OBLIGATIONS I

1. OFFER

01. Gunthing v Lynn: An offer cannot be vague.

02. Hillas v Arocos: Exception - Even if a contract doesn't have every little detail spelled out, it can still be
considered valid if both parties know what they're agreeing to. (Timber Trade).

03. Carlill v Carbolic Smoke Ball Co: May be made to a particular person, class or persons, or the public at
large.

04. Harvey v Facey: The answer to a question or the supplying of information, rather than an offer for sale;
a mere statement of price.

05. Spencer v Harding: Instead, when goods are sold by tender, it's more like an invitation for people to
make offers or bids. The seller isn't bound to accept any particular bid unless they explicitly agree to it.
So, even if someone offers the highest bid, the seller can choose whether or not to accept it.

06. Harvela Investments Ltd. Royal Trust of Canada: EXCEPTION TO (SPENCR V HADING): In cases
where the person inviting tenders explicitly states in the invitation that they will accept the highest offer
to buy or the lowest offer to sell, a contract is formed as soon as the highest offer to buy or the lowest to
sell is communicated.

07. Blackpool and Flyde Aero Club v Blackpool Borough Council: The court recognized exceptions to the
general rule that invitations to tender are not contractual offers. These exceptions apply when tenders are
invited from known persons and selected persons under a clear and prescribed procedure.

08. Fisher v Bell: General rule is that a display of price marked goods in a shop is not an offer to sell goods
but is an invitation to customer to make an offer to buy.

09. Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd: taking articles from the shelves is
seen as a customer's offer to buy, not the chemist's offer to sell. The sale is only completed when the
chemist accepts the purchase price. Thus, the transaction meets the requirement of being "under the
supervision of a registered pharmacist" as mandated by the Pharmacy and Poisons Act.

10. Grainger v Gough: Advertisements that goods are for sale is not an offer.

11. Carlill v Carbolic Smoke Ball Co: EXCEPTION: Advertisement offers a reward for the return of lost
property it will be considered to be an offer rather than an invitation to treat. In this case it was held that
unilateral contract was created and that it was not mere puff because of the deposit made with the bank.
12. Lallyett v Negris Co: Held that the advertisement was an invitation to treat an not an offer, and the court
jurisdiction will be where the contract was completed not where the invitation to treat was made.

13. Payne v Cave: In an auction, the auctioneer’s call for bids is an invitation to treat. The bids made by a
person at the auction are offers which the auctioneer can accept or reject as he chooses. Similarly the
bidder may retract his bid before it is accepted.

14. Hyde v Wrench: The counter offer was a rejection of original terms and the original offer was put to an
end thereby.

15. Stevenson v McLean: Counter offer should be distinguished from a mere request for information.

2. ACCEPTANCE

01. Brogden v Metropolitan Railway Co.: Acceptance by Conduct.

02. Muthukuda v Sumanawathie: offer of marriage may be accepted by conduct which is unequivocal and
which indicates a definite understanding between the parties that a marriage is to take place.

03. Jones v Daniel: Acceptance must be unqualified (a counter offer has been made which the original
offeror may reject).

04. Great Northern Railway Co. v Witham: (THIS IS AN EXCEPTION TO THE GENERAL RULE
WHERE - A tender is an offer, the acceptance of which leads to the formation of a contract) In the
case of Great Northern Railway Co. v Witham, imagine that John advertises for offers to supply goods
up to a certain limit within a specific time frame. Now, let's say Sarah submits an offer (tender) to John.
If John accepts Sarah's offer, it doesn't immediately create a contract. Instead, John's acceptance turns
Sarah's tender into a standing offer. This means Sarah is offering to supply the goods up to the stated
limit at the agreed price whenever John asks for them.

05. Entores v Miles Far East Corporation: acceptance must be communicated to the offeror (declaration
theory); until and unless the acceptance is so communicated, no contract comes into existence.

06. Adams v Lindsell & University of Ceylon v Fernando: the postal acceptance dates from posting even if
the letter is delayed.

07. Household Fire Insurance Co. v Grant: Postal rule applied even where letter is lost

08. Re London & Northern Bank: The postal rule will not apply where acceptance has not been properly
posted
09. Felthouse v Bindley: Silence does not amount to acceptance

10. Powell v Lee: Acceptance must be communicated by the offeree or by someone with his authority

11. Quener Duaine v Col: Acceptance should be made in the prescribed form according to the offer. Here an
offer by telegram is evidence of a desire for a prompt reply, so that acceptance sent by post may be
treated as ineffective.

12. Tinn v Hoffman: When not made clear that no other method would suffice, an equally expeditious
method would suffice.

13. Yates Building Co. Pulleyn Ltd: No enforceable contract if precise method of acceptance was prescribed
and not fulfilled.

14. R v Clarke: To accept the reward offer and create a contract, the person must act because of, or "rely
on," the offer. Since it wasn't clear if the person provided the information for the reward, there was no
contract in this case.

15. Williams v Carwardine: If someone knows about a reward offer and does the required action, that's
enough to accept the offer, regardless of their motives. So, Mrs. Williams got the reward even though
she didn't give information specifically to get it.

16. Tinn v Hoffman: Cross-offers i.e. two identical offers exchanged between the parties, does not form and
agreement but rather two separate offers which require acceptance to form a contract.

17. Byrne v Van Tienhoven: the "expedition theory," which speeds up the acceptance of offers sent by post,
doesn't apply to the revocation (cancellation) of offers sent by post. This means that when you send a
letter accepting an offer, it's accepted as soon as you post it, even if the other person hasn't received it
yet. However, if you try to cancel or revoke an offer by post, it's not considered revoked until the other
person receives the letter. So, there's a stricter rule for revoking offers compared to making offers.

