Morris v Baron & Co

Lorp Fintay L.C. My Lords, this action was brought
for the recovery of 8881. 4s., the price of goods which had been sold
and delivered by the plaintiff to the defendants. The right of the
plaintiff to recover this sum was not in dispute, but the defendant®
set up a counter-claim for damages for non-delivery of other goods
by the plaintiff to the defendants.

The case was tried by Bailhache J. without a jury. He gave
judgment for the plaintiff on the claim, and dismissed the counter-
claim on the ground that the defendants had not made a valid
exercise of their option under the contract to have the goods in
question delivered to them.

The Court of Appeal reversed the judgment of Bailhache J. on the
counter-claim, and entered judgment upon it for the defendants, the
damages to be assessed by a referee.

From that decision this appeal is brought to your Lordships'
House by the plaintiff in the action.

The appellant is a worsted manufacturer and the respondents are
merchants. On September 24, 1914, they entered into a contract
in writing for the sale by the appellant to the respondents of 500
pieces of cloth : 223 of these pieces were delivered. Disputes arose .
between the parties, the respondents complaining of delay in delivery
under the contract, and the appellant complaining of the respon-

(1) [1915] 3 K. B. 242. (3) (1805) 6 East, 307.
(2) (1867) L. Ri 2° Q.° By 2753" (4) (say Ly RAO oreo
(1868) L. R. 3 Q. B. 272. (5) (1810) 17 Ves. 356,

(6) [1904] 1 Ch. 634,

A. C. AND PRIVY COUNCIL,

dents' failure to pay for the goods which had been delivered, and
litigation ensued.

The first action was brought on March 19, 1915. In it the
plaintiff (the present appellant) claimed 888J. 4s., the price of the
_ goods delivered, while the defendants (the present respondents)
counterclaimed for damages in respect of the failure to deliver
277 pieces, the balance of the 500 pieces contracted to be sold.
On April 20, 1915 (three days after the delivery of the counter-
claim), the parties at an interview agreed to a settlement, and on
April 22 the respondents sent a letter to the appellant setting out
the terms of settlement. The appellant did not admit the correct-
ness of the statement of the terms in this letter, but Bailhache J.
for the purposes of his judgment assumed its correctness, and I
shall deal with the case on this basis, accepting the respon-
dents' statement of the terms of settlement. The letter is as
follows :—

"24 and 26, Brook Street, Bradford, April 22nd, 1915.

"Messrs. The Troydale Mill Co., Leeds.

"Dear Sirs,—As personally arranged between Mr. Morris and
Mr. Baron, we herewith confirm the terms agreed upon.

" Both to withdraw the legal proceedings and instruct the solicitors
accordingly, and each to pay his own costs, you to allow 301. (thirty
pounds) to us to meet expenses incurred through not fulfilling the
orders.

'The account to be left over for three months so as to give us the
opportunity of selling the goods, and the goods not delivered to be
kept for us if we ask for them.

'""We have the option of taking up the balance of pieces to com-
plete the order, giving time to make.

" Yours faithfully,
" Baron & Co."

The three months' extension of credit which was given by the
terms embodied in this letter for the goods delivered expired on
July 22, 1915, and on the 27th the appellant wrote asking for pay-
ment according to agreement. On the 28th the respondents wrote
back saying that they would be pleased to pay the account if the
appellant delivered the balance of the blue pieces to complete the

7

H. L. (E.)
1917

——
Morris
uv.
BARON AND
CoMPANY.

Lord Finlay
L.C,

8

H. L. (£.)
1917

Morris
v.
BARON AND
COMPANY.

Lord Finlay
L.C.

HOUSE OF LORDS [1918]

order as stated in the respondents' letter of April 22. On
August 17 the respondents wrote as follows to the appellant :—

" 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. ;

" 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 us know by return of post if you will do this."

A proposal was made by the respondents in September for a
variation in the class of goods to be delivered, but this came to
nothing.

On September 27 the respondents wrote pressing for delivery, and
on February 15, 1916, the second action (that on which this appeal
is brought) was begun by the appellant.

Notwithstanding the agreement of April 22, 1915, the respondents
had consistently refused payment for the goods already delivered,
insisting on their claim to keep back the payment until delivery of
the further goods.

The statement of claim in the second action was for the 8881. 4s.
for the goods delivered.

The defence admitted the plaintiff's claim, subject to the counter-
claim.

The counter-claim set out the contract of September 24, 1914, the
proceedings in the first action and the settlement embodied in the
letter of April 22, 1915, alleging that the defendants had exercised
their option thereunder, but that delivery had not been made, and
claimed damages for non-delivery under the arrangement of April 22,
1915, or, alternatively, under the original contract of September 24,
1914.

The counter-claim was based before Bailhache J. solely on the
agreement of April 22, and after hearing the evidence of the parties
he delivered judgment, disallowing the counter-claim on the ground
that the demand by the respondents for the delivery of the goods
under the arrangement of April 22, 1915, was not a valid exercise of
the option inasmuch as it was coupled with a refusal to abide by the

terms of that arrangement as to payment for the goods already
delivered.

A. C. AND PRIVY COUNCIL.

It was contended before your Lordships on behalf of the respon-
dents that the payment of that money was not a condition precedent
to the exercise of the option. But the real question is not whether
payment was a condition precedent, but whether the respondents
could make a valid claim to have the goods delivered under the
option while refusing to observe their part of the bargain. It is
perfectly true that the appellant did not, as he might have done,
claim that the contract of April 22, 1915, was at an end, treating the
respondents' conduct as repudiation. But the question remains
whether they could validly exercise their option while repudiating
their own obligation under the agreement which conferred that option.
Bailhache J. held that they could not, andI agree. It was contended
that the obligation to pay the 888i. 4s. at the end of the three months
did not go to the root of the contract and that the only remedy was
an action for the amount. The question is whether the obligation
_ was regarded by the parties as an essential part of the new contract,
and I think that its terms show that it was so regarded. It is,
indeed, in itself a very important question for a manufacturer
whether he is to go on making goods without being paid for those
which have been delivered, and the stipulation that he should have
the money at the end of the three months appears to me to be an
essential part of the contract. A party to a contract which imposes
certain obligations and confers certain rights upon him cannot claim
to exercise these rights while repudiating his obligations in material
particulars. The option to take the goods might indeed have been
exercised before the three months had expired, but it would not have
been a valid exercise of the option within the three months if at the
same time the defendant repudiated his obligation to pay at the end
of that term.

For these reasons I agree with the decision of Bailhache J. on the
contract of April 22.

An objection was also raised before Bailhache J. to the enforce-
ment of the new contract on which the counter-claim is based on the
eround that it is not enforceable by reason of the 4th section of the
Sale of Goods Act. This point was not argued before him owing to
the view which he took on the point I have just dealt with. It was
raised and fully argued in the Court of Appeal and in your Lordships'
House.

9

H. L. (E.)
1917

MorRIs

v,
BARON AND
COMPANY,

Lord Finlay
L

10

H. L. (E.)
1917

=
MORRIS
wv,
BARON AND
COMPANY.

Lord Finlay
L.C.

HOUSE OF LORDS [1918]

It was contended on behalf of 'the respondents that the new
agreement was not an agreement for the sale of goods but for the
settlement of an action. It was no doubt the settlement of an action
but a part, and a very material part, of that settlement appears to
me to have been an agreement for the sale of goods. It is an
agreement that the respondents should have an option of taking the
balance of goods undelivered, and it was implied that they were to
pay for them on the terms of the original agreement. Surely this
is an agreement for the sale of goods. This point, I agree with the
Court of Appeal, would be enough to defeat the counter-claim.

But the Court of Appeal went on to hold that the arrangement of
April 22, 1915, not being enforceable, must be wholly disregarded
and the parties relegated to their rights under the original contract.

