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Elements in a Contract - Cases involving local councils
In Amalgamated Investment & Property Co Ltd v John Walker & Sons Ltd (1977) (Mistake) - the seller sold the buyer a warehouse knowing that the buyer intended to redevelop the property. A day later the Department of Environment Designated the property a listed building – a mechanism that is used to protect buildings of historic importance or significance. The buyer brought an action in court to render the contract void on the grounds that a mistake had been made. The court held that there was valid and enforceable contract. At the time the parties entered into the contract neither of the parties knew that the building was to become a listed building.
In Blackpool and Flyde Aero Club Ltd v Blackpool Borough Council (1990) (Invitation to Treat) - the defendants invited tenders from operators wishing to operate flights from the local airport to submit a tender by a stipulated date. The plaintiffs submitted a tender by the stipulated date but it arrived after the stipulated date. As a result, the defendants refused to consider the tender and the plaintiffs sued. It was held that the defendants’ invitation to tender was an invitation to treat and since the plaintiffs had submitted a genuine offer the defendants must consider it.
In Chapleton v Barry Urban District Council (1940) (Express Terms) - the plaintiff hired a deck chair from Barry UDC and according to the sign that was posted, payment for the hire of the chair was to be made at a specified counter or booth. The plaintiff followed the instructions and once payment was made he was given a receipt which had an exclusion clause printed on it that excluded liability for injury incurred while using the chairs. The plaintiff sat on the chair and was injured as a result of a faulty chair. He brought an action against Barry UDC and was successful in his claim.
The court held that the terms in a contract must be made or stipulated prior to the acceptance or the formalization of the contract and any term, stipulation or clause that came after the formalization of the agreement would not be part of the contract.
In Glasbrook Brothers v Glarmorgan County Council (1925) (Consideration) - the defendants owned a colliery and requested for protection from the police during a strike. Once the strike was over the police submitted a bill for the work that they had put in. The defendants refused to pay and an action was brought against the defendants. The plaintiffs were successful because in providing the additional resources that was required the police had gone over and above their duty.
In Gibson v Manchester City Council (1979) (Offer) - Manchester City Council advertised details of a scheme for tenants to buy their council houses. The plaintiff wrote to the council and the council accordingly replied with a price and certain terms. The house was then taken off the list of tenant-occupied houses maintained by the council and put on the house purchase list. A local election ensued and the new council reversed the policies of the former council and the sale did not go through. Gibson sued.
The Court of Appeal held that despite the fact that all the formalities had not been concluded, there was a clear intention to contract based on the transaction or what had transpired as a whole and found in favor of the plaintiff.
The council appealed. The House of Lords held that the fact that the council stated the price of the house and some other terms did not mean that there was an offer. It was merely a step in the negotiation process and the negotiations had not yet ripened into a contract.
In Kleinwort Benson Ltd v Lincoln City Council (1999) (Mistake) - a bank had paid a local council for certain financial transactions which at the time of making the payments, the bank was under the impression that such payments were legal. It later turned out that the payments were illegal and the court ruled that the payments should be returned to the bank. The bank had made a mistake of law.
In Liverpool City Council v Irwin (1977) (Parol Evidence) - the tenants in a block of flats rented out by the City Council refused to pay the rent because the flats were in a state of disrepair and some of the basic amenities were either not available or were unusable. The council sued and in their claim they argued that the duty to keep the flats in good repair was not a term of the agreement. The House of Lords held that the landlord should take reasonable care to ensure that the facilities were kept in a good state of repair and the plaintiffs were unsuccessful in their claim.
In Storer v Manchester City Council (1974) (Offer) – the city council wrote to a sitting tenant (a sitting tenant is a tenant who is already occupying a property and has a legal right to stay on the premises) asking him if he wished to purchase the property he was residing in and if so to sign and return the council’s standard form agreement, which the tenant did.
Soon after a new council took over and did not wish to proceed with the agreement and put forward the argument that the agreement had not been signed on the council’s behalf. It was held that the council had made a valid offer and its acceptance constituted a contract, despite the fact that, it was not signed by the council’s representative.
© 2017 Kathiresan Ramachanderam and Dyarne Jessica Ward