Used as an opportunity to tackle the principles surrounding surety for a partners borrowing against a risk of property repossession, this House of Lords appeal took the opportunity to address Royal Bank of Scotland plc v Etridge (No.2), Barclays Bank plc v Harris, Midland Bank plc v Wallace, National Westminster Bank plc v Gill, UCB Home Loans Corporation Ltd v Moore, Barclays Bank plc v Coleman, Bank of Scotland v Bennett and Kenyon-Brown v Desmond Banks & Co; all of which, were at various stages of litigation.

In these instances, the wives of husbands both acting as individuals and owners of their businesses, offered themselves as surety for loans that notwithstanding payment, placed the wives’ interest in the matrimonial home in the hands of the lenders upon default.

As had become a feature of the courts, it had become common for those co-signatories to deny knowledge of that risk, and claim they were unduly influenced into signing, either through withholding of information, or misrepresentation by the husbands; whereupon recovery of funds through property repossession became almost impossible for the lenders in the absence of overwhelming evidence to the contrary.

Legal precedent for the requisite principles needed to secure repossession, are found in Barclays Bank plc v O’Brien; in which, it was stated that the bank or lender, is held accountable for disclosure to the co-signing party when (i) the wife is signing despite no financial gain on her part and (ii) the manner in which the husband has induced the wife’s assistance represents an inequitably wilful act that enables the wife to withdraw her acquiescence if needed.

Having taken this process a stage further, the House of Lords expressed that in such circumstances, the banks or lenders were to insist upon privately held meetings with just the wife; and that a full and comprehensive disclosure of her liabilities were to be explained by a representative of the bank before strongly advising her to seek independent legal advice prior to signing; whereas previous cases (including those below) allowed the lenders to rely upon mere solicitor referral, whose written confirmation of an explanation was sufficient enough to support a possession order.

Royal Bank of Scotland v Etridge (No.2)

Unlike the following cases, the wife’s claim of undue influence in similar circumstances, fell foul of insubstantial evidence and was dismissed both in the first hearing and in the Court of Appeal.

Having approached the claim under both ‘actual’ and ‘presumedundue influence, it was ultimately judged in favour of the bank, but not before caution was raised when attempting to exploit legal principles with questionable evidence.

Despite this outcome, the matter was presented to the House of Lords in the hope of preventable repossession, whereupon the appeal was unanimously dismissed. 

Barclays Bank plc v Harris

In this matter, the wife again stood as surety for her husband’s company, however, the solicitor involved was not appointed by her, but did enjoy a close relationship with her husband.

Unaware as to the liabilities of her signing, the wife argued that she had been unduly influenced by her partner to sign the agreement; while the bank itself had never obtained written confirmation from the solicitors that they had fully explained the legal ramifications of her actions, yet were aware that the solicitors felt they had not provided clear enough instruction as to her responsibilities.

Having been heard as an interlocutory appeal, the bank had been supported, despite stark evidence to the contrary, and was now before the House of Lords for final judgment, where the appeal was unanimously upheld and the case referred for full trial.

Midland Bank plc v Wallace

In this interlocutory appeal, the lender was put on inquiry after the wife of the borrower stood as surety for her husbands debts, whereupon a solicitor was required to provide independent legal advice as to her liabilities, prior to her signing the document.

Under agreed legal principles, a solicitor must be appointed by the wife, or her husband, and act accordingly in order to remain party to the outcome of the agreement should the need arise.

Here, it transpired that the solicitor had acted alone, therefore the bank had a right to damages for breach of implied warranty of authority against the solicitor, but not the wife.

However, the Court of Appeal awarded in favour of the bank, thus being again challenged by the wife on grounds of undue influence, where the House upheld the appeal and referred the case for full trial.

National Westminster Bank plc v Gill

What began as a possible argument for misrepresentation, ended up failing under a claim of ‘actualundue influence, when the wife standing surety to a £36,000 loan was actually party to an advance of around £100,000, but one that demonstrated her approval and acquiescence.

This became fatal to her allegation, and thus was brought before the House of Lords, who again unanimously dismissed the appeal.

UCB Home Loans Corporation Ltd v Moore

Varying slightly, this interlocutory matter concerned the actions of both an insurance company and husband, that culminated in the bank agreeing to the loan, despite failing to check and receive confirmation that the signing wife had been made aware of her legal encumbrance.