18. Dickinson v Dodds: revocation need not be in communicated by the offeror personally, it is sufficient if
it is done through a reliable third party

19. Boyd v Nel – an option offer is an offer to keep open for a definite or indefinite period an offer that has
already been made. In English law a promise to keep an offer open for a fixed period does not prevent
its revocation within that period. However, a person by giving consideration may buy a promise to keep
an offer open for a fixed period.

20. Shuey v U.S. – held that an offer made by advertisement in newspaper could be revoked by a similar
advertisement even though second advertisement was not read by some offerees – revoked by
reasonable steps.
21. Errington v Errington and Woods – once the offeree has commenced performance of an unilateral offer,
the offerror may not revoke the offer.

22. Ramsgate Victoria Hotel v Montefiore – defendant’s delay in allotting the shares caused the lapse of the
plaintiff’s offer to buy the same.

23. Financings Ltd. v Stimson: When an offer is made with conditions, either clearly stated or implied from
the circumstances, those conditions must be met for the offer to be valid. If the conditions are not
fulfilled, the offer cannot be accepted. This means that if the specified conditions are not satisfied, the
offer is considered null and void, and cannot be acted upon.

24. Bradbury v Morgan: the offeree cannot accept an offer after notice of the offeror’s death. However, if
the offeree does not know of the offeror’s death and there is no personal element involved, then he may
accept the offer.

3. INTENTION TO CREATE LEGAL RELATIONS

01. Balfour v Balfour: Social agreements are not intended to be legally binding. If failed to prove otherwise,
the court will rule that there was no enforceable agreement.

02. Merritt v Merritt: EXCEPTION: this principle was rebutted where two spouses who formed an
agreement over their matrimonial home were not on good terms.

03. Jones v Padavatton – demonstrates how domestic agreements, such as in between a mother and
daughter, are presumed not to be legally binding unless there is clear intention.

04. Parker v Clarke – If social agreements have serious consequences for the parties, it may rebut the
presumption of no intention to create legal relations in social agreements.

05. Simpkins v Pays: evidence of "mutuality" among the parties. He reasoned that if there wasn't an
arrangement to share the prize money, it would be highly unlikely for the plaintiff to suddenly lose
interest in the competition, given her inclination for gambling. Therefore, the court upheld the
agreement as valid.

06. Rose and Frank Co. v Crompton Bros. Ltd: In business agreements the presumption is that the parties
intend to create legal relations and make a contract. This presumption can be rebutted by the inclusion of
an express statement to that effect in the agreement

07. Jones v Vernon Pools - "Honour Clauses" in "Gentlemen’s' Agreement" will be recognised as negating
intention to create legal relations, as where the clause, "this agreement is binding in honour only" was
effective.
 4. OBJECTIVE AND SUBJECTIVE TEST

01. Smith V Hughes: Outlined the objective interpretation of contract formation, stating that if a person's
conduct leads a reasonable observer to believe they are agreeing to certain terms, they are bound by
those terms even if their actual intentions differ.

02. Centrovincial Estates PLC v. Merchant Investors Assurance Company Ltd: Consider the scope of the
objective test

5. FORM OF A CONTRACT

01. Emalia Fernando v Caroline Fernando: executant signed in hospital room in the presence of a notary
and witness. Notary and witness later attested it in a separate room. Held that the deed was not valid.

02. Section 2 of the Prevention of Frauds Ordinance: certain requirements for transactions involving land or
immovable property to be legally enforceable. These requirements include:
The transaction must be in writing.
The writing must be signed by the party making the transaction or by someone authorized by them.
The signing must occur in the presence of a licensed notary public.
Two or more witnesses must be present at the same time.
The execution of the writing must be duly attested by the notary and witnesses.

03. Section 19 of the General Marriage Registration Ordinance: a promise of marriage must be in writing for
a legal action to be brought for breach of that promise.

04. Section 5(1) of the Sale of Goods Ordinance: a contract for the sale of goods must be supported by a
written note or memorandum signed by the party to be charged.

05. Section 10(1) of the Money Lending Ordinance: every promissory note must clearly state the borrowed
capital, deductions, and interest rate. Failure to comply with these requirements makes the promissory
note unenforceable under Section 10(2).

06. Section 18 of the Prevention of Frauds Ordinance: any promise, contract, bargain, or agreement
establishing a partnership must be in writing and signed by the parties to be legally binding.
 6. CAPACITY OF PARTIES TO CONTRACT

01. Kithsiri Perera v Dayasiri Perera: In addition to the consent of a guardian, the permission of court is
required in order to enter into a contract pertaining to immovable property of a minor

02. Nel v Divine, Hall & Co: Beneficial Contracts of Minors may be entered into without the assistance of
the guardian and binds the minor to the extent to which he has benefitted from the contract. A minor will
not be held to future performance under a contract even though beneficial.

03. Section 3 of the Sale of Goods Ordinance: the capacity to buy and sell is governed by general contract
law. However, if necessaries (goods essential for life or suitable for the individual's condition) are sold
to a minor or someone mentally incapacitated, they must pay a reasonable price. "Necessaries" in this
context encompass items vital for existence, those suitable for the individual's status, goods promoting
future mental and moral well-being, and services protecting the individual's rights, such as legal fees for
defending their rights.

04. Donatio Moris Causa: A minor who has testamentary capacity can also donate mortis cuasa without the
authority of his curator, although he may be incapable of making a donatio inter vivos (because it is
presumed to be a detriment to him). However, in Sri Lanka, Section 3 of the Wills Ordinance provides
that “no will made by any person under the age of eighteen years, shall be valid, unless such person shall
have obtained letters of venia aetatis or unless such person shall have been lawfully married”.

05. Soysa v Soysa: Under Roman Dutch law a contract made by an insane person is void even if the other
party to the contract was not aware of the insanity of the person with whom he made the contract

7. TERMS, CONDITIONS AND WARRANTIES

01. Poussard v Spiers: when a contract stipulates a specific condition to be fulfilled before performance,
failure to meet that condition allows the other party to consider the contract discharged. In this case, the
actress's performance from the first night was deemed a condition precedent, and her inability to fulfill it
due to illness led to the producers' right to refuse her services and terminate the contract.

