a case study of contract law

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Contracts Cases Outline

Contract law concerns the creation and enforcement of binding agreements between parties. Generally, the elements of a legally enforceable contract are assent, a valid offer, acceptance, and consideration. Most contract law concepts stem from common law, but some come from other sources, such as the universally adopted Uniform Commercial Code (UCC). Below is an outline of key cases in contract law with links to the full text of virtually every case, provided free by Justia.

• 2 Mutual Misunderstanding
• 4 Destroying an Offer
• 5 Option Contracts
• 6 Acceptance
• 7 Imperfect Acceptances
• 8 Consideration
• 9 Reliance and Promissory Estoppel
• 10 Contract Terms
• 11 Integrated Agreements
• 12 Conditions Precedent
• 13 Definiteness
• 14 Unconscionability
• 16 The Statute of Frauds
• 17 Breach of Contract
• 18 Anticipatory Repudiation
• 19 Excusing Conditions
• 20 Remedies

Assent binds parties in a contract. Assent is measured by the outward manifestations of the parties, rather than the inner, private, or secret intentions of the parties. Assent may be found when a reasonable person in the situation would have believed that there was assent, even if one party lacked subjective intent to be bound.

Lucy v. Zehmer 一 A contract is enforceable if one party reasonably believes that the other party has sufficient intent to enter into the agreement, even if the other party actually does not.

Leonard v. Pepsico, Inc. 一 Generally, an advertisement is not an offer. In evaluating whether an advertisement was an offer, a court will not consider the subjective intents or views of the parties, but what an objective, reasonable person would have understood.

Gleason v. Freeman 一 Whether a binding contract exists depends on the objective expressions of intent to be bound and the definitiveness of the terms of the agreement. When a party’s words create doubt as to their intent to be bound, a court will consider the situation and conduct of the parties under the circumstances. Continuing to negotiate an agreement’s terms may be evidence that the parties did not intend to be bound.

Mutual Misunderstanding

There is no mutual assent if the parties attach materially different meanings to their manifestations. However, the meaning attached by one party may control if that party does not know or have reason to know of a different meaning attached by the other and the other knows or has reason to know of the meaning attached by the first.

Raffles v. Wichelhaus 一 A contract is invalid if there is no meeting of the minds, as is the case when there is a mutual mistake.

An offer is a manifestation of assent by an offeror to an offeree that the offeror commits to a deal on specific terms and gives the offeree the power to assent to the terms and make a contract. If the so-called offeree knows that the so-called offeror does not intend to give the offeree the power to make a contract by simply accepting, there is no offer.

Lonergan v. Scolnick 一 An invitation for offers is not by itself an offer to form an enforceable contract.

Maryland Supreme Corp. v. Blake Co. 一 A mere price quotation and an invitation to enter into negotiations is not an offer, but whether an offer was made depends on the intention of the parties and the facts and circumstances of the case.

Sateriale v. R.J. Reynolds Tobacco Co. 一 An offer to enter into a unilateral contract may exist when an advertiser, in clear and positive terms, promises performance in exchange for something requested by the advertiser, and the recipient of the advertisement reasonably may conclude that acting in accordance with the request would form a contract. Advertisements may be offers when they invite the performance of a specific act without further communication and leave nothing for negotiation. If the offeror retains some discretion in performance, this does not preclude the existence of an offer.

Destroying an Offer

There are four general ways to destroy an offer: rejection or counteroffer, revocation, lapse, or death or incapacity. An offer may be effectively revoked if the offeree learns that the offeror no longer intends to keep the offer open, even if the offer is not expressly revoked. An offer may lapse after a reasonable period of time, depending on the circumstances surrounding the offer.

Dickinson v. Dodds 一 A promise to keep an offer open for a certain period of time is not binding without the consideration and acceptance necessary to form a binding agreement. One cannot accept an offer when they have knowledge that the offeror’s mind is no longer in agreement, even if the offeror did not expressly retract the offer.

Minnesota Linseed Oil Co. v. Collier White Lead Co. 一 An acceptance must be made within a reasonable time after an offer is received, as defined by the circumstances of the case.

Option Contracts

An option contract is a promise that the offeror’s right to revoke their offer will be limited, usually by a period of time. An offer is generally binding as an option contract if it is in writing and signed by the offeror, includes purported consideration, and proposes an exchange on fair terms within a reasonable time. (An offer may also be binding as an option contract if it is made irrevocable by statute.)

Beall v. Beall 一 An option agreement must be supported by consideration to be binding. Otherwise, it is a mere offer to sell, which may be revoked at any time before acceptance. However, an option may be binding if it is accepted within the time limit and before the offer is withdrawn.

Board of Control of Eastern Michigan University v. Burgess 一 One dollar may be valid consideration for an option to purchase land, so long as the dollar is paid or tendered. Written acknowledgment of receipt of consideration merely creates a rebuttable presumption of consideration. If an option contract fails for lack of consideration, the underlying offer will not be affected. However, the underlying offer may then be revoked at any time.

An offeree exercises their power to create a contract by accepting an offer. An offeree usually has a reasonable period of time to accept an offer, unless the offer specifies a time limit. Conduct by both parties recognizing the existence of a contract may be sufficient to show an agreement, even if the moment when a sufficient agreement was formed cannot be determined.

La Salle National Bank v. Vega 一 There is no offer when the so-called offer is not intended to give the so-called offeree the power to make a contract. A contract may dictate certain requirements for acceptance and may specify the mode of acceptance required.

Ever-Tite Roofing Corp. v. Green 一 If the time limit to accept is not specified in the offer, it is within a reasonable period of time. What constitutes a reasonable period of time is determined by the nature of the proposed contract, usages of business, and other relevant circumstances that the offeree knows or has reason to know at the time of acceptance.

Maryland Supreme Corp. v. Blake Co. 一 Conduct by both parties recognizing the existence of a contract may be sufficient to show an agreement, even if the moment when a sufficient agreement was formed cannot be determined. In addition to any contractual language, usage of trade, course of dealing and performance, and general circumstances may be used to determine the terms of the parties’ agreement.

Hendricks v. Behee 一 A valid contract is only formed when acceptance of the offer is communicated to the offeror. Similarly, a revocation is only effective when it is communicated to the offeree before acceptance. Communication of acceptance of a contract to an agent of the offeree does not bind the offeror. However, when an agent of the offeree obtains notice that the offer was withdrawn, that notice is binding upon the offeree.

Adams v. Lindsell 一 Under the mailbox rule, an offer is accepted when the acceptance is put into the mail by the offeree.

Carlill v. Carbolic Smoke Ball Co. 一 An advertisement may be an express contractual promise to pay when evidence of the advertiser’s sincerity, such as a deposit of the reward in a bank, would lead a reasonable person to think that they had the power of acceptance. Acceptance of such an offer may be made by performance, and no prior notice of the acceptance is required.

Marchiondo v. Scheck 一 An offer that invites acceptance by performance, which does not also invite acceptance by promissory acceptance, may not be revoked after performance has begun. Beginning performance effectively creates an option contract conditional on completed performance in accordance with the offer’s terms.

Imperfect Acceptances

Imperfect acceptances (or implied rejections) may take the form of counteroffers, acceptances with conditions, or responses containing new terms. Under the mirror image rule, acceptance generally must be coextensive with the offer and may not include additional terms or conditions. The mirror image rule is different for transactions falling under Section 2-207 of the UCC.

Gresser v. Hotzler 一 Under the mirror image rule, acceptance must be coextensive with the offer and may not introduce additional terms or conditions. Immaterial variations included in an acceptance will not hinder contract formation. However, a material term or condition introduced in the acceptance may preclude contract formation.

Diamond Fruit Growers, Inc. v. Krack Corp. v. Metal-matic, Inc. 一 Under UCC Section 2-207, a common-law counteroffer containing different or additional terms operates as an acceptance if the responding form includes a definite and seasonable expression of acceptance. Between merchants, such terms become part of the contract unless the offer expressly limits acceptance to its terms, the terms materially alter the contract, or a party objects to the terms. If the definite and seasonable expression of acceptance is expressly conditioned on assent to the different or additional terms, a contract is not created unless the offeror assents to the new terms. If the conduct of the parties recognizes the existence of a contract, but the offeror does not assent to the new terms, only the terms on which the parties’ forms agree will remain, and any other terms may be replaced with UCC terms.

Klocek v. Gateway, Inc. 一 Additional terms included with a product do not become part of a contract if the purchaser is not a merchant, unless the purchaser expressly agrees to them.

Hancock v. American Telephone & Telegraph Co., Inc. 一 Clickwrap agreements, which require a computer user to consent to terms and conditions by clicking on a dialog box, are typically upheld when they were clearly presented to the consumer, and the consumer had an opportunity to read the agreement and unambiguously accepted the terms.

Consideration

Consideration may be virtually anything for which one would bargain in exchange for a promise. Consideration may be a return promise, some kind of property, an affirmative action, or the forbearance of a legal right. Usually, consideration is a return promise. A contract will be unenforceable if it lacks consideration or an adequate substitute.

Reed v. University of North Dakota 一 Surrender of a legal right by signing a release form in exchange for participation may constitute consideration.

McCormick v. Dresdale 一 The forbearance of a legal right may qualify as valid consideration for a settlement agreement, but claims forgone that were false and made in bad faith may not constitute valid consideration.

Kirksey v. Kirkse y 一 A mere gratuitous promise without consideration is not enforceable, even if the promisee reasonably relied upon the promise and incurred a detriment.

Hamer v. Sidway 一 The forbearance of a legal right may still be valid consideration even if such forbearance benefited the promisee and did not benefit the promisor.

Schnell v. Nell 一 Consideration of one cent, which is clearly nominal, cannot support an exchange of $600. Furthermore, a moral consideration cannot support a promise, nor will a compromise of a legally groundless claim. Past services, love, and affection cannot be legal consideration for the promise to pay money to a third person.

Hooters of America, Inc. v. Phillips 一 There is no consideration if a return promise is in fact illusory. An illusory promise is one that makes performance optional and is, therefore, no promise at all. A promise to arbitrate when one party retains the right to modify or terminate the agreement, thereby creating an imbalance of obligation, is an illusory and unenforceable promise.

Alaska Packers’ Ass’n v. Domenico 一 There is no consideration when a party refuses to perform that which they are already bound to perform until the other party agrees to increased compensation for that same performance.

Angel v. Murray 一 A contract modification is generally unenforceable without additional consideration, and a promise to perform a pre-existing duty is not valid consideration. However, if the parties voluntarily and in good faith agree to a modification, it may be enforced without additional consideration if it is made to fairly and equitably address unexpected or unanticipated circumstances that arise during performance.

Reliance and Promissory Estoppel

When a promisee reasonably and foreseeably relies on a promise to their detriment, the promise is enforced to avoid injustice. Similarly, when an offeror should reasonably expect to and does in fact induce the offeree’s substantial action or forbearance before acceptance, a binding option contract may be enforced to the extent necessary to avoid injustice.

Ricketts v. Scothorn 一 When a promisee alters their position for the worse in reliance on a promisor’s promise, and the promisor should have expected that alteration as a reasonable and probable consequence of their promise, the promise may be enforced under the doctrine of equitable estoppel.

Dixon v. Wells Fargo Bank, N.A. 一 It is not necessary that there be an intent to mislead or deceive for an otherwise unenforceable contract to be enforced under the doctrine of promissory estoppel. Instead, under the circumstances, it must be unjust to allow one party to walk away from the natural or reasonably anticipated detrimental consequences of their representations or conduct when they take advantage of or string along another party. In such cases, pre-contractual liability should be limited to reliance expenditures.

Salsbury v. Northwestern Bell Telephone Co. 一 For reasons of public policy, charitable subscriptions should be binding even if there is no consideration or detrimental reliance.

Contract Terms

Contracts may contain both express and implied terms. If a dispute arises because contract language is ambiguous, a court may consider evidence other than the language contained therein, such as the circumstances surrounding the contract. Courts sometimes infer contract terms by examining circumstances such as course of performance, course of dealing, and usage of trade.

Threadgill v. Peabody Coal Co. 一 A party may be bound by trade usage if they had actual knowledge of the trade usage, or if the trade usage was so well established as to suggest constructive knowledge. When a party has not expressly agreed to be bound by trade usage, it may only be binding if it is reasonable, generally meaning that the usage must not be illegal or violative of public policy.

Wood v. Lucy, Lady of Duff-Gordon 一 An implied promise may exist when a contract’s express terms lack mutuality of obligation.

Billman v. Hensel 一 Financing clauses impose an implied obligation to make a reasonable and good-faith effort to satisfy the condition. A promisor cannot be excused from performance because of a condition precedent when they prevented the performance of the condition themselves.

Locke v. Warner Bros., Inc. 一 A contract that gives one party discretion affecting the rights of the other party imposes a duty to exercise that discretion in good faith and in accordance with fair dealing. In cases of subjective satisfaction, so long as dissatisfaction is asserted in good faith, it does not matter whether such dissatisfaction is reasonable.

Traders Bank v. Dils 一 Generally, there is no fraud when a promise is not performed, but an exception exists when the device used to accomplish the fraud is the promise itself. Fraudulent inducement is based on a party’s fraudulent representation of their intention to perform, rather than a breach of the agreement to perform.

Frigaliment Importing Co. v. B.N.S. Int’l Sales Corp. 一 When a contract term is in dispute, a court will consider the language of the contract; definitions of the term from other sources, such as dictionaries and regulations; the circumstances surrounding the agreement, including preliminary negotiations; trade usage; and course of performance. A court will also consider whether one party knew or should have known how the other party interpreted the contract.

Random House, Inc. v. Rosetta Books LLC 一 Contract language is ambiguous if a reasonably intelligent person who has considered the context of the agreement and applicable customs, practices, usages, and terminology could objectively interpret the language in more than one way. If contract language is ambiguous, a court will consider extrinsic evidence to interpret it. If contract language can most reasonably be read to convey one certain meaning, the party wishing to deviate from that interpretation bears the burden of negotiating for language expressing that deviation.

Integrated Agreements

Only a binding, completely integrated agreement discharges prior agreements to the extent that they are within its scope. An agreement is not completely integrated if it omits a consistent, additional agreed term either agreed to for separate consideration or naturally omitted under the circumstances.

Trident Center v. Connecticut General Life Ins. Co. 一 There is no prohibition against the use of parol evidence in interpreting contracts under California state law, no matter how thoroughly they appear to be integrated.

Mitchill v. Lath 一 An oral agreement may alter a written contract if it is a collateral agreement, it does not contradict express or implied provisions of the written contract, and it is one that parties would not ordinarily include in the written contract. An oral agreement may not alter a written contract if it is closely related to the subject of the written agreement.

Masterson v. Sine 一 Parol evidence may not be used to add to or alter the terms of an integrated agreement. To determine whether a written contract was an integration, meaning a complete and final embodiment of the terms, a court will consider whether the parties intended their writing to serve as the exclusive embodiment of the agreement. If an agreement is only partially integrated, parol evidence can be used to prove elements of the agreement that are not reduced to writing.

Luther Williams, Jr., Inc. v. Johnson 一 The parol evidence rule does not prevent a court from admitting testimony concerning an oral condition precedent. Parol testimony concerning an oral condition precedent is admissible when the contract is silent on the matter, the testimony does not contradict the writing, and it may be inferred under the circumstances that the parties did not intend the writing to encompass their entire agreement.

In re Soper’s Estate 一 When contract language is ambiguous not on its face, but when practically applied, parol evidence is admissible to determine the parties’ intent.

Conditions Precedent

If parties include a condition precedent in their agreement, the performance obligations to which the condition precedent applies will not become due until the condition precedent is satisfied.

Luttinger v. Rosen 一 A contract is not binding if a condition precedent, meaning a fact or event that the parties intend must exist or take place before performance, is not met.

Dove v. Rose Acre Farms, Inc. 一 An employer may not be obligated to perform under a bonus contract until the employee has satisfied all required conditions, even if those conditions seem especially strict.

Evans, Mechwart, Hambleton & Tilton, Inc. v. Triad Architects, Ltd. 一 A pay-when-paid provision operates only as a timing mechanism, while a pay-if-paid provision operates as a condition precedent that may discharge the duty to pay if the parties clearly intended to create such a condition precedent.

Definiteness

A contract may be unenforceable if a material term of the agreement is too indefinite. A contract will not fail for indefiniteness if the parties intended to make a contract, and there is a reasonably certain basis for giving an appropriate remedy.

Varney v. Ditmars 一 The words “fair” and “reasonable” may be definite enough to be enforceable, depending on the circumstances of the case, especially when they are used synonymously with “market value.” However, such words may be too indefinite to be enforceable when their meaning cannot be determined with a reasonable degree of certainty under the circumstances.

Community Design Corp. v. Antonell 一 An uncertain contract may nevertheless be enforceable when one party benefits from another party’s performance. A jury may properly determine the exact terms of such a contract.

Walker v. Keith 一 An agreement to agree, even in a renewal option, is not enforceable. Only option contracts that specify all the material terms with substantial certainty and leave nothing to be agreed upon in the future are enforceable.

Moonlenaar v. Co-Build Companies, Inc. 一 If a renewal clause leaves rent to be determined by a subsequent agreement, it is implied that the new rent will be “reasonable” or the “fair market” value, and is thus specific enough to be enforceable. Parol evidence may be used to explain the implicit term and show what the parties intended. There may be additional reason to enforce a renewal option when a party has already paid valuable consideration, such as higher rent.

Unconscionability

A contract may be unenforceable for unconscionability in certain circumstances. A court may consider such factors as the relevant bargaining power between the parties, their relationship, the ability of the accepting party to review and understand the contract before signing, and whether the terms unreasonably favored one party.

Williams v. Walker-Thomas Furniture Co. 一 Unconscionability, including an absence of meaningful choice on the part of one of the parties together with contract terms unreasonably favorable to the other party, may be a valid defense to the enforcement of a contract.

Vernon v. Qwest Communications Int’l, Inc. 一 In Colorado, a contract is unconscionable if it is both substantively and procedurally unconscionable. Relevant factors include unequal bargaining power, lack of opportunity to read the document before signing it, use of fine print, an absence of evidence that the provision was commercially reasonable, the terms of the contract, the relationship of the parties, and the circumstances surrounding the formation of the contract.

A contract may be rescinded when a mistaken belief related to a basic assumption of both parties materially affects the agreed performance. However, rescission may not be appropriate when the party challenging the contract has assumed the risk of loss related to a mistake.

Estate of Nelson v. Rice 一 A party bears the risk of mistake when they are aware at the time of contracting that they have only limited knowledge of the facts to which the mistake relates but treat such knowledge as sufficient. One who is consciously ignorant may be said to have assumed the risks associated with that ignorance.

Grenall v. United of Omaha Life Ins. Co. 一 A decedent’s unilateral mistaken belief that they were in good health when purchasing an annuity is not a valid basis to rescind the contract. The burden of such a risk is reasonable because it is an inherent part of a life annuity contract.

The Statute of Frauds

The statute of frauds provides that certain agreements are not enforceable without a written document signed by the party against whom enforcement is sought. Agreements that fall under the statute of frauds include contracts not performed within one year of the making of the contract, contracts for the sale of goods worth $500 or more, and contracts involving an interest in land.

Radke v. Brenon 一 A letter written to offer land for sale is sufficient to satisfy the Minnesota statute of frauds. Under the statute, a note or memorandum may be sufficient evidence to enforce an oral contract so long as the writing expresses consideration, is signed by the selling party or their lawful agent authorized in writing, and states expressly or by necessary implication the parties to the contract, the land involved, and the general terms and conditions of the sale. When all the evidence clearly indicates that an oral contract was made, a court may overlook technical requirements that would otherwise lead to an outcome contrary to the statute's purpose.

DF Activities Corp. v. Brown 一 There is an exception to the UCC's statute of frauds when the party against whom enforcement is sought admits in court that an oral contract for sale was made. However, once one party has submitted a sworn statement denying the existence of a contract, the other party cannot continue a lawsuit under the exception, hoping that the first party will perjure themselves.

McIntosh v. Murphy 一 A court has discretion to ignore the statute of frauds to avoid injustice, especially considering the doctrines of part performance and equitable estoppel.

Breach of Contract

Once a party breaches a contract, the other party has the right to sue for damages. If the breach is material, the party may have the right to suspend their own performance while pursuing damages. A breach is not material if there was substantial performance of the contract.

Kingston v. Preston 一 If a condition precedent is not met by one party, the other has no duty to perform, since their obligation to perform does not arise until the condition is satisfied.

Jacob & Youngs, Inc. v. Kent 一 Parties are obligated to fully perform under their contracts, but a trivial and innocent omission may sometimes be excused to the extent that damages may be limited to the difference in value between the performance bargained for and the actual performance, rather than the cost of replacement.

Anticipatory Repudiation

Anticipatory repudiation occurs when one party unequivocally manifests their intention not to perform their contractual obligations before they become due. Generally, an aggrieved party may await performance for a reasonable period of time or pursue a remedy for the breach.

Hochster v. De La Tour 一 Once a party repudiates their contractual obligations, the other party has the right to sue under the contract, even if performance has not yet become due.

Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp. 一 If one party reasonably believes that the other will commit a breach by non-performance, they have the right to demand adequate assurance of future performance. This UCC principle is equally applicable under New York common law.

