Mayfair Trading Co Pty Ltd v Dreyer

Mayfair Trading Co Pty Ltd (the appellant) appealed to the High Court of Australia from a judgment of the Supreme Court of South Australia. The dispute concerned the interpretation of a written agreement for the sale of a business, specifically whether the vendor, Mr. Dreyer (the respondent), was entitled to recover the full purchase price despite the purchaser's repudiation of the contract. The Supreme Court had found in favour of the respondent.

The High Court was required to determine whether the respondent, having elected to treat the contract as repudiated by the appellant, could nevertheless sue for the full purchase price as a debt due under the contract. The central legal issue was whether the appellant's repudiation discharged the contract in such a way that the respondent could no longer enforce the obligation to pay the full purchase price, or whether the contract remained on foot for the purpose of recovering the agreed price.

The Court held that where a contract for the sale of a business provides for payment of the purchase price by instalments, and the purchaser repudiates the contract before all instalments are due, the vendor may elect to affirm the contract and sue for the full purchase price as a debt. Dixon C.J. and Taylor J. reasoned that the obligation to pay the purchase price was an independent covenant, and the vendor's right to recover the full price was not extinguished by the purchaser's repudiation. They distinguished this situation from cases where the contract is terminated by mutual agreement or by operation of law, in which event future obligations may cease. McTiernan J. concurred, finding that the contract remained enforceable for the recovery of the price.

The appeal was dismissed.