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“It is evident both on principle and on authority,” said Lord Moulton in 1913:
“that there may be a contract the consideration for which is the making of some other contract. ‘If you will make such and such a contract I will give you one hundred pounds,’ is in every sense of the word a complete legal contract. It is collateral to the main contract, but each has an independent existence, and they do not differ in respect of their possessing to the full the character and status of a contract. But such collateral contracts must from their very nature be rare.”
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References
1 Heilbut Symons & Co. v. Buckleton [1913] A.C. 30 at p. 47.Google Scholar
2 City and Westminster Properties (1934), Ltd. v. Mudd [1958] 3Google Scholar W.L.R. 312; and Mouat v. Betts Motors, Ltd. [1959]Google ScholarA.C. 71 (J.C.).
3 Law of Contract (4th ed. 1956), p. 100.Google Scholar Pollock on Contract (Winfield's 13th ed.), p. 202 agrees that whether there are two contracts or one is “a nice question but not material to the result.” Other textbooks, in effect, agree either by ignoring the collateral contract together, (e.g., Wilson, Law of Contract, p. 238), or by failing to distinguish it clearly from a “one-contract” analysis: Cockle, Cases and Statutes on Evidence (9th ed.), p. 338; Chitty on Contract (21st ed.), pp. 174, 181 (but see p. 131); Benjamin on Sale (8th ed.), pp. 671–672; Smith & Thomas, Casebook on Contract, Chap. 10. Supporters of the collateral contract are: Salmond & Williams on Contracts, pp. 151 et seq; p. 177; Sutton & Shannon, Contracts (5th ed.), Art. 19; Anson, Law of Contract (20th ed.), p. 295; Williams, Statute of Frauds s. IV, Part III, Chap. III; and (perhaps) Odgers, Construction of Deeds and Statutes (4th ed.), pp. 72 et seq.
4 This article is not concerned with subsequent variations or agreements.
5 Mercantile Agency Co., Ltd. v. Flitwick Chalybeate Co. (1897) 14 T.L.B. 90, per Lord Halsbury L.C. (H.L.).
6 P. O. Lawrence, J. in Jacobs v. Batavia & General Plantations Trust [1924] 1Google Scholar Ch. 287, p. 295; (affd. C.A. [1924] 2 Ch. 329).
7 e.g., Bank of New Zealand v. Simpson [1900]Google Scholar A.C. 182. See further Chitty on Contract (21st ed.), p. 174; Phipson on Evidence (9th ed.), Chap. XLVII; and Odgers, Construction of Deeds and Statutes (4th ed.), pp. 31, 53, 72 et seq.
8 Hutton v. Warren (1836) 1 M. & W. 466, 475 (Parke B.).
9 If the writing expresses exactly what the parties desired to express, it cannot be rectified even if they were both mistaken as to the fundamental meaning: Rose (Frederick E.) Ltd. v. Pim (William H.) Ltd. [1953] 2Google Scholar Q.B. 450. See also infra, p. 63.
10 See Bank of Australia v. Palmer [1897] A.C. 540; Jervis v. Berridge (1873) L.K. 8 Ch. 351.
11 Pym v. Campbell (1856) 6 E. & B. 370; Pattle v. Hornibrook [1897] 1 Ch. 25; New London Credit Syndicate, Ltd. v. Neale [1898] 2 Q.B. 487; Kuenigl v. Donnersmarck [1955] 1Google Scholar Q.B. 515. “It is in analogy with the delivery of a deed as an escrow; it neither varies nor contradicts the writing but suspends the commencement of the obligation”: Wallis v. Littell (1861) 11 C.B.(N.B.) 369 at p. 375.
12 Note, too, the use of parol evidence to ascertain the objective “intention” of the parties, “identify” the subject-matter, and so control the implication of contingent “conditions” subsequent: Krell v. Henry [1903] 2Google Scholar K.B. 740.
13 See for example Trans Trust S.P.R.L. v. Danubian Trading Co., Ltd. [1952] 2Google Scholar Q.B. 297 (Denning L.J. at p. 304). The “contingency” interpretation would have been possible in many of the “collateral warranty” cases discussed below.
14 See the discussion in Oscar Chess, Ltd. v. Williams [1957] 1Google Scholar W.L.E. 370 (C.A.).
15 Cheshire & Fifoot, op. cit., p. 100.
16 Smith v. Jeffryes (1846) 15 M. & W. 561; and see Harnor v. Groves (1855) 15 C.B. 667. Quaere whether Williams is correct in suggesting that in this case, and others like Giraud v. Richmond (1846) 2 C.B. 835, the Statute of Frauds excludes oral evidence independently of the common law rule (The Statute of Frauds s. IV, p. 150).