Excusing Conditions

Certain conditions may excuse a party from performing their contractual obligations. Under the doctrine of impossibility, a party may generally be excused from performance if performance becomes impossible or impracticable due to no fault of their own. Under the doctrine of frustration of purpose, a party may be excused from performance if their principal purpose for contracting is substantially frustrated by no fault of their own.

Acme Markets, Inc. v. Federal Armored Express, Inc. 一 If the non-occurrence of a condition would cause a disproportionate forfeiture, a court may excuse the non-occurrence so long as the condition was an immaterial part of the agreement. To determine whether a forfeiture is disproportionate, a court must weigh the extent of the obligee’s forfeiture against the importance of the risk against which the obligor sought to protect and the degree to which that protection would be lost if the non-occurrence was excused.

Alderman v. Davidson 一 A party’s waiver of their right to enforce one provision of a contract may waive their right to enforce another provision if their waiver intended such a consequence as indicated by their conduct. Even if the party did not intend to waive their right, they may be estopped if their conduct induced the other party into reasonably believing that strict compliance was not necessary.

Zwick v. Lodewijk Corp. 一 A clause in a lease providing that a lessor’s failure to act on any default does not waive the right to declare a default is not effective. A non-waiver provision may be considered evidence of non-waiver, but it itself can be waived. Additionally, the statute of frauds does not bar an oral modification to extend the time for performance, including payment.

Taylor v. Caldwell 一 Impossibility may excuse a borrower or bailee from returning a bailed item if performance becomes impossible because the item has perished, so long as the impossibility is not due to the fault of the borrower or bailee.

Hewitt v. Biscaro 一 Only a governmental order or promulgation of a governmental regulation rises to the level of an event that may excuse performance based on impracticability. A verbal instruction is insufficient. A party may not assert that a condition excuses them from performance if the attempt to avoid performance is not made in good faith and in accordance with fair dealing.

Route 6 Outparcels, LLC v. Ruby Tuesday, Inc. 一 When parties define the contours of a force majeure provision, such contours dictate its application, effect, and scope. A party may not use a force majeure clause to excuse their non-performance when they expressly limited the clause to events beyond the control of the non-performing party. While a global economic downturn is not within a party’s control, their decisions regarding how to cope with the downturn are.

Krell v. Henry 一 When a party’s purpose for contracting is frustrated by the non-occurrence of a condition, the occurrence of which was a basic assumption of the contract, the party’s duties may be discharged so long as the non-occurrence was not their fault.

Remedies for breach of contract protect each party’s expectation interests, reliance interests, and restitution interests. Parties often include liquidated damages provisions in their contracts, under which they agree on damages in event of a breach ahead of time. Parties are also entitled to limit available remedies by including provisions such as damages caps.

Carr-Gottstein Properties v. Benedict 一 A liquidated damages provision is valid when actual damages would be difficult to calculate, so long as the agreed amount is a reasonable forecast of likely damages and not so disproportionate an amount as to be punitive in nature.

O’Brian v. Langley School 一 A party opposing a liquidated damages provision may be entitled to conduct discovery to prove that the provision is an unenforceable penalty.

Nohe v. Roblyn Development Corp. 一 A court has discretion to compare the damages fixed in a liquidated damages provision to actual damages and choose not to enforce the liquidated damages provision if the difference between the provision and actual damages is unreasonable.

Ash Park, LLC v. Alexander & Bishop, Ltd. 一 When a contract for the sale of land is breached, a court has discretion to order specific performance, regardless of whether it is demonstrated that a legal remedy would be inadequate.

Reed Foundation, Inc. v. Franklin D. Roosevelt Four Freedoms Park, LLC 一 A court may order specific performance even if this would offend aesthetic considerations.

i.Lan Systems, Inc. v. Netscout Service Level Corp. 一 Specific performance may be appropriate when goods are unique or irreplaceable as a practical matter, but specific performance may not be appropriate when it is the contract itself that is unique, rather than the goods.

Grossinger Motorcorp, Inc. v. American National Bank and Trust Co. 一 A liquidated damages provision is only enforceable if the parties intended to agree to settle monetary damages in advance. Therefore, an optional liquidated damages clause is unenforceable because it shows that the parties did not have the necessary intent.

Groves v. John Wunder Co. 一 When a construction contract is breached, the correct measure of damages is the cost of remedying the defect, rather than the difference in value between the land as it was before the contract was made and the land as it would have been had the contract been performed.

Peevyhouse v. Garland Coal & Mining Co. 一 A breach of contract claim cannot give rise to a damages award so substantial that it results in economic waste. If a breach is merely incidental to the main purpose of the contract, and the economic benefit that would result from full performance would be grossly disproportionate to the cost of performance, damages may be limited to the diminution in value to the premises due to the non-performance.

Parker v. Twentieth Century-Fox Film Corp. 一 The measure of damages for wrongful discharge is the salary that the employee would have earned, minus the amount that the employer affirmatively proves that the employee has earned or with reasonable effort might have earned from other employment. However, the employer must show that the other employment was comparable or substantially similar to the job from which the employee was discharged.

R.R. Donnelley & Sons Co. v. Vanguard Transp. Systems, Inc. 一 A non-breaching party’s duty to mitigate damages is suspended when they reasonably rely upon the breaching party’s assurances that they would correct the issue. When reliance is not reasonable, a non-breaching party retains their duty to mitigate, even though the breaching party could conceivably cure the breach.

Hadley v. Baxendale 一 Damages for breach of contract may be any damages naturally arising from the breach or any damages that the parties could have reasonably contemplated at the time when the contract was made.

Manouchehri v. Heim 一 The measure of direct damages for breach of warranty is the difference between the value of the goods as warranted and the value of the goods actually delivered. This value may reasonably be approximated by the cost to repair the goods. In instances in which goods are irreparable or non-replaceable, a court may use other proper grounds to approximate the value.

This outline has been compiled by the Justia team for solely educational purposes and should not be treated as an independent source of legal authority or a summary of the current state of the law. Students should use this outline as a supplement rather than a substitute for course-specific outlines.

Last reviewed August 2023

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Normile v. Miller

Professor Melissa A. Hale

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Contract Law: From Trust to Promise to Contract

Investigate contracts from ideation to execution, their pitfalls and remedies.

Learn about contracts in this online course from Harvard Law Professor Charles Fried, one of the world's leading authorities on contract law.

What You'll Learn

Contracts are promises that the law will enforce. But when will the law refuse to honor a promise? What happens when one party does not hold to their part of the deal? This version of the course adds new units on Interpretation, Agency, Partnerships, Corporations, and Government Regulation.

We are exposed to contracts in all areas of our life–agreeing to terms when downloading a new computer program, hiring a contractor to repair a leaking roof, and even ordering a meal at a restaurant. Knowing the principles of contracts is not just a skill needed by lawyers, it illuminates for everyone a crucial institution that we use all the time and generally take for granted.

This contract law course, with new materials and updated case examples, is designed to introduce the range of issues that arise when entering and enforcing contracts. It will provide an introduction to what a contract is and also analyze the purpose and significance of contracts. Then, it will discuss the intent to create legal relations, legality and morality, and the distinction between gifts and bargains. The course also investigates common pitfalls: one-sided promises, mistake, fraud, and frustration. With the knowledge of what makes contracts and how they can go wrong, Professor Fried will discuss remedies and specific performance. Finally, Professor Fried will introduce how contracts can create rights for third parties.

The course's instructor, Charles Fried, has been teaching at Harvard Law School for more than 50 years and has written extensively on contracts. Not only is Professor Fried a leading authority on contract law, but he also utilizes a story-telling approach to explaining the topic, which creates a unique and interesting class experience.

The course will be delivered via edX and connect learners around the world. By the end of the course, participants will be able to:

• A theoretical background of contracts, trust, and promise
• How to form contracts through valid offer and acceptance
• Limits to enforcing contracts
• Issues excusing contractual performance
• Available remedies for contractual breaches
• Third parties’ ability to enforce contracts

Your Instructor

Charles Fried is the Beneficial Professor of Law at Harvard Law School, where he has been teaching since 1961. Most recently, Fried has taught Contracts and Constitutional Law. He was the Solicitor General of the United States from 1985 to 1989, where he argued 25 cases in front of the Supreme Court. Fried was also an Associate Justice of the Supreme Judicial Court of Massachusetts from 1995 to 1999. Fried has authored many books, including  Anatomy of Values ,  Right and Wrong ,  Modern Liberty ,  Contract as Promise ,  Making Tort Law , and  Saying Where the Law Is: The Constitution in the Supreme Court , in addition to more than 30 journal articles.

Ways to take this course

When you enroll in this course, you will have the option of pursuing a Verified Certificate or Auditing the Course.

Alternatively, learners can Audit the course for free and have access to select course material, activities, tests, and forums.  Please note that this track does not offer a certificate for learners who earn a passing grade.

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Contract Law Case Notes

Contract cases.

This page provides a list of cases cited in our  Contract Law Lecture Notes , as well as other cases you might find useful. It also provides links to case-notes and summaries.

• Abbey National Bank plc v Stringer
• Adams v Lindsell
• Addis v Gramophone
• AEG (UK) Ltd v Logic Resource Ltd
• African Export-Import Bank v Shebah Exploration & Production Company Ltd
• Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd
• Ajayi v RT Briscoe (Nigeria) Ltd
• Alan Auld Associates v Rick Pollard Associates
• Albert v MIB
• Alder v Moore
• Alderslade v Hendon Laundry Ltd
• Alfred Dunhill v Sunoptic
• Alfred McAlpine Construction Ltd v Panatown Ltd
• Ali v Petroleum Company of Trinidad and Tobago
• Allcard v Skinner
• American Cyanamid Co v Ethicon Ltd
• Anglia Television v Reed
• Antonio v Antonio
• Arbuthnott v Fagan
• Arcos Ltd v EA Ronaasen & Son
• Arnold v Britton
• Ashfaq v International Insurance Co of Hannover
• Atlantic Baron, The
• Attorney General of Belize v Belize Telecom Ltd
• Atlas Express Ltd v Kafco
• Attorney General v Blake
• Attrill v Dresdner Kleinwort Ltd
• Attwood v Small
• Avery v Bowden
• AXA Sun Life Services Plc v Campbell Martin Ltd
• Azimut-Benetti SpA v Healey
• Aziz v Ciaxa d’Estalvis de Catalunya I Manresa (C-226/12)
• B & S Contracts & Design v Victor Green Publications
• Baird Textile   Holdings v Marks & Spencer
• Baker v Black Sea & Baltic General Insurance Co Ltd
• Baker v Jones
• Balfour v Balfour
• Bank of Australasia v Palmer
• Bannerman v White
• Barbudev v Eurocom Cable Management
• Barclays Bank v Fairclough Building
• Barry v Davies
• Barton v Armstrong
• Bell v Lever bros
• Bentsen v Taylor, Sons
• Berkeley Community Villages Ltd v Pullen
• Beswick v Beswick
• Bieber v Teathers Ltd (In Liquidation)
• Bisset v Wilkinson
• Blackpool and Fylde Aero Club v Blackpool BC
• Blue v Ashley
• BNY Mellon Corporate Trustee Services Ltd v LBG Capital No 1 Plc
• Bolton v Madden
• Bolton v Mahadeva
• Borrelli v Ting
• Boulton v Jones
• BP Exploration Co (Libya) Ltd v Hunt (No 2)
• BP Refinery (Westernport) Pty Ltd v Shire of Hastings
• Bradbury v Morgan
• Brikom Investments Ltd v Carr
• Brinkibon Ltd v Stahag Stahl GmbH  
• British Fermentation Products v Compair Reavell
• British Steel Corp v Cleveland Bridge and Engineering Co Ltd
• British Westinghouse Electric Co Ltd v Underground Electric Railways Co of London Ltd
• Britoil plc v Hunt Overseas Oil Inc
• Brocklehurst’s Estate , Re
• Brogden v Metropolitan Co
• BS & N Ltd v Micado Shipping (The Seaflower) (No 1)
• Bunge Corporation v Tradax SA
• Bunge SA v Nidera BV
• Butler Machine Tool v Ex-Cell-O Corporation
• BV Nederlandse Industrie Van Eiprodukten v Rembrandt Enterprises
• Byrne & Co v Leon Van Tien Hoven & Co
• C&P Haulage v Middleton
• Cable & Wireless plc v IBM UK
• Canada Steamship Lines Ltd v R
• Canary Wharf (BP4) T1 Ltd v European Medicines Agency
• Car and Universal Finance   Co Ltd v Caldwell
• Carlill v Carbolic Smoke Ball
• Casehub Ltd v Wolf Cola Ltd
• Cavendish Square Holding BV v Makdessi
• CCC Films v Impact Quadrant Ltd
• Central London Property Trust Ltd v High Trees House Ltd
• Centrovincial Estates plc v Merchant Investors Assurance Company Ltd
• Chandler v Webster
• Chapelton v Barry UDC
• Chappell v Times   Newspapers
• Chappell v Nestle
• Chartbrook Ltd v Persimmon Homes Ltd
• Chudley v Clydesdale Bank Plc
• CIBC Mortgages plc v Pitt
• Circle Freight International Ltd v Medeast Gulf Exports Ltd
• Clarke v Dickson
• Clea Shipping v Bulk Oil (The Alaskan Trader) (No 2)
• Clef Aquitaine SARL v Laporte Materials (Barrow) Ltd
• Clough v London and North Western Railway
• Cohen v Roche
• Collier v P & MJ Wright (Holdings) Ltd 
• Collins v Godefroy
• Combe v Combe
• Commission for New Towns v Cooper (GB) Limited
• Co-op insurance v Argyll Stores
• Cooper v Phibbs
• Couchman v Hill
• Couturier v Hastie
• Cramaso LLP v Ogilvie-Grant
• Credit Lyonnais Bank Nederland NV v Burch
• Cremdean Properties Ltd v Nash
• Crossley v Faithful & Gould Holdings Ltd
• CTI Group Inc v Transclear SA (The Mary Nour)
• CTN Cash & Carry Ltd v Gallaher
• Cundy v Lindsay
• Cunliffe-Owen v Teather & Greenwood
• Currie v Misa
• Cutter v Powell
• D & C Builders v Rees
• Dakin & Co Ltd v Lee
• Darlington BC v Wiltshier Northern Ltd
• Daulia Ltd v Four Millbank Nominees Ltd
• Daventry DC v Daventry and District Housing Ltd
• Davis   Contractors v Fareham   UDC
• De Wutz v Hendricks
• Decro Wall v Practitioners in Marketing
• Denne v Light
• Derry v Peek
• Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd
• Dickinson v Dodds
• Dimmock v Hallett
• Dimskal Shipping Co SA v International Transport Workers Federation
• Director General of Fair Trading v First National Bank
• Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening
• Doyle v Olby
• Drew v Daniel
• DSND Subsea Ltd v Petroleum Geo Services ASA 
• Dunlop Pneumatic Tyre Co Ltd v Selfridge Ltd
• Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd
• Dunnachie v Kingston-upon-Hull City Council
• Durham Tees Valley Airport Ltd v Bmibaby Ltd
• East v Maurer
• Eastwood v Kenyon
• Ecay v Godfrey
• Edgington v Fitzmaurice
• Edwards v Skyways Ltd
• Edwinton Commercial Corporation v Tsavliris Russ Ltd (The Sea Angel)
• El Awadi v Bank of Credit and Commerce International SA
• Emery v UCB Corporate Services
• Entores Ltd v Miles Far East Corporation
• Errington v Errington Woods
• Ertel Bieber v Rio Tinto
• Esso Petroleum v Commissioners of Customs & Excise
• Esso Petroleum v Mardon
• Esso Petroleum Ltd v Niad Ltd
• Evia Luck, The
• Experience Hendrix LLC v PPX Enterprises Inc
• Falcke v Gray  
• Farley v Skinner
• FC Shepherd v Jerrom
• Felthouse v Bindley
• Fercometal SARL v Mediterranean Shipping Co SA, The Simona
• Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour
• Financings Ltd v Stimson
• First Plus Financial Group v Hewett
• First Tower Trustees Ltd v CDS (Superstores International) Ltd
• Foakes v Beer
• Foley v Classique Coaches
• Force India Formula One Team Ltd v Etihad Airways PJSC
• Foster v Mackinnon
• Frederick Rose Ltd v William Pim Jnr & Co Ltd
• Freeth v Burr
• Frost v Knight
• FSHC Group Holdings Ltd v GLAS Trust Corp
• Galoo v Bright Grahame Murray
• Gamerco SA v ICM/Fair Warning Agency Ltd
• Gebruder Metelmann GmbH & Co v NBR (London) Ltd
• Geier v Kujawa, Weston & Warne Bros (Transport) Ltd
• General Billposting Co v Atkinson
• George Mitchell v Finney Lock Seeds
• George Wimpey UK Ltd v VI Components Ltd
• Gibbons v Proctor
• Gibson v Manchester City Council
• Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd
• Gillespie Bros & Co v Cheney, Eggar & Co
• Glasbrook Bros Ltd v Glamorgan CC
• Globalia Business Travel SAU v Fulton Shipping Inc
• Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (The Golden Victory)
• Goldsworthy v Brickell
• Goodchild v Bradbury
• Goodlife Foods Ltd v Hall Fire Protection Ltd 
• Gould v Gould
• Government of Zanzibar v British Aerospace Ltd
• Grainger & Son v Gough
• Gran Gelato Ltd v Richliff (Group) Ltd
• Granatino v Radmacher
• Grant v Bragg
• Great Peace Shipping v Tsavliris International
• Greenhouse v Paysafe Financial Services Ltd
• Grogan v Robin Meredith Plant Hire
• Hadley v Baxendale
• Hammond v Osborn
• Hannah Blumenthal, The 
• Hansa Nord, The
• Hare v Nicoll
• Hardman v Booth
• Hartley v Ponsonby
• Hartog v Colin & Shields
• Harvela v Royal Trust Co of Canada
• Harvey v Facey
• Hasham v Zenab
• Hayward v Zurich Insurance Co Plc
• Henry Kendall & Sons v William Lillico & Sons Ltd
• Henthorn v Fraser
• Heilbut, Symons and Co v Buckleton
• Heisler v Anglo-Dal Ltd
• Herne Bay Steamboat v Hutton
• Heron II, The ( Koufos v Czarnikow Ltd )
• Heyman v Darwins
• HIH Casualty and General Insurance Ltd v Chase Manhattan Bank
• Hill v CA Parsons Ltd
• Hirachand Punamchand v Temple
• Hirji Mulji v Cheong Yue Steamship Co Ltd
• Hochster v De la Tour
• Hoenig v Isaacs
• Hollier v Rambler Motors (AMC) Ltd
• Holwell Securities v Hughes
• Hong Kong Fir Shipping v Kawasaki Kisen Kaisha
• Horsfall v Thomas
• Horton v Horton (No 2)
• Hounslow LBC v Twickenham Gardens
• Household Fire & Carriage Accident Insurance Co Ltd v Grant
• Howard E Perry & Co v British Railways Board
• Howard Marine v Ogden
• Hughes v Metropolitan Railway Co
• Hussey v Eels
• Hutton v Warren
• Huyton v Peter Cremer
• Hyde v Wrench
• IFR Ltd v Federal Trade Spa
• Iggleden v Fairview Homes
• Impact Funding Solutions Ltd v AIG Europe Insurance Ltd
• Imperial Land Company of Marseilles, ex parte Harris, Re
• Ingram v Little
• Interfoto Picture Library v Stiletto Visual Programmes
• Investors Compensation Scheme Ltd v West Bromwich Building Society
• Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith)
• Islamic Republic of Iran Shipping Lines v. Steamship Mutual Underwriting Association (Bermuda)
• J Spurling Ltd v Bradshaw
• Jacobs v Batavia and General Plantations Trust
• Jackson v Horizon Holidays
• Jackson v Royal Bank of Scotland
• Jarvis v Swan Tours
• John Grimes Partnership Ltd v Gubbins
• Johnson v Agnew
• Jones v Daniel
• Jones v Padavatton
• Joscelyne v Nissen
• Joseph Constantine SS Co v Imperial Smelting Corporation Ltd
• Joseph Travers & Sons Ltd v Cooper
• Kings Norton Metal v Edridge, Merrett
• Kleinwort Benson (KB) v Malaysia Mining Corporation BHD (MMC BHD)
• Kolmar v Traxpo Enterprises
• Krell v Henry
• L’Estrange v F Graucob Ltd
• Laemthong International Lines Co Ltd v Abdullah Mohammed Fahem & Co
• Lampleigh v Braithwaite
• LauritzenCool AB v Lady Navigation Inc
• Law Debenture Trust Corp plc v Elektrim SA
• Leaf v International Galleries
• Les Affréteurs Réunis Société Anonyme v Leopold Walford (London)
• Lewis v Avery
• Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd
• Little v Courage Ltd
• Liverpool City Council v Irwin
• LJ Korbetis v Transgrain Shipping BV
• Lloyds Bank v Bundy
• London Export Corporation v Jubilee Coffee Roasting Co Ltd
• London Joint Stock Bank Ltd v Macmillan 
• Lovelock v Franklyn
• Lowe v Peers
• Luxor (Eastbourne) v Cooper
• Mahkutai, The
• Malik (Deceased) v Shiekh
• Manchester Diocesan Council for Education v Commercial and General Investments Ltd
• Maritime National Fish v Ocean Trawlers
• Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd
• May & Butcher Ltd v The King
• McArdle, Re
• McCrone v Boots Farm Sales Limited
• McCutheon v David MacBrayne Ltd
• Merritt v Merritt
• Mersey Steel and Iron Co v Naylor Benzon & Co
• Mihalis Angelos , The
• Milward v Earl Thanet
• Mitchell v Homfray
• Modahl v British Athletic Federation
• Monarch Airlines Ltd v London Luton Airport Ltd
• Monarch Steamship, The
• Mondial Shipping and Chartering BV v Astarte Shipping Ltd (The Pamela)
• Moorcock, The
• Morris-Garner v One Step (Support) Ltd
• Moschi v Lep Air Services
• Mountford v Scott
• Moursi v Doherty
• MSC Mediterranean Shipping Co v Cottonex Anstalt
• Museprime Properties Ltd v Adhill Properties Ltd
• MWB Business Exchange Ltd v Rock Advertising Ltd (Court of Appeal)
• MWB Business Exchange Ltd v Rock Advertising Ltd (Supreme Court)
• Nanfri, The
• National Westminster Bank Plc v Amin
• National Westminster Bank Plc v Breeds
• National Westminster Bank v Morgan
• Nehayan v Kent
• Newman v Framewood Manor Management Co Ltd
• New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (The Eurymedon)
• Nicolene v Simmonds
• Nisshin Shipping Co Ltd v Cleaves & Co Ltd
• Nobahar-Cookson v The Hut Group Ltd
• Notcutt v Universal Equipment Co (London) Ltd
• Nottingham Building Society v Eurodynamics Systems 
• O’Sullivan v Management Agency & Music
• Office of Fair Trading v Abbey National
• Olley v Marlborough Court
• Oscar Chess v Williams
• Ocean Tramp Tankers Corporation v V/O Sovfracht (The Eugenia)
• Overseas Medical Supplies Ltd v Orient Transport Services Ltd
• Page One Records v Britton
• Pagnan Spa v Feed Products Ltd
• Pakistan International Airlines Corp v Times Travel (UK) Ltd
• Pao On v Lau Yiu Long
• Parfitt v Lawless
• Parker v South Eastern Rly Co
• ParkingEye Ltd v Beavis
• Parkinson v College of Ambulance
• Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd
• Partridge v Crittenden
• Patel v Ali
• Payne v Cave
• Payzu Ltd v Saunders
• Peekay Intermark v Australia & New Zealand Banking Group
• Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd
• Perry v Sidney Phillips
• Persimmon Homes Ltd v Ove Arup and Partners Ltd
• Pesticcio v Niersmans
• Pharmaceutical Society of Great Britain v Boots
• Philips Electronique Grand Publique SA v BSB Ltd
• Phillips v Brooks
• Photo Production Ltd v Securicor Transport Ltd
• Pilkington v Wood
• Pinnel’s Case
• Pitts v Jones
• Pitt v PHH Asset Management Ltd
• Powell v Brent LBC
• Price v Strange 
• Quinn v Burch Bros (Builders) Ltd
• R&S Pilling (t/a Phoenix Engineering) v UK Insurance Ltd
• R v HM Attorney-General for England and Wales
• Radford v De Froberville
• Raffles v Wichelhaus
• Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland
• Rainy Sky SA v Kookmin Bank
• Ramsgate Victoria Hotel v Montefoire
• Raphael, The
• Raymond Burke Motors Ltd v Mersey Docks & Harbour Co
• Reardon Smith Line Ltd v Hansen-Tangen
• Redgrave v Hurd
• Redland Bricks v Morris
• Regalian Properties v London Dockyard
• Regus (UK) Ltd v Epcot Solutions Ltd
• Reichman v Beveridge
• Reid v Rush Tompkins Group plc
• Reveille Independent LLC v Anotech International (UK) Ltd
• Reynolds v Atherton
• Rice v Great Yarmouth BC
• Riverlate Properties v Paul
• Roberts and Co Ltd v Leicestershire
• Robinson v Harman
• Robophone Facilities Ltd v Blank
• Roche v Sherrington
• Rock Advertising v MWB Business Exchange Centres
• Rolls Royce Power Engineering plc v Ricardo Consulting Engineers Ltd
• Roscorla v Thomas
• Rose & Frank v Crompton Bros
• Routledge v Grant
• Royal Bank of Scotland plc v Etridge (No 2)
• Royscott Trust v Rogerson
• RTS Flexible Systems Ltd v Molkerei Alois Müller
• Ruxley Electronics and Construction Ltd v Forsyth
• Salt v Stratstone Specialist Ltd
• Scally v Southern Health and Social Services Board
• Scammell and Nephew Ltd v Ouston
• Scammell v Dicker
• Schebsman, Re
• Schuler AG v Wickman Machine Tools Sales Ltd
• Scotson v Pegg
• Scott v Avery
• Scottish Widows Fund and Life Assurance Society v BGC International
• Scriven Bros and Co v Hindley and Co
• Scruttons   Ltd v Midland Silicones   Ltd
• Selectmove, Re
• Shadwell v Shadwell
• Shanklin Pier Ltd v Detel Products Ltd
• Sharpley v Louth
• Shaw v Applegate
• Shell UK Ltd v Lostock Garages Ltd
• Shirlaw v Southern Foundries (1926) Ltd
• Shogun Finance v Hudson
• Siboen & the Sibotre, the
• Simantob v Shavleyan
• Simpkins v Pays
• Skeate v Beale
• Smith New Court Securities Ltd v Scrimgeour Vickers etc Ltd
• Smith v Cooper
• Smith v Hughes
• Smith v Land & House Property Corp
• Smith v UMB Chrysler (Scotland) Ltd
• Societe des Industries Mtallurgiques SA v The Bronx Engineering Co Ltd
• Societe Generale, London Branch v Geys
• Soulsbury v Soulsbury
• Spencer v Harding
• Spice Girls v Aprilia
• Spring v National Amalgamated Stevedores and Dockers Society (no 2)
• St Albans City and DC v International Computers
• Starsin, The
• Statoil ASA v Louis Dreyfus Energy Services (The Harriette N)
• Stevenson, Jacques v McLean
• Stewart Gill Ltd v Horatio Myer & Co Ltd
• Stilk v Myrrick
• Stocznia Gdynia SA v Gearbulk Holdings Ltd
• Stocznia Gdanska SA v Latvian Shipping Co
• Storer v Manchester City Council
• Street v Coombes
• Sudbrook Trading Estate v Eggleton
• Suisse Atlantique Societe d’Armement SA v NV Rotterdamsche Kolen Centrale
• Suleman v Shahsavari
• Sumpter v Hedges
• Super Servant Two, The
• Swynson Ltd v Lowick Rose LLP
• Tamplin v James
• Tartsinis v Navona Management Co
• Taylor v Caldwell
• Tekdata Interconnections Ltd v Amphenol Ltd
• Telegraph Despatch and Intelligence v McLean
• Telford Homes Ltd v Ampurius Nu Homes Holdings Ltd
• Tenax Steamship Co Ltd v The Brimnes
• Thomas v BPE Solicitors
• Thomas v Thomas
• Thornton v Shoe Lane Parking
• Thomas Witter Ltd v TBP Industries Ltd
• Tinn v Hoffman
• Tito v Waddell (No 2)
• Tool Metal Manufacturing v Tungsten
• Transfield Shipping Inc v Mercator, The Achilleas
• Transocean Drilling UK Ltd v Providence Resources Plc
• Trollope & Colls Ltd v North West Metropolitan Regional Hospital
• Trump International Golf Club Scotland Ltd v The Scottish Ministers
• Tsakiroglou & Co Ltd v Noblee Thorl GmbH
• Turner v Green
• Tweddle v Atkinson
• UCB Corporate Services Ltd v Williams
• Universal Cargo Carriers Corp v Citati  
• Universe Sentinel, The
• Universe Tankships v ITWF
• Valilas v Januzaj
• Vaswani v Italian Motors (Sales & Services)
• Victoria Laundry (Windsor) Ltd v Newman Industries Ltd
• Vitol SA v Norelf Ltd (The Santa Clara)
• Walford v Miles
• Walters v Morgan
• Ward v Byham
• Warner Bros Pictures Inc v Nelson
• Warren v Mendy
• Wates Ltd v GLC
• Watford Electronics Ltd v Sanderson CFL Ltd
• Watts v Morrow
• Wellesley Partners LLP v Withers LLP
• Wells v Devani
• Whincup v Hughes
• White & Carter v McGregor
• William Sindall plc v Cambridgeshire County Council
• Williams v Bayley
• Williams v Carwardine
• Williams v Roffey Bros
• Williams v Williams
• Willis Management (Isle of Man) Ltd & Anor v Cable and Wireless plc
• With v O’Flanagan
• WJ Alan & v El Nasr Export and Import
• WJ Tatem v Gamboa
• Wood v Capita Insurance Services Ltd
• Woodar Investment Development Ltd v Wimpey Construction UK Ltd
• WN Hillas v Arcos
• World Wide Fund for Nature v World Wrestling Federation Entertainment
• Wright v Carter
• Wrotham Park Estate Co v Parkside Homes
• Yam Seng Pte Ltd v International Trade Corp Ltd
• 118 Data Resource Ltd v IDS Data Services Ltd

