CASES IN CONTRACT LAW

CASE LIST
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Balfour Vs Balfour
Pharmaceutical Society .. Vs Boots Cash Chemists
Louisa Carlyle Vs. Carbolic Smoke Ball Co.
Adams Vs. Lindsell
British Road Services Vs Arthur Crutchley & Co
Hyde Vs. Wrench
Byrne & Co. Vs Leon Van Tienhoven
Victoria Hotel Co.. Vs Montefiore
Minister of Public Works and Land Affairs Vs Group Five Building Ltd
Colombo Municipal Council Vs KPC Builders (Pvt.) Limited and Bank of
Ceylon
Davies Contractors, Ltd v Fareham Urban District Council
Hadley Vs. Baxendale
David Vs Seneviratne
Surrey County Council and Another Vs. Bredero Homes Ltd.
Ruxley Electronics and Construction Ltd Vs Forsyth

Balfour Vs Balfour (1919)

Intention to create legal relationship
Husband was to go to Ceylon for Employment
and wife to stay on medical advise
Husband promised wife to pay 30 pounds per
month till she joins him
Later separated and divorced; Wife claimed
arrears in payment
Held no contract

Pharmaceutical Society of Great Britain Vs Boots Cash Chemists

(Southern) Ltd [1953]- Offer and Invitation to Treat
BCC implemented a new method [self service selling] for certain

medicines, where customers pick drugs off the shelves and pay for
them at the till.
Under s 18(1), Pharmacy and Poisons Act 1933, a pharmacist is
required to supervise at the point where "the sale is effected", for
certain prescribed drugs
The Pharmaceutical Society of Great Britain objected and argued that
displaying of goods were an "offer" and when a shopper selected and
put the drugs into the shopping basket this was an "acceptance".
Boots argued that the sale was still only effected at the till under the
supervision of a pharmacist
Held the display at shelf is invitation to treat; customer picking up goods
is offer; Acceptance is made by accepting money at the till

Louisa Carlyle Vs. Carbolic Smoke Ball Company [1892]

-Ingredients Necessary
CSB Co. advertised in November 1891 a rubber ball filled with carbolic acid as a
remedy for influenza colds. It stated that, buyers who found it did not work after
having used three times daily for two weeks would be rewarded with 100; and
that 1000 has been deposited in bank showing their sincerity.
Mrs. Carlyle who acted accordingly had influenza on 13 January 1892 after using
the smoke ball for two months as per the advertisement and printed directions
supplied with the ball. She sued for breach of contract. The company argued that
there was no serious contract.
The Court of appeal unanimously found that;

1.
2.
3.
4.

the advertisement was a unilateral offer to all the world

satisfying conditions for using the smoke ball constituted
acceptance of the offer
purchasing or merely using the smoke ball constituted good
consideration
company's claim that 1000 was deposited at the Alliance Bank
showed the serious intention to be legally bound.

Adams Vs Lindsell (1818)

Acceptance- Mail Box Rule
[If the offeror, either expressly or impliedly, indicates that postal acceptance is
sufficient then they should bear the consequences of the postal rule]
On 2 September 1817, L made offer by post to A to sell them certain
wool clothes, inviting acceptance by post
A received it on Friday, 5 September 1817, and posted their acceptance
on the same day
The Acceptance was not received by L until 9 September.
Meanwhile, on 8 September, L not having received an answer by 7
September as they had expected, sold the wool clothes to someone
else.
Held that there was a contract on 5 September when A posted their
acceptance. If contracts can be concluded by postal correspondence, it
should not go on ad infinitum

British Road Services Vs Arthur V. Crutchley & Co [1968]

Acceptance
BRS delivered
to AC's warehouse.
Battlewhisky
of Forms
BRS's driver gave AC a delivery note which

contained BRSs conditions.

AC stamped the note "Received under AC's
conditions". The whisky was stolen.
It was held that AC stamping the delivery note was a
counter offer which was accepted by BRS by handing
over the whisky.
And, the contract was made on AC's conditions.
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Hyde Vs Wrench (1840)

[Counter offer rejects the offer]
1. W offered to sell his farm to H for 1,200. H, through his agent refused.
2. W wrote to Hs agent offering to sell it to H for 1,000.
3. H in turn, offered to buy the farm for 950.
4. W asked for time to consider and later wrote rejecting the offer of 950.
5. Further later H wrote to W purporting to accept the offer of 1,000.
6. W refused to complete any sale and H sued for specific performance.

The defense was that there was no contract.

7. It was held that there was no contract. The offer to buy at 950 rejected
the offer to sell at 1000, and it was not then allowable for the plaintiff to
"revive the offer" by acceptance.

Byrne & Co. Vs Leon Van Tienhoven (1880)

[ revocation terminates the offer, but no revocation is effective through
post]
1. LVT offered to sell tin-plates to B by letter posted on 01 October.
2. LVT wrote further letter to B on 08 October revoking the offer
3. B received the first letter on 11 October and telegraphed acceptance on

the same day; confirmed acceptance on 15th .

4. B received the second letter on 20 October.
5. LVT refused to sell, stating there is no contract; B sued for breach of
contract
6. Held that the contract has been formed; for
1. the postal rule is only established for making acceptance; when the
offeror infers that he accedes to receive acceptance by post, the
post office acts as his agent.
2. There is no such postal rule for revocation; The revocation to be
effective, should be communicated to the offered before his
acceptance.

Ramsgate Victoria Hotel Company Vs Montefiore 1866

Lapse of Time
Montefiore applied to Ramsgate Victoria Hotel Company in

June for shares and paid a deposit to the companies bank.

