English Legal Cases Made Easy Episode 10 – When is a Contract a Contract? Or can we just agree to disagree?

It’s easy to tell if you’ve made a contract with somebody isn’t it?  Well, there are some who would argue that even if it looks like a duck and quacks like a duck, that does not mean it necessarily is a duck!  A company called G.Percy Trentham Limited was instructed to carry out what Lord Justice Steyn called “window works” on a construction site.  That is, they were asked to design, supply and install windows in a building.  Now, the other side in this argument, Archital Luxfer Limited, undertook this work.  They were manufacturers and installers of aluminium windows.  (Case citation: G. Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep. 25; 63 B.L.R.44 CA (Civ Div) I am sure that you are now looking at this arrangement and saying to yourself – well, that’s a clear case of a contractor and a sub-contractor.  However, if you were on Archital’s side, you would be wrong.  They argued that there was no binding contract (‘sub’ or otherwise) at all!  This is despite the fact that Archital carried out the work fully and Trentham paid them – in full.  Confused?  You will be!

The problem arose when the main employer (Municipal Mutual) took action against the main contractor (Trentham) for defects and delays who then took action against the subbie (Archital).  It gets easier – honestly.  Peeved by having to pay out substantial sums of money when it wasn’t their fault, Trentham placed the blame on their sub-contractors, one of which was Archital who then took great exception to this and vigorously defended themselves.   Their defence was two-pronged; firstly that there were no defects or delays and secondly, that there was not even a contract between them so how could it be breached… nurr!

Their reasoning was that no integrated written contract ever came into being and, furthermore, they had never fully agreed on terms.  Trentham argued that there were oral discussions, written exchanges and, of course, performance of these transactions by Archital.  Hmm.. Checkmate I believe. 

This was heard in the Court of Appeal and the point of appeal was that the first judge should not have come to his conclusions (that there was a binding contract) on the evidence placed before him.  Archital’s appeal against this decision was rejected.

The Court of Appeal judge said “I am, in any event, satisfied that in this fully executed transaction a contract came into existence during performance even if it cannot be precisely analysed in terms of offer and acceptance and it does not matter that a [written] contract came into existence after part of the work had been carried out and paid for.”  He finished with “I would therefore hold that a binding contract was concluded”.

So there you have it.  Even if you faff about swapping letters, forms, changing prices and asking endless questions, if you then go on to perform the essential requirements of the service that you have been asked to do and it is paid for – then, quite frankly, you have a contract.  Quack quack!

Tina Morgan    www.john-kennedy.co.uk      

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English Legal Cases Made Easy Episode 9 - When Sundays were Sundays - Or are people in Wednesbury reasonable?

Do you remember when Sundays were a special day - you couldn't go shopping, pubs had very restricted opening hours, people ate Sunday lunch at lunchtime and there would be a bloke driving round in a van in the afternoon selling cockles and winkles for your Sunday tea? Ah, yes, life was very reasonable ... well for some anyway. For others, however, life was made a little difficult by a local authority and they found themselves having to comply with the view that Sundays were sacred. Wednesbury, an old market town in the West Midlands, was the site of this dedication to the old ways. The Corporation there allowed Associated Provincial Picture Houses to operate a cinema on the condition that children under 15 would not be allowed entry on Sundays. Feeling miffed about this (probably because there was virtually nothing else for children to do on a Sunday at this time except, of course, to be good, go to Grandma's for tea, wear their Sunday best clothes, attend Sunday School and be seen and not heard and so would have potentially been a good source of revenue) they challenged the local authority in a judicial review. Associated Pictures took the local government to court saying that they had acted outside their powers by being completely unreasonable in their decision.

Sadly for our intrepid warriors in the cause of re-inventing Sundays, 1948 was not the year to do so. The Court held that it did not have the right to interfere with the decision of a local authority unless in making that decision, the local authority had taken into account factors that ought not to have been taken into account, or they had failed to take into account factors that ought to have been taken into account, or that the decision was so unreasonable that no reasonable authority would ever consider imposing it. Get that?