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Essential Cases: Contract Law (6th edn)  

Essential Cases : Contract Law provides a bridge between course textbooks and key case judgments. Essential Cases provides you with succinct summaries of some of the landmark and most influential cases in contract law. Each summary begins with a review of the main case facts and decision. The summary is then concluded with expert commentary on the case from the author, Nicola Jackson, including an assessment of the wider questions raised by the decision.

It can act as a succinct reference source alongside your core textbooks as you proceed through your course. It can also be used as a stand-alone revision aid as you approach examinations. But central to the Essential Cases series is the aim to encourage your own critical exploration of the legal matters under discussion.

Where possible, a link to a free-to-access full version of the judgment is included in each summary, providing you with an opportunity to deepen your understanding by reading the judgment of the court for yourself.

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• Alphabetical contents  
• Adams v Lindsell [1818] EWHC KB J59; (1818) 1 B & Ald 681; (1818) 106 ER 250  
• Butler Machine Tool Co. Ltd v Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401, Court of Appeal  
• Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256  
• Dickinson v Dodds (1876) 2 Ch D 463  
• Entores Ltd v Miles Far East Corporation [1955] 2 QB 327  
• Felthouse v Bindley [1862] EWHC CP J35; 142 ER 1037  
• Fisher v Bell [1961] 1 QB 394; [1960] 3 WLR 919  
• Harvey & Facey [1893] AC 552  
• Hyde v Wrench (1840) 49 ER 132  
• Partridge v Crittenden [1968] 1 WLR 1204  
• Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401  
• Balfour v Balfour [1919] 2 KB 571 including commentary on Merritt v Merritt [1970] EWCA Civ 6; [1970] 1 WLR 1211.  
• Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130  
• Chappell & Co. Ltd v Nestlé Co. Ltd [1960] AC 87  
• Pao On & others v Lau Yiu Long and another [1980] AC 614  
• Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24  
• Stilk v Myrick [1809] EWHC KB J58; (1809) 2 Camp 317  
• Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1  
• Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407  
• Shogun Finance Ltd v Hudson [2003] UKHL 62  
• Smith v Hughes (1871) LR 6 QB 597 includes commentary on Centrovincial Estates plc v Merchant Investors Assurance Company Ltd [1983] Com LR 158  
• Bisset v Wilkinson [1927] AC 177  
• Edgington v Fitzmaurice (1885) 29 Ch D 459  
• Spice Girls Ltd v Aprilia World Service [2002] EWCA Civ 15  
• With v O’Flanagan [1936] Ch 575  
• Zurich Insurance Co. Ltd plc v Hayward [2017] AC 142; [2016] UKSC 48  
• Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833  
• Times Travel (UK) Ltd v Pakistan International Airlines Corporation [2021] UKSC 40; [2021] 3 WLR 727  
• Royal Bank of Scotland v Etridge (No.2) [2001] UKHL 44  
• George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803  
• Goodlife Foods Ltd v Hall Fire Protection Ltd [2018] EWCA Civ 1371  
• Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433  
• L’Estrange v Graucob Ltd [1934] 2 KB 394  
• Parker v The South Eastern Railway Company (1877) 2 CPD 416  
• Arnold v Britton [2015] UKSC 36  
• Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896  
• Hong Kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26  
• Lombard North Central plc v Butterworth [1987] QB 527  
• L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235  
• White and Carter (Councils) Ltd v McGregor [1962] AC 413  
• Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696  
• J. Lauritzen v Wijsmuller (The ‘Super Servant Two’) [1990] 1 Lloyd’s Rep 1  
• Krell v Henry [1903] 2 KB 740  
• Attorney General v Blake & another [2000] UKHL 45; [2001] 1 AC 268  
• Cavendish Square Holding BV v Talal El Makdessi; ParkingEye Ltd v Beavis [2015] UKSC 67  
• Farley v Skinner [2001] UKHL 49  
• One Step (Support) Ltd v Morris-Garner [2019] AC 649; [2018] UKSC 20  
• Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344  
• Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528  
• Watts & another v Morrow [1991] 1 WLR 1421  

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Locus Classicus Cases In Contract Law: Top 21

• Post author: Edeh Samuel Chukwuemeka ACMC
• Post published: June 17, 2024
• Post category: Law Reporting

Locus Classicus Cases In Contract Law: In today’s post, I will be sharing a list of some of the leading cases on contract law. This is basically to help scholars, lawyers and law students all of the world, find contract law cases so as to enable them consolidate their legal arguments, articles and points in law examinations. If you have been searching for cases to fortify your points in any matter that concerns contract, then search no further. Trust me; this article contains almost all the leading cases on the law of contract.

Nonetheless, before I move to the crux of this article, I would like to share some of basic information about the law of contract with you. This is also very pertinent because it will help you to understand the cases that will be mentioned here wholesomely. So what is a contract?

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Table of Contents

What is a contract?

Contract has been given different definitions by different people. According to Sir Fredrick Pollock , A contract is a promise or set of promises which the law will efforce. More so, the American Law Institute gave an elaborate definition in their paper titled “ Restatement of American Law: Contracts ” when they defined contract as “ a promise or set of promises, the breach of which the law gives a remedy, or performance of which the law in some way recognizes as a duty.” 

In my view, “a contact is an agreement giving rise to obligations which are enforced or recognized by law”. Conversely, it should be noted that while every contract is ultimately an agreement, it is not every agreement that is a contract.

Features/Characteristics of a contract

Below are some of the characteristics of a binding contract:

• There must be an offer and acceptance (the agreement)
• There must be an intention to create legal relations
• There is a requirement of written formalities in some cases
• There must be consideration (Except if the agreement is under seal)
• The parties must also have the capacity to contact
• There must be genuineness of consent by the parties to the terms of the contract
• The contract must not be contrary to public policy

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Classification of Contract

Basically, contract is classified into Simple contract or Formal contract. The two classifications of contract will be explained explicitly below:

1. Simple contract: A simple contract is also called an informal contract. It is a contract, whether writen or oral, which is not under seal. It can also be implied from the conduct of parties. Simple contract are not binding except there is consideration. In a simple or informal contract, only a party who has furnished consideration can bring an action to enforce the contract.

2. Formal contract: On the other hand, a formal contract is a contract which is reduced to writing, singed by parties contracting and impressed with a seal. It is also called a specialty contact or a deed. The basic features of a formal contract is to that it must be signed, sealed and delivered. These actions constitute the execution of a deed.

Now that you known what a contract is, the various types of contract and the characteristics of a contract, we will now see some of the leading cases in contract law.

Top 21 Locus Classicus Cases In Contact law

Below are some of the cases in the law of contract:

• Carlill v Carbolic Smoke Ball Co
• Andrews v Hopkinson
• Fisher v Bell
• Spencer v Harding
• Central London Property Trust Ltd v High Trees House Ltd
• Brodgen v Metropolitan Railway Co.
• Lampleigh v Braithwaite
• Roscolar v Thomas
• Stevenson v McLean
• Eastwood v Kenyon
• White v Bluet
• Combe v Combe
• Dela Bere v Pearson
• Read v Dean
• Bournemouth Athletic Football Club Ltd v Manchester United Football Club
• Tinn v Hoffman & Co
• Couturier v Hastie
• Dunlop Pneumatic Tyre Co Ltd v Selfridge
• Griffith v Brymer
• Darkin v Lee
• Startup v Macdonald

Yeah! Those are some of the leading cases in contract law. Nevertheless, as we continue, will be sharing with you the case summary of each of the cases mentioned in the list above with their citations. I enjoin you to read painstakingly so that you will achieve your purpose for reading this work. Now, below is the case summary of the leading cases in the law of contract.

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1. Carlill v Carbolic Smoke Ball Co

Citation : [1893] 1 QB 256

The case of Carlill v Carbolic Smoke Ball Co is a good illustration of a unilateral contract. In this case, the defendant were proprietors of a medical preparation called “ The Carbolic Smoke Ball” . They advertised in various newspapers and magazines offering to pay €100 to any person who contracted influenza after using the ball three times a day for two weeks.

They added that they had deposited €1,000 at the Alliance Bank, Regent Street, to show their sincerity in the matter. The plaintiff, a lady, used the ball as was advertised and was attacked by influenza. She sued for €100 and the company agured that there was no intention to create legal relations.

The court held in favor of the plaintiff and said that the fact that €1,000 was deposited at the Alliance Bank, shows that there was an intention to create legal relations.

2. Andrews v Hopkinson

Citation: [1956] 3 All ER 422

The case of Andrews v Hopkinson is one of the contract cases that explains where a collateral contract will fail with the main contract. Apparently, a collateral contract is a preliminary contract which is usually oral and forms the reason or the inducement for the making of another related contract.

In the case of Andrews v Hopkinson, the collateral contract failed with the main contract. Here, a dealer said to the plaintiff, “ It is a nice little bus, I would stake my life on it. You will have no trouble with it. ” The plaintiff entered into a written hire-purchase contract with a finance company. The car was not roadworthy. The court held that the dealer was liable.

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3. Fisher v Bell

Citation: [1960] 3 All ER 731

The case of Fisher v Bell is a contract case that is usually used to explain the difference between an invitation to treat and an offer. In this case, the respondent, shopkeeper, displayed a knife with a price tag. He was charged for offering to sale a knife contrary to section 1(1) of the Restriction of Offensive Weapons Act 1959 .

The question that arose for determination in court was whether the display of this knife constituted an offer for sale within the meaning in the Restriction of Offensive Weapons Act 1959. It was held by the Court of Appeal that the display was an invitation to offer and so the shopkeeper was not liable.

4. Spencer v Harding

Citation: [1870] LR 5 CP 561

In Spencer v Harding, the defendant sent out circulars inviting tenders to buy stock. The Plaintiff claimed that the circular was an offer to sell the stock to the highest bidder and that they had sent the highest bid which the plaintiff had refused to accept.

The court held that the circular was an invitation to treat and not an offer. Wiles J said thus: “ It is a mere attempt to ascertain whether an offer can be obtained within such a margin as the seller are willing to accept.”

5. Central London Property Trust Ltd v High Trees House Ltd

Citation : [1947] KB 130

The case of Central London Property Trust Ltd v High Trees House Ltd is also one of the leading cases in the law of contract. This case changed the former rule of law in pinnel’s case. The case is usually referred to as the High Trees case or principle of Equitable Estoppel.

In Central London Property Trust Ltd v High Trees House Ltd, the plaintiff least a block of flat to the defendant at a rent of €2,500 per annum in September 1939. In January 1940 the plaintiff agreed in writing to reduce the rent by half because of war condition which had caused many vacancies in the flats. No express limit was set for the operation of this reduction.

From 1940 to 1945 the defendant paid the reduced rent. In 1945, the flats became fully occupied again. The plaintiff’s company then claimed the full rent, suing for rent at the ordinary rate for the last two quarters of 1945.

It was held by Lord Denning that, as agreement for the reduction of rent had been acted upon by the defendants, the plaintiff were estopped in equity from claiming the full rent from 1941 until early 1945 when the flats were fully let.

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6. Brodgen v Metropolitan Railway Co.

Citation: [1877] 2 AC 666

This is one of the contract cases that is offen cited to backup the rule that a contract can be made by conduct. In this case, Brodgen had for many year supplied the defendant company with coal without a formal contract. Brodgen then suggested that the relationship be regularised through a formal contract. Metropolitan’s agent sent a draft agreement to Brodgen who inserted an Arbitrator’s name in the space provided for it, signed it and wrote it away in his drawer and nothing further was done to complete its execution.

Both parties acted on the strength of the terms contained in the draft, supplying and paying for the coal in accordance with its clauses until a dispute arose and Brodgen denied that any binding contract existed between them. The house of Lord’s held that a contract arisen by conduct.

7. Lampleigh v Braithwaite

Citation : [1615] Hob 105

In this case, the defendant, Braithwaite, had killed Patrick Mahume. He then requested the plaintiff to do all he could to obtain a royal pardon for him from the king. To this end, the plaintiff exerted himself and undertook a lot of journeys to and from London, incurring certain expenses.

He succeeded in obtaining the pardon and the defendant promised to pay him the sume of €100 for his trouble and expenses. It was held that the plaintiff was entitled to the sum as his services were procured at the defendant’s previous request an in circumstances in which it was responsible to expect that payment would be made for the services. Accordingly, there was consideration for the defendant’s promise.