At the end of November, by which time the value of shares
had fallen, RVH Co. sent him a letter confirming the allotment
and requested payment of the balance due.
M refused and RVH Co. brought an action for specific
performance of the contract
M contended that his offer had expired and could no longer
be accepted.
Held, that the offer was for a reasonable time only, and had

lapsed.

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Minister of Public Works and Land Affairs Vs Group Five

Building Ltd [1999]: Privity of Contract
In a building renovation contract in Cape Town, a P-sum was named for

a specialist nominated subcontractor to install a fire alarm system

The subcontractor who was so nominated by the Employer, defaulted
on half way and another specialist subcontractor had to be renominated, at higher prices
The main contract provided that the Contractor is obliged to complete
the whole of works to the satisfaction of the Engineer.
Employer deducted the losses incurred due to the failure of the
Nominated Subcontractor from the Main Contractors payments.
It was held that the Main Contractor has only a general responsibility,
and not a technical responsibility to supervise nominated
subcontractors work
And that, he cannot be asked to do work for which he has not
stipulated a price because he and the employer have not agreed
thereon.
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Colombo Municipal Council Vs KPC Builders (Pvt.)

Limited and Bank of Ceylon (2008) Suretyship Contract
The Contractor did not perform the contract to the satisfaction of

the Engineer/ Employer

The Employer lodged its claim to the Surety to en-cash the OnDemand Performance Guarantee. The Contractor obtained
interim injunction against encashment.
The Employer appealed and the Court of Appeal Held;

The guarantee contract usually is a Contract under Seal

Being an autonomous contract, there is obligation arising out of it
independent of the principal contract.
A court will not grant injunction unless there are very strong reasons
Any difference between the real loss suffered and payments made
under the Guarantee can be adjusted later upon determination by
the Court or arbitrator as the case may be.
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Davies Contractors, Ltd v Fareham Urban District

Council (1956); 2 All ER 145 ; Frustration/ Quantum Meruit
The subject matter was a contract to build 78 houses during eight months

for a value of 85,836 GBP.

It was common grounds that there was unexpected shortage of skilled
labour and certain construction materials during the period of construction.
The contract extended for 22 months and was completed successfully. The
final contract price was 94,425 GBP.
The Contractors actual cost was 115,233 GBP; The Contractor contended
that they were entitled to the actual cost on quantum meruit
Their argument was that the original contract was discharged by frustration
and a new quasi contract had emerged
It was observed that principles of frustration require that the footing or basis
of a contract should have been overthrown on a certain date rendering it to
be ceased onwards.
Held that the circumstances had only caused the contract being more
onerous (tedious) than the parties had contemplated.

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Hadley Vs Baxendale (1854)

Remoteness of Damages
A broken crankshaft was given by H to B, a transport contractor, to take to a

work-shop.
B agreed to deliver it by the next day, but was at breach, by delaying the
delivery for several days
B was not told that the absence of the crankshaft meant complete work
stoppage, as there were no spare.
H sued for damages due to lost profits and wages
Admitting the breach, B argued that the damages were too remote.
Held, that the damages are to be considered as two fold;

Ordinary Damages; by imputed knowledge, the kind of damages that the innocent
party would sustain in ordinary course of things
Special Damages; those damages, considering the special knowledge between
the contracting parties, the innocent party would be subject to

On the facts of the case, H, the hirer was entitled to ordinary damages,

because the special knowledge that the non availability of a spare shaft was
not communicated to B

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David & Co. Vs Seneviratne (1946)

Remoteness of Damages
On 24 February 1943, S agreed to carry out repairs on a certain parts

of a oil mill of D
On 31 March, S informed that he could not do repairs owing to a break
down at his workshop
On 14 April D informed the parts are required on 01 May
S failed to do the repairs successfully even by June
D claimed loss of profit calculated on the daily production capacity of
the oil mill, for delay
Held, that only nominal damages would be recoverable, because;
The principles Roman Dutch Law are the same as those formulated
in the case Hadley Vs Baxendale
The special circumstance that the mill cannot be run until the repair
has been completed was not communicated at the time of entering
into the contract
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Surrey County Council and Another Vs Bredero Homes

Ltd. (1992); Measure of Damages
Owners [two councils] sold land on condition that the

purchasers should develop same according to a specific plan

The purchasers built more housing units than specified in the
plan and made excessive profit; the Owners(Sellers) had not
suffered damages but claimed enhanced sales price;
Granted nominal damages, stating that;

The starting principle is that the aggrieved party ought to be compensated

being put in the same financial position as if the contract had been fully
performed.[Loss of Bargain]
If the aggrieved party is unable to establish the value of the loss of bargain,
he may seek compensation in respect of his reliance losses, to recoup
expenses incurred in reliance on the contract.
The third principle on restitution is to deprive the wrongdoer from gaining
from the breach; it may only apply when both the compensatory principles
fail, and in very limited situations

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Ruxley Electronics and Construction Ltd Vs Forsyth

[1996] : Substantial Performance
A contract was made for construction of a swimming pool

with depth specified as 7.5 ft. at a particular end

The depth as constructed was 6.75 feet at that end
Employer refusing to pay the balance, counter claimed cost
for reconstruction, in 21,560 GBP
Held;

the pool built was fit and safe for the purpose intended, and the
value is not substantially reduced
the appropriate measure of damages is the difference in value
between the work as built and the work as specified in the contract
The object of damages is to compensate the plaintiff, not to punish
the defendant. Thus, nominal damages for loss of amenity in 2,500
GBP was awarded
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THANK YOU

G. H. Lawrence