Casenote: Foley vs Classique Coaches, Limited

A contract made on the sale of land, which was alongside other land belonging to the plaintiff, which the defendants intended to use for their business as motor coach proprietors. The sale would go through as long as the defendants brought all the petrol they required from the plaintiffs" at a price to be agreed by all the parties in writing and from time to time", this was described as a supplemental agreement to the prior agreement formulated.

Further agreements were laid down saying that the defendants would *2 purchase no petrol from any other person so long as the plaintiff was able to supply them with the quantities sufficient to satisfy their daily requirements. Clause 8 stated the following: "if any dispute or difference shall arise on the subject matter or construction of this agreement the same shall be submitted to arbitration in the usual way in accordance with the provisions of the Arbitration Act, 1889. "

The sale went through, and the defendants purchased petrol from the plaintiffs for three years. After this period a few problems arose and the defendants tried to repudiate the second agreement, alleging that it had no binding force. ARGUMENT: The defendants agued that the second agreement had no binding force as: 1. No agreement in writing as to price had ever been made 2. The clause requiring the defendants to take their petrol supplies from the plaintiff was an unreasonable and unnecessary restraint of their trade.

The plaintiffs agued that: 1. The agreement was valid and binding 2. Therefore by purchasing petrol from other suppliers they had actually broken this contract, even though they proposed to repudiate the contract saying that it had no force 3. After three years the defendant did not follow the contract, as the contract stated that the defendant would purchase petrol only from them as long as the defendant is alive

PROCEDURAL HISTORY TRIAL: 1. Lord Heward C. J. : agreement was valid and binding, as there was no price agreed a term of reasonable quality and reasonable price must be implied instead and the arbitration clause would apply to any failure to agree the price, and therefore, the contract was enforceable although no definite price was fixed for the petrol at the time the contract was made. 2.

The defendants were only required to purchase petrol from the plaintiff for the purpose of the business carried on by them on the land purchased from the plaintiff, and so long as it was supplied of a reasonable price and quality, the obligation was not an unreasonable and unnecessary restraint of their trade. COURT OF APPEAL On appeal by Classique Coaches, Limited: Scrutton, Greer and Maugham.  

Scrutton and Maugham held that the Lord Chief Justice's decision was right and therefore the agreement was valid and binding because: 1. There was a binding agreement by which the defendants got the land on condition that they should buy their petrol from the plaintiff, which is of reasonable quality and reasonable price. As no price was agreed, a term of reasonable price and quality can be implied which makes the contract binding and valid (Scrutton and Greer)

2. Its quite clear that the defendants obligation to take their supplies of petrol from the respondent applies only to the business carried on by them on the land adjoining the respondent's petrol pumps. (Scrutton) cl. 2; the vendor shall deliver petrol from the pumps on his land, the petrol cannot, therefore, be supplied elsewhere. (Maugham). DECISION IN CASE: It was held: (1.

) that a term must be implied in the agreement that the petrol supplied by the plaintiff should be of reasonable quality and sold at a reasonable price, and that if any dispute arose as to what was a reasonable price it was to be determined by arbitration pursuant to clause 8; (2) that inasmuch as the defendants were only required to purchase petrol from the plaintiff for the purpose of the business carried on by them on the land purchased from the plaintiff, and so long only as it was supplied of a reasonable quality and at a reasonable price, the obligation was not an unreasonable and unnecessary restraint of their trade; and (3.

) that the agreement therefore was valid and binding on the defendants. The Sales of Goods Act 1893 says if the price is not mentioned and settled in the contract it is to be a reasonable price. Clause 8 stated the following: "if any dispute or difference shall arise on the subject matter or construction of this agreement the same shall be submitted to arbitration in the usual way in accordance with the provisions of the Arbitration Act, 1889. " OBITER DICTA The contract was bad as if the defendant was to have their business in Edinburgh, they would still be required to purchase their petrol from the plaintiffs in London.

The contract implies that the defendant is only required to purchase petrol from the defendants on the adjoining land that they are running their business from and not from any other remote place from London. Appeal dismissed. iv. National Coal Board v. Galley was similar to that of Foley v. Classique Coaches Ltd. as in this case a form of mediation was implemented or was provided in both cases. In Foley a clause implied that Arbitration would be the result of any dispute should any arise in the supply, purchase, and quality of the goods, whereas in National Coal Board v.

Galley. a trade union called the "Nocads" (National Association of Colliery Overmen and Deputies and Shotfirers) was the form of mediation available to employees should any dispute arise, in particular on working hours and wages. In the case of Foley v. Classique Coaches the agreement had been in process for three years until the defendants tried to repudiate the agreement without going through arbitration to sort the matter out. They then broke this agreement and were taken to court. In National Coal Board v.

Galley, the defendant had worked under the agreement for four years and then tried to repudiate it, and not turn up for the over time required of him in the agreement, he therefore broke the agreement and was taken to court. The defendants agreement to work over time was made by the trade union and therefore he should have sought a remedy through the trade union rather than repudiating the contract and therefore in turn breaking its terms and conditions. v. In the case of Esso Petroleum v. Harper's Garage, there are two garages referred to; one agreement was made for twenty-one years, and the other for four years and five months.

The defendant had argued that the contract was an unreasonable and unnecessary restraint of their trade, it was said that there was an "undue" restraint of trade. The agreement made for twenty-one years was considered to be an unreasonable restraint of trade and therefore the contract was rendered as void. Foley v. Classigue Coaches was referred to as the case where the contract was considered as only an "agreement to agree". SCRUTTON, L. J. , dealt with the matter of trade briefly saying that it was indefensible.

The reasons given in this case were not applicable to Mr Megarry's proposition, despite the agreement being applicable to all petrol required by the defendants for their business being run on a particular piece of land. vi. King's motors (Oxford) Ltd. v. Lax and another, was a case of a filling station on lease to the plaintiffs, where an agreement was to be made later on the rent to be paid on the premises. The defendants gave notice to the plaintiffs to the termination of the contract when the defendants tried to exercise the option.

The plaintiffs argued that this option was null and void. It was held that due to the absence of arbitration clause or some prior agreement, supplementing the initial agreement that fixed the rent to be paid, the option was void and could not be enforced. The case was appealed and Foley v. Classique Coaches was used in the argument. The argument was that as in the case of Foley v. Classique Coaches a term of reasonable price and reasonable quality was implied by the courts, and if any dispute arose it should be dealt with through arbitration.

There is only one clause on arbitration in the case being argued which only referred to the premises catching fire. 1 Considered that where a detail had to be agreed upon there was no agreement until that detail was agreed. 2 Was decided on the case of May and Butcher, Ltd. V. R. Considered that where a detail had to be agreed upon there was no agreement until that detail was agreed. 3 Repudiation of contract relieves other party from performance of any conditions precedent. 4 Arbitration should take place if both parties can agree no price.