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8. Roscolar v Thomas

Citation: [1842] 2QB 234

To wholesomely discuss past consideration as a topic in the law of contract, the case of Roscolar v Thomas must be mentioned. In this case, the plaintiff bought a horse from the defendant. After sometime, the defendant promised the plaintiff that it was a sound horse, free from vice. The horse was in fact a vicious horse. The plaintiff sued the defendant for breach of promise.

It was held that the action will fail. If the promise had been given at the time of the sale, it would have been supported by consideration, but since it was given after the sales had taken place, the consideration which the plaintiff furnished was past and he had furnished no new consideration for the defendant’s promise.

9. Stevenson v McLean

Citation: [1880] 5 QBD 346

In Stevenson v McLean, the defendant offered on a Sunday to sell the plaintiff some quantity of iron. The offer was left open till close of business on Monday. On Monday, the plaintiff telegraphed ro ask for information. On that same Monday, at 10:00am, the defendant received a telegram but didn’t reply it. On that same day, the plaintiff accepted the original offer at 1.34pm. At 1.25pm the defendant revoked the offer by telegram. At 1.46pm the plaintiff received telegram of revocation.

On hearing the matter, the court held that the plaintiff first telegram was not a counter offer but a mere inquiry, so that the offer was still open when the plaintiff accepted it. The plaintiff had accepted the offer before the defendant’s revocation was communicated to him.

10. Eastwood v Kenyon

Citation: [1840] 11 Ad & El 438

Eastwood v Kenyon is the case in contract that is used to explain that moral obligation does not amount to consideration. In this case, the death of John Sutcliff left his infant daughter as his sole heiress. The plaintiff, as the girl’s guardian, spent money on her education and for the benefit of the estate, and the girl, when she came of age, promised ro reimburse him.

She then married the defendant, who also promised to pay. The plaintiff sued the plaintiff on this promise and the court dismissed the action, reiterating the rule that moral obligation does not amount to consideration. The court noted that if the notion is accepted it would destroy the requirement of consideration as the law requires an additional element to the defendant’s promise. That element is consideration and it cannot be a mere moral obligation.

11. White v Bluet

Citation: [1853] 23 LJ Ex 36

The case of White v Bluet explains the position that consideration in contract need not to be adequate by sufficient. In this case, a sun owned his father a sum of money. Subsequently, the sun harassed his father with frequent complaints about the way his father distributed his wealth among his children which was unfavorable to him.

The son then alleged that his father promised him that if he would stop complaining, he (the father) would discharge him from the debt and he stopped. The question before the court was whether this action of the son constituted consideration for the father’s promise. The court held that it did not because:

The father had a right to distribute his property in any manner he liked and so the son had no right to complain in the first place.

The son had no right to complain; thus is abstaining from doing what he had no right to do constituted no consideration for the father’s promise.

12. Combe v Combe

Citation : [1951] 2 KB 213

This is a contract case where the court held that consideration is an essential element of a binding contract. Here, a wife started proceedings against the husband for divorce and she obtained a decree nisi against the husband. The husband then promised to pay her an annual allowance of €100 free of tax as a permanent maintenance for her.

After the decree nisi was made absolute, the husband never kept his promise. Thereupon the wife brought an action against him to make him pay the money. The court held that she didn’t offer consideration for the husband’s promise.

13. Dela Bere v Pearson

Citation : [1908] 1 KB 280

In this case, the defendant placed an advertisement in the newspaper to give financial advice to readers. The plaintiff wrote, asking for the name of a good stockbroker. The editor negligently recommended someone who was an undischarged bankrupt.

On the strength of the editor’s advice, the plaintiff sent some money to the broker, who misappropriated it. The plaintiff brought an action in court seeking to recover his money from the the newspaper. The issue in court was whether the plaintiff furnished any consideration.

The court considered that many people bought newspaper because of that publication. It further held that the plaintiff had furnished consideration for the contract. The defendant could and did benefit from the plaintiff buying the newspaper and the plaintiff had also consented to the publication of his question in the defendant’s newspaper if the defendants wished to do so.

14. Read v Dean

Citation: [1949] 1 KB 188

In the case of Read v Dean, the plaintiff hired the defendant’s moto launch for a holiday with his family on the river Thames. Two hours after he had set sail, the launch caught fire.

The firefighting equipment provided in the launch was out of order and the plaintiff suffered serious injuries and lost all his belongings on board. It was held that there must be implied into the contract of hire an undertaking by the defendant to make the launch as fit for the purpose of the hiring as reasonable care could make it, and that the defendant was therefore liable.

15. Bournemouth Athletic Football Club Ltd v Manchester United Football Club

Citation: Vol Xi (2) Student Law Report 22

The case of Bournemouth Athletic Football Club Ltd v Manchester United Football Club is another popular case in the law of contract. In this case, a transfer agreement was made between the two football clubs. Under it, a footballer was to be transferred from Bournemouth to Manchester united for €194,445 in addition, a further sum of €27,777 was to be paid to Bournmouth if the footballer scored 20 goals in the first-team competitive matches. From October to December 1972, the football scored 4 goals in 11 matches. In December, Manchester United appointed a new manager who re-organised the team.

As a result, the footballer was transferred in early 1973 to Westham United Football club for €170,000. The plaintiff argued that the contract of the defendant in transferring the footballer was in Breach of the contract because there was an implied term in the contract that the footballer was entitled to a reasonable opportunity to score the goals. The court of appeal held that such term must be implied in order to give business efficacy to a contract.

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16. Tinn v Hoffman & Co

Citation: [1873] 29 LT 271

The court in Tinn v Hoffman & Co held that a cross-offer does not constitute a contract.

The facts of the case are as follows: the defendant wrote to the plaintiff offering to sell him 800 tons of iron at 69s per ton. The plaintiff wrote to the defendant, on the same day offering to buy 800 tons of iron at 69s per ton. The letters crossed in the post and the court held that there was no contract.

17. Couturier v Hastie

Citation: [1856] 5 HLC 673

This is the leading contract law case that stipulates the position of the law where there is a mistake as to the existence of the subject matter of the contract. In Couturier v Hastie, a man bought a cargo of corn which he and the seller thought at the time of the contract, to be in transit from Salonica to England, but which, unknown to them had become fermented and had already been sold by the master of the ship to a Tunis. It was held that the contract was void and the buyer not liable for the price of the cargo.

In the words of Lord Cranworth , “ The contract plainly imports that there was something which was to be sold at the time of the contract and something to be purchased. No such thing existing; I think the Court of Exchequer Chamber has come to the only reasonable conclusion upon it . ..”

18. Dunlop Pneumatic Tyre Co Ltd v Selfridge Ltd

Citation: [1915] AC 847

This is one of the leading contract cases that is associated with the principle of privity of contract. The principle states that only a party to a contract can enjoy right or suffer burdens partaining to the contract.

In Dunlop Pneumatic Tyre Co Ltd v Selfridge Ltd, the plaintiff sold tyres to a certain dealer on the understanding that he would not re-sell below a certain price and that in the event of a sale to customers the dealer would extract the same promise from them.

The dealer sole the tyres to Selfridge who agreed to observe the restrictions and to pay Dunlop €5 for each Tyre they sold below the restricted price. Selfridge in fact sold the tyres below the restricted price to a customer and Dunlop brought an action against them to enforce the promise to pay €5 per tyre, for each breach. It was held that while Selfridge had committed to breach the contract between him and the dealer, Dunlop was not a party to this contract and had furnished no consideration for the defendant’s promise.

19. Griffith v Brymer

Citation: [1903] 19 TLR 434

This is one of the cases under Mistake as a topic in contract law. In Griffith v Brymer, a contract was made for the hire of a room on 26 June 1902, the day fixed for the coronation of King Edward VII, for the purpose of viewing the coronation procession.

At the time the contract was made, it was unknown to the parties, the decision to postpone the coronation had already been taken. Since the contract was merely for the hire of the room on 26 June to view the coronation procession, performance was impossible. The contract was held to be void.

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20. Darkin v Lee

Citation: [1916] 1 KB 566.

This contract case explains the principle that where a party who performed his obligation defectively but substantially can sue for the contract price, but he will be liable to have deducted from the price the cost of making good the deficiency.

In Darkin v Lee, the plaintiff contracted to carry out repairs on the defendant’s house. He carried out the repairs but the work was not done in accordance with the contact’s specification. It was held that the plaintiff was entitled to be paid the agreed sum subject to a deductive equal to the cost of putting the defect right.

21. Startup v Macdonald

Citation: [1843] 6 M & G 593.

The rule of law in Startup v Macdonald is that; where the obligation under a contract is to deliver goods or render services, tender of such goods and services which is refused, discharges the party making the tender from any further obligation and enables him to sue for a breach of contract.

In Startup v Macdonald, the plaintiff agreed to sell 10 tonnes of oil to the defendant within the last 14 days of March. Pursuant to this agreement, the plaintiff delivered the oil to the defendant at 8:30pm on 31 March, a Saturday, but the defendant refused to accept the delivery because of the lateness of the hour.

It was held that the plaintiff made a valid tender of the goods and therefore discharged his obligations under the contract and the defendant was therfore liable in damages for non-acceptance of the goods.

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Final words

Those are some of the leading contract law cases you should know. Hope this article was able to give you exactly what you wanted. If you have any case you were really expecting to be in this list but was not mentioned here, kindly let us know using the comment section. Accordingly, share you comments and questions in the comment section too. I will be very glad to give you a reply.

Edeh Samuel Chukwuemeka, ACMC, is a lawyer and a certified mediator/conciliator in Nigeria. He is also a developer with knowledge in various programming languages. Samuel is determined to leverage his skills in technology, SEO, and legal practice to revolutionize the legal profession worldwide by creating web and mobile applications that simplify legal research. Sam is also passionate about educating and providing valuable information to people.

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• Contract Law

List of 20 notable cases of Contract Law

This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article discusses twenty important case laws related to contract law which are often required for competitive examinations. 

Table of Contents

Introduction 

According to Section 2(h) of the Indian Contract Act, 1872 , an agreement enforceable by law is known as a contract. The contract law generally concerns rights in personam which means private rights that only affect two private individuals entering into a contract with each other. There are several important concepts in relation to contract law that can be better understood by means of case laws. This article aims to provide the same to its readers. 

Notable case laws of Contract Law

Before delving into the cases, let us briefly discuss about the essentials of a valid contract which are provided hereunder:

• Acceptance of the offer;
• Parties must be competent to enter into a contract;
• There must be a consideration which is to be lawful in nature;
• Free consent of the parties;
• Intention to enter into a legal relationship;
• The contract entered into must be certain;
• A contract must not be expressly declared to be void. 

The case laws that have been discussed hereunder are all related to the contract law jurisprudence and anyone studying contract law does come across these cases. 

Balfour v. Balfour (1919)

The 1919 case of Balfour v. Balfour was the foundation for the contract law as it gave birth to the purpose behind the creation of the legal reaction theory in contract law. Legal reaction theory means that one lawful act will be responsible for a subsequent legal act to take place. Lord Justice Atkin observed that agreements that are made between a husband and his wife, specifically personal family relationships, to provide maintenance costs, and other related capitals are generally not categorized as contracts because in general, the parties to the agreement do not intend to enter into an agreement that should be attending legal ends. Therefore, a contract cannot be enforceable by nature if the parties to the same do not intend to create legal relations with each other. 

Lalman Shukla v. Gauri Datt (1913)

The importance of knowledge and communication, in formation of a contract, was highlighted by the Allahabad High Court in the landmark judgment of Lalman Shukla v. Gauri Datt (1913). The Hon’ble Court observed that the fundamental necessity of a valid contract is the knowledge and assent of a proposal in order to convert the concerned proposal into an enforceable agreement. In the present case, none of the criteria discussed are being fulfilled as the plaintiff was unaware and there was an absence of assent about the particular act. This is also an important principle governing general offers in contract law, and a classic example of a general offer is offering a reward by means of an advertisement for finding a lost article. Only the person completing the required task is said to be accepting the offer.  

Rose and Frank Co v. Crompton and Brother Ltd (1925)

The House of Lords in the well-known case of Rose and Frank Co v. Crompton and Brother Ltd (1925) highlighted agreements that are enforceable by law. The Court, in this case, held that the very fact that the arrangement between the parties to the case does not constitute a legal contract will not ipso facto preclude the orders and acceptances from constituting legally binding contracts. Therefore, the absence of enforceability of a legal arrangement that is expressed under an agency agreement does not preclude the legal transactions.

Harvey v. Facey (1893)

The difference between an “invitation to offer”, and “offer” has been laid down by the Lords of Judicial Committee of the Privy Council on the appeal in the case of  Harvey v Facey (1893). While the case surrounded an issue that arose regarding the offer to sell a Bumper Hall Pen, the Privy Council observed that there never existed an agreement between the parties to the case. The Council went further to state that for a contract to be valid, a proposal and an acceptance are needed and to make the contract binding. Further, acceptance of the proposal must be notified to the individual who is proposing because a legally enforceable agreement requires sureness to hold from both the parties to the contract.

Ramsgate Victoria Hotel v. Montefiore (1866)

In the case of Ramsgate Victoria Hotel v. Montefiore (1866), the Court of Exchequer discussed revocation of an offer that resulted due to lapse of time. As the defendant wanted to purchase shares in the plaintiff’s hotel, and also went ahead to communicate the offer to the defendant, the plaintiff had accepted the offer after six months of its proposal. By that time the share value had decreased which affected the interest of the defendant to purchase the same. While passing an order in favor of the defendant, the Court drew attention to the fact that the plaintiff had not accepted the offer in spite of being provided with sufficient time to consider. As the offer was accepted after six months, the same can no longer be categorized as valid, and therefore even if the defendant doesn’t show interest in buying the shares, he will not be held liable for the same. 

Felthouse v. Bindley (1862)

The concept of acceptance was taken up by the Court of Exchequer Chamber, the United Kingdom in the case of F elthouse v. Bindley (1862). While accepting an offer proposed to a party, he or she cannot remain silent. If he or she remains so then the same cannot be presumed to be an acceptance of the proposed offer. The Court of law made it clear that there should be absolute clarity in the communication of the acceptance of an offer so as to proceed towards the formation of a valid contract. 

Pharmaceutical Society of Great Britain v. Boots Cash Chemist (1953)

The case of Pharmaceutical Society of Great Britain v. Boots Cash Chemist (1953) revolves specifically around the concept of “invitation to offer”. The case which appeared before the Courts of Appeal of England and Wales involved the defendant, a pharmaceutical company who introduced a new method of displaying the drugs for the shoppers, which could be used for purchasing drugs, and the plaintiff objecting to the same. The Court of law observed that “goods on a display are an invitation, not an offer” instead, the customers make an offer when they take the medicines to the register with the cashier being under the shopkeeper to accept the offer proposed. The Court reasoned that displaying medicines to the customers will be treated as an “invitation to treat”, and not as an “offer”. 

Bhagwandas Kedia v. Girdharilal & Co (1959)

The Supreme Court of India while deciding the case of Bhagwandas Kedia v. Girdharilal & Co (1959) took into account Sections 2 , 3 , and 4 of the Indian Contract Act, 1872. The Court observed that making an offer at a place that has been accepted elsewhere does not ipso facto form part of the cause of action in a suit for damage, in scenarios for breach of contract. Generally, a contract is the consequence of acceptance of offer and intimation of that acceptance, therefore the intimation must be by the same external manifestation which is recognized by the law, or is sufficient in the eyes of law.

Kedarnath v. Gorie Muhammad (1886)

The Calcutta High Court in a notable case of Kedarnath Bhattacharji vs Gorie Mahomed (1886), observed that although the promise made in this case was in relation to a charitable purpose and that the defendant, in this case, had no benefit,  the defendant was held responsible for the promise made by him. The Court believed that the defendant will be held liable, as it was noted that in this case people were asked to knowingly subscribe to the purpose for which the money was to be applied or used. Along with this, the people were aware that in the faith of their subscription they had to incur the obligation to pay the contractor for the work. In this case, the law of the applicant was recognized by the Hon’ble High Court as the conclusion of a contract with the contractor was made at the will of the promoter, which was to be perceived as a good consideration according to Section 2(d) of the Indian Contract Act, 1872.

Durga Prasad v. Baldeo (1880)

The two-Judge Bench of Allahabad High Court comprising Justices Pearson, and Oldfield decided on the validity and legitimacy of a contract in the well-known case of Durga Prasad v. Baldeo (1880). In this case, the Court referred to the doctrine of rule of law that is inherently related to Section 2(d) of the Indian Contract Act, 1872. Section 2(d) read with Section 25 of the Act of 1872 states that “any agreement without consideration is void”. Thus when the legislation itself clears the necessities of a valid agreement, there cannot exist any case which walks against the statutory rules. 

Leslie Ltd v. Sheill (1914)

The English Court of Appeal in the well-known case of Leslie Ltd v. Sheill (1914) took into account the issue as to whether the defendants, in the case, are entitled to equitable restitution against a loan provided to a minor or not. Explaining the doctrine of equitable restitution, the Court viewed that, “If an infant obtains property or goods by misrepresenting his age, he can be compelled to restore it so long as the same is traceable in his possession”. The Court went further to state that restitution stops whenever the repayment begins, and the principles of equity do not enforce any kind of contractual obligations against a minor. 

Mohori Bibee v. DharmodasGhose (1903)

A bench of Judges Lord Mcnaughton, Lord Davey, Lord Lindley, Sir Ford North, Sir Andrew Scoble, and Sir Andrew Wilson considered the ambit of minor’s agreement in the well-known case of Mohori Bibee v. DharmodasGhose (1903). The Privy Council expressly barred any person below the age of eighteen years to enter into a contract, and take major decisions in relation to the same. Thus in the present case where the plaintiff and the defendant had entered into a mortgage deed, the same was held to be void as the mortgage execution was carried out by a minor individual. 

Raghava Chariar v. Srinivara (1916)

The issue in the present case of Raghava Chariar  v. Srinivara (1916), the issue that appeared before the Madras High Court was whether a mortgage that had been executed in favor of a minor who had also advanced the mortgage money in totality, would be deemed to be enforceable by him or by any other person on his behalf, or not. In comparison to previous observations in the case of Mohori Bibee v. DharmodasGhose (1903) which has provided a restrictive view on the liability of minors in contracts, the present case holds greater significance in the current scenario as it facilitated in providing a divergent scope of safeguarding minors in the contracts.

Donoghue v. Stevenson (1932) 

The doctrine of negligence was laid down unambiguously by the House of Lords in the English case of Donoghue v. Stevenson (1932). In the present case, the injuries that were caused to the plaintiff from the defendant’s defective products were claimed on the basis of the contract of sale between the parties to the case. While it was the plaintiff’s friend who suffered the damage, the plaintiff did not, hence the plaintiff’s claim could only be on the grounds of negligence by the defendant. The issue before the Court was whether the defendant owed a duty of care to the plaintiff or not. Applying the “neighbor principle”, the Court rules out that the defendant did owe a duty of care to the plaintiff. 

Phillips v. Brooks (1919)

The issue as to whether a mistake to identify an essential of a contract ipso facto makes the contract void or not came before Judge Horridge of the King’s Bench Division in the case of Phillips v. Brooks (1919). The Court while ruling out in favor of the defendant observed that the claimant in the case intended to sell the ring to the man in front of him, that is a face-to-face contract, whoever that man turned out to be. No relevant mistake could therefore be scooped out from this case. As the property had passed to the rogue, the claimant in the case was therefore not entitled to recover the ring.

Dunlop Pneumatic Tyre Co Ltd. v. Selfridge & Co (1915)

In the case of Dunlop Pneumatic Tyre Co Ltd. v. Selfridge & Co (1915), the House of Lords delivered a judgment that accompanied the understanding of the concept of “construction of contract”. Dismissing the appeal in the present case, the Court held that as there existed no contract between the plaintiff and the defendant, therefore, the plaintiff, in this case, can no way sue the defendant. Taking a cue on the aspect of privity of contract, the Court observed that only the parties to a contract can sue each other over breach of the contract entered into, and the only exception to this general rule will be in case of a principal-agent relationship where the agent was unnamed by the party under whom he/ she was appointed. 

Hadley v. Baxendale (1854)

Consequential damage over breach of contract was determined by the English Court in the well-known case of Hadley v. Baxendale (1854). When the defendant made an error in carrying out his work which was assigned to him by the plaintiff in his mill, the latter claimed professional negligence on the latter’s part. The issue before the Court was whether the claim that was made by the plaintiff was disproportionate to the damages caused or not. Observing that losses can be claimed if it can be reasonably viewed to have been the outcome of the defendant’s actions, the Court ruled out that the defendant will not be liable to compensate the plaintiff for his losses on grounds that the plaintiff had not reasonably foreseen the consequences of the delay caused by the defendant. 

Dickinson v. Dodds (1876)

England’s Court of Appeal, in the well-known case of Dickinson v. Dodds (1876) took into account whether a defendant who had promised to keep his offer open till a certain day be bound by contractual obligations if he had revoked his promise and sold off his offer to a third party, prior to the specified date? Ruling out that there was no contract that was formed between the parties to the case, the defendant had no obligations to follow before he could revoke his promise. The Court reasoned that although the defendant had made an offer, he did possess the right to revoke the same before the offer was accepted by the plaintiff, hence was not liable for his action. 

Powell v. Lee (1908)

A well-known case of offer and acceptance was the case of Powell v. Lee (1908) which involved the plaintiff filing a suit against the defendant over breach of contract. The question that the King’s Division Bench considered was whether a person who acted in an unauthorized capacity, communicated an offer’s acceptance? Ruling that for an acceptance to be valid, the same should be communicated, and the same should be carried out by the person offering in an authorized capacity, the Court dismissed the plea of breach of contract between the plaintiff, and the defendant. 

