Brogden v Metropolitan Railway [1877]

Court: House of Lords

Facts: Mr. Brogden, who managed a coal supply partnership, had an informal arrangement with the Metropolitan Railway Company (C) to supply coal. Over time, Brogden proposed a formal contract, and negotiations resulted in a draft document. Brogden added his details and an arbitrator’s name to the draft, writing “approved” at the end, but the formal contract was never executed. Both parties acted in accordance with the terms of the draft agreement. When disputes arose, Brogden argued that no formal contract had been established, leading to legal action.

Issue: Was a contract formed by the conduct of the parties, despite the absence of a formally executed agreement?

Held: The House of Lords held that a contract had been formed through the conduct of the parties. Lord Blackburn emphasized that if an offer requires acceptance through a particular act, then performing that act constitutes acceptance. In this case, Brogden’s act of writing "approved" on the draft document and the subsequent conduct of both parties in line with the draft’s terms demonstrated acceptance and mutual intent to be bound. The court found that both parties had acted as if the draft agreement was binding, thus a contract was enforceable despite the lack of formal execution.

Key Judicial Statement: Lord Blackburn stated, "Where an offer stipulates expressly or implied that acceptance must be done by a certain act, such as by posting a letter, the offer must be accepted in that manner. Mere mental assent to an offer does not amount to acceptance. Where a draft contract is agreed as the basis of a formal contract and parties have acted upon the draft and treated it as binding, they will be bound by it, even though they had contemplated a formal execution of the contract."

💡Leveluplaw: Brogden v Metropolitan Railway Company underscores that a contract can be formed through the conduct of the parties, especially when they act on an informal agreement as if it were formal. This case clarifies that acceptance of an offer can occur through actions that fulfill the terms of the offer, even if a formal document has not been executed. It highlights the principle that both parties’ conduct can demonstrate mutual intent to be bound, making the informal agreement enforceable.