Case Studies Law

• A share is "the interest of a shareholder in the company measured by a sum of money, for the purpose of a liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders"


  Borland's trustee v Steel bros & co Ltd
• Cumbrian Newspapers Group Ltd v Cumberland & Westmorland Herald


  Claimant acquired 10.67% stake in defendant company, with special rights attaching to those shares, including pre-emption rights and the right to appoint a director to the board.

  Defendant company passed a special resolution to remove these rights, but the courts held this was unlawful.

  Case illustrates the requirement in company law for class rights to be varied with a 75% majority of shareholders in that class.
• Bushell v Faith (1970)


  • Company had 3 equal shareholders, who were also the company directors
  • Two directors passed a resolution to remove the third director from office (they had 2/3 votes therefore a majority)
  • The articles stated that in the event of a vote to remove, the votes of the director tripled - hence the director voted 3:2 to defeat the resolution
• Implied authority - Watteau v Fenwick


  • New owners of hotel continued to employ original owner as hotel manager (Mr Humble)
  • At time os the dispute, licence was still held in his name.

  1. Mr Humble ordered cigars for the bar from the Claimant, Mr Watteau
  2. The hotel owner Mr Fenwick, refused to pay for cigars arguing they were unaware of the contract.

  Held: Purchasing stock was within the implied/usual authority of a "bar manager". The contract was therefore binding on the hotel owner. The key fact was that the claimant was not made aware of Mr Humble's lack of actual authority.
• Freeman & Lockyer v Buckhurst Park Properties Ltd 


  • BBP four directors, none formally appointed MD
  • Mr Kapoor effectively ran company alone, entering contracts with claimant, which board always approved
  • One this occasion board refused to honour contract with claimant, arguing mr Kapoor had no authority to make the contract

  Held: By honouring previous contracts the board gave clear impression that Kapoor had authority of MD and therefore could make this type of contract. Claimant relied on that representation when entering contract therefore co could not later deny authority existed.
• Wagon Mound Case


  • Due to defendants negligence, oil spilled into the claimants wharf
  • Oil caught fire, causing serious damage to the wharf
  • Held: fire damage was not reasonably foreseeable
• Sayers v Harlow DC

  Women trapped in public toilet fell and injured herself trying to climb out.

  Held: Contributory negligence
• ICA v Shantwell

  -       Two brothers, employed by ICI, were certified and experienced in wiring up and checking the safety of explosives.

  -       They tested some explosives without observing strict safety rules, they claimed damages against the employer.

  -       Held: by their conduct the brothers consented to the risks of their actions and therefore volenti applied.
• Exclusion clauses - Hedley Bryne v Heller & Partner


  Where a valid exclusion clause exempted Heller and Partners liability for a negligent misstatement
• Origins of negligence - Donoghue v Stevenson 


  • Landmark case - before only contract law provided remedy for losses suffered by an injured party.
  • Donoghue had beer from cafe which had snail in bottom leading to her falling ill.
  • Successfully claimed damages against manufacturer
  • Neighbour principle - All manufacturers owe duty of care towards the end consumer of their products
• Bourhill v young 


  • Bourhill was pregnant and witnessed motor accident and went to look what happened.
  • Shock caused miscarrige of her child.
  • Tried to sue dead motorcyclist for damages

  Held: Bourhill was not a foreseeable victim

  Only people who were immediately at the scene when it occurred were owed a duty of care
• What are not offers? 


  A mere statement of selling price (Harvey v Facey)

  A mere statement of intention to sell (Harris v Nickerson)

  Invitations to treat
• Invitations to treat


  Examples:

  • Most advertisements (Partridge v Crittenden)
  • Shop Window Displays (Fisher v Bell)
  • Goods on a shop shelf (Pharmaceutical Society of GB v Boots Cash Chemists)
• Past consideration 


  Not valid

  • E.g. if you carry out some voluntary work, then afterwards you are promised some money for doing the work - this promise is not legally binding
  • Re: MacArdle (1951) - Husband and wife decorated a family home

  Exception to general rule:

  • If payment was reasonably expected before doing the work
  • Re: Casey's Patents (1892)
• Performing existing legal duties 


  If you promise to do something you were already legally obliged to do this is not valid consideration

  E.g.

  • Collins v Godefroy (1831) - witnessed promised payment
  • Stilk v Myrick (1809) - crew promised extra pay to complete a voyage
• Performing existing legal duties - Exceptions 


  1. Exceeding your existing legal duties = valid consideration

  • Glassbrook Bros Ltd v Glamorgan Co Council (1925) - police promised payment to disperse rioting workers
  • Hartley v Ponsonby (1857) - Crew promised extra pay to complete a voyage

  2. Where performing existing legal duties provides extra practical benefits to other party = valid

  • Williams v Roffey Bros - a contractor promised extra pay to complete work on schedule
• Domestic and social agreements 


  Presumption = no intention to be legally bound

  • Balfour v Balfour (1919) - Promise of regular payments between a "happily married couple"

  Presumptions are rebutted if there is clear evidence that intention exists

  • Merritt v Merritt - agreement between divorcing couple
  • Simpskin v Pays - Social agreement to split winnings
• Commercial agreements 


  Business transactions, and agreements with third parties

  Presumption = there is intention to be legally bound

  • Simple and fair presumption

  If presumption is rebutted if there is clear evidence that no intention exists

  • Gentlemens agreements
  • Jones v Vernon Pools - contract stated agreement is "binding in honour only"
• Poussard v Spiers & Pond


  Opera singer failing to appear on opening night

  • Damages and/or repudiation of contract (breach of conditions)
• Bettini v Gye


  Breach of a warranty

  Damages only

  Bettini v Gye - Opera singer failed to appear for rehearsals