Lennon v Scarlett & Co

In Lennon v Scarlett & Co, the plaintiff, a merchant in Cairns, sued the defendant, a merchant in Melbourne trading as Scarlett & Co, for damages for breach of a contract for the sale of 500 tons of maize. The dispute arose from an exchange of telegrams on 1st June 1920, where the plaintiff offered to sell maize at a specified price and delivery period, and the defendant accepted the offer, requesting a contract be forwarded. Subsequent correspondence involved the plaintiff sending a contract note with additional terms, which the defendant objected to, leading to further negotiation and ultimately the defendant's repudiation of any contract. The case was heard in the High Court of Australia.

The central legal issues before the court were whether a binding contract was concluded by the initial telegrams exchanged on 1st June 1920, and if so, whether the plaintiff's subsequent attempts to introduce additional terms constituted a repudiation of that contract. The court was also required to determine the appropriate measure of damages for the breach, specifically the date on which the market price should be assessed.

The High Court held that a binding contract was formed by the first two telegrams on 1st June 1920. The court reasoned that all essential terms – parties, subject matter, price, and delivery – were present in these initial communications. The defendant's request to "forward contract" was interpreted not as a condition precedent to the contract's formation, but as a request for a formal document embodying the agreed terms. The court found that the plaintiff's subsequent attempts to add further conditions to the contract note did not amount to a repudiation of the contract, particularly as the defendant never accepted such a repudiation, instead denying the existence of any contract. The measure of damages was determined to be the difference between the contract price and the market price on the date the contract should have been performed.

Consequently, the High Court found in favour of the plaintiff, holding that a binding contract had been entered into and that the defendant had repudiated it. The court ordered judgment for the plaintiff for damages to be assessed and awarded costs of the action.