Introduction to Business Law: Judicial
Precedent
Judicial precedent
Judicial precedent at times is called legal citation
is not confined to case law statutes, ordinances,
regulations and administrative rulings also
include in this wide canopy. Disclosure of the
latter may be of greater practical importance,
especially if it would be more difficult for the
tribunal to discover on its own. What constitutes
a controlling jurisdiction can be a complicated
question. On questions of federal law, U.S.
Supreme Court precedent is obviously
controlling, as are cases from the federal circuit
in which you are litigating. As for state law,
regardless of the court, you are in, you are
obliged to cite directly adverse authority from
the jurisdiction whose law the court is applying.
In addition, if you are urging the court to adopt
or rely upon the law from other jurisdictions, the
duty of candor requires disclosure of directly
adverse authority from those jurisdictions as
well. The disclosure obligation is not limited to
adverse appellate decisions—the rule requires
disclosure of any adverse authority in the
controlling jurisdiction, not just controlling
authority (Sealy, 2000).
American Bar Association Formal Opinion 280
(June 1949), which is still relevant today,
provides a few questions to ask when you find
directly adverse authority:
Is the decision which opposing counsel has
overlooked one which the court should clearly
consider in deciding a case? Would a reasonable
judge properly feel that a lawyer who advanced
as the law a proposition adverse to the
undisclosed decision was lacking in candor and
fairness to him? Might the judge consider
himself misled by an implied representation that
the lawyer knew of no adverse authority?
Some courts have evenly maintained that a
lawyer’s duty of candor to the court must always
prevail in any conflict with the duty of zealous
advocacy while representing its client. At this
standstill, some equilibrium must be wracked
between the two ethical obligations. Under the
Model Rule 3.3 cmt. 3, ‘a lawyer is not required
to make a disinterested exposition of the law, but
must recognize the existence of pertinent legal
authority’. Counsel for an appellee; for instance,
does not require disclosing the fact that he could
find no case law to argue confirmation of a fact
adjudged by the lower court. The rules do not
endorse; a requirement that the lawyer, in
addition to advocating the cause of his client,
steps first into the shoes of opposing counsel to
find all potentially contrary authority, and finally
into the robes of the judge to decide whether the
authority is indeed contrary or whether it is
distinguishable”.
If the candor towards tribunal is taken into
consideration, then according to 27 NCAC 02
rule 3.3, (Macdonald and Koffman, 2007)
A lawyer shall not knowingly
1. Make a false statement of material fact or
law to a tribunal or fail to correct a false
statement of material fact or law
previously made to the tribunal by the
lawyer;
2. fail to disclose to the tribunal legal
authority in the controlling jurisdiction
known to the lawyer to be directly adverse
to the position of the client and not
disclosed by opposing counsel; or
3. offer evidence that the lawyer knows to be
false. If a lawyer, the lawyer’s client, or a
witness called by the lawyer, has offered
material evidence and the lawyer comes to
know of its falsity, the lawyer shall take
reasonable remedial measures, including,
if necessary, disclosure to the tribunal. A
lawyer may refuse to offer evidence, other
than the testimony of a defendant in a
criminal matter that the lawyer reasonably
believes is false.
In deciding disputes of inferior courts follow the
decision of the higher courts if cases involving
similar facts of law and points of law come
before them. It must be noted at this stage that it
is not the entire judgment that is a binding
precedent. It is only that part that constitutes the
ratio decidendi (reasons for the decision) and
the rest of the judgment is not binding.
Sometimes a may have said things which are
strictly relevant to the final judgment. Such
remarks are known as obiter dicta (remarks
made by the way) and do not create any binding
precedent. However, an obiter dictum is not
altogether destitute of legal consequences; it
creates a persuasive authority when there is no
binding precedent available.
Declaratory precedent: Where a judge applies
an already existing principle to the case before
him for his judgment, his decision is a
declaratory precedent. But if no applicable legal
principle exists, the judge creates a new rule of
law to govern the facts before him, and this may
act as a future precedent for the judges of the
inferior courts.
The decisions of the High Court bind the courts
inferior to it as magistrates’. A High Court judge
is bound by the decision of the Court of Appeal,
but he is not absolutely bound to follow the
previous decisions of other High Court judges.
In actual practice, he will nearly always do so
unless convinced that the other judge was
wrong. The magistrates’ court is bound by all
superior courts, but they themselves do not
create binding precedent, and their judgments
are not reported in the Law Reports.
It should be noted that the decisions of superior
courts are not strictly binding but are usually
followed in similar cases unless they are found
not compatible with the situation in question.
Advantages of case law are
1. Certainty: The maxim of stare decisis (to
stand by the decision already made) has
contributed certainty and consistency in
the development of the rules of law. The
strict requirement of following the
precedent of the superior courts also
relieves the judges for their decisions.