The Court of Appeal treated the case of Noble v. Ward (1) as
having decided as a matter of law that in a case to which the 4th
section of the Sale of Goods Act applies the original contract cannot
be rescinded by a contract not complying with the section. In that
case there was a valid contract on August 18 for the delivery of goods
by the plaintiff to the defendant, and at an interview on September 27
it was agreed that the time for delivery should be extended. The
defendant refused to take delivery and an action was brought for
non-acceptance, the declaration covering either the contract of
August 18 or that of September 27. The case was tried before
Bramwell B., who directed a nonsuit on the ground that the contract
of August 18 had been rescinded by the parol agreement of
September 27, and that the parol agreement itself could not be sued
on owing to the 17th section of the Statute of Frauds. The nonsuit
was set aside by the Court of Exchequer, and Bramwell B. was
himself a member of the Court and delivered the leading judgment.
He pointed out that under s. 17 the contract of September 27 was
not " allowed to be good," and that to treat it as having the effect
of rescinding the old contract would be to hold that it was good for
that purpose.. A new trial was accordingly ordered. This decision
was affirmed in the Exchequer Chamber, judgment being delivered
by Willes J. He said that no rescission could be effected by an
invalid contract and that it would be at least a question for the jury
whether the parties did intend to rescind.

(1) L. R. 1 Ex, 117; L. RB, 2 Ex, 136.

Bevis ; AND PRIVY COUNCIL.

There are two observations to be made on this case.

In the first place, the agreement varying the first agreement was
by s. 17 of the Statute of Frauds one which was not allowed to be
good, while under s. 4 of the Sale of Goods Act, 1893, which applies
in the present case, it is merely not enforceable by action.

There is a marked difference between the wording in this respect
of the 4th section of the Statute of Frauds and the 17th section, as
was pointed out in Leroux v. Brown (1), and, notwithstanding the
obiter dicta (for they are no more) of some eminent judges, I do not
think that the language of the two sections had the same effect.
For the present purpose it is enough to say that both Courts in
Noble v. Ward (2) treated the contract as being invalid. The change
made in the wording of the 4th section of the Sale of Goods Act as
compared with s. 17 of the Statute of Frauds in my opinion altered
the law. The agreement of April 22, 1915, in this case is not under
that section invalid, as was the agreement in Noble v. Ward (2) under
s. 17 of the Statute of Frauds. It is only not enforceable by action.

In the second place, Noble v. Ward (2) does not lay down as a
matter of law that the parties cannot agree to rescind a written
agreement which the law requires to be in writing by the substitution
for it of another agreement not in writing, and therefore unenforce-
able. On the contrary Willes J. in the Exchequer Chamber says
that the question would be for the jury. If the law were as the
Court of Appeal in the present case has laid it down, he would have
said that the judge must rule that such a rescission could not take
place.

The point which arises in such cases seems to me to have been well
stated by Lord Denman in Stead v. Dawber. (3) In that case there
was an agreement for the sale of goods to be delivered "' on the 20th
to the 22nd." The plaintiff at the defendant's request verbally
agreed to enlarge the time to the 23rd or 24th. Lord Denman,
after saying that many cases had been cited, expressed himself as
follows: " But it seems to us that we are mainly called on 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

(1) 12 C. B. 801. (2) L. R. 1 Ex. 117; L, RB. 2Ex. 135.
(3) (1839) 10 Ad. & E, 57, 64, 65,

11

H. L. (E.)
1917

—
Morris
Vv.
BARON AND
COMPANY.

Lord Finlay
L.C.

12

H. L. (E.)
1917

——

Morris

v.
BARON AND
COMPANY.

Lord Finlay
L.C,

ee

HOUSE OF LORDS [1918]

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?"

The present is not a case in which there has been a mere attempt
to vary the written contract by parol, the situation of the parties
being otherwise unchanged. The legal proceedings then pending
between the parties were withdrawn, each bearing his own costs,
a sum of 301. was to be allowed to meet expenses from non-delivery,
three months' credit was given to the respondents to give them the
opportunity of selling the goods, and the respondents were released
from the obligation to take the balance undelivered, getting an
option instead. Under these circumstances it seems to me to be out
of the question to hold that merely because the option is not enforce-
able on account of the 4th section of the Sale of Goods Act the rights
of the parties are to be regarded as still governed by the original
contract under which the respondents were bound to take delivery
of the balance. Both parties treated the original contract as at an
end until attention was called in the Court of Appeal to the case of
Noble v. Ward (1), and the respondents throughout insisted on the
option given by the new arrangement and treated the obligation to
take delivery as at an end. To go back to the default in making
delivery before the first action would be to ignore the settlement for
301. of that claim, and to give damages for a subsequent default
would be to treat the respondents as having been willing after the
settlement to perform the original contract, which they certainly
were not.

The evidence in the present case points to the conclusion that the
parties intended not merely to vary the original contract but to set
it aside and substitute another for it, giving a mere option to take
delivery of the parcel undelivered. This is the effect of the language
of the memorandum of April 22, 1915, and it was on this assumption
that all the subsequent dealings and correspondence of the parties
proceeded. It is true that neither party adhered to its terms. The
appellant tried to get payment of the 888/..4s. before the three
months' further credit had expired, and the respondents refused to
pay when it had expired, claiming to retain the money until the

goods were delivered. But neither party ever referred to the original

(1)EL. R. 1 Ex. 117; L. R. 2 Ex. 135.

A. C. AND PRIVY COUNCIL.

contract as governing their rights; on the contrary, they treated
it as at an end.

Is the law such as to prevent effect being given to the intention of
the parties to treat the original contract as rescinded ?

All that Noble v. Ward (1) decided was that it was a mistake to
say that as a matter of law the original contract was rescinded, the
variation being by parol and there being no change of circumstances.
It did not decide that as a matter of law the first contract still existed.
As was said in the judgment of the Exchequer Chamber, that would
be a matter for the jury. There are some old cases in which it was
held that there could not be an accord and a satisfaction by taking
an unenforceable agreement in substitution for one which was
enforceable (see Case v. Barber (2) in the 33rd year of Charles II. ;
also Comyns' Digest, "' Accord' (B 4) 4, 6, and the case there cited of

Wickham v. Taylor (3), 33 Car. 2); but I do not think that these
cases can be now regarded as good law. The non-enforceability of
the new agreement would no doubt be a very material fact in
arriving at a conclusion upon the question whether the new agree-
ment without performance was taken in accord and satisfaction of
the old, but it seems to me to be immaterial when once this has been
established in point of fact.

In the present case the parties, in my opinion, took the new
agreement such as it was with the other terms of settlement in
accord and satisfaction of the original agreement, and there is
nothing in law to prevent them from doing so. The respondents,
therefore, must stand or fall by the agreement of April 22. It was
upon that agreement that the case was brought before Bailhache J.,
and the learned judge held that the respondents could not recover
upon it because they not only failed to pay the 888/. 4s. at the
expiration of the extended credit given by that agreement, but
throughout insisted that they would not pay until the further goods
had been delivered under the option.

In my opinion the decision of Bailhache J. should be restored and
this appeal allowed with costs here and below.

Viscount Hatpane. My Lords, Bailhache J., who tried the
action out of which this appeal arises, decided that what was done

apie Rh 1 Ex, 1173 L: R, 2 (2) T. Raym. 450.
Ex. 135. (3) T. Jones, 168.

13

H. L. (E.)
1917

Morris
v. i
BARON AND
COMPANY.

Lord Finlay
L.C,

14

H. L. (E.)
1917

——
Morris
v.
BARON AND
COMPANY.

Viscount
Haldane.

HOUSE OF LORDS [1918]

by the respondents, as it appeared from their letters and the oral
evidence, amounted to a repudiation of their contract. In order to
reach this conclusion legitimately it had, as I think, to be established
that the respondents did more than merely commit a breach of the
particular obligation which they violated by insisting on delivery
of the still undelivered goods, or on damages for their non-delivery,
before paying the money which they owed for the price of the goods
already delivered. Such a refusal to pay would not be enough
unless it took place in circumstances which rendered what was done
inconsistent with an intention to be bound any longer by the con-
tract as a whole. JI doubt whether so much as this ought to be
inferred in the case before us, and my inclination on this point is to
take the view which was adopted by the Court of Appeal. But I do
not think that it is necessary to decide the question, for it appears to
me that the effect of the letter of April 22, 1915, coupled with the
circumstances in which it was written, was to extinguish altogether
the earlier contract for delivery of September 24, 1914, the only
contract which the respondents could really enforce by their counter-
claim.

