Dany Lions Ltd v Bristol Cars

For summary judgment purposes, a contractual promise to achieve a specified result may amount to a warranty that performance is possible. Common mistake cannot render the contract void where the contract contains that warranty, or where the alleged impossibility affects only one element of wider contractual works. A request for information does not reject or terminate an existing offer. Summary judgment is appropriate where the issues are questions of law on undisputed facts and the defence has no realistic prospect of success.

The claimant sought summary judgment on two issues arising from an alleged contract for the restoration and conversion of a rare motorcar. It contended that the contract fixed the price at £153,000 inclusive of VAT and that the defendant was liable to perform the agreed works.

The defendant disputed the existence of an agreed maximum price and pleaded that the contract was void for common mistake or, alternatively, frustrated because it later became apparent that the automatic transmission could not be fitted while retaining the car’s full functionality. The applications also sought alternative strike-out relief. The central questions were the proper construction of the email exchange, the effect of the alleged impossibility, and whether those issues could properly be determined summarily.

1. Contract and price. The defendant’s email of 30 June 2011 was an offer to carry out the specified works for £153,000. The claimant’s email of 1 July was a request for information. It was neither an acceptance, rejection nor counter-offer, and therefore did not terminate the extant offer. The claimant’s email of 5 July accepted that offer, or alternatively made an offer on materially identical terms which the defendant accepted. The contract therefore included a term that the price would not exceed £153,000 inclusive of VAT.
2. Nature of the obligation. The defendant undertook to adapt and fit an automatic gearbox to suit the engine and match the transmission points. It assumed a positive obligation to achieve that result, rather than merely undertaking to investigate whether the result was possible.
3. Common mistake. Applying the elements identified in Great Peace Shipping v Tsvarliris Salvaging Ltd, the defence failed. The contract itself warranted the possibility of performing the relevant obligation. Further, even assuming a common assumption and an inability to fit the gearbox without adverse consequences, that circumstance did not make performance of the whole contract impossible. The gearbox work was one element of a substantially wider restoration contract.
4. Frustration and summary judgment. The frustration defence was based on the same alleged impossibility arising after formation, but it could not succeed on the facts advanced. The guidance in Federal Republic of Nigeria v St Helena Invoice Corporation, including the principles derived from Swain v Hillman, ED & F Man Liquid Products v Patel, Royal Brompton Hospital NHS Trust v Hammond (No 5) and Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd, permitted determination without a trial. The issues were legal questions on undisputed facts, and the defendant’s case lacked a realistic prospect of success.
5. The applications for summary judgment succeeded on the identified issues.