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construction the courts would probably ‘infer’ that the maximum amount to be ordered was to be the same as the year before. However, there is also authority that a contract such as this should be interpreted as bona fide. In MacLelland v. Adam and Mathie,54 for example, the Court of Session allowed a proof of an averment that purchasers had increased the quantity of spirits they wished to buy at a fixed price, when a tax had been imposed while their agreement was effective. In Wilkie v. Bethune,55 an employer agreed to give his employee potatoes as part of his remuneration. When the crop failed and the price of potatoes trebled, the court refused to compensate the employee on the basis of the new price and instead ordered damages which would enable him to buy an equivalent amount of other food. Accordingly, since Motor Works is ‘snatching’ at a bargain, the courts might interpret the promise in good faith and argue that they can only order the same amount as the previous year. If the contract expressly entitled Motor Works to purchase as much as they wanted, I do not think the clause would be struck down as illegal or as a leonine bargain in modern Scots law.

In Case 8(c), as it is a unilateral obligation binding only Alloy, Metal Works is not obliged to buy any steel as it has not undertaken any obligation to do so.

england

In English law, a bare promise, such as that which appears to have been made by Alloy, to sell to the promisee such and such goods if the promisee makes an order, is called a ‘standing offer’. According to orthodox law, it is not binding in itself, because it has not been accepted nor, as importantly, has any consideration been provided or promised in exchange for it (see Case 1).56 Note that merely ‘agreeing’ to the offer does not, in orthodox law, make the offer binding because the promisee, not having promised to do anything, has not provided consideration in exchange for the promise.57 Thus, until the offer is accepted and paid for, the offeror is free to withdraw the offer at any time.58 That said, it appears that the orthodox law rules on consideration are not always followed in this area, and that many courts have simply assumed, without much discussion, that,

56Routledge v. Grant [1828] 4 Bing. 653; Treitel, Contract, 39.

57See, e.g., Firestone Tyre & Rubber Co. Ltd v. Vokins [1951] 1 Lloyd’s Rep. 32.

58On the requirements for a proper withdrawal, such as notice, etc., see Treitel, Contract, 39–44.

where there is some sort of acceptance of the offer, ‘requirements’ agreements are binding, regardless of the apparent lack of consideration.59 For the purposes of this answer, I will, in any event, assume that the offer has been accepted and is prima facie binding. This could happen by Motor Works doing something or promising to do something in return for the promise, for example, promising to place a minimum order each year. More typically, however, the promise would become binding by Motor Works actually placing an order, assuming that Alloy had not yet withdrawn its offer (which may be unrealistic if the market price has risen). The latter scenario would then resemble the case of Great Northern Rly Co. v. Witham,60 where the defendant’s gratuitous promise to ‘undertake to supply the Company for twelve months with such quantities of [specified articles] as the Company may order from time to time’ was held to be a standing offer, which was later turned into a series of contracts by the plaintiff’s orders.

Assuming, then, that Alloy’s promise is prima facie binding, is Alloy bound to provide the amount of steel ordered by Motor Works in Cases 8(a) and 8(b), where the market price has risen? According to orthodox law, the answer is clear: Alloy must provide the steel. Alloy’s offer is on its face an unambiguous promise to supply whatever amount of steel Motor Works orders at a set price; thus it must supply that amount. There is no general principle in English law, such as a principle of good faith, which would allow a court to invalidate a bargain which has become substantively unfair or to invalidate a bargain where one party is, in lay person’s terms, attempting to take advantage of the other party’s imprecise contractual drafting. There is English legislation, the Unfair Terms in Consumer Contracts Regulations61 (based on a recent EEC Directive62), that allows courts to invalidate substantively unfair contracts, but it does not apply here because Alloy is not a consumer (and for other reasons as well, including that Alloy itself made the offer).

The question is whether an English court would want, and be able, to find some way of getting around the orthodox rules in order to invalidate the bargain. It is unlikely that a court would seek to invalidate the bargain struck in Case 8(a), where the market price rose by 20 per cent and a normal order was placed. A rise of 20 per cent is, I assume, not unusual, and Motor Works has not attempted to take advantage of the open-ended

59 Re Gloucester Municipal Election Petition [1901] 1 KB 683. See generally J. N. Adams, ‘Consideration for Requirements Contracts’, LQ Rev. 94 (1978), 73. 60 [1873] LR 9 CP 16.

61Unfair Terms in Consumer Contracts Regulations 1994 (SI 1994, No. 3159).

62EC Directive on Unfair Terms in Consumer Contracts (93/13/EEC).

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nature of the agreement. It is also unlikely that on the facts of Cases 8(b) or 8(c), an English court would seek to invalidate the bargain. The advan- tage-taking is not that extreme, and, as importantly, there is no easy way for an English court to invalidate. The open-ended nature of the promise is not in itself a problem,63 the words of the contract are reasonably clear, and no court would wish to hold that such promises are generally unenforceable.

If an English court were to invalidate the order in Case 8(b), it would have to be on the basis that, on the proper interpretation of the contract, it was an implied term that Motor Works would not order more than a certain amount of steel, or perhaps not order more than Motor Works could use itself. The general rule regarding the judicial implication of terms into contracts is that the terms must be ‘necessary to give the transaction such business efficacy as the parties must have intended’.64 Significantly, it is not enough to show merely that the term is a reasonable one.65 That said, ‘business efficacy’ is sufficiently vague as to allow courts much leeway.

