Rob/Jason,

It must surely depend upon the facts. There may be cases where the  

reasonable interpretation of all actions is that they are referable to  

an anticipated contract, and that everything is to be reversed if one  

doesn't in fact materialise. (Goff in British Steel.) But there will  

also (perhaps more commonly) be cases where the parties are pursuing a  

line of negotiations that never finishes, intending to finish it but  

not necessarily intending it to exclude all other possible agreement,  

in which case an agreement can properly be inferred from conduct.

The fact that it is same machine, same price etc doesn't answer the  

point, but the context of the prior negotiations (a strict emphasis on  

having a written deal or no deal, and shared good reasons for it such  

as exclusion clauses/loose cannon employees who do unauthorised deals/

conditions of an insurance policy) may indicate that later conduct is  

properly to be interpreted as being on risk.

In a nutshell, have they impliedly agreed (not necessarily in a  

contractual sense) that all possible contracts are to be one way or  

not at all, or merely that the initial line of negotiations will only  

become a contract by that one way (counterparts signed etc) or not at  

all.

Best,

Adam Kramer

On 16 Jan 2010, at 05:14, Robert Stevens wrote:

>

> Well, that, of course, was what the manufacturer was arguing for. If  

> you

> think that, then they will not be liable for any consequential loss  

> if the

> machinery proves defective. I can see the view, but it seems to me  

> to be

> odd to say that the parties' perfomance didn't indicate that (i)  

> that the

> manufacturer undertook to deliver and install machinery of  

> satisfactory

> quality and (ii) the employer undertook to pay what they did, and  

> not a

> potentially lower reasonable remuneration. I am saying that the  

> offer and

> acceptance were constituted by the performance, not the prior to-ing  

> and

> fro-ing in the prior negotiations.

>

> Rob

>

>> "If there are two sets of negotiations, one of which does not  

>> result in a

>> contract, that does not necessarily prevent the other from  

>> resulting in a

>> contract."

>>

>> Not having read the case were there really two sets of  

>> negotiations? From

>> your description it looks more like one set (the same machine, same  

>> price

>> etc). If that's the case why isn't "no contract, unjust enrichment  

>> claim"

>> the better answer?

>>

>> Jason Neyers

>> Associate Professor of Law

>> Faculty of Law

>> University of Western Ontario

>> N6A 3K7

>> (519) 661-2111 x. 88435

>>

>>

>>

>> Robert Stevens wrote:

>>> An interesting decision of the Court of Appeal which I have only  

>>> just

>>> come

>>> across RTS Flexible Systems v Muller

>>>

>>> http://www.bailii.org/ew/cases/EWCA/Civ/2009/26.html

>>>

>>> Overturning a decision of Christorpher Clarke J

>>>

>>> http://www.nadr.co.uk/articles/published/CommercialReports/RTS%20v%20Muller%202008.pdf

>>>

>>> Simplified, the facts are that RTS are the suppliers of automated

>>> machinery for packaging food, and Muller negotiate with them for the

>>> supply of some yoghurt packaging machines.

>>>

>>> Initially the parties contract on the basis of a 'letter of  

>>> intent', but

>>> this, it is now accepted, expires and is no longer relevant.

>>>

>>> The agreement to replace the letter of intent contained a clause  

>>> (48)

>>> which stated that

>>>

>>> "This Contract may be executed in any number of counterparts  

>>> provided

>>> that

>>> it shall not become effective until each party has executed a

>>> counterpart

>>> and exchanged it with the other."

>>>

>>> This never occurred.

>>>

>>> Meanwhile, machinery was delivered and paid for.

>>>

>>> A dispute arose. Before Clarke J the only issue seems to have been  

>>> what

>>> the contract's terms were, but before the Court of Appeal the

>>> manufacturer

>>> changed tack and argued that because of clause 48 there was no  

>>> contract

>>> at

>>> all. They did so because this would mean that their potential  

>>> liability

>>> would then be limited (see para [48] of Waller LJ's judgment) to

>>> reimbursing anything they had been overpaid over and above a quantum

>>> meruit.

>>>

>>> Clarke J, following Steyn LJ in Trentham v Archital Luxfer [1993] 1

>>> Lloyds

>>> LR 25, held that there was a contract which arose from the parties'

>>> performance. The Court of Appeal concluded that as the negotiations

>>> disclosed that there was no contract unless the conditions in  

>>> clause 48

>>> were satisfied, that there was as a result no contract, following a

>>> similar approach of Goff J in British Steel Corporation v Cleveland

>>> Bridge[1984] 1 All ER 504.

>>>

>>> My own view, is that the view of Clarke J and Steyn LJ is to be

>>> preferred.

>>> If there are two sets of negotiations, one of which does not  

>>> result in a

>>> contract, that does not necessarily prevent the other from  

>>> resulting in

>>> a

>>> contract. Similarly, the fact that the one set of negotiations  

>>> resulted

>>> in

>>> no contract, doesn't mean that no contract arose when the  

>>> machinery was

>>> manufactured, delivered, accepted and paid for. Can it really be the

>>> case

>>> that the manufacturer (RTS) had given no undertaking that the  

>>> machinery

>>> supplied would work, so that if it didn't they would not be liable  

>>> for

>>> the

>>> (vast?) consequential loss that Muller might consequently suffer?  

>>> Did

>>> Muller, after installing the machines, really intend that their

>>> contractual obligation to pay for what they had received was still

>>> conditional on the exchange of a counterpart?

>>>

>>> The Supreme Court have given leave to appeal  (the Court of Appeal  

>>> had

>>> refused).

>>>

>>> RS

>>>

>>>

>>>

>>

>

>

> --

> Robert Stevens

> Professor of Commercial Law

> University College London

>