Lens v Devonshire
Club (1914)
It was held that the winner of a competition held by a golf
club could not sue for his prize where "no one concerned with that
competition ever intended that there should be any legal results flowing from
the conditions posted and the acceptance by the competitor of those
conditions".
Balfour v Balfour
(1919)
The defendant who worked in Ceylon, came to England with his
wife on holiday. He later returned to Ceylon alone, the wife remaining in
England for health reasons. The defendant promised to pay the plaintiff £30 per
month as maintenance, but failed to keep up the payments when the marriage
broke up. The wife sued. It was held that the wife could not succeed because: (1)
she had provided no consideration for the promise to pay £30; and (2)
agreements between husbands and wives are not contracts because the parties do
not intend them to be legally binding.
Merrit v Merrit
(1970)
The husband left his wife. They met to make arrangements for
the future. The husband agreed to pay £40 per month maintenance, out of which
the wife would pay the mortgage. When the mortgage was paid off he would
transfer the house from joint names to the wife's name. He wrote this down and
signed the paper, but later refused to transfer the house.
It was held that when the agreement was made, the husband
and wife were no longer living together, therefore they must have intended the
agreement to be binding, as they would base their future actions on it. This
intention was evidenced by the writing. The husband had to transfer the house
to the wife.
Parker v Clarke
(1960)
Mrs Parker was the niece of Mrs Clarke. An agreement was
made that the Parkers would sell their house and live with the Clarkes. They
would share the bills and the Clarkes would then leave the house to the
Parkers. Mrs Clarke wrote to the Parkers giving them the details of expenses
and confirming the agreement. The Parkers sold their house and moved in. Mr
Clarke changed his will leaving the house to the Parkers. Later the couples
fell out and the Parkers were asked to leave. They claimed damages for breach
of contract.
It was held that the exchange of letters showed the two
couples were serious and the agreement was intended to be legally binding
because (1) the Parkers had sold their own home, and (2) Mr Clarke changed his
will. Therefore the Parkers were entitled to damages.
Tanner v Tanner
(1975)
A man promised a woman that the house in which they had
lived together (without being married) should be available for her and the
couple's children. It was held that the promise had contractual force because,
in reliance on it, the woman had moved out of her rent-controlled flat.
Jones v Padavatton
(1969)
In 1962, Mrs Jones offered a monthly allowance to her
daughter if she would give up her job in America and come to England and study
to become a barrister. Because of accommodation problems Mrs Jones bought a
house in London where the daughter lived and received rents from other tenants.
In 1967 they fell out and Mrs Jones claimed the house even though the daughter
had not even passed half of her exams.
It was held that the first agreement to study was a family
arrangement and not intended to be binding. Even if it was, it could only be
deemed to be for a reasonable time, in this case five years. The second
agreement was only a family agreement and there was no intention to create
legal relations. Therefore, the mother was not liable on the maintenance
agreement and could also claim the house.
Simpkins v Pays
(1955)
The defendant, her granddaughter, and the plaintiff, a
paying lodger shared a house. They all contributed one-third of the stake in
entering a competition in the defendant's name. One week a prize of £750 was
won but on the defendant's refusal to share the prize, the plaintiff sued for a
third.
It was held that the presence of the outsider rebutted the
presumption that it was a family agreement and not intended to be binding. The
mutual arrangement was a joint enterprise to which cash was contributed in the
expectation of sharing any prize.
BUSINESS/COMMERCIAL AGREEMENTS
Rose v Crompton
Bros (1925)
The defendants were paper manufacturers and entered into an
agreement with the plaintiffs whereby the plaintiffs were to act as sole agents
for the sale of the defendant's paper in the US. The written agreement
contained a clause that it was not entered into as a formal or legal agreement
and would not be subject to legal jurisdiction in the courts but was a record
of the purpose and intention of the parties to which they honourably pledged
themselves, that it would be carried through with mutual loyalty and friendly
co-operation. The plaintiffs placed orders for paper which were accepted by the
defendants. Before the orders were sent, the defendants terminated the agency
agreement and refused to send the paper.
It was held that the sole agency agreement was not binding
owing to the inclusion of the "honourable pledge clause". Regarding
the orders which had been placed and accepted, however, contracts had been
created and the defendants, in failing to execute them, were in breach of
contract.
Jones v Vernon
Pools (1938)
The plaintiff claimed to have won the football pools. The
coupon stated that the transaction was "binding in honour only". It
was held that the plaintiff was not entitled to recover because the agreement
was based on the honour of the parties (and thus not legally binding).
