Page 1 of 3
1.
(i) ‘although goods are displayed and it is intended that customers should go and choose
what they want, the contract is not completed until, the customer having indicated the articles
which he needs, the shopkeeper, or someone on his behalf accepts the offer. Then the
contract is completed.’
From Halsbury’s [110-285] ‘no breach of legislation requiring sale of proprietary medicines
to be effected under the supervision of pharmacist where display of items for sale was not
offer and supervision was provided at cashier's desk where sale took’
(ii) The judges agreed with the Lord Chief Justice and relied on the reasoning of an
illustration based around transactions carried out in a bookshop: ‘enabling customers to have
free access to what is in the shop, to look at the different articles, and then, ultimately, having
got the ones which they wish to buy, come up to the assistant saying “I want this”? The
assistant in 999 times out of 1,000 says “That is all right,” and the money passes and the
transaction is completed’.
Even though the notion that common law is based on precedent, it had to ‘case of first
instance’ at one time. This is, obviously, one of those ‘case of first instance’.
(iii) They gave reasons by analogy with a transaction in a bookshop, that the contract is
completed when the customer makes an offer at the cash desk, and the shopkeeper accepts the
offer.
It makes sense to me that deciding the case differently would make it difficult for self-service
and for bookstores, as examples, to do business effectively. What would that accomplish?
Iv) They should not be offended, because it means the case has no need for defence. The case
is obviously won by the defence!
(v) as per Partridge v Crittenden [1968] 2 All ER 421 this is an ‘offer to treat’, not an offer
for sale, that is, a request to others to make offers to engage in negotiations with a contract in
mind. No contract, therefore, no breach of contract.
Scott Quayle
Research and Legal Reasoning
Week 11 Seminar
Page 2 of 3
2.
(i)
(ii)
(a)
Corporate Personality in governed by rules as set out by legislation. In this
case it has the following attributes:
! The purpose of the corporation has to be lawful
! The proceedings have to be regular
! The prime object of turning a private business into a limited company is to
convert unlimited liability into limited liability.
! Debentures are secured forms of credit that a company can borrow. When
the company is liquidated, the secured forms of credit get paid off first.
! The shareholders and holders of debentures in a company are public
knowledge.
! Shareholders can be related to each other.
! There must be seven shareholders
! Holding one share is enough to be a shareholder.
! There is no minimal value for a share.
(b)
debentures are secured credit, whereas trade-creditors are unsecured. (The way
companies get around this today is ask for Directors’ guarantees). If a
company is “wound-up” secured creditors get to be paid off before the
unsecured creditors.
It appears the judges of the Court of Appeal did not think in terms that the company
has a real existence. They looked at the situation, being one man being the influence
and authority over the whole company, and assumed that this could not have been
intended by legislature. From there they sought various grounds upon which they may
prohibit such a result. In doing so, they tried to create intended meanings for the
legislature, to suit their judgement.
The scope and effect of the Companies Act was not taken into account in their
judgement, in that “private” companies’ shareholders could be classed in the same
vein as this decision; the private company being a trustee for the shareholders in the
business. Those shareholders would the be declared liable without limit to discharge
the debts of the company.
The judges of the Court of Appeal were of the opinion that the company was a mere
scheme to enable Aron Salomon to carry out business in the name of a company.
Unfortunately, for them, their decision was contradictory in that the limited company
was a legal entity, or it was not. If it was, the business belonged to the limited
company, and not Mr. Salomon. If it was not a company, there was no person and no
thing to be an agent at all; and it is impossible to say at the same time that there is a
company and there is not. Either way they would fail if (a) it is a company (b) if it is
not a company, there can be no liquidation under the Companies Acts.
Another judge read into legislature that six of the members where there simply in
order to enable the seventh to carry on business with limited liability, and, in his
opinion, that was not the intention of the Legislature. In the Legislature, there was no
intention manifest in the statute to back up that opinion.
Scott Quayle
Research and Legal Reasoning
Week 11 Seminar
Page 3 of 3
The outcomes of the case was predetermined by a lack of definition in the legislation.
Although Lord McNaghten described what he termed as a ‘great scandal’ where
‘debenture-holders generally step in and sweep off everything’, he still decided that
‘the appeal ought to be allowed, and the counter-claim [sic] dismissed’. He, as the
other Lords, chose not to add their interpretation to legislation, as the Court of Appeal
judges wrongly did. There is evidence to suggest that most of the Lords would have
liked to have that definition, so they could make a similar decision in line with the
Court of Appeal.
Scott Quayle
Research and Legal Reasoning
Week 11 Seminar