Questions 1 Is the decision in this case inevitable, given that English law does not, in general, treat silence as a misrepresentation? 2 Did the plaintiffs consent to the payments to the directors? 3 Did the directors unjustly enrich themselves at the expense of the plaintiffs? 4 If these facts arose again today, would the contracts be voidable in equity?
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Donovan LJ: The dealer in this case was clearly the plaintiff finance company’s agent to do a variety of things: to receive an offer of hire purchase; to tell the proposed hire purchaser, the defendant, that the plaintiffs would accept the business; to ensure that comprehensive insurance was effected by the defendant; and thereafter to deliver the car to him. In the written hire purchase form of agreement there was no clause negativing agency between the plaintiffs and the dealer. In these circumstances, authority to receive a notice of revocation of the hire purchase offer was, in my opinion, within the dealer’s authority as ostensible agent for the plaintiffs…

Then was a notice of revocation given before the offer was accepted? That acceptance must be taken to have taken place not earlier than 25 March 1961. Before then, namely, on 20 March, the defendant had taken the car back to the dealer, told him he did not want to go on with the transaction and offered to forfeit his deposit. The dealer said words to the effect that he would get in touch with the plaintiffs to see what could be arranged, and told the defendant that he himself should also communicate with the plaintiffs, which the defendant did not do. Clearly, both parties were under the impression that what was in view was the rescission of an existing concluded contract, whereas at this moment there was no contract at all. But it is conceded, and I think rightly so, that, if an offeror makes it clear that he does not want to go on with the transaction, it is properly treated as a revocation of his offer, notwithstanding that the words used would be more appropriate to a case of rescission. Thus one reaches the stage that an offer here has been revoked before acceptance and the revocation communicated to the ostensible agent of the offered. There is thus an end of the matter in favour of the defendant. But if this view be wrong, I would agree that the offer here was on the basis that the car remained substantially in the same condition until acceptance, and that this did not happen…

Associated Japanese Bank (International) Ltd v Credit du Nord [1989] 1 WLR 255 Queen’s Bench Division

Steyn J: Throughout the law of contract, two themes regularly recur-respect for the sanctity of contract and the need to give effect to the reasonable expectations of honest men. Usually, these themes work in the same direction. Occasionally, they point to opposite solutions. The law regarding common mistake going to the root of a contract is a case where tension arises between the two themes. That is illustrated by the circumstances of this extraordinary case.