Written By: Richa Buragohain.
Edited By: Rushank Shah.
INTRODUCTION
Brogden v Metropolitan Railway Co[1887]2 App Cas 666 is an English contract law case that established that a contract could be accepted by implying the parties’ conduct. The parties wished to draft an agreement to sell and buy coal in the present case. Once headed terms were agreed, the railway company supplied a draft to the supplier.
The complainants, Brogden, were coal suppliers to the defendant, Metropolitan Railway. They completed business dealings regarding the coal frequently for several years, on an informal basis. There was no written contract between the complainant and the defendant. However, the parties decided that it would be best to draft a formal agreement for their future business dealings. The Metropolitan Railway made a draft contract and sent this to Brogden. Brogden made some minor amendments, filled in some blanks, added an arbitration clause, and sent it back to Metropolitan Railway. The defendant then filed the document and never communicated their acceptance of the contract. Throughout this period, the claimants continued to supply the coal. Subsequently, a dispute arose, and it was questioned whether the written agreement was valid.
FACTS
Brogden had supplied Metropolitan Railway Company with coal without any formal contract for many years. Eventually, Brogden suggested that the parties draw up a legal contract. Metropolitan drew up a draft agreement, leaving certain parts blank for Brogden to fill in. Brogden filled in the blanks and also added an arbitration clause. He then signed the bottom of the agreement and sent it back to Metropolitan. Metropolitan did not respond.
The parties followed the terms of the draft agreement and occasionally referred to the ‘contract’ when dealing with minor disputes. However, when a significant dispute arose, Brogden denied that any contact had been formed between them. Metropolitan sued Brogden for breach of contract.
The House of Lords (The Lord Chancellor, Lord Cairns, Lord Hatherley, Lord Selborne, Lord Blackburn, and Lord Gordon) held a valid contract between suppliers, Brogden and the Metropolitan Railway. The draft contract that was amended constituted a counteroffer, which was inferred by the parties’ conduct. The prices agreed in the draft contract were paid, and coal was delivered. Although there had been no communication of acceptance, performing the contract without any objections was enough.
The judgment from Lord Blackburn’s, “I have always believed the law to be this, that when an offer is made to another party, and in that offer, there is a request express or implied that he must signify his acceptance by doing some particular thing, he is bound.” He noted that the burden of establishing whether the parties had been acting following a contract lies with the party who relies on that fact to prove their case.
Lord Cairns said: ‘But my lords, over and above that, I must say that having read with great care the whole of this correspondence, there appears to me clearly to be pervading the whole of it the expression of a feeling on the one side and the other that those who were ordering the coals were ordering them, and those who were supplying the coals was supplying them, under some course of dealing which created on the one side a right to give the order, and on the other an obligation to comply with the order.’ And ‘there may be a consensus between the parties far short of a complete model of expressing it, and that consensus may be discovered from letters or other documents of an imperfect and incomplete description.’
ISSUES
When a dispute arose, the issue, in this case, was whether there was a contract between Brogden and the Metropolitan Railway and if the written agreement they had was valid.
RULES
The House of Lords accepted that the completion of the arbitrator’s name technically rendered it a counteroffer. However, since the parties to the contract had traded on the contract terms, they had accepted the counteroffer as part of the agreement, and Brogden, therefore, could not claim that there was no contract.
ANALYSIS
The court asked how the later conduct of the parties, in which the coal was supplied and paid for at the prices agreed in the draft contract, was to be accounted for. There was a contract between the parties, and the rights and obligations of the parties had to be considered as if the unexecuted draft had been completed.
CONCLUSION
In this case, the directors of the Metropolitan Railway Company had brought an action against Brogden & Co. to recover damages for a breach of contract. But the contract was valid because the contract had been performed, so the defendant’s conduct had made acceptance.
PERSONAL COMMENTS
By sending the draft agreement to the plaintiff defendant proposed and filling the blank spaces, the plaintiff was implied to have made a counteroffer. After receiving the draft agreement, the company showed its mental acceptance by keeping the deal, but because of not signifying his assent, there was no contract. A dispute later arose, but it was questioned whether the contract was valid as it was argued that there had been no acceptance. But from my point of view, while dealing according to the terms of the contract, they signified their acceptance by conduct. Hence, there was a binding contract.