Contract - 1991

These cases are extracted from a very large database. The entries on that database are now being published individually to the main swarb.co.uk website in a much improved form. As cases are published here, the entry here will be replaced by a link to the same case in that improved form on swarb.co.uk. In addition the swarb.co.uk site includes very substantial numbers of cases after 2000. Please take the time to look.  

This page lists 27 cases, and was prepared on 06 June 2013. These case are being transferred one by one to the main swarb.co.uk site which presents them better, with links to full text where we have it, and much improved cross referencing.

Chapman -v- Aberdeen Construction Group [1991] IRLR 505
1991 Lord Caplan	Contract, Employment, Scotland
	It having been conceded that contracts of service fell within section 15 of the 1977 Act, the court found that the question whether the contract was a consumer contract depended on the circumstances. Though the employee pursuer was to be regarded as a consumer in relation to his contract of employment with the defenders, the term consumer may not sit comfortably on an employee in relation to his work.
	Unfair Contract terms Act 1977 15

Concordia Trading B V -v- Richco International Ltd [1991] 1 Lloyd's Rep 475
1991 Evans J	Contract
	Under a FOB contract the sellers sold to the buyers a quantity of Argentine soya beans. The contract incorporated the provisions of GAFTA 64 (General Contract FOB Terms for Grain in Bulk) which included clause 24 default (set out in part at page 480 of the judgment). The contract was part of a string. The sellers failed to present documents. In the event the documents were tendered to the end buyer and receiver of the cargo and were accepted and paid for. Later, the vessel carried the goods to Odessa and discharge began. The buyers claimed damages in respect of the sellers' default in not tendering documents, contending that the date of default was 29.9.87. The sellers argued (i) that the date of their (undisputed) default in failing to tender the documents to the buyers took place later again when the documents would normally have become available to the buyers and (ii) the market price of the goods (or the documents representing the goods) was ubstantially lower than the contract price and the buyers were only entitled to nominal damages. The dispute was referred to arbitration. The Board of Appeal accepted the buyers' contention that the sellers' default took place on 29 September. In their award they stated that the sellers were not in default until the day it was no longer possible for them to purchase the documents for the goods in order to fulfil the contract, which was 28 September. The basis for the award was that as the contract was silent as to the time for performance of the sellers' obligation to tender the documents to the buyers, this was by legal implication a reasonable time, and such time continued until it became impossible for the sellers to obtain the documents. The sellers appealed, the question of law for decision being whether the Board were wrong in law in holding that the date of default was 29 September, and if so by reference to what criteria should the date of default be established? Evans J held that there was on the FOB seller who was obliged by his contract to obtain and tender the shipping documents, a duty to perform that obligation forthwith i.e. with all reasonable despatch, subject to there being no express provision or time limit to the contrary in the contract. The sellers' duty to send forward the documents forthwith remained the same as in the general case even though a string, circle or insolvency was involved. Since the sellers' obligation was to tender the shipping documents forthwith and they were in breach of contract if they failed to do so, it seemed likely that that duty should have been performed on or shortly after 5 August, but that was for the Board of Appeal to decide. The question raised is the "date of default" for the purposes of the present contract. In Toprak Mansulleri Ofisi v Finagrain Compagnie Commerciale Agricole et Financière S.A., [1979] 2 Lloyd's Rep. 98 Mr Justice Robert Goff (as he then was) held at p. 109 that the same words "in default of fulfilment of contract" in cl. 28 of GAFTA 27 –...meant, quite simply, the day on which [the buyers] failed to perform the obligation which entitled the sellers to determine the contract

Patten -v- Burke Publishing Ltd [1991] 1 WLR 527
1991 ChD Millet J	Contract, Litigation Practice	Casemap
	The publisher to whom the plaintiff author had sold the rights to his book became insolvent. He sought a declaration that it would be in breach of the contract. Held: The guiding principle which determines how the discretion is to be exercised whether to grant declarations is that the Court must do what is necessary to achieve justice. If a contract had been repudiated, and was no longer in effect, a declaration would be the way to achieve fullest justice by making it clear to the plaintiff that he was free of the contract.