Merritt v. Merritt (1970)

The Master of the Rolls decision in the case of Merritt v. Merritt (1970) plays a significant role in framing the contract law jurisprudence. Although the present case walks in the same line as the case of  Balfour v. Balfour (1919), the Court distinguished both these cases on the grounds that the present involves parties who are separated from their marital ties, whereas in the 1919 case, the parties where the couple was married. In the present case, the husband had signed an agreement with his wife of £40 per month in connection to their mortgage house. When the payment was made, the wife claimed the property to be hers. The Court of Appeal held the agreement to be binding in nature as against the decision made in the Balfours’ case. 

Conclusion 

It is necessary to take note of the cases which have been discussed in this article as questions surrounding them are often located in different law examinations. A law student must, therefore, have these cases at their fingertips. Although the list of twenty cases provided in this article is not exhaustive, they surely are the foremost ones to be learned along with the contract law. 

References 

• https://lawbhoomi.com/law-of-contracts-notes-study-materials-and-case-laws/
• http://www.a4id.org/wp-content/uploads/2016/10/A4ID-english-contract-law-at-a-glance.pdf
• https://grrajeshkumar.com/class-notes-on-contract-i-1st-sem-3-year-ll-b/

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Contract Law: The Case Study Essay

• To find inspiration for your paper and overcome writer’s block
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A contract is a mutual agreement of obligation between two people or parties reaching consent. In most cases, such commitments are enforced by the law. The arrangement involves one side making an offer, which the other party accepts. A contract consists of such elements as offer and acceptance, appropriate consideration, and legality (Eisenberg, 2018). The parties involved should also have the contractual capacity to commit to the pact. Applying the law in contracting means that there are consequences if any participant forfeits the rules pertaining to the engagement. Therefore, breach of contract necessitates legal measures for failing to honor the deal or hindering the execution of the promise by the other party. This negligence is a case of punitive damage for which the complainant requires compensation for money and time wastage.

The scenario presented involves two individuals, Johnny, who is not a merchant under the Uniform Commercial Code, and his neighbor Mark, from whom he offers to buy a car for $30,000. The latter requires some time to consider the offer to which Johnny agrees and puts down in writing that his proposition is going to remain open for fourteen days. After a week, Johnny sees another car that fascinates him, buys it and informs Mark of his intention to revoke the initial offer. In response, Mark insists that Johnny’s proposal was in writing and still holds it. Johnny apologizes, saying he cannot keep the agreement but promises to give mark $10,000 for the assistance that he had received from him in the previous year around the house. Appeased, Mark accepts only for Johnny to annul his second pledge after a week. The former decides to sue Johnny for breach of contract on the two commitments, buying the car and the $10,000 offer.

There was a valid contract between the two, but Johnny dissipated both Marks’s time and money. He Hastily offers to buy the car instead of informing him that he hasn’t made a final decision and needs to check more cars before settling on one. Johnny also made the mistake of writing down his promise to Mark. Purchasing a car requires a lot of research and inquiries instead of choosing the first option due to the availability of more varieties that might even be cheaper in the market. After being approached by Mark, Johnny should have told him that he had not made a final decision because he still wanted to look around; therefore, he was unwilling to commit. The promising note written by Johnny caused the car to be withheld from other customers willing to purchase it. Mark, the car owner, had the opportunity to sell the machine, but he had the integrity to hold it. Johnny’s actions concerning the car are wrong, and he deserves to pay for them.

There is evidence of an oral contract between Mark and Johnny, although it is related to the first agreement, which Johnny also broke. He acknowledges Mark’s help on his property and offers to compensate him, making the latter cancel his initial disappointment on the car contract. This agreement makes Johnny legally liable to atone for all the words he fails to honor.

Breach of a contract is concluded when a party involved fails to perform their role and doesn’t give a valid excuse. In this view, the elements of a contract are not fully satisfied; therefore, Mark has an entitlement to take legal action against Johnny (Luntz et al., 2017). Having kept his part of the agreement, Mark deserves compensation for indemnity.

Eisenberg, M. A. (2018). The Theory of Efficient Breach. In Foundational principles of contract law . Oxford University Press.

Luntz, H., Hambly, D., Burns, K., Dietrich, J., Foster, N., Harder, S., & Grant, G. (2017). Torts: Cases and commentary ( 8 th ed.). LexisNexis Butterworths.

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Lumley v Foster – the danger of oral contracts and contracting with the correct entity

Despite the volumes of case law illustrating the dangers of not having a written contract when carrying out a construction project, it is still common practice, particularly for smaller domestic projects and in this current market where builders are in high demand, for parties not to have a   formal contract .

Nine times out of ten all will be absolutely fine: works will progress, any small issues will be amicably overcome between the parties, the project will complete and everyone will be satisfied with the result.

But construction projects can be uncertain beasts. Every now and then, things won’t run so smoothly. There may be   defects ,   delays , cost pressures, design changes, or any variety of   unforeseen issues . This is when not having a written contract to fall back on can become a real problem.

The case of   Lumley v Foster   is a good reminder of what can happen if a written contract is not put in place.

Cases about oral contracts usually involve a disagreement over whether there actually was a contract, and if so, what the terms were and then, whether they had been breached. But here, the dispute hadn’t even had a chance to get to that stage because the first issue the court had to decide was: which entity did the claimant homeowner contract with? Unbelievably, there were six possible contenders in the frame.

This blog takes a closer look at this case and how the court reached its conclusion.

What happened?

The claimant homeowner contracted with one of the six defendants listed below to carry out construction works on her home. No written contract was agreed.

It was decided as common ground in this case that the contract was concluded at a meeting at the property on 21 June 2016 which was attended by the builder, Mr Foster (D2 – see below) and the claimant. Here, the parties agreed the scope of the works in broad terms as well as a contract price (£100K).

Apparently, Mr Foster’s normal business practice was to provide his clients with a formal written contract and he alleged that he delivered a quotation to the property a few days later, on 24 June 2016 (this was rejected by the court for the reasons summarised below).

The works were duly carried out but they were so sub-standard that the property was “scarcely habitable” and substantial remedial works were required. Eventually, the defendant builders downed tools with the works incomplete and left the claimant living in what had become a building site. The claimant issued proceedings for   breach of contract .

The claim form named six different defendants:

• Foster & Co Group Ltd (D1)
• Mr Nicholas Foster (D2)
• Mrs Joanna Foster (D3)
• Foster and Co Developments Ltd (D4)
• Foster and Co Construction Ltd (FCCL) (D5)
• Foster and Co Ltd (D6)

The particulars of claim stated that the contract had been concluded by Mr Foster on behalf of all of the defendants. However, the defence responded that the contract was concluded between the claimant and FCCL (D5). This was problematic for the claimant because FCCL was in liquidation and if the defence was correct her claim would be worthless.

In her reply, the claimant alleged that the contract was between her and Mr Foster, alternatively Mr Foster and Mrs Foster (D3), who together traded as Foster and Co or the Foster & Co Group.

The question for the court was: who was the defendant?

The court started by setting out the following objective test to determine who the counterparty to the contract was:

“The question is what a reasonable person, furnished with the relevant information, would conclude. The private thoughts of the protagonists concerning who was contracting with whom are irrelevant and inadmissible.”

(Jackson LJ, paragraph 57(ii),    Hamid v Francis Bradshaw Partnership. )

To establish what a reasonable person would conclude, the judge put himself in the position of a reasonable person and sought to garner the views of witnesses, and consider the limited documentary evidence and the persuasiveness of each witness’ statement.

The   judgment   goes into great detail about the conflicting accounts provided by the parties but to give an idea of the evidence the court had to decipher, some examples are:

• Company flyer: The claimant said she had first contacted the defendants by telephone, having seen a flyer advertising “Foster & Co”. She spoke to the sister-in-law of Mr Foster, who answered the phone: “Foster & Co”.

The defendants disagreed and said that the claimant had heard about the defendants as a result of the claimant seeing signs in her neighbourhood that had FCCL’s name on them. (The claimant denied this, and the court accepted her denial. No evidence was provided that such signs were in existence at the material time).

• Company car: Mr Foster arrived at the property for the 21 June meeting in a car bearing the livery of “Foster & Co”.
• Mr Foster made several statements to the claimant to the effect that he would  personally  ensure that her project was completed. (Mr Foster flatly denied making any of these statements. The court rejected his denials).
• Mr Foster claims that he showed the claimant FCCL’s website. The claimant denied this and the court agreed with her. In the judge’s words this "was in my judgment not merely a failure of recollection on Mr Foster’s part but a dishonest attempt to fix the Claimant with knowledge that she would be contracting with FCCL… ”
• Mr Foster provided reassurance that he and his wife would be taking personal responsibility for the project.
• Witnesses reported that Mr Foster spoke about the “Foster & Co” brand but did not mention FCCL or any other corporate entity.
• Invoices: The claimant was sent invoices in the name of Foster & Co, which did not mention FCCL. These were sent by Mrs Foster, in emails which identified her as Company Secretary of the “Foster and Co Group”.
• Conflicting bank accounts: Invoices were paid to an account which the claimant thought was in the name of Foster & Co. In fact, the account was in the name of FCCL.
• Company sign and livery: When works at the property were being carried out, a sign was erected stating: “Foster & Co” and the workmen deployed at the property had uniforms with “Foster & Co” livery.

The court held that the contract was concluded between the claimant and Mr Foster   personally . Although a quotation was produced by Mr Foster with documentary evidence that the intended contracting entity was FCCL, there was no reference to the quotation in any communication between the parties.

The court concluded that Mr Foster did not deliver the quotation to the property and the quotation was created by Mr Foster after the event to support his case that FCCL was the defendant.

The key practical takeaways from this case are:

• Make sure you know who you are contracting with and that your contract clearly and correctly states this. If it’s not clear, then find out and don’t sign the contract until you are sure.
• Always do your due diligence on your counterparty. Check their financial health, follow up on any references/testimonials and ensure adequate   insurances   are in place.
• Always document your contractual relationship: even for small domestic projects, standard forms which are straightforward to complete are available such as the   JCT homeowner building contract . A paper trail of emails, brochures, plans and invoices can also help with this.
• Having a contract in place will help avoid disputes and ensure the parties have agreed how to deal with common issues (for example, delay,   cost issues   and   scope changes ) at the start of the project, hopefully giving you the best possible chance of a smooth running project.

This article first appeared on the Practical Law Construction blog dated 9 March 2022

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The key English contract law cases of 2020

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It has been a most unusual year. In response to the global pandemic, the Cabinet Office issued Guidance in the summer, encouraging contractual parties to act “responsibly and fairly” in the performance and enforcement of their contracts.

In a similar vein, the British Institute of International and Comparative Law (“ BIICL ”) has published three Concept Notes, the first of which noted that a plethora of disputes from the pandemic would be destructive to good contractual outcomes and the effective operation of markets. However, the BIICL also recognised that there are some cases which do require the involvement of the courts.

Inevitably then, there have been disputes which have made it to the courts this year: some which started before the pandemic hit; some borne of the pandemic itself (notably, the recent insurance business interruption case, which you can read about here   1 , and a case concerning material adverse effect clauses, which you can read about here ); and others that presumably just could not be resolved consensually. What can we learn from the decisions in these disputes? In this briefing we review this year’s important contract cases and consider what commercial parties can learn from them.

1. At the time of writing, we note that the Supreme Court heard a leapfrog appeal from the decision of the High Court from 16-19 November 2020. The judgment is pending.

Implied duties of good faith: plead at your peril.

Last year we noted that the law was still in a state of flux. One year on, is it any clearer when a contract will be subject to an implied duty of good faith? It’s fair to say the law still “has not yet reached a stage of settled clarity” ( Cathay Pacific Airways Ltd v Lufthansa [2020] EWHC 1789 ) with a continuing split between the two visions of this duty, namely:

• that there is a class of “relational contracts” that are subject to a duty of good faith as a matter of law ( Essex County Council v UBB Waste (Essex) Ltd [2020] EWHC 1581 ), or
• that such a duty will only arise where the strict tests for the implication of terms in fact are satisfied ( Taqa Bratani Ltd & Ors v Rockrose UKCS8 LLC [2020] EWHC 58 ).

Around these central themes, there have been various clarifications to the law. For example, in Morley v Royal Bank of Scotland Plc [2020] EWHC 88 (Ch) the High Court rejected a borrower’s argument that the bank had an implied duty to act in good faith towards it under a loan agreement. The Court held that this was not a relational contract of any kind but an ordinary loan facility agreement. The bank’s decision to call in the loan was the exercise of a contractual right, not a discretion (subject to the Braganza duty). The bank’s power to obtain a revaluation of the charged assets and its power to charge a default interest rate were discretions which had to be exercised for purposes connected to the bank’s commercial interests and not so as to vex the borrower maliciously (following Property Alliance Group Ltd v Royal Bank of Scotland plc [2018] EWCA Civ 355 ). On the facts, they had been exercised properly.

Similarly, the courts continue to treat references to good faith in some clauses as evidence that a wider overarching duty of good faith should not be implied into the agreement (see Russell v Cartwright [2020] EWHC 41 (Ch) ).

Perhaps most important is the nature of any duty of good faith. While this is sometimes described in broad terms, for example to “adhere to the spirit of the contract, to observe reasonable commercial standards of fair dealing, to be faithful to the agreed common purpose, and to act consistently with the justified expectations of [the other party]” ( CPC Group Ltd v Qatari Diar Real Estate Investment Company [2010] EWHC 1535 ), the courts have recently made it very clear that the assertion that a party has not acted in good faith is a serious allegation.

In Essex County Council v UBB Waste (No. 3) [2020] EWHC 2387 (TCC) the courts suggested this was, put colloquially, an allegation of “sharp practice” . To make such an allegation without proper foundation was out of the norm and justified an order for costs on an indemnity basis.

What does this mean for you?

Good faith is still an evolving area in English law. Until we have greater clarity, it is worth considering whether your contract might be classified as “relational” or whether a duty of good faith might arise under the rules for the implication of terms in fact. In either case, you might want to address the matter expressly. Finally, allegations of a breach of good faith are serious and should not be made without foundation, so plead at your peril.

Excusing liability

In times of crisis, contractual parties may have even greater reason to examine those parts of their contracts which may exclude or limit liability or offer defences to breach (such as force majeure provisions).

Force majeure and a variety of limitations

A recent dispute concerning the 2011 riots in London put all of these provisions under the spotlight. The High Court found that a warehouse operator had failed to use reasonable skill and care to protect the contents of the warehouse (CDs and DVDs), which were destroyed by fire during the riots. Could the operator rely on any contractual terms to excuse or limit its liability?

It was not able to rely on the force majeure clause since the fire was not a circumstance “beyond [its] reasonable control” . The Court found that, if it had acted reasonably, it could and should have prevented the fire.

Since the claims (for loss of profits, business interruption costs and increased cost of working, suffered as a result of the fire) were all direct (in that they were exactly the type of loss that one would expect to result from the breach), the clause excluding liability for “indirect and consequential loss” did not apply. A cap on liability for damage to goods was no protection either as the claims were not for damage to the goods themselves. However, an overall – aggregate – cap on all liability (of £5 million) was effective.

What does this mean for you? These types of clauses are very topical in the current uncertain times and always need to be drafted carefully. This case reminds us that the position of commercial parties will depend upon the exact terms of the contracts, applied to the facts of the situation.

Where can you read more? See 2 Entertain Video Ltd & Ors v Sony DADC Europe Ltd [2020] EWHC 972 (TCC) .

Indirect and consequential loss

Another recent case highlights just how useful an exclusion of “indirect and consequential loss” could have been, if only it had been included.

A contractor terminated a construction contract for breach by its employer (on the basis that the latter had failed to provide a prepared site for the water treatment plant that was to be built). The Board of the Privy Council held that the contractor was entitled to recover, as damages for breach, the loss of profits that it would have made under an operation and maintenance contract for the same plant had it been built. These losses were not too remote (and fell within the second limb of Hadley v Baxendale [1854] EWHC Exch J70) as they were within the reasonable contemplation of the parties to the construction contract when that contract was entered into (on the same day as the operation and maintenance agreement).

What does this mean for you?  When entering into related contracts, it is vital to consider the exact relationship between them, including the consequences of a termination, breach or force majeure scenario arising under one of them and the knock-on effects this might have. Exclusion of liability under a related contract might be achieved by an exclusion of indirect and consequential loss (depending upon the specific drafting) or expressly.

Where can you read more? See AG of the Virgin Islands v GWA [2020] UKPC 18 . 

Loss of goodwill

It is also relatively common to see clauses exclude liability for “loss of goodwill”. The Court of Appeal decided that, in a commercial context, the ordinary legal meaning of “goodwill” was the good name and public reputation of the business concerned. If a contract intends the term to have an unusual or technical meaning (such as the accounting concept of goodwill) then that should be spelt out expressly.

This decision highlights how important it is to agree the meaning of (and clearly define) terms in agreements, particularly where something different from the ordinary legal meaning is intended.

Where can you read more? See Primus International v Triumph Controls [2020] EWCA Civ 1228 .

What is a reasonable condition of consent (and what is not)?

In a recent decision, the High Court considered the case law on contractual consent provisions, which often state that one party “shall not unreasonably withhold consent” to whatever is being requested.

If we call the party asking for consent, Party A; and the party being asked to give consent, Party B, the Court found that the authorities drew the following distinction:

• while it may be legitimate for Party B to impose a condition to protect or compensate it for the impairment of a benefit it enjoys under the contract which would result from giving consent,
• that is completely different to imposing a condition which would impair a right which Party A currently enjoys under the contract.

The contract was for the onshore pipeline transportation of hydrocarbons produced in the North Sea. The producer (Party A in our analogy) requested consent to amend its estimated production profile for transportation for the period from January 2021 to December 2040. The pipeline owner (Party B) stated that it was only willing to consent to the amendment if Party A agreed to an increase in the tariff payable under the agreement. Contractually, Party B was not entitled to “unreasonably withhold” its consent to the amendment. Was Party B therefore acting contractually or non-contractually by seeking to impose a tariff rise as a condition to giving consent?

The Court found that Party A was both entitled and obliged to tender its hydrocarbons for transportation at the contractual tariff for the duration of the agreement, which would continue until terminated on one of the contractual bases set out in the agreement. The terms did not limit that entitlement and obligation to the period up to 2020. In those circumstances, it would be inconsistent with the terms and scheme of the agreement if Party B was entitled to make its consent to the amendment conditional on a fundamental revision of the parties’ bargain in the form of a new tariff. Party B was acting non-contractually.

This decision clarifies that a condition might be reasonable as a prerequisite to giving consent (e.g. to make up for something lost by the consenting party as a result of the change). However, a party cannot use a consent request as an opportunity to renegotiate terms or impose an unrelated change on the other party. It may be preferable to make this clear in the drafting of any relevant provision, by stating that consent cannot be unreasonably withheld or delayed, or made subject to additional conditions.

Where can you read more? See Apache North Sea v INEOS FPS Limited [2020] EWHC 2081 (Comm) .

How will the Courts determine the law applicable to an arbitration clause?

The Supreme Court recently provided the answer to this question in a landmark decision.

An arbitration clause is generally regarded as legally distinct from the main agreement in which it is contained (and the Rome I Regulation excludes arbitration and choice of court clauses from its scope). In England, therefore, common law conflict of laws rules apply to determine the law applicable to the arbitration agreement. Under those rules that will be: (i) the law expressly or impliedly chosen by the parties; or (ii) in the absence of such choice, the law “most closely connected” to the arbitration agreement.

Where the parties have not specified the law applicable to the arbitration agreement, but they have chosen the law to govern the contract as a whole, this choice will generally also apply to the arbitration agreement, rather than the law of the seat of the arbitration (as the Court of Appeal had held). But where the parties have made no choice of law to govern the arbitration agreement, either specifically or by choosing the governing law of the contract, the closest connection test will, in general, lead to the arbitration agreement being governed by the law of the seat of arbitration.

The potential for issues regarding what the applicable law of an arbitration clause is arise most frequently where the law governing the main contract and the place of the seat do not “match”. To remove the room for debate, parties, where the seat of arbitration is in England and the law of the contract is not English, therefore frequently consider using an express choice of law to govern the arbitration clause. Often, this is in favour of the law governing the main contract (the benefits of consistency with that law being something touched upon by the Supreme Court in its judgment). That approach should not change. The Supreme Court’s clarification of this area is welcome but is a general interpretative approach. Therefore, in such cases, an express designation still carries the value of some increased certainty (it will, of course, always be necessary to ensure the clause is properly drafted and works under the chosen law).

Where can you read more? See Enka Insaat Ve Sanayi AS (Respondent) v OOO Insurance Company Chubb (Appellant) [2020] UKSC 38 , and, for our ArbitrationLinks coverage see here .

What stays and what goes in assignment and novation?

The High Court held that an assignment by a contractor to an employer of “ the subcontract ” was an assignment of both (a) accrued rights, and (b) future rights under the subcontract. This meant that when the employer claimed damages in the sum of £133 million from the contractor, the contractor was left without a contractual right to seek a direct remedy from the subcontractor (in principle, it would be able to claim contribution from the subcontractor under the Civil Liability (Contribution) Act 1978, but this would have to be considered, alongside the effect of any relevant limitation or exclusion provisions, at full trial). The Court also held that the assignment did not amount to a novation, so that the contractor’s obligations under the subcontract had not been transferred to the employer.