Having induced his wife to sign the agreement through fraudulent means, the husband’s acting insurance broker never once communicated with the wife, while the lenders and the solicitors, equally failed to instruct or advise her accordingly.

At the point of this appeal, the House ruled that to establish full accountability, the case was required to go to trial.

Barclays Bank plc v Coleman

When a husband and wife who were both members of the Hassidic Jewish community, signed an agreement for monies secured to purchase property, the wife again acted as surety for the loan, despite a lack of knowledge as to the fullness of her legal obligation.

When heard at trial, she claimed that an elderly solicitor had been acting for her, but had failed to fully explain her liabilities as legally required.

However, when suing for breach of duty, it was established that the gentleman had since died, and so no proceedings on her part could be brought; but other issues remained in contention at the point of this appeal, which despite a degree of reservation, was wholly dismissed.

Bank of Scotland v Bennett

For loans secured against the survival of his company, a husband had again, coerced his wife into signing as surety for a substantial amount before the unavoidable collapse of the firm.

Having challenged the validity of the order for repossession, the wife argued that she had been victim to undue influence on the part of her husband, and that the bank had due notice of such impropriety.

The trial judge found in her favour before the Court of Appeal again upheld her claim, hence the final appeal by the bank in the House of Lords, who uniformly upheld the argument taken by the bank.

Kenyon-Brown v Desmond Banks & Co

On this occasion, the wife claimed undue influence in that she had reluctantly agreed to sign as surety for her husband’s debts at his suggestion, yet unaware that their jointly-owned home was at risk.

The wife also argued that she had received no prior legal advice from their acting solicitor, whereupon the solicitor provided legal certification to the bank claiming such advice had been given.

Unable to provide sufficient evidence at the Court of Appeal, the solicitor’s contention was then presented to the House of Lords, who upheld their appeal in full, while reminding the parties that:

“Banks and other lenders who take charges from surety wives are certainly purchasers of property rights. But they acquire their rights by grant from the surety wives themselves.”


(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.”


The amendment of an existing contract underpins the argument between contracting parties, when a main building contractor secures a residential refurbishment project and accepts the tender of a carpentry subcontractor’s tender, despite the low value of his submission.

Having agreed to both first and second fix twenty-seven flats within a specified time for £20,000, the respondent carried out the work on the understanding that payments were made on an arbitrary basis; and so, after six months he had first-fixed all twenty-seven flats but second-fixed only nine, while having been paid £16,200 for the work performed.

Aware that his tender was now unprofitable, the respondent renegotiated to keep his business afloat and avoid the financial penalty clause applied to the appellants should the project overrun; whereupon, both parties agreed to continue working together on condition that a further £10,300 would be paid in incremental payments of £575 for each flat completed; however, when the respondent left the project, only £1,500 had been paid and only seventeen of the twenty-seven flats were substantially completed.

Initially seeking around £33,000 in damages, the respondent reduced his claim to around £11,000, citing that the appellants had breached the terms of their oral agreement, while the appellants argued that the agreement to pay the additional £10,300 was unenforceable due to non-completion and that no consideration had been given by the  respondent during revision of the original contract. 

First argued in the Kingston-Upon Thames County Court, the judge found that while the flats had not been completed, there had been sufficient consideration to allow calculable damages of around £11,800; and so, awarded accordingly.

Presented to the Court of Appeal, the issues around payment for incomplete performance of a contract and the argument for lack of consideration were given closer examination, before the Court noted how p.126, para.183 of Chitty on Contracts, stated that:

“The requirement that consideration must move from the promisee is most generally satisfied where some detriment is suffered by him e.g. where he parts with money or goods, or renders services, in exchange for the promise. But the requirement may equally well be satisfied where the promisee confers a benefit on the promisor without in fact suffering any detriment.”

Thus, the Court dismissed the appeal, on grounds that the respondent’s agreement to continue working toward completion of the flats provided a degree of benefit to the appellants, as failure to do so rendered them subject to the penalty clause, while the Court finally reminded the parties that:

(i) if A has entered into a contract with B to do work for, or to supply goods or services to, B in return for payment by B; and (ii) at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will, or will be able to, complete his side of the bargain; and (iii) B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time; and (iv) as a result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit; and (v) B’s promise is not given as a result of economic duress or fraud on the part of A; then (vi) the benefit to B is capable of being consideration for B’s promise, so that the promise will be legally binding.”