In the case of scenario 8(c), where the market price dropped and no steel was ordered, the contract would need to be interpreted as requiring that Motor Works would order a certain amount of steel, presumably the amount that it ‘needs’ for its own production that year. An implied term of this sort is more difficult to imply than a maximum order term since, while it might be implicit in the agreement that Motor Works will not order more than it needs, it is more difficult to assume that Motor Works is agreeing to buy only from Alloy (though the history of their relationship might provide evidence to the contrary). If the contract was an oral contract, implying either a maximum or minimum order term is easier. The imprecision of oral language makes such agreements more amenable to creative interpretation. But if the contract were in writing, it will be more difficult for Alloy to claim that on its proper interpretation the promise was subject to certain conditions. The words of the promise, as stated in the hypothetical, are unambiguous.

It may be thought that in certain cases, for example where a buyer orders 100 times its normal requirements and solely for the purposes of resale, a court surely would find some way of implying a limiting term. That said, there are no clear precedents in English law for such an approach – though there are also no clear examples of English courts

63 In Great Northern Rly Co. v. Witham [1873] LR 9 CP 16, noted above, a similarly open-ended

65 Liverpool CC v. Irwin [1977] AC 239.

refusing to follow such an approach. Perhaps the closest analogy, and a case which gives some support for implying a term into Alloy’s promise, is Staffordshire Area Health Authority v. South Staffordshire Waterworks.66 The court interpreted an agreement to supply water at a fixed price ‘at all times hereafter’ as meaning ‘at all times hereafter during the subsistence of the agreement’, the agreement being terminable by notice. In general, however, all that can be said with confidence in this area is that the more clear the advantage-taking, the harder a court will try to interpret the agreement as containing an implied term precluding such advantagetaking.

ireland

Where a promise appears to be made for some consideration but which consideration is really illusory, the promise must be disregarded.67 In Case 8(a), Motor Works has provided no consideration for Alloy’s promise to sell Motor Works as much steel as it ordered during the coming year. If Motor Works merely counterpromises to buy ‘as much steel as it ordered’, it is likely that an Irish court would follow English precedent and find that Motor Works’ counter-promise does not amount to consideration for the purposes of an enforceable contract.68

However, the position could be treated differently by an Irish court where Alloy’s promise was treated as a tender. In such instance, Alloy’s promise to sell to Motor Works ‘as much steel as it ordered’ could be considered a tender for an indefinite amount. At this stage neither party is bound by Alloy’s tender. English case law provides that Alloy could avoid contractual liability if it withdrew its promise or tender before an order had actually been placed by Motor Works for a specific amount of steel.69 It is possible that an Irish court would follow this decision in the absence of other factors, such as the provision of some form of consideration by Motor Works. Accordingly, once an order has been placed by Motor Works Alloy may then be bound to fulfil it.70

Promissory estoppel, acting as a shield, could arise in a situation where Alloy revokes its tender but Motor Works goes ahead and orders the amount of steel it usually needs but later only pays to Alloy the original contract price. If Alloy instituted proceedings against Motor Works

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seeking the difference in the amount payable, Motor Works could then raise promissory estoppel to seek to defeat their claim. Where the promise was intended to be binding, intended to be acted on, and in fact acted on, an Irish court, relying on the principles of estoppel and having regard to all the circumstances of the case, might find it inequitable for Alloy to rely on their revocation of tender.71

In Case 8(b), the market price rises to 20 per cent more than the contract price and Motor Works orders twice the steel it usually needs. As stated above, if an Irish court followed the Firestone Rubber decision, it would hold that Motor Works’ counter-promise to buy ‘as much steel as it ordered’ did not amount to consideration for Alloy’s promise for the purposes of an enforceable contract.

However, once Motor Works places an order with Alloy for a specific amount then the contract may be enforceable in an Irish court. Once the market price in steel rose it was in Alloy’s interests to revoke the offer. By failing to revoke the offer, Alloy could become liable to Motor Works to comply with the terms of their tender once their tender was accepted by Motor Works.

If Alloy could establish that Motor Works’ acceptance of its tender was made after a reasonable time for acceptance of the tender, the tender might be found to have lapsed. What is reasonable depends entirely upon the circumstances of the offer and the effect of a late acceptance. Clearly, Alloy would be greatly affected by Motor Works’ acceptance of Alloy’s tender.72

Where Motor Works placed an order for twice the steel it usually needs and an Irish court found such acceptance to be sufficient consideration, Alloy could argue that it was an implied term of the contract that Motor Works would only order the amount of steel it usually needed. Traditionally, the courts were reluctant to imply terms in a bargain because this resulted in a modification of the contract as struck between the parties. Indeed, in Tradox (Ireland) Ltd v. Irish Grain Board Ltd, McCarthy J said, ‘[it] is not the function of the Court to rewrite a contract for parties met upon commercially equal terms; if such parties want to enter into unreasonable, unfair or even disastrous contracts that is their business not the business of the Court’.73 In this case, it is possible that an Irish court, having regard to Alloy’s promise and the subsequent course of dealings between the parties prior to Motor Works’ order, might imply such a

71See Case 1. See also Central London Property Trust v. High Trees House [1947] KB 130.

72See Ramsgate Victoria Hotel v. Montefiore [1866] LR 1 Exch. 109. See also Friel, Contract, ch. 3.

73[1984] IR 1.