A Summary of Bannerman v White (1861)

Case name & citation: Bannerman v White (1861) 10 CBNS 844; 142 ER 685

Court: Court of Common Pleas, England and Wales
Date of judgment: 12 June 1861
Area of law: Incorporation of terms; importance of statement

The Situation

A buyer wanted to purchase hops for making beer.

Before finalizing the deal, the buyer asked the seller if the hops had been treated with sulphur. The buyer made it clear that if the hops had been treated with sulphur, he wasn’t interested in buying them, because he couldn’t use them for making beer.

His wordings were: “If they have been treated with sulphur, I am not interested in even knowing the price of them.”

The seller wrongly assured the buyer that the hops had not been treated with sulphur.

After buying the hops, the buyer discovered that some of them had indeed been treated with sulphur and decided to cancel the contract.

The Legal Issue that arose

The seller argued that the discussion about sulphur was just part of the preliminary negotiations and not part of the actual contract.

The question was whether the statement about sulphur was a term of the contract (meaning it was a key part of what the contract promised) or just a casual comment.

The Court’s Decision in Bannerman v White

The court decided that the statement about sulphur was a term of the contract.

This is because the buyer had clearly said that the use of sulphur was very important to him, and he would not have bought the hops if he knew they were treated with sulphur.

Since the seller breached this term by selling hops that had been treated with sulphur, the buyer was right to cancel the contract.

Key Point

If a statement is very important to one of the parties and that party makes it clear that the statement is crucial to their decision, then the statement can become a term of the contract.

If the term is breached, the affected party can treat it as a breach of contract and may be entitled to remedies like rejecting the contract.

Significance (Bannerman v White)

This case illustrates that a pre-contractual statement may become a term of the contract if it is shown to be significantly important to one party. It underscores the principle that the more critical a pre-contractual statement is to one party’s decision to enter into the contract, the more likely it is to be incorporated as a term, rather than merely a representation. If a statement is treated as a term, its breach allows for remedies available for breach of contract, rather than those available for misrepresentation.

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Birch v Paramount Estates (1956): A Brief Summary

Birch v Paramount Estates (Liverpool) Ltd (1956) 167 EG 396

Terms in a contract; representation

The case of Birch v Paramount Estates Ltd (1956) illustrates how oral representations can sometimes be incorporated into a written contract, particularly when they are fundamental to the agreement.

Facts (Birch v Paramount Estates)

A couple purchased a new house from a developer. The developers promised that the house would be “as good as the show house”. Upon completion, the house did not meet this standard. The buyers sought to hold the developers accountable for the discrepancy.

Issue

The issue was whether the promise made by the developers, which was not included in the written contract, could still be considered a binding term of the contract.

Decision of the Court in Birch v Paramount Estates

The Court of Appeal held that the promise, despite being verbal and omitted from the written contract, was so central to the agreement that it constituted a term of the contract. Thus, the developers were liable for not meeting the promised standard.

Legal Principle

This case demonstrates that even when a contract is formalized in writing, important spoken representations made during negotiations can be treated as contractual terms if they were fundamental to the agreement and relied upon by the parties. This principle is crucial in protecting parties who rely on verbal assurances that significantly influence their decision to enter into a contract.

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Ecay v Godfrey (1947): A Case Summary

Ecay v Godfrey (1947) 80 Lloyds Rep 286

Ecay v Godfrey (1947) is a notable case in contract law that illustrates the difference between a mere statement and a term of a contract. Here is a detailed description of the case:

Facts of the Case

Parties Involved: The plaintiff (Ecay) was the buyer, and the defendant (Godfrey) was the seller of a boat.

Context: The plaintiff was interested in purchasing a boat from the defendant. During the negotiations, the defendant told the plaintiff that the boat was “sound” and in good condition.

Advice: Despite this statement, the defendant also advised the plaintiff to have the boat surveyed/checked before finalizing the purchase.

Issue in Ecay v Godfrey

The central issue in the case was whether the defendant’s statement about the boat being “sound” constituted a term of the contract or was merely a representation.

Court’s Decision

The court held that the statement made by the defendant was not a term of the contract. Instead, it was considered a mere representation.

Reasoning: The fact that the defendant advised the plaintiff to get the boat surveyed implied that the statement about the boat being “sound” was not intended to be a binding term of the contract. By suggesting a survey, the defendant indicated that the statement was not meant to be taken as a guarantee or term but rather a preliminary assertion.

