This case was an appeal from a judgement delivered by the First Hall, Civil Court concerning a dispute regarding the payment of Lm1,858.18 allegedly due by the defendant company to the plaintiff company for the balance of the price of certain merchandise sold and consigned that remained unpaid.

The facts of the case were as follows:

The defendant company had approached the plaintiff company for a quotation in relation to the provision of certain works to be carried out in the dance school owned by the former company. The plaintiff company had issued a quotation dated 27 February 2003, with all the relevant prices and details of the order.

The defendant company had accepted this quotation and gave the plaintiff company the go ahead to initiate works which included the installation of apertures since it was intended that the dance school be opened by September 2003. Once the works were in progress and some windows were installed, the plaintiff company issued a confirmation order dated 1 September 2003. The defendant company denied receiving such confirmation order and held that the prices it had agreed on where those in the quotation.

The defendant company claimed that

1) the plaintiff company had quoted the prices of the merchandise which included “shutters and louvers including Maltese fittings” which had to be installed and fixed by a certain date agreed upon by the parties;

2) It had accepted the merchandise on the basis of the quoted prices;

3) It had demanded a refund for the cancellation of ordered merchandise that was not fitted by the agreed date;

4) The plaintiff company had demanded a higher price than that quoted previously since it had requested that the “shutters and louvers including Maltese fittings” be paid separately;

5) From the quote, it was clear that the established price included everything.

It therefore resulted that the defendant company had treated the quotation document as the contract binding the parties and upon which it paid the deposit. The plaintiff company claimed that the deposits were in fact paid on the basis of the confirmation order.

The Civil Court however found it hard to believe that the plaintiff company started works without receiving a deposit.

The Court also held that the plaintiff company did not define clearly what the disputed sum represented. The Court of First Instance therefore denied the plaintiff company’s claims and ruled in favour of the defendant company.

The plaintiff company appeal on the grounds that the First Hall, Civil Court was mistaken in its decision. The plaintiff company insisted that the legal relationship between itself and the defendant company was regulated by the Confirmation Order of 1 September 2003 and not the quotation of 27 February, 2003. This was the issue that had to be determined by this Court of Appeal.

The Court of Appeal made reference to a series of judgements relevant to this issue including Emmanuel Grech vs Giuseppe Borg et nomine (1931) and Accountant General vs Carmelo Penza nomine (2003). In the latter judgement, the Court held that a legal relationship is established upon an offer and acceptance. The acceptance of an offer is a manifestation of the desire to accede to such offer thereby concluding an agreement between parties.

The Court of Appeal pointed out that both the offer and the acceptance must be precise, determinate and complete. Therefore the offer must constitute a proposal to contract and be a clear intention to bind oneself while the acceptance must be an express, clear declaration by the other party to agree to such relationship being formed with the proposer.

The agreement constituted by the offer and acceptance must be perfect both in form as well as in substance in that the acceptance must conform with the relevant offer.

The Court of Appeal made the following observations:

1) The quotation included a phrase stating “confirm your order by signing here”, however, this quotation had remained unsigned by the defendant company’s legal representative;

2) Between the issue of the quotation and the confirmation order, according to the plaintiff company’s managing director, a series of discussions and agreements as to the execution of works had taken place;

3) The defendant company had cancelled certain orders allegedly since they had not been installed within the agreed time;

4) The parties disagreed as to whether the works according to the conformation order had started before or after the issue of such order. The plaintiff company held that it was declared that before the works began, the final order had to be finalised and signed;

5) There were works done by the plaintiff company for the defendant company which were not contemplated neither by the quotation nor by the confirmation order. According to a witness who was the main contractor, it was probably such work which was done before the issue of the confirmation order which was work connected to the wooden flooring and not work done in execution of the confirmation order or quotation.

On the basis of the above, the Court of Appeal recognised that between the drawing up of the quotation providing an estimate dated 27 February 2003 and the issue of the confirmation contract dated 1 September 2003, there were substantial changes made to the order which rendered the contract that could have been binding by virtue of the quotation, imperfect. This was also due to the acceptance of the defendant company to the offer of the plaintiff company, not being clear and unequivocal and in conformity with such offer.

The Court of Appeal concluded by quoting an Italian 1985 judgement wherein it was held a contract is perfect and concluded upon the acceptance of the offer and the offeror being aware of such acceptance. If the party accepting so accepts with modification in that the acceptance is not in conformity with the offer, this acceptance is tantamount to a new offer to the party who originally offered and the contract will be final and perfect upon the other party being informed of acceptance to such modified offer.

On the basis of the above, the Court upheld the appeal and revoked the judgement of the First Hall Civil Court and ordered the defendant company to pay the plaintiff company the disputed sum with interest and to pay the legal expenses.