Contract Tutorial 3

25 October 2016 15:01

Dickinson v Dodds (1876) 2 Ch D 463

Defendant sell his house to claimant. Promised offer open till Friday. Thursday he accepted offer
from other party. Defendant asked friend to tell claimant that offer was withdrawn. Claimant heard
the news and went to accept the offer on Firday.
Held, offer has been effectively revoked. No obligation as claimant had provided no consideration
for the promise.
The offeror is free to withdraw the offer at any time before acceptance takes place unless a deposit
has been paid.

Household Fire Insurance v Grant (1879) 4 Ex D 216

Grant had negotiated to purchase shares in Household Fire. Application accepted and name added
to list of registered shareholders. Letter informing Grant of this never reached him -> never paid for
shares. Got earnings from dividends into his account though. Household fire went into liquidation ->
application for money from Grant. Refused to pay as he thought he was not a shareholder as he
never received the notification.

Held, that contract was formed when the acceptance was mailed. Pros of postal rules outweigh
cons. Offeror can always choose to only make it binding once he receives the mail. Thesiger &
Baggallay

Bramwell. Postal rule hinders transactions. Notion of acceptance must reach party before offer is
binding. If it is applied here must be applied in all instances of notices via mail. I.e. sending someone
money per mail. Even though money does not arrive it has been paid

Byrne v Van Tienhoven (1880) 5 CPD 344

Offered by letter to sell goods at a certain price. Later wrote to plaintiffs to withdraw that offer.
Plaintiffs accepted offer by telegram before knowing that it has been revoked.
Held that contract was made. Revocation only became effective when it was received by the
plaintiffs. By that time the contract had been made

Henthorn v Frazer [1892] 2 Ch 27

Parties had discussed sale of properties to the Henthorn. Defendant wrote an offer to sell and
handed it to Henthorn. New buyer turned up and contract was concluded. Frazer wrote to plaintiff
to withdraw the offer. Before the letter was received Henthorn had through his solicitor written
back to accept the offer.
Held, by Lord Herschell:
Where the circumstances are such that it must have been within the contemplation of the parties
that, according to the ordinary usages of mankind, the post might be used as a means of
communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

PSGB v Boots [1953] 1 QB 101

Entores v Miles Far Eastern Corp [1955] 2 QB 327

Claimant sent telex message from England offering to purchase 100 tons of Cathodes from the
defendants in Holland. Defendant accepted offer per telex. At what point did contract come into
existence? If acceptance was made at the time the telex was sent Dutch law would apply. If it took
place when it was received English law would apply.
Held, to amount to effective acceptance it needs to be communicated to the offeree. Contract was
made in England
This only applies to instantaneous communications such as by fax. Agreement made in one country
and amended in another should still not be regarded as having been made in the second country.

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and amended in another should still not be regarded as having been made in the second country.

Partridge v Crittenden [1968] 1 WLR 1204

Defendant placed advert in magazine selling Birds. Advert was ITT and not an offer.

Holwell Securities v Hughes [1974] 1 WLR 155

Hughes granted Holwell option to buy his house for 45000. Option was to be accepted 'by notice in
writing' within 6 months. Five days before expiry Holwell posted letter of acceptance. Letter was
never received by Hughes. Holwell claimed that contract has to be enforced because of postal rule.
Held that by requiring 'notice in writing' Hughes had specified that he wanted to receive the
communication before contract was formed. Therefore it excluded the postal rule.

Butler Machine Tool v Ex-Cell-O Corp [1979] 1 WLR 401

Gibson v Manchester CC [1979] 1 WLR 294
Council wrote to Mr Gibbson and told him at what price he could buy the council house that he was
living in. Gave Mr Gibbson the details of a mortgage proposal, expressively stated that the proposal
to sell the council house to Mr Gibbson was not a firm offer to sell the house and give him a
mortgage. If he wants to proceed he should fill a form and make a formal application to buy the
house. After Mr Gibbson filled the form there were elections and the conservatives were kicked out
of council and labour got the power. Labour reversed the policy of selling off council houses. Now
refused to sell the house to Mr Gibbson. As he had already filled the application form he said it was a
breach of contract.
House of Lords held, No breach of contract, house remained property of council; as there has not
been an offer yet; they just invited him to enter negotiations for buying a house (because of
language: "may be prepared to sell the house to someone")

Brinkibon v Stahag Stahl [1983] AC 34

Brinkibon, in London, wanted to buy steel form Stahag based in Austria. Accepted offer by Telex. To
sue Stahag Brinkibon needed to prove that contract was formed in England.
Held that, contract had been formed in Austria. -> instantaneous communication
Lord Wilberforce: "No universal rules can cover all cases involving instantaneous communication.
Machine might be broken, Acceptance might be sent out of office hours, needs to be assessed on
a case to case basis"

Blackpool & Fylde Aero Club v Blackpool BC [1990] 3 All ER 25

Club had concession from the council to operate pleasure flights from the council's airport. Invited
to bid for a new concession subject to strict tender rules. Submitted the highest bid on time. Council
only opened their bid after deadline though and marked it as 'late'. Was not considered and when
council realized mistake they wanted to renew the bidding process. Party who had actually won
claimed that it had entered a binding contract though.
Held, if in a case like this where the procedure is clear, orderly and familiar, a conforming tender is
submitted before the deadline, the invitee is entitled as a matter of contractual right to be sure that
his tender will be considered.

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