BTF 1010 casesummaries.doc

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Department
Business Research
Course
BTC1110
Professor
Mark Bender
Semester
Spring

Description
Cases Making the Contract – Elements: 1. Has an offer been made- distinguish offer from invitation to treat (ads, catalogues, auctions, tenders)/ indication of a present intention. (1) 1. Harvey v Facey[1893]AC 552 pg-153 Facts: Facey owned a property that Harvey wanted to buy. Telegraphic transaction was made and Harvey sued Facey and lost. Harvey only supplied information about the lowest price and did not make an offer. Ratio: Supplying information on request is not making an offer and the information supplier is not bound by it. 2. Partridge v Crittenden[1968] 2 All ER 421 pg-156 Facts: Partridge placed an advertisement for bramble finch. Ratio: A person does not breach the law if he/her makes an invitation to treat. 3. Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] I QB 401 pg-157 Facts: Pharmaceutical Society of Great Britain (PSGB) thought that Boot Cash Chemists (BCC) had breached the contract by displaying drugs. The question was when the offer was made. Ratio: A person does not breach the law if he/her makes an invitation to treat. Displaying things is not making an offer. 4. Grainger & Sons v Gough [1896] AC p.g: 157 Facts: G & S operated a winery and distributed price catalogue. Is it an offer? Ratio: It was an invitation to treat because if it would have been an offer then the seller would be bound to supply any quantity demanded at the price advertised. 5. Carlill v Carbolic Smoke Ball Co [1893] I QB 256 pg-159 Facts: Carbolic Smoke Ball Co. (CSB) manufactured a medical preparation and advertised that anyone who uses it will be cured of influenza and if not then they would be paid 100 pounds, for which they deposited 1000 pounds in a bank. Carlill bought it but was not treated. Ratio: The court decided that offer can be made to the world at large. Also if the offeror did not intend the offer to be taken seriously, why would he advertise that he had put 100 pounds in the bank. 6. Harvela Investments Ltd v Royal Trust Co of Canada Ltd[1985]3 WLR pg-162 Facts: Shares were being sold to the highest bidder; Royal Trust’s bid was an amount of $101,000 in excess of any other offer. Ratio: If a bidder (accepting the offer) does not comply with the implied terms of the offer, there is no sale. 2. Acceptance- Only valid if it is properly communicated. Revocation of offer (2) 7. Routledge v Grant(1828) 4 Bing 653;130 ER 920 pg-165 Facts: G offers to buy R’s house. Promises to leave the offer open for 6 weeks. R buys a new house expecting to sell his to G. Before expiration of time, G withdrew his offer. R sues G Ratio: The rule is that an offer may be revoked anytime prior to acceptance. 8. Byrne & Co v Van Tienhoven & Co(1880) LR 5 CPD 342 pg-165 Facts: An offer was sent from London to New York by post. Due to postal delay there were differences in acceptance and revocation of the offer. Ratio: An offer cannot be revoked unit it is received by the offeree. In this case acceptance was cabled before the offer was revoked. 9. Hyde v Wrench(1840) 3 Beav 334 pg-168 Facts: Wrench offered to sell his property to Hyde and Hyde made a counter offer. Wrench did not accept it and Hyde agreed to accept the earlier offer. Ratio: Once a counter offer has been made by the offeree, the original offer is rejected and cannot be accepted again. 10. Turner Kempson & Co Pty Ltd v Camm[1922] VLR pg-168 Facts: Turner Kempson (TK) offered raspberry pulp to Camm who changed the offer. TK did not accept the changed offer so Camm sued him. Ratio: Once a counter offer has been made by the offeree, the original offer is rejected and cannot be accepted again. 11. Masters v Cameron(1954) 91 CLR 353 pg-170 Facts: Cameron owned a farm and Masters wanted to buy it. Masters paid 1750 pounds as deposit but did no sign a contract; due to financial difficulties he withdrew the offer. The agreement included a term that this agreement was ‘subject to preparation of a formal contract of sale’. Ratio: In this case the court decided that an arrangement made ‘subject to contract’ is presumed not to be a contract. The deposits belonged to Masters. There are 3 possibilities in a case like this: I. There is a contract which is immediately binding, and one of the terms is that formal documentation is prepared. II. There is a contract but nothing can happen until a formal document is prepared III. There is no contract. 12. Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd pg 174 Facts: Not given Ratio: Actual communication of acceptance is not necessary where the offeror has expressly or impliedly accepted the ordinary post as the means of communication between parties. Acceptance occurs when the letter is posted, even if the letter is lost in the post, but it must be properly stamped and addressed (Postal Rule). 13. Powell v Lee(1908) 99 LT 284 pg-176 Facts: The management committee of a school met to discuss application for headmaster. Powell was first selected and sent a telegram by Lee (committee member) but was later rejected. Powell sued them and lost. Ratio: An acceptance can be communicated by the third party provided the third party has been given the actual authority to communicate acceptance. In this case Lee was not authorised to communicate decision to Powell. 14. Felthouse v Bindley (1862) 11 Facts: Not given Ratio: The contract is not made until acceptance has been communicated to the offeror. Silence is not acceptance. 15. Ramsgate Victoria Hotel Co Ltd v Montefiore (1886) LR 1 Exch 109 Facts: Not given. Ratio: When no time limit is mentioned, the offer remains open for a reasonable time. Reasonable time will depend on each case. 3. Intention- Did parties intend their agreement to be legally binding. Domestic agreements (3d). (3) For commercial agreement. 16. Todd v Nichol [1957] SASR 72 pg-188 Social or domestic agreement Facts: Mrs Nichol invited her sister in law and niece to live with her, and that she would provide free accommodation till the rest of their lives. Due to a fight she wanted them to leave the house. Ratio: If the agreement is of domestic nature the court begins with the presumption that the parties did not intend to contract. Presumption can be rebutted if there is evidence to contrary. The case had commercial flavor. 17. Roufos v Brewster (1971) 2 SASR pg-123 18. Carlill v Carbolic Smoke Ball Co [1893] I QB 256 pg-159 Facts: Carbolic Smoke Ball Co (CSB) manufactured a medical preparation and advertised that anyone who uses it will be cured of influenza and if not then they would be paid 100 pounds, for which they deposited 1000 pounds in a bank. Carlill bought it but was not treated. Ratio: It is presumed that commercial agreements are to be legally enforceable; however it may be rebutted if there is evidence to the contrary. In this case the company made a promise which was binding. 19. Rose and Frank Co v J R Crompton & Bros Ltd[1923] 2 KB 261 pg-189 Commercial agreements Facts: Crompton agreed with Rose and Frank that they will be made their exclusive distributors. Crompton made it clear that it was not a contract or a legal agreement and shall not be subject to jurisdiction. Ratio: As the parties made it clear that they did not intend to create a legal relation. Thus there was no contract. 20. Kleinwort Benson v Malaysia Mining Corp Berhard [1988] WLR 799 pg-191 Facts: MMC wanted a loan from KB and refused to give a formal guarantee, instead wrote a letter of comfort. They went bankrupt and MMC sued them. Ratio: A letter of comfort is not held binding. The court held that it was merely a representation and not a promise of future conduct. 21. Masters v Cameron(1954) 91 CLR 353 pg-170 Facts: Cameron owned a farm and Masters wanted to buy it. Masters paid 1750 pounds as deposit but did no sign a contract; due to financial difficulties he withdrew the offer. Ratio: In this case the court decided that an arrangement made ‘subject to contract’ is presumed not to be a contract. Generally courts regard agreements made ‘subject to contract’ not binding. There are 3 possibilities in a case like this: I. There is a contract which is immediately binding, and one of the terms is that formal documentation is prepared. II. There is a contract but nothing can happen until a formal document is prepared III. There is no contract 22. Plastyne Products v Gall Engineering Co Pty Ltd (1988) NSW pg-193 Facts: The buyer sent a letter to the seller in which the buyer stated that it was prepared to pay $350,000. The letter concluded: ‘Upon receipt of your signed acceptance, we shall instruct our solicitors to draw up a formal contract. Ratio: There is a contract which is immediately binding, and one of the terms is that formal documentation is prepared. 