02. Beetini v Gye: not every contractual term amounts to a condition. In this case, the clause regarding
rehearsals was not considered a condition, and therefore a breach of this clause alone did not justify
termination of the contract.

03. Jamis v Suppa Ummain: Sri Lanka, the terms "warranty" and "condition" should be interpreted based on
their meanings in English law when applied to contracts governed by English law, and based on their
 meanings in Roman Dutch law when applied to contracts governed by that legal system.

04. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd: when a breach of contract occurs, the
court considers the effects of the breach rather than just the quality of the terms broken. If the breach
results in delays or non-performance but does not fundamentally undermine the contract's purpose, the
injured party may not be entitled to repudiate the contract but may only claim damages.

05. The Mihalis Angelos: the intention of the parties in a contract is inferred by examining the
circumstances at the time of making the contract. If, at the time of the contract, one party had no
reasonable grounds for believing that the agreed-upon terms would be fulfilled, the other party may be
entitled to repudiate the contract.

06. Unfair Contract Terms Act No. 26 of 1997: restrict the extent to which liability in a contract can be
excluded for breach of contract and negligence, largely by reference to a reasonableness requirement,
but in some cases by a specific prohibition.

07. UCTA Section 13: defines "business liability," which means the responsibility that comes from doing
business activities or using business premises. It's mostly about holding businesses accountable for what
they do.

08. UCTA Section 7: EXCEPTION: UCTA also applies to private contracts.

09. UCTA Section 13(2): determine if someone is considered a consumer. If they're not doing business
when making a contract, but the other party is, and the contract involves goods usually bought for
personal use, then they're treated as a consumer. So, if you're just buying something for yourself and the
seller is a business, you're likely protected as a consumer under this law.

10. Peter Symmons & Co v Cook: to be considered as buying in the course of a business, purchasing cars
must be an integral part of the buyer's business or a necessary incidental to it. If this condition is not
met, and the buyer is purchasing for personal use or consumption, they are treated as a consumer and
afforded the protections provided to consumers under the law.

11. UCTA Section 3: Exemption of liability for negligence

3(1): No one can avoid liability for death or personal injury caused by negligence through a contract
term or notice
3(2): Liability for negligence causing other types of loss or damage can be excluded if the exclusion is
reasonable.

12. Section 4: This section prevents one party from excluding or restricting liability for breach of contract if
the other party is a consumer or if the contract is based on the other party's standard terms of business,
unless the exemption clause is reasonable.

13. Section 5: Clauses in contracts providing indemnity, especially for consumers, are unenforceable if
unreasonable.

14. Section 6: Manufacturers or distributors cannot avoid liability for negligence due to defects in goods
intended for private use or consumption, as stated in guarantees.
15. Section 7 Exemption of Implied Terms in Contracts of Sale and Hire-Purchase
o Section 7(1) in contracts for the sale of goods and hire purchase, the implied terms as to title cannot
be excluded or restricted by a contract term
o Section 7(2) the implied terms as to the correspondence with description or sample, fitness for purpose
and satisfactory quality cannot be excluded or restricted by any contract term against a person dealing
as a consumer
o Section 7(3) where the person is not dealing as a consumer, such liability can only be excluded or
restricted in so far as the term is reasonable

16. Section 9: This provision prevents rights preserved in one contract from being removed by a subsequent
contract.

17. Section 10: Requirement of reasonableness

10(1): Any term in a contract must be fair and reasonable considering the circumstances known or
reasonably expected by the parties when the contract was made.
10(4): If an exclusion clause seeks to limit liability rather than exclude it entirely, the court considers the
resources available to meet the liability and the extent of available insurance cover.

18. Section11: Clauses

To the extent that UCTA prohibits the exclusion or restriction of any liability, it also prohibits:
the making of the liability or its enforcement subject to restrictive or onerous conditions
the exclusion or restriction, of any rights or remedy in respect of the liability or the subjection of any
person to any prejudice in consequence of his pursuing any such right or remedy ; and
the exclusion or restriction of rules of evidence or procedure.

8. CONSIDERATION AND JUSTA CAUSA

01. Lipton v Buchanan: defined justa causa as “denoting the ground, reason or object of a promise giving
such promise a binding effect in law. It has a much wider meaning than the English term consideration
and comprises the motive or reason for a promise and also purely moral consideration”

02. Jayawickrama v Amarasuriya: the "justa causa" would be the moral obligation resting upon the
defendant to fulfill their promise to pay the plaintiff Rs. 150,000. This moral obligation served as the
legal basis for the contract, providing the justification for its enforceability despite the absence of a
formal agreement.

03. Public Trustee v Udurawana: the "justa causa" would be the past faithful services rendered by the
employee to the employer. The promise made by the employer to pay a pension or gratuity can be seen
as a recognition or acknowledgment of these past services. Therefore, the legal basis or justification for
enforcing the promise would be the moral duty or obligation arising from the faithful services provided
by the employee.
04. Attorney-General v Abraham Saibo & Co: consideration is an essential element in a contract for sale of
goods under the Sale of Goods Ordinance No. 11 of 1896.

05. Currie v Misa: referred to consideration as consisting of a detriment to the promisee or a benefit to the
promisor: “some interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by the other”.

06. Dunlop v Selfridge Ltd: “an act or forbearance of one party, or the promise thereof, is the price for
which the promise of the other is bought and the promise thus given for value is enforceable”

07. Re McArdle: the promise was unenforceable as all the work had been done before the promise was
made and was therefore past consideration.

08. Salman v Obias: ‘valuable consideration’ as used in section 17 of the Registration of Documents
Ordinance was subject of interpretation by the courts – deed of transfer to appellant by grandmother
alleged that consideration was attending to her and covering her medical costs – no consideration as
alleged consideration was past consideration.