It’s imperative to think – in advance and before agreeing to do so – what the possible effects of a transfer of rights might be, so that you are not left without a clear remedy, should that be needed. The decision also contains a handy summary of some of the key aspects of assignment and novation:

Assignment:

• Subject to any express restrictions, a party to a contract can assign the benefit of a contract without the consent of the other party to the contract.
• The burden of a contract (the obligations under it) cannot be assigned but the principle of conditional benefit can apply so as to impose on the contractual assignee a positive obligation where such obligation is inextricably linked to the benefit assigned.
• In the absence of any clear contrary intention, reference to assignment of the contract by the parties is understood to mean assignment of the benefit of both accrued and future rights.
• It is possible to assign future rights only, but clear words are needed for that.
• Novation occurs when the original contract between A and B is extinguished and replaced by the creation of a new contract between A and C.
• Novation requires the consent of all parties to the original and new contract. Consent can be given in the original contract, but clear words are needed.
• The terms of the new contract must be sufficiently certain to be enforceable.
• In every case the court must construe the contractual arrangements to give effect to the expressed intentions of the parties, using the established rules of construction.

Where can you read more? See Energy Works (Hull) Limited v MW High Tech Projects UK Limited and another [2020] EWHC 2537 (TCC) .

Notices: the devil in the detail

A share purchase agreement provided that the sellers would pay the buyer an amount equal to any tax liability which arose in certain circumstances, provided that, when making a claim, the buyer provided written notice stating “ in reasonable detail ” the matter which gave rise to the claim, the nature of such claim and (so far as reasonably practical) the amount claimed. The buyer gave notice of a claim to the sellers, referring to an investigation begun by the relevant tax authorities and gave a chronology of key milestones. Was this enough?

The High Court noted that the “reasonable detail” requirement amounted to an obligation to provide sufficient information so that the sellers, acting reasonably, knew what matter gave rise to the claim as well as the nature of the claim and, if reasonably practical, the amount. On the facts, the notice was insufficient. It contained no indication of the relevant facts, events or circumstances giving rise to the claim. Reference to the tax investigation was insufficient, and did not import all the tax authority’s comments and allegations, even if they were known to the sellers’ representatives. There had to be some indication of how the claim arose out of the facts identified.

Requirements to provide details usually mean that more, rather than less, should be included. It might help to consider what the purpose of the notification is and what it is that the recipient will need to know in order to respond or take a matter forward.

Where can you read more? See Dodika Ltd & Ors v United Luck Group Holdings [2020] EWHC 2101 (Comm) .

Waiver by election: understanding the boundaries

Rights can sometimes be lost by waiver by election: where a party has alternative, inconsistent rights, has knowledge of the facts which give rise to them and acts in a way which is only consistent with its having chosen to rely on one of them, it will be taken to have waived the other right ( Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 ). This explains why a party who communicates unequivocally an intention to continue with performance thereby loses the right to terminate a contract (instead, it is taken to have affirmed the contract).

A recent decision of the Privy Council is an important, and topical, illustration of the boundaries of the concept of waiver by election and highlights that it isn’t always applicable.

The parties entered into a fuel supply agreement against the backdrop of a potential closure of a refinery which supplied petroleum to the seller. The seller had a specific contractual right in a “Performance Relief” clause (effectively, a force majeure clause) to withhold, reduce or suspend deliveries to the extent it thought fit where necessitated by, amongst other things, the closure of the refinery.

When the refinery gave notice to the seller that it was closing, the seller notified the buyer but carried on supplying fuel, purchased and shipped from elsewhere while negotiations took place between the parties (as the seller sought a price increase to offset its higher costs). When these negotiations broke down, the seller sought to rely on the clause. The buyer argued that the seller’s rights had been “exhausted” after the seller had continued making deliveries. The Board of the Privy Council disagreed: waiver by election did not apply here. The seller’s right to claim performance relief did not present the seller with a binary, all-or-nothing choice between, on the one hand, putting an end to all the parties’ obligations or, on the other hand, treating all those obligations as still binding. Instead, it had a range of options: at one end of the scale, the seller might merely delay a delivery of fuel; at the other extreme, the seller might decide to cease all further deliveries under the contract, as eventually happened.

In situations where a party is faced with deciding whether to exercise a contractual right or not, whether taking one course of action will constitute a “waiver” of its other right(s) will ultimately turn on whether the rights are truly inconsistent with each other. Parties who want to make it clear that any action they are taking is to be without prejudice to their other rights should say so expressly, in writing. It should also be kept in mind that in these types of situations, estoppel can be relevant  – for example, if the seller had unequivocally represented it would not withhold deliveries under the supply agreement despite the closure of the refinery, it might have lost its right to performance relief by waiver by estoppel. There was no argument, however, that this was so in this case.

Where can you read more? See Delta Petroleum v BVI Electricity Corporation [2020] UKPC 23 .

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2024 Investment Climate Statements: Chile

• EXECUTIVE SUMMARY

With the third highest GDP per capita in Latin America, Chile has historically enjoyed significant economic stability and prosperity. After a wave of civil unrest in 2019, Chile’s political leadership launched a constitutional rewrite process to address social concerns. Although Chileans rejected the proposals of two constitutional referendums, the government’s use of peaceful and democratic tools was largely credited for diffusing social tension. Chile’s solid macroeconomic policy framework gives the country one of the strongest sovereign bond ratings in Latin America and provided fiscal and monetary space to reactivate the economy after the COVID-19 pandemic. According to its Central Bank, Chile’s economic growth was 0.2 percent in 2023 and is projected between 2 and 3 percent in 2024.

Despite its relatively small domestic market, Chile has successfully attracted Foreign Direct Investment (FDI), with an FDI to GDP ratio of nearly 85 percent. The country’s market-oriented policies create significant opportunities for foreign investors to participate in the country’s economic growth. Chile has a sound legal framework and there is general respect for private property rights. Sectors that attract the most FDI are mining, financial services (including pensions and health insurance), and utilities (including electricity, energy, water, and telecommunications). Mineral, hydrocarbon, and fossil fuel deposits within Chilean territory are restricted from foreign ownership, but companies may sign resource extraction contracts with the government. According to Transparency International’s 2023 Corruption Perceptions Index, Chile ranked 29 out of 180 countries worldwide and second in Latin America – behind Uruguay which ranked 16th.

Although Chile is an attractive destination for foreign investment, challenges remain. Some government reform proposals caused concern about potential impacts on investments in the healthcare, insurance, and pension sectors. Despite a general respect for intellectual property (IP) rights, Chile has not fully complied with its IP obligations set forth in the U.S.-Chile Free Trade Agreement. Environmental permitting processes, indigenous consultation requirements, and cumbersome court proceedings have made large project approvals increasingly time consuming and unpredictable, especially in cases with political sensitivities. The current administration prioritizes attracting foreign investment, especially into technological sectors and natural resource extraction associated with the green transition (lithium, copper, and green hydrogen), and continues to implement measures to streamline the investment process.

1. Openness To, and Restrictions Upon, Foreign Investment

• Policies Towards Foreign Direct Investment

For more than four decades, promoting FDI has been an essential part of the Chilean government’s national development strategy. The country’s market-oriented economic policies create significant opportunities for foreign investors to participate. Laws and business practices do not discriminate against foreign investors, who receive treatment no less favorable than Chilean nationals and domestic companies. Chile’s business climate is generally straightforward and transparent, and its policy framework has remained consistent despite administrations of different political leanings, episodes of social unrest, and two unsuccessful attempts to rewrite the Chilean Constitution. However, permitting processes for infrastructure, mining, and energy projects are lengthy and outcomes are less predictable in cases involving politically sensitive environmental impact assessments, water rights issues, and indigenous consultations. InvestChile is the government agency responsible for promoting the entry and retention of FDI into Chile. InvestChile carries out programs and services to attract investment, provide legal and sectorial information, facilitate the establishment of new businesses, and provide export and reinvestment assistance.

• Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors have access to all industries, except for the domestic maritime freight sector, where companies are subject to a 49 percent foreign ownership limit. Since 2019, transit between domestic ports was allowed for foreign cruise vessels with over 400 passengers. Some international reciprocity restrictions exist for fishing.

With few exceptions, enterprises in Chile may be 100 percent owned by foreigners. Chile only restricts the right to private ownership or establishment in what it defines as certain “strategic” sectors, such as nuclear energy and mining. The current Constitution establishes the “absolute, exclusive, inalienable and permanent domain” of the Chilean state over all mineral, hydrocarbon, and fossil fuel deposits within Chilean territory. However, Chilean law allows the government to grant concession rights and enter into lease agreements with individuals and companies for exploration and exploitation activities, and to assign contracts to private investors, without discrimination against foreign investors.

Chile does not have an investment screening mechanism. FDI formal approval procedures are expeditious, and investments are usually approved. Some transactions require an anti-trust review by the office of the national economic prosecutor (Fiscalía Nacional Económica) and possibly by sector-specific regulators.

• Other Investment Policy Reviews

The World Trade Organization (WTO) conducted its sixth Trade Policy Review for Chile in December 2023. The full report is available here: https://www.wto.org/english/tratop_e/tpr_e/tp551_e.htm   . The Organization for Economic Co-operation and Development (OECD) latest Investment Policy Review for Chile is from 1997, available here: http://www.oecd.org/daf/inv/investment-policy/34384328.pdf . On March 27, 2023, the OECD published a new report named “FDI Qualities Review of Chile: Boosting sustainable development and diversification,” which contains an updated assessment of Chile’s FDI policy framework as well as policy recommendations. Chile is not part of the countries covered to date by the United Nations Conference on Trade and Development’s (UNCTAD) Investment Policy Reviews.

• Business Facilitation

The Chilean government has taken significant steps towards facilitating business transactions over the past decade. Starting in 2018, the government introduced an updated electronic and online systems for providing tax information, submitting complaints related to contract enforcement, and completing online registration of closed corporations (i.e., non-public corporations). In June 2019, the Ministry of Economy launched the Unified System for Permits (SUPER), an online single-window platform that brings together 182 license and permit procedures, simplifying the process of obtaining permits for investment projects. However, as noted previously, the private sector still considers the permitting process lengthy and overly cumbersome. Chile participates in the WTO Joint Initiative on Investment Facilitation for Development, which is coordinated by the country’s Permanent Representative to the WTO.

According to the World Bank, Chile has one of the shortest and most user-friendly processes among Latin American and Caribbean countries – 11 procedures and 29 days – to establish a foreign-owned limited liability company (LLC). Drafting statutes of a company and obtaining an authorization number can be done online at https://www.registrodeempresasysociedades.cl/   . Electronic signature and invoicing allow foreign investors to register a company, obtain a taxpayer identification number and get legal receipts, invoices, credit and debit notes, and accountant registries. A company typically needs to register with Chile’s Internal Revenue Service, obtain a business license from a municipality, and register either with the Institute of Occupational Safety (public) or with one of three private nonprofit entities that provide work-related accident insurance, which is mandatory for employers. In addition to the steps required of a domestic company, a foreign company establishing a subsidiary in Chile must authenticate the parent company’s documents abroad and register the incoming capital with the Central Bank. This procedure, established under Chapter XIV of the Foreign Exchange Regulations, requires a notice of conversion of foreign currency into Chilean pesos when the investment exceeds $10,000. The registration process at the Registry of Commerce of Santiago is available online.

• Outward Investment

The Government of Chile does not have active policies to promote or incentivize outward investment, nor does it impose restrictions on FDI.

• 2. Bilateral Investment and Taxation Treaties

Chile has signed 55 bilateral investment treaties (BITs), 34 of which are in force to date. Currently Chile has agreements in force with Austria, Belgium and Luxembourg, Costa Rica, Croatia, Cuba, Czechia, Denmark, El Salvador, Finland, France, Germany, Greece, Guatemala, Honduras, Hong Kong SAR, Iceland, Italy, Malaysia, Nicaragua, Norway, Panama, Paraguay, Philippines, Poland, Portugal, Romania, South Korea, Spain, Sweden, Switzerland, Ukraine, the United Kingdom, Uruguay, and Venezuela.

Chile has 32 free trade agreements (FTAs) with 66 countries. On January 1, 2004, the United States and Chile brought into force the investment chapter in their bilateral FTA. Chile has additional investment chapters in force under FTAs, or supplementary investment agreements to the FTAs with Argentina, Australia, Bolivia, Brazil, Canada, China, Colombia, Hong Kong SAR, Japan, Mexico, the Netherlands, Republic of Korea, Peru, the Pacific Alliance (composed of four countries: Chile, Colombia, Mexico, and Peru), and the Comprehensive and Progressive Transpacific Partnership (CPTPP). Chile is currently negotiating investment dispute resolution chapters that are part of FTA negotiations between the Pacific Alliance and Associated States (Australia, Canada, and New Zealand), and signed on January 26, 2022, the FTA between the Pacific Alliance and Singapore. Chile signed the Advanced Framework Agreement with the European Union on December 13, 2023. As of April 4, 2024, it has not yet entered into force.

The U.S.-Chile Bilateral Tax Treaty, signed in 2010, entered into force December 19, 2023. Chile has 36 other double taxation treaties in force with Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Colombia, Croatia, Czechia, Denmark, Ecuador, France, India, Ireland, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Paraguay, Peru, Poland, Portugal, Russia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, the United Arab Emirates, the United Kingdom, and Uruguay. Chile also signed a double taxation agreement with the Pacific Alliance countries (Colombia, Mexico, and Peru), that has not yet entered into force.

Since the 2014 Tax Reform, the total income tax rate on dividends or profits earned by Chilean firms’ shareholders who are residents in other countries at 44.45 percent (a result of adding the 35 percent “retention tax” on dividends and profits to a 9.45 percent corporate income tax). Residents in countries, such as the United States, with a tax treaty in force with Chile are subject to a 35 percent retention tax rate, and no corporate income tax. Chile’s 2020 Tax Modernization bill reformed real estate and income taxes and applied Chile’s 19 percent value-added tax to foreign digital services.

3. Legal Regime

• Transparency of the Regulatory System

Chile’s legal, regulatory, and accounting systems are transparent, generally provide clear rules for competition and a level playing field for foreigners and are consistent with international norms. However, environmental regulations, which include mandatory indigenous consultation required by the International Labor Organization’s Indigenous and Tribal Peoples Convention (ILO 169), and other permitting processes have become lengthy and unpredictable, especially in politically sensitive cases.

Chile does not have a regulatory oversight body. Four institutions play key roles in the rule-making process: the General-Secretariat of the Presidency (SEGPRES), the Ministry of Finance, the Ministry of Economy, and the General Comptroller of the Republic. Most regulations come from the national government; however, some, particularly those related to land use, are decided at the local level. Both national and local governments are involved in the issuance of environmental permits. Regulatory processes are managed by governmental entities. NGOs and private sector associations may participate in public hearings or comment periods.

In Chile, non-listed companies follow norms issued by the Accountants Professional Association, while publicly listed companies use the International Financial Reporting Standards (IFRS). Since January 2018, IFRS 9 entered into force for companies in all sectors except for banking, in which IFRS 15 will be applied. IFRS 16 entered into force in January 2019. On January 1, 2022, Chile’s Financial Market Commission (CMF) began implementation of the IFRS 17 accounting standards in the Chilean insurance market.

The legislation process in Chile allows for public hearings during discussion of draft bills in both chambers of Congress. Draft bills submitted by the Executive Branch to the Congress are readily available for public comment. Ministries and regulatory agencies are required by law to give notice of proposed regulations, but there is no formal requirement in Chile for consultation with the public, conducting regulatory impact assessments of proposed regulations, requesting comments, or reporting results of consultations. For lower-level regulations or norms that do not need congressional approval, there are no formal provisions for public hearing or comment. As a result, Chilean regulators and rulemaking bodies normally consult with stakeholders, but in a less formal manner.

All decrees and laws are published in the Diario Oficial (similar to the Federal Register in the United States), but other types of regulations are not always found there. There are no other centralized online locations where regulations in Chile are published.

According to the OECD, regulatory compliance rates in Chile are generally high. The approach to enforcement remains punitive rather than preventive, and regulators still prefer to inspect rather than collaborate with regulated entities on fostering compliance. Each institution with regulation enforcement responsibilities has its own sanction procedures. Law 19.880 from 2003 establishes the principles for reversal and hierarchical recourse against decisions by the administration. An administrative act can be challenged by lodging an action in the ordinary courts of justice, or by administrative means with a petition to the Comptroller General of the Republic. Affected parties may also make a formal appeal to the Constitutional Court against a specific regulation.

Chile still lacks a comprehensive, “whole of government” regulatory reform program. The OECD’s April 2016 “Regulatory Policy in Chile” report asserts that Chile took steps to improve its rule-making process, but still lags the OECD average in assessing the impact of regulations, consulting with outside parties on their design and evaluating them over time. According to the World Bank´s Global Indicators of Regulatory Governance, Chile has made limited progress on transparency, impact assessment and ways to appeal and challenge regulations. In a recent positive step, the government submitted to Congress on January 10, 2024, a bill that aims to reduce timeframes for obtaining permits, by imposing deadlines on permit procedures, with default decisions in case of no reply by authorities.

Chile’s level of fiscal transparency is excellent. Information on the budget and debt obligations, including explicit and contingent liabilities, is easily accessible online.

• International Regulatory Considerations

Chile does not share regulatory sovereignty with any regional economic bloc. However, several international norms or standards from multilateral organizations (UN, WIPO, ILO, among others) are referenced or incorporated into the country’s regulatory system. As a member of the WTO, the Chile notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).

• Legal System and Judicial Independence

Chile’s legal system is based on civil law. Chile’s legal and regulatory framework provides for effective means for enforcing property and contractual rights.

Laws governing issues of interest to foreign investors are found in several statutes, including the Commercial Code of 1868, the Civil Code, the Labor Code, and the General Banking Act. Chile has specialized courts for dealing with tax and labor issues.

The judicial system in Chile is generally transparent and independent. The likelihood of government intervention in court cases is low and state-owned enterprises or other government institutions are not given favorable treatment. If a state-owned firm is involved in the dispute, the Government of Chile may become directly involved through the State Defense Council, which represents the government interests in litigation cases related to expropriations. Regulations can be challenged before the court system, the National Comptroller, or the Constitutional Court, depending on the nature of the claim.

• Laws and Regulations on Foreign Direct Investment

Chile’s framework for foreign investment is set by Law 20848 of 2015, which created InvestChile and the Agency for the Promotion of Foreign Investment (APIE), the successor to the former Foreign Investment Committee. The InvestChile website ( https://investchile.gob.cl/   ) provides relevant laws, rules, procedures, and reporting requirements for investors. For more on FDI regulations and services for foreign investors, see the section on Policies Towards Foreign Direct Investment.

Competition and Antitrust Laws

Chile’s anti-trust law prohibits mergers or acquisitions that would prevent free competition in the respective industry. An investor may voluntarily request a ruling by an anti-trust court that would state a planned investment would not have competition implications. The national economic prosecutor (FNE) is an active institution in conducting investigations for competition-related cases and filing complaints before the Free Competition Tribunal (TDLC), which has jurisdiction over those cases.

In February 2023, the FNE approved the sale of Soprole –a Chilean dairy products firm – by New Zealand-based Fonterra to Gloria – a Peruvian holding. The FNE found that, even though the overlap between Gloria’s and Soprole’s operations in some dairy products would increase market concentration, the presence of other competitors and potential entry of imported products meant there were no significant risks to competition in the sale.

In April 2023, the FNE ordered the TDLC to fine TWDC Enterprises 18 Corp. – owned by Disney Group – US$ 3.6 million for submitting false information when it notified FNE about a merger with 21st Century Fox in the cable television services market in 2018.

In July 2023, the FNE approved Germany-based holding Hapag Lloyd’s acquisition of SAAM Ports y SAAM Logistics, integrating shipping services with port operations and extra-port services. The FNE estimated that current regulations in the ports sector reduce risks of anti-competitive behavior such as blocking supplies, blocking clients or conglomerate risks.

In December 2023, the FNE approved, OnNet Fibra’s (partially owned by U.S.-based investment fund KKR) acquisition of Chile-based Entel’s fiber optic infrastructure assets subject to mitigation measures. The measures include eliminating exclusivity and non-competition clauses in the services contract between both companies, and Entel selling part of its fiber optic assets to a third company.

• Expropriation and Compensation

Chilean law grants the government authority to expropriate property, including property of foreign investors, only on public interest or national interest grounds, on a non-discriminatory basis and in accordance with due process. The government has not nationalized a private firm since 1973. Expropriations of private land take place in a transparent manner, and typically only when the purpose is to build roads or other types of infrastructure. The law requires the payment of immediate compensation at fair market value, in addition to any applicable interest.

Dispute Settlement

• ICSID Convention and New York Convention

Since 1991, Chile has been a member state to the International Center for the Settlement of Investment Disputes (ICSID Convention). In 1975, Chile became a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

National arbitration law in Chile includes the Civil Procedure Code (Law Num. 1552, modified by Law Num. 20.217 of 2007), and Law Num. 19.971 on International Commercial Arbitration.

Investor-State Dispute Settlement

Apart from the New York Convention, Chile is also a party to the Pan-American Convention on Private International Law (Bustamante Code) since 1934, the Inter-American Convention on International Commercial Arbitration (Panama Convention) since 1976, and the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States since 1992.