17 Powell v. Edmunds (1810) 12 East 6; Shelton v. Livius (1832) 2 Cr. & J. 411.
18 Henderson v. Arthur [1907] 1Google Scholar K.B. 10. See too Longman v. Blount (1896) 12 T.L.R. 520.
19 Hutton v. Watling [1948]Google Scholar Ch. 398.
20 Leggott v. Barrett (1880) 15 Ch.D. 306.
21 Harris v. Rickett (1859) 4 H. & N. 1, p. 7, per Pollock C.B.; and see Stones v. Dowler (1860) 29 L.J.Ex. 122.
22 Lockett v. Nicklin (1848) 2 Ex. 93, 100 per Alderson B.; Allen v. Pink (1838) 4 M. & W. 120; Beckett v. Nurse [1948] 1Google Scholar K.B. 535.
23 Palmer v. Johnson (1884) 13 Q.B.D. 351 (especially Bowen L.J. at p. 357).
24 Hassan v. Runciman & Co. (1905) 91Google Scholar L.T. 808.
25 Ardennes S.S. (Cargo Owners) v. Ardennes S.S. (Owners) [1951] 1Google Scholar K.B. 55.
26 Otto v. Bolton [1936] 2Google Scholar K.B. 46, 50, 51; Miller v. Cannon Hill Estates, Ltd. [1931] 2Google Scholar K.B. 113, 118; Collins v. Hopkins [1923] 2Google Scholar K.B. 617, p. 629 (furnished tenancy).
27 Malpas v. L. & S. W. Ry. (1866) L.E. 1 C.P. 336.
28 Abbott v. Hendricks (1840) 1 M. & G. 791. Townend v. Toker (1866) 1 Ch. 446; see too Halsbury, , Laws of England (3rd ed.) Vol. 11, pp. 403–404.Google Scholar
29 Denning, L.J. in Turner v. Forwood [1951] 1Google Scholar All E.R. 746, at p. 749. (Consideration stated in writing to be 10s. Real consideration of £1,250 could be proved.) The more explicitly the consideration is set out in the document, the more difficult is it to persuade the court that additions should be made: Barton v. Bank of N.S.W. (1890) 15 App.Cas. 379, 381, per Lord Watson. No oral addition will be allowed to contradict the consideration clearly expressed in the document: Ridout v. Bristow (1830) 1 C. & J. 231. On contradicting the writing see infra, p. 81.
30 Lord Bussell of Killowen C.J. in Gillespie Bros. v. Cheney, Eggar & Co. [1896] 2 Q.B. 59, p. 62. See, too, Newman v. Gatti (1907) 24Google Scholar T.L.R. 18, 20 (Vaughan Williams L.J.); Palmer v. Johnson (1884) 13 Q.B.D. 351, 357 (Bowen L.J.).
31 Citing Birch v. Paramount Estates, Ltd. (1956) 16Google ScholarEstates Gazette 396 (house to be as good as the show house).
32 Oscar Chess, Ltd. v. Williams [1957] 1Google Scholar W.L.R. 370, p. 376.
33 Malpas v. L. & S. W. Ry. (1866) L.R. 1 C.P. 336. Compare cases like Evans v. Roe (1878) L.R. 7 C.P. 138.
34 Stucley v. Bailey (1862) 1 H. & C. 405. Cf. Jervis v. Berridge (1873) L.R. 8 Ch. 351.
35 See, e.g., Guardhouse v. Blackburn (1866) 1 P. & D. 109, 117: “The general rule… is based on the proposition that written testimony is of a higher grade—more certain, more reliable—than parol, and that resort should be had to the highest evidence of which a subject is capable to the exclusion of the inferior class.” Compare Meres v. Ansell (1771) 3 Wils.K.B. 275, 276. If a statute demands writing, the reason for the demand will depend upon the particular statute.
36 Bramwell B. in Wake v. Harrop (1862) 30 L.J.Ex. 273, p. 277 (affd. 31 L.J.Ex. 451); Inglis v. Buttery (1878) L.R. 3 App.Cas. 552, 577 per Lord Blackburn.
37 Cf. Bradford v. Romney (1862) 30 Beav. 431.
38 Henman v. Berliner [1918] 2Google Scholar K.B. 236, 239, 240; Walker Property, Ltd. v. Walker (1947) 171Google Scholar L.T. 204 (C.A.: the judgments appear to include all three analyses since Evershed L.J. seems to use the collateral contract—of which he may be said to be the leading modern judicial exponent. See his judgments in Routledge v. McKay [1954] 1Google Scholar W.L.R. 615; Mahon v. Ainscough [1952] 1Google Scholar All E.B. 337; Webster v. Higgin [1948] 2Google Scholar All E.R. 127).