09. Lampleigh v Braithwait: A past act is saved from the rule that past consideration is no consideration if
two conditions are satisfied:- a. That the act was done at the request of the promisor; and b. That the
parties all along contemplated that payment would be made.

10. Chappell & Co Ltd v Nestle Co Ltd: Consideration must be sufficient but need not be adequate.

11. Thomas v Thomas: Consideration must be sufficient but need not be adequate.

12. Tweddle v Atkinson: Consideration must move from the promise

13. Alliance Bank v Broom: If one person has a valid claim against another (in contract or tort) but promises
to forebear from enforcing it, that will constitute valid consideration if made in return for a promise by
the other side to settle the claim

14. Collins v Godefroy: If someone is under a public duty to do a particular task, the agreeing to do that task
is not sufficient consideration for a contract

15. Glassbrooke Bros v Glamorgan County Council: if someone exceeds their public duty, then this may be
valid consideration

16. Stilk v Myrick: If someone promises to do something they are already bound to do under a contract that
is not valid consideration.

17. Hartley v Ponsonby: nineteen out of thirty six crew deserted ship and captain promised to pay extra to
remainder. Here promise to sail back in dangerous and seriously undermanned conditions discharged the
sailors from their existing contract and left them free to enter into a new contract for the rest of the
voyage
18. Williams v Roffey Bros Ltd: If the performance of an existing contractual duty confers a practical
benefit on the other party, this can constitute valid consideration

19. Scotson v Pegg: If a party promises to do something for a second party, but is already bound by a
contract to do this for a third party, this is good consideration.

20. Penny V Cole (Pinnel’s case) : offering to pay part of what you owe usually isn't enough to settle the
entire debt, unless there's something extra offered as well.

21. Foakes v Beer: the rule of law in this case means that Foakes had to pay not just the debt, but also the
interest as agreed upon.

22. Re Selectmove: arrears in tax put Inland Revenue in a position to put Selectmove in liquidation.
Selectmove tried to rely on the agreement made with collector of taxes that they would pay arrears in
instalments when they were put in liquidation and it was held that they had not provided consideration
for the promise not to put into liquidation

23. HBF Dalgety Ltd v Morton: accord and satisfaction

24. Hirachand Punamchand v Temple: EXCEPTION TO PINNEL: Third party part-payment of the debt–
father paid smaller sum to money lender which was accepted as full payment of son’s debts. Held to be
valid consideration.

25. Wood v Robarts: Composition Agreements

26. Central Property Trust v High Trees House Ltd (High Trees Case): the doctrine of promissory estoppel
was propounded in equity (which is founded on fairness) and does not look with favour on a man who
promises relief to another and then goes back on his promise.
 9. ERROR / MISTAKE

01. Bell v. Lever Brothers (1932) AC 161: only mistakes related to the identity of the parties involved or
the subject matter of the contract, as well as issues concerning the quality of an item, could invalidate a
contract by negating consent.

02. Galloway v. Galloway: contracts entered into under a common mistake of fact may be rendered void. In
this instance, the mistake about the marital status of the parties led to the separation agreement being
declared void. (Mistake as to the existence of the subject matter).

03. Couturie v Hastie: contracts for the sale of specific goods, if the goods perish without the seller's
knowledge before the contract is made, the contract is void. This principle is reflected in Section 6 of
the Sale of Goods Act 1979, which gives legal effect to the decision in Couturie v Hastie.

04. Diamond V British Columbia Thoroughbred Breeders’ Society: Mistake as to identity of the subject-
matter - A mistake as to the identity of the subject-matter of the contract may be sufficiently
fundamental to avoid a contract if both parties thought that they were dealing with one thing when in
fact they were dealing with another.

05. Sheikh Brothers Ltd v Ochsner: Physical Impossibility: This occurs when it is impossible, from a
physical standpoint, to carry out the terms of the contract.

06. Cooper v Phibbs: Legal Impossibility: This arises when the contract requires something to be done that
is prohibited by law or where one party already possesses the subject matter of the contract.

07. Griffith v Brymer: Commercial Impossibility: This occurs when, while the contract remains physically
and legally possible to perform, unforeseen circumstances render its commercial purpose unachievable.

08. Bell v. Lever Brothers Ltd (1932) AC 161: Mistake as to quality - Generally common errors as to
quality do not nullify agreement unless the parties treat the existence of quality as fundamental to the
contract.

09. Oscar Chess Ltd v. Williams (1957) 1 WLR 370 – both parties entered into a contract for the sale of a
car under the belief that the car was a 1948 model when in fact it was a 1939 model. Once again the
mistake was not sufficiently fundamental to avoid the contract.
10. Raffles v. Wichelhaus (1864) 2 H & C 906: The court held that the contract was not enforceable
because there was ambiguity. Without a consensus ad idem (meeting of the minds) between the parties,
a binding contract could not be formed. The objective test indicated that a reasonable person would not
have been able to identify with certainty which ship was agreed upon.

11. Wood v. Scarth (1858) 1 F & F 293: The court refused the order of specific performance but the
defendant was liable in damages.

12. Hartog v Colin and Shields (1939): The court ultimately declared the contract void due to the mistake.
The test for determining whether a mistake voids a contract in this context appears to have three parts:
One party to the contract is genuinely mistaken over a material detail that, had the truth been known,
would have meant they could not have agreed to the terms stated.
The other party to the contract ought reasonably to have known about the mistake.
The party making the mistake was not at fault in any other way.

13. Smith v. Hughes (1871): The court held that it could not declare the contract void merely because one
party later discovered it was less advantageous than he believed.