It was argued for the appellant that he could succeed even without
establishing so much as that the letter of April 22, 1915, effected a
complete extinguishment. For it was suggested that, although the
respondents were precluded by the requirements of s. 4 of the Sale
of Goods Act, 1893,.from enforcing by their counter-claim in the
action any variations made by that letter of the earlier contract,
still, even if the alterations amounted to no more than variations,
as distinguished from total abrogation, the appellant could set them
up and rely on them by way of defence. The Sale of Goods Act,
which in substance follows the language, not of s. 17 of the Statute
of Frauds, but of s. 4, provides merely that a contract which is not
evidenced by a note or memorandum signed by the party to be
charged on it, or his agent, cannot be enforced in proceedings. The |
contract, it was said, therefore stands, although it is one of imperfect
obligation. It was argued that it may on this account be relied
on by a defendant who asserts that it contains, read together with
the original contract which it sought to vary, the real and only
complete terms of the bargain. If this were so the appellant con-
tended that in the present case no claim would lie against him for

A; C. AND PRIVY COUNCIL.

damages for non-delivery. For, to begin with, the bargain of
April 22, 1915, amounted to an accord and satisfaction of the claim
for damages against him which had accrued and had been asserted
in the previous action which was compromised. In the second
place, the appellant urged that the respondents had not given an
order for delivery of any goods under the terms of the agreement of
compromise which varied the old contract, and that consequently
there had been no breach.

My Lords, adverting first to the question whether the appellant as
defendant to the counter-claim could rely on the second and informal
agreement as entitling him to set up mere variations made by it of
the terms of the gld agreement, I think the contention of the appel-
lant's counsel at the Bar is untenable. It is no doubt true that the
provisions of s. 4 of the Sale of Goods Act relate to evidence and
procedure and not to substantive validity. They follow in this
respect the provisions of s. 4 of the Statute of Frauds, and ever since
Leroux v. Brown (1) settled what was finally held to be the true view,
despite apparently conflicting dicta in earlier cases, it has been clear
that such provisions belong to the lex fori rather than to substantive
law. Lord Blackburn, in his judgment in this House in Maddison v.
Alderson (2), adopts this view of the Statute of Frauds, and lays it
down as applicable to the 17th as well as to the 4th section of that
statute. A similar view had been previously expressed, not only by
the members of the Court of Appeal who decided Britain v.
Rossiter (3), but in earlier cases, and I think that it must now be
taken to be the better opinion that the 4th and 17th sections stand
on the same footing in this respect. It is true that the language of
the 17th section, which, like the 4th section of the Sale of Goods Act,
relates to the sale of goods of the value of 10/. or upwards, differs
from that of the 4th. Instead of saying, as the latter and also the
4th section of the Sale of Goods Act do, that no action shall 'be
brought to charge any one on a contract which does not comply with
it, it says that no contract which does not fulfil its requirements
"* shall be allowed to be good." But these words have been con-
strued as meaning good for the purpose of being enforced by
proceedings. This being so, they do not destroy the contract for

(1) 12 C. B. 801. (2) 8 App. Cas. 467, 488.
(3) 11 Q. B. D. 123.

15

H. L. (B)
1917

——

MorrIs

xX
BARON AND
COMPANY.

Viscount
Haldane,

16

H. L. (£.)
1917

——

Morris

OP
BARON AND
COMPANY.

Viscount
Haldane,

HOUSE OF LORDS [1918]

every purpose. But I think that, in addition to this, a further
construction is now firmly settled which bases both the 4th and 17th
sections of the Statute of Frauds upon a special rule of evidence.
That rule is that where an agreement is validly entered into which
has had to comply with the Statute of Frauds, and variations are
afterwards sought to be introduced by parol or by a document which
does not comply with the statute, these variations cannot be set up
even by a defendant as an answer in proceedings to enforce the
original agreement. This rule was so laid down by Sir William
Grant in Price v. Dyer (1), and again by a later Master of the Rolls
Lord Lyndhurst (at that time Sir John Copley) in Robinson v.
Page. (2) These authorities were followed not loag since in Vezey
v. Rashleigh (3) by Byrne J. It shows how definite the principle
thus based on the statute was considered to be that in these cases,
which related to the specific performance of contracts for the sale of
land, the rule was applied, notwithstanding the tenderness towards
defendants which the element of discretion in decreeing specific
performance sometimes admits of. But both Sir William Grant
and Lord Lyndhurst intimated the opinion that complete rescission
by parol, as distinguished from mere variation, stands on a SSE
footing, and is outside the principle so established.

In the Court of Appeal in the present case it was held that the
respondents as plaintiffs in the counter-claim could wholly disregard
what was looked upon merely as an invalid attempt at variation and
could set up a breach of the original agreement as remaining for this
purpose unaltered. It seems to have been thought that this conclu-
sion covered the whole ground, and disposed of the matter in con-
troversy. The authority relied upon was Noble v. Ward. (4) The
judgments there interpreted the 17th section of the Statute of Frauds
as establishing the same rule as the 4th, a rule which the apparently
still more emphatic expression in the 17th section "shall not
be allowed to be good" rendered the easier to recognize. The
decision was one of high authority, for it was first given in the
Court of Exchequer by Bramwell B. on behalf of that Court,
and it was afterwards affirmed in the Exchequer Chamber in

(1) 17 Ves. 356, 363. (4) li. Rel Bx. 117: eee

(2) (1826) 3 Russ. 114, 121. Ex. 135.
(3) [1904] 1 Ch. 634,

A.C. AND PRIVY COUNCIL.

a judgment which Willes J. delivered on behalf of a Court con-
sisting of Blackburn, Mellor, Montague Smith, and Lush JJ. as
well as himself. Neither Bramwell B. nor Willes J. draw any
distinction between the terms of the 17th and the 4th sections
of the Statute of Frauds, and from the authorities referred to
by them it appears as though no such distinction was in their
minds. Lindley J., in delivering the judgment of the Court of
Common Pleas in Hickman v. Haynes (1), seems to take the same
view.

Now the important point here is to see, not merely what Noble v.
Ward (2) decided, but what it did not decide. I think that it did
not decide, as the Court of Appeal appear to have supposed, that an
agreement which complied with the statute could not have an end
put to it by a subsequent parol agreement. The action had been
brought on a valid written contract for the sale of goods of more
than 10. in value, to be delivered at certain times. The times of
delivery under this agreement were sought to be treated as varied
by a parol agreement. The question was whether what had
happened was that the old contract was gone. It was held that,
on the facts, there was no giving up of the old contract independently
of the effect of such variations as had been attempted to be imported
by the new one. There had been a still earlier written contract than
that sought to be varied, apparently a formal document, and it was
treated as effectively cancelled by the language of the very parol
contract which was held inoperative to merely vary the terms of the
formal contract which followed the first. What was really decided
was that while the parties might have entered into a parol contract
to rescind simpliciter the second, just as they had so rescinded the
first, they had not done so. As to the second, they had simply made
a new parol contract which sought to vary the mode of carrying the
second one into effect. In one sense, no doubt, the intention was to
rescind, for the novation attempted to be effected by the final parol
contract would, if valid, have established a new contract containing
as an entirety the old terms together with and as modified by the
new terms incorporated. But this could only have amounted to a
partial rescission, or, in other words, a mere variation; and, as
Willes J. pointed out in the Exchequer Chamber, the question

(1) L. RB. 10 ©, P. 598. (2) diek.1 Ex, 1175 DB. 2 Bx, 135.

A. O. 1918. 3 c

17

H. L. (B.)
1917

Morris

%
BARON AND
COMPANY,

Viscount
Haldane,

18

H. L. (E.)
1917

—S—

Morris

v.
BARON AND
COMPANY,

Viscount
Haldane.

