Morris v Baron and Co
[1918] A.C. 1(Decision by: Lord Atkinson)
Between: Morris - Appellant
And: Baron and Company - Respondent
Judges:
Lord Finlay LC
Viscount Haldane
Lord Dunedin
Lord AtkinsonLord Parmoor
Subject References:
SALE OF GOODS
Contract required to be evidenced in Writing
Rescission
Variation
Accord and Satisfaction
Implied Rescission by unenforceable Parol Contract
Legislative References:
Sale of Goods Act, 1893 (56 & 57 Vict. c. 71) - s. 4
Judgment date: 19 October 1917
Decision by:
Lord Atkinson
My Lords, I concur.
The facts of this case have been already stated, and it is unnecessary to repeat them, or the criticism, in which I concur, on the authorities cited. It is well established, and was not questioned in argument on this appeal, that the parties to an agreement reduced into writing may rescind that agreement by a parol agreement subsequently entered into by them with that specific intention. There can be no doubt that it is quite competent to the parties to a written agreement to say by parol, "Let us put an end to this agreement," and if that be so, it is, I think, equally competent for them to say by parol, "Let us put an end to this agreement, start afresh, and make an agreement to a particular effect in substitution for the first." In my view this would be so though it might happen that, owing to some statutory provision such as that contained in the 4th section of the Statute of Frauds, the parol agreement could not, by reason of its not being evidenced in a particular way, be enforced at law, provided the intention of the parties to rescind the first be clear. And this, too, whether the second agreement was entered into before or after a breach of the first.
If the parol agreement were absolutely void it might possibly be otherwise; but owing to the terms of s. 4 of the Sale of Goods Act, 1893, this latter question does not arise in this case, and it is not, in my view, necessary to decide it. That section merely enacts that a contract for the sale of goods of the value of 10l. or upwards shall not be enforceable by action unless one of several things occurs, namely, unless the buyer shall accept part of the goods so sold and actually receive the same, or give something in earnest to bind the contract, or in part payment of it, or unless some note or memorandum in writing of the contract be made and signed by the party to be charged or his agent in that behalf. The very fact that it can be enforced by action if any one of these several things be done goes to show that the contract itself is, under this section of the statute, a valid contract, whatever contracts of the like nature may have been under the 17th section of the Statute of Frauds. In Maddison v. Alderson Lord Blackburn said:
"I think it is now finally settled that the true construction of the Statute of Frauds, both the 4th and the 17th sections, is not to render the contracts within them void, still less illegal, but is to render the kind of evidence required indispensable when it is sought to enforce the contract."
I do not find that it was ever seriously questioned that this was the true state of the law as to the 4th section of the Statute of Frauds. The doubt was as to whether the same rule applied to the 17th section, or whether contracts within it not in writing where none of the particular matters specified had been done were not absolutely void. There is nothing in all this inconsistent with the well established rule that a contract which the law requires to be evidenced by writing cannot be varied by parol: Goss v. Lord Nugent; Stead v. Dawber; Noble v. Ward; Sanderson v. Graves. The foundation, I think, on which that rule rests is that after the agreed variation the contract of the parties is not the original contract which had been reduced into writing, but that contract as varied, that of this latter in its entirety there is no written evidence, and it therefore cannot in its entirety be enforced.
There is a clear distinction, however, between cases such as these and cases like Ogle v. Earl Vane, where one party at the request of and for the convenience of the other forbears to perform the contract in some particular respect strictly according to its letter. As, for instance, where one party, bound to deliver goods sold upon a certain day, at the request of and for the convenience of the other postpones delivery to a later day. In such a case the contract is not varied at all, but the mode and manner of its performance is, for the reasons mentioned, altered. Moreover, rescission of a contract, whether written or parol, need not be express. It may be implied, and it will be implied legitimately, where the parties have entered into a new contract entirely or to an extent going to the very root of the first inconsistent with it: Hunt v. South Eastern Ry. Co.; Thornhill v. Neats. I now turn to the new agreement entered into in the present case on April 20, 1915, and contrast its provisions with those of the original contract. For the purpose of this comparison I assume that the new agreement is correctly embodied in the letter of the respondents dated April 22, 1915, by which date I shall hereafter describe it.
