Brogden v Metropolitan Railway [1877]
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Brogden v Metropolitan Railway Company [1876–77] LR 2 App Cas 666 is a landmark decision in English contract law, establishing the principle that a contract can be formed by the conduct of the parties. The case involved Mr Brogden, the chief of a partnership, supplying coals to the Metropolitan Railway Company. Over the years, an informal arrangement evolved, leading Brogden to propose a formal contract for a longer-term coal supply. The negotiations between the parties' agents resulted in a document that Brogden approved and returned to Metropolitan.
Brogden suggested a formal contract for the ongoing coal supply, and negotiations took place between the parties' agents. Metropolitan's agents drafted terms of agreement, and Brogden added details and an arbitrator's name, signalling his approval by writing "approved" at the end of the document. While the parties contemplated exchanging formal agreements, the only document in existence was the one with Brogden's approval. Both parties initially acted in accordance with the terms specified in the informal agreement. However, when more serious disagreements arose, Brogden argued that no formal contract had been established, leading to a legal dispute.
The judgment, delivered by the House of Lords, held that a contract had arisen through the conduct of the parties. Lord Blackburn, in his judgment, emphasised that when an offer contains an express or implied request for acceptance through a particular act, completing that act binds the parties. He distinguished mere mental assent from the conduct that unmistakably shows both parties are bound by the agreement.
Lord Blackburn also pointed out that in cases where the offer explicitly or implicitly requires acceptance through a specified action, the contract is complete once that action is taken. In the context of the Brogden case, the word "approved" written by Brogden on the document constituted acceptance, and both parties were bound by their subsequent actions in line with the agreement. Additionally, Lord Blackburn highlighted the distinction between cases where parties have only reached the stage of an offer and cases where they have acted upon an informal draft as if it were a formal agreement. In the latter situation, if both parties have waived the execution of a more formal instrument and have agreed, through their conduct, to treat the informal document as binding, the contract is enforceable.
In summary, Brogden v Metropolitan Railway Company is significant for establishing that a contract can be formed by the conduct of the parties, especially when they act upon an informal agreement as if it were a formal one, demonstrating their mutual intent to be bound by its terms.
Brogden suggested a formal contract for the ongoing coal supply, and negotiations took place between the parties' agents. Metropolitan's agents drafted terms of agreement, and Brogden added details and an arbitrator's name, signalling his approval by writing "approved" at the end of the document. While the parties contemplated exchanging formal agreements, the only document in existence was the one with Brogden's approval. Both parties initially acted in accordance with the terms specified in the informal agreement. However, when more serious disagreements arose, Brogden argued that no formal contract had been established, leading to a legal dispute.
The judgment, delivered by the House of Lords, held that a contract had arisen through the conduct of the parties. Lord Blackburn, in his judgment, emphasised that when an offer contains an express or implied request for acceptance through a particular act, completing that act binds the parties. He distinguished mere mental assent from the conduct that unmistakably shows both parties are bound by the agreement.
Lord Blackburn also pointed out that in cases where the offer explicitly or implicitly requires acceptance through a specified action, the contract is complete once that action is taken. In the context of the Brogden case, the word "approved" written by Brogden on the document constituted acceptance, and both parties were bound by their subsequent actions in line with the agreement. Additionally, Lord Blackburn highlighted the distinction between cases where parties have only reached the stage of an offer and cases where they have acted upon an informal draft as if it were a formal agreement. In the latter situation, if both parties have waived the execution of a more formal instrument and have agreed, through their conduct, to treat the informal document as binding, the contract is enforceable.
In summary, Brogden v Metropolitan Railway Company is significant for establishing that a contract can be formed by the conduct of the parties, especially when they act upon an informal agreement as if it were a formal one, demonstrating their mutual intent to be bound by its terms.