14. Cundy v. Lindsay (1878): When a written contract is involved, extrinsic evidence is generally not
allowed to contradict the terms of the written agreement. However, for a mistake regarding the identity
of a party to render the agreement void, the mistaken party must establish several key points:
(i) Intent to deal with someone else: The mistaken party must demonstrate that they intended to transact
with a specific individual or entity other than the one they ended up dealing with.
(ii) Awareness of intention: It must be shown that the party with whom the mistaken party dealt was
aware of this intention to transact with someone else.
(iii) Identity as critical importance: The mistaken party must establish that they considered the identity
of the other party to be of critical importance to the agreement.
(iv) Reasonable steps taken: The mistaken party should have taken reasonable steps to ascertain the
identity of the other party before entering into the agreement.
These criteria collectively determine whether the mistaken party's belief about the identity of the other
party is sufficient to render the contract void. If all these conditions are met, it may be possible for the
mistaken party to successfully argue that the contract should be void due to the mistaken identity.

15. Ingram v. Little [1961] 1 QB 31: The claimants were treated as having made the offer to the real
businessman, not to the rogue. Since the rogue was incapable of accepting the offer on the
businessman’s behalf, there was no contract due to the mistake

16. Lewis v. Averay [1972]: The Court of Appeal held for the defendant. The claimant was presumed to
intend to contract with the person in front of him, no matter who that turned out to be. The court did not
think there was anything on the facts which displaced this presumption. There was therefore no mistake
as to a fundamental term of the contract. At most, the contract was merely voidable for
misrepresentation.
17. Saunders v Anglia Building Society [1971] AC 1004 & Petelin v Cullen [1975]: Mistake relating to
documents: the strict requirements necessary for a successful plea of non est factum are generally that:
 The person pleading non est factum must belong to "class of persons, who through no fault of their
own, are unable to have any understanding of the purpose of the particular document because of
blindness, illiteracy or some other disability." The disability must be one requiring the reliance on
others for advice as to what they are signing.  The "signatory must have made a fundamental mistake
as to the nature of the contents of the document being signed", including its practical effects.  The
document must have been radically different from one intended to be signed.

18. Foster v Mackinnon: an elderly man signed a bill of exchange but was only shown the back of it. He
was granted a new trial

10. MISREPRESENTATION

01. Bissett v Wilkinson: In this case, the vendor of land in New Zealand stated that it would support 2000
sheep. However, it was later found that the land could not support that many sheep. The court held that
the vendor was not liable for misrepresentation because the statement was deemed to be one of
opinion, not fact. Importantly, the purchaser was aware that the land had not previously been used for
sheep rearing, which influenced the court's decision.

02. Smith v Land and House Property Corp: Here, the vendor of a hotel described it as "let to Mr.
Frederick Fleck (a most desirable tenant)." However, it was discovered that the tenant was actually in
arrears with rent. The court considered this statement to be one of fact rather than opinion because the
vendor impliedly stated that he knew the fact supporting his opinion that the tenant was "desirable."
Therefore, the vendor was held liable for misrepresentation.

03. Dimmock v Hallet: This case involved land described as "fertile and improvable." The court held that
such expressions of opinion are often considered mere "puffs" and do not constitute representations of
fact. In other words, statements that describe the potential or possibilities of a property are generally
not treated as factual representations that can give rise to liability for misrepresentation.

04. Edington v Fitzmaurice: In this case, P was induced to lend money to a company based on the
directors' statement that they intended to use the funds for expansion. However, it was later revealed
that the directors never had such an intention; instead, they needed the money to pay off debts. The
court held that the directors' statement of intention amounted to a statement of fact. If a person
knowingly makes a promise or statement of intention that induces another party to enter into a contract
and then fails to carry out that promise, they can be held liable for misrepresentation.
05. Esso Petroleum v Mardon: In this case, Esso Petroleum provided Mardon with a forecast regarding the
future petrol throughput of a service station. However, the actual throughput fell short of the forecast.
The court found that Esso, being in possession of special knowledge and skill regarding petrol
throughput forecasts, had a duty of care to ensure the accuracy of the forecast. Since the forecast was
found to be negligently made, it constituted a misrepresentation. Esso was held liable for providing a
misleading forecast.

06. Solle v Butcher: In this case, the plaintiff told the defendant that he could charge a rent of £250 for a
flat. The defendant paid rent at this rate for some time before seeking a declaration that the standard
rent was actually £140. The defendant argued that the flat had become a new and separate dwelling,
not subject to Rent Restriction Acts. However, the court held that the plaintiff's statement regarding
the rent was a statement of fact, not law. The legal status of the flat was a matter of law, but the
representation about the rent amount was factual.

07. Beattie v Edbury: Here, directors of a company represented that they had the power under the
company's private Act to issue new preference shares ranking pari passu with an existing issue. The
court held that this representation was a statement of law, not fact. The legal authority to issue shares
is a matter of law, and everyone is presumed to know the law. Therefore, the representation was not
actionable as misrepresentation.

08. Beattie v Edbury: Here, directors of a company represented that they had the power under the
company's private Act to issue new preference shares ranking pari passu with an existing issue. The
court held that this representation was a statement of law, not fact. The legal authority to issue shares
is a matter of law, and everyone is presumed to know the law. Therefore, the representation was not
actionable as misrepresentation.

09. Cherry v Colonial Bank of Australia: In this case, directors of a bank borrowed funds without
obtaining the necessary consent from shareholders, as required by law. The court held that by
borrowing without consent, the directors had impliedly made a statement of fact - namely, that they
had obtained the shareholders' consent. This was actionable as misrepresentation because it was a
factual assertion about the directors' actions, rather than a statement of law.

10. Smith v Hughes: Justice Blackburn emphasized that there is no legal duty for a seller to inform the
buyer of a mistake unless induced by the seller's actions.

11. Fletcher v Krell: Here, a woman applied for the position of governess without disclosing her divorce
status. The court held that her silence about her marital status did not amount to misrepresentation.
Since the employer did not inquire about her marital status, the woman had no legal duty to disclose it.
This case reaffirms the principle that silence alone does not constitute misrepresentation unless there is
a specific duty to disclose.