Edwards v Skyways
(1964)
The plaintiff pilot was made redundant by the defendant. He
had been informed by his pilots association that he would be given an ex gratia payment (ie, a gift). The defendant failed to pay and the pilot sued. The
defendant argued that the use of the words "ex gratia" showed that
there was no intention to create legal relations.
It was held that this agreement related to business matters
and was presumed to be binding. The defendants had failed to rebut this
presumption. The court also stated that the words "ex gratia" or
"without admission of liability" are used simply to indicate that the
party agreeing to pay does not admit any pre-existing liability on his part;
but he is certainly not seeking to preclude the legal enforceability of the
settlement itself by describing the payment as "ex gratia".
JH Milner v Percy
Bilton (1966)
A property developer reached an "understanding"
with a firm of solicitors to employ them in connection with a proposed
development, but neither side entered into a definite commitment. The use of
deliberately vague language was held to negative contractual intention.
Weeks v Tybald
(1605)
The defendant "affirmed and published that he would
give £100 to him that should marry his daughter with his consent." The
court held that "It is not reasonable that the defendant should be bound
by such general words spoken to excite suitors."
Heilbut, Symons
& Co v Buckleton (1913)
The plaintiff said to the defendants' manager that he
understood the defendants to be "bringing out a rubber company." The
manager replied that they were, on the strength of which statement the
plaintiff applied for, and was allotted, shares in the company. It turned out
not to be a rubber company and the plaintiff claimed damages, alleging that the
defendants had warranted that it was a rubber company. The claim failed as
nothing said by the defendants' manager was intended to have contractual
effect.
Kleinwort Benson v
Malaysia Mining Corp (1989)
The plaintiff bank agreed with the defendants to lend money
to a subsidiary of the defendants. As part of the arrangement, the defendants
gave the plaintiffs a letter of comfort which stated that it was the company's
policy to ensure that the business of its subsidiary is at all times in a
position to meet its liabilities. The subsidiary went into liquidation and the
plaintiffs claimed payment from the defendants.
It was held that the letters of comfort were statements of
the company's present policy, and not contractual promises as to future
conduct. They were not intended to create legal relations, and gave rise to no
more than a moral responsibility on the part of the defendants to meet the
subsidiary's debt.
Esso Petroleum Ltd
v Commissioners of Customs and Excise [1976] 1 All ER 117
In 1970 the taxpayers ('Esso') devised a petrol sales
promotion scheme. The scheme involved the distribution of millions of coins to
petrol stations which sold Esso petrol. Each of the coins bore the likeness of
one of the members of the English soccer team which went to Mexico in 1970 to
play in the World Cup competition. The object of the scheme was that petrol
station proprietors should encourage motorists to buy Esso petrol by offering
to give away a coin for every four gallons of Esso petrol which the motorist
bought. The coins were of little intrinsic value but it was hoped that
motorists would persist in buying Esso petrol in order to collect the full set
of 30 coins. The scheme was extensively advertised by Esso in the press and on
television with phrases such as: 'Going free, at your Esso Action Station now',
and: 'We are giving you a coin with every four gallons of Esso petrol you buy.'
Folders were also circulated by Esso to petrol stations which stated, inter
alia: 'One coin should be given to every motorist who buys four gallons of
petrol - two coins for eight gallons and so on.' 4,900 petrol stations joined
the scheme. Large posters were delivered by Esso to those stations, the most
prominent lettering on the posters stating: 'The World Cup coins', 'One coin
given with every four gallons of petrol'. The Customs and Excise Commissioners
claimed that the coins were chargeable to purchase tax under s2(1) of the
Purchase Tax Act 1963 on the ground that they had been 'produced in quantity
for general sale' and therefore fell within Group 25 of Sch 1 to the 1963 Act.
Held (Lord Fraser of Tullybelton dissenting) - The coins had
not been 'produced … for … sale', within Group 25 of Sch 1, and were not
therefore chargeable for the following reasons -
(i) On the basis
that the posters and other advertising material constituted an offer by the
garage proprietors to enter into a contract with each customer to supply a coin
with every four gallons of petrol sold, the contract envisaged was not a
contract of 'sale', since the consideration for the transfer of the coins was
not a money payment but the undertaking by the customer to enter into a
collateral contract to purchase the appropriate quantity of Esso petrol.
(ii) (per Viscount
Dilhorne and Lord Russell of Killowen, Lord Wilberforce and Lord Simon of
Glaisdale dissenting) Furthermore, in the circumstances, and in particular in
view of the fact that the coins were of little intrinsic value to customers, it
could not be inferred that either Esso or the petrol station proprietors on the
one hand, or the customers on the other, intended that there should be a
legally binding contract to supply the coins to customers who bought the
appropriate quantity of petrol. It followed that the coins had been produced
for distribution by way of gift and not by way of sale.
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