Contrast with Schawel v Reade

The outcome in Ecay v Godfrey contrasts with the case of Schawel v Reade [1913]. In Schawel v Reade, a statement made about the quality of a horse was held to be a term of the contract because of its significant importance and the context in which it was made. The buyer relied on the statement, which was made emphatically and without any qualification. In contrast, in Ecay v Godfrey, the suggestion to have a survey showed that the statement about the boat’s condition was not intended to be a definitive term of the contract.

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A Case Summary of Schawel v Reade [1913] 2 IR 81

Schawel v Reade [1913] is a notable case in English contract law that deals with the concept of a statement becoming a contractual term. Here’s a summary of the case:

Facts (Schawel v Reade)

The plaintiff was interested in buying a horse for stud purposes from the defendant.

During the examination of the horse, the seller (defendant) made a statement to the plaintiff: “You need not look for anything: the horse is perfectly sound.”

Relying on this assurance, the plaintiff did not conduct any further inspection or checks of the horse.

The sale was completed about three weeks later.

After the purchase, the horse turned out to be unsatisfactory, and the plaintiff sought to claim damages from the seller.

Issue in Schawel v Reade

The key issue was whether the seller’s statement about the horse being “perfectly sound” constituted a term of the contract.

Judgment of the Court

The House of Lords held that the seller’s statement was indeed a term of the contract. The reasoning was based on the strength and importance of the seller’s assertion. The statement was made in a manner that implied the seller was providing a guarantee about the condition of the horse. The court concluded that the assurance was sufficiently emphatic to be considered part of the contract.

Significance

The case established that the more emphatic and significant a statement made during negotiations is, the more likely it is to be regarded as a contractual term.

A Contrasting View

In the given case of Schawel v Reade [1913], despite the three-week gap between the statement and the final contract, the Court determined it to be a term. However, in contrast, Routledge v McKay (1954) provides a different perspective on how the timing of statements impact their status as contractual terms. Here, a statement regarding the age of a motorbike being sold was not considered as a term due to the lapse of several days after it was made.

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Routledge v McKay [1954] 1 WLR 615 Court of Appeal

The Routledge v McKay case [1954] provides an important example of how courts determine whether a statement made prior to the formation of a contract is considered a term of that contract or merely a representation. Given below are the facts and judgment.

Facts (Routledge v McKay)

In Routledge v McKay, the parties involved were private individuals negotiating the sale of a motorbike. The defendant, drawing from the registration book, informed the plaintiff that the motorbike was made in 1942. This information was provided orally during their discussions. A week later, a written contract was drawn up for the sale of the motorbike, but it did not include any reference to the motorbike’s year of manufacture. After the contract was concluded, it was discovered that the motorbike was actually a 1930 model. The plaintiff, dissatisfied with the motorbike’s true age, claimed that the year of manufacture was a term of the contract and sought to enforce this as a contractual term.

Judgment

The court held that the statement regarding the motorbike’s year of manufacture was not a term of the contract. There was a significant time lapse (about a week) between the making of the statement and the conclusion of the contract. The court observed that the longer the interval between the statement and the contract, the less likely it is that the statement was intended to be a contractual term.

Furthermore, the written contract, which was concluded after the statement was made, did not mention the year of manufacture. The absence of this information in the written contract indicated that the parties did not regard the statement as a binding term.

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A Case Summary of Walters v Morgan (1861)

Citation: Walters v Morgan (1861) 3 De Gex, Fisher & Jones 718; 45 ER 1056.

Jurisdiction: England & Wales
Court: High Court of Chancery
Judgment Date: 02 November 1861
Judge: Lord Chancellor Lord Campbell

Facts of the case (Walters v Morgan)

The Plaintiff, William Walters, previously a master mariner and now a brickmaker, entered into an agreement with the Defendant, Thomas Morgan, a retired draper.

The agreement allowed Walters to dig, search for, and remove stone, sand, minerals, and clay from Morgan’s land in Pembrokeshire for one year, with an option to extend this into a 21-year lease. He would pay a fee per ton of material extracted.

Walters prepared the lease without prior detailed negotiations and persuaded Morgan to sign it, suggesting that any discrepancy in mineral value would be fairly adjusted.

After Morgan discovered the land’s true value, he refused to let Walters mine it.

Walters sued Morgan for breach of contract and sought specific performance to enforce the lease.

Issue that arose

Could specific performance be granted?

Court’s Findings in Walters v Morgan

There was no fiduciary relationship between Walters and Morgan.