4. Consideration - Have both sides provided something of value. Exception (deed). a. Consideration must move from promisee – 4a b. Considerations have to be sufficient and don’t have to be adequate. Exceptions and other clauses included – 4b 23. Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd[1915] All 5.16 pg-197 Facts: Dunlop manufactured tyres and entered into agreement with wholesaler (Dew and Co) regarding selling of Dunlop tyres below list price. Dunlop sued Selfridge(retailer) but lost. Ratio: Only the promisee could enforce the promise. In this case as Dunlop had not provided any consideration to Selfridge he lost the case. 24. Coull’s v Bagot’s Executer and Trustee Co Ltd (1967) 5.15 pg-197 Facts: Mr Coulls was the sole owner of some land. In an agreement to remove stone from his property Mr Coulls authorised O’Neil to pay all royalties to himself and his wife jointly. Some time later Mr Coulls died and executer asked whether Mrs Coulls has a legal right to one-half of the royalties. Ratio: If a promise is made by the promisor to two or more persons jointly, only one of those persons need provide consideration. In this case the court decided that as the promise was made only to Mr Coull’s, his wife was not a joint promisee. 25. Roscorla v Thomas (1842) 114 ER 496; 3 QB 234 pg-199 Facts: The plaintiff purchased a horse from the defendant for 30 pounds. After the sale, plaintiff sought assurance that the horse was sound. Assurance was given but the horse was vicious. Plaintiff sued for breach of contract but lost. Ratio: Any warranties must be given prior to the making of the contract. 26. Re Casey’s Patents: Stewart v Casey [1892] Ch 104 pg-200 Facts: Stewart and Carlton jointly owned patent rights. After Casey undertook marketing activities for them Stewart and Casey gave Casey one-third share of the patents. Ratio: 27. Thomas v Thomas(1842) 2 QB 851 5.20 pg-200 Facts: Not given Ratio: Consideration does not have to adequate, it must be sufficient. In this case the consideration was”$1 for Rolls Royce” 28. Eastwood v Kenyon (1840) 11 A&E 438 5.22 pg-201 Ratio: Consideration does not have to adequate, it must be sufficient. In this case consideration was”In love and affection” 29. Dunton v Dunton (1984) 18 VLR 114 pg-202 Facts: Mr Dunton agreed to pay his divorced wife a monthly sum provided that she conducts herself with sobriety and virtuous manner. Mrs Dunton sued when her ex-husband refused to pay. Ratio: Consideration does not have to adequate, it must be sufficient. In this case the wife had to act in a respectable and orderly manner. 30. Collins v Godefroy (1831) 109 ER 1040 5.33 pg-210 Facts: Collins was asked to attend court and was promised to be paid by Godefry for appearing. But Godefroy refused to pay. Collins sued him but failed. Ratio: A promise to perform a public duty, already owing will not be a good consideration unless the promisee provides something in addition to the duty. 31. Wigan v Edwards (1973) 47 ALJR 586 pg-203 Facts: Mr and Mrs Edwards signed a contract to purchase a house from Wigan. After some days they gave a list of faults which had to be fixed before they would proceed with the contract. Edwards sued Wigan when she failed to carry out her promise. Ratio: The high court held that even though the Edwards did not have a good chance of winning the legal claim. Giving up the claim was a good consideration and so Wigan was bound by her promise. 32. Stilk v Myrick (1809) 170 ER 1168 pg-205 Facts: Stilk signed on as a seaman for a voyage from London. During the voyage 2 crew members deserted and the remaining crew were promised the wages of the deserters. After voyage the captain refused to pay. Ratio: A promise to perform a duty, already under contract will not be a good consideration unless the promisee provides something in addition to the duty. 33. Williams v Roffey Bros & Nicholls(Contractors) Ltd [1991] I QB 1 pg-206 Facts: Roffey entered into a contract with Williams. Under contract Williams agreed to provide carpentry, but after getting into trouble he realised he was under payed. Roffey agreed to pay extra money but did not pay after completion of work. William sued Roffey and won. Ratio: A promise to perform an existing contractual duty could amount to consideration if it conveyed a practical benefit to the promisor and there was no element of duress (threat). 