Gte Directories (HK) Ltd v. Tse Kam Tsang t/a North Pole Fur Factory
Read the full judgment text of DCCJ 9788/1986 on BabelCite. This District Court judgment.
1. The Plaintiffs' claim is against Tse Kam Tsang trading as North Pole -Fur Factory for advertisement charges published in the 1986 issue of Business Telephone Directory.
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Contract for advertisement – offer and acceptance – whether undertaking by offer or not to withdraw offer is binding. Held – offer may be withdrawn as promise to keep offer open is part of the original offer; plaintiff cannot invoke equitable doctrine of estoppel. IN THE DISTRICT COURT OF HONG KONG HOLDEN AT KOWLOON CIVIL JURISDICTION ACTION NO. 9788 OF 1986 ____________ BETWEEN
_______ Coram: H.H. Judge L.J. D'Almada Remedios in Court. Date: 16th day of January, 1987. J U D G M E N T 1. The Plaintiffs' claim is against Tse Kam Tsang trading as North Pole -Fur Factory for advertisement charges published in the 1986 issue of Business Telephone Directory. 2. It is the plaintiffs' case that on the 15th March 1985 the contract for advertisement was entered into by the defendant with the Hong Kong Telephone Company Limited. This action is now brought by the plaintiffs as assignees of the contract. 3. The claim is disputed by the defendant on the ground that he did not at any time enter into any contract for or request the publication of the advertisement as alleged by the plaintiffs. 4. At the hearing, the defendant elected not to give evidence. The sole witness at the trial was Mr. Kevin Chu, a sales representative of the plaintiff. It does not appear to be disputed that the plaintiffs are publishers of the Telephone Directory. Mr. Chu stated in evidence that his job was to look for potential customers with a view to their making applications for advertisement in the directory. By appointment made over the telephone he went to see a Miss Lau at Room 18, 10th floor, Kam Hon Industrial Building. Although he did not expressly say so I accept that he believed these premises to be the premises of the North Pole Fur Factory. He asked her who was ‘the boss' of the factory and she said that she was. He told her he was seeking her patronage in advertising in the directory and on that day she signed two applications for advertisement, one for insertion in the English and the other in the Chinese version of the directories. 5. In so far as it is alleged that a contract was entered into on that day (15/3/85), that is not correct. What Miss Lau signed amounted to nothing more than all offer. The application states: "The above subscriber requests the Hong Kong Telephone Co. Ltd. to insert …”. So it is an offer made to the Hong Kong Telephone Company for acceptance by the Hong Kong Telephone Co. There would be no contract until the offer has been accepted by the person to whom it was made. 6. There were printed terms and conditions at the back of the applications. 7. Counsel for the defendant has referred to the following clause among the printed terms:
It is argued, therefore, that if acceptance is by publication (the date for which is agreed to be 1st January 1986), it was open to the offeror to withdraw his offer at any time before that date unless before doing so the Telephone Company had communicated acceptance of the offer in some other form. I accept that as a point well taken. However, the solicitor for the plaintiff points out that the clause goes on to provide that:
In the context of this clause the contention put forward on behalf of the plaintiff is that although the Telephone Company may decline acceptance of at any time before publication, the offeror must keep his offer open and cannot vrithdraw it. Even if the clause is to be so construed, the law is that until acceptance and up to the moment of acceptance no legal obligation exists. An undertaking or promise to keep an offer open is part and parcel of the original offer and is not binding and can be withdrawn unless supported by consideration. It is for the offeree to prove consideration. I do not find that burden discharged. It is submitted that when the request for advertisement was made the telephone company would give consideration to its publication which is consideration moving from the offeree. I do not accept that. It is just another way of saying that the offeree will consider whether to accept the offer. It may be that some attempt to inject consideration may be found in the statement that 'the signature of the subscriber constitutes an irrevocable authority to the Telephone Company to put in hand the preparations for the incorporation of the advertising in the next issue of the 'Telephone Directory'. I do not think that this assists the plaintiff either. The Telephone Company may run and manage its own business and make any preparations it thinks fit for such purpose without the consent or authority of any outsider. An irrevocable authority given to the Telephone Company to do what it is entitled to do is no consideration. Nor do I think that the plaintiff can invoke the equitable doctrine of estoppel. It has been well observed in Chitty on Contracts (25th Edn.) page 153 that:
