Tag: Implied contract

Balmain New Ferry Co Ltd v Robertson [1906]

Case name & citation: Balmain New Ferry Co Ltd v Robertson (1906) 4 CLR 379; [1906] HCA 83

  • The concerned Court: High Court of Australia
  • Decided on: 18 December 1906
  • The bench of judges: Griffith C.J., Barton and O’Connor, JJ.
  • Area of law: Implied terms in contract; false imprisonment

Facts of the Case (Balmain New Ferry Co Ltd v Robertson)

In Balmain New Ferry Co Ltd v Robertson (1906), the defendants, Balmain New Ferry Company, operated a ferry service that required passengers to pay a penny upon entry to the wharf and another penny upon exit. A clear notice at the wharf stipulated this rule: “a fare of one penny must be paid on entering or leaving the wharf. No exception will be made to this rule, whether the passenger has travelled by ferry or not.” The plaintiff, Robertson, paid the entry fee but missed the ferry. He then decided not to travel and attempted to leave the wharf, refusing to pay the exit fee. The defendants prevented him from leaving until he paid the penny required for exit.

Issue

The central issue was whether the defendants’ refusal to allow Robertson to leave the wharf without paying the exit fee amounted to false imprisonment.

Judgment in Balmain New Ferry Co Ltd v Robertson

The court held that there was an implied term in the contract between the ferry company and Robertson that required the payment of the penny to exit the wharf. Given that Robertson had used the wharf on many previous occasions, he was deemed to be aware of the conditions set out in the notice.

Reasoning

The court concluded that Robertson was bound by the relevant clause, as it was reasonable to expect him to have known about it due to his prior use of the wharf. The court further held that the defendants were not liable for false imprisonment because the condition that one penny be paid on exit was reasonable.

Analysis of False Imprisonment 

To constitute false imprisonment, there must be a total restraint on the plaintiff’s freedom of movement. In this case, the court found no false imprisonment since Robertson could have avoided the situation by paying the penny, which was a reasonable condition of his entry and exit from the wharf.

The situation was distinguished from total restraint, as seen in Bird v Jones, where it was established that a partial restraint is insufficient to constitute false imprisonment. In the Balmain case, since the plaintiff could have left the wharf by water, there was no total restraint on his movement, further supporting that there was no imprisonment.

Comparison to Other Cases

The reasoning in this case was similar to Herd v Weardale Steel Co Ltd, where the court held that an employer was not liable for false imprisonment when a miner was refused permission to be brought to the surface before the end of his shift, based on the miner’s contractual obligations.

Conclusion (Balmain New Ferry Co Ltd v Robertson)

The case established that an occupier of premises could impose reasonable restrictions on the right of visitors to leave, without being liable for false imprisonment. The restrictions must be reasonable, and the implied consent of the visitor, based on awareness of the terms, plays a crucial role in determining the legality of the restraint.

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Shirlaw v Southern Foundries Ltd: A Summary

Shirlaw v Southern Foundries is a UK contract law and corporate law case that established the so-called “officious bystander” test. Given below are the case details.

Case name & citation: Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 (CA)
Court and jurisdiction: The Court of Appeal, England and Wales
Year of the case: 1939
Area of law: Implied terms in a contract

Facts of the case (Shirlaw v Southern Foundries)

In 1933, Shirlaw was given a position as managing director of Southern Foundries for a fixed period of ten years. It was required that he also serve as a director of the company. Because managing directors had to vacate their office if they ceased to be regular directors.

In 1935, the business of Southern Foundries was acquired by Federated Foundries Ltd, which altered the articles of association. The new articles permitted the removal of a director by an instrument subscribed by two other directors and the company secretary. Shirlaw was removed from his position as a director by Federated Foundries Ltd. This meant that he was also terminated from his role as managing director under the terms of the contract he had held for that position.

He brought a claim for damages for breach of contract.

Contentions by the company

The company asserted that they were permitted to make alterations to their articles of association. The new articles had been correctly adopted, and the new procedures had been carried out in the appropriate manner. It would be inappropriate for a court to interfere with the company’s right to alter articles given that they have the statutory right to do so.

Contentions by Shirlaw

Shirlaw argued that his employment contract was for a ten-year fixed term and that the articles were unable to amend it. He argued that it was an implied term of the contract that required that the company would not amend its articles in a manner that would be detrimental to him.

Judgment of the Court in Shirlaw v Southern Foundries

Shirlaw was awarded damages for breach of contract.

The Court applied the “officious bystander” test. This test describes the principle that a term should be implied into a contract if it is apparent that the only reason it has not been expressly included is because it is “so obvious that it goes without saying.”

It was determined by the Court of Appeal that there had been a breach of two implied terms. These were:

1. That the company would not remove Shirlaw from his role as managing director during the tenure of his ten-year contract. (Neither would it revoke his regular director status for the said duration.)

2. That the company would not alter its articles of association in such a way as to make it possible for someone else to remove him from his position as director/managing director.

Although it is not possible to prevent a company from altering its Articles on the basis that doing so would constitute a breach of contract; however, a legal claim for damages could be brought against the company (if it amends the articles to the detriment of a validly made contract prior to the amendments).

The Officious Bystander Test

The above case of Shirlaw v Southern Foundries was the one from where the expression “officious bystander” first came.

McKinnon LJ laid out that a term could be implied when it was so obvious that ‘it goes without saying’. In this regard, he quoted:

If, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in the agreement, they would testily suppress him with a common ‘Oh, of course.’

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