Brogden v Metropolitan Railway Company


(1877) 2 App Cas 666

House of Lords


From the beginning of 1870 Brogden had supplied MRC with coal and coke for the use of their locomotives. In November 1871 Brogden suggested that the parties should enter into a formal contract. A draft agreement was drawn up which stated


'Brogden shall, at their own expense, as from January 1 1872, supply every week and deliver for the use of the MRC at the Paddington Station 220 tons of coal, and any farther quantity of coal, not exceeding 350 tons per week, at such times and in such quantity as MRC shall from time to time require.'


The payment was to be at the rate of 20s per ton of 20 cwt. Either of the parties could


'determine this agreement by giving two calendar months previous notice in writing on November 1 1872.'


If no such notice was given the agreement was to continue in force


'for one year from January 1 1873.'


If any differences should arise they were to be referred to


'the arbitration of [name of arbitrator to be inserted], and such person or persons as shall be mutually agreed upon.'


The draft agreement was handed to Brogden by MRC for approval by them. Brogden left the date blank. He filled up the part describing the parties by putting in the names of himself and partners. He filled in the arbitration clause with the name, 'William Armstrong Esq of Swindon,' and, finally, he appended the word 'approved,' and under it signed his own name, 'Alexander Brogden.' He sent the agreement back to MRC to have a formal contract drawn up in duplicate and signed by the respective parties. Brogden never made a copy of the agreement. Mr Burnett, an employee of MRC, put the draft agreement into his drawer where it lay forgotten. Brogden and MRC then conducted business on the basis of the draft agreement for nearly a year until Brogden refused to deliver any more coal. During that year the parties had in most letters between them made reference to 'the contract'.


The issue before the court was whether a concluded contract had ever been entered into between the two parties.


The Lord Chancellor Lord Cairns


My Lords... the parties were approaching to a meeting for a definite and clearly expressed purpose, namely, to make a contract, which was to last for a considerable length of time, and it will be one of the observations in the case, that the view taken by the Appellants in this case leaves your Lordships entirely without any explanation of what ultimately became of that contract which the parties, clearly, were seriously bent upon agreeing to in some form or other.


Now, my Lords, I will call your Lordships' attention to what was done subsequent to this date; but before I do so, there is at the very outset this remarkable circumstance, which your Lordships will bear in mind: these two parties having been in negotiation up to 22 December, both of them clearly bent upon making a contract which was to provide for a supply of coals in the following year, both of them engaged upon it, and so seriously engaged upon it that they had reduced it into writing with very considerable minuteness of detail; according to the view of the Appellants, this agreement, which they were so bent on forming, is said suddenly and without any kind of explanation to have passed entirely out of view, an incomplete and unfinished transaction, as regarded which there never was any consensus between them, and no explanation is given in any shape or form of why it was, according to the view of the Appellants, that there never was any reference afterwards to the contract, nor any proceeding taken to have it brought to a definite point. My Lords, it would be, indeed, a very strange matter if, both parties having, shewn such earnestness in the business to which they were addressing themselves, they were from the moment of 22 December to be held to have parted without any impression whatever that anything had been done towards accomplishing the object of that act upon which they were bent.


But, my Lords, what took place afterwards was this: On 22 December Mr Burnett, getting this draft, putting it where the contracts of the company were placed for custody, writes in return to Messrs Brogden & Sons. He makes no objection to anything which had been done with regard to that document; he is silent upon that subject, but he says, 'We shall require 250 tons per week of locomotive coal, commencing not later than 1st January next' - the very date which was the date mentioned in the contract for the commencement of the supply - 'Reply by wire that you will do this, that we may arrange with other collieries accordingly.' My Lords, the contract had provided, with regard to the amount of the supply, that it should be '220 tons of coal, and any farther quantity of coal not exceeding 350 tons per week, at such times and in such quantity as the company shall by writing under their agent's hands from time to time require, such notice to be given to the contractors or agents of the contractors for the time being.'...


Now, my Lords, what I have to ask myself is this: the draft having been returned with only one variation to which, as far as I can see, any objection could have been taken, namely, that with reference to the arbitrator, and no objection having been made upon the score of the insertion of his name, although any communication which might have been made must distinctly have been made in writing; I have to ask, how is the course of action of the parties - the suppliers of coal and the railway company - during the following year to be accounted for?...


[Lord Cairns then gave examples of how the business was conducted between the parties on the basis of the agreement.]


But, my Lords, over and above that, I must say that having read with great care the whole of this correspondence, there appears to me clearly to be pervading the whole of it the expression of a feeling on the one side and on the other that those who were ordering the coals were ordering them, and those who were supplying the coals were supplying them, under some course of dealing which created on the one side a right to give the order, and on the other side an obligation to comply with the order. If it had not been so, I cannot conceive how when there were these repeated complaints against the Messrs Brogden for short or irregular supplies, and when they say more than once that the prices they were receiving from the Metropolitan Company did not make their bargain a good one, or did not make the Metropolitan Company good customers, how it was that if they did not feel that there was a contract somewhere or other entitling the Metropolitan Company to a supply, and binding them (the Brogdens) to supply coal, they did not say, If you do not like the mode in which we are supplying, or the extent to which we are supplying, it is quite easy for you to get your supplies elsewhere, and we are under no obligation to supply you. They do not do that; on the contrary, they go on asking for indulgence and consideration in a way which it appears to me to be impossible to account for, except upon the footing which they recognise in the letter I have read of 25 July, that there was a contract under which there was some maximum or other up to which they were bound to supply the coal.


My Lords, those are the grounds which lead me to think that, there having been clearly a consensus between these parties, arrived at and expressed by the document signed by Mr Brogden, subject only to approbation, on the part of the company, of the additional term which he had introduced with regard to an arbitrator, that approbation was clearly given when the company commenced a course of dealing which is referable in my mind only to the contract, and when that course of dealing was accepted and acted upon by Messrs Brogden & Co in the supply of coals.