Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd

98 CLR 93

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(Judgment by: WILLIAMS J)

Between: TALLERMAN & CO PTY LTD
And: NATHAN'S MERCHANDISE (VICTORIA) PTY LTD

Court:

Judges: Dixon CJ

Williams JFullagar J
Kitto J
Taylor J

Subject References:
Contract
Subsequent agreement
Earlier contract
Abrogation
Contract made outside State
Implied rescission
Intention

Judgment date: 18 February 1957

MELBOURNE

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Judgment by:
WILLIAMS J

This is an appeal by the plaintiff in an action brought in the Supreme Court of New South Wales at common law to recover from the defendant the sum of PD8,800 as the purchase price of 1,600,000 Hungarian bullets or alternatively to recover the same sum as damages for breach of contract to take delivery of these goods and pay for them. Clancy J. who tried the action without a jury gave a verdict for the plaintiff for PD8,800. There were three counts in the declaration the first, the common money counts, to recover the price of the goods and the second and third counts to recover damages for breach of contract, the breach alleged in the second count being refusal to take delivery of or pay for the goods and in the third count repudiation of the contract.

It does not appear in respect of which of these counts his Honour gave his verdict. In his reasons for judgment he did not discuss whether there was any evidence of the damage the plaintiff had suffered from the breaches alleged in the second and third counts so that he may have awarded the sum of PD8,800 under the first count as the purchase price of the goods. But this is not necessarily so because the amount that should be awarded as damages may be the same, the only evidence of damage at the date of breach, that is 30th September 1952, being the evidence tendered on behalf of the plaintiff that the bullets were then unsaleable. From that verdict the defendant appealed to the Full Supreme Court consisting of Roper C.J. in Eq., Ferguson and Manning JJ., which court unanimously allowed the appeal, and ordered that the verdict for the plaintiff should be set aside and a verdict entered for the defendant.

From that order of the Full Supreme Court the plaintiff has appealed to this Court. I shall not refer to the oral evidence or correspondence in any detail because this has already been done for me by other members of this Court. It is sufficient to say that the origin of the dispute was a dispute that arose early in 1952 regarding the rights and obligations of the parties under three orders dated respectively 20th April 1951, 14th May 1951 and 2nd August 1951 given by the defendant, a company incorporated in Victoria, with its headquarters and store in Melbourne, to the plaintiff, a company incorporated in New South Wales with its headquarters in Sydney but with a branch in Melbourne. Each of these orders was for 1,000,000 Hungarian bullets at 110s. per thousand, delivery to be into defendant's store, the date of delivery to be "about earliest", and payment to be "net seven days or cash on delivery at seller's option".

In the action the plaintiff sought to prove that in February 1952, 2,170,000 bullets had still be to be delivered under these orders. Be that as it may, it is clear that in that month the plaintiff forwarded 1,800,000 bullets, that is 180 cases, by rail to Melbourne consigned to the defendant, that these cases were picked up by the defendant's carrier and taken to its store, but that after a short delay the defendant refused to accept them and caused them to be consigned back to the plaintiff to Darling Harbour Sydney by rail. On 3rd March 1952, the plaintiff's solicitors wrote to the defendant requiring it to accept the bullets and stating that, failing a satisfactory solution, they would have no alternative but to take the necessary steps to enforce their rights in the usual way. This threat of litigation was followed by correspondence mostly between the solicitors for the plaintiff and the solicitors for the defendant in which the defendant at first asserted that, despite the words in the orders "delivery about earliest", it had been agreed that deliveries would be made as and when the defendant required bullets to fulfil orders received by it from its customers.

In a letter of 21st March 1952 the defendant stated that it intended to carry out this agreement for delivery but that it was prepared without prejudice to its legal rights to depart therefrom to the extent that it would undertake that delivery instructions covering the balance of bullets would be given so that the final delivery would be made not later than 30th September next. After some intermediate correspondence without prejudice in which the defendant refused a counter-offer but nevertheless repeated this offer the plaintiff's solicitors in a letter to the defendant's solicitors dated 4th June 1952 posted in Sydney headed "without prejudice" stated that they had now been instructed to accept the defendant's offer to the effect that delivery of the balance of "this order" for bullets would be accepted not later than 30th September next. Between the offer of 21st March and this acceptance 200,000 further bullets had been delivered by the plaintiff to the defendant at its request so that the balance of the 1,800,000 bullets of which the defendant had refused to take delivery had been reduced to 1,600,000 bullets.