Antecedent to that date 223 pieces of the serge purchased had been delivered, irregularly, no doubt, and occasionally behind time, but still delivered and accepted, the contract price of which amounted to 888l. 4s. The last delivery took place on March 6, 1915. In the months of December, 1914, and January, 1915, the respondents were pressing for more regular and speedy deliveries of the goods, and the appellant was pressing for the payment of the price of those delivered. In the respondents' letter of January 28, 1915, they assert the rights they claim to exercise. The important passage runs thus:
"Re your account which is due to-day, we beg to draw your attention to the fact that after all your repeated promises you are not delivering as you should, and we consider it perfectly right from our part to hold this money over until you fulfil your deliveries up to date."
The sum which the respondents then owed was, as appears from the appellant's statement of claim of March 19, 1915, 563l. 6s. 5d. Three deliveries of goods were made subsequently to the date of this letter, the contract price of which amounted to 324l. 10s. 7d. On March 19, 1915, the appellant instituted an action to recover this sum of 888l. 4s., the contract price of all the goods delivered and then unpaid for. The respondents on April 17, 1915, delivered their defence and counter-claim. They did not dispute the appellant's claim for 888l. 4s. On the contrary, they admit it subject to their counter-claim. In their counter claim they set forth the substance of their contract of September 24, 1914. They state that under it the price of the serge to be delivered was 1s. 5d. per yard, that 10 pieces of blue serge and 15 pieces of grey were to be delivered within four days of its date, 10 additional pieces of blue serge within seven days of its date, and the remainder of the 500 pieces at the rate of 40 to 50 pieces per week from the expiry of this period of seven days, and that payment for the pieces delivered was to be made one month after delivery, less 21/2 per cent. discount. They then aver that the appellant had delivered 223 of the 500 pieces, but failed to deliver 277 pieces, that the market price of the serge had risen to 2s. 2d. per yard, being 9d. per yard higher than the contract price, and they claimed to recover that difference on the 24,930 yards comprised in the undelivered pieces. Now it will, I think, be found that every important provision of this contract of September 24, 1914, is in conflict with the provisions of the new agreement of April 22, 1915, save and except the price of the serge.
First, the sum admitted to be due, 888l. 4s., is not to be paid at once, though the time for payment under the contract of September had long passed, but the respondents are to have three months extended credit for the payment of it. Secondly, the respondents are released from all obligations to take delivery of any portion of the undelivered 277 pieces. Thirdly, the appellant is released from his obligation to deliver the portion of those pieces, already manufactured, at the rate of 40 or 50 per week, or at any other specified rate. Fourthly, the goods already manufactured are to be kept for the respondents if they ask for them. No time is mentioned within which they must ask for them, if at all, and it is not very clear what this provision really means. It is certain, however, that it is inconsistent with the provision of the earlier agreement of September, and the respondents are given an option, to be exercised presumably within a reasonable time, to demand delivery of the residue of the goods then unmanufactured, giving the time necessary for their manufacture. In addition the legal proceedings are to be withdrawn, all claim for damages to be abandoned. A sum of 30l. is to be paid to the respondents, not as damages properly so called, but to meet the expenses incurred through this not fulfilling of the orders, i.e., presumably the respondents' order or demands for delivery; and, lastly, the appellant and respondents are respectively to bear their own costs.
It is quite impossible, in my opinion, to reconcile the agreement of April 22, 1915, with that of September 24 previous. With the exception already pointed out as to price, they are in conflict in all those material and fundamental provisions which go to the root of each of them. It is, I think, impossible to arrive at any rational conclusion as to the meaning, aim, and effect of this new arrangement other than this, that it was the clear intention of both the appellant and the respondents to put aside, in their future dealings, the original agreement, and to treat it thenceforth as abandoned or non-existent.
The contract of April 22, 1915, is not an invalid contract, since it could be enforced in its entirety against the respondents, who have in their signed letter of that date provided a memorandum of its contents sufficient, as against them, to satisfy the statute; but if so, it must rescind by implication the earlier contract over which it is to prevail and with which it is in conflict. The fact that the respondents, if they desired to enforce it in a Court of law against the appellant, would not have the written evidence necessary to prove it, cannot, in my view, prevent its operating as an implied rescission of the earlier agreement. Indeed, all the correspondence of the parties subsequent to its date so treats it. The earlier agreement is never referred to as regulating their respective rights and obligations. It seems to be treated as abrogated and abandoned.