HOUSE OF LORDS (1918)

whether there had taken place an independent and complete rescis-
sion, if it had been really raised, must under the circumstances have
formed a separate question for the jury, a question which in fact was
not put. What was therefore decided was merely that where
parties enter into an invalid contract, which purports to vary, and
only to that extent to supersede or rescind, an earlier written con-
tract, the later one does not operate validly. It was not decided by
Noble v. Ward (1) that the Statute of Frauds prevents a parol
agreement, if it plainly purports to do so, from rescinding in its
entirety a previous written contract. Even although itself incapable
of being sued on, a parol contract may have that effect. The ques-
tion is whether there is an intention in any event to rescind, inde-
pendent of any further intention which may exist to substitute a
second contract. I think that Noble v. Ward (1) affirms what seems
to result from principle, that in such a case the agreement to
rescind must receive effect.

Even if Noble v. Ward (1) can be taken as a decision confined to
the 17th section, which I think it ought not to be, the authorities in
equity to which I have referred established the principle clearly as
regards the 4th section of the Statute of Frauds and of the Sale of
Goods Act. No doubt it is not to be found in the expressed words
of the sections. But if the construction placed by the Courts on
such words is not accepted injustice will result. For it would then
be in the power of a defendant to insist that the contract to be sued
on by the plaintiff must be the entire new contract comprising the
old one with the parol variations, and then to defeat the plaintiff by
setting up the statute. The Courts, in order to avoid this result,
have read the language as implying that the original formal con-
tract is not, in any question of evidence in proceedings, to be treated
as varied by a subsequent contract which is informal, and therefore
of imperfect obligation. But this reason obviously does not apply
to a complete rescission by parol, which does not seek to set up a new
contract to be sued on, but merely terminates existing relations.

Accordingly while a parol variation of a contract required to be
in writing cannot be given in evidence, the very authorities which
lay down this principle also lay down not less clearly that parol
evidence is admissible to prove a total abandonment or rescission.

(1) L. R. 1 Ex. 117; L. BR. 2 Ex. 136.

A. C. AND PRIVY COUNCIL.

Now there is no reason why this should not be done through the
instrumentality of a new agreement which does not comply with the
statutory formalities, just as readily as by any other mode of mutual
assent by parol. What is, of course, essential is that there should
have been made manifest the intention in any event of a complete
extinction of the first and formal contract, and not merely the desire
of an alteration, however sweeping, in terms which still leave it
subsisting.

The Court of Appeal in the present case indorsed with their
approval the judgments of the Divisional Court in Williams v.
Moss' Emires, Ld. (1), delivered by Shearman J. and Sankey J.,
and followed these judgments. My Lords, it is with hesitation that
I differ from any statement of the law by these two able judges, just
as I always hesitate in differing from Swinfen Kady L.J. and
Bankes L.J. But consideration has satisfied me that Williams v.
Moss' Empires, Ld. (2) was a more than doubtful decision. There,
under a contract in writing which was not to be performed within
a year, the plaintiff had been engaged by the defendants to act at
their theatre on certain terms which included the payment of salary
at a specified rate. During the currency of the contract, and within
less than a year from its termination, the parties verbally agreed to
a variation of the plaintiff's salary for a part of the remainder of the
term of the engagement. Subsequently the plaintiff sued the
defendants to recover salary earned since the verbal agreement at
the rate specified in the original contract. It was held that the
verbal agreement, being one which was to be performed within a
year, and therefore not within the Statute of Frauds, was admissible
in evidence to prove that the parties had substituted for the original
contract a new contract embodying the variation as to salary along
with the unaltered terms of the original contract. The statement
of the law made by Byrne J. in Vezey v. Rashleigh (3), to which I
have already referred as following the previous decisions of Sir
William Grant and Lord Lyndhurst, was criticized as inadequate.
It was said that Noble v. Ward (4) and other cases had laid down the
law more correctly as being that where an agreement varying an

(1) [1915] 3 K. B. 242. (4) Is Red Ex, 117) 0, BR. 2
(2) [1915] 3 K. B. 242, 247, 248. Ex. 135.

(3) [1904] 1 Ch. 634.
3 C 2

19

H. L. (E.)
1917

Sa

Morris

a
BARON AND
COMPANY,

Viscount
Haldane.

20

H. L. (E.)
1917

"——_

Morris

We
BARON AND
COMPANY.

Viscount
Haldane.

HOUSE OF LORDS [1918]

«

agreement which would be invalid if it were not in writing " is itself

of such a character that it is bound to be in writing," then, unless it
is in writing, it cannot be relied on, but that it is otherwise when it
need not itself be in writing. The authorities were said by Shear-
man J. to have left it open to the Court to hold that "if there is
nothing in the terms of the new contract which necessitates a written
contract, then, although the original contract was one which was
bound to be in writing, the new parol contract can be enforced
because although it is not in writing it is nevertheless an effective
contract." Sankey J. put the same view in other words: "A
contract which in compliance with the Statute of Frauds is in writing
may be rescinded by a new agreement. The new agreement may
be one which in order to be enforceable is required to be in writing
or it may be one which is valid though it is not in writing. If it is
one which is required to be in writing and is not in writing it is
unenforceable and cannot be treated as evidence that the original
contract has been rescinded, and the original contract, therefore,
remains in force. But if the new agreement is in writing, or, if
verbal, is one which need not be in writing, the new agreement is
valid and the original contract is rescinded."

My Lords, I find myself unable to agree with this statement of the
law, which appears to me, to begin with, to put absolute rescission
on the same footing with variation. In so far as it does this it is
inconsistent with the authorities in the Court of Chancery to which
I have referred and which were, in my opinion, correctly applied by
Byrne J. in Vezey v. Rashleigh. (1) Nor does it, for the reasons I
have already given, appear to me to derive any support from Noble
v. Ward (2), or for that matter from the preponderance of the views
expressed in the earlier decisions of the common law Courts which
were cited and considered in the course of the latter case.

But the difficulty does not end here. If the Divisional Court were
right, an agreement which is not in writing, and if it stood by itself
would not be required to be so by the statute, can vary the terms of
an antecedent agreement put into writing so as to comply with
requirements imposed by the statute. This appears to me, for
reasons which I have already stated, to be at variance with both
principle and authority, and I cannot assent to the proposition.

(1) [1904] 1 Ch. 634. (2) L. R. 1 Ex. 117; L. RB. 2 Ex, 135.

"A.C. AND PRIVY COUNCIL.

Now the Court of Appeal in the present case adopted the views of
Shearman J. and Sankey J. as expressed in the passages I have cited
from their judgments, and I am therefore compelled to differ from
the opinion they have expressed as a statement of the law upon the
subject.

My Lords, I have come to the conclusion that what happened in
April, 1915, as evidenced by the letter of April 22, amounted to a
complete rescission and abandonment of the old agreement of
September 24, 1914, and the substitution of a completely new and
self-contained agreement. The letter purports to set out the result
of a conversation between the representatives of the appellant and
the respondents which took place just before it, and it is of course
the only admissible evidence of the terms then arranged. The
proceedings in the old action are to be withdrawn and the sum of
301. is to be allowed to the respondents to meet expenses incurred
through not being able to fulfil orders, because, no doubt, of the
asserted breach of contract by the appellant.

Then the amount due to the appellant on his account for goods
already delivered is to be left over for three months so as to give
to the respondents the opportunity of selling the goods already
delivered, and the goods not delivered are to be kept for the respon-
dents if they choose to ask for them. I think that there is here, in
the first place, a good accord and satisfaction after breach which
discharged any right of action for damages which had accrued to
the respondents. In the second place, I think that although the
letter does not, so far as liability on the part of the appellant is con-
cerned, comply with the requirements of the Sale of Goods Act,
either as regards signature or as regards sufficiently setting out the
description of the goods or all the terms of the bargain relating to
them, it not the less discloses a definite and self-subsisting parol
agreement to abrogate altogether the existing arrangements under
the agreement of September 24, 1914, which was no longer to be in
force. I draw the inference from the letter as read with reference
to the circumstances of the case that the new arrangement was to be
a complete settlement of the dispute and to initiate new relations
between the parties.

If I am right in this, the appeal succeeds and should be allowed

with costs.

21

H, L. (B.)
1917

——
Morris
v.
BARON AND
COMPANY.

Viscount
Haldane,

—

22

HL (E.)
1917

——
MorRIs
UO;
BARON AND
COMPANY.