39 [1948] Ch. 398.
40 [1948] 1 K.B. 535.
41 Lord Greene M.E. [1948] Ch. p. 403.
42 Because there would be no memorandum sufficient to satisfy s. 40, Law of Property Act, 1925. See further infra, p. 71. Their Lordships' obvious reluctance to decide the case in the way it was decided shows how weak the presumption has become. Compare the stronger emphasis of Bramwell B. in Rogers v. Hadley (1863) 2 H. & C. 227, p. 249.
43 See particularly Williams Statute of Frauds s. IV, Part III, Chap. III.
44 There are cases in which the courts separated a transaction into two contracts. But they adumbrate the later cases only lightly. See Green v. Saddington (1857) 7 E. & B. 503; Mayfield v. Wadsley (1824) 3 B. & C. 357. See too the cases on “severance,” infra, p. 73.
45 (1864) 17 C.B.(n.s.) 578; 34 L.J.C.P. 7.
46 (1864) 17 C.B.(n.s.) p. 585; 34 L.J.C.P. p. 9 (Erle C.J.). Most of the cases cited did not involve collateral contracts, e.g., Harris v. Rickett (1859) 4 H. & N. 1; and Wallis v. Littell (1861) 11 C.B.(n.s.) 369.
47 (1871) L.R. 6 Ex. 70.
48 (1873) L.B. 8 Ch. 756.
49 Ibid., p. 766.
50 On demurrer: (1875) L.B. 10 Q.B. 174. (Cockburn C.J., Mellor, Lush and Archibald JJ.)
51 (1875) 32 L.T. 320.
52 Cockburn C.J. and Mellor J. It is sometimes suggested that there is a distinction between the two decisions, i.e., that they show that what is “collateral” and acceptable for the purposes of the statute may not be “evidentially” collateral and admissible: see Phipson on Evidence (9th ed.), p. 619. It is suggested that this is not so. In the second decision, Blackburn J. himself expressly approves Morgan v. Griffith (supra).
53 See infra, p. 77. The judges also paraded the banner of the parol evidence rule as though it meant what it said; and, furthermore, they now took the view that the writing was “contradicted” by the collateral promise.
54 [1901] 2 K.B. 215.
55 Ibid., p. 222, A. L. Smith M.B. This and other passages of his judgment (especially p. 221) suggest “one contract.” But it will be suggested that this is not the most elegant explanation, nor that intended by the court. In particular, it is easier to say that the C.A. intended a “two-contract” analysis if their judgment is read together with that of Bruce J., which they were reversing: see (1901) 84 L.T. 549.
56 This is a favourite phrase in all the collateral contract cases. “Warranty,” it is suggested, is used in most of them in the old sense of “contractually binding guarantee,” and not in the modern sense of “term of the contract which is not a condition.”
57 Lord Abinger, Chanter v. Hopkins (1838) 4 M. & W. 399, p. 404. See too Sale of Goods Act, 1893, s. 62 (“an agreement with reference to goods which are the subject of a contract of sale, but collateral to the main purpose of such contract”); also Stoljar, Conditions, Warranties and Descriptions (1952) 15 M.L.B. 425, where he advances nine “meanings” of collateral warranty at p. 430.
58 (1901) 85 L.T. 162 (Div.Ct.), pp. 165–166. The whole of this passage (too long to quote here) is worth reading as an example of the understandable confusion caused by the different lines of authority. The collateral contract cases had been inappropriately cited to him in a case where there was only one contract; and he found them “difficult to reconcile with the older cases” such as Kain v. Old (1824) 2 B. & C. 627.
59 [1901] 2 K.B. 215.
60 e.g., Wills J. in Kennard v. Ashman (1894) 10 T.L.R. 213: “The cases as to collateral agreements had gone quite far enough and he was not disposed to carry the doctrine further than it had already gone” (p. 214).
61 Especially in the cases where landlords had made oral statements to tenants taking a written lease: Green v. Symons (1897) 13 T.L.E. 301 (C.A.); Kennard v. Ashman (1894) 10 T.L.E. 213; Best v. Edwards (1896) 60 J.P. 9; Burstal v. Bianchi (1892) 65 L.T. 678. And see Grimston v. Cunningham [1894] 1 Q.B. 125; Newman v. Gatti (1907) 24 T.L.R. 18.
62 As perhaps in De Lasalle v. Guildford [1901] 2Google Scholar K.B. 215. And see Somervell, L.J. in Walker (Co.) Ltd. v. Walker (1947) 177Google Scholar L.T. at p. 206, who bases a “collateral term” analysis upon Erskine v. Adeane. For a curious analysis see Odgers, Construction of Deeds and Statutes, p. 78, where the author presents together under the same heading “collateral agreements” and the frustration cases.