Conveyance of property and the requisite methods of notice when accepting an offer are clearly defined under section 196 of the Law of Property Act 1925, so when a buyer elected to take advantage of an option to purchase, they did so in a way that flirted with the prescribed method yet failed to secure the bargain, despite arguments to the contrary.

Having decided to sell his home, the respondent wrote to the appellants setting out an option to purchase, which expired within a six-month period, while the specific terms of the offer outlined in clause 2, stated clearly that:

“The said option shall be exercisable by notice in writing to the intending vendor at any time within six months from the date hereof…”

Contrastingly, section 196(4) of the Law of Property Act 1925, also explains that:

“Any notice required or authorised by this Act to be served shall also be sufficiently served, if it is sent by post in a registered letter addressed to the lessee, lessor, mortgagee, mortgagor, or other person to be served, by name, at the aforesaid place of abode or business, office, or counting-house, and if that letter is not returned through the post-office undelivered; and that service shall be deemed to be made at the time at which the registered letter would in the ordinary course be delivered.”

Law of Property Act 1925

And so, on this occasion the appellants solicitors drafted a written acceptance of the offer, before hand delivering it to the respondent’s solicitors, while noting within the correspondence that a copy of the written notice of acceptance and a deposit cheque had also been posted to the respondent’s home. 

After receiving the letter, the solicitors telephoned the respondent to advise him they had received the notice and that a copy of it was on its way to him, whereupon he explained that he had already made travel plans; and so, having been instructed by his solicitors to leave despite the expected letter, he vacated his home for a number of days.

After being franked and handed to the post-office, the letter failed to arrive at the respondent’s home; hence, the appellants sought legal action to secure the property, on grounds that a contract for both sale and purchase had been executed, irrespective of whether the posted letter had arrived, while it was also argued that the oral communication between the solicitors and the respondent further confirmed acceptance of the offer, when factoring in the solicitors possession of the letter.

In the first instance, the appellants relied upon Henthorn v Fraser; in which, the Court of Appeal held that:

“Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.”

Henthorn v Fraser

However, the court ruled against them, before the Court of Appeal overruled and distinguished Henthorn in light of an absence of expressed postal methods expressed within the purchase option.

And so, dismissing the appeal on grounds that failure of the respondent to physically take receipt and read the notice became fatal to any claim of right to buy, the court reminded the parties that:

“If a notice is to be of any value it must be an intimation to someone. A notice which cannot impinge on anyone’s mind is not functioning as such.”


Prior to the Misrepresentation Act 1967 ,many cases involving mistruths and false inducements relied upon rules of collateral warranty and negligent misrepresentation to establish liability; however, on this occasion an international oil company was betrayed by their own haste when attempting to victimise a willing, but inexperienced employee.

In 1961, the cross-appellants looked to construct a new filling station within the busy streets of Southport; and so, having established the location and calculated the potential value of business, it was agreed that once opened, the station could very well expect to turnover around 200,000 gallons of petrol per year within its first three years of trading. 

With such positive projections, the cross-appellants purchased the site and began work; however, during the planning permission stage they were delivered an unexpected blow when the local authority expressed that the petrol pumps were not permitted to face the road, but were instead to be positioned at the rear of the building.

This unexpected design change heavily reduced their previous calculations; however, undeterred they sought to recruit a leaseholder for the site; and so, after a successful interview, the appellant was conditionally offered the post, while subject to rents based upon the now unrealistic sales volumes.

However, during his interview the appellant queried the figures presented, while the cross-appellants argued there was no cause for concern and that the original projections remained reliable.

Despite his concerns, the appellant accepted the position, before working tirelessly for two years, until faced with financial ruin after losing money from the severely reduced sales, considerable personal investment and a sizeable overdraft no longer repayable, he approached the cross-appellants with every intention to quit; whereupon, they agreed to reduce the rent and offer bonus payments from the sale of petrol in order to offset his losses. 