HOUSE OF LORDS [1918]

Lorp Dunepiy. My Lords, I do not recapitulate the circum-
stances of the case, as they have been fully set out by the noble Lord
on the woolsack. For the sake of-clearness and brevity I shall call
the contract of September 24, 1914, contract A and the agreement
of April 20, 1915, contract B. As to contract B, there is no
memorandum in writing sufficient to satisfy s. 4 of the Sale of Goods
Act, if that section applies to it ; and its terms have been held to be
for the purposes of this case set out in the letter of April 22, 1915,
It is admitted that (1.) the legal proceedings which had been insti-
tuted in respect of breaches of contract A, which consisted of claim
and counter-claim, were withdrawn; (2.) the account for goods
delivered under contract A was left over for three months ; (3.) 301.
was allowed in credit by the plaintiff to the defendants. Upon these
facts the case falls to be decided.

My Lords, the case raises points of law of great nicety, chiefly for
the reason. that there is a mass of authority, not always consistent,
dealing with questions akin to the questions here raised ; and that
there is a great responsibility on any one in your Lordships' House
who attempts to lay down general rules, and in so doing may seem
to run counter to the dicta of learned judges in the past. Nor has
the case been made easier by the somewhat peculiar manner in which
it was treated by the parties and, in consequence of their attitude,
by the Courts below.

The action is for the value of goods sold and delivered to the
amount of 888/. 4s. It is not expressly founded on any contract,
although the goods were doubtless delivered under contract A.
The defence admits the claim as for goods sold and delivered, then
sets out contract B, and averring breach counter-claims under that
contract. It is true that in the pleading there is made an alternative
claim as for breach of contract A, but before the trial judge the whole
case for the counter-claim was put and urged on the assumption
that contract B was the ruling contract and that the breach had
taken place under it. The trial judge found in fact that in terms of
contract B the defendants were bound to pay 888l/. at the end of
July, being the date of the expiry of the three months; that they
positively refused to do so; and on these facts he held that the
counter-claim failed. Itis a little difficult to say whether the learned
judge held the counter-claim to fail because this maintained attitude

Tienes AND PRIVY COUNCIL.

of the defendants amounted to a repudiation of the contract; or
upon the ground that as the defendants never asked for delivery,
except coupled with the assertion that they refused to pay the 8881.
until delivery was made, that was tantamount to the defendants
never really asking for delivery at all. On the learned judge's

23

H, L, (E.)
1917

——

Morris

v,
BARON AND
COMPANY.

announcing his decision counsel for the plaintiff said that he had a Lord Dunedin.

point which he had not been able to bring forward, namely, that
contract B was unenforceable under the 4th section of the Sale of
Goods Act, and therefore could not be the foundation of a counter-
claim. To this counsel for the defendants retorted that if that were
so he might go back to the original contract, to which counsel for the
plaintiff replied that he was prepared to deal with that argument.
The matter then dropped.

In the Court of Appeal, the learned judges having scemingly
indicated that they were not prepared to agree with the view of the
learned trial judge as to the application of the facts to contract B,
the plaintyi brought forward his argument that s, 4 of the Sale of
Goods Act applied to contract B. This was resisted by the defen-
dants' counsel, as appears from the judgment of Swinfen Eady L.J.,
who says: " The question is, was the contract of April 22 an agree-
ment which is within the section and ought it to be in writing ? Was
it an agreement for the sale of goods? It is contended by the
defendants that it was not." The defendants, however, found
salvation in the defeat of their argument, for the Court of Appeal,
deciding against them that contract B did fall within the section,
preceeded to say that the case was ruled by the case of Noble v,
Ward (1), and gave judgment for the counter-claim upon the alter-
native plea for breach of the original contract A, a view which seems
to have been unpressed by the defendants themselves. Accordingly,
as the appeal now stands before your Lordships' House, the question
to be first decided is whether, assuming that contract B is within
the section, the present case really falls within the decision in Noble
v. Ward. (1)

My Lords, let me first say that I unhesitatingly accept Noble v.
Ward (1) as well decided and laying down correct law. The judg-
ment in the Exchequer was the judgment of Pollock C.B. and
Bramwell, Channell, and Pigott BB. In the Exchequer Chamber

Gy bees iis, 117; Ly BR. 2) Ex, 135.

24

H. L, (E.)
1917

——_—

Morris

Las
BARON AND
COMPANY.

Lord Dune lin.

HOUSE OF LORDS [1918]

the judgment was given by Willes J., and was concurred in by
Blackburn, Mellor, Montague Smith, and Lush JJ. He would be
a bolder iconoclast than I am who should say that a judgment
resting on the authority of such names did not correctly set forth
the law of England. But now comes the question of what exactly
it was that Noble v. Ward (1) decided, and that is not so easy to
determine as. might be expected. For in truth there are three
possible views of the true effect of Noble v. Ward. (1) I shall
examine each of them. First, there is the view, strongly contended
for by the appellant at your Lordships' Bar, that, inasmuch as the
transaction in that case fell within the 17th section of the Statute
of Frauds, which uses the expression "' No contract... . shall be
allowed to be good except," &c., it was entirely void, and as such
could effect nothing either by way of rescission or variation of the
anterior contracts: and that as the 4th section of the Sale of Goods
Act, like the 4th section of the Statute of Frauds, does not make
void a contract, but only prevents enforcing it, contract B in this
case, though nut enforceable, might yet serve as a defence to get rid
of contract A.

My Lords, it is quite true that in the Exchequer Chamber Willes J.
uses the expressions "' invalid "' and "' void,"' and I confess if I could
have read the case as reported in the Exchequer Chamber apart from
all other authority, I should have come to the conclusion that that
was the ground of judgment, and that, to say the least of it, the
question was still open when you had something to which s. 4 applied
ands. 17 didnot. But, on the best consideration I can give, I do not
think that would be a safe view. For Lord Blackburn, who was a
party to the judgment, distinctly said in the case of Maddison v.
Alderson (2) in this House : "' 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." And Brett L.J. in
Britain v. Rossiter (3) says: "In my opinion no distinction exists
between the 4th and the 17th sections of the statute."

In view of these opinions I am inclined to think that although,

(1) DRS aa es ey eke: (2) 8 App. Cas. 467, 488.
Ex, 135. (3) 11 Q. B. D. 128, 127.

A. C. AND PRIVY COUNCIL.

doubtless, Noble v. Ward (1) proceeded on the 17th section, yet the
judgment would have been the same had there only been the 4th in
question.

The second interpretation is that which the Court of Appeal have
here given, adopting and relying on the views of Shearman and
Sankey JJ. in the case of Williams v. Moss' Empires, Ld. (2) It is
most succinctly put by Sankey J. in that case: '' A contract which
in compliance with the Statute of Frauds is in writing may be
rescinded by a new agreement. The new agreement may be one
which in order to be enforceable is required to be in writing, or it may
be one which is valid though it is not in writing. If it is one which
is required to be in writing and is not in writing, it is unenforceable
and cannot be treated as evidence that the original contract has been
rescin ted, and the original contract, therefore, remains in force. But
if the new agreement is in writing, or, if verbal, is one which need not
be in writing, the new agreement is valid and the original contract is
rescinded." It must be kept in view that this statement of the law
is given after Shearman J. had cited the series of cases Goss v.
Lord Nugent (3), Noble v. Ward (1), Stead v. Dawter (4), Giraud v.
Richmond (5), Marshall v. Lynn (6), and Stowell v. Robinson. (7) It
will be noticed at once that the learned judge ignores the distinction
between variation and rescission. The contract with which he was
dealing was obviously a case of variation. There had been an
engagement for three years at a certain salary. A verbal arrange-
ment was made whereby the amount of salary was altered ; all other
terms of the original contract remained. Indeed, the learned judge
says in so many words that no such distinction exists where the
alteration is a material one. He says: "I think some confusion
has arisen from the use of the words ' variation of a contract.' The
result of varying the terms of an existing contract is to produce, not
the original contract with a variation, but a new and different
contract."