63 e.g., Routledge v. McKay [1954] 1Google Scholar W.L.E. 615 (Evershed M.R., pp. 620, 622); Mahon v. Ainscough [1952] 1Google Scholar All E.E. 337 (C.A.) (vendor's innocent representation that property had not suffered war damage not a warranty). Evershed M.R.: “no hint… of there having been any intention to make such a separate contract as a warranty must necessarily import” (p. 340). See too Jenkins L.J., p. 341. Many other cases have ambiguous language: e.g., Miller v. Cannon Hill Estates [1931] 2Google Scholar K.B. 113.
64 See Oscar Chess, Ltd. v. Williams [1957] 1Google Scholar W.L.K. 370. Morris L.J. (dissenting at p. 381): “The plaintiffs do not allege that there was any collateral oral warranty. They submit that the statement of the defendant was not something detached from the contract but was a part of the contract.” Contrast Denning L.J. (p. 376), who is concerned with “collateral warranty” in one contract.
65 [1957] 1 Q.B. 229. See too Shanklin Pier, Ltd. v. Detel Products, Ltd. [1951] 2Google Scholar K.B. 854, and (1959) 75 L.Q.B. 34 (J. J. Davies).
66 It is suggested that until the terms of the hire-purchase are rendered certain, there can be no collateral contract. The latter will, therefore, usually involve an executed consideration (actual acceptance of the finance company's terms) rather than an executory consideration, since a promise to buy from the company would not relate to any particular terms (Scammell, Ltd. v. Ouston [1941]Google Scholar A.C. 251). It is suggested further that in these situations no collateral contract can be based on an implied warranty alone and that the only situation in which the collateral contract can be based upon an implied representation is where there has been a breach of the implied warranty of authority by an agent.) The conflicting decisions on this point are cited by McNair, J. in Andrews v. Hopkinson (supra), at p. 237.)Google Scholar
67 Yonge v. Toynbee [1910] 1Google Scholar K.B. 215, p. 228.
68 Lord, Davey, Starkey v. Bank of England [1903]Google Scholar A.C. 114 at p. 119, quoting Lord Campbell in Lewis v. Nicholson (1852) 18 Q.B. 503. See too Lord Halsbury L.C., at p. 118.
69 Willes J. in Collen v. Wright (1857) 8 E. & B. 647, 658 (the locus classicus of the doctrine). See too Lindley L.J. in Firbank's Executors v. Humphreys (1888) 18 Q.B.D. 54, p. 62 (“There is a representation by the directors to the contractor and consideration given by him in the shape of action by himon the faith of the promise”); and Heskell v. Continental Express, Ltd. [1950] 1Google Scholar All E.R. 1033, 1042–1043 (Devlin J.).
70 See Lord Halsbury L.C. in Mercantile Agency Co., Ltd. v. Flitwick Chalybeate Co. (1897) 14 T.L.R. 90: collateral contract cases are “not really violations of the rule.”
71 The lease in this case was to be for three years and might therefore have been made by parol: Statute of Frauds, s. 2; Eeal Property Act, 1845, s. 3. If a lease were for a longer period and a deed necessary in consequence (sea now ss. 52 and 54, Law of Property Act, 1925), the oral agreement could not possibly take effect, it is suggested, as a collateral term, but only as a collateral contract. It is interesting to note that De Lasalle would have been in a much worse position if he had had only a contract for a lease with a collateral oral term, for, in the absence of adequate part performance, such a contract would be unenforceable: Hawkins v. Price [1947]Google Scholar Ch. 645.
72 See, too, Mahon v. Amscough [1952] 1Google Scholar All E.R. 337; City and Westminster Properties, Ltd. v. Mudd [1958] 3Google Scholar W.L.E. 312 (discussed infra); Routledge v. McKay [1954] 1Google Scholar W.L.E. 615.
73 [1924] 2 Ch. 329 (C.A.); Warrington and Sargant L.JJ.
74 Re Tewkesbury Gas Co. [1911] 2Google Scholar Ch. 279; Re Chicago and N.W. Granaries Co. [1898] 1 Ch. 263.
75 This was, it is true, a written collateral contract. But it is not easy to agree with P. O. Lawrence J. ([1924] 1 Ch. at p. 296), that it could not have been admitted had it been verbal. His distinction between Morgan v. Griffith (supra) and what would then have been the situation is not, with respect, very convincing.
76 [1924] 2 Ch. at p. 338.
77 [1958] 3 W.L.R. 312.