34. Pinnel’s case (1602) 77 ER 237 (Court of Common Pleas) pg.207 Facts: Pinnel was owed some money and upon agreement was payed less but before due date, Pinnel later sued for the remaining amount but lost. Ratio: As the debt was repaid before due date this amounted to something extra. 35. Foakes v Beer [1881-5] All ER 106 pg-208 Facts: Not given Ratio: If a party provides something of value (consideration), then the party can protect itself from the contractual obligation. 36. Hirachand Punumchand v Temple [1911] All ER 1597 5.31 pg-209 Facts: Not given Ratio: If a part payment is made by a third party then the debtor cannot recover the balance. Promissory Estoppel (Elements): I. The promisee on reasonable grounds, assumed that a legal relationship existed (Quaglia’s case) or would exist (Walton’s case) between the promisor and the promisee. II. The promisor was responsible for the assumption. III. The promisee acted by relying on the assumption IV. The promisee will suffer detriment if the promisor is permitted to renege (go back on) on the promise. 37. Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 pg-142 Facts: The plaintiff leased a block to the defendant (HTHL) for 2500 pounds, which he reduced due to World War 2 but again increased after things turned back to normal. Plaintiff did not claim the back rent. Ratio: Promissory estoppel stopped the defendant from claiming back rent while he was entitled to return to the original agreement. 38. Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR pg-215 Facts: Maher owned a property with building on it. He entered into negotiations with Walton stores to lease the land, tear down the old building, and erect a new one. Maher signed the contract and forwarded it to Walton stores who did not sign its part of amended agreement and later refused to deal. Maher sued Walton stores and were awarded damages. Ratio: The case used promissory estoppel. The court decided that a legal relationship existed between them, also the defendant induced the plaintiffto adopt the presumption. The defendant also knew that his actions would detriment plaintiff. 39. Je Maintiendrai Pty Ltd v Quaglia and Quaglia (1980) 26 SASR pg-214 Facts: Quaglia leased a shop for 3 years at $278/month. Due to difficulties the lessor agreed to accept a lower amount. When Quaglia called quits the lessor sued for arrears. Ratio: The court decided that detriment existed as Quaglia had to pay back the money in lump sum amount whereas the situation would have been different if he had to pay it back in instalments. Quaglia won the case. Express terms of the contract Signature – Binding or not binding 40. L’Estrange v Graucob [1934] 2 KB (Binding) pg-229 Facts: L’Estrange bought an automatic cigarette machine from Graucob (defendant) and signed the sales agreement (without reading) which contained the exemption clause. Machine was defective so she sued Graucob. Ratio: As the documents were signed, so they were binding. As the documents did not contain any implied term, therefore she could not rely on it. 41. DJ Hill and Co Pty Ltd v Walter H Wright Pty Ltd [1971] VR 749 pg-232 Facts: DJ Hill(Hill) hired a cartage contractor(Wright) to carry some valuable machinery. The machinery was damaged in transit due to negligence of Wright. On delivery one of Hill’s employee signed the exemption clause(damages due to transit). The employee did not read this form. Prior to this event both have been involved in at least 10 dealings. Hill sued for breach of contract and won. Ratio: In this case the court decided that the documents did not appear anything but a delivery docket and so the exemption clause was not a term. The number of past transactions did not matter in this case. (Is the document contractual in nature?) 42. Oceanic Sun Line Shipping v Fay (1988) 165 CLR pg-236 Facts: Fay booked a cruise from NSW to Greek on a Greek vessel owned by OSLS. Brochure showed that cruise was governed by terms on the ticket which stated that all actions against OSLS be brought in Greece. Fay was injured and brought the case in NSW; the owner argued that it was a condition of the contract that the case is brought in Greece. Ratio: The court decided that the contract was made in NSW and the brochure did not amount to reasonable notice because the brochure was not a document which could reasonably be regarded as contractual in nature. Thus the clause containing Greece was not a term of the contract. (Is the term unusual?) 