Scally -v- Southern Health and Social Services Board [1991] 4 All ER 563 HL; [1992] 1 AC 294
1991 HL Lord Bridge	Northern Ireland, Health Professions, Contract, Damages	Casemap 1 Citers
	The plaintiffs were junior doctors employed by the respondents. Their terms had been collectively negotiated, and incorporated the Regulations. During the period of their employment different regulations had given and then taken way their right to purchase additional superannuation contributions. They had not been told of the rights and had failed to exercise them. They claimed damages for breach of contract and of statutory duty. Held: The term was valuable and not negotiated with the plaintiffs. The defendants had a duty to bring the new rights to their attention. "If a duty of the kind in question is not inherent in the contractual relationship, I do not see how it could possibly be derived from the tort of negligence." The claims were not time barred because the obligation to inform had been continuing.
	Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965 4(1) 5 - Health Services (Superannuation) Regulations (Northern Ireland) 1962 (1962 (NI) 237) - Health Services (Superannuation) (Amendment) (Number 3) Regulations (Northern Ireland) 1974 (1974 (NI) 327)

East -v- Mawer [1991] 1 WLR 461
1991 CA	Contract	1 Citers
	Misrepresentation Act 1967

The Amazonia [1991] Lloyd's Rep 236
1991 CA Dillon LJ	Contract	Casemap 1 Cites
	The court rehearsed the doctrine that a common mistake as to the law would vitiate a contract, Though the rule was well established, the particular contract was void on the basis of a mistake as to foreign law because foreign law is to be treated by the English courts as a question of fact.

Wright -v- Tennent Caledonian Breweries Ltd 1991 SLT 823
1991 IHCS Lord Allanbridge, Lord Sutherland Lord President Hope	Scotland, Contract	1 Citers
	The court sought to construe a deed of variation of a loan agreement. In the case of two or more individuals, the obligations and conditions affecting the borrower were to be binding on the individuals "jointly and severally". Despite this, one of the debtors submitted that her liability under the loan agreement was only pro rata, because it would have required clear provisions in the deed of variation to incorporate the joint and several liability into the loan agreement. Held: The court rejected that argument. Lord Allanbridge: "In my opinion the statement in clause 1.03 of the deed of variation that the obligations and conditions affecting the borrower shall be binding on two or more persons jointly and severally goes beyond a mere definition of the expression 'the borrower'. It is concerned not with the question who is to be taken to be the borrower - that is to say, with the person or persons to whom that expression extends - but with the measure of the obligations undertaken by those persons in that capacity." The whole structure of the loan agreement as varied "including the use of the expression 'the borrower' in the singular at the outset to describe the two persons who are to receive the loan" confirmed his view that the debtors' liability under the agreement was joint and several (as opposed to pro rata).

Royscot Trust Ltd -v- Rogerson; 1991

Banque Keyser Ullmann SA -v- Skandia (UK) Insurance Co Ltd [1991] 2 AC 249
1991 HL Lord Templeman, Lord Jauncey of Tullichettle	Contract, Torts - Other	Casemap 1 Citers
	Banks had made loans against property which the borrower had said was valuable, and, also insurance policies against any shortfall on the realisation of the property. The borrower was a swindler and the property worthless. The insurers relied upon a fraud exception in the policies to repudiate liability. The banks discovered that the agent of their broker who had placed the insurance had, by an altogether separate fraud, issued cover notes in respect of non-existent policies for part of the risk. This had come to the knowledge of one of the insurers before a substantial part of the advances had been made. The banks claimed that the insurers were under a duty of good faith to disclose this information and that, if they had done so, the banks would have so distrusted the brokers that they would have made no advance and therefore suffered no loss. Held: Assuming that a duty to disclose the information existed, the breach of duty did not cause the loss. The failure to inform the lenders of the broker's fraud had induced them to think that valid policies were in place. But even if this had been true, the loss would still have happened. The insurers would still have been entitled to repudiate the policies under the fraud exception.