My Lords, I find myself unable to subscribe to this view. The
difference between variation and rescission is a real one, and is

(eky ices dts... BR. 2 (4) 10 Ad. & E. 57.

Ex. 135. (5) (1846) 2 C. B. 835.
(2) [1915] 3 K. B. 242, 248. (6) (1840) 6 M. & W. 109.
(3) 5B. & Ad. 58. (7) (1887) 3 Bing. N. C, 928.

25

HAG

Vv
BARON AND
COMPANY.

Lord Dunedin.

26

H, L. (E.)
1917

Morris

t.
BARON AND
COMPANY.

Lord Dunedin.

HOUSE OF LORDS [1918]

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.

Now each and every of the cases cited (leaving aside for the
moment Noble v. Ward (1) ) were attempts to vary; in not one of
them was it a case of rescission. Noble v. Ward (1), though also a
case of attempted variation and decided as such, yet had in it the
distinction which Shearman J. ignores. In that case there were
what Lord Bramwell called contracts A, B, and C. A and B were
in writing, C was a parol contract. It was entered into when A and
B were both extant and partially performed. Now it was held that
C could not vary B, but there was no difficulty made as to its
rescinding A. I do not mean that this was decided upon adverse
contentions, for neither party maintained that A was to goon. But
still the only thing that rescinded or abrogated A was C, and had the
plaintiff in that case claimed damages under A as well as under B
I do not doubt that the plea that A was abrogated would have been
sustained. This brings me to the third view of Noble v. Ward (1),
which I humbly think is the correct one. The criterion does not lie
in the question of whether the later contract is itself a contract which
needs to be in writing. The criterion is in the question whether
what is intended to be effected by the second contract is rescission
or variation. Noble v. Ward (1) decided that if the second contract
fell within the statute then it could not be appealed to to vary the
former ; but it did not decide that it could not be appealed to to
rescind, :

Willes J., in giving judgment and speaking of the later contract,
and of the fact that a verbal contract to rescind simpliciter was quite
good, says: " But it would be at least a question for the jury,

(1) L. R. 1 Ex, 117; L. RB. 2 Ex, 135.

A. C. AND PRIVY COUNCIL.

whether the parties did intend to rescind." That contract B, if it
falls within s. 4, is not gone altogether although not enforceable is
clear from the passage already cited from Lord Blackburn, and the
like is said in the same case by Lord Selborne (1): "It has been
determined at law (and, in this respect, there can be no difference
between law and equity) that the 4th section of the Statute of
Frauds does not avoid parol contracts, but only bars the legal
remedies by which they might otherwise have been enforced." If,
then, the contract exists its existence must be treated as a fact, and
it must be looked at to see if apart from enforceability it did or did
not put an end to the former contract. For it would be an extra-
ordinary result that although a parol contract to rescind a written
contract is good, as to which there is no doubt (Goman v. Salisbury (2)
and Willes J. in Noble v. Ward (3) ), yet the same thing cannot
happen if after rescinding the first contract the parties go on to make
another contract which may or may not be enforceable. Accord-
ingly, if express words to that effect are used there can be no doubt.
It seems to follow that implication may do as well as express words.
But here there must be a note of warning. If the implication be no
more than this, that the second contract if valid would displace the
first, that by itself is not enough, for, as Willes J. says in Noble v.
Ward (4), "' It is quite in accordance with the cases of Doe d.
Egremont v. Courtenay (5) and Doe d. Biddulph v. Poole (6), over-
ruling the previous decision of Doe d. Egremont v. Forwood (7),
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." The cases there cited are all
cases of surrenders of leases upon new leases granted in which it
was held that the surrender, whether express or implied, was condi-
tional upon the new lease being good.

I now turn to the facts in this case. There had been alleged

(1) 8 App. Cas. 474. (4) L."R. 2 Ex. 138.
(2) (1684) 1 Vern. 240. (5) (1848) 11 Q. B. 702.
(3) L. R. 2 Ex. 136. (6) (1848) 11 Q. B. 713.

(7) (1842) 3 Q. B. 627.

27

H. L. (E.)
1917

Morris
v.
BARON AND
CoMPANY,

Lord Dunedin.

28

Hei.(i)
1917

——
Morris
Vv,
BARON AND
COMPANY.

Lord Dunedin.

HOUSE OF LORDS {1918]

breach of contract A on both sides, and action raised with counter-
claim. Now the first term of the new contract B is to put each party
to withdraw legal proceedings ; then to give three months' credit to
the defendants in the payment of a sum admittedly due for goods
already delivered; then to allow them 30/. in satisfaction of the
expenses they had incurred by reason of non-delivery under contract
A; and lastly to substitute for the right of the plaintiff to supply and
the duty of the defendants to take 277 pieces of cloth, an option on
the defendants' part to take them if they pleased.

My Lords, it seems to me impossible to come to any conclusion on
this but that-the parties agreed that the old contract should be
abrogated. I use the word " abrogate,' because I think it is a
better word than " rescind'"' when you deal with a contract which
has been partly implemented, but as regards the authorities I might
as well say '"' rescind." Further, as regards this arrangement there
cannot be a restitutio in integrum. The defendants have had the
extended credit, have had the 30/. placed to their credit, and have
enjoyed an option not to take, which, if the market had been a falling
one instead of a rising one, they would probably have availed them-
selves of ; and these advantages have been enjoyed and cannot be
taken away. In respect of these things the old contract was to be
held abrogated. But the judgment of the Court of Appeal leaves
the defendants with all these advantages and yet holds the old
contract binding still.

I am fortified in my view by a passage in Fry on Specific Per-
formance (8rd ed.). Sect. 1039 is as follows: " But where the new
contract is relied on only as an extinguishment of the old one, the
mere fact that it is not in writing, and so could not be put in suit,
seems to be no ground for denying its effect in rescinding the original
contract. The Statute of Frauds does not make the parol contract
void, but only prevents an action upon it; and it does not seem to
be necessary to the extinction of one contract by another that the
second contract could be actively enforced. The point has never,
it is believed, been matter of decision. But in point of principle it
seems to stand on the same footing as a simple agreement to rescind."

I am therefore of opinion that the present case is not ruled by
Noble v. Ward (1), because the question here is not whether contract

(1) LD. R.VExs117 pi AR 2 Bx 195.

A: C. AND PRIVY COUNCIL.

A was varied by contract B, but whether it was rescinded by contract
5, and on the facts I hold that it was.

There remains the question whether the defendants can sue for
breach of contract B in so far as that contract is a contract for sale
of the 277 pieces of cloth. I think they cannot for several reasons.

29

H, L, CE.)
1917
MorRRIS

Vv
BARON AND
COMPANY,

In the first place, I think, though with some hesitation, that it falls tora paneain,

within the 4th section of the Sale of Goods Act, and cannot therefore,
being a parol contract, be actively enforced. I say " with some
hesitation," because, looking at the 4th section, I cannot help feeling
that the section was meant to deal with what I may call pure
contracts of sale, and not contracts dealing with other arrangements
as well; and I have felt doubts as to whether when, as here, you
have a composite arrangement, dealing with the getting rid of
competing claims under an old contract as well as providing for the
supply of goods in the future by way of sale, the section ought to
apply. But on the whole I have come to the conclusion that in so
far as implement of that portion which is sale is asked the section
must apply. But further and apart from that, and taking the case
as it was taken by Bailhache J., I agree with the conclusion he
reached. I think that the maintained attitude of the defendants
under no circumstances to pay the 888/. unless delivery were first
made was equivalent to repudiation, but I do not find such an
unqualified acceptance on the plaintiff's part of that repudiation as
to amount to rescission. But I think also that the payment of the
388/. at the end of the three months was a consideration going to the
root of the contract because it was the counterpart of the plaintiff's
'orbearance to sue and the grant to the defendants of an option to
sake instead of the old duty to take, and that it was not in the
,0sition of an ordinary payment of instalment which would make
he case fall within the lines of Mersey Steel and Iron Co. v. Naylor,
Benzon & Co.(1) Accordingly, being a stipulation going to the
'oot of the contract, the defendants have all along been in breach,
ind cannot call on the plaintiff to implement his part; and thus

here can be no damages.