As an act of continued faith, the appellant agreed to honour a twelve-month contract; however, his circumstances continued to deteriorate; and despite the cross-appellants offering him a more profitable station, their support diminished until the arrangement became unsustainable; and yet, in 1966, the cross-appellants issued a writ for non-payment of petrol supplied during their working relationship.

Naturally shocked and angered, the appellant counter-claimed for damages caused through the loss of earnings, damage to his health, lost opportunities through his efforts to make the site a success, breach of warranty through the misleading statements made in relation to sales turnover, negligent misrepresentation and the inducement to take employment where the outcome was never going to be the one presented during his interview.

In the first instance, the Court of the Queen’s Bench held that the cross-appellants comments were tantamount to opinions and not warranties, but that the claim for negligent misrepresentation was enforceable until the date of the revised employment contract in 1964.

In the Court of Appeal, the appellant relied upon Hedley Byrne & Co Ltd v Heller & Partners Ltd; in which, the House of Lords held that:

“[I]f someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference.”

Hedley Byrne & Co Ltd v Heller & Partners Ltd

And so, having examined the finer points of collateral warranty and the limitations of contractual breaches, the Court unanimously upheld the appeal, on grounds that the flow of damages were unmistakably linked to the claims made; and that remoteness could not stand when factoring in the sources of revenue used by the appellant when trying so hard to keep the station afloat, while finally clarifying that:

“[I]f a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another be it advice, information or opinion with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct, and that the advice, information or opinion is reliable.”


The principle of ‘frustration’ and the nature of commercial contracts are both given equal consideration when a local authority fails to acknowledge or pay costs exceeding the original agreement, despite pleas for reasonability by the claimants.

Shortly after World War II, the appellants tendered for the construction of a large number of houses over a fixed period; and so, due to the economic fragility of the country, their submission included a letter outlining allowances for rising material costs and labour shortages, while after further negotiations, the respondents allowed them to perform their contractual obligations until the agreed eight-month period expired. 

Upon discovery that only a fraction of the total number of houses had been completed, the appellants cited frustration through inclement weather, delays in material deliveries and a shortage of labour; whereupon, the local authority expressed no disagreement with their statement and the work continued for another fourteen months.

However, upon completion the total cost of the work was £115,233, versus the agreed £94,424, which left the appellants facing a loss of around £20,000.

When asked to pay the additional sum on grounds of quantum meruit (payment for services rendered and therefore deserved) the respondents refused to pay and offered only the amount contracted for; before the appellants claimed recovery on grounds that:

1. The letter submitted with the tender was part of the contract.

2. The contract was entered into on the proviso that both materials and labour were available.

3. Because those two elements were absent the contract had ceased to exist thus any subsequent performance was subject to a quantum meruit. 

Under arbitration, the doctrine of frustration was given considered significance in favour of the appellants on the strength of the letter; while in court, the judge also agreed the letter formed part of the contract and awarded accordingly. 

Under challenge, the Court of Appeal disagreed and referred the matter back for greater clarification of frustration; and so, with the arbitrator remaining resolute on the letter, the Court held that the letter was a mere facet of negotiations, therefore frustration had not occurred.

After which, it was put before the House of Lords in order that the appellants could advance their contention that where frustration failed quantum meruit ought to succeed.

To clarify, the nature of frustration relies more upon unforeseen circumstances affecting both parties to a contract, as opposed to one at a loss through unexpected events; while in this instance, the appellants were aware that labour and material shortages were likely, and neither party had agreed that the original contract had ceased to exist and that another had begun.

With this in mind, the House dismissed the appeal on grounds that unless agreed to, the terms of the original contract had remained unaltered, despite the increased duration of the project and escalating costs incurred by the appellants.

All of which, amounted to little more than a seemingly well-drafted plan gone awry, while the House reminded the parties that:

“[F]rustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to do.”


Rectification of contract and the exclusionary rule of pre-contract negotiations when deciphering both parties intentions are uneasy bedfellows within English law; and yet, these two principles proved effective when the complex and confused drafting of a multimillion pound construction project created heated litigation.

When the land dealer respondents and property developer appellants undertook a mixed development scheme, schedule 6 of the contract bred uncertainty and conflict through opposing interpretations that at first glance favoured of the respondents to the tune of almost £3.6m.