The inclination of my opinion is that this new agreement is an agreement for the sale of goods within the meaning of the 4th section of the Sale of Goods Act, and is not of the nature of the agreement dealt with in Foster v. Dawber, Dobson v. Espie, and Williams v. Stern. For these reasons, apart from others, I think the decision of the Court of Appeal enabling the respondents to sue by counter-claim for the breach of the agreement of September 24, 1914, was erroneous and should be reversed. Bailhache J., as I understand his judgment, practically nonsuited the respondents on their own case in support of their counter-claim on the ground that they did not before the end of July, 1915, nor since, ever give a firm order for the delivery of the goods under the agreement of April 22, 1915; that, on the contrary, on July 28, 1915, although the period of their extended credit had elapsed, they wrote that they would pay the appellant's account if he delivered the balance of the blue pieces to complete the order stated in the letter of April 22, 1915. So that, taking that letter as a full embodiment of the terms of the new contract, the respondents were acting in violation of it and repudiating it, since they were bound to pay the sum of 888l. 4s. for the goods actually delivered to them and admitted by them to be due, whether the whole or any portion of the remaining 277 pieces were delivered or not. They adhered to the attitude thus taken up to the end. The Court of Appeal differed with the learned judge on this point. They held that the respondents by their letter of August 17, 1917, if not by their earlier letters, did clearly exercise the option reserved to them by the agreement of April 22, 1915. The first paragraph of that letter ran thus:-
"Gentlemen, - We are surprised you have not replied to our letter of the 28th July. As explained in that letter we shall be glad to pay your account on delivery of the balance of the pieces to complete the order."
The second thus:
"As you have not answered we must now ask you to deliver the balance of the blue pieces on or before the 21st September, 1915. Kindly let me know by return of post if you will do this."
Having regard to this latter paragraph I concur with the Court of Appeal. I think the letter amounted to a firm order, notwithstanding that it was accompanied by an illegal claim to refuse to pay the 888l. 4s. until the balance of the pieces had been delivered. The result, in my opinion, is that the respondents cannot support a counter-claim based either upon the earlier or upon the later agreement. Not on the former, because it has been rescinded, not upon the latter, because they cannot prove it in a Court of law by a note or memorandum in writing, signed by the party to be charged as defendant in that suit by counter-claim, namely, the present appellant. The respondents will, of course, have to pay the sum of 888l. 4s., the price of the goods they have received. The law as to the accord and satisfaction of a breach of an agreement was much discussed in argument.
There is no doubt that the general principle is that an accord without satisfaction has no legal effect, and that the original cause of action is not discharged as long as the satisfaction agreed upon remains executory. That was decided so long ago as 1611 in Peytoe's Case. If, however, it can be shown that what a creditor accepts in satisfaction is merely his debtor's promise and not the performance of that promise, the original cause of action is discharged from the date when the promise is made: Sibree v. Tripp; Hall v. Flockton; Evans v. Powis. In the view I take as to the rescission of the original contract, it is unnecessary for me to express an opinion as to whether the agreement of April 22, if it had not amounted to a rescission of the earlier one, would have come within the principle of these authorities; but questions were raised as to which no authority was cited, and which, now that the principles of equity prevail over those of common law in all Courts, may some day call for decision.
They are of some nicety. They are these. If in cases of the kind first above mentioned part of the satisfaction or the accord be given and accepted as such, but the whole has not been given, so that the new contract is not completely performed, can the person accepting the part performance sue upon the original cause of action without restoring or giving credit for what he has received to him who gave it, and if the part performance be of such a nature that it cannot be restored or given credit for, and the parties be put in the same position as they occupied when the original breach was committed, can the original cause of action be sued upon? And again, in cases of the second class, can the original cause of action be sued upon if the agreement accepted in accord and satisfaction be such that, though valid, it cannot be sued upon inasmuch as a memorandum of it has not been signed by the party to be charged, though it is not in itself an invalid contract? I abstain from expressing any opinion on any of these points in the desire to preserve my freedom of action, should they hereafter arise before me for decision.
The appeal should, I think, be allowed with costs here and below.