Contract Law | Interpretation of Contracts

Rules for Interpretation of Contracts: Pre-Contractual Documents/Draft Agreements

Antecedent Agreements A concluded antecedent agreement may be relied upon in interpreting a later contract in pursuance of that agreement.  However, an antecedent agreement may be considered only on the basis of its particular facts and circumstances. Pre-Contractual Documents/Draft Agreements A concluded contract may be preceded by multiple drafts. Draft agreements may even be signed. Draft…

Basic Principles of Contract | Contract Law

Derry v. Peek

Derry v. Peek (1889) LR 14 App Cas 337 (Misrepresentation or Fraud—Collateral Warranty) FACTS: A tramway company’s prospectus stated that it had the right to use steam power for moving carriages as an absolute right, though in actuality it was subject to condition of Board of Trade (BoT). Plaintiff, on faith of that statement, took…

Basic Principles of Contract | Contract Law

Esso Petroleum Co. Ltd. v. Mardon

Esso Petroleum Co. Ltd. v. Mardon [1976] QB 801 (Collateral Warranty and Misrepresentation) FACTS: A much experienced employee of Esso estimated throughput of petrol from particular station (to be built) to reach 200,000 gallons in 3rd year of operation. But, owing to refusal by planning authority, filling station was now built “back to front”. Ignoring…

Basic Principles of Contract | Contract Law

Smith v. Hughes

Smith v. Hughes (1871) LR 6 QB 597 (Mutual and Unilateral Mistake—Misrepresentation, Fraud—Condition, Warranty) FACTS: S (Smith) sued H (Hughes) for the price of oats sold and delivered, and for damages for not accepting the oats. S had offered to sell to H by sample a parcel of oats. According to H, S described the…