Robophone Facilities Ltd v Blank

JurisdictionEngland & Wales
CourtCourt of Appeal
Judgment Date27 Jun 1966

[1966] EWCA Civ J0627-2

In The Supreme Court of Judicature

Court of Appeal

From His honor Sir Alun plugh

Bloomsbury County Court

Before:

The Master of the Rolls

(Lord Denning)

Lord Justice Harman and

Lord Justice Diplock

Robophone Facilities Ltd.
Plaintiffs Respondents
and
Blank
Defendant

The Appellant appeared in person.

Mr. R. Johnson (instructed by Messrs Field Roscoe & Co.) appeared as Counsel for the Respondents.

The Master of the Rolls
1

We have become used to hire purchase agreements in these Courts. We have in this case a new kind of agreement, a long term hiring of goods at a fixed rental. A few weeks ago we heard a case about a juke-box which was let for a fixed term of four years. Now we have a telephone-recording machine which was let for a fixed term of seven years. In these long term agreements (unlike a hire purchase agreement) the hirer has no option to determine the agreement: nor has he any option to purchase. He is bound irrevocably for a period of years by all the terms printed on the back of the printed form, without any of the protection given by the Hire-Purchase Act: and at the end of the period the machine does not belong to him. It still belongs to the people who let it out to him.

2

The facts of this case are startling. The plaintiffs say that the machine cost them £105 to manufacture. A salesman called on a customer and got him to sign a printed form agreeing to hire it for seven years. Eleven days later, before the machine was delivered or installed, the customer repented and cancelled it. They accepted the cancellation and did not deliver it. Yet he has been ordered to pay damages of £245. 14s. Od. in respect of a machine he has never seen and which the plaintiffs can re-let to anyone else. Some profit! I confess that I should be sorry if the law; allows them to recover it. So I will consider the case in detail.

3

The plaintiffs are a Company called Robophone Facilities Ltd. They are associated with a Company called Robophone Ltd. who have brought out an electric machine. It is used in connection with telephones. It is something of a "Robot". It operates when there is no one in the house to answer a telephone call. When someone telephones, this machine tells the caller that the householder is out but that it will take a message. The caller speaks his message. The machine records it on a tape. It can take up to 250 messages. When the householder comes in, he can play the tape back and hear the messages. The machine canonly "be connected to the telephone with the consent of the Postmaster-General. Robophone Ltd. Have an agreement with him under which they agree not to sell the machine to the subscriber, and to maintain it in good condition, and agree also to indemnify the Crown against any damage that may be done. Robophone Ltd. distributes the machine through the plaintiffs, Robophone Facilities Ltd.

4

On the 4th June, 1965, a salesman from Robophone Facilities Ltd. called on Mr. Blank, who is an accountant and tax consultant. Mr. Blank said he wished to hire a Robophone machine of a model called the "Secretary" model. The salesman produced a printed form of rental agreement. He filled in some of the blanks. On the front of the form he filled in the period of hire as "seven years": and the hire rent as "£17. lis. Od." per quarter. On the back of the form he filled in "£350" as the sum for which the machine was to be insured by the hirer. There were two spaces for signature; one for the hirer, the other for Robophone Facilities Ltd. Mr. Blank signed the space for the hirer. But no one signed for Robophone Facilities Ltd. Mr. Blank told the salesman that he wanted the equipment quickly. The salesman said he would get in touch with the General Post Office so as to get it installed as quickly as possible.

5

On the back of the form there were fifteen printed terms which are much relied on by Robophone Ltd, I must draw attention to eight of them:-

6

1. The hirer….undertakes to enter into and observe such agreement if any as the Postmaster-General may require in relation to the installation.

7

3. The hirer shall pay to the Company, on installation of the Robophone, hire rent for the first quarter and shall thereafter pay quarterly by banker's order punctually hire rent so long as this agreement shall continue.

8

4. The hirer agrees to continue the hiring for the period of hire.

9

7. The hirer shall insure the same at his own cost in thejoint names of the Company and the hirer for the sum of £300 at least.