And so, relying upon the argument of construction to claim their fees the respondents took the matter to court; where in the first instance, the judge found in their favour and awarded the amount, before a failed appeal left the appellants pursuing a remedy in the House of Lords. 

Here, the House discussed the nature of contracts and the intentions of those involved before referring to Prenn v Simmonds; in which, it held that:

It is only the final document which records a consensus.”

Prenn v Simmonds

Before noting that in order to achieve a clear outcome, the parties must seek rectification of the contract, as defined in Swainland Builders Ltd v Freehold Properties Ltd; in which, the Court of Appeal held that:

“The party seeking rectification must show that: (1) the parties had a common continuing intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified; (2) there was an outward expression of accord; (3) the intention continued at the time of the execution of the instrument sought to be rectified; (4) by mistake, the instrument did not reflect that common intention”

Swainland Builders Ltd v Freehold Properties Ltd

However, on this occasion the respondents were adamant that the calculation formulae was correct, despite obvious contention by the appellants; and so, the House upheld the appeal on grounds that an objective application of the formulae through the eyes of a reasonable man showed that while the respondents were content to pursue the terms of schedule 6 under a clear misapprehension; sufficient reasoning and supporting evidence reflected the views of both the House and laymen, while reminding the parties that:

“When the language used in an instrument gives rise to difficulties of construction, the process of interpretation does not require one to formulate some alternative form of words which approximates as closely as possible to that of the parties. It is to decide what a reasonable person would have understood the parties to have meant by using a language which they did.”


Equity regards as done that which ought to be done’ while in this instance, the maxim is perfectly suited to the exploitative coloration of a business agreement; when in September 1937, a parent company and subsidiary entered into a written lease agreement concerning a newly built block of flats.

Shortly after the outbreak of World War II, the buildings became partially occupied due to the risk of bombing; and so, in order to keep the relationship profitable and fair, the claimants agreed to reduce the rent from 2500l to 1250l per annum.

Yet, while the rent reduction was put in writing, it failed to express the end of the revision, despite the original lease agreement running for a period of ninety-nine years.

Although the defendants enjoyed the reduced rent up to December 1945, despite the buildings now enjoying full occupancy with many tenants now paying higher rents than those initially agreed; the death of the parent company’s owner revealed the oversight before the claimant and surviving business partner sought to recover rent arrears to the sum of 625l for the period between 29 September 1945 and 25 December 1945, while the defendants argued that the letter containing the reduced rent constituted a legally binding and thus enforceable contract for the remainder of the lease.

Referring to the binding effects of a promise, the court of the King’s Bench quickly balanced the probability of a breach where an agreement to reduce rents was challenged.

However, on this occasion the court upheld the claim on grounds that when agreeing to the reduce the rent, it had been undertaken with mind to the onset of war, therefore no reasonable person would have entered into an arrangement where one party would unlawfully profit at the expense of another, while reminding the parties that:

“[A] promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply.”


After litigation is bought against a third party, the enforcement of a contract extending beyond reasonable bounds proves the undoing of a commercial tyre distributor, when the rules of English contract law move to narrow the scope of claim and protect those party to sub-contracts.

In 1911, the appellant tyre manufacturer set about establishing written agency distributorship agreements with a number of commercial outlets, in order to retain control over the sale value of its key products, while schedules 2 and 5 of those contracts required all participating agencies to agree that:

“(2) We will not sell or offer any Dunlop motor tyres, covers or tubes to any private customers or to any co-operative society at prices below those mentioned in the said price list…nor give to any such customer or society any…discounts or advantages reducing the same.

(5) We agree to pay to the Dunlop Pneumatic Tyre Co Ltd, the sum of 5l for each and any tyre, cover or tube sold or offered in breach of this agreement, as and by way of liquidated images and not as penalty, but without prejudice to any other rights or remedies you or the Dunlop Pneumatic Tyre Co Ltd may have hereunder.”

In exchange for this compliance, the agencies were granted a 10% discount and in some instances, annual rebates for high value orders.

On this occasion, the respondents had purchased a Dunlop tyre from an agency, who as consideration, were prevented from selling Dunlop products to any other firms or individuals for less than the standard list price.