In a letter of 8th July 1952 to the plaintiff the defendant stated that since their offer of three months ago the situation had deteriorated and that it was holding substantial stocks and sales were slow. It raised the new assertion that the number of bullets it had contracted to purchase still undelivered was not 1,800,000 (then reduced to 1,600,000) as the plaintiff claimed but 800,000 (then reduced to 600,000) because the order of 2nd August 1951 had never been accepted by the plaintiff. The letter ended: "The present position is that we do not anticipate being able to take delivery of the balance of 600,000 bullets on the 30th September, but will do so at the earliest opportunity." This attempt on the part of the defendant to repudiate its offer of 21st March 1952 which the plaintiff had accepted on 4th June 1952 to give instructions for the delivery of the balance of the bullets on or before 30th September 1952 and to reduce the number of bullets of which it was obliged to take delivery to 600,000 bullets was naturally resented by the plaintiff which denied that it had not accepted the offer of 2nd August 1951. The defendant failed to give delivery instructions for any further bullets on or before 30th September 1952 and no further bullets were delivered either on or after that date.

After some further negotiations which proved fruitless, the plaintiff in December 1952 commenced the present action. The writ was served on the defendant in Victoria under the Service and Execution of Process Act 1901-1950. The defendant entered a conditional appearance and moved to set aside the writ on the ground that the causes of action sued upon arose in Victoria and not in New South Wales. This application was dismissed by consent after it had been agreed between the parties that the plaintiff would confine its action to an action to enforce a contract made in Sydney arising from the correspondence between the parties and their respective solicitors. To give effect to this agreement the endorsement on the writ was amended so that it read: "The Plaintiff claims the sum of Eight thousand eight hundred pounds (PD8,800 0s. 0d.) in respect of a contract made between the Plaintiff and the Defendant whereby the Plaintiff undertook to supply and the Defendant undertook to accept and pay for inter alia 1,600,000 bullets at the price of PD5 10s. 0d. per thousand. Alternatively the Plaintiff claims from the Defendant damages for breach of the said contract made between the Plaintiff and the Defendant for delivery to the Defendant by the Plaintiff of the said bullets of which the Defendant has either failed to take delivery or alternatively failed to pay for". In correspondence between the solicitors for the plaintiff and the solicitors for the defendant at the time of the service of the declaration the solicitors for the plaintiff informed the solicitors for the defendant that the contract sued upon in all three counts was the contract arising from the correspondence between the respective solicitors and parties subsequent to the initial contract referred to in the third count in the declaration. This count is in the following words: "And for a third count the plaintiff as aforesaid sues the Defendant as aforesaid for that prior to the making of the promises hereinafter set forth there was a certain contract binding between the Plaintiff and the Defendant relating to the sale of certain bullets by the Plaintiff to the Defendant and prior to and at the time of the making of the said promise a dispute existed between the Plaintiff and the Defendant relating to certain terms of the said contract and thereupon in consideration that the Plaintiff would waive the performance of certain matters claimed by it in the said dispute and would settle the said dispute on certain terms then agreed upon between the parties the Defendant promised the Plaintiff that it would buy and take delivery from the Plaintiff of the balance of the said bullets namely One million six hundred thousand (1,600,000) and pay to the Plaintiff for the same the sum of eight thousand eight hundred pounds (PD8,800) not later than the thirtieth day of September One thousand nine hundred and fifty-two and all things happened all times elapsed and all conditions were fulfilled entitling the Plaintiff to a performance by the Defendant of its said promise and yet the Defendant did not and refused to take delivery of the said balance of the said bullets or to pay to the Plaintiff the sum of Eight thousand eight hundred pounds (PD8,800) not later than the thirtieth day of September One thousand nine hundred and fifty-two and has repudiated the said promise and refused to be bound by the same whereby the Plaintiff lost the benefit of the Defendant's said promise." The initial question that arises is therefore whether such a contract was made and that depends basically upon the effect of the acceptance by the plaintiff on 4th June of the defendant's offer of 21st March. When the solicitors for the defendant in the letter of 21st March stated that the defendant without prejudice to its legal rights was prepared to depart therefrom to the extent mentioned it must have meant that the offer was to be without prejudice to the defendant's legal rights if the offer was not accepted. Where an offer is made without prejudice but is subsequently accepted "a complete contract is established, and the letter, although written without prejudice, operates to alter the old state of things and to establish a new one. A contract is constituted in respect of which relief by way of damages or specific performance would be given": Walker v Wilsher, ^[F27] at p. 337: Holdsworth v Dimsdale; ^[F28] In re River Steamer Co ; Mitchell's Claim, ^[F29] at p. 832. When the solicitors for the plaintiff said that they accepted the offer in a letter headed "without prejudice" they may have inserted the words "without prejudice" because the offer had been made by the defendant "without prejudice" but in the letter of 4th June these words could have no meaning because when an offer is accepted the contract is complete and the acceptance of the offer could not be made without prejudice to its legal effect. Then what was the legal effect of the offer and acceptance? Clancy J. was of opinion that it had the effect of bringing