12. Fletcher v Krell: Here, a woman applied for the position of governess without disclosing her divorce
status. The court held that her silence about her marital status did not amount to misrepresentation.
Since the employer did not inquire about her marital status, the woman had no legal duty to disclose it.
This case reaffirms the principle that silence alone does not constitute misrepresentation unless there is
a specific duty to disclose.
13. Nottingham Brick & Tile Co. v Butler: the purchaser asked the vendor's solicitor if the land was
subject to restrictive covenants. The solicitor replied that he was not aware of any, failing to mention
that he hadn't bothered to read the relevant documents. Although the solicitor's statement was literally
true, his failure to disclose crucial information amounted to a misrepresentation, allowing the
purchaser to rescind the contract.

14. With v O’Flanagan: involved negotiations for the sale of a medical practice. Initially valued at £2000,
the practice's value significantly declined due to the illness of the vendor by the time the contract was
made. The court set aside the contract, ruling that the vendor should have communicated the change in
circumstances. The vendor's silence in the face of this development constituted a misrepresentation.

15. Lambert v Co-Operative Insurance: Contracts Uberrimae Fiei, such as insurance contracts and family
settlements, impose a duty of disclosure of all material facts due to one party's superior knowledge. In
Lambert v Co-Operative Insurance, Mrs. Lambert failed to disclose her husband's previous convictions
when insuring her family's jewelry. The insurer avoided the policy, and the court upheld this decision,
emphasizing the duty of utmost good faith in insurance contracts.

16. Museprime Properties v Adhill Properties: the plaintiffs were able to rescind the contract due to
material misrepresentations that induced them to purchase the properties. The inaccurate statements
played a significant role in their decision-making process, justifying their claim for rescission, return
of deposit, damages, and interest.

17. Horsfall v Thomas: the buyer of a gun did not examine it before purchasing. Since the buyer was
unaware of any misrepresentation regarding the gun's defect, their decision to purchase was not
influenced by the concealment of the defect. Therefore, their claim for rescission failed due to lack of
reliance.

18. Attwood v Small: the purchasers of a mine relied on exaggerated statements about its earning capacity
made by the vendors. However, the purchasers had these statements checked by their own expert
agents, who erroneously confirmed their accuracy. Despite the misrepresentation, the court held that
the purchasers did not rely on the representations, thus denying their claim for rescission.

19. Redgrave v Hurd: the plaintiff solicitor advertised for a partner and represented the earnings of his
business during interviews. The defendant relied on these representations and agreed to purchase the
house and take a share in the business. Despite not thoroughly examining the business records
provided by the plaintiff, the defendant's reliance on the false representations was evident. The Court
of Appeal ruled in favor of the defendant, emphasizing that reliance on false representations is
sufficient to establish a claim for misrepresentation, regardless of the buyer's diligence in verifying the
information.

20. Derry v Peek: the defendants' statement about the company's right to use steam power was found to be
careless but not fraudulent because they honestly believed it to be true. However, in some legal
systems, such as Roman Dutch law, fraudulent intention is a prerequisite for proving fraud.
21. Hedley Byrne v Heller: Heller's statement about Easypower's creditworthiness led to losses for Hedley
Byrne, indicating negligent misrepresentation. Duty of care may arise, especially when the representor
has special skill or knowledge and knows that the representee will rely on the representation.

22. Misrepresentation Act 1967: provides remedies for negligent misrepresentation similar to those for
fraudulent misrepresentation, unless the defendant can prove they had reasonable grounds to believe
the facts they represented were true. Innocent misrepresentation, however, may lead to rescission of
the contract but generally does not result in damages.

23. Long v Lloyd: If the injured party affirms the contract after discovering the misrepresentation, they
may lose the right to rescind. In Long v Lloyd, the purchaser accepted the vehicle despite discovering
faults, thus affirming the contract.

24. In Leaf v International Galleries: Delay in seeking rescission may result in the loss of this remedy. In
Leaf v International Galleries, the plaintiff waited five years before seeking rescission, and the court
held that this delay barred the right to rescind.

25. Vigers v Pike: Rescission may be impossible if restitution cannot be made in full. For instance, in
Vigers v Pike, significant mineral extraction from a leased mine made rescission impractical.

26. Philips v Brooks: If a third party acquires rights in good faith and for value, the misrepresentee may
lose the right to rescind. This principle is illustrated in Philips v Brooks, where a third party's
acquisition of property rights prevented rescission.

27. Whittington v Seale-Hayne: Farwell J, following the precedent set by Bowen LJ in Newbigging v
Adam, ruled that the plaintiffs could recover expenses directly arising from obligations imposed by the
lease. These included rents, rates, and repair costs stipulated in the contract. However, expenses such
as removal costs and consequential losses, such as loss of profits, value of lost stock, and medical
expenses, were not recoverable under the indemnity. This is because they did not stem directly from
obligations outlined in the lease agreement. Awarding these expenses would essentially equate to
damages, which are distinct from indemnity. By delineating between expenses directly related to the
contract and those resulting from the operation of the plaintiffs' poultry farm, the court ensured that
indemnity served its purpose of reimbursing the innocent party for expenses incurred in complying
with the terms of the contract, without conflating it with damages for losses beyond the scope of the
contract itself.

28. Doyle v Olby (Ironmongers) Ltd: The defendant is bound to make reparation for all the actual damage
directly flowing from the fraudulent inducement...It does not lie in the mouth of the fraudulent person
to say that they could not have been reasonably foreseen
29. East v Maurer: The plaintiff could recover damages in respect of another such business in which he
would have invested his money if the representation had been made, but not the profits which he
would have made out of the defendant's business, if the representation relating to it had been true.

30. Esso v Mardon: The injured party may elect to claim damages for negligent misrepresentation at
common law. The test of remoteness in the tort of negligence is that the injured party may recover for
only reasonably foreseeable loss

31. Royscott Trust Ltd v Rogerson: The Court of Appeal held that the car dealer was liable to the finance
company under Section 2(1), applying the deceit rule. This meant that the dealer was responsible for
all the losses suffered by the finance company, even if those losses were unforeseeable, as long as they
were not too remote. It was foreseeable that a customer buying a car on hire purchase might
dishonestly sell the car, so the dealer was liable for the losses incurred by the finance company due to
this misrepresentation.

