MORAN v UNIVERSITY COLLEGE SALFORD

(c) Charlotte and Stephen Halliday; Supplied by The Public Catalogue Foundation

Interlocutory discourse between those that apply for, or request, obtainment of services, and the party empowered to grant them, can on the surface, appear to suggest a verbal, or somewhat provisional agreement to contract to one another.

Unfortunately, it would seem that under common law, this would be a false assumption, as there is still yet more to require a binding agreement; so, when an applicant for a university degree course becomes victim to an administrative error, it is left for the courts to clarify the mechanics of these arrangements in a light that might well surprise. 

After choosing to study for a recognised qualification in a competitive field, the appellant used a central admissions system to act on his behalf when approaching a number of suitable universities.

After facing a volume of rejections, he received an unconditional offer from a provider of notable standing; however, there were certain conditions attached to the offer, and one of those, was the preclusion from seeking admission through the clearing system, as well as accepting any other offers from universities at a later date.

The appellant duly acquiesced to these conditions and returned his acceptance form, both in good time and using the methods prescribed by the university.

During the period between his acceptance and subsequent discovery that his application had been denied due to oversubscription, the appellant had left his position of employment, turned down a second interview for another post, surrendered his tenancy with his landlord and made plans to relocate in order to support his education.

In fact, it was due to a phone call to the university that he learned of the error; at which point, he was informed that he could try to apply for an alternative course through clearing (which by this time had run its course). 

When seeking legal remedy under (i) specific performance (ii) mandatory injunction and (iii) breach of contract, the court found that although the offer had been sent and the acceptance received within the guidelines, there was no guarantee of contract until the enrolment process and payment of fees had occurred.

As this fact prevented the existence of a contract, any claim for specific performance was quashed, along with that of a breach or mandatory injunction; yet, upon appeal, the details of the arrangement were given a thorough examination and some interesting facts emerged.

While it was central admission policy to issue application guidelines to the public, there were similar guidelines issued to the receiving universities that contained within them, important information that upon consideration, warranted inclusion to the former documentation as they outlined the responsibilities of the providers where such errors were found.

In addition to this, the failure of the admissions team to properly address the appellants application had denied him any opportunity to enter clearing; an act held by the Court as consideration prior to contract.

Unfortunately, despite the good intention and sufferance of the applicant (under the assumption that a legal contract had been constructed), the court ruled that as with the first judgment, there had been no evidence to suggest a contract existed, because there had been no formal enrolment and agreed payment of fees; a caveat which had been further construed from the terms contained within the central admissions guide.

“Whether or not….an agreement is legally enforceable depends primarily upon the terms of the particular agreement and secondly upon the ‘matrix’ which is provided by the scheme itself.”

GRANT v BRAGG

As can sometimes happen, the mediation by a solicitor can prove the undoing of bargaining between parties, when for one reason or another, the third party attempts to manipulate matters to the detriment of those he was initially employed to serve.

On this occasion, a shareholder sale agreement was drafted by two company co-directors; one of whom, had decided upon his retirement to relinquish his stake holding for a sum of around £347,000.

During the preliminary stages of the contract, numerous oral agreements were made with little to no conflict; however, as time progressed, the matter became complicated through the construction of a draft agreement, which had been worded by a second firm of solicitors.

At the point of litigation, communication had deteriorated to a quick succession of emails between the respondent and the solicitor alleged to be acting for both parties.

Within these exchanges were a number of comments and misinterpretations that ultimately derailed the negotiations; however, for the purposes of the clarification, the timeline was as follows:

(1) A draft agreement was made on behalf of both parties, subject to mutual consent to the document’s wording.

(2) The respondent’s solicitors suggested an amendment to the terms of the agreement.

(3) The suggestion was construed by the appellant as a rejection of the agreement.

(4) The mediating solicitor construed from a telephone conversation, that the respondent was refusing to sign the agreement without knowledge of the appellant’s future plans.

(5) The respondent expressed that he perceived the appellant to be contractually obliged to purchase the shares.

(6) The respondent denied he had any interest in the future of the company or the appellant.

(7) The mediating solicitor imposed a time restriction for acceptance of the draft agreement.

(8) The mediating solicitor withdrew his services upon expiration of the time restriction.

(9) The respondent later agreed to sign the agreement, despite his earlier reservations.

In the first hearing, the judge found that the discussions within the first and last email were tantamount to a binding contract; and so, awarded accordingly.

However, at the Court of Appeal a reexamination of the facts and chronology of events painted quite a different picture.

Here, it was held that while the contract itself was not subject to time penalties, the position adopted by the ‘mediating’ solicitor was one that implied how all terms of the bargain were now defined through his presence.

Therefore, by the imposition of a threshold upon which to contract, the eventual acceptance by the respondent was both after the fact and thereby null in effect.

Hence, for that reason (and perhaps unnecessary element of the negotiation) the appeal was upheld and judgment awarded to the appellant, while the court reminded the parties that:

“[T]here is a distinction between a counter-offer or a refusal, which does put an end to an offer, and a request for further information which does not amount to a new offer but is to an investigation of the offering party’s position.”

DESTINY 1 v LLOYDS TSB BANK

As discussed in Crest Nicholson, it is imperative for disputing parties to recognise that the wording of documents and the terms implied behind them, are not to be misconstrued to the detriment of those seeking justice (as is demonstrated in this brief matter).

When a small business owner found himself in a position to expand upon his success as a retail outlet, he began negotiations with a new bank that had shown an interest in helping him secure an additional property with a view to opening a second store.

As there were complex requirements within the proposed arrangement, there needed to be a number of component contracts that would collectively form a single binding contract.

These came in a number of different forms, including several small charges against the properties held under title by the appellant, a guarantee of indemnity for a supplier the appellant had chosen for his new store, and  a re-financing of an existing loan with his current bank; which due to its significant size, formed the footing of the agreement, because without it the bank had no means by which to achieve a workable profit.

As part of the pre-contract process, the bank sent a letter that conveyed its agreement to proceed with the package contract, on the proviso that the appellant also agreed to submit to the terms contained within the letter and the actions he was required to undertake prior to their commencement.

The appellant duly signed and returned the letter to display his compliance with those terms, but unfortunately for reasons not outlined within the appeal hearing, the bank was unable to proceed with the loan refinancing; therefore, the proposed arrangement could not be realised.

It was this unexpected withdrawal that promoted the appellant to cite that his business had subsequently suffered pecuniary losses through the inability to expand, and that the banks unwillingness to endorse his guarantee to the potential supplier constituted a clear breach of contract.

When given broad and considered thought in the Court of Appeal, it was reiterated that while the bank and the appellant had drawn up a multi-layered agreement to contract, no breach could be found without the complete participation of all the arrangements, for without them functioning as a whole, no such contract could be seen to exist.

Likewise, the the bank’s letter merely outlined that they needed the appellant’s agreement to the terms contained within, and that his acceptance did not by extension, form a binding arrangement.

Furthermore, while the bank’s cessation to undertake business with the appellant had left him dissatisfied, there could be no causal link between a failure of the contract to become manifest, and any obstruction of commercial expansion under his own efforts.

Hence, the court dismissed the appeal, while reminding the parties that:

“[T]he law decides whether a contract has come into existence by looking objectively at what each party said to the other, not at their subjective intentions or understandings.”