Lorp Atkinson. My Lords, I concur. —
The facts of this case have been already stated, and it is unneces-

(1) 9 App. Cas. 434.

30

ys (E)
1917

—S—

MorrRIs

Vv
BARON AND
COMPANY.

Lord Atkinson.

HOUSE OF LORDS [1918]

sary 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 101. 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 memoran-
dum 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 (1) 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

(1) 8 App. Cas. 467, 488.

A. C. AND PRIVY COUNCIL.

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 (1); Stead v.
Dawber (2); Noble v. Ward (3); Sanderson v. Graves. (4) 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 (5), 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. (6); Thornhill
y. Neats. (7) 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

(1) 5B. & Ad. 58. (4) (1875) L. R. 10 Ex. 234.
(2) 10 Ad. & E. 57. (5). LU. RB. 2 Q. B, 278; L. 8.3
Peilok tbs, 117;-L. R. 2 Q. B. 272.

Ex. 135. (6) (1875) 45 L. J. (Q.B.) 87.

(7) (1860) 8 C. B. (N.S.) 831.

31

H. L. (E.)
1917

Morris
v.
BARON AND
COMPANY.

Lord Atkinson.

82 HOUSE OF LORDS [1918]

H. L.(E.) been delivered, irregularly, no doubt, and occasionally behind time,
1917 but still delivered and accepted, the contract price of which
Morris 2®Mounted to 888i. 4s. The last delivery took place on March 6,

1 1915. In the months of December, 1914, and January, 1915, the

BARON AND
Company. respondents were pressing for more regular and speedy deliveries of

Lord Atkinson. 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, 5631. 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 8881. 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 appel-
lant's claim for 8881. 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 Is. 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 2} per cent. discount. They
then aver that the appellant had delivered 228 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

ASC, AND PRIVY COUNCIL.

agreement of April 22, 1915, save and except the price of the
serge.

First, the sum admitted to be due, 8881. 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 froin his
obligation to deliver the portion of those pieces, already manufac-
tured, 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 isnot 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 manu-
facture. In addition the legal proceedings are to be withdrawn, all
claim for damages to be abandoned. A sum of 301. 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, ie.
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, ain, and effect of this new arrange-
ment 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
A.C. 1918. 3 1D,

83

H. L. (E.)
1917

——
Morris
v.
BARON AND
COMPANY.

Lord Atkinson.

34 HOUSE OF LORDS [1918]

H.L.(E.) contents sufficient, as against them, to satisfy the statute ; but if
1917 _—°80, it must rescind by implication the earlier contract over which it
Moners 18 to prevail and with which it is in conflict. The fact that the
Barow anp respondents, if they desired to enforce it in a Court of law against
Company. the appellant, would not have the written evidence necessary to
Lord Atkinson, 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 (1), Dobson v. Espie (2),
and Williams v. Stern. (3) 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 embodi-
ment 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 888/. 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 respon-
dents 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

(1) (1851) 6 Ex. 839. (2) (1857) 2H. & N. 79.
(3) (1879) 5 Q. B. D. 409.

A.C. AND PRIVY COUNCIL.

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 pleces 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, notwith-
standing that it was accompanied by an illegal claim to refuse to pay
the 888/. 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 agree-
ment. 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 8881. 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. (1) 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: Svibree v.
Tripp (2); Hall v. Flockton (8) ; Evans v. Powis. (4) 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

(1) (1611) 9 Rep. 7b, 79b. (3) (1851) 16 Q. B. 1039 (Ex.
(2) (1846) 15 M. & W. 23. Ch.).
(4) (1847) 1 Ex. 601.
3 D2

35

H. L. (E.)
1917

——
Morris
Re
BARON AND
COMPANY,

Lord Atkinson,

36

H. L. (E.)
1917

_——
Morris
v.
BARON AND
- COMPANY.

Lord Atkinson.

HOUSE OF LORDS [1918]

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.

Lorp Parmoor (1) (after stating the facts as above). My Lords,
in my opinion, the determining factor, on which the appeal depends,
is the intention of the parties at the time when the parol arrange-
ment was made in April, 1915. This question is one of fact, and
depends on the conclusions to be drawn from the acts and conduct
of the parties. The parol arrangement does not comply with the
conditions of s. 4, sub-s. 1, of the Sale of Goods Act, 1893, and, if it
is to be regarded as a contract of sale, is consequently not enforceable
by action against the appellant. I think that in substance the
contract is a contract of sale, and therefore within s. 4, sub-s. 1, of
the Sale of Goods Act, 1893. Some question was raised at the
hearing before your Lordships as to the terms of the parol arrange-
ment. The case has, however, proceeded throughout on the basis
that these terms are contained in the note of April 22, 1915, and it
is unnecessary to further consider the evidence under this head.
There can be no doubt that, if it is admissible in evidence, the crucial

(1) Read by Lord Dunedin,

A. GC. AND PRIVY COUNCIL.

factor, in determining the conclusions to be drawn from the acts
and conduct of the parties, is the parol arrangement. If this
arrangement expressed in clear language an intention to rescind the
earlier contract in September, it would, in the absence of explanation,
be decisive. Iam unable to understand any principle on which it
can be said that the terms of the parol arrangement are not admissible
in determining the intention of the parties in April, 1915. If a
factor of such importance was eliminated from consideration under
any technical rule, there would be great danger of coming to a
conclusion contrary to that which was really intended by the
parties. I can find no authority for any such proposition, and it is
not to be found in the decision of Noble v. Ward (1), to which
frequent reference was made during the hearing of the argument.
With all respect to the opinion of Sankey J. in the case of Williams
v. Moss' Empires, Ld. (2), I cannot agree that if a subsequent
contract is unenforceable, as being one which is required to be in
writing, aud is not in writing, it cannot be treated as evidence that
the original contract has been rescinded, and the original contract
therefore remains in force. In his judgment in the Court of Appeal
Bankes L.J. approved the opinion of Sankey J., but, as stated above,
it does not appear to me to be correct, or supported by authority.
The next point which arises for consideration is whether, taking
into consideration the parol arrangement of April as part of the acts
and conduct of the parties, there was an intention to rescind the
earlier contract of September, 1914. The note of April 22, 1915,
was drawn up in confirmation of terms agreed upon to compromise
an action brought, and a counter-claim made, on the September
contract. It provides that both parties shall withdraw the legal
proceedings on terms, each party to pay his own costs and the
appellant to allow 30/. to the respondents to meet expenses incurred
through not fulfilling the orders. I agree in the construction
_ placed by Mr. Tinda! Atkinson on the latter portion of the termis of
the note. The account due to the appellant is to be left over for
three months so as to give the opportunity of selling the goods—
that is to say, the goods already delivered to the respondents. The
goods not delivered to the respondents are to be kept for them if
they ask for them. A further option is given to the respondents of
(jie Babes. 17: LR. 2 Ex.135. (2) [1915] 3 K. B. 242.

37

Hal Gis)
1917

——
Morris
OP
BARON AND
COMPANY.

Lord Parmoor,

38

Hel. CE.)
1917

Morris
%.
BARON AND
COMPANY.

Lord Parmoor

HOUSE OF LORDS [1918]

taking up the balance of pieces to complete the order, giving time
to make. It is clear that these terms are an alteration of the
September contract, but this in itself would not be sufficient to
support the plea of rescission. It is necessary further to inquire
whether the conditions have been so changed in their essential
character that there is a substantial inconsistency, such as to lead to
the inference that the parties did intend to rescind the earlier
contract of September. It is not possible to lay down any general
principle, but where the alteration is such that the conditions of the
earlier contract cannot be restored without placing one of the parties
under a permanent and substantial disability there is a strong prima
facie probability of an intention to rescind. This factor applies in
the present case, and is supported, not only by the acts and conduct
of the parties at the time, but by the whole course of their
subsequent acts and conduct. The case before Bailhache J. was
fought on the construction of the April contract, and I cannot find
that the September contract was regarded as material until this
issue was raised in the argument before the Court of Appeal. It
was pointed out in argument that the April contract refers to the
earlier contract, but the answer is that it does so only so far as is
necessary to identify the subject-matter, and that from a business
aspect the two contracts are essentially different. I have therefore

_ come to the conclusion that it was the intention of the parties at the

time when they made the parol contract in April, 1915, to rescind
and put an end to the earlier contract of September, 1914.