43. Interfoto Picture Library v Stiletto Visual Programmes Ltd pg-237 Facts: Stiletto hired some transparencies from Interfoto. The delivery note contained that a delivery charge of 5 pounds/day will be charged. Other libraries charge only 3.50 pounds/ week. Stiletto returned the transparencies late. Interfoto sued him but lost. Ratio: If the unsigned term is particularly unusual, extra notice will have to be given. In this case Interfoto was entitled to 3.50 pounds/week. Also the term was wholly different to the industrial norm, the condition was not a term of contract. 44. State Rail Authority of NSW v Heath Pty Ltd (1986)7 NSWLR 170 pg-233 Facts: Heath and State Rail reached an understanding that for five years, Heath would have right to erect hoardings, but the written contract stated that the Rail could terminate the contract with a months notice. On asking about this term he was assured that it had five years but would be difficult to change the contract. Ratio: In this case Heath was made aware that the contract could not be changed. Knowing, this he signed the contract. Therefore, the term in the contract was binding. It was not displaced by any oral agreement to the contrary. When are oral representations binding? • Promissory statements – The reasonable bystander test. 45. Ven Den Esschert v Chappell [1960] WAR 114 pg-242 Facts: Ven agreed to sell the house to Chappell. Immediately before signing the contract Ven asked about white ants and the reply was negative. But after taking possession, she found white ants. Ratio: An oral representation can be added to the written terms if the evidence suggests that this is what the parties intended. In this case the plaintiff would not have signed the contract without the assurance. 46. Oscar Chess Ltd v Williams [1957] All ER 325 pg-243 Facts: Williams sold a Morris car to Oscar. There were some registration issues which Williams was unaware of. Williams sold the car to Oscar who later realised the difference, they sued Williams. Car’s model year was not stated correctly. Ratio: The court decided that Williams was unaware of the year of manufacture. He relied on the registration book which was tampered. Denning LJ held that the statement was mere representation and not a term of the contract. 47. Esso Petroleum v Mardon [1976]2 WLR 583 pg-107 Facts: Mardon(plaintiff) leased a petrol station and was misguided on the amount of petrol it will sell. Local planning authority altered plans. Mardon sued for breach of warranty and negligent misrepresentation and won. Ratio: The court of appeal found that Esso had warranted the estimate. This is so because Esso had all the required information to make the judgment. Collateral Warranties 48. De Lasalle v Guildford [1901]2 KB 215 pg-167 Facts: The plaintiff signed a written contract and was given oral assurance of the drainage before handing over the contract. Drainage problems lead Lasalle to sue. Ratio: The court held that there were two contracts in this case. One written (the written lease) and one oral (assurance regarding the drain) 49. L G Thorne & Co Pty Ltd v Thomas Borthwick & Sons (1995) 56 SR(NSW) 81 Facts: This case is of sale of oil. During negotiations sample of oil were presented but were not mentioned in the contract. When oil did not conform the sample buyer sued seller. Ratio: The court held that there were two contracts in this case, partly oral and partly written. 50. JJ Savage and Són Pty Ltd v Blakney (1970) 119 CLR 435 pg-245 Facts: Blakney entered into a contract with Savage and was told the ‘estimated’ speed of the cruiser would be 15mph. The top speed was less and so Blakney sued Savage for collateral warranty but lost. Ratio: The high court decided that a representation is not a collateral warranty merely because it is one of the factors the induced the contract. A collateral warranty must be promissory. 51. Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR I pg-169 Facts: Mr Rainbird was an insurance agent and influenced a carpenter to take a policy making false claims about the benefits. On injury Gates did not get the claim. Ratio: If a collateral warranty is inconsistent with the main warranty, then no collateral contract exists. Meaning of a term • The reasonable person test • Parol Evidence Rule 52. Hope v RCA Photophone of Australia Pty Ltd(1937) 59 CLR pg-248 Facts: RCA hired certain sound system to Hope but Hope refused to pay as the system wasn’t new. Agreement did not include this condition. Hope claimed under payroll evidence but lost. Ratio: As there was no ambiguity in the agreement, parol evidence was not allowed. The court also refused to accept an implied term, as it would conflict with the express term contained in the documents. 