32. s. 2(2) of the Misrepresentation Act 1967: gives the court a discretion, where the injured party would
be entitled to rescind, to award damages in lieu of rescission. Damages under s.2(2) cannot be claim as
such; they can only be awarded by the court.

11. DURESS

01. Barton v Armstrong: ruling underscored the principle that contracts entered into under duress, even if
the duress played only a partial role in the decision-making process, are voidable. It placed the burden
of proof on the party making the threats to demonstrate that their actions did not influence the victim's
decision to enter into the contract. Barton v Armstrong expanded the scope of duress to the person
beyond just physical violence, recognizing that threats of harm, including death threats, can coerce
individuals into agreements they would not otherwise make.

02. Skeate v Beale: Under the 19th-century limitation on duress, threats related to the seizure of goods did
not constitute sufficient duress to render a contract void. The threat of distress, though wrongful, was
not deemed as duress in this context. Therefore, the contract remained valid even though it was
entered into under such circumstances.

03. Maskell v Horner: A broader restitutionary principle applies where money paid to avoid goods being
seized or to obtain their release could be recovered. The plaintiff could recover the money paid under
the threat of goods seizure. This case established that payments made under duress involving the
seizure of goods could be subject to recovery under a wider restitutionary rule.

04. The Sibeon and The Sibotre Case: it was confirmed that duress can indeed take the form of economic
pressure. This acknowledgment reinforces the idea that economic coercion can invalidate a contract if
it undermines the voluntariness of the agreement.
 05. The Atlantic Baron: economic duress can occur in commercial transactions, particularly when one
party threatens to breach a contract unless the other party agrees to unfavorable terms. However, the
affected party must act promptly to reclaim their rights, as delay can result in the loss of the right to
rescind the contract.

06. Pao On v Lau Yiu Long: Lord Scarman, concurring with the judgment, emphasized that mere
commercial pressure is not sufficient to establish duress. There must be a factor that coerces the
individual's will to the extent that it vitiates their consent. To determine whether there was coercion of
will:
It's essential to consider whether the alleged coerced party protested at the time of making the contract.
Whether they had alternative courses of action available to them, such as adequate legal remedies.
Whether they sought independent advice.
Whether they took any steps to avoid the contract after entering into it.
These factors are relevant in assessing whether the individual acted voluntarily or not. In this case,
since the defendant made a conscious decision after considering their options and chose to agree to the
renegotiation, the court found that there was no coercion of will and thus upheld the validity of the
contract.

07. The Universe Sentinel: This ruling reflects a broader understanding of economic duress, recognizing
that even if a party technically consents to the terms of a contract, their consent may not be genuine if
it was obtained under duress. Therefore, contracts entered into under economic duress may be
voidable, and the aggrieved party may seek to recover any payments made under duress.

08. B&S Contractors v Victor Green Publications: This ruling demonstrates the court's recognition that
economic duress can arise when one party exploits the urgent needs or vulnerabilities of another party
to extract additional payments or concessions.

12. UNDUE INFLUENCE

01. Williams v Bailey: This case highlights the importance of ensuring that contracts are entered into freely and
without undue pressure or influence from other parties.

02. Wright v Vanderplank: The parent-child relationship inherently involves trust and confidence, making it
susceptible to presumed undue influence.

03. Wright v Carter: Similarly, the relationship between a solicitor and client involves trust and reliance on the
solicitor's expertise, creating a presumption of undue influence.

04. Mitchell v Homfray: The vulnerability of patients and their reliance on medical professionals for advice and
care can lead to presumed undue influence.
05. Ellis v Barker: Trustees have a fiduciary duty to act in the best interests of beneficiaries, and any transaction
between them may raise suspicions of undue influence.

06. Roche v Sherrington: Religious advisers often hold significant influence over their followers, making
transactions between them subject to scrutiny.

07. Allcard v Skinner: This case underscores the importance of prompt action and equitable considerations in
cases involving undue influence and voidable transactions.

08. Midland Bank v Shepherd; The relationship between husband and wife does not, as a matter of law raise a
presumption of undue influence

09. Matthew v Bobbins: The relationship between employer and employee does not, as a matter of law raise a
presumption of undue influence

10. Lloyd's Bank v Bundy: highlights the court's recognition of the duty owed by a bank to a customer in certain
circumstances, particularly when there is a relationship of trust and confidence, and when the bank stands to
benefit from the transaction. Failure to uphold this duty, especially in the absence of independent advice for
the customer, can lead to the setting aside of the transaction due to undue influence.

11. National Westminster Bank v Morgan: With both presumptions (as a matter of law and upon proving the
existence of a relationship under which the complainant generally reposed trust and confidence in the
wrongdoer) the transaction must be to the ‘manifest disadvantage’ of the party claiming undue influence

13. UNENFORCEABLE CONTRACTS

01. Mahmoud & Isphani (1921) 2 KB 731: Statutory prohibitions could be express or implied. They may
declare certain contracts null and void or prohibit making of a contract in a manner other than specified
under the pain of invalidity.

02. Hull Blyth & Co v. Valliappa Chettiar: The court highlighted that if a contract is made with a party who is
not aware of or not involved in the offense created by the statute, the contract may still be valid, even if it
violates the statute.

03. Fernando v. Ranmanathan: underscores the importance of discerning legislative intent when assessing the
legality of contracts. If the intent is to discourage certain transactions through charges or fees, the contract
may still be valid. However, if the intent is to protect public interests through compliance requirements,
contracts failing to meet those standards could be deemed illegal.
04. Light Weight Body Armour Ltd v. SL Army: Public policy is a restitution cause which once gotten in, no
knowing where it will lead to.

