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Smith v Hughes

Court of Queen's Bench [1871] LR 6 QB 597

Overview

Hughes (defendant) trained racehorses. Smith (plaintiff) was a farmer who offered to sell oats to Hughes (D). Smith (P) showed Hughes (D) a sample of the oats for sale, after which Hughes agreed to purchase them.

Hughes (D) believed that the oats he was shown were 'old oats'. This was important to him because racehorses only eat old oats. However, the oats he was shown and the oats supplied were in fact 'new oats' ('green oats').

Upon discovering the oats were 'new', Hughes (D) endevoured to return them and avoid paying; Smith (P) refused to take them back and sued for the price.

At first instance the jury found for the defendant (D) following certain directions from the judge.

The Court held that there was a contract; it did not matter that the subjective intention of the parties differed - that is, that Smith intended to sell new oats and Hughes intended to buy old oats. Hughes' conduct was such that a reasonable person would believe he was consenting to the terms offered by Smith.

In other words, agreement is determined objectively by reference to the conduct of the parties rather than subjectively by reference to actual intention of the parties.

A new trial was ordered.

Race horses

Facts

Hughes (defendant) trained racehorses. Smith (plaintiff) was a farmer who offered to sell oats to Hughes (D). Smith (P) showed Hughes (D) a sample of the oats for sale, after which Hughes agreed to purchase them.

Hughes (D) believed that the oats he was shown were 'old oats'. This was important to him because racehorses only eat old oats. However, the oats he was shown and the oats supplied were in fact 'new oats' ('green oats').

Upon discovering the oats were 'new', Hughes (D) endevoured to return them and avoid paying; Smith (P) refused to take them back and sued for the price.

There was some dispute about the facts on appeal, but Chief Justice Cockburn proceeded on the following assumption:

[page 634 All ER] ... we must assume that nothing was said on the subject of the defendant's manager desiring to buy old oats, nor of the oats having been said to be old, while, on the other hand, we must assume that the defendant's manager believed the oats to be old oats, and that the plaintiff was conscious of the existence of such belief, but did nothing directly or indirectly to bring it about, simply offering his oats and exhibiting his sample, remaining perfectly passive as to what was passing in the mind of the other party.

 

Held (Court of Queen's Bench)

The Court held that there was a contract; it did not matter that the subjective intention of the parties differed - that is, that Smith intended to sell new oats and Hughes intended to buy old oats.

Hughes' conduct was such that a reasonable person would believe he was consenting to the terms offered by Smith.

Chief Justice Cockburn

Justice Cockburn (emphasis added; page references from All ER):

[page 634] The question is whether under such circumstances [described above in the facts] the passive acquiescence of the seller in the self-deception of the buyer will entitle the latter to avoid the contract. I am of the opinion that it will not. The oats offered to the defendant's manager were a specific parcel, of which the sample submitted to [635] him formed a part. ...

[page 635] Here the defendant agreed to buy a specific parcel of oats. The oats were what they were sold as, namely, good oats according to the sample. The buyer persuaded himself they were old oats, when they were not so; but the seller neither said not did anything to contribute to his deception. He has himself to blame. ...

[page 636] It only remains to deal with an argument which was pressed upon us, that the defendant in the present case intended to buy old oats, and the plaintiff to sell new, so the two minds were not ad idem; and that consequently there was no contract. This argument proceeds on the fallacy of confounding what was merely a motive operating on the buyer to induce him to buy with one of the essential conditions of the contract. Both parties were agreed as to the sale and purchase of this particular parcel of oats. The defendant believed the oats to be old, and was thus induced to agree to buy them, but he omitted [637] to make their age a condition of the contract. All that can be said is, that the two minds were not ad idem as to the age of the oats; they certainly were ad idem as to the sale and purchase of them. ...

 

Justice Blackburn

On the issue of consensus ad idem (emphasis added):

I apprehend that if one of the parties intends to make a contract on one set of terms, and the other intends to make a contract on another set of terms, or, as it is sometimes expressed, if the parties are not ad idem, there is no contract, unless the circumstances are such as to preclude one of the parties from denying that he has agreed to the terms of the other. The rule of law is that stated in Freeman v Cooke. If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms.

 

Justice Hannen

Justice Hannen agreed with the other members of the court that there should be a new trial, but differed in his reasons. He considered a new trial necessary because:

[638] ... I think it doubtful whether the jury sufficiently understood the direction they received to enable them to take it as their guide in determining the question submitted to them. ...

Justice Hannen believed the claim could only succeed in the following circumstances:

[639] ... If ... in the present case the plaintiff knew that the defendant, in dealing with him for oats, did so on the assumption that the plaintiff was contracting to sell him old oats, he was aware that the defendant apprehended the contract in a different sense from that in which he meant it, and he is thereby deprived of the right to insist that the defendant shall be bound by that which was only the apparent and not the real bargain' ...

Justice Hannen also managed to craft the following sentences ...

[639] ... In order to relieve the defendant, it was necessary that the jury should find, not merely that the plaintiff believed the defendant to believe that he was buying old oats, but that he believed the defendant to believe that the plaintiff was contracting to sell old oats. ... I can find very little, if any, evidence to support a finding ... in favour of the defendant. It may be assumed that the defendant believed the oats were old, and it may be suspected that the plaintiff thought he so believed, but the only evidence from which it can be inferred that the plaintiff believed that the defendant thought that the plaintiff was making it a term of the contract that the oats were old is that the defendant was a trainer, that trainers as a rule use old oats, and that the price given was high for new oats and more than a prudent man would have agreed. ...