BetterLawNotes-5 (2)


Not all contracts are formed by the process of offer and acceptance. There may be a single signed document or there may be an exchange of documents each of which is signed by one or both parties. Exceptionally, the court may find that a contract has been formed by performance of the agreement itself.

Brogden v The Directors of the Metropolitan Railway Co (1877) 2 App Cas 666

M sent a draft agreement to B. The draft agreement included an arbitration clause, but the name of the arbitrator had been left blank. B inserted a name, wrote “approved” at the end of the draft and signed it and sent it back to M. M filed the agreement at its office. For a time, both parties proceeded to deal with each other pursuant to the terms of the agreement. Subsequently a dispute arose, and B claimed that there was no contract between the parties. The House of Lords held that the conduct of the parties had established a contract between them, and that B was in breach of the contract and hence liable to M.

Clarke v Dunraven, the Satanita [1897] AC 59 (HL)

C and D entered their yachts in a yacht club race. Each agreed to be bound by the club’s sailing rules. During the race, D’s yacht collided with and sank C’s yacht. The collision was due to improper navigation by D’s yacht which constituted a breach of the sailing rules. The House of Lords, affirming the Court of Appeal, held that there was a contract between C and D and C was entitled to recover damages from D for breach of that contract and D’s liability was not limited under the Merchant Shipping Act Amendment Act 1862.

‘I cannot entertain any doubt that there was a contractual relation between the parties to this litigation. The effect of their entering for the race, and undertaking to be bound by these rules to the knowledge of each other, is sufficient, I think, where those rules indicate a liability on the part of the one to the other, to create a contractual obligation to discharge that liability.’ (Lord Herschell at 63).

Upton v Powell [1942] 1 All ER 220

P’s barn caught fire. He called Upton police and asked for the fire brigade to be sent. The policeman telephoned a garage near the Upton fire station, the fire station having no telephone, and the Upton brigade duly attended the scene and put out the fire. It transpired that while P lived in the Upton police district, he lived in the Pershore, not the Upton, fire district. It followed that P was entitled to the services of the Pershore brigade free of charge but not those of the Upton brigade. At the time the fire brigade was sent all concerned believed that P’s barn lay in the Upton fire district. The Court of Appeal upheld the judge’s finding that there was a contract between Upton fire brigade and P by which P promised to pay for the brigade’s services.

Taylor v Allon [1966] 1 QB 304

T’s car insurance policy had expired on 5th April. He had intended to change insurers and had a 30-day cover note from his new insurers taking effect from 16th April. He had also been sent a 15-day cover note from his old insurer taking effect from 6th April. T was stopped by the police on 15th April. He produced his expired certificate and the temporary cover note from his new insurers. He did not produce the cover note from his old insurers. T was charged with driving a motor car without insurance. T’s old insurers gave evidence at the hearing that they would have assumed liability under the 15-day cover note. T was convicted. His subsequent appeal against conviction was dismissed.

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