2nd Round Problem (moot of 2004/2005)
In The House of Lords
Vulcan Co v Shane
Shane hoped to launch a motor racing team in 2003 and entered negotiations with several potential suppliers of parts. At his request Vulcan Co sent him a brochure advertising Vulcan 2k engines and giving their price as £10,000. Shane decided that his car should use a Vulcan 2k engine and eight weeks before the start of the season wrote to Vulcan Co to ask if they would be willing to supply one of these for £10,000. Igor, a sales representative of Vulcan Co, telephoned Shane and told him that “we’re very excited that you’re going to use the Vulcan 2k engine. The deal will have to go to Val, our in-house lawyer, for checking, but I’m sure that will just be a formality.” Shane asked Igor if he could send him the dimensions of the Vulcan 2k engine “so that I can get on with building a suitable chassis and bodywork”, and Igor faxed these the next day.
Igor sent a request for advice to Val stating that “the deal is excellent, and Vulcan Co will go ahead unless you advise otherwise. We should progress speedily because the customer needs the engines soon if he is to compete in this year’s race season.” Val replied four weeks later and informed Igor that Vulcan Co could not supply a Vulcan 2k engine to Shane because Vulcan Co had agreed an exclusive use deal with another motor racing team. The next day Igor was informed by the Vulcan Co accounts department that it had received £10,000 from Shane and a request to discuss delivery details. Igor was busy with other tasks and did not contact Shane until ten days later when he wrote saying that unfortunately Vulcan Co could not supply the engine and his money was being returned. By then Shane had built the chassis and bodywork for his car at the cost of £8,000, and the parties are agreed that it was impossible for him at that point to make other arrangements for the 2003 season: thus his expenditure was wasted. Shortly before the season ended Shane learned that Val had been mistaken, and that the exclusive use deal only applied to a different engine, as any reasonably competent solicitor would have realised on reading the documents.
Shane claimed £8,000 from Vulcan Co.
Chaser J. found in Shane’s favour, on the basis that: (i) following Walton Stores it was clear that Vulcan Co was estopped from denying that a valid contract had been formed, thus Shane could recover the £8,000 as damages for breach of contract; and further
(ii) following White v Jones it was clear that Val could be deemed to have assumed responsibility to Shane, and that Val had acted negligently, thus Shane could recover the £8,000 as damages for the tort of negligence from Vulcan Co as Val’s employer.
On appeal by Vulcan Co the Court of Appeal upheld the judgment in favour of Shane. Indolent LJ, who delivered the judgment of the Court, stated that he could see no reason for disagreeing with any part of Chaser J’s reasoning.
Vulcan Co have been given leave to appeal to the House of Lords and to argue that both grounds which Chaser J gave for finding in Shane’s favour are wrong as a matter of law.
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