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      

Legal-Easy

English Legal Cases Made Easy Episode 4 - Don't Believe the Hype - A warning for purveyors of snake oil

Once upon a time (and a very, very long time ago) people were extremely silly and believed what they were told in an advertisement, something which would never happen these days! One of these people bought a small ball filled with carbolic acid from which a rubber tube entered the nose and when the ball was squeezed, the vapours made the nose run thereby preventing the catching of flu. Well, so the company who made them claimed. In fact, they were so insistent that this little device would prevent the owner from getting flu, they proclaimed in their advertisement that if it were to fail, they would pay £100 to the poor sufferer (if they survived of course, as flu was a tricky customer in 1891) and to show their sincerity, they had deposited £1000 with a bank in Regent Street.

Well, Mrs Carlill (for that was her name) duly bought herself a Carbolic Smoke Ball and used it in accordance with the instructions. Sadly, however, she contracted the flu. Upon recovery from said flu, Mrs Carlill became the personification of vengeance and pursued the Carbolic Smoke Ball Company to within an inch of its life. I won't bore you with the arguments but the outcome was that Mrs Carlill won her reward of £100 (and seemed to suffer no lasting ill-effects from either the flu or the nasally-inserted rubber hose complete with nostril-hair-removing carbolic fumes).

The point of law that arose from this strange case was to do with contract law (Case citation: Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1). The company argued that it was not meant to be a real contract and that the promise of a reward was a "mere puff" which was not meant to be taken seriously. They also said that it did not comply with the requirements of a proper contract as the offer was made to the public as a whole and there was no "acceptance" (necessary to form a contract at that time). The judges thought otherwise and said that the Company had made a UNILATERAL offer of a contract to the entire world and that Mrs Carlill had accepted that offer by purchasing the Smoke Ball. They also said that the Company had clearly meant what they had said as they had deposited the money with a bank. In other words, the only "mere puff" had been from the smoke ball itself.

Finally, just so as you know, carbolic acid was put on the Poisons Register in 1900 and Mrs Carlill lived to a ripe old age of 96, succumbing to the Grim Reaper in 1942 mainly through old age but, sadly, also due to a touch of flu.

Tina Morgan   www.john-kennedy.co.uk

Legal-Easy