8. On the 22nd April 1985 two letters were addressed by the plaintiffs to the North Pole Fur Factory. Both were printed letters in identical form: one relating to the request for advertisement in the English and the other in the Chinese directory. 9. It is submitted that these letters can be read as acceptance of the offer. Counsel for the defendant takes issue with this contention. He makes the following points: Acceptance must be by the person to whom the offer is made. The offer was made to the Telephone Company. The letters were not written by or on behalf of the Telephone Company. They were written by the plaintiffs who described themselves as publishers of the telephone directories. In short, the letters acknowledged the receipt of the applications made in which the terms of the offer were mentioned. 10. I agree with counsel for the defendant. Acceptance must be unequivocal. The letters are quite capable of being construed as a reminder of the proposals made by Miss Lau to avoid any misunderstanding. In any event, acceptance must be by the Telephone Company. There is no evidence before me of acceptance by the Telephone Company or that the plaintiffs have been authorised to accept offers made to the Telephone Company. Even if one were to accept that the plaintiffs were the introducing or canvassing agents for the Telephone Company, such agents have no implied authority to accept offers on behalf of the principal. 11. Upon receipt of those letters, the defendant replied shortly in the following terms:
12. It is clear from that communication that if anyone made such a request on behalf of the defendant, that person had no authority to do so and that the defendant does not wish to have any advertisement in the directories. It follows by necessary implication that if the request for advertisement was treated as having been made by someone who was presumed to have authority that is not admitted and the request must, therefore, be regarded as withdrawn. 13. On receipt of the letter, the plaintiffs' representative again called on Miss Lau and after persuasion obtained her agreement to have the advertisement in the Chinese but not the English directory. Hence, the claim in this action for advertisement charges in the Chinese directory. 14. It is a little surprising that the plaintiffs' should call on Miss Lau and act on her instructions notwithstanding the defendant's letter to which I have referred. No attempt was made to contact or consult the defendant. In the circumstances, the consent given by Miss Lau does not avail the plaintiff. The plaintiffs well knew and were given prior notice to the effect that Miss Lau had no authority in the matter. Yet Mr. Chu approached Miss Lau and not the defendant. 15. The solicitor for the plaintiffs refers to this consent or agreement by Miss Lau as the 'second contract' and says that the defendant can be held liable on the ground that Miss Lau had apparent authority to act gent far the defendant. This is a fanciful argument that holds no water. I do see how it could be said that she had apparent or ostensible authority in the face of express prior notice in writing by the defendant to the effect that she had none. 16. I will now deal with matter on the basis that the letter written by the plaintiffs to which I have referred amounted to acceptance of the offer to form a completed contract. It is contended that Miss Lau had ostensible authority to bind the defendant. Again, I do not agree. The concept of 'apparent' or 'ostensib1e' authority rests on the principle of ‘holding out'? A representation by the agent himself that he has authority cannot create ostensible authority. There must be a representation by the principal as to the extent of the agent's authority. No representation by the agent as to the extent of his authority can amount to a 'holding- out' by the principal: see Bowstead on Agency (15th Edn.) p.286. 17. It is said that when Mr. Chu called on Miss Lau she was the only person in occupation of the premises. I do not see how that amounts to holding out. The same observation can be made when she said she was ‘the boss'. She used the firm's chop when making the offer. Obviously, Mr. Chu dealt with Miss Lau as proprietor and Miss Lau purported to act as such. The defendant did not hold out Miss Lau to be his agent and her possession of the chop does not imply an authorisation to enter into contracts. It is said that Mr. Chu knew that Miss Lau had her own telephone business line which was changed from her name to the North Pole Fur Factory. I do not see how this amounts to any representation by the defendant that Miss Lau was thereby authorised to enter into contracts on his behalf. 18. I have dealt with this aspect of the matter for completeness on the footing that even if there was acceptance by the Telephone Company to constitute a contract, I am not satisfied that Miss Lau was clothed with ostensible authority to enter into the contract on which the plaintiffs' claim is founded. 19. The plaintiffs' claim is, therefore, dismissed with costs. I am awarding costs on a party and party basis although the irony of the situation is such that had the plaintiff succeeded I would have found my hands tied and would have had to award costs on a solicitor and own client basis since the contract (if there was one) included a clause to that effect. I grant a certificate for counsel.
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