05. Richardson v. Mellish (1824) 2 BING 229 at 252: Burroughs J stated: Although social concepts are ever
changing, at any given point in time, there would be definite types of contractual clauses which law would
condemn on grounds of public policy.

06. Fernando v. Piyadasa 61 NLR 566: All bargains to stifle criminal prosecution (by supressing
investigations, deterring citizens from their public duty of assisting the detection and punishment of crime)
are void and against public policy.

07. Vijiya Narayan v. Gen. Insurance Co 47 NLR 289: Agreements that Conflict With Morality: Agreements
relating to;  Mess up or restrain marriages.  Voluntary separation of husband wife.  Marriage brokerage.
 Maintenance.  Future succession.  Usury.  Wagering based on chance or uncertainty.

08. Swaminadan Chetti v. Douglas 32 NLR 293: Restraint of individual freedom.

09. Finlays Rentokil v.Vivekananthan (1995) 2 SLR 346: an injunction will not be allowed against an
employee if it would force the employee working for the former employer or starve

14. DAMAGES

01. Hedley Byrne v Heller: Damages are not available for undue influence but of a bank has broken a duty
of care damages may be available in negligence

02. Gooneratne v Don Philip S; Bodigar v Nagoor; Ratwatte v Goonesekera: Laesio Enormis is a legal
concept derived from Roman Dutch law, which is applicable in certain legal systems, particularly in
some jurisdictions influenced by Roman-Dutch legal principles, such as Sri Lanka. It deals with
situations where there is a significant disparity between the value received by one party in a contract and
the consideration provided by that party.

03. Hadley v Baxendale: damages for a breach of contract must be foreseeable or within the contemplation
of both parties at the time of contracting. The case underscores the importance of communication and
the consideration of foreseeable consequences when assessing damages for breach of contract.

04. Victoria Laundry v Newman Industries: while compensation for ordinary loss of profits was warranted
due to the delayed delivery, Victoria Laundry could not claim extraordinary profits from a particularly
lucrative contract unless Newman Industries had sufficient knowledge or acceptance of liability for such
losses. This case highlights the distinction between different types of loss and the requirement for
foreseeability and knowledge in claiming damages for breach of contract.
05. Heron II v. Koufos: illustrates the distinction between the principles of remoteness of damages in
contract law compared to tort law. It emphasizes the requirement for a higher degree of probability for
the loss to be considered within the contemplation of the parties in contract law, using the phrase 'not
unlikely', rather than simply 'foreseeability'.

Mitigation of loss: it is the duty of every plaintiff to mitigate his loss, that is, to do his best not to
increase the amount of damage done. There are three rules:- (i) The plaintiff cannot recover for loss
which the plaintiff could have avoided by taking reasonable steps; (ii) The plaintiff cannot recover for
any loss he has actually avoided, even though he took more steps than were necessary in compliance
with the rule above; and (iii) The plaintiff may recover loss incurred in taking reasonable steps to
mitigate his loss, even though he did not succeed.

06. Sale of Goods Ordinance Section 50(1): Where the seller wrongfully, neglects or refuses to deliver the
goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery.

07. Sale of Goods Ordinance Section 49(1): Where the buyer wrongfully neglects or refuses to accept and
pay for the goods, the seller may maintain an action against him for damages for non-acceptance.

15. REMEDIES

01. TSB Bank v Camfield: where rescission is ordered the whole transaction will be set aside.

02. O’Sullivan v Management Agency & Music Ltd: However, the fact that restitution integrum is
impossible will not be a bar to rescission.

03. Barclays v Caplan: It may be possible for the court to sever from an instrument affected by undue
influence the objectionable parts leaving the part uncontaminated by undue influence enforceable

04. Warner Bros v Nelson: the defendant could be restrained by an injunction from breaking the second
understanding. She would not be forced to act for the plaintiff because she could earn a living by doing
other work.
 16. QUANTUM MERUIT

01. Sumpter v Hedges: quantum meruit payment would require the inference of a new contract for the partial
work, independent from the lump sum contract. Yet, on the facts, there is no inference of a new contract for
partial works. As the only applicable contract is the lump sum contract, the employee was not entitled to
recover the contract price for his partial performance of the contractual works.

02. Universal Acupuncture Pain Servs. V. Quadrino & Schwartz, 02-9469: Held that attorneys are entitled to recover
in quantum merit for services rendered to a client in a contingency case where the client discharges the
attorneys before the case's completion, even if the client fails to recover any damages.

17. PRIVITY OF CONTRACT

01. Donoghue v. Stevenson: highlights the duty of care that manufacturers owe to consumers, emphasizing
accountability for ensuring the safety and quality of their products. It illustrates how negligence
principles are applied to hold parties responsible for their actions or omissions, even in cases where
there is no direct contractual relationship between them.

02. Price v. Easton, Tweddle v. Atkinson, Dunlop Pneumatic Tyre v. Selfridge and Co. Ltd: In Price v. Easton, a
contract was made where work would be done in exchange for payment to someone else. When that
third party tried to sue for the payment, the court said they couldn't because they weren't directly
involved in the contract and didn't provide anything of value themselves.
Similarly, in Tweddle v. Atkinson, someone couldn't sue for payment that was promised to their father
because they didn't give anything in return for that promise.
These cases helped establish the importance of consideration in contracts. Consideration ensures that
both parties are giving something of value and helps make contracts legally binding.
In Dunlop Pneumatic Tyre v. Selfridge and Co. Ltd., Lord Haldane further clarified this principle,
emphasizing that consideration must move from the promisee, meaning each party must give
something of value for the contract to be valid.

03. Winterbottom v. Wright: This ruling was important because it helped establish the concept that,
generally, if there's no direct agreement or contract between two parties, one party can't sue the other
for damages or injuries. This idea of "privity of contract" has influenced how negligence cases are
handled, helping to define who can be held legally responsible for harm caused by faulty products or
actions.