53. Burger King Corp v Hungry Jack’s Pty Ltd [2001] NSWCA 187 pg-269 Facts: Burger King(BK) is a US firm and gave Hungry Jack’s(HJ) exclusive right to develop BJ in Australia, in return HJ promised to open 4 outlets every year. Later BK wanted Australian market for itself so secretly started discussions with Shell. BK terminated HJ’s contract and HJ sued for breach of good faith. Ratio: The court decided that BK breached its implied obligation of good faith. 54. Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd pg-272 Facts: Costa Vraca(plaintiff) operated a tomato farm and asked the defendant to spray insecticides. Following spraying, the crop died and CV sued the defendant. Ratio: The court decided that there was an implied term that the services would be carried out with reasonable care and skill. As the defendant did not take reasonable care he was in breach of contract and liable for damages. 55. Read v Nerey Nominees Pty Ltd 56. Henry Kendall & Sons v Williams Lillico & Sons Ltd [1962] 2 All ER pg-274 Facts: The vendor regularly sold nuts to SAPPA and there were many transactions in the past. Each time the vendor sent a note confirming the oral contract (the order) and a dispute arose whether the terms were included in each contract. Ratio: The Court decided that the terms of the sold note were part of the contract on the basis on consistent past dealings between them. There were on express terms to the contrary. 57. British Crane Hire Corp Ltd v Ipswich Plant Hire Ltd pg-274 Facts: Plaintiff(P) hired a crane with a driver from defendant(D).Later D sent a form which stated that P was liable for all the costs for damages during hire. Crane was damaged because of the driver. P sued D. Ratio: The term was not an express term as it was sent after the contract, also there were insufficient past dealings. However, the term in hire-form ought to be implied on the basis of a trade custom. 58. The Moorcock (1889) 14 PD 64 pg-276 Facts: Plaintiff (P) owned a ship and wanted to berth it on a dock owned by the defendant (D). D gave permission for a fee and during berthing ship got damaged due to the hard ground beneath. Ratio: The court decided that it was an implied term that the river is suitable (fit) for the purpose of use. 59. Codelfa Construction Pty Ltd v State Rail Authority of NSW pg-277 Facts: State Rail Authority was building a new railway and Codelfa won the tender. Codelfa worked 24*7 which resulted in noise causing disquiet among locals. Locals took the matter to court and claimed a ban. All those resulted in reduction of work shifts and increase in expenses, SRA then appealed to the High Court. Ratio: 60. Read v Nerey Nominees Pty Ltd [1979] VR 47 pg-203 Facts: Read twice took his BMW car to Nerey to have fix transmission. Nerey told Read that a switch was missing. In fact the switch was wired incorrectly by Nerey. On one occasion the car was not in neutral and caused damages. Ratio: Mark J held that both TPA s 74 and common law implied a warranty of reasonable care and skill into the contract. Though Nerey warned about the defect, it does not mean that Nerey’s breach had not caused the loss. 61. Crago v Multiquip Pty Ltd 62. Carpet Call Pty Ltd v Chan (1987) ATPR pg-217 Facts: Chan bought a carpet for his night club and asked Carpet Call to provide a good carpet that can withstand young patrons. Chan refused to pay full price after certain areas of carpet were damaged because of stains and customer abuse. Ratio: It was a consumer contract as the good is normally acquired for personal use. As the buyer did not rely on seller’s skill while supplying good, so Chan lost the case. 63. Frank v Grosvenor Motor Auctions Pty Ltd [1960] VR 607 pg-282 Facts: Frank purchased a Renault from GMA and was told that there was nothing wrong with the car except for the clutch. Later he found that there were many defects with the car. Ratio: Pape J outlined that the car was not of merchantable quality and if the buyer indicated the purpose of purchase were the goods fit for that purpose. 