78 His Lordship doubted whether attention could ever be paid to words deleted in documents in view of Inglis v. Buttery (1878) 3 App.Cas. 552, 558. At any rate, “that method of construction must be confined to commercial cases where the words struck out appear on the face of the signed document” (p. 820).
79 Each acceptance of rent waived the breach up to that time. But more must be shown before a complete release is proved. See Megarry & Wade, op. cit., p. 604. Here the landlords were merely “willing to wink” at the tenant sleeping on the premises.
80 [1947] K.B. 130.
81 It might, of course, have been argued that the landlord's continuing willing ness to “wink” at the tenant's sleeping on the premises amounted impliedly to a representation after the lease, suspending his rights: compare Hughes v. Metropolitan Ry. (1877) 2 App.Cas. 439. But such a line of reasoning would be likely to founder on the same rock as the argument that there had been a release, i.e., that there was insufficient in the landlord's conduct to indicate a promise to suspend the covenant for the future: compare Bird v. Hildage [1948] 1Google Scholar K.B. 91. As Harman J. insists, such a promise can be found only in the express promise made before the lease.
82 [1958] 3 W.L.R., p. 324. His Lordship found the case of Re Wm. Porter & Co., Ltd. [1937] 2Google Scholar All E.B. 361 “truly analogous”; but it is respectfully submitted that that was a somewhat different case.
83 See infra, p. 83. Compare with cases discussed above Marbé v. Geo. Edwardes, Ltd. [1928] 1Google Scholar K.B. 269, pp. 279–280 (Bankes L.J.), 289 (Lawrence L.J.), and Routledge v. McKay [1954] 1Google Scholar W.L.E. 615, where the written agreement excluded the possibility of collateral terms, but was not necessarily inconsistent with a collateral contract (Evershed M.R., p. 621–622).
84 As amended by the Hire Purchase Act, 1954.
85 (1931) 47 T.L.R. 593 (C.A. affirming Div.Ct., ibid., p. 410). See too Boston v. Boston [1904] 1Google Scholar K.B. 124; see, too, supra, p. 65.
86 [1948] 1 K.B. 535; Walford v. Narin [1948] 2Google Scholar All E.E. 85; Hawkins v. Price [1947]Google Scholar Ch. 645 (oral agreement to give vacant possession); Hawkesworth v. Turner (1930) 46Google Scholar T.L.E. 389. (Contrast Angell v. Duke (No. 1) (1875) L.E. 10 Q.B. 174, with Mechelin v. Wallace (1837) 7 A. & E. 49.) A plaintiff may waive an oral term which benefits him alone, and enforce the contract without it: North v. Loomes [1919] 1Google Scholar Ch. 378. But he cannot enforce it where the term omitted from the memorandum is solely of benefit to the defendant, even if he is willing to be bound: Burgess v. Cox [1951]Google Scholar Ch. 383. E.E.M. in (1951) 67 L.Q.E. 299, 300, suggests that Martin v. Pycroft (1852) 2 De G. M. & Q. 785 gives a different answer in the second situation; but quaere whether that ought not to be regarded as a case of a collateral contract (to pay a premium), which the plaintiff was compelled to observe before equity would allow him to enforce the contract, in view of what Knight Bruce L.J. says at pp. 794–795 about parol evidence. (The rest of the judgment implies, it must be admitted, a “one-contract” view.)
87 Williams, Statute of Frauds s. IV, p. 58; Megarry and Wade, Law of Real Property, p. 516.
88 e.g., Angell v. Duke (1875) L.E. 10 Q.B. 174.
89 Also, contracts required to be in writing may involve different considerations, e.g., bills of exchange. See the cases mentioned post, p. 76; and Byles on Bills (21st ed.) Chap. 8. But the collateral contract may, even then, be used to support an otherwise void promise: Heseltine v. Simmons [1892] 2 Q.B. 547, 553–555 (C.A.: valid oral contract collateral to bill of sale rendered partially void under s. 8, Bills of Sale Act, 1882).
90 Sutton & Shannon, Contracts (5th ed.) Art. 92.
91 See Cruickshanks v. Rose (1831) 1 Mood. & R. 100; and Lord, Evershed M.B. in Napier v. National Business Agency, Ltd. [1951] 2Google Scholar All E.R. 264, 266.
92 In Kearney v. Whitehaven Colliery Co. [1893] 1 Q.B. 700, Lord Esher M.R. goes to unjustifiable lengths to try to split up a simple contract of employment into two. (See Marsh (1948) 64 L.Q.R. 230, p. 350 (n. 80), citing Kenyon v. Darwen Cotton Manufacturing Co., Ltd. [1936] 2Google Scholar K.B. 193, 206–207. But see now Jennings v. Kinder [1959]Google Scholar Ch. 22, where for tax purposes a housing assistance scheme was severed from the contract of service.) Compare the similar problem which has presented itself in the frustration cases: Denny Mott & Dickson, Ltd. v. Fraser, Ltd. [1944]Google Scholar A.C. 265, 278–280, 283–284.