into existence a new contract entered into by way of compromise made in Sydney, where the letter of acceptance was posted, for the purchase by the defendant of the 180 cases of bullets as to which the dispute arose incorporating the provisions of the orders relating to price and delivery into store and payment upon delivery but including the new term as extending the time for delivery of the bullets until 30th September 1952. But their Honours in the Full Supreme Court in their unanimous reasons for judgment reached a contrary opinion. They said: "It was not disputed that the original contract for the sale of the bullets was made in Melbourne; nor was it disputed that at a later date the parties entered into an arrangement in Sydney. Assuming, but without so deciding, that this arrangement was a binding contract, the right of the respondent to succeed in the action depended upon whether the second contract amounted to a rescission of the first contract and the substitution for it of the new contract (the old conditions being imported into it so far as applicable) or whether the second contract merely related to the mode or manner of performance of the first contract and left the first contract in full force and effect". ^[F30] Later in their reasons their Honours said that in their opinion the second of these alternatives was correct. They could find no intention that the parties intended by the later contract, assuming the offer and acceptance created contractual relations, to rescind the earlier contract and to substitute a second contract made in Sydney for it. They said: "It is sufficient for us to say that in our view the new contract preserved the rights of the parties under the original contract and merely agreed that a mode of performance would be accepted by both parties in lieu of that provided for under the original contract but without prejudice to their rights thereunder. The use of the expression `without prejudice' in the context in which it appears is cogent evidence of the fact that the contractual liability of the parties under the original contract was intended to be preserved. However, there are many other indications that such is the case which are apparent when regard is had to the precise expressions used in the material letters and the general tenor of the whole of the correspondence" ^[F31] . I find it difficult with all respect to understand exactly what their Honours meant in this passage. In the earlier passage cited they had assumed without deciding it that the effect of the offer and acceptance created contractual relations between the parties. In this later passage they seem to suggest that no such contractual relations were created. If the existing contract or contracts between the parties provided for delivery at one time and the parties agreed to change that to another time the existing obligations of the plaintiff to make and of the defendant to accept delivery and the existing obligation of the defendant to pay for the goods must all have been changed. The existing contractual relations of the plaintiff and the defendant must have been varied to that extent. It would appear that their Honours must have considered that in the letter of 21st March the defendant was making the business suggestion that as a way out of the difficulty it would undertake that orders for the delivery of the balance of the bullets would be given on or before 30th September if the plaintiff would concede to the defendant this further time to take delivery of and pay for the goods. In other words it was asking the plaintiff if it would forbear from suing to enforce what it asserted but the defendant denied to be its rights under the existing contract or contracts in the meantime and would accept this method of performance as a waiver of its rights under that contract or contracts. If this was all that the offer and acceptance meant there would, of course, be no variation of the existing contractual rights at all. No fresh contractual rights would be created. It would simply be a case of voluntary waiting and not an alteration of the contract: Hickman v Haynes, ^[F32] at p. 606; Plevins v Downing, ^[F33] at pp. 225, 226; Besseler Waechter Glover & Co v South Derwent Coal Co Ltd, ^[F34] at p. 416. But in my opinion the letter of 21st March cannot be read as a request to the plaintiff voluntarily to concede the defendant further time to take delivery of the bullets and as a consequence further time to pay for them. The defendant was not asking the plaintiff to make a concession. It was insisting that it was not bound to take delivery of any bullets until it required them to fulfil orders from its customers. It was not requesting the plaintiff to give it time to perform its admitted obligations in a different manner to that provided for in the existing contract or contracts. It was not requesting the plaintiff voluntarily to forbear from enforcing its rights within the principle of such cases as: Ogle v Vane (Earl); ^[F35] Hickman v Haynes; ^[F36] Levey & Co v Goldberg. ^[F37] It was asserting that under the existing contractual rights the plaintiff could not force it to take delivery of any bullets but that it was prepared to offer, without prejudice to its existing legal rights if the offer was not accepted, to make a new and altered agreement which should prove satisfactory to both parties because it would give the defendant a reasonable time within which to dispose of the 1,800,000 bullets to its customers and place itself in funds to pay the plaintiff for them, and the plaintiff would be able to dispose of the bullets and recover the purchase price in a reasonable time. In other words the defendant was offering to compromise the dispute in the manner suggested in the offer. In Callisher v Bischoffsheim, ^[F38] a case that is frequently cited, it was held that the compromise of a disputed claim made bona fide is a good consideration for a promise, even although it ultimately appears that the claim was wholly unfounded. Cockburn C.J. said: "The authorities clearly establish that if an agreement is made to compromise a disputed claim, forbearance to sue in respect of that claim is a good consideration; and whether proceedings to enforce the disputed claim have or have not been instituted makes no difference". ^[F39]

