General Principle:
A contract can be formed in absence of a written agreement if both parties’ actions are in accordance with the agreement.
Name:
Brogden v Metropolitan Railway Co. (1877) 2 Book Cas 666
Facts:
For several years, Brogden (complainant) had supplied the railway company (the defendant) with coal in the absence of a written agreement. The parties decided to enter a written contract. A draft contract was prepared and then sent to the complainant. The complainant amended it and marked it as approved before returning it to the railway company. Their agent put the draft in his desk. Business continued between the complainant and the defendant. The two parties maintained the trade arrangements under this new document until December 1973, at which point Brogden refused to continue to supply coal on that basis. He stated that, since the railway company had never actually made an alternate draft, which they intended to be a counter offer, there could be no legal contract.
Ratio:
The House of Lords held a contract did materialise through what the parties’ actions that they carried out. The offer was the company ordering coal and the acceptance was Brogden was supplying it.
Application:
Actions between the parties can amount to a mutuality of obligations being fulfilled, even in the absence of a written contract.
Analysis
Acceptance by performance or performance by conduct
ABC Builders did not reply to this letter, but immediately started work. The general principle is in the majority of cases, the acceptance is communicated to the offeror in some way. However, in some instances acceptance can be through performance of the contract. In Brogden v Metropolitan Railway Co. [1877] 2 App Cas 666 the House of Lords held a contract did materialise through what the parties actually did – the actions they carried out. The offer was the company ordering coal and the acceptance was Brogden was supplying it. Thus using this case the actions between the parties ABC and Camford University Property Developers plc can amount to a mutuality of obligations being fulfilled, even in the absence of a written contract.
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