant, has taken two points, first, this was not an offer for sale and, secondly, that the
justices' reason for finding that it was not a close-ringed bird was plainly wrong because the fact that one
could remove the ring did not render it a non-close-ringed bird.
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CONTRACT LAW
POSTAL RULE: ACCEPTANCE OF AN OFFER
Case: Adams v Lindsell (1818) 1 B & Ald 681
Facts:
The case involved two parties in the sale of wool. On 2 September, the defendants wrote to
the plaintiffs offering to sell them certain fleeces of wool and requiring an answer in the course
of post. The defendants misdirected the letter so that the plaintiffs did not receive it until 5
September.[1] The plaintiffs posted their acceptance on the same day but it was not received
until 9 September. Meanwhile, on 8 September, the defendants, not having received an answer
by 7 September as they had expected, sold the wool to someone else.
The defendants argued that there could not be a binding contract until the answer was actually
received, and until then they were free to sell the wool to another buyer.
Judgment:
Law J said that if that was true it would be impossible to complete any contract through the post; if the
defendants were not bound by their offer until the answer was received, then the plaintiffs would not be
bound until they had received word that the defendants had received their acceptance, and this could go
on indefinitely. Instead it must be considered that the offerors were making the offer to the plaintiffs
during every moment that the letter was in the post. Then when the Offeree has placed his acceptance in
the post there is a meeting of minds, which concludes the offer and gives effect to the acceptance.
The acceptance did not arrive in course of post strictly speaking (all parties understood in course of post
to refer to 7 September). But because the delay was the fault of the defendant it was taken that the
acceptance did arrive in course of post.
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CONTRACT LAW
AUCTION SALES
Case: Harris v Nickerson (1873) LR 8 QB 286
“The case established that an advertisement that goods will be put up for auction does not constitute
an offer to any person that the goods will actually be put up, and that the advertiser is therefore free
to withdraw the goods from the auction at any time prior to the auction. All three judges concurred
but issued separate judgments.”
Facts:
The Defendant placed an advertisement in London papers that certain items, including brewing
equipment and office furniture, would be placed up for auction over three days in Bury St.
Edmunds. The Plaintiff obtained a commission to buy the office furniture and expended time
and expense to travel to Bury St. Edmunds to bid for the office furniture. On the third day, the
lots for the office furniture were withdrawn. The Plaintiff sued for loss of time and expense. The
judge at first instance found in favour of the Plaintiff. Leave was given to appeal to the High
Court.
The Plaintiff submitted that the advertisement constituted a contract between themselves and
the Defendant that the latter would sell the furniture according to the conditions stated in the
advertisement, and that accordingly the withdrawal of the furniture was a breach of contract.
The Defendant submitted the advertisement of a sale did not constitute a contract that any
particular lot or class of lots would actually be put up for sale.
Judgment:
The court held unanimously that the advertisement did not constitute an offer, but rather was a
mere declaration of intent. Blackburn, J. founded his judgment on public policy grounds, calling
it a "startling proposition" that "any one who advertises a sale by publishing an advertisement is
now responsible to everybody who attends the sale for his cab hire or travelling expenses".
Quain and Archibald, JJ. also drew public policy arguments, emphasising that there existed no
authority on which to base a decision that the Defendant is liable to indemnify all those who
attended his auction. The court upheld the appeal.
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CONTRACT LAW
AUCTION SALES
Case: British Car Auctions Ltd v. Wright [1972]1 WLR 1519.
Facts:
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