However, they were also afforded a discretionary right to sell Dunlop products to other trade outlets at a maximum of 10% discount on the proviso that those purchasing had pre-signed a prohibitive contract similar to the one held by the agencies.

With this in mind, the respondents later sold a particular Dunlop tyre to a private customer at a seven and a half percent discount; and yet, when ordering the tyre from the agency, they were informed that no discount could be offered to the buyer without the completion of a signed price maintenance agreement (an act later executed by the respondents).

Having learned of this, the appellants sought an injunction and sued the respondents for breach of contract on grounds that the agency were acting under their principle control, therefore by selling the tyre to a prohibited party, they were liable for damages, as expressed in schedule 5 above.

In the first instance, the judge awarded in favour of the appellants, before granting the injunction as requested; while challenged in the Court of Appeal, the respondents argued that the contract between the agency and the appellants excluded the right to enforce it upon a third party, on grounds that no consideration had been given by the appellants when the price maintenance agreement was drafted between the respondents and the agency.

Having lost the appeal, the appellants pressed the issue before the House of Lords, who unanimously upheld the previous judgment, on grounds that a lack of consideration at the point the agreement was made, precluded the appellants any claim of right under English common law, while reminding the parties that:

“[O]nly a person who is a party to a contract can sue on it.


‘Reading the small print’ is a phrase familiar to discerning consumers, and in so this instance the value of careful reading served to remind that contracts of all shapes and sizes require careful attention, especially when the text is not readily visible.

In 1933, two travelling salesmen paid a visit to a small community café in Wales in order to sell them an automatic cigarette vending machine; and so, having spent a number of hours discussing the user benefits and attached payment terms, the respondent duly agreed to sign the partially completed ‘sales agreement’ in expectation of a new and fully working product.

Upon payment of the deposit, the appellants returned a signed ‘order confirmation’ and accompanying eighteen-month guarantee; at which point, the contract was well underway and instalments were regularly paid.

However, after a period of less than a few days, the machine began malfunctioning and several engineer visits were arranged, before at the point of exhaustion, the respondent requested the item be returned in forfeit of her deposit.

In spite of this, the appellants refused to terminate the transaction, whereupon the respondent commenced litigation for return of the monies paid on grounds that the product had been unfit for purpose and so contrary to the contract and guarantee.

Likewise, the appellants counter-claimed their remaining costs owed for the purchase of the machine, before the respondent amended her claim to include repayment for failure to provide full consideration, breach of implied condition that the vending machine was functioning at point of sale, and/or damages for breach of implied warranty that the product was fit for purpose.

The argument cited by the appellants relied upon an absence of failed consideration and non-existence of implied conditions as per section 11(c) of the Sale of Goods Act 1893,  which read that:

“Where a contract of sale is not severable, and the buyer has accepted the goods, or part thereof, or where the contract is for specific goods, the property in which as passed to the buyer, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there be a term of the contract, express or implied, to that effect.”

Sale of Goods Act 1893

Thus, no implied warranty existed on grounds that the signed sales agreement excluded both condition and warranty within the small print shown at the bottom, which read that:

“[T]his agreement contains all the terms and conditions under which I agree to purchase the machine specified above, and any express or implied condition, statement, or warranty, statutory or otherwise not stated herein is hereby excluded…”

Whereupon, the respondent contended that she had been induced to sign the agreement through misrepresentation on grounds of never having her attention drawn to the exclusion notice beforehand.

In the first instance, the Carnarvonshire County Court awarded a sum of 70l for the respondent in light of a perceived breach of warranty, despite her signature and no evidence of misrepresentation, and further allowed the appellants the sum of 71l for the monies unpaid.

Having appealed in the Court of the Kings Bench, the appellants argued again that no misrepresentation had occurred, and that at any point the respondent was free to note and enquire as to the limitations of the contract, but had waived that right when signing to the terms expressed.

Here, the Court relied upon the principles used in Parker v South Eastern Railway Co; in which, the Court of Appeal had held that:

“In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents.”

Parker v South Eastern Railway Co

Which translated that despite recognition of the respondent’s misfortune, the law could not enforce a claim for misrepresentation based upon the oversight of a party willing to contract.

Hence, the court set aside the respondent’s award and upheld that of the appellants, while reminding the parties that:

“When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.”

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