The purchaser is not obliged to disclose any facts exclusively within their knowledge that might influence the price, provided there is no misrepresentation or deceit.

Simple reticence does not amount to legal fraud.

However, misleading gestures or words, or any contrivance to hurry the vendor into an agreement without proper information or advice, would be sufficient grounds for the court to refuse specific performance. Walters had misled Morgan by preparing the lease without prior negotiations and inducing him to sign it with promises of fair adjustments, which the court found unacceptable.

Outcome

The bill for specific performance filed by the plaintiff was dismissed. The Court found that the defendant had been induced to sign the agreement without full opportunity to understand or negotiate the terms, which constituted sufficient grounds for denying specific performance.

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A Case Summary of Cutter v Powell (1795)

Case name & citation: Cutter v Powell (1795) 6 Term Rep 320; 101 ER 573; [1795] EWHC KB J13

The concerned Court: Court of King’s Bench
Decided on: 9 June 1795
The bench of judges: Lord Kenyon CJ, Ashhurst J, Grose J, Lawrence J
Area of law: Entirety of contracts; the strict rule of performance; partial performance

What is the case about?

This is a significant case in English contract law. It dealt with the concept of entire contracts and the strict rule of performance in contract law. It was decided by the King’s Bench in 1795.

What happened in Cutter v Powell?

The plaintiff’s spouse, Cutter, agreed to serve as the second mate aboard Powell’s ship (“The Governor Parry”) for a journey from Jamaica to Liverpool. According to the contract, Cutter would receive 30 guineas as long as he fulfilled his duties until the ship reached Liverpool. The contract read as follows:

_____would be paid 30 guineas ‘provided he proceeds, continues and does his duty as second mate … to the port of Liverpool’.

The voyage began on August 2nd and concluded on October 9th, but unfortunately, Cutter passed away on September 20th, seven weeks into the voyage, constituting about 75% of the journey. Despite this, when the plaintiff requested a portion of her late husband’s wages, Powell refused. As a result, the plaintiff initiated legal action to recover a fair share of the wages.

Judgment (Cutter v Powell)

The court held that since the contract was considered “entire,” the plaintiff’s claim was not valid. It was determined that Cutter’s widow could not claim any compensation for the work he had completed prior to his passing. According to the court, Cutter was obligated to fulfill the entire voyage before becoming eligible for payment.

The strict rule of performance

This case was based on the strict rule of performance.

Typically, a party is relieved of their contractual obligations only when they have fully completed their part of the agreement, adhering precisely to the contract terms. Partial performance is usually deemed inadequate and could lead to the party being regarded as if they hadn’t fulfilled any obligations at all.

The potential injustice that can arise

In some contracts known as “entire,” one party’s entitlement to payment hinges on their full completion of contractual duties. This case demonstrates the consequences of failing to fulfill such a contract. It also highlights the potential for injustice, as Cutter’s death, an event beyond his control, can hardly be considered a default on his part.

Comment

This old case is often used to highlight the legal requirement for full performance before one can pursue legal action regarding an entire contract. While this principle remains relevant, contemporary legal standards might lead to a different ruling today. Cutter’s widow could now potentially argue that her husband’s premature death rendered the contract frustrated. Consequently, she could seek compensation for the significant value her husband provided to his employer before his passing under section 1(3) of the Law Reform (Frustrated Contracts) Act 1943.

Considering the harshness of the strict rule of performance, the judges have, over time, developed some exceptions when the rule does not operate e.g. divisible contracts, acceptance of part-performance, substantial performance, prevention of performance, etc. (in cases like Hoenig v Isaacs [1952], Bolton v Mahadeva [1972])

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Nutbrown v Thornton (1804) 10 Ves 159

Nutbrown v Thornton (1804) 10 Ves 159 is a notable case in contract law, particularly concerning the remedy of specific performance.

Facts of the case (Nutbrown v Thornton)

The claimant and the defendant entered into a contract where the defendant agreed to sell machinery to the claimant. However, the defendant breached the contract by refusing to deliver the machinery. The defendant was the sole manufacturer of this type of machinery, meaning the claimant could not obtain the machinery from any other source.

Issue

The claimant sought specific performance of the contract. This legal remedy compels the defendant to fulfil their contractual obligations, rather than just awarding damages for the breach.

Judgment in Nutbrown v Thornton

The court granted specific performance. Although damages are typically awarded for breach of contract, in this case, they would be inadequate because the claimant could not purchase the machinery from any other manufacturer. The unique nature of the machinery made it impossible for the claimant to find a suitable substitute, thus justifying the need for specific performance to ensure the claimant received the agreed-upon machinery.

