Blomley v Ryan - An intoxicating victory - Part 1
May 24th 2008 06:43
Blomley v Ryan (1956) 99 CLR 362 HCA
Ryan (the defendant) was the owner of a grazing property (farm) which Blomley (the plaintiff) wanted to purchase. Ryan was an older man in his late seventies with a limited education and what could diplomatically be described as a “tendency” to engage in bouts of alcoholism.
Blomley, the purchaser, visited the defendant while he was in the middle of one of his drinking bouts with an offer he couldn’t possibly refuse: a bottle of rum. That’s right; with a bottle of rum in hand he visited the elderly alcoholic farm-owner and started negotiations to purchase the property from him.
Not surprisingly, Blomley found this negotiating tactic to be highly advantageous. Perhaps the most surprising aspect of the case was that the drunken Ryan was still able to negotiate after a bottle of rum and a week-long binge, and even sign his name on a legal document of sale. But sign it he did, and after a few long hours at the negotiating table, the cunning and conniving Blomley walked out with an absolute bargain: a specifically enforceable contract to buy the property for just 25,000 pounds, 8,000 pounds less than the market value of the farm (33,000 pounds).
8,000 pounds may not sound like much in today’s economy, but back in 1956 it was a small fortune. Firstly it represented a discount of 24% on the market value of the property. Secondly, the contract price itself represented a price of 6 pounds, 15 shillings an acre, so the 8,000 pound difference was the equivalent of approximately 1,185 free acres! To put that into context (and understanding that the MCG is around 4.33 acres) you’re talking about almost 275 large football fields! So the plaintiff’s contract was certainly negotiated at a significant under-value.
When Ryan awoke from his drinking bout the next day, he found himself immersed in a thick mental haze. Then, of course, he discovered the signed contract of sale and alarm bells starting ringing. His head was spinning, the blood was rushing through his veins, and suddenly things became all too clear – in the previous night’s drunken bout, he had entered into a contract to sell his entire property for 25,000 pounds!
He was enraged, infuriated, hung over and still a little intoxicated from the previous night’s indulgences, but there was one thing he knew for sure – he was never going to complete the sale, no matter what Blomley said, did or threatened.
So Blomley, the plaintiff, marched off to court and demanded specific performance of the contract. He demanded the court to order the sale to go through.
As for Ryan, he too tried to march off to court, but his gait ended up resembling more of a swagger. Still, he got there in the end, and counter-claimed for rescission, demanding to have the sale set aside on the grounds of unconscionable conduct.
What happened?
Well, you could read through pages and pages of long-winded judicial transcripts to find out. But no, I’m not really that cruel. You can read the quick summary below.
Case Summary
Ryan (the defendant) was the owner of a grazing property (farm) which Blomley (the plaintiff) wanted to purchase. Ryan was an older man in his late seventies with a limited education and what could diplomatically be described as a “tendency” to engage in bouts of alcoholism.
Blomley, the purchaser, visited the defendant while he was in the middle of one of his drinking bouts with an offer he couldn’t possibly refuse: a bottle of rum. That’s right; with a bottle of rum in hand he visited the elderly alcoholic farm-owner and started negotiations to purchase the property from him.
Not surprisingly, Blomley found this negotiating tactic to be highly advantageous. Perhaps the most surprising aspect of the case was that the drunken Ryan was still able to negotiate after a bottle of rum and a week-long binge, and even sign his name on a legal document of sale. But sign it he did, and after a few long hours at the negotiating table, the cunning and conniving Blomley walked out with an absolute bargain: a specifically enforceable contract to buy the property for just 25,000 pounds, 8,000 pounds less than the market value of the farm (33,000 pounds).
8,000 pounds may not sound like much in today’s economy, but back in 1956 it was a small fortune. Firstly it represented a discount of 24% on the market value of the property. Secondly, the contract price itself represented a price of 6 pounds, 15 shillings an acre, so the 8,000 pound difference was the equivalent of approximately 1,185 free acres! To put that into context (and understanding that the MCG is around 4.33 acres) you’re talking about almost 275 large football fields! So the plaintiff’s contract was certainly negotiated at a significant under-value.
When Ryan awoke from his drinking bout the next day, he found himself immersed in a thick mental haze. Then, of course, he discovered the signed contract of sale and alarm bells starting ringing. His head was spinning, the blood was rushing through his veins, and suddenly things became all too clear – in the previous night’s drunken bout, he had entered into a contract to sell his entire property for 25,000 pounds!
He was enraged, infuriated, hung over and still a little intoxicated from the previous night’s indulgences, but there was one thing he knew for sure – he was never going to complete the sale, no matter what Blomley said, did or threatened.
So Blomley, the plaintiff, marched off to court and demanded specific performance of the contract. He demanded the court to order the sale to go through.
As for Ryan, he too tried to march off to court, but his gait ended up resembling more of a swagger. Still, he got there in the end, and counter-claimed for rescission, demanding to have the sale set aside on the grounds of unconscionable conduct.
What happened?
Well, you could read through pages and pages of long-winded judicial transcripts to find out. But no, I’m not really that cruel. You can read the quick summary below.
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