2. Possibility of growth: Case law grows out
of the practical problems and thus it keeps
pace with the changing needs of society.
3. Rich in detail: Each principle of law or
equity is supported by elaborate judgments
of distinguished judges. These are
tremendous values to judges, lawyers and
students of law who understand,
appreciate and apply to the practical
problems facing them.
Disadvantages are
1. Rigidity: Since the decision of the superior
courts binds the inferior ones, it apparently
destroys the original thinking of a judge of
an inferior court as he is restricted from
using his own reasons for giving a
different judgment. In actual practice, a
judge of an inferior court can refuse to
apply a precedent where he feels that it
may lead to injustice in the case before
him. He may refuse to follow the past
decision on the following grounds:
1. By distinguishing the fact, i.e. the
case before him does not fall within
the ratio decidendi of an earlier case
and there exists some material
difference between the facts of these
two cases.
2. By proving that the superior court
had omitted to consider the provision
of some relevant Act or some other
earlier decision which was binding
on it. Such a decision of the superior
court is known as ‘per incuriam’.
2. Over-subtlety: The concept of precedent
has led judges sometimes to create
artificial distinctions to avoid following an
earlier decision.
3. Bulk and complexity: Much of the case law
is contained in voluminous law reports
dating back to the Middle Ages. These
reports have to be constantly referred to by
those who are connected with the
administration of justice. For these
reasons, a great volume of case law has
now been embodied in statutes.
Case
There must be offer and acceptance. Offer and
acceptance have the following rules:
• An offer may be made to a specific person
or to any member of a group of persons or
to the world at large, but it cannot form the
basis of a contract until it has been
accepted by an ascertained person or
groups of persons.
• An offer may be made by word of mouth
in writing or by conduct.
• An offer must contemplate giving rise to
legal consequences if accepted.
• The terms of the offer must be certain and
free from vagueness in expression.
• Every offer must be communicated; for a
contract to arise, two parties must be of the
same mind, and so it cannot be accepted by
a person who does not know that it has
been made. This applies to both specific
and general offers.
• The offeror may attach any conditions to
his offer but must communicate them to
the offeree before they bind him by his
acceptance of the offer. In commercial
agreement, this rule is chiefly important
where the terms of the offer are usually of
a complex nature (Graw S., 178-201).
Facts
The person advertised in the newspaper for a
reward to anyone who gets his dog. A shepherd
found the dog when the offer had elapsed.
Legal Issues Involved
This is a case of offer and acceptance. In order
to be an enforceable contract, certain basic
requirements must be present. There must be an
agreement based upon genuine consent of the
parties, supported by consideration and made for
a lawful object between competent parties. The
rules of an offer include:
An offer may be made to a specific person or to
any member of a group of persons or to the
world at large, but it cannot form the basis of a
contract until it has been accepted by an
ascertained person or group of persons. If A
makes an offer to B, it is a specific offer and B
is the only person who can accept it. But in many
cases, it is immaterial to whom the offer is made.
Offers made by an advertisement are the
commonest form of offers made to the world at
large and can be accepted by anyone just by
acting on them (Gower and Davies, 2006).
Carilil V Carbolic Smoke Ball Co, 1893
The defendants offered a reward of $ 100 to
anyone who contracted influenza after using
their smoke ball for a fortnight. The plaintiff,
relying on the advertisement, bought the smoke
ball and used it as prescribed, but still contracted
influenza. She sued for the advertised reward.
Held that the defendant was a true offer, and not
a mere advertising puff, and the defendants were
liable to pay the reward.
An offer may be made by word of mouth, in
writing or by conduct. The person making the
offer is called the offeror, and the person to
whom the offer is made is called the offeree. A
common example of the offer by conduct may
be omnibus plying on a particular route. It is an
offer by the owner of the bus to carry passengers
at the published fares for various stages. The
offer is accepted by conduct when a passenger
boards the bus with the intention of becoming a
passenger(Gower and Davies, 2006).
An offer must contemplate giving rise to legal
consequences if accepted. The terms of the offer
must be certain and free from vagueness in
expression. L bought a horse from G, and
offered to pay another 5 for the horse if it proved
lucky to him. Held the term “lucky” was too
vague to form the basis of a legally enforceable
agreement.
Every offer must be communicated; for a
contract to arise, two parties must be of the same
mind, and so it cannot be accepted by a person
who does not know that it has been made. This
applies to both specific and general offers. Thus
where A, without knowing that a reward is
offered, finds B’s lost dog and brings it to B, he
cannot recover the reward if he learns of the
reward after returning the dog(Gower and
Davies, 2006).
R V Clarke, 1927
A reward was advertised for information leading
to the arrest of the two murderers of two police
officers, and a free pardon if the person giving
the information was an accomplice. C gave the
information. Held C was not entitled to a
government reward because at the time the
information was given by him he had forgotten
all about the reward d.