To prevent misapprehension I desire to refer to the later portion
of the judgment of Swinfen Kady L.J., in which he refers to the case
of Noble v. Ward (1) and the opinion stated by Shearman J. in the
case of Williams v. Moss' Empires, Ld. (2) In my opinion the case
of Noble v. Ward (1) was decided on the ground that it was the
intention of the parties in the subsequent contract not to rescind the
earlier contract, but only to vary it. It is a settled principle that a
contract, which is required to be in writing, and is not in writing,
cannot vary the terms of an earlier contract, where such earlier
contract is required by statute to be in writing in order to be enforce-
able by action. If, therefore, the right conclusion should be that
the parties intended not to rescind the earlier September contract,

G)sLA Red Exo] Lak. 2x loo (2) [1915] 3 K. B. 242.

A. C. AND PRIVY COUNCIL.

but to introduce a variation in these terms, I think that the prinaiple
in Noble vy. Ward (1) would have applied. There is no reason to
dissent from the opinion expressed by Shearman J. in Williams v.
Moss' Empires, Ld. (2) and approved by Swinfen Eady L.J., although,
for the reasons given above, it is not, in my opinion, applicable to the
present case. "The principle as laid down by Willes J., who
delivered the judgment of the Court, in Noble v. Ward (3) is where
there is alleged to have been a variation of a written contract by a
new parol contract, which incorporates some of the terms of the old
contract, the new contract must be looked at in its entirety, and if
the terms of the new contract when thus considered are such that
by reason of the Statute of Frauds it cannot be given in evidence
unless in writing, then being an unenforceable contract it cannot
operate to effect a variation of the original contract. That principle
is to be found in a number of cases, which I need not refer to in
detail." After referring to the cases of Goss v. Lord Nugent (4),
Stead vy. Dawber (5), Giraud v. Richmond (6), Marshall v. Lynn (7),
and Stowell v. Robinson (8), the learned judge continues: '' Those
cases show that whenever the parties vary a material term of an
existing contract they are in effect entering into a new contract, the
terms of which must be looked at in their entirety, and if the new
contract is one which is required to be in writing but is not in writing,
then it must be wholly disregarded and the parties are relegated to
their rights under the original contract." Unless the principle is
maintained that it is not admissible to vary the terms of a contract
in writing by a subsequent parol contract, which in itself would be
required to be in writing to be enforceable, the safeguards provided
either by the Statute of Frauds or the Sale of Goods Act, 1893, might
be practically evaded and rendered of little value as a protection
against fraud or to ensure certainty.

The case of Noble v. Ward (1) has been so fully considered by other
members of your Lordships' House that it is unnecessary to refer
further to it. There are, however, two cases to which I would desire

Myer web Ex 117 5-1, FR. 2 (4) 5 B. & Ad. 58.

Ex. 135. (5) 10 Ad. & E. 57.
(2) [1915] 3 K. B, 242, 246. (6) 2.0. B. 835.
(3) L. R. 2 Ex. 135. (7) 6M. & W. 109.

(8) 3 Bing. N. C. 928.

9
Ve

H. L. (E.)
1917

Morris
Vv.
BARON AND
COMPANY.

Lord Parmoor,

)

40

H. L. (E).
1917

Morris
Vv.
BARON AND
COMPANY.

Lord Parmoor,

HOUSE OF LORDS £1918]

to refer your Lordships. In Gloss v. Lord Nugent (1) Denman C.J.
says: "It should rather seem that a written contract concerning
the sale of lands may still be waived and abandoned by a new
agreement not in writing, and so as to prevent either party from
recovering on the contract which was in writing." In the case of
Maddison v. Alderson (2) Lord Selborne states the law applicable
to contracts not enforceable through non-compliance with statutory
requirements : " It has been determined at law (and, in this respect,
there can be no difference between law and equity), that the 4th
section of the Statute of Frauds does not avoid parol contracts, but
only bars the legal remedies by which they might otherwise have
been enforced: Crosby v. Wadsworth (3); Lerouw v. Brown (4);
Britain v. Rossiter. (5) Crosby v. Wadsworth (3) was an action
of trespass brought by the trespasser against the vendor of a growing
crop. 'The contract was by parol, and it was held to be concerning
an interest in land, within the 4th section of the statute. 'But'
(said Lord Ellenborough) 'the statute does not expressly and
immediately vacate such contracts, if made by parol; it only pre-
cludes the bringing of actions to enforce them by charging the
contracting party, or his representatives, on the ground of such
contract, and of some supposed breach thereof ; which description
of action does not properly apply to the one now brought, viz., a
mere general action of trespass, complaining of an injury to the
possession of the plaintiff, however acquired, by contract or other-
wise.' In the same case Lord Blackburn says: "'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." It is not necessary further to consider the opinion so
expressed by Lord Blackburn in the present case, but it is noticeable
that Lord Blackburn had been a member of the Court when Willes J.
eave judgment in Noble v. Ward. (6)

If the original contract of September, 1914, has been rescinded,
and the later contract of April, 1915, is not enforceable against the

(1) 5 B. & Ad. 58, 66. (4) 12 C. B. 801
(2) 8 App. Cas. 467, 474, 488. (5) 11°Q.. BAD, 4198
(3) (1805) 6 East, 602, 611. (6) L. R. 2 Ex. 135.

A. GC. AND PRIVY COUNCIL

appellant as not complying with the conditions in s. 4, sub-s. 1, of
the Sale of Goods Act, 1893, the appellant succeeds in his appeal.
Assuming, however, that the case had to be determined on the terms
of the later contract, I agree with the judgment of Bailhache J.
Under the April contract the appellant was entitled to the payment
of his account after a period of three months. Bailhache J. has
found that during this period no firm offer was given to the appellant
by the respondents under the contract, and that at the end of this
period the appellant had done nothing in breach of his obligations.
On July 27, 1915, the appellant wrote to the respondents claiming
the payment to which he was then entitled under the April contract.
On July 28 the respondents answered: " Referring to yours of
yesterday's date, we shall be pleased to pay your account if you
deliver the balance of the blue pieces to complete the order, as stated
in our letter of April 22nd." This condition the respondents were
not entitled to make, and they withheld payment because they
conceived that they had a counter-claim for damages exceeding the
amount of their indebtedness. In a letter of August 17th the
respondents maintained the same attitude, and, although there was
a subsequent attempt to settle, they did not recede from the view
as to the nature of their rights stated in the letter of July 28. No
firm order was ever given by the respondents in accordance with the
terms of the April contract. They were insisting that they had
a right to give an order, not under the terms of the April contract,
but of a different contract to which the appellant had never been
a consenting party. There was no justification for this attitude.
The difference on which the respondents continuously insisted had
reference to a matter of essential substance, namely, the claim of the
appellant to be paid his account of 888/. 4s., irrespective of further
deliveries.

The question then arises whether the persistent maintenance of an
untenable construction of a contract on a matter of essential
substance should be regarded as not consistent with a continuing
intention to observe the contractual obligations. I think that the
answer should be in the affirmative. If this is so, the respondents
could not substantiate their counter-claim for damages, even on the
assumption that they were entitled to enforce their right under the
April contract by action against the appellant. This conclusion

41

H. L. (E.)
1917

——
Morris
Ge
BARON AND
COMPANY.

Lord Parmoor,

49 ; HOUSE OF LORDS [1918]

H.L.(E.) renders it unnecessary to consider whether the payment of his

1917 account to the appellant was a condition precedent to the giving of a
Morris firm order under the contract, and I do not understand that the
Baroy axp Judgment of Bailhache J. depended on the acceptance of any such
Company. construction of the contract.
Lord Pamoor, My Lords, in my view the appellant succeeds and the appeal

should be allowed with costs here and below.

Order of the Court of Appeal reversed and judgment of
Baulhache J. restored. The respondents to pay the
costs in the Courts below and also the costs of the

appeal to this House.

Lords' Journals, Oct. 19, 1917.