64. H Beecham & Co Ltd v Francis Howard & Co Pty Ltd [1921] VLR pg-285 Facts: The buyer wanted to buy timber used in making pianos. The buyer selected timber from seller’s yard but the wood was infected with dry rot which is unsuitable for making pianos but suitable for making boxes. Ratio: The court decided that even though the wood could be put to some use, it was not of merchantable quality. Also price is an important factor of the quality expected. 65. Grant v Australians Knitting Mills(1993)50 CLR pg-287 Facts: Grant suffered from dermatitis after wearing underwear manufactured by AKM as he did not wash them before use while there were no complaints from other clients. Grant won the case. Ratio: The court decided that Goods may be of merchantable quality even though the defect, once detected can be easily remedied. 66. David Jones Ltd v Willis (1934) 52 CLR 110 pg-288 Facts: Willis wanted a pair of walking shoes for her bulged foot in David Jones. After second use the heels collapsed causing injury to Willis. Ratio: The court decided that the goods were not of merchantable quality and not fit for the purpose specified. 67. Godley v Perry [1960] I All ER 36 pg-289 Facts: A boy purchased a toy and broke when used and caused injury. Ratio: If goods are bought for normal purpose, then the buyer is not entitled to rely on seller’s judgement. In this case the good was not of merchantable quality. (The same principle applied to Preist v Last [1903] 2 KB 148(a hot water bottle) and Frost v The Aylesbury Dairy Company Ltd [1905] 1 KB 608(milk)). 68. Teheran-Europe Co Pty Ltd v ST Belton(Tractors) Ltd [1968] 2 All ER pg-232 Facts: The seller (Belton) supplied air compressors to the buyer for export to Iran. The tractors did not satisfy the Iranian import requirements. Buyer lost the case. Ratio: The implied condition of fitness for purpose only applies where it can be said that the buyer has made the particular purpose known to the seller in such a way that the seller knows that he or she is being relied upon. 69. Ashington Piggeries v Cristopher Hill Ltd [1971] I All ER 737 pg-234 Facts: Ashington had a mink farm and ordered mink food from Hill who had never previously prepared food for minks. Hill got used some meal provided by Norsildmel to prepare mink food. Some reaction made the food poisonous and minks died. Ashington sued Hill who in turn sued Norsildmel for breach of contract. Ratio: 70. Olley v Marlborough Court Ltd 71. L’Estrange v Graucob [1934] 2 KB pg-229 Facts: L’Estrange bought an automatic cigarette machine from Graucob (defendant) and signed the sales agreement which contained the exemption clause without reading it. Machine was defective so she sued Graucob. Ratio: As the documents were signed, so they were binding. As the documents did not contain any implied term, therefore she could not rely on it. (reasonable notice test) 72. Parker v South Eastern Railway Co (1877) 2 CPD pg-157 Facts: Parker left a bag at railway cloakroom, and paid for it. On the face of the ticket there was a number and the words ‘See Back’. On the back there were several clauses. One clause stated that company will not be responsible for package exceeding the values of 10 pounds. On return Parker could not find his bag, so he sued the railways for 24 pounds and lost. Ratio: The judge in this case decided that is reasonable notice has been given, it does not matter whether the other party read the clause or not. 73. Oceanic Sun Line Shipping v Fay (1988) 165 CLR pg-158 Facts: Fay booked a cruise from NSW to Greek on a Greek vessel owned by OSLS. Brochure showed that cruise was governed by terms on the ticket which stated that all actions against OSLS be brought in Greece. Fay was injured and brought the case in NSW; the owner argued that it was a condition of the contract to be brought in Greece. Ratio: The court decided that the contract was made in NSW and the brochure did not amount to reasonable notice because the brochure was not a document which could reasonably be regarded as contractual in nature. Thus the clause containing Greece was not a term of the contract. Exemption Clause: 74. Is the clause a term of the contract? 75. If it is a term of the contract, does it cover the breach that has occurred? 76. Curtis v Chemical Cleaning and Dyeing Co[1951] I KB 805 pg-233 Facts: Mrs Curtis took a wedding dress to the defendant drycleaner and was asked to sign a receipt for disclaiming damage to the beads and sequins. The dress was damaged and Curtis claimed damages. Ratio: As the assistant had innocently made a false representation, so they could not rely on the exemption clause except for beads and sequins. 