In the present case the plaintiff was claiming that under the existing contract or contracts the defendant was bound to take delivery of the 1,800,000 bullets it had railed to Melbourne and that the defendant either had taken delivery or had wrongly refused to take delivery of these bullets, while the defendant was claiming that it was not bound to take delivery of them and had not done so. In other words, the plaintiff was claiming that under the existing contractual relations the defendant was in default and the defendant was claiming that it was not. The offer that the defendant made and the plaintiff accepted was an offer to compromise this dispute by treating the 1,800,000 bullets as though they had not been delivered to the defendant, the defendant in that event agreeing to take delivery of the 1,800,000 bullets on or before 30th September 1952.

After the defendant's offer had been accepted by the plaintiff, there was a binding contract that the defendant would give orders for the delivery of the balance of the bullets on or before 30th September 1952 and that the plaintiff would deliver the bullets pursuant to such orders.

There can be no doubt as to what was meant by the balance of bullets in the letter of 21st March. It must have meant the 1,800,000 bullets (subsequently reduced to 1,600,000) that had been railed to Melbourne and back to Sydney. These were the bullets in dispute. They were the balance of the bullets undelivered under more than one order but by the time the letter of 21st March was written all these orders were referred to as one contract, as well they might be because each order was identical in all its terms except as to date. The major item in the dispute that existed between the parties was as to whether the defendant should have taken delivery of these bullets when they were railed to Melbourne and thereby have become liable to pay for them. The minor item was whether the plaintiff or the defendant should pay the railage and storage charges which had been incidentally incurred. In these circumstances the offer and the acceptance can only be regarded as a settlement by way of compromise of the major item, the settlement of the minor item being by agreement left in abeyance. It is immaterial to my mind whether the compromise should be regarded as a completely new contract made in New South Wales whereby impliedly the existing contract or contracts were completely rescinded and a new contract substituted for them, the new contract incorporating the terms of the orders as to price, delivery into store and time for payment and including the new term providing for delivery on or before 30th September 1952 required to give effect to the offer of 21st March and its acceptance of 4th June, or merely as a variation of the existing contract or contracts by substituting a new term as to delivery for the old term. In the former event there could be no question that the whole of the new contract was made in New South Wales. It would only be made when the letter of 4th June was posted in Sydney. But assuming that the offer and acceptance amounted to no more than a variation of the existing contract or contracts there would still be a new contract and this contract also would only be made when the letter of 4th June was posted in Sydney. There is in the case of contracts required to be evidenced by writing under the Statute of Frauds a distinction between the effect of a subsequent parol agreement which is intended to rescind an existing contract evidenced by writing whether the parol agreement can be enforced or not and a parol agreement which is intended to vary the existing contract but not to rescind it. In the first case the parol agreement is effective to rescind the existing contract although it cannot be sued upon, whereas in the second case the parol agreement is ineffective to rescind the existing contract or even to vary it because the variation is not evidenced by writing and the existing contract can be sued upon as though the parol agreement had never been made: Morris v Baron & Co; ^[F40] British & Beningtons Ltd v North Western Cachar Tea Co Ltd. ^[F41] The question in each of these cases was whether the old contract or contracts was or were still on foot. It was held in Morris v Baron & Co ^[F42] that the old contract was not because the parties had intended to rescind it by the unenforceable parol agreement whether that agreement was itself enforceable or not. It was held in British & Beningtons Ltd v North Western Cachar Tea Co Ltd ^[F43] that the old contracts were still on foot because in the subsequent parol agreement there was no intention to rescind them. The only intention was to vary them but this variation could not be proved in the absence of writing so that the old contracts, which were all that could be proved, could still be sued upon as though the variation had never been attempted. In British & Beningtons Ltd v North Western Cachar Tea Co Ltd ^[F44] Lord Sumner said: "It was, however, argued before your Lordships that, even so, the old contracts were discharged because a varied contract is not the old contract, and as you cannot have a new and varied contract and an old and unvaried contract regulating the same thing at the same time, the old contract, like other old things, must be disregarded. As a matter of formal logic, this may possibly be so, but such was not the view taken by this House in Morris v Baron & Co, ^[F45] since, if their Lordships had thought that any variation whatever would make a new contract and discharge the old one, they would have said so expressly and would not have dealt with the extent and completeness of the changes, as they did. The variation may be a new contract, so as to make writing, duly signed, indispensable to its admissibility, for this is a matter of form and of the words of the statute, but the discharge of the old contract must depend on intention, tested in the manner settled in Morris v Baron & Co" ^{[F46] [F47]} .