93 [1955] 2 Q.B. 525.
94 Under s. 56(A), Defence (General) Regulations, 1939.
95 Compare Clifford (Frank) Ltd. v. Garth [1956] 2Google Scholar All E.R. 323 (C.A.).
96 Denning L.J. [1955] 2 Q.B. at pp. 534–535, citing Lord, Moulton in Heilbut Symons & Co. v. Buckleton (supra)Google Scholar: “It is said that if damages could be recovered it could be an easy way of getting round the law about illegality. That does not alarm me at all.” His Lordship places emphasis upon the fact that the builders had not been negligent in accepting the assurance of the defendant because architects customarily provide the licences for work to be done. The agreement of Birkett and Romer L.JJ. with the judgment of Denning L.J. means that, in illegality cases, the collateral contract can operate only where it is reasonable for the representee to rely upon the promise.
97 Ibid., 539–640. The collateral promise could be said to be a guarantee of the main contract's legality. That was why the damage consequent upon the breach equalled the excess sum otherwise irrecoverable. Where the breach of a collateral contract is not the cause of illegality, which arises without the knowledge of the parties, the measure of damage would not necessarily be as great. If both parties knew of the illegal element, and the collateral contract was merely part of their nefarious scheme, that contract would, of course, itself become illegal.
98 Birkett L.J., ibid., p. 538. Lacking the collateral contract analysis, the Court of Appeal had been quite unable to do so in the very similar case of Re Mahmoud & Ispahani [1921] 2Google Scholar K.B. 716.
99 [1959] A.C. 71 (J.C.). See too Jennings v. Kinder [1959]Google Scholar Ch. 22.
1 [1959] A.C. at p. 81. Cf. the interpretation of this case in (1959) 75 L.Q.R. 7.
2 Hopkins v. Prescott (1847) 4 C.B. 578; and Napier v. National Business Agency, Ltd. (supra). It must be remembered also that the analysis cannot apply to contracts “collateral” in a different sense, i.e., those arising out of or founded upon an illegal transaction. Such collateral contracts are themselves illegal and void: see, e.g., Fisher v. Bridges (1854) 3 E. & B. 642 (security for balance of price of land conveyed for illegal purpose).
3 Henry v. Smith (1895) 39 S.J. 559, p. 560, per Wright J.; Morgan v. Griffith (1871) L.R. 6 Ex. 70, p. 73, per Kelly C.B.; Martin v. Pycroft (1852) 2 De G.M. & G. 785. Equity also has its own ways of enforcing collateral promises: e.g., Bannister v. Bannister [1948] 2Google Scholar All E.E. 133 (C.A.: constructive trust).
4 But, a breach of the oral contract, however fundamental it may be to the bargain, will presumably not give the promisee a right to repudiate the main contract (although, as the cases in the last note show, equity may refuse specific performance of the latter to the promisor). If so, Bunn v. Harrison (1886) 3 T.L.R. 146 (C.A.) involved one contract only. (Repudiation allowed for breach of “warranty,” so fundamental as to be a “condition,” about sanitary state of the premises. There was no formal written contract in that case, and a “one-contract” analysis was plainly appropriate.)
5 Carter v. Salmon (1880) 43 L.T. 490, per Cotton L.J. at p. 493. (In this case, the alleged oral agreement to repair before demanding rent was inconsistent with the writing, and bad on that ground. But the court was clearly of opinion that the tenant could not have set up any oral agreement against the mortgagee of the reversion. But the latter had no notice of any such agreement. (Compare Smith v. Jones [1954] 2Google Scholar All E.R. 823.) What if he had? Such a personal collateral contract would not normally bind him; but his knowledge might well affect the exercise of the court's discretion if equitable remedies were sought. If the collateral agreement touched and concerned the land it might affect an assignee of a lessor or lessee. Compare the rather different case of Phillips v. Miller (1875) L.R. 10 C.P. 420, p. 437.
6 [1958] 3 W.L.R. p. 324 (italics supplied). See, too, Sargant, L.J. in Jacobs' case [1924] 2 Ch. at p. 339.Google Scholar
7 [1935] Ch. 657 (Luxmoore J. Alleged oral agreement by vendor of registered land that be would use adjoining strip only as tennis courts.)