10

8. The Company undertakes to maintain the Robophone in good repair and working condition.

11

10. This agreement may be terminated forthwith by the Company

12

(a) If required in writing by the Postmaster-General….or

13

(b) If the hirer shall have committed any breach of the terms herein contained

14

11. In the event of this agreement being terminated under the provisions of paragraph 10(a) above, the hirer shall be liable to pay the rentals up to the date of actual termination only, but if this agreement shall be terminated for any other reason whatsoever then the hirer shall not be entitled to any credit or allowance in respect of any payments made by him under the terms of this agreement but shall thereupon pay to the Company all rentals accrued due and also by way of liquidated or agreed damages a sum equal to 50 per centum of the total of the rentals which would thereafter have become payable.

15

14. This agreement shall become binding on the Company only upon acceptance thereof by signature on their behalf".

16

It is clear that that document, although called an agreement, was only an offer. It could be revoked by Mr. Blank at any time before it was accepted by the Company, see Financings Ltd. v. Stimson, 1962, 1 Weekly Law Reports, p. 1184. In order to become binding, someone duly authorized would have to sign it as accepted on behalf of the Company and moreover their acceptance would have to be communicated to Mr. Blank. The general rule undoubtedly is that, when an offer is made, it is necessary; in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified, see Carlill v. Carbolic Smoke Ball Co., 1893, 1 Queen's Bench at p. 262 by Lord Justice Lindley; Entores Ltd. v. Miles Far East Corporation. 1955, 2 Queen's Bench at p. 336 by Lord Justice Parker. Clause 14 does not dispense with the necessity of notification. Signing without notification is not enough.It would "be deplorable if it were. The Company would "be able to keep the form in their office unsigned, and then play fast and loose as they pleased. Mr. Blank would not know whether or not there was a contract binding them to supply or him to take. Just as mental acceptances is not enough, see Felthouse v. Bindley (1862) 11 Common Bench, New Series, p. 869, nor is internal acceptance within the Company's office. In this very case we know that the Company signed it sometime or other (for it was produced at the trial complete with signature), but we do not know when the Company signed it. No evidence was given on the point. In the circumstances I think that until the Company notified Mr. Blank of their acceptance, the agreement was not complete. It was, in the words of Mr. Blank himself, provisional.

17

Meanwhile the salesman got on with the preliminaries in anticipation of an agreement being concluded. He got from the Post Office application forms for permission to install the machine. He took them to Mr. Blank. One form contained an application for Switch 2A for Robophone Answering/Recording Machine. Mr. Blank signed this application. Another form contained special conditions requiring Mr. Blank to indemnify the Crown against any damage. On this document Mr. Blank added in his own handwriting a modification that he would indemnify the Crown "providing that the contingencies are safeguarded properly by effective insurance". I see no reason why Mr. Blank should not make this modification. He was not bound at this stage to anyone. He was not bound by Clause 1 of the Company's printed form. He signed the Post Office form and dated it 9th June, 1965. He sent these forms back to the salesman, who made no comment and forwarded them to the Post Office. It appears that the Post Office was unwilling to agree to Mr. Blank's modification, and they never did agree to it. Everything was clearly still in the stage of negotiation.

18

In the next few days Mr. Blank telephoned three timesto Robophone asking when the machine was coming. He spoke to a lady but got no satisfactory reply. In consequence he decided not to proceed with the purchase of the Robophone machine. He entered into negotiation with a rival concern for a "Telstar" telephone answering machine. On the 15th June, 1965, he wrote this letter to the salesman of Robophone: " In view of your failure to notify me as to whether the provisional agreement is accepted, I wish you to consider the matter cancelled, I telephoned on three different days but received none of the promised reply". Mr. Blank in that letter took the very point which he has since taken, namely, that he had never been notified of any acceptance by the Company: that on this account there was no binding contract and that he was entitled to revoke his offer and consider the matter cancelled. On the 16th June, 1965, the salesman replied: "Wish to thank you for your letter dated 15th June, 1965, which I read with considerable surprise and bewilderment. On the 4-th June at approximately 3.00 p.m. you signed a rental agreement for the supply, installation and maintenance for a 'Secretary' Robophone for 7 years contract. As per Clause 1 of the Rental Agreement I applied on your behalf to the telephone manager for the supply of a Switch 2A to be installed by the G.P.O. Engineers. You signed the necessary G.P.O. form which was received on 9th June, 1965, by the telephone manager and passed to the...

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