ON APPEAL FROM THE SUPREME COURT OF Contract-Statute of Frauds-Negotiations in code cablegrams-Offer and accept.
ance-Ambiguity-Extrinsic evidence-Subsequent correspondence. Principal and agent - Undisclosed principal--Ratification. SYDNEY, Aug. 27, 28,
Where the documents relied upon to prove a contract consisted of transla- 29, 30.
tions and expansions of a number of cablegrams in code which passed between the parties:
Held, that the Court, in considering whether there was a concluded agreement at a certain date should look at all the surrounding circumstances for the purpose of ascertaining the sense in which abbreviated communica- tions, capable of more than one meaning, were likely to have been understood by the recipients, and that, although the documents of that date were capable of being read SO as to constitute a complete contract, evidence was admissible of communications between the parties before and subsequent to that date which tended to negative that conclusion.
Hussey v. Horne-Payne, 4 App. Cas., 311, applied. Although as a general rule it is not necessary, in order to satisfy the requirements of the Statute of Frauds, that the acceptance of an offer in writing should also be in writing, yet if the facts show that the party making the offer did not intend to be bound unless the other party accepted it in writing, there is no contract without such acceptance.
So, where the parties were in places far apart and all the negotiations were necessarily conducted by cable :
Held, that the inference was irresistible that a party making a cabled offer did not intend to be bound by it until he was informed in like manner that the offer was accepted.
Moore v. Campbell, 10 Ex., 323, applied. Where in an action upon a contract of sale, involving a number of special terms and conditions, subsidiary to the main transaction, the owners, as plaintiffs, rely upon ratification of a contract made by their agent, they must establish that the agent professed to be acting as an authorized agent for the owners with respect to the whole bargain.
Keighley, Maxsted &Co. v. Durant, (1901) A.C., 240, applied. Decision of the Supreme Court, 15th February 1907, affirmed.
APPEAL from a decision of the Supreme Court of New South Wales.
The following statement of the proceedings in the case is taken from the judgment of Griffith C.J. :-
"This was an action brought by the appellants (plaintiffs) against the respondent (defendant) for damages for breach of an alleged contract for the sale of the S.S. Peregrine by the plaintiffs to the defendant for the sum of £28,000. The defendant denied the making of the alleged contract, and also set up the Statute of Frauds. The documents relied upon to prove the contract were cablegrams which passed between one Moller, who was the defendant's agent, and who was a ship broker at Shanghai in China, and one Miles, who was alleged to be the plaintiffs' agent, and who was at Manila in…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Howard Smith & Co Ltd v Varawa [1907] HCA 38
Case
[1907] HCA 38
Decision Date
CaseChat Overview and Summary
The parties to this appeal were Howard Smith & Co Ltd (the plaintiffs) and Varawa (the defendant). The dispute concerned an alleged contract for the sale of the steamship "Peregrine" by the plaintiffs to the defendant for £28,000. The defendant denied the existence of a concluded contract and also raised the defence of the Statute of Frauds. The case reached the High Court of Australia on appeal from the Supreme Court of New South Wales, which had directed a verdict for the defendant.
The legal issues before the High Court included whether a concluded contract for the sale of the "Peregrine" had been formed between the parties on 1st December 1904, or alternatively on 3rd December 1904. Further issues were whether the negotiations, conducted through coded cablegrams, were sufficiently clear to constitute a binding agreement, and whether extrinsic evidence of surrounding circumstances and subsequent correspondence was admissible to determine the parties' intentions and the existence of a contract. The court also considered whether the agent, Miles, had purported to act on behalf of the plaintiffs (the owners) in such a way as to allow for ratification of the contract by them, and whether the Statute of Frauds had been satisfied.
The High Court, in affirming the decision of the Supreme Court, held that the cablegrams exchanged between the parties were ambiguous and capable of more than one meaning. Therefore, the court was entitled to consider all surrounding circumstances to ascertain the intended meaning of these abbreviated communications. Crucially, the court found that evidence of communications before and after the alleged contract dates was admissible to demonstrate that no concluded agreement had been reached. The court applied the principle that where parties negotiate through cablegrams, and the communications are ambiguous, the onus is on the party alleging a contract to prove it clearly. Furthermore, the court held that even if an offer is accepted, if the offeror's intention was not to be bound unless acceptance was in writing, then no contract arises without such written acceptance, a principle particularly relevant in the context of distant negotiations via cable. The court also applied the rule from *Keighley, Maxsted & Co v Durant* that for a contract to be ratified, the agent must have professed to act for the principal in respect of the whole bargain, which the plaintiffs failed to establish.
The High Court dismissed the appeal, finding that the plaintiffs had not discharged the onus of proving a concluded contract. The court concluded that the cablegrams, when considered in light of the subsequent correspondence and the parties' conduct, did not demonstrate a clear intention to be bound on the dates in question. The court also found that the agent, Miles, had not professed to act on behalf of the plaintiffs in a manner that would permit ratification of the alleged contract. Consequently, the defendant was entitled to judgment.