8 Unregistered encumbrances not binding: Land Registration Act, 1925, s. 20 (1). Usually, such agreements are restrictive covenants and would today need to be registered as such under the Land Charges Act, 1925. See Spicer v. Martin (1888) 14 App.Cas. 12 (argued in the C.A. along collateral contract lines: 34 Ch.D. 1).
9 See Byles on Bills (21st ed.), pp. 110–111; Halsbury, Laws of England (3rd ed.), Vol. 3, p. 165Google Scholar; Chalmers, Bills of Exchange (12th ed.) 55–58. It is not clear how far the exceptions to this rule go. Certainly the true consideration can be proved by parol. (Abbott v. Hendricks (1840) 1 M. & G. 791, Turner v. Forwood [1951] 1Google Scholar All E.R. 746; and the explanation of Pike v. Street (1828) M. & M. 226 in Henry v. Smith (1895) 39 S.J. 559.) And evidence can also be given if it would support a plea of the general issue, i.e., to show that there was an unfulfilled condition precedent to the operation of the bill. New London Credit Syndicate, Ltd. v. Neale [1898] 2 Q.B. 487, 491. See too Hitchings & Coulthurst Co. v. N. Leather Co. of America [1914] 3Google Scholar K.B. 907.
10 Bills of Exchange Act, 1882, ss. 3, 83.
11 Of course, an oral collateral contract might be enforceable in its own right: as in Lindley v. Lacey (supra).
12 Channel, B., Maillard v. PageGoogle Scholar (1870) L.E. 5 Ex. 312 at p. 319.
13 [1924] 2 Ch. 329 (ante, p. 69). Clearly where there is a third party in the extraneous agreement, it must be collateral only: Webb v. Spicer (1849) 13 Q.B. 894; Salmon v. Webb (1852) 3 H.L.C. 510.
14 [1913] A.C. 30, p. 47.
15 See Oscar Chess, Ltd. v. Williams [1957] 1Google Scholar W.L.R. 370; Lord, Wright in Norwich Union Fire Ins. Soc, Ltd. v. Price [1934]Google Scholar A.C. 455, 463.
16 See Hodges v. Jones [1935]Google Scholar Ch. 657, 669, distinguishing Jameson v. Kinmell Bay Land Co., Ltd. (supra). See too Shepperd v. Ryde Corpn. (1952) 85Google Scholar C.L.R. 1, pp. 12–17 (H.Ct.Aus.).
17 Denning, L.J., in Oscar Chess, Ltd. v. Williams, supra, p. 376.Google Scholar On rescission of contracts induced by innocent misrepresentations which are not contractually binding, see Cheshire and Fifoot, op. cit., at pp. 211 et seq.
18 Wills, J. in Best v. EdwardsGoogle Scholar (1896) 60 J.P. 9, 10.
19 A. L. Smith, M.E.De Lasalle v. Guildford [1901] 2Google Scholar K.B. 215, p. 222. See too Mahon v. Ainscough [1952] 1Google Scholar All E.R. 337, p, 340; Webster v. Higgin [1948] 2Google Scholar All E.R. 127, pp. 128, 130.
20 See especially Farwell, J. in Terrene v. Nelson [1937] 3Google Scholar All E.R. 739 at p. 744. Compare De Lasalle v. Guildford, Otto v. Bolton, Miller v. Cannon Mill Estates, discussed supra, p. 62.
21 See the cases discussed, p. 62, ante. And see the two majority judgments in Oscar Chess, Ltd. v. Williams [1957] 1Google Scholar W.L.R. 370. Morris L.J., in his dissent, gave greater weight to the presence of a written document in Routledge v. McKay [1954] 1Google Scholar W.L.R. 615; but the attitude of the majority is thought to support the view advanced above.
22 Greswolde Williams v. Barneby (1900) 17Google Scholar T.L.R. 110.
23 Palmer v. Johnson (1884) 13 Q.B.D. 351, per Bowen L.J. at p. 357; Saunders v. Cockrill (1903) 87Google Scholar L.T. 30 (C.A.), Lord Alverstone C.J. at p. 31; Lawrence v. Cassel [1930] 2Google Scholar K.B. 83 (C.A.). Similarly, there is no problem as to consideration in cases like Mouat v. Betts Motors, Ltd. [1959]Google Scholar A.C. 71 (J.C.).
24 Bruce, J. in Lloyd (Edwd.) Ltd. v. Sturgeon Falls Pulp Co., Ltd. (1901) 85Google Scholar L.T. 162, 165 thought (wrongly) that this was essential. Compare the attempts to turn auctioneers' promises to sell “without reserve” into contracts collateral to the sale; the consideration on the customers' part can be thought of as going to, and bidding at, the auction sale. See Professor Gower's suggestion in (1952) 68 L.Q.R. 457, at p. 459, concerning Warlow v. Harrison (1859) 1 E. & E. 309. The case seems equally open to the “typical” collateral contract explanation.