In Morris v Baron & Co ^[F48] and British & Beningtons Ltd v North Western Cachar Tea Co Ltd ^[F49] their Lordships were dealing with the somewhat special case of an original contract required to be evidenced by writing by the Statute of Frauds that was enforceable because it complied with the statute and of a subsequent parol contract varying that contract which was a perfectly good contract but was not enforceable because the statute was not complied with. In deciding whether or not the effect of the subsequent contract was impliedly to rescind the original contract so that the enforceable legal relations between the parties were completely dissolved, it was recognized that one important consideration to be taken into account was that the parties would probably not intend such a dissolution and would only intend the subsequent contract to have this effect if it was itself enforceable or in other words if it was itself evidenced by writing as required by the statute. If it was itself so evidenced then it would not be difficult to imply that the parties did intend the original contract to be rescinded and to be completely replaced by a new contract, the subsequent contract containing such of the terms of the old contract as had not been affected by the variation and the new terms introduced by that variation if any. Two passages in the judgment of Willes J. in Noble v Ward ^[F50] illustrate the point: "Mr. Holker has contended, that though the contract of the 27th of September cannot be looked on as a valid contract in the way intended by the parties, yet since, if valid, it would have had the effect of rescinding the contract of the 18th, and since the parties might have entered into a mere verbal contract to rescind simpliciter, we are to say that what would have resulted if the contract had been valid, will take place though the contract is void; or, in other words, that the transaction will have the effect which, had it been valid, the parties would have intended, though without expressing it, although it cannot operate as they intended and expressed .... It is quite in accordance with the cases of Doe d. Egremont v Courtenay ^[F51] and Doe d. Biddulph v Poole, ^[F52] overruling the previous decision of Doe d. Egremont v Forwood; ^[F53] see ^[F54] to hold that, where parties enter into a contract which would have the effect of rescinding a previous one, but which cannot operate according to their intention, the new contract shall not operate to affect the previously existing rights. This is good sense and sound reasoning, on which a jury might at least hold that there was no such intention". ^[F55] The second of these passages was cited by Lord Dunedin in Morris v Baron & Co, ^[F56] at p. 27. His Lordship said: "The difference between variation and rescission is a real one, and is tested, to my thinking, by this: In the first case there are no such executory clauses in the second arrangement as would enable you to sue upon that alone if the first did not exist; in the second you could sue on the second arrangement alone, and the first contract is got rid of either by express words to that effect, or because, the second dealing with the same subject-matter as the first but in a different way, it is impossible that the two should be both performed. When I say you could sue on the second alone, that does not exclude cases where the first is used for mere reference, in the same way as you may fix a price by a price list, but where the contractual force is to be found in the second by itself". ^[F57]

