Court: House of Lords

Full Case Name: Rose & Frank Co v. Crompton Bros

Date Decided: 17th December 1906

Citations: (1925) AC 445

Appellant: Crompton Bros

Respondent: Rose & Frank Company

Facts: An American organization and English organization went into a sole office agreement in 1913 for the offer of paper products in the USA. The composed agreement contained a condition specifying that it was anything but a formal nor lawful agreement, and a “Honourable pledge” between colleagues. Hence, the American organization set requests for paper which were acknowledged by the British organization. Before the requests were satisfied, the British organization ended the office agreement and would not send the products, asserting that the 1913 agreement was not lawfully official and that, subsequently, the requests didn’t make lawful commitments

Issues:

  1. Whether the sole agency agreement of 1913 constituted a legally binding contract.
  2. Whether the orders constituted enforceable contracts of sale.

Judgement: Initially, with respect to the 1913 agreement, the Court gave superseding weight to the arrangement in the agreement that explicitly gives that it is to be exclusively a “honorary pledge”  as demonstrating that the parties did not intend the arrangement as a legally-binding contract. Secondly, the Court held that the fact that the arrangement does not constitute a legal contract does not preclude the orders and acceptances from constituting legally-binding contracts. The lack of enforceability of an express legal arrangement under an agency agreement does not preclude the legal transactions.

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