Mathieson Gee (Ayrshire) Ltd v Quigley

An acceptance must correspond with the offer. A purported acceptance of a contract of a materially different character creates no consensus in idem and therefore no contract.

The court may find that no contract exists even where both parties plead a concluded agreement and ask only for its construction. The parties cannot require the court to formulate terms for an agreement which they never made.

Written contractual communications are construed from their terms in the light of circumstances known to both parties when they were written. Subsequent conduct is generally inadmissible as an aid to that construction, subject to limited exceptions.

The respondents offered by letter to supply mechanical plant for the appellant’s work. Their charges were to accord with S.R. & O. No. 1277 of 1941, as amended by S.R. & O. No. 915 of 1947. The appellant replied in terms which purported to accept an undertaking to remove silt.

The Lord Ordinary and the majority of the First Division treated the correspondence as constituting a contract, although they differed as to its effect. Lord Carmont dissented and concluded that the parties had made no contract. The appellant appealed to the House of Lords, principally supporting the Lord Ordinary’s construction and alternatively adopting Lord Carmont’s conclusion.

The central questions were whether the letters disclosed consensus in idem and whether the court could find that no contract existed although both parties had pleaded a concluded agreement.

1. Appeal allowed and action dismissed. Lord Normand and Lord Reid each concluded that the letters disclosed no consensus in idem and therefore created no contract. Lord Tucker and Lord Cohen agreed.

2. Per Lord Normand, the respondents’ letter was an unambiguous offer to hire out mechanical plant. The stipulated charging rules covered the machines but excluded drivers or operators. The assurance of co-operation supplemented that plant-hire arrangement; it did not convert it into an undertaking to complete the work.

3. Per Lord Normand, the appellant’s reply purported to accept a contract to remove the silt. That was a contract for work, with incidents materially different from the offered hire of plant. The respondents had therefore offered one kind of contract while the appellant purported to accept another.

4. Per Lord Reid, the letters had to be construed from their terms in the light of the circumstances known to both parties when they were written. The ordinary rule prevented subsequent acts from being used to determine their true construction. Lord Normand likewise held that none of the limited exceptions concerning subsequent conduct was engaged.

5. Per Lord Normand, Sutton & Co v Ciceri & Co was distinguishable. That case concerned the meaning of an existing contract where an ambiguity had been expressly identified and the offeror’s later response and conduct supported the suggested meaning. Here the offer was unambiguous and the reply purported to accept something which had not been offered.

6. Per Lord Normand and Lord Reid, a court may decide that no contract exists even though both parties allege a concluded contract and ask the court to construe it. Following Lord Loreburn LC’s reasoning in Houldsworth v Gordon Cumming, judicial interpretation cannot extend to making a bargain for the parties.

7. Per Lord Reid, dismissal did not prevent the respondents from seeking remuneration on a ground other than the contract pleaded in the action.

1. House of Lords: Allowed the appeal unanimously, held that no contract had been concluded and dismissed the action.

2. First Division of the Court of Session: The majority construed the correspondence as a contract. Lord Carmont dissented, holding that no contract existed.

3. Lord Ordinary: Treated the correspondence as a concluded contract and determined its effect; earlier verbal negotiations were held irrelevant.