The U.S.-Chile FTA, in force since 2004, includes an investment chapter that provides the right for investors to submit claims under the ICSID Convention, the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules, or any other mutually agreed upon arbitral institution. Under the U.S.-Chile FTA, companies have the option to initiate a claim if they do not achieve a resolution in a previous consultations process with the Chilean government. One U.S. investor filed an arbitration claim against the State of Chile on January 31, 2024, under ICSID, invoking the U.S.-Chile FTA after ending a consultations process in 2023 with no agreement. According to the investor’s claim, the Chilean government breached the terms of a school food program’s public procurement contract by imposing arbitrary discounts in the price set for their services between 2019 and 2021. Another case involves three U.S.-based insurance companies that alleged financial losses because of the pension withdrawal bills of 2021 (Law 21.330), which allowed some retirees to seek an “advance payment” against their annuity accounts. In the case of these insurance companies, the consultations stage expired and there was no agreement with the government of Chile. The companies may still decide to initiate a case before ICSID.

Over the past 10 years, there were only four investment dispute cases brought by foreign investors against the state of Chile before the World Bank’s International Center for Settlement of Investment Disputes (ICSID) tribunal. In the first case, a Spanish-Chilean citizen demanded US$ 338.3 million in compensation for the alleged expropriation of Chilean newspaper El Clarín in 1975 by Chile’s military regime. ICSID issued a final ruling on January 7, 2020, in favor of the Chilean state and rejecting the claimant’s case. The second case was brought in 2017 by a Colombian firm, which held concession contracts as operators of the public transportation system in Santiago de Chile. The firm claimed US$ 347 million for Chilean government actions that allegedly created unfavorable operating conditions for the claimants’ subsidiaries and resulted in bankruptcy proceedings. On January 7, 2021, ICSID ruled in favor of the Chilean state, rejecting the claims. Two more cases pending resolution were brought by foreign investors in 2021. On April 13, 2021, a Chilean subsidiary of a Colombian power company filed an arbitration request against Chile related to an electrical transmission project. The authorities fined US$ 72.8 million for construction delays that the firm argues were due to unforeseeable circumstances. Hearings took place during 2023, and the ruling is expected in the first half of 2024. On August 13, 2021, two French firms operating the Santiago International Airport filed an arbitration request against the Chilean state for allegedly not taking measures to alleviate the temporary drop in their revenues from the decrease in air traffic and commercial airport activity due to the COVID-19 pandemic and the sanitary measures taken by the State, such as border closures and imposition of quarantines. In this case, the arbitration tribunal was constituted in 2022 and the Chilean state filed a request to address the objections to jurisdiction as a preliminary question.

Local courts respect and enforce foreign arbitration awards, and there is no history of extrajudicial action against foreign investors.

• International Commercial Arbitration and Foreign Courts

Mediation and binding arbitration exist in Chile as alternative dispute resolution mechanisms. A suit may also be brought in court under expedited procedures involving the abrogation of constitutional rights. The U.S.-Chile FTA investment chapter encourages consultations or negotiations before recourse to dispute settlement mechanisms. If the parties fail to resolve the matter, the investor may submit a claim for arbitration. Provisions in Section C of the FTA ensure that the proceedings are transparent by requiring that all documents submitted to or issued by the tribunal be available to the public, and by stipulating those proceedings be public. The FTA investment chapter establishes clear and specific terms for making proceedings more efficient and avoiding frivolous claims. Chilean law is generally to be applied to all contracts. However, arbitral tribunals decide disputes in accordance with FTA obligations and applicable international law. The tribunal must also accept amicus curiae submissions.

The Chilean Judiciary Code and the Code of Civil Procedure govern domestic arbitration. Local courts respect and enforce foreign arbitral awards and judgments of foreign courts. Chile has a dual arbitration system in terms of regulation, meaning that different bodies of law govern domestic and international arbitration. International commercial arbitration is governed by the International Commercial Arbitration Act that is modeled on the 1985 UNCITRAL Model Law on International Commercial Arbitration. In addition to this statute, there is also Decree Law Number 2349 that regulates International Contracts for the Public Sector and sets forth a specific legal framework for the State and its entities to submit their disputes to international arbitration.

No Chilean state-owned enterprises (SOEs) have been involved in investment disputes in recent decades. A Chilean government agency filed an arbitration case in February 2021 against a U.S. firm at the International Chamber of Commerce International Court of Arbitration which remains pending.

• Bankruptcy Regulations

Chile’s 1982 Insolvency Law was updated in October 2014. The current law aims to clarify and simplify liquidation and reorganization procedures for businesses to prevent criminalizing bankruptcy. It also established the new Superintendence of Insolvency and created specialized insolvency courts. Creditors’ approval is required to select the insolvency representative and to sell debtors’ substantial assets. The creditor also has the right to object to decisions accepting or rejecting creditors’ claims. However, the creditor cannot request information from the insolvency representative. The creditor may file for insolvency of the debtor, but for liquidation purposes only. The creditors are divided into classes for the purposes of voting on the reorganization plan; each class votes separately, and creditors in the same class are treated equally.

4. Industrial Policies

• Investment Incentives

The Chilean government generally does not subsidize foreign investment, nor does it issue guarantees or joint financing for FDI projects. There are, however, some incentives directed toward isolated geographical zones and to the information technology sector. These benefits relate to co-financing of feasibility studies as well as to incentives for the purchase of land in industrial zones, the hiring of local labor, and the facilitation of project financing. Other important incentives include accelerated depreciation accounting for tax purposes and legal guarantees for remitting profits and capital. The 2020 Tax Reform, contained in Law 21.210 from 2020 established a Value Added Tax (VAT) exemption on capital goods (machines, vehicles, equipment, and accessories) for investments of at least US$5 million. Additionally, the Start-Up Chile program provides selected entrepreneurs with grants of up to US$80,000, along with a Chilean work visa to develop a “startup” business in Chile over a period of four to seven months. Chile has other special incentive programs aimed at promoting investment and employment in remote regions, as well as other areas that suffer development lags. All these opportunities are available in the same terms for both domestic and foreign investors.

• Foreign Trade Zones/Free Ports/Trade Facilitation

Chile has two free trade zones: one in the northern port city of Iquique (Tarapaca Region) and the other in the far south port city of Punta Arenas (Magallanes Region). Merchants and manufacturers in these zones are exempt from corporate income tax, value added taxes (VAT) – on operations and services that take place inside the free trade zone – and customs duties. The same exemptions also apply to manufacturers in the Chacalluta and Las Americas Industrial Park in Arica (Arica and Parinacota Region). Mining, fishing, and financial services are not eligible for free trade zone concessions. Foreign-owned firms have the same investment opportunities in these zones as Chilean firms. The process for setting up a subsidiary is the same inside as outside the zones, regardless of whether the company is domestic or foreign owned.

• Performance and Data Localization Requirements

Chile does not follow “forced localization.” A draft bill that is pending in Chile’s Congress could result in additional requirements (owner’s consent) for international data transfers in cases involving jurisdictions with data protection regimes below Chile’s standards. The bill, modeled after the European Union’s General Data Protection Regulation (GDPR) also proposes the creation of an independent Chilean Data Protection Agency that would be responsible for enforcing data protection standards.

Neither Chile’s Foreign Investment Promotion Agency nor the Central Bank applies performance requirements in their reviews of proposed investment projects. The investment chapter in the U.S.–Chile FTA establishes rules prohibiting performance requirements that apply to all investments, whether by a third party or domestic investors. The FTA investment chapter also regulates the use of mandatory performance requirements as a condition for receiving incentives and spells out certain exceptions. These include government procurement, qualifications for export and foreign aid programs, and non-discriminatory health, safety, and environmental requirements.

Chile does not apply requirements for foreign IT providers to turn over source code and/or provide access to encryption, nor are there restrictions for the free transmission of customer or business-related data outside the country. As a rule, there are no local data storage requirements. Chile’s Intellectual Property Law protects computer programs “whatever the mode or form of expression, as source program or object program, and the preparatory documentation, its technical description and user manuals.”

5. Protection of Property Rights

• Real Property

Property rights and interests are recognized and generally enforced in Chile. There is a recognized and generally reliable system for recording mortgages and other forms of liens.

There are no restrictions on foreign ownership of buildings and land, and no time limit on the property rights acquired by them. The only exception, based on national security grounds, is for land located in border territories, which may not be owned by nationals or firms from border countries, without prior authorization of the President of Chile. There are no restrictions to foreign and/or non-resident investors regarding land leases or acquisitions. Unoccupied properties can always be claimed by their legal owners and, as usurpation is a criminal offense, several kinds of eviction procedures are allowed by the law, though they can sometimes be onerous and lengthy.

• Intellectual Property Rights

According to the U.S. Chamber of Commerce’s International IP Index, Chile’s legal framework provides for fair and transparent use of compulsory licensing; extends necessary exclusive rights to copyright holders and maintains a voluntary notification system; and provides for civil and procedural remedies. However, IP protection challenges remain. Chile’s framework for trade secret protection has been deemed insufficient by private stakeholders. Pharmaceutical products suffer from relatively weak patenting procedures, the absence of an effective patent enforcement and resolution mechanism, and some gaps in regulation governing data protection.

The Government submitted to Congress in 2018 a bill to reform to Chile’s pharmaceutical drugs law called “Ley de Fármacos II”. A mixed committee tasked to reconcile conflicting amendments made by the Senate and the Lower Chamber indefinitely postponed its final review due to deadlock in Congress. While the pharmaceutical industry reports that the reconciliation process addressed some of their concerns regarding the new regulations, it identified the lack of coverage being offered in price regulations as an outstanding issue of concern.

In addition to Law 21.335 that modernizes certain aspects of Chile’s patent and IP regime, Law 21.426 against trade in illicit and counterfeit goods entered into force in 2022. Chile enacted two laws in 2023 that may strengthen IPR enforcement: Law 21.577 against organized crime established special investigative techniques and bolstered the confiscation of illicit profits, and Law 21.595 created new categories of “economic crimes,” new penalties, such as the confiscation of profits, and new criminal liability for legal entities. Chile also issued Decree 7/2023 on Information Security and Cybersecurity Policy compliance for government agencies. Right holders understand that this Decree will prevent government computer systems from having unlicensed software.

The Intellectual Property Brigade (BRIDEPI) of the Chilean Investigative Police (PDI) reported that it seized 51,312 counterfeit products in 2023, worth a total of US$ 13.6 million, and arrested 194 individuals on charges related to IPR infringement. Additionally, the National Customs Service reported that it seized more than 4.2 million counterfeit products in 2023.

Chile’s IPR enforcement remains relatively lax, particularly in relation to piracy, copyright, and patent protection, while prosecution of IP infringement is hindered by gaps in the legal framework and a lack of expertise in IP law among judges. Rights holders indicate a need for greater resources devoted to customs operations and a better-defined procedure for dealing with small packages containing infringing goods. The legal basis for detaining and seizing suspected transshipments is also insufficiently clear.

Since 2007, Chile has been on the U.S. Trade Representative’s (USTR) Special 301 Priority Watch List (PWL). In October 2018, Chile’s Congress successfully passed a law that criminalizes satellite piracy. In December 2021, the Government of Chile submitted legislation to implement a legal framework to penalize the circumvention of technology protection measures (TPM) by amending Chile’s existing IPR law. This legislation remains pending in Congress. However, other challenges remain related to longstanding IPR issues under the U.S.-Chile FTA: the pending implementation of UPOV 91; the implementation of an effective patent linkage in connection with applications to market pharmaceutical products; adequate protection for undisclosed data generated to obtain marketing approval for pharmaceutical products; and amendments to Chile’s Internet Service Provider liability regime to permit effective action against Internet piracy.

On December 13, 2023, Chile signed the updated Association Agreement with the European Union, accepting the protection of 222 product terms as Geographic Indicators (GI), including mostly cheeses and processed meats. The EU and Chile also agreed to give GI protection for some common product names such as parmesan, feta, and gruyere, which are also produced in many countries globally, including the United States and Chile. Chile’s broad acceptance of EU GIs and the inclusion of common names affects market access for U.S. dairy exports to Chile as provided for in the U.S.-Chile FTA. There is an ongoing engagement between the United States and Chile to preserve market access for U.S. products marketed in Chile using common names.

Chile is not listed in the USTR’s Notorious Markets List. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/   .

6. Financial Sector

• Capital Markets and Portfolio Investment

Chile developed capital markets and keeps them open to foreign portfolio investors. Foreign firms offer services in Chile in areas such as financial information, data processing, financial advisory services, portfolio management, voluntary saving plans and pension funds. Under the U.S.-Chile FTA, Chile significantly opened its insurance sector, with very limited exceptions. The Santiago Stock Exchange is Chile’s dominant stock exchange, and the third largest in Latin America. However, when compared to other OECD countries, it has lower market liquidity.

The free flow of financial resources into Chile’s real economy allows its commodity export-dependent economy to adjust to external shocks. Chile accepted the obligations of the International Monetary Fund’s Article VIII (sections 2, 3 and 4) and maintains a free-floating exchange rate system, free of restrictions on payments and transfers for current international transactions. Credit is allocated on market terms and its various instruments are available to foreigners. The Central Bank of Chile (CBC) reserves the right to restrict foreign investors’ access to internal credit in case of a credit shortage but has not exerted this authority to date.

• Money and Banking System

Chile has the highest banking services penetration rate in Latin America: 92 percent of residents older than 18 have a bank account. There are 13.5 million credit cards and 27.3 million debit cards in the Chilean banking system, along with 10.8 million current accounts and 20.7 million savings accounts. State-owned Banco Estado supports financial inclusion through CuentaRut, a commission-free card with an electronic account available for all Chilean residents (national and foreigners) with a RUT (national ID number). As of December 2023, nearly 14.6 million people (82 percent of Chilean residents) had a CuentaRut account.

The Chilean banking system is healthy and competitive. The 2019 General Law of Banks (LGB) provides general guidelines for establishing a capital adequacy system in line with Basel III standards and gave the Financial Market Commission (CMF), the regulator for banks, insurance companies and the stock market, the authority to establish its framework. All Chilean banks meet Basel III requirements, even though its implementation process ends on December 1, 2025. The system’s liquidity position (Liquidity Coverage Ratio) is on average above 200 percent, more than twice the regulatory limit (100%). Capital adequacy ratio of the system was 16.16 percent as of December 2023 and remains robust even when including discounts due to market and/or operational risks. As of December 2023, non-performing loans (i.e., loans 90 days past due) were 2.13 percent compared to 1.68 percent in December 2022. This result was influenced by the end of the expansive fiscal and monetary policies implemented in 2021 in response to the economic shock from the COVID-19 pandemic, and currently higher interest rates.

As of December 2023, the total assets of the Chilean banking system amounted to US$ 458.9 billion, according to the CMF. The largest six banks (Banco de Crédito e Inversiones, Banco Santander-Chile, Banco Estado, Banco de Chile, Scotiabank Chile, and Itaú Chile) accounted for 87.4 percent of the system’s assets. Chile’s Central Bank conducts the country’s monetary policy, is constitutionally autonomous from the government, and is not subject to regulation by the CMF.

Foreign banks have an important presence in Chile, comprising three out of the six largest banks of the system. Out of 17 banks currently in Chile, five are foreign owned but legally established banks in Chile and three are branches of foreign banks. Both categories are subject to the requirements of the Chilean banking law and to supervision by the CMF. There are also 25 representative offices of foreign banks in Chile, six of them from the United States. There are no reports of correspondent banking relationships withdrawal in Chile.

To open a bank account in Chile, a foreigner must present his/her Chilean ID Card or passport, Chilean tax ID number, proof of address, proof of income/solvency, photo, and fingerprints.

Foreign Exchange and Remittances

• Foreign Exchange

Law 20.848, which regulates FDI (described in section 1), prohibits arbitrary discrimination against foreign investors and guarantees access to the formal foreign exchange market, as well as the free remittance of capital and profits generated by investments. There are no other restrictions or limitations placed on foreign investors for the conversion, transfer or remittance of funds associated with an investment.

Investors, importers, and others have access to foreign exchange in the official inter-bank currency market without restriction. The Central Bank of Chile (CBC) reserves the right to deny access to the inter-bank currency market for royalty payments more than five percent of sales. The same restriction applies to payments for the use of patents that exceed five percent of sales. In such cases, firms would have access to the informal market. The Chilean tax service reserves the right to prevent royalties of over five percent of sales from being counted as expenses for domestic tax purposes.

Chile has a free floating (flexible) exchange rate system since 1999. Exchange rates of foreign currencies are fully determined by the market. The CBC reserves the right to intervene under exceptional circumstances to correct significant deviations of the currency from its fundamentals. These interventions are not designed to maintain a determined exchange rate level, which results from the currency market supply and demand, but instead aim to preserve financial stability when there is an excessive volatility in the foreign exchange market. This authority has been used seven times since 1999, the latest being an announcement in July 2022 when the CBC injected US$ 25 billion into the foreign exchange market following an unusual depreciation of the Chilean peso (CLP) due to external shocks.

• Remittance Policies

Remittances of profits generated by investments are allowed at any time after tax obligations are fulfilled; remittances of capital can be made after one year following the date of entry into the country. In practice, this permanency requirement does not constitute a restriction for productive investment, because projects normally need more than one year to mature. Under the investment chapter of the U.S.–Chile FTA, the parties must allow free transfer and without delay of covered investments into and out of its territory. These include transfers of profits, royalties, sales proceeds, and other remittances related to the investment. However, for certain types of short-term capital flows, this chapter allows Chile to impose transfer restrictions for up to 12 months, as long as those restrictions do not substantially impede transfers. If restrictions are found to impede transfers substantially, damages accrue from the date of the initiation of the measure. In practice, these restrictions have not been applied in the last two decades.

• Sovereign Wealth Funds

The Government of Chile maintains two sovereign wealth funds (SWFs) built with savings from years with fiscal surpluses. The Economic and Social Stabilization Fund (FEES) was established in 2007 and was valued at US$5.1 billion as of February 2024. The purpose of the FEES is to fund public debt payments and temporary deficit spending to keep a countercyclical fiscal policy. The Pensions Reserve Fund (FRP) was built up in 2006 and amounted to US$8.6 billion as of February 2024. The purpose of the FRP is to anticipate future needs of payments to those eligible to receive pensions, but whose contributions to the private pension system fall below a minimum threshold.

Chile is a member of the International Working Group of Sovereign Wealth Funds (IWG) and adheres to the Santiago Principles.

Chile’s government policy is to invest SWFs entirely abroad into instruments denominated in foreign currencies, including sovereign bonds and related instruments, corporate and high-yield bonds, mortgage-backed securities from U.S. agencies, and stocks. Approximately 65.5 percent of the FEES (US$2.7 billion), as well as 50.3 percent of the FRP (US$4.3 billion), were invested in assets based in the United States as of January 2024.

7. State-Owned Enterprises

Chile had 28 state-owned enterprises (SOEs) in operation as of 2022. Twenty-seven SOEs are commercial companies and the newest one (FOINSA) is an infrastructure fund that was created to facilitate public-private partnership projects. At the same time, 25 SOEs are not listed and are fully owned by the government, while the remaining three are majority government owned. Ten Chilean SOEs operate in the port management sector, six in the services sector, three in the defense sector, three in the mining sector (including CODELCO, the world’s largest copper producer, and ENAP, an oil and gas company), two in transportation, one in the water sector, one is a TV station, and one is a state-owned bank (Banco Estado). The state holds a minority stake in four water companies after a privatization process. In 2022, total assets of Chilean SOEs amounted to US$ 81.8 billion, while their total net income was US$ 3.0 billion. Chilean SOEs employed 47,669 people in 2022.

Twenty SOEs in Chile fall under the supervision of the Public Enterprises System (SEP), a public agency that oversees SOE governance. The rest – including the largest SOEs such as CODELCO, ENAP and Banco Estado – have their own governance and report to the Executive Branch. Allocation of seats on the boards of Chilean SOEs is determined by the SEP or outlined by the laws that regulate them. In CODELCO’s corporate governance, there is a mix between seats appointed by recommendation from an independent high-level civil service committee, and seats allocated by political authorities in the government.

The Budget Directorate published an updated list of SOEs, including their financial management information, available in the following link: http://www.dipres.gob.cl/599/w3-propertyvalue-20890.html   .

In general, Chilean SOEs work under strict budget constraints and compete under the same regulatory and tax frameworks as private firms. The exception is ENAP, which is the only company allowed to refine oil in Chile. The main Chilean SOEs compete in the domestic market according to commercial terms. TVN (national TV broadcaster) and Banco Estado (Chile’s third biggest bank) operate in very competitive markets. Several other SOEs operate in sectors with characteristics of natural monopoly such as water, infrastructure, ports, and transportation, in some cases in public-private partnerships or join ventures with private firms. In general, Chilean SOEs operating in the domestic market provide non-discriminatory treatment in their purchases. CODELCO competes internationally as one of the world’s biggest copper producers, and it is developing a lithium division to operate Chile’s largest deposits in partnership with private companies. ENAP has oil and gas investments abroad with branches in Argentina, Ecuador, and Egypt. There are no significant investments from Chilean SOEs in the United States. As an OECD member, Chile adheres to the OECD Guidelines on Corporate Governance for SOEs.