The offeror cannot bind the other party without
his consent(Gower and Davies, 2006).
Fleethouse V Bindley, 1862
F wrote to his nephew offering to buy one of his
horses adding: if I hear no more about him I
consider that the horse is mine $ 30.15
shillings”.
The nephew did not reply, but told Bindley, an
auctioneer, to keep the horse out of the sale of
this farm stock as it was sold to the plaintiff.
Bindley sold the horse by mistake and F sued
him for damages. Held that as the nephew had
never communicated his acceptance to F, there
was no contract of sale, and so the auctioneer
was not liable.
The offeror may attach any conditions to his
offer but must communicate them to the offeree
before they bind him by his acceptance of the
offer. In commercial agreement, this rule is
chiefly important where the terms of the offer
are usually of a complex nature.
An offer must be distinguished from:
1. An invitation to treat
2. A mere declaration of an intention
3. A mere supply of information
Marked prices of goods displayed in shop
windows or catalogs mentioning prices of goods
at the market prices. The prospective buyer, by
offering that price is himself the offeror and his
offer, if accepted, creates a binding
agreement(Sealy, 2000).
Pharmaceutical Society of Britain V Boots
Chemist, 1953
Goods were sold in B’s shop under the self-
service system. Customers selected their
purchases from the shelves, put them into
baskets supplied by B and took them to the cash
desk where they paid the price. Held the
customer made the offer when he presented
them at the cash desk, and not when he removed
them from the shelves.
Fisher V Bell, 1961
B, a shopkeeper, displayed a flick knife priced at
four shillings in his shop window. He was
charged with offering for sale an offensive
weapon contrary to the Restriction of Offensive
weapons Act. Held that mere display of the
goods in a shop window is not by itself an offer
for sale. B was not bound to sell the knife to nay
one entering his shop and offering him four
shillings(Sealy, 2000).
Declaration of importance
Where a person expresses or declares his
intention to do a thing or an act, it does not bind
him to another person who suffers damage
because he fails to carry out his intention despite
the fact that someone relied on his declaration
and acted on it(Gower and Davies, 2006).
Harris V Nickerson, 1873
N, an auctioneer, advertised that there would be
a sale of office furniture.
H, a prospective buyer, traveled from London to
attend the sale, but all the office furniture was
withdrawn. H thereupon sued the auctioneer for
the loss of time and travel expenses. Held that
the auctioneer was not bound to sell not making
an offer which my acceptance could is turned
into a contract.
The mere statement of the lowest price at which
a person will sell property or goods contains no
implied condition to sell at that price to the
person making such inquiry (Sealy, 2000).
Harvey V Facey, 1893
In this case, H telegraphed to F: “will you sell
Bumper Hall pen?
Telegraph lowest cash price” F, replied: “lowest
cash price for Bumper Hall pen is $ 900”. H
Telegraphed back “we agree to buy for $ 900
asked by you. F refused to sell and H sued him
contending that a telegram constituted a binding
contract. It was held that H was not entitled to
damages as in replying, he was merely stating
the lowest cash price and not making an offer.
Revocation
Offer may be terminated by revocation i.e an
offer may be revoked by the person who has
made it at any time before it has been accepted.
A bid at an auction is revocable until the hammer
falls.
Where the offeror promises orally or in writing
to keep his offer open for a specified time, he is
not bound by it i.e he can still revoke it at any
time before the expiration of that time unless:
1. The offer has already been accepted
2. The promise to keep the offer open is
supported by consideration i.e. the offeree
paid some money or money’s worth to the
offeror to keep his offer open for a
specified period.
3. The promise to keep the offer open was
made under seal. A promise under seal
does not require consideration.
A promise to keep an offer open for a certain
specified time is called an option, and we have
seen above that it is not binding on the offeror
unless either it is under seal or some
consideration has been given for it to the offeror.
Analysis of the Case
From the case, an advert was made to the whole
world, not to a specific person. It could be
described as an invitation to treat. I will advise
Andy that he is not liable for anything.
• if Andy is his young brother the position
will be the same if he is at age of entering
into a contract.
• if Cassey dies before he is brought then the
subject matter of the contract is revoked.
In order to a contract, an offer must be accepted.
Where the acceptor various the terms it amounts
to a counteroffer and the offer is terminated. I
will further advise the sales on various ways in
which an enforceable contract can be made. One
of the ways is to offer and acceptance without
changing terms. The acceptance must also be
communicated to the offerer in a manner
prescribed by the offeror. Lastly, it must be
within the time specified.
List of References
Gower, L, & Davies, P, 2006. Principles of
Modern Company Law. New York: Sweet and
Maxwell
Macdonald, E, & Koffman, L, 2007. The Law of
Contract, Oxford: Oxford University Press.
Sealy, L, C, 2000. Jordans Cases and materials
in Company law, London: Butterworth’s
Heinemann
