Case notes
Gibson v Manchester City Council [1978] 1 WLR 520 (CA); [1979] 1 WLR 294 (HL)
 Facts: Council policy of selling houses – claimant applied for details of
mortgage terms. Council responded saying ‘the [council] may be prepared to
sell you the house at the purchase price…’ and invited claimant to make
formal application. Claimant responded with completed forms. Council policy
changed under new party stating no houses sold unless contract already
made.
 Issue: Whether letter was offer or invitation to treat (is contract in place)
 Decision: Court of Appeal (Lord Denning) looked at correspondence as a
whole and says it was a contract, but House of Lords said it wasn’t a contract
 Reasoning: ‘may be prepared to sell’ did not constitute an offer, only Gibson’s
response was an offer which was never accepted
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
 Facts: Defendants made advertisement of smoke ball that would cure flu.
Offered to pay £100 to anyone who contracted influenza after using smoke
ball. Claimant saw advertisement, bought ball and used it in said specific
manner for specific period, and contracted influenza. Carbolic claimed
advertisement was only invitation to treat, not legally binding offer.
 Issue: Whether advertisement was an offer or invitation to treatment
o Impossible to make offer to world? Advert too vague to be offer? No
notification of acceptance?
 Decision: Court of Appeal decided Mrs Carlill entitled to reward as advert was
offer of unilateral contract and she had performed conditions of it
 Reasoning: £1000 deposit added validity to advertisement, offer can be made
to world (but only contract with people who performed it’s conditions), not
possible for notification of acceptance apart from performance
Walford v Miles [1992] 2 AC 174
 Facts: Buyers and sellers of a company agreed for sellers to only deal with
buyers and stop any negotiations with competing buyer. Sellers later
continued negotiations and sold to third party. Buyers sued for breach of oral
agreement. Seller’s claimed negotiations still taking place and oral agreement
= agreement to negotiate in good faith.
 Issue: Whether agreement to only negotiate with one buyer was legally
binding contract or not
o Do agreements to negotiate have legal certainty
o Does idea of ‘good faith’ contradict adversarial positions of parties in
negotiations?
 Decision: Court of Appeal decided this specific agreement was not an
enforceable contract
 Reasoning: Agreement to negotiate had unspecified time, and was under no
obligation to continue to negotiate and was entitled to withdraw at any time
Foley v Classique Coaches Ltd [1934] 2 KB 1
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Facts: Foley agreed in writing to sell piece of land to Classique Coaches, on
condition they purchase all petrol from him at price to be agreed ‘in writing
and from time to time’ and no one else as long as Foley able to supply. 3
years later Classique Coaches claimed contract void due to uncertainty and
stopped buying petrol from Foley – no agreed price of fuel and petrol clause
was unreasonable restraint of trade.
Issue: if no price quoted is the contract void
Decision: Contract not void, Classique Coaches breached contract
Reasoning: Defendant had performed obligations for 3 years and they could
not repudiate this suddenly
o When agreement made and obligations performed, it implied that the
price under agreement was reasonable
o Price agreement also included arbitration clause that would have been
able to solve this type of dispute
Byrne v Van Tienhoven (1880) 5 CPD 344
 Facts: Defendant (Cardiff) wrote letter Oct 1 to claimant (New York) offering
sale of tin plates, took 10-11 days to be delivered. Claimant received letter
Oct 11, accepted same day by telegram and also by letter Oct 15. Defendant
had sent letter Oct 8 withdrawing offer which arrived Oct 20. Claimant sued
for damages for non-delivery of tin plates.
 Issue: Whether withdrawal of offer was acceptable
 Decision: Withdrawal not effective as contract had been created on Oct 11
when claimant accepted offer from Oct 1 letter
 Reasoning: Offer cannot be withdrawn by posting secondary letter that does
not arrive until after first letter received and responded to
New Zealand Shipping Co Ltd v AM Satterthwaite &Co Ltd (The Eurymedon) [1975]
AC 155
 Facts: Contractors unloading machinery from ship. Contract between
machinery owners and carriers had limitation clause – no agent of carrier
liable for damage unless action brought within one year. Ship unloaders
damaged machinery, machinery owners brought action outside one year.
 Issue: Whether stevedores (unloaders) benefitted from time limit as
agreement between carrier and owners
o Contract between two parties sued on by third person
 Decision: Privy Council decided stevedores weren’t liable as they could rely
on time limit clause
 Reasoning: Wording of clause covered all parties involved in carriage of
goods