77. Thornton v Shoe Lane Parking Ltd [1971] I All ER 686 pg-228 Facts: Thornton took his car to the car park operated by the defendant and outside sign read “Parking at owner’s risk.” The ticket read subject to conditions of the premises. Inside was an exemption clause for personal injuries. Thornton was injured and claimed the car park 50% responsible. Ratio: The court held that the contract was made before the ticket was purchased (i.e. vending machine); also the clause was very wide. Lord Denning MR said that as the clause was very destructive it had to be painted in red. 78. Andrews Bros (Bournemouth) Ltd v Singer Car Co Ltd [1933] All pg-178 Facts: Singer promised to deliver a ‘new’ car the dealer but instead delivered unused but not new car. Singer had an exemption clause for any warranties under common law or statute. Ratio: The exemption clause did not cover breach of express warranty. 79. White v John Warwick & Co Ltd [1953] 2 All ER 1021 pg-251 Facts: White hired a tricycle from Warwick and was injured due to some bicycle flaw. He sued Warwick for breach of contract and tort of negligence. Warwick had an exemption clause. Warwick lost tort of negligence but was safe for breach of contract as it was included in the exemption clause. Ratio: The court held that the exemption clause did not relieve Warwick from its liability under the tort of negligence. 80. Sydney Corporation v West (1965) 14 CLR 481 pg-254 Facts: West parked his car in a car park operated by SC. He was issued a ticket with the exemption clause in it. A thief used a duplicate ticket and stole West’s car. Ratio: The exclusion clause in the ticket was a term of contract. The court decided that the exclusion clause was very wide, in the light of the contract it meant excluding damage by attendant or something like that and not giving a car away. 81. Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR pg-183 Facts: Darlington (broker) traded Delco’s share. Delco did not permit the broker for unauthorised trading which the broker did and Delco suffered losses. Darlington had some exemption clause. Clause included that Darlington was not liable for any trading activity undertaken on behalf of Delco whether pursuant to the agreement or not. The second clause included that the agent was liable only for 100 dollars for damages for, or in respect to any connection established by this agreement. Ratio: The court held that clause1 did not exclude the defendant from laiblity because it is presumed that the defendant would carry on activity under Delco’s authority. But he was exempted under clause2 which stated “damages for, or in respect to any connection established by this agreement.” So he was liable only for 100 dollars. 82. Smith v Land & House Property Corp (1884) 28 Ch D 7 pg-98 Facts: During the sale of a hotel, the vendor told the purchaser that Fleck was a “desirable tenant” but it turned out to be otherwise. The court had to decide whether the statement was an opinion or fact. Ratio: In this case Bowen LJ decided that “if facts are not equally known to both sides, then a statement of opinion by the one who knows the facts best will be a statement of material fact.” In this case Smith knew facts about Fleck where as the buyer did not. So the plaintiff won the case. 83. Holmes v Jones (1907) 4 CLR 1692 pg-100 Facts: The vendor overstated the no. of cattle to the purchaser who got his agent to confirm. Purchaser sued the vendor for misrepresentation. Ratio: In this case the court rejected the action brought on the basis of misrepresentation because the purchaser had not relied upon the misrepresentation. 84. Redgrave v Hurd (1881) 20 Ch D I pg-100 Facts: The vendor misstated the amount of receipts. On asking about other receipts the purchaser was told that they came from other business. The owner carelessly glanced at the document but did not analyse it. He sued them for misrepresentation. Ratio: In this case the court decided that as the representation was material which induced the purchaser to enter into the contract, defendant was liable. There was no obligation on the purchaser to investigate the vendor’s case. ”It is not a defence to fraud to argue that the plaintiff would have known the truth if he or s
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