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

The plaintiff, Tallerman & Co Pty Ltd, and the defendant, Nathan's Merchandise (Victoria) Pty Ltd, entered into written contracts for the sale of goods, which were made in Victoria. The defendant returned a significant portion of the delivered goods, relying on a subsequent parol agreement regarding delivery terms. Correspondence between the parties, some marked "without prejudice," led to a dispute over whether a new contract or a variation of the existing contracts had been formed. The plaintiff issued a writ in the Supreme Court of New South Wales, and by consent, the parties agreed that the contract in question was one alleged to have been made in Sydney through the correspondence. The trial judge found for the plaintiff, but the Full Court of New South Wales allowed the defendant's appeal.

The central legal issues before the High Court were whether the correspondence between the parties constituted a new contract, a variation of the original contracts, or merely an executory accord, and consequently, whether the Supreme Court of New South Wales had jurisdiction to hear the matter based on the alleged place of contract formation. The court also considered the legal effect of agreements made "without prejudice" and the distinction between rescission and variation of existing contracts.

A majority of the High Court (Dixon C.J., Fullagar and Taylor JJ.) held that the correspondence did not create a new contract nor a varied contract, but rather an accord executory. They applied the principle that a contract is completed upon communication of acceptance to the offeror, and that a contract is made where the act creating the contractual obligation occurs. They also reasoned that a variation of a contract does not create a new contract but affects the existing one, which remains made at its original place of formation. Williams and Kitto JJ. dissented, finding that the correspondence constituted a new contract made in Sydney.

Ultimately, the appeal was dismissed, but the High Court varied the order of the Full Court to a judgment of non-suit, acknowledging that the merits of the real dispute had not been fully investigated due to the restricted basis on which the case had been dealt with in the lower courts.