Factual and Procedural Background
Company A (the seller of iron) and the Defendant (an iron-monger) engaged in written negotiations for the purchase of approximately seventy-three tons of iron. A series of letters between 7 February and 8 March 1827 discussed price, exact sizes, shipment within two or three weeks, and the possibility of market reductions. Company A ultimately shipped the iron on 21 March 1827 and invoiced it at £8 10s for bars and £9 10s for rods.
The Defendant remitted only the amount that would be due at his lower quoted prices of £8 and £9, asserting (1) late shipment, (2) deficiency in weight, and (3) incorrect sizes. Company A sued in the Burgh Court for the unpaid balance of £38 6s 8d. The Burgh Court held for the Defendant and awarded him costs.
Company A then advocated the case to the Court of Session, which reversed the Burgh Court, entered decree for the balance claimed by Company A, and awarded Company A the costs of both courts.
The Defendant appealed to the House of Lords. The House reversed the Court of Session, reinstated the original Burgh Court decree in favour of the Defendant, and adjusted the orders as to costs.
Legal Issues Presented
- Whether a binding contract at the higher prices (£8 10s / £9 10s) was concluded in the February correspondence, or whether Company A accepted a new offer at the lower prices by shipping after the Defendant’s letter of 8 March 1827.
- Whether the Defendant’s silence and acceptance of the goods barred him from disputing the invoice price or claiming deficiencies.
- Whether alleged short weight entitled the Defendant to a deduction.
- How litigation expenses should properly be apportioned.
Arguments of the Parties
Defendant’s Arguments
- The February letters never created a concluded contract; each communication altered material terms.
- Any earlier offer had lapsed owing to Company A’s six-week delay in shipment.
- The Defendant’s letters of 8 and 16 March constituted the only valid outstanding offer—namely purchase at the lower rates, subject to prompt shipment and protection against a market fall. By shipping after receipt of those letters, Company A necessarily accepted those terms.
- Retention of the Defendant’s drafts constituted acquiescence in the lower price.
- A proven deficiency in weight (about 15 cwt) warranted a corresponding deduction.
Plaintiff’s (Company A’s) Arguments
- The contract was concluded on 12 February 1827 at the higher prices; later attempts to vary those terms were ineffective.
- Shipment occurred within a commercially reasonable time given freight limitations.
- The Defendant accepted and sold the iron without prompt protest, thereby waiving objections as to price, delay, or quality.
- Any claim for short weight was not raised in due time and was therefore barred.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Whitsun and Trustees (22 Feb 1828) 6 S.&D. 579 |
A purchaser must raise quality or weight objections promptly to preserve the right to deductions or rescission. |
Quoted by Company A to argue that the Defendant’s late complaint about weight barred the defence; the House of Lords did not find the timing determinative in the circumstances. |
Court’s Reasoning and Analysis
The House of Lords, speaking through Judge [Last Name] (the Lord Chancellor), held that the letters of 7, 10 and 12 February did not amount to a concluded bargain: each letter proposed new terms rather than accepting previous ones. Consequently, no binding obligation at the higher prices existed before 8 March.
The letter of 8 March introduced fresh conditions—lower prices, prompt shipment, and protection against market reduction. Company A shipped after receiving that letter and therefore could not insist on prior, non-existent terms. Although Company A’s covering letters purported to reject the lower prices, its conduct (shipping and retaining the Defendant’s partial drafts) constituted acceptance in fact.
The Lord Chancellor criticised the Court of Session for assuming a completed February contract and for overlooking that conduct can create assent notwithstanding verbal disclaimers. He further found the lower court’s dismissal of the weight-deficiency defence unsustainable because an assertion of short quantity is always germane to a claim for full payment.
On costs, the Court of Session had, per incuriam, awarded Company A the expenses of the advocation. The House recalibrated expenses to reflect that the Defendant had succeeded up to the Lord Ordinary’s interlocutor but that neither side prevailed in later stages.
Holding and Implications
HELD: The House of Lords reversed the interlocutors of the Court of Session, reinstated the Burgh Court’s decree assoilzieing (absolving) the Defendant, and ordered:
- Defendant entitled to expenses in the Burgh Court and in the advocation up to and including the Lord Ordinary’s judgment of 10 July 1830.
- Each party to bear its own costs in the Inner House and on the appeal.
- Cause remitted to the Court of Session (Second Division) to implement the judgment.
Implications are confined to the parties: Company A recovers nothing beyond sums already remitted; the Defendant pays no additional balance; and expense allocations are adjusted. The House set no new precedent beyond reaffirming orthodox principles of contract formation and acceptance by conduct.