In the present case the offer of 21st March and its acceptance on 4th June are in writing so that both the original contract or contracts and this subsequent variation are evidenced by writing and equally enforceable. No implication should therefore arise that the original contract or contracts were only intended to be rescinded if an enforceable contract was substituted for them. If it is necessary to decide whether the acceptance by the plaintiff of the offer of 21st March had the effect of rescinding the existing contract or contracts and substituting an entirely new contract for them, I am prepared to decide that it had this effect. The offer if accepted was intended to resolve the whole of the major dispute between the parties. The plaintiff was to give up its right to claim that the 1,800,000 bullets had been duly delivered to the defendant in which case it could have sued the defendant for the purchase price if it was not paid. The bullets were to be considered as though they had not been delivered at all. Executory rights and obligations were created with respect to their delivery. The plaintiff had to be ready and willing to deliver the bullets in whatever quantities they were ordered from time to time until 30th September. The defendant had the option of taking delivery of the bullets in such quantities and at such times up to that date as it thought fit. Prior to the offer and acceptance, subject to the defendant's claim that there was an overriding agreement that it need not take delivery of the bullets until it required them to supply its customers, an agreement which was probably unenforceable for want of writing under s. 9 of the Goods Act 1928 (Vict.), the plaintiff had the right to deliver the goods "about earliest" which must have meant as soon as it was reasonably practicable and the defendant was bound to accept them and pay for them whether it had managed to resell them or not, and on the other hand the defendant could have refused to accept delivery if the plaintiff had not been ready and willing to deliver the bullets at this time. The rights and obligations of the plaintiff and the defendant with respect to the 1,800,000 bullets arose under three contracts and it was intended to combine these rights and obligations in one contract and to provide for the delivery of the whole of the bullets on or before the same date irrespective of the due dates of delivery under the existing contracts. The plaintiff's right to recover the price of the goods depended upon their delivery. Until then they were at its risk and the alteration of the time for delivery was a very material alteration in the existing contractual rights. An intention to rescind the existing contract or contracts and to substitute for them a single new contract incorporating such parts of the old contracts as the parties did not choose to alter is in these circumstances not difficult to imply and it is even less difficult when the new term is like the old terms evidenced by writing so that the rescission of the old contract or contracts will not leave the altered rights and obligations of the parties unenforceable for want of writing. A subsequent executory agreement substituting a new time or mode for the delivery of goods for that contained in an existing contract was held in two of the older cases Stead v Dawber ^[F58] and Marshall v Lynn ^[F59] impliedly to have rescinded the existing contract even where the substituted agreement could not be enforced for want of writing. These cases were referred to by Blackburn J. in Ogle v Earl Vane ^[F60] when his Lordship was discussing the distinction between a seller saying to a purchaser, who finds it inconvenient to take delivery under a contract, as a concession: "I'll wait, but I do not bind myself to wait" and a seller promising a purchaser for a good consideration to give time. His Lordship said: "The question in such cases being, `Have you ever bound yourself?' In Stead v Dawber, <sup>[F61]</sup> at p. 25], the court evidently thought this distinction important. That was an action for nondelivery of a cargo of bones, which were by the written contract to be shipped on the 20th to the 22nd of May, and to be paid for by an acceptance at three months from the delivery; and the 22nd happening to be Sunday, in a conversation between the defendant and the plaintiff's agent, at the suggestion of the defendant, the Monday or Tuesday following was substituted; and the agent who proved this, also stated that the acceptance would also be proportionally enlarged. The court say the main question was whether the enlargement of this time was an alteration of the contract, or only a dispensation with its performance at the time. And after noticing the cases of Cuff v Penn <sup>[F62]</sup> and Goss v Lord Nugent, <sup>[F63]</sup> as apparently contradictory, the court proceed to say: `But it seems to us that we are mainly called upon to decide a question of fact; what, namely, was the intention of the parties in the arrangement come to for substituting the 24th for the 22nd as the day of delivery; did they intend to substitute a new contract for the old one; the same in all other respects, except those of the day of delivery and date of the accepted bill, with the old one?' And the court came to the conclusion-and I do not think they could well have come to any other-that though the variation was so slight, it did amount to a complete, new, and substituted contract for a delivery on the 24th instead of the 22nd. In Marshall v Lynn, ^[F64] there was more of a change in the contract. In that case, the defendant agreed in writing to buy certain potatoes of the plaintiff, to be shipped on board a certain vessel on her next arrival at Wisbeach; but on her next arrival, the defendant asked the plaintiff to allow the vessel to go an intermediate voyage; and the plaintiff agreed to this, which was clearly substituting one contract for another". ^[F65] Perhaps I may add that in Marshall v Lynn ^[F66] the exact words of Parke B. were: "Now, in this case, by the original contract, the defendant was to accept the goods, provided they were sent by the first ship: the parties afterwards agreed by parol that the defendant would accept the goods if they were sent by the second ship, on a subsequent voyage: that appears to me to be a different contract from what is stated before. Such was my strong impression, independently of any decision on the point: but the case of Stead v Dawber, ^[F67] at p. 25] is precisely in point with the present, and on looking at the judgment, it does not appear to proceed altogether upon the time being an essential part of the contract, but on the ground that the contract itself, whatever be its terms, if it be such as the law recognizes as a contract, cannot be varied by parol. It has been said that the adoption of this rule will produce a great deal of inconvenience; I am not, however, aware of much practical inconvenience that can result from it, and none that furnishes any reason for altering the rule of law in respect of these mercantile contracts. They frequently vary in terms, and admit of some latitude of construction, but the expressions used in them generally indicate the intention of the parties sufficiently well; there is a sort of mercantile short-hand, made up of few and short expressions, which generally expresses the full meaning and intention of the parties. On the whole, it appears to me that no reasonable distinction can be made between this case and that of Goss v Lord Nugent. ^[F68] This is a new contract, incorporating new terms". ^[F69]