25 Either with a third party (as in the cases discussed ante, p. 68) or with the same party. The consideration, it is suggested, is invariably that act (i.e., executed not executory). It could be executory—(a promise to make the main contract)—so long as the terms of the latter were already certain: see ante, p. 68, n. 66. Evershed, M.R. in Routledge v. McKay [1954] 1Google Scholar W.L.R. 622 seems to suggest that those terms must always be known at the time of the collateral promise; but this seems unnecessary if the collateral contract is “unilateral,” and the consideration executed.
26 [1955] 2 Q.B. 525 (but see ante, p. 74, n. 97). This occasions less surprise when compared with the many cases in which the value given as consideration was barely perceptible. Consider: Haigh v. Brooks (1839) 10 A. & El. 309; affd., ibid., 323; Rajbenbach v. Mamon [1955] 1Google Scholar Q.B. 283. The formation of a contract void or unenforceable on other grounds would presumably be equally effective, e.g., one void by reason of mistake. It is sometimes suggested that a contract of sale, “void for mistake” because the specific subject-matter ha s perished unbeknown to both parties, can form the consideration for a promise by the seller that the goods do exist. But it is suggested that this is rarely an appropriate analysis, and that such a seller's guarantee will usually form part of the one contract, ousting the understanding, normally implied in such a case, of “no goods, no contract”: see McRae v. Commonwealth Disposals Commission (1951) 84Google Scholar C.L.R. 377. S. 6 of the Sale of Goods Act, 1893, does not, it is suggested, prevent this solution, because of the operation of s. 55. (Contra Cheshire and Fifoot, Contract (4th ed.), p. 176 (n), who seem to think that the guarantee would not be actionable at all.)
27 (1931) 47 T.L.R. 593 (C.A.).
28 See Cockle Cases and Statutes on Evidence (9th ed. by G. D. Nokes) at p. 341.
29 (1864) 34 L.J.C.P. 7.
30 [1913] A.C. 30, 47.
31 [1903] 1 K.B. 253, p. 256 (alleged oral agreement about house, written lease). For a fascinatingly unsuccessful attempt to adopt this dictum without violating the other decisions, see Eve, J. in Crawford v. White City Rink (Newcastle on Tyne) Ltd. (1913) 29Google Scholar T.L.R. 318, at p. 319; (his decision of the case did not turn upon his view of the law, since he found insufficient evidence that an oral agreement was ever made).
32 (1893) 95 L.T.J. 82. See too Wills, J. in Kennard v. AshmanGoogle Scholar (1894) 10 T.L.R. 213, 214.
33 See Williston (1911) 24 Harv.L.R. 415, “Liability for Honest Misrepresentation,” and (1913) 27 Harv.L.R. 1, “Representation and Warranty”; Stoljar (1952) 15 M.L.R. at p. 427.
34 See (1901) 84 L.T. 549, pp. 550–551. “I do not know of any case where a warranty as to the existing condition of the subject-matter of the sale or lease has been held to be collateral. …I doubt very much whether any such verbal warranty could be …said to be collateral to the main contract.”
35 [1901] 2 K.B. at p. 223.
36 e.g., Mahon v. Ainscough [1952] 1Google Scholar All E.R. 337 (C.A.).
37 [1948] 2 All E.R. 127. Both Lord Greene M.R. (pp. 128 and 129) and Evershed L.J. (p. 130) treat the guarantee as a collateral contract. Whether the Hire Purchase Act, 1938, applied to the written agreement was clearly of no consequence.
38 See, e.g., Bailey v. Woolstone Bros. (1907) 42Google Scholar L.J. 457 (C.A.). Phipson on Evidence (9th ed.), p. 604, still suggests that in such a case a collateral agreement is enforceable only if it deals with an “independent matter.” Sed quaere.”
39 [1948] 2 All E.R. 127.
40 The attempt made by P. O. Lawrence, J. in Jacobs v. Batavia and General Plantations Trust, Ltd. [1924] 1Google Scholar Ch. 287, 296, to show that this is not the case is unconvincing.
41 On collateral terms: cases such as Henderson v. Arthur [1907] 1Google Scholar K.B. 10, cited ante, p. 61. On collateral contracts: Erskine v. Adeane (1873) L.R.8 Ch. 756, 766 (Mellish L.J.); Llanelly Ry. v. L. &, N. W. Ry. (1873) L.R.8 Ch. 942, 953, 954 (C.A.) (affd. (1875) L.R. 7 H.L. 550); Horncastle v. Equitable Society (