• Privatization Program

Chile does not have a privatization program.

8. Responsible Business Conduct

Awareness of the need to ensure corporate social responsibility has grown over the last two decades in Chile. However, NGOs and academics who monitor this issue believe that risk mapping and management practices still do not sufficiently reflect its importance.

On November 12, 2021, the CMF published new annual reporting requirements for publicly traded companies on policies, practices, and metrics adopted to meet environmental, social, and governance goals. The new regulation will require companies to restructure their annual reports to integrate sustainability issues throughout the report. The new annual report structure includes sections on company profile, corporate governance (including sustainability risks, particularly climate change), strategic objectives, personnel (include diversity, equity, inclusion and accessibility, workplace and sexual harassment, training, and benefits), business model, supplier management, regulatory compliance (related to customers, workers, environment, and free competition), and sustainability indicators (in line with international standards). The requirements went into effect for large businesses (of consolidated total assets of approximately $850 million or higher) for reporting year 2022, published in March 2023. For companies with less than $45 million consolidated assets, the requirements go into effect for reporting year 2023.

The government of Chile encourages foreign and local enterprises to follow generally accepted Responsible Business Conduct (RBC) principles and uses the United Nations’ Rio+20 Conference statements as its principal reference. Chile adheres since 1997 to the OECD Guidelines for Multinational Enterprises. It also recognizes the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy; the UN Guiding Principles on Business and Human Rights; the UN Global Compact’s Ten Principles, and the ISO 26000 Guidance on Social Responsibility. The government established a National Contact Point (NCP) for OECD MNE guidelines located within the Undersecretariat for International Economic Relations, and has a Responsible Business Conduct Division, whose chief is also the NCP. In August 2017, Chile released its National Action Plan on Business and Human Rights based on the UN Guiding Principles. Separately, the Council on Social Responsibility for Sustainable Development, coordinated by Chile’s Ministry of Economy, is currently developing a National Policy on Social Responsibility.

Regarding procurement decisions, ChileCompra, the agency in charge of centralizing Chile’s public procurement, incorporates the existence of a Clean Production Certificate and an ISO 14001-2004 certificate on environmental management as part of its criteria to assign public purchases.

No high profile or controversial instances of corporate impact on human rights have occurred in Chile in recent years.

The Chilean government effectively and fairly enforces domestic labor, employment, consumer, and environmental protection laws. There are no dispute settlement cases against Chile related to the Labor and Environment Chapters of the Free Trade Agreements signed by Chile.

Regarding the protection of shareholders, the Superintendence of Securities and Insurance (SVS) has the responsibility of regulating and supervising all listed companies in Chile. Companies are generally required to have an audit committee, a directors committee, an anti-money laundering committee and an anti-terrorism finance committee. Laws do not require companies to have a nominating/corporate governance committee or a compensation committee. Compensation programs are typically established by the board of directors and/or the directors committee.

Independent NGOs in Chile promote and freely monitor RBC. Examples include NGO Acción Empresas Inicio – Acción Empresas (accionempresas.cl)   , Chilean chapter of the World Business Council for Sustainable Development (WBCSD); the Catholic University of Valparaiso’s Center for Social Responsibility and Sustainable Development VINCULAR: http://www.vincular.cl/;   ProHumana Foundation; and the Andres Bello University’s Center Vitrina Ambiental.

Chile is an OECD member but is not participating actively in the implementation of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas.

Chile is not part of the Extractive Industries Transparency Initiative (EITI). Chile joined The Montreux Document on Private Military and Security Companies in 2009. However, there are no private security companies based in Chile participating in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA).

• Additional Resources

Department of State

• Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/ )
• Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/ )
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/ )
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ( https://www.state.gov/u-s-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises/ )
• Xinjiang Supply Chain Business Advisory ( https://www.state.gov/xinjiang-supply-chain-business-advisory/ )

Department of the Treasury

• OFAC Recent Actions ( https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions   )

Department of Labor

• Findings on the Worst Forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings   )
• List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods   )
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab   )
• Comply Chain ( https://www.dol.gov/ilab/complychain/   )
• Climate Issues

Chile is one of the signatories of the Paris Agreement. The Environment Ministry published its 2050 Long-Term Climate Strategy (ECLP), a roadmap that details how Chile will fulfill its commitments, considering a 30-year timeframe. It was incorporated into Law 21.455, known as the Framework Law of Climate Change, enacted on June 13, 2022. The law also includes the Nationally Determined Contribution (NDC), which contains Chile’s commitments to the international community in mitigation and adaptation to climate change, which will be updated every five years. In 2022, Chile joined the Regional Escazu Agreement, which aims to guarantee full and effective access to environmental information, public participation in environmental decision-making process, and access to environmental justice.

The main climate-related policy measures introduced by the government belong to six categories: sustainable industry and mining; green hydrogen production; sustainable construction of housing and public/commercial buildings; electromobility in the public transport system; phasing out coal-fired power generation plants; and other energy efficiency measures.

Under the Framework Law of Climate Change, the Environment Ministry is responsible for drawing up an emissions mitigation plan with limits for each productive sector. There will be specific strategies and goals for the main sectors contributing to greenhouse gas emissions, some of them already in place. These will include: in the energy sector, phasing out coal-based power generation plants, with an aim to have closed 18 plants by 2025 and all of them by 2040; in the mining sector, reduction of greenhouse gas emissions to a minimum level by 2050 under the ECLP (both for emissions generated from the extraction and production processes, and indirectly, such as from electric power consumption); in the agricultural sector, Chile adhered to the COP26 goal to reduce methane (CH4) emissions by 30% by 2030, and joined the U.S. sponsor Global Methane Pledge.

In 2023, Chile passed the Nature Law that creates the Service for Biodiversity and Protected Areas (SBAP) complying with international protection and conservation commitments. Through SBAP, Chile standardizes the classification of protected areas based on the six categories defined by the International Union for Conservation of Nature (IUCN). Three of the categories – strict nature reserve (Ia) and wilderness area (Ib), national park (II), natural monument or feature (III) – prohibit all commercial exploitation of natural resources and industrial infrastructure.

Chile introduced in 2020 an emissions compensation mechanism for companies that pay green taxes, which are currently applied to emissions of particulate matter, sulfur dioxide, nitrogen oxide and carbon dioxide. This mechanism created a regulated carbon market, which allows industries to reduce their tax burden by financing emission reduction or emission absorption projects carried out by NGOs, foundations, or other institutions. Some examples of projects that can use this mechanism include energy efficiency initiatives, heater replacement, clean transportation, and reforestation.

There is increasing incorporation of environmental considerations into public procurement. In 2012, the government published the Socially Responsible Purchasing Policy, containing strategic sustainability guidelines, which are non-binding recommendations. In 2016, the Ministry of the Environment launched a public procurement policy with environmental criteria, both for the bidder’s operations and the characteristics of the products purchased.

9. Corruption

Chile implements various laws to combat public corruption, including the 2009 Transparency Law that mandates disclosure of public information related to all areas of government and created an autonomous Transparency Council in charge of overseeing its implementation. Subsequent amendments expanded the number of public trust positions required to release financial disclosure, mandated disclosure in greater details, and allowed for stronger penalties for noncompliance.

In March 2020, the government proposed new legislation aimed at combatting corruption, as well as economic and electoral crimes. Four new pieces of legislation seek to strengthen enforcement and increase penalties for collusion among firms; increase penalties for insider trading; provide protections for whistleblowers seeking to expose state corruption; and expand the statute of limitations for electoral crimes. This legislation remains under discussion in the Chilean Congress.

Anti-corruption laws, in particular mandatory asset disclosure, do extend to family members of officials. Political parties are subject to laws that limit campaign financing and require transparency in party governance and contributions to parties and campaigns.

Regarding government procurement, the ChileCompra (central public procurement agency) website allows users to anonymously report irregularities in procurement. An executive decree defines sanctions for public officials who do not adequately justify direct contracts. The Corporate Criminal Liability Law provides that corporate entities can have their compliance programs reviewed by domestic firms authorized by Chile’s Financial Market Commission (CMF) to certify them as sufficient. The General Comptroller’s office oversees the control of the legal aspects, management, pre-audit and post-audit functions of all civil service activities. Private companies have increasingly incorporated internal control measures, as well as ethics committees as part of their corporate governance, and compliance management sections. Additionally, Chile Transparente (Chilean branch of Transparency International) developed a Corruption Prevention System to facilitate private firms’ compliance with the Corporate Criminal Liability Law.

Chile signed and ratified the Organization of American States (OAS) Convention against Corruption. The country also ratified the UN Anticorruption Convention on September 13, 2006. Chile is also an active member of the Open Government Partnership (OGP) and, as an OECD member, adopted the OECD Anti-Bribery Convention.

NGOs that investigate corruption operate in a free and adequately protected manner. U.S. firms have not identified corruption as an obstacle to FDI.

• Resources to Report Corruption

Dorothy Perez Gutierrez General Comptroller Comptroller General’s Office Teatinos 56, Santiago de Chile +56 2 32401100

David Ibaceta Medina Director General Consejo para la Transparencia Morande 360 piso 7 (+56)-(2)-2495-2000 [email protected]  

Michel Figueroa Executive Director Chile Transparente (Chile branch of Transparency International) Perez Valenzuela 1687, piso 1, Providencia, Santiago, Chile (+56)-(2)-2236 4507 [email protected]  

Octavio Del Favero Executive Director Ciudadania Inteligente Holanda 895, Providencia, Santiago, Chile (+56)-(2)-2419-2770 https://ciudadaniai.org/contact  

Benjamín García Executive Director Espacio Publico Orrego Luco 087, Piso 3. Providencia, Santiago, Chile T: (+56) (9) 6258 3871 [email protected]  

Observatorio Anticorrupción (Run by Espacio Publico and Ciudadania Inteligente) https://observatorioanticorrupcion.cl/  

Ma nuel Henriquez Executive Director Observatorio Fiscal (focused on public spending) Don Carlos 2983, Oficina 3, Las Condes, Santiago, Chile (+562) (2) 4572 975 [email protected]  

• 10. Political and Security Environment

Pursuant to a political accord in response to the 2019 civil unrest, Chile held a plebiscite in October 2020 in which citizens voted to draft a new constitution. In September 2022, Chileans rejected by a nearly 62 to 38 percent margin a draft constitution that reflected the vision of the political left. In December 2022, lawmakers established a second constitutional process. Voters also rejected, in December 2023, the second constitutional draft, penned by the political right, by a nearly 55 to 44 percent margin. In January, President Boric closed discussions on constitutional reform during his administration, leaving the current constitution unaltered.

Prior to 2019, there were generally few incidents of politically motivated attacks on investment projects or installations except for the southern areas of Araucania region and Arauco province in neighboring Bio Bio region. This area, home to nearly half a million indigenous inhabitants, has seen an ongoing trend of politically motivated violence and organized criminal activity. Land claims and conflicts with forestry companies are the main grievances underneath the radicalization of a relatively small number of indigenous Mapuche communities, which has led to the rise of organized groups that pursue their demands by violent means. Incidents include arson attacks on churches, farms, forestry plantations, forestry contractors’ machinery and vehicles, and private vehicles, as well as occupation of private lands, resulting in over a half-dozen deaths (including some by police forces), injuries, and damage to property. Since October 2021, the Chilean Congress has extended the State of Emergency in the Araucanía Region every 15 days. The State of Emergency permits the Chilean army to support Carabinero police actions, specifically to secure important transportation corridors. Government data suggests the State of Emergency’s success – pointing to a 30 percent reduction in rural violence. President Boric announced the creation of a Presidential Commission for Peace and Understanding on June 21, 2023, to find a solution to Mapuche land claims.

Since 2007, Chile has experienced several small-scale attacks with explosive and incendiary devices, targeting mostly banks, police stations, and public spaces throughout Santiago, including metro stations, universities, and churches. ATMs have been blown up in the late evenings or early mornings. Attacks generally occur during times of minimal civilian foot traffic and have generally avoided causing civilian casualties. Eleven incidents of bombs that either exploded, were defused by authorities, or failed to detonate have occurred since May 2019. Anarchist groups often claim responsibility for these acts, as well as violent incidents during student and labor protests. According to analysts and media reports, these anarchist groups do not have a unified manifesto, but their motives revolve around general anti-government sentiment, including environmental degradation; restitution of public lands to indigenous groups; imprisoned acquaintances; protest of public transportation costs; and denunciation of “corporate greed.” Half a dozen activists are currently convicted and imprisoned for attacks that claimed about 15 injuries among civilians and police officers.

While the security environment is generally safe, street crime, carjackings, telephone scams, and residential break-ins are common, especially in larger cities. Law enforcement agencies have observed an increase in transnational criminal activity and attempts by narcotics organizations to gain footholds in Chile. Vehicle thefts are a serious problem in Valparaiso and northern Chile (from Iquique to Arica), with most of those vehicles allegedly smuggled into neighboring Bolivia. On occasion, illegal activity by striking workers resulted in damage to corporate property or a disruption of operations. Some firms have publicly expressed concern that during a contentious strike, law enforcement has appeared reluctant to protect private property.

Chilean authorities have attributed an increase in violent crime in Chile, in part, to an increase in Chile of migrants connected to transnational criminal organizations. President Boric and the Interior Ministry view border control as one of the primary methods to reduce crime in Chile. In July 2023, President Boric introduced a new National Policy on Migration and Foreigners. In June 2023, President Boric announced that he would fast-track a bill to create a new Ministry of Public Security, and Chile’s Congress continues to debate numerous security-related bills.

Chilean civil society is active, and demonstrations occur frequently. Although most demonstrations are peaceful, criminal elements have taken advantage of civil society protests to loot stores along protest routes and clash with the police. Annual demonstrations to mark March 29, the Day of the Young Combatant; September 11, the anniversary of the 1973 coup against the government of President Salvador Allende; and October 18, the anniversary of the outbreak of the 2019 civil unrest, have resulted in damage to property, looting, and scuffles between police and protestors.

• 11. Labor Policies and Practices

Unemployment in Chile averaged 8.6 percent of the labor force during 2023, while the labor participation rate was 62.1 percent of the working age population, estimated as 16.3 million people in December 2023. The labor participation of migrants was 75.8 percent of the working age foreign population in Chile, estimated at 1.0 million people in December 2023. Chilean workers are adequately skilled and some sectors such as mining, agriculture, and fishing employ highly skilled workers. In general, there is an adequate availability of technicians and professionals. The National Institute of Statistics (INE) estimates informal employment in Chile in 27.6 percent of the workforce as of December 2023.

Article 19 of the Labor Code stipulates that employers must hire Chileans for at least 85 percent of their staff, except in the case of firms with less than 25 employees. However, Article 20 of the Labor Code includes several provisions under which foreign employees can exceed 25 percent, independent of the size of the company.

In general, employees who have been working for at least one year are entitled to statutory severance pay, upon dismissal without cause, equivalent to 30 days of the last monthly remuneration earned, for each year of service. The upper limit is 330 days (11 years of service) for workers with a contract in force for one year or more. The same amount is payable to a worker whose contract is terminated for economic reasons. Upon termination, regardless of the reason, domestic workers are entitled to an unemployment insurance benefit funded by the employee and employer contributions to an individual unemployment fund equivalent to three percent of the monthly remuneration. The employer’s contributions shall be paid for a maximum of 11 years by the same employer. Another fund made up of employer and government contributions is used for complementary unemployment payments when needed.

Labor and environmental laws are not waived to attract or retain investments.

During 2022 (latest data available), Labor Directorate data showed that 11,256 unions and 2,493 workers federations were active. In the same period, 411,390 workers were covered by collective bargaining agreements. Unions can form nationwide labor associations and can affiliate with international labor federations. Contracts are normally negotiated at the company level. Workers in public institutions do not have collective bargaining rights, but national public workers’ associations undertake annual negotiations with the government.

The Labor Directorate under the Ministry of Labor is responsible for enforcing labor laws and regulations. Both employers and workers may request labor mediation from the Labor Directorate, which is an alternate dispute resolution model aimed at facilitating communication and agreement between both parties.

Labor Directorate data shows that 661 legal strikes occurred in 2022 (latest data available), involving 106,821 workers during the same period. As legal strikes in Chile have a restricted scope and duration, in general they do not present a risk for foreign investment.

Chile has and generally enforces laws and regulations in accordance with internationally recognized labor rights of freedom of association and collective bargaining, the elimination of forced labor, child labor, including the minimum age for work, discrimination with respect to employment and occupation, and acceptable conditions of work related to minimum wage, occupational safety and health, and hours of work. On January 1, 2023, Chile raised its monthly minimum wage to CLP 410,000 – US$ 496– for all occupations, including household domestic staff, more than twice the official poverty line. Workers older than 64 or younger than 19 years old or younger are eligible for a special minimum wage of CLP 305,851 (US$ 370) a month. Information on potential gaps in law or practice with international labor standards by the International Labor Organization is pending.

Collective bargaining is not allowed in companies or organizations dependent upon the Defense Ministry or whose employees are prohibited from striking, such as in health care, law enforcement, and public utilities. Labor courts can require workers to resume work upon a determination that a strike causes serious risk to health, national security, the supply of goods or services to the population, or to the national economy.

The U.S.-Chile FTA, in force since January 1, 2004, requires the United States and Chile to maintain effective labor and environmental enforcement.

In April 2023, congress passed a law to enact a 40-hour work week by May 2028 by gradually decreasing the 45-hour work week. The lowering of the maximum number of labor hours is implemented gradually from 44 hours since its promulgation, 42 hours the second year, and 40 hours starting the third year of its promulgation. Provisions on premium compensation for overtime work are not affected by the new law. The law provided exemptions from restrictions on hours of work for some categories of workers such as managers; administrators; employees of fishing boats; restaurant, club, and hotel workers; drivers; airplane crews; telecommuters or employees who worked outside of the office; and professional athletes.

• 12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs

Since 2013, Overseas Private Investment Corporation (OPIC) partnered with U.S. solar energy developers to finance five large-scale power facilities throughout the Atacama Desert in northern Chile, one of which remains operational. Other OPIC-financed projects in the country include the run-of-river hydropower project Alto Maipo, and the toll road Vespucio Norte Express. There are no investment incentive agreements between Chile and the United States that support them. Since the World Bank categorized it as a high-income country, Chile is ineligible for U.S. International Development Finance Corporation financing.

• 13. Foreign Direct Investment Statistics

* Source for Host Country Data: Central Bank of Chile, 2022 year-end data released in March 2023.

According to the IMF’s Coordinated Direct Investment Survey (CDIS), total stock of FDI in Chile in 2022 amounted to US$ 256.5 billion, compared to US$ 237.0 billion in 2021. Canada, the United States, and the Netherlands are the main sources of FDI to Chile (same rank order as in 2021) with US$ 35.5 billion, US$ 22.8 billion and US$ 21.2 billion, respectively, concentrating 31.1 percent of the total.

Chile’s outward direct investment stock in 2022 amounted to US$ 136.0 billion, compared to US$ 132.5 billion in 2021. It is less concentrated in South America than in previous years, with Brazil, Peru, and Colombia combined representing nearly 23.5 percent of total Chilean outward FDI. The United States and Germany are the second and fourth destination, respectively, of Chilean FDI with 16 percent of the total, combined.

The data below is consistent with host country statistics. Although less prominent than in previous years, some tax havens are relevant sources of inward FDI to Chile, with Bermuda, the British Virgin Islands, and Luxembourg ranking eleventh, twelfth, and sixteenth, respectively, according to the Central Bank of Chile. However, the category “Not Specified (including Confidential)” totals US$ 93.9 billion, more than any other country source of inward FDI into Chile.

• 14. Contact for More Information

Alexis Gutiérrez Economic Specialist Avenida Andrés Bello 2800, Las Condes, Santiago, Chile (56-9) 4268 9005 [email protected]  

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U.s. department of state, the lessons of 1989: freedom and our future.

Blue Light Phones Business Success Stories [2024]

In today’s tech-savvy world, protecting our eyes from digital screens is more important than ever. Starting a blue light phone business taps into this necessity.

Blue light phones are devices equipped with technology that filters out harmful blue light, reducing eye strain and potentially improving sleep. This business involves designing, manufacturing, and promoting phones with built-in blue light filters.

There’s a growing market of consumers increasingly aware of their digital health. By addressing a common concern with an innovative product, you can carve out a niche in the competitive tech industry.

This venture requires thorough research into blue light technology, reliable manufacturing partnerships, and an effective marketing strategy. While the initial set-up might be complex, the potential to connect with a health-conscious audience makes it worthwhile.

In this list, you'll find real-world blue light phones business success stories and very profitable examples of starting a blue light phones business that makes money.

1. Knightscope, Inc. ($3.6M/year)

William Santana Li, Chairman and CEO of Knightscope, was inspired to start the business after witnessing the 9/11 attacks in NYC. Despite being told it was impossible, he raised over $70 million in equity and built Autonomous Security Robots to reimagine public safety and secure the nation. With contracts across 5 time zones and numerous crime-fighting wins, Knightscope is scaling its operations and solidifying its position in the market.

How much money it makes: $3.6M/year How much did it cost to start: $10M How many people on the team: 57

William Santana Li, the Chairman and CEO of Knightscope, has raised over $70 million in equity to build Autonomous Security Robots (ASRs) that are patrolling the country today to provide smart eyes and ears for law enforcement and security professionals.

Part of Starting A Blue Light Phones Business: Everything You Need To Know ‹ ›

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