But if I am wrong, and the proper implication is that the old contracts were not impliedly rescinded at all or rescinded only so far as was necessary to give effect to the new term, the result would in my opinion be the same. There would be the two sets of contracts on foot, the old contracts and the new contract consisting of some of the terms of the old contracts and a new term. The old contracts and those contracts as varied cannot be the same contract. They must be different contracts. The new contract must override the old contracts so far as their terms clash and the old contracts even if they are not rescinded rendered inoperative to this extent. An existing contract that is varied as to one of its terms must be in law a new contract. It only becomes a contract when the variation is made, in the present case when the offer of 21st March was accepted on 4th June. It is this new contract that the plaintiff is seeking to enforce and not the old contracts even if, contrary to my own opinion, they have not been rescinded. The question whether the plaintiff, without infringing the agreement as to jurisdiction between the parties, is entitled to sue in the Supreme Court of New South Wales really depends upon whether the effect of the acceptance on 4th June 1952 of the offer of 21st March 1952 was to create contractual relations between the parties, and in my opinion there is no doubt that this was their effect. It appears to me, as it does to Kitto J., that the real contract between the parties is that alleged in the third count and that this is a contract made in New South Wales. The plaintiff is entitled to succeed on this count provided there is evidence of the damage it has suffered from its breach. The evidence of this damage is slight. The price of 1,600,000 bullets was PD8,800 but the plaintiff, who retained the bullets, would not normally be entitled to receive this amount as damages for breach of the contract. But there is evidence that the bullets were at the date of the breach, that is on 30th September 1952, unsaleable and valueless. Where there is no available market for the goods at the date of the breach, and there was none in the present case, the measure of damages is that prescribed by s. 52 (2) of the Sale of Goods Act 1923 (N.S.W.), that is the estimated loss directly and naturally resulting in the ordinary course of events from the buyer's breach of contract. There is evidence that on 30th September 1952 the sales tax on bullets which had been increased about a year before was impeding their sales, that the dire effect of myxamatosis on the rabbit population had reduced the demand for bullets, that there were plenty of locally made bullets on the market which were preferred to the imported variety and that there was a serious financial recession which had caused the falling off of sales. All these circumstances tended to make the sale of imported bullets in any quantities impossible. The defendant gave no evidence to contradict this evidence and it seems to be clear that the reason why the defendant did not want to take delivery of any further bullets from the plaintiff was that it could not resell them and this circumstance supports the plaintiff's evidence that no demand for imported bullets existed in September 1952. But no serious attention seems to have been directed at the trial to the proper quantum of damages for breach of contract and I agree with Kitto J. that it would be advisable to order a new trial on this question.