BetterLawNotes-5 (2)

CONTRACT LAW

Suppose that Alice and Bob agree to meet at their local pub on Saturday at 8 pm. On the night Alice is stood up: Bob decides to go to the cinema with Chrissie instead. Can Alice sue Bob for breach of contract?

Just because it is possible to establish that an offer has been accepted and that consideration has been provided, does not mean a contract, in the sense of a legally enforceable agreement, has been created. Why not? Because the parties may not have intended that their agreement give rise to legal obligations.

The classic examples are social and family arrangements.

Balfour v Balfour [1919] 2 KB 571

Mr B was employed in Ceylon. He returned to England with Mrs B on leave but due to illness she was unable to return to Ceylon with him. Mr B promised to pay his wife a monthly allowance of £30 pending her return to Ceylon. Mr B failed to pay the allowance and Mrs B sued him. The court held that Mr B’s promise was unenforceable.

‘It is necessary to remember that there are agreements between parties which do not result in contracts within the meaning of that term in our law. The ordinary example is where two parties agree to take a walk together, or where there is an offer and an acceptance of hospitality. Nobody would suggest in ordinary circumstances that those agreements result in what we know as a contract.’

(Atkin LJ at 578).

Jones v Padavatton [1969] 2 All ER 616

A mother promised her daughter that if the daughter gave up her job in the United States and came to England to read for the Bar, the mother would pay her $200 a month for the duration of her studies. A majority of the Court of Appeal held that the mother and daughter had not intended that the mother’s promise be legally enforceable.

Contrast Balfour and Jones with Merritt v Merritt.

Merritt v Merritt [1970] 2 All ER 760

Mr M had left Mrs M and was living with another woman. Mr M promised to pay his wife a weekly sum and signed a written agreement promising that if the wife paid off the mortgage Mr M would transfer beneficial ownership of the house to her. The court held that the agreement was binding.

In a commercial context, there is a general presumption that the parties intend their agreement to be legally binding. But the presumption may be rebutted.

Rose & Frank Co v Crompton [1925] AC 445

The parties agreed for R&F to distribute C’s goods in the United States and Canada. The arrangement was expressly stated not to constitute a formal or legal agreement and not to be subject to the jurisdiction of the law courts of the US or England. R&F acted as distributor of C’s goods for a number of years until C sought to terminate the arrangement without giving the period of notice specified in the agreement. R&F’s action for breach of contract failed on the ground that the obligation to give notice of termination specified in the agreement was not legally enforceable.

Appleson v Littlewoods [1939] 1 All ER 464

The claimant’s action against the defendant for failing to honour a winning football pools coupon failed. The operation of the pools was stated not to ‘attended by or give rise to any legal relationship whatsoever’.

But compare the previous two cases with Edwards v Skyways.

Edwards v Skyways Ltd [1964] 1 WLR 349

An airline company promised to make ‘ex gratia’ payments to redundant pilots. The claimant, one of the redundant pilots, sought to enforce the promise. The judge held that the words ‘ex gratia’ indicated that the company was not admitting to any pre-existing liability, not that its promise to make the payment was not to be enforceable.

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