Significance

This case underscores the principle that specific performance is an appropriate remedy when the subject matter of the contract is unique and damages would not adequately address the loss suffered due to the breach. The decision illustrates the court’s discretion in awarding equitable remedies to ensure fair and just outcomes in situations where monetary compensation falls short.

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Cohen v Roche [1927]: A Quick Summary

Case name & citation: Cohen v Roche [1927] 1 KB 169

Area of law: Specific performance under contract law; Availability of substitute goods

Facts (Cohen v Roche)

The claimant owned a furniture shop and entered an agreement to purchase a quantity of Hepplewhite chairs to sell in his shop. The defendant, in breach of contract, refused to deliver the chairs. The claimant sued for breach of contract and sought specific performance for delivery of the chairs.

Decision

The court held that the sale was valid but ordered an award of damages rather than the order of specific performance sought by the claimant.

The claimant would be adequately compensated by an award of damages.

Legal principle

It was held that the chairs were ‘unremarkable’ and possessed no special feature that made them unique and irreplaceable. As such, the claimant could obtain substitute chairs from another source and an order of specific performance would not be appropriate.

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Godecke v Kirwan (1973) 129 CLR 629: A Case Summary

Case name & citation: Godecke v Kirwan [1973] HCA 38; 129 CLR 629; 1 ALR 457

The bench of judges: Walsh, Gibbs and Mason JJ.
Decided on: 20 September 1973
The concerned Court: High Court of Australia
Area of law: Agreement contemplating execution of formal contract; Certainty of contract

What happened in Godecke v Kirwan?

The case of Godecke v Kirwan (1973) revolved around the central issue of whether a binding contract for the sale of land was established between two parties or were they still negotiating.

Godecke (the buyer) and Kirwan (the vendor) agreed in writing through a document titled “Offer and Acceptance” for the sale of a piece of land for a price of $110,000.

The document outlined the terms and conditions for the sale of the property.

The crux of the matter hinged on the interpretation of several clauses within the document. Clause 3 and special condition 1 suggested that the execution of a formal contract was necessary for the purchaser to gain possession of the property. Additionally, clause 6 indicated that further agreements might be required by the vendor.

Clause 3 & 6 read as follows:

“Possession shall be given and taken on settlement upon signing and execution of a formal contract of sale within 28 days of acceptance of this offer.”

“If required by the Vendor/s I/we (the buyer) shall execute a further agreement to be prepared at my costs by his appointed Solicitors containing the foregoing and such other covenants and conditions as they may reasonably require………”

Kirwan (the vendor) decided not to proceed with the sale. He argued that there was no binding contract. The case was heard at the Supreme Court of Western Australia.

Hearing and Court’s Judgment

The primary judge initially ruled that there was no binding contract, primarily because the execution of a formal contract appeared to be a condition precedent. However, on appeal to the High Court of Australia, the Court disagreed and decided that while the parties intended to execute a formal contract, it was not a condition for the formation of a binding agreement.

The judges supported the notion that the requirement for a formal contract did not negate the existence of a binding agreement. The execution of a formal contract was seen as a condition of certain obligations (such as giving and taking possession and paying part of the purchase price) rather than a condition of agreement itself.

Additionally, the judges considered the inclusion of clause 6, which allowed for the possibility of further agreements. Clause 6 of the document allowed the vendor to require the execution of a further agreement containing additional covenants and conditions, if deemed reasonable by their solicitors.

The Court discussed the legal principle that parties to a contract can leave certain terms to be determined by a third party without rendering the contract void for uncertainty. Specifically, Clause 6 allowed the solicitors for the vendor to unilaterally include additional terms, provided these terms are reasonable.

The clause allowed the solicitors for the vendor to determine additional terms, which is a common practice and doesn’t invalidate the contract. It allowed to add more conditions to the agreement, but only if these new conditions don’t contradict the existing ones or the original agreement and are reasonable.

Thus, the existing agreement was binding.

Quote from the case

“Clause 6 does not require that the additional terms should be the subject of agreement between the parties. The inclusion of additional terms depends on the unilateral requirement of the solicitors for the vendor, subject to the qualification that the requirement must be reasonable. It is well established that the parties to a contract may leave terms – even essential terms – to be determined by a third person: Foster v. Wheeler (1888) 38 Ch D 130; May and Butcher Ltd. v. The King (1934) 2 KB 17, at p 21.”

(GIBBS J at p 646)

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