So, there you have it...the Court held that the decision by Wednesbury Corporation to uphold the specialness of Sundays with regard to children and movies did not fall into any of those categories. Lord Greene, who was the Master of Rolls at that time and, therefore, a very important person, said:

"It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word "unreasonable" in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting "unreasonably." Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrington LJ in Short v Poole Corporation [1926] Ch. 66, 90, 91 gave the example of the red-haired teacher, dismissed because she had red hair. That is unreasonable in one sense. In another sense it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith; and, in fact, all these things run into one another." (Case citation: Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223).

Out of this wonderful piece of logic we get the "Wednesbury Test" which is when you apply all 3 limbs of the Court's decision or "Wednesbury Unreasonableness" which is just the third part - that is, being so unreasonable that no reasonable authority could have decided that way.

Right - now that's clear - I'm off to the Flicks!

Tina Morgan   www.john-kennedy.co.uk

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English Legal Cases Made Easy Episode 8 - A Heller-va Responsibility - when one should keep shtum!

So, you are getting a little worried about whether your client is going to be able to pay for all the advertising they are placing with you and they have asked you to do some more. Here's a good idea, why don't you ask your bank to get in touch with their bank to see if they are good for the money? This is exactly what an advertising agency called Hedley Byrne did in the late '50's. Thinking they were safe when their client's bankers responded with "yeah, no worries" (or words to that effect), they did the work. I expect you can guess what happened next. Yes, the clients were not good for it. In fact, they were at that time and known to all parties, the subsidiary of a company that was already in liquidation. Nevertheless, the bankers (Heller & Partners) believed that "the company would not undertake any commitments they are unable to fulfil" (Case citation: Hedley Byrne v Heller [1964] AC 465)

Sadly, it all ended in tears because that is exactly what Easipower did and left Hedley Byrne seriously out of pocket. The problem Hedley Byrne had was that they couldn't sue Easipower because they had gone bust but they had no relationship with Heller & Partners - there was no contract between them. Sometimes, though, you just have to give it a go which they did and they very nearly won as well. The case went right up to the House of Lords and it was decided that although there was no contractual relationship between them, Heller did owe Hedley Byrne a duty of care. The Lords said that if someone possesses a special skill and they apply that skill in the assistance of another person who relies on it, then a duty of care arises. They said that the bank (Heller) had made a negligent misrepresentation and the only thing that saved them having to fork out, was that they had marked their letter "Without Responsibility". The Lords decided that this was enough to let them off the hook.

The lesson here is that if you are in a position of special responsibility and you are asked for information about someone or something that could be relied upon, be very, very careful how you respond as you could be the one who ends up in court. Have a nice day!

Tina Morgan   www.john-kennedy.co.uk

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English Legal Cases Maded Easy Episode 7 - Oh Dear, What Can the Matter Be - in which a public convenience becomes extremely inconvenient

Imagine how you would feel if you went into a public lavatory, shut the door behind you and when you went to leave, found the lock was broken and you couldn't get out. Oh dear! This is what happened to poor Mrs Sayers way back in the '50's when there was such a thing as a public toilet. The poor lady was well and truly stuck in the lavatory and the only thing she could think to do was to escape over the top. Unfortunately, she decided to use the toilet-roll holder as a step-ladder. Sadly for her, the toilet-roll holder did what they are put on this earth to do - that is - roll. Mrs Sayers fell and hurt her leg. I'll put you out of your misery at this point as you are probably agog with anxiety as to how badly poor Mrs Sayers was hurt and I'll tell you that apparently it "wasn't serious" but it "wasn't trivial". Mmmm...that's what I like - straight talking!

Naturally, (and let's face it, it was the call of nature that started this whole thing) Mrs Sayers took the local authority to court for their negligence in not maintaining their toilet cubicles to a proper standard and she won. She did, however, lose a portion of the damages awarded to her because the court felt that putting your whole weight on to a toilet-roll holder was probably not appropriate in all the circumstances.

This case is an example of contributory negligence - that is, that although the person suffered an injury due to somebody else's negligence, their own negligence contributed to that injury. In this case, Mrs Sayers was held to have contributed to her own injury to the level of 25%. (Case citation: Sayers v Harlow UDC (1958) 1 WLR 623).

I suppose, to be on the safe side, one should perhaps leave the door open to prevent this kind of calamity but on the other hand, there are certain things one should keep to oneself - wouldn't you agree?

Tina Morgan   www.john-kennedy.co.uk

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