Pooraka Holdings Pty Ltd -v- Participation Nominees Pty Ltd (1991) 58 SASR 184
1991 King CJ	Contract, Commonwealth	Casemap 1 Citers
	The court considered the creditor's duty of disclosure to a surety. Held: The duty of disclosure extends to any unusual feature surrounding the transaction between the creditor and the surety (a) of which the creditor is or ought to be aware, (b) of which the surety is unaware, and (c) which the creditor appreciates, or in the circumstances ought to appreciate, might be unknown to the surety and might affect the surety's decision to become a surety.

Crittal Windows Ltd -v- Stormseal (UPVC) Window Systems Ltd [1991] RPC 265
1991 Scott J	Contract	Casemap 1 Citers

Hewcastle Catering Ltd -v- Ahmed & Elkamah [1992] ICR 626; [1991] IRLR 473
1991 CA	Employment, Contract	Casemap 1 Citers
	The employers devised a VAT evasion scheme depending in part on the co-operation of the employees, but the employees themselves received no benefit. After giving evidence against their employers, the plaintiffs were dismissed. The employer appealed a finding of unfair dismissal, saying the employees were to be prevented from relying upon their unlawful agreement. Held: Public policy would be against making such a claim impossible. A contract would be void for illegality if in all the circumstances it would be an affront to the public conscience to allow it to be enforced. Such a defence should not succeed where the defendant's own conduct was signficantly more reprehensible than the claimant's.
	Value Added Tax Act 1983 2(3) 39(1) 39(2) - Customs and Excise Management Act 1979 152

Elpis Maritime Company Limited -v- Marti Chartering Company Limited (The Maria D) [1991] 3 WLR 330; [1992] 1 AC 21; [1991] 3 All ER 758; [1991] 2 Lloyds Rep 311
1991 HL Lord Brandon	Contract	1 Citers
	Brokers (Marti) were to guarantee a charter on the Gencon form, which contained, as one of the additional typed clauses a provision (Clause 24) in the following terms: "Demurrage guaranteed and payable directly by charterers to owners. However Marti guarantees about outstanding demurrage, if any, and for balance freight" The brokers stamped and signed the front page "For and on behalf of charterers as brokers only". The intervening pages were, so far as the brokers were concerned, simply stamped with the brokers' stamp without any indication of capacity. The last page (which was the last page of the typed additional clauses 18-55) bore the brokers stamp and a signature below the words "Charterers". There was an oral contract, made in the course of telephone conversations, by which Marti guaranteed the liabilities of the charterers in respect of demurrage and the balance of the freight. Held: Lord Brandon indicated that there were two possibilities: a) Marti signed the page containing clause 24 as a contracting party, in which case the prior oral agreement of guarantee was subsumed in the written agreement signed by Marti on its own account so that there was a written agreement of guarantee signed by the person to be charged therewith and enforceable in the first of the two ways prescribed by the Statute; and b) Marti signed the charterparty, including clause 24, solely as agents of the charterers, in which case the signature, although affixed as agent for the charterers, was nevertheless a note or memorandum of the prior oral agreement. It was irrelevant with what intention or in what capacity Marti signed. Held: The contention failed. It was irrelevant in what capacity or with what intention the document there being considered was signed. What mattered was the signature.

Goff -v- Gauthier [1991] 62 P&CR 388
1991	Land, Contract	1 Citers

The Peonia [1991] I Lloyd's Rep 100
1991 CA Lord Justice Bingham, Lord Justice Slade	Damages, Transport, Contract	Casemap
	The ship had been returned beyond the charter date. The court was asked whether, when the vessel was sent on a legitimate last voyage but, through no fault of the charterers, was then redelivered after the final terminal date, the owners were entitled in respect of the overrun period to hire at the market rate (if higher than the charterparty rate) or only at the charterparty rate. Held: The owners could claim the market rate. In relation to an illegitimate last voyage Lord Justice Bingham said that the owner: ". . was entitled to payment of hire at the charterparty rate until redelivery of the vessel and (provided he does not waive the charterer's breach) to damages (being the difference between the charter rate and the market rate if the market rate is higher than the charter rate) for the period between the final terminal date and redelivery". Lord Justice Slade: "The judgments of Lord Denning MR and Lord Justice Browne in The Dione …are, in my opinion, on a proper analysis, authority binding this Court for the proposition that if charterers send a vessel on a legitimate last voyage and the vessel is thereafter delayed for any reason (other than the fault of the owners) so that it is redelivered after the final terminal date, the charterers will (in the absence of agreement to the contrary) be in breach of contract and accordingly, if the market rate has gone up, will be obliged to pay by way of damages the market rate for any excess period after the final termination date up to redelivery…"

The Black Falcon [1991] I LLR 77
1991 Steyn J	Contract, Transport	1 Citers
	The ship under charter was returned late. The arbitrators had awarded the market rate of hire from the date when the vessel would have been delivered if she had not undertaken her last (illegitimate) voyage rather than from the last date when she could have been delivered without a breach of charterparty. Held: The courtoverturned the award: "In my judgement the arbitrators' approach conflicts with the principle governing the calculation of damages which was enunciated in The Dione …A study of the judgments of the majority reveals that this case is authority for the proposition that in circumstances where the owners undertook the illegitimate last voyage without waiving their rights to claim damages, the charterers' obligation is to pay the charter rate until the last permissible date for redelivery, and thereafter pay the market rate until the actual redelivery ….I am of course bound by this decision. But . . . I would have come to the same conclusion in the absence of authority."

Torvald Klaveness A/S -v- Arni Maritime Corporation (The Gregos) [1991] 2 LLoyds Rep 40
1991 ChD Evans J	Contract, Transport	Casemap 1 Citers
	The ship was returned late from a charter. The court was asked whether or not the legitimacy of the last voyage fell to be established at the date when the order was given or at the time when the last voyage began. Held: It was the second: "the charterer does commit a breach of contract by failing to redeliver at the end of the charter period and is liable in damages, if the market rate exceeds the charter rate, as well as for hire until redelivery takes place".

Sainsbury -v- O'Connor (1991) 1 WLR 963
1991 CA Nourse LJ	Contract
	The court was asked whether the taxpayer remained the beneficial owner of certain shares notwithstanding the existence of an unexercised option to purchase them given to another. Held: He did so remain. Nourse LJ said: "Then take the previous example [company A enters into an unconditional contract to sell shares in company B to company C], but suppose that the contract is subject to a condition precedent. Until the condition is satisfied the equitable interest in the shares will not pass to Company C. It will remain in Company A. What ground is there for thinking that the beneficial ownership of the shares will also not remain in company A? In order to answer that question we must look to Wood Preservation Ltd v. Prior [1969] 1 W.L.R. 1077. That is a difficult decision. Goff J. at first instance did not distinguish between the beneficial ownership of the shares and the equitable interest in them. In my view he was right not to make that distinction. However, he thought that, because the purchaser could obtain specific performance of the contract by waiving the condition precedent at any time, "the beneficial interest had sufficiently passed to the purchaser." I respectfully think that that was an error on the part of the judge. Unless and until the condition was either waived or satisfied there could be no right to specific performance and no passing of the equitable interest."

Rath -v- CS Lawrence & Partners (PJ Cook & Co) (a Firm) (Third Party) [1991] 1 WLR 399
1991 CA	Limitation, Contract	Casemap 1 Cites 1 Citers
	The plaintiff bought the property in 1982, relying on the defendant's survey, which later proved incorrect having failed to identify subsidence. The writ was issued in 1984. Delays before the expiry of the limitation period led the defendant to apply to dismiss the claim for inordinate and inexcusable delay. Held: The plaintiff's appeal against dismissal failed. Once the claim was issued, the plaintiff was under a duty to proceed with reasonable diligence, and delay after issue, and even within the limitation period could justify dismissal.

Lark -v- Outhwaite; 1991

Dimskal Shipping Co SA -v- International Transport Workers Federation ("The Evia Luck"); HL 1991

Regina v Lord Chancellor, ex parte Nangle [1991] ICR 743
1991 CA	Employment, Contract
	The applicant was a Civil Servant seeking judicial review of the Department's decision to discipline him. The issue was whether he had a contract of employment or merely a relationship with the Crown, regulated under its prerogative powers. There were a number of documents which, together, comprised Mr Nangle's appointment. There was a letter of appointment which cross referred to other documents which either were enclosed with the letter or were readily available elsewhere. Held. The question whether there was an intention to create legal relations had to be ascertained objectively, and where the terms of the relationship are to be derived solely from the documents, its answer depends upon the construction of those documents: "[I]n our judgment, that the question whether there is an intention to create legal relations is to be ascertained objectively, and where the terms of the relationship are, as here, to be derived solely from the documents, depends upon the construction of those documents. It is possible for a party to believe mistakenly that he is contractually bound to another when in fact he is not; and conversely to believe that he is not when he is. His belief is immaterial. While this remains a subjective belief uncommunicated to the other party, this is plainly correct. But where such a belief is expressed in the documents it must be a question of construction of the documents as a whole what effect should be given to such a statement." Civil servants enter into legal relations with the Crown in the form of contracts of employment: "In our judgment the use of the word "appointment" is neutral and certainly does not negative an intention to create legal relations. Many contractual relationships of employer and employee are described as appointments".

Spiro -v- Glencrown Properties Ltd and Another; ChD 1991

Hawker -v- Vickers [1991] 1 NZLR 399
1991	Land, Contract, Commonwealth	Casemap 1 Citers
	(New Zealand Court of Appeal) The court considered the ability of a party to waive compliance with a condition, saying: "there is nothing inconsistent in providing expressly or by necessary implication for unilateral waiver of a condition up to a certain date and thereafter for allowing either party to avoid the contract for non fulfilment of the condition. Such a provision simply recognises the commercial reality that the nature and significance to the parties of a condition in a contract may change over time or at a point in time. If the contract [sic] is fulfilled or waived, the parties then have the certainty of an unconditional contract. If not fulfilled or waived by the nominated date, each is free to end the contract by appropriate notice to the other."

Office Angels Ltd -v- Rainer-Thomas [1991] IRLR 215
1991 CA Sir Christopher Slade	Employment, Contract	Casemap 1 Cites 1 Citers
	The court re-stated the principles applicable in testing whether an employee's restrictive covenant was reasonable: "The court cannot say that a covenant in one form affords no more than adequate protection to a covenantee's relevant legitimate interests if the evidence shows that a covenant in another form, much less far-reaching and less potentially prejudicial to the covenantor, would have afforded adequate protection." The court nevertheless identified a prototype non-solicitation covenant likely to be effective in most cases where there was a need to protect a client connection or a goodwill: "At least at first sight, a suitably drafted covenant precluding the defendants, for a reasonable period of time after the termination of their employment, from soliciting or dealing with clients of the plaintiff with whom they had dealt during the period of their employment would appear to have been quite adequate for the plaintiff's protection in this context." Sir Christopher Slade said: "The employer's claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as,in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation."

Neilson -v- Stewart [1991] UKHL 13; 1991 SC (HL) 22; 1991 SLT 523; [1991] BCC 713
21 Mar 1991 HL	Scotland, Contract, Company
	[ Bailii ]

Lipkin Gorman (a Firm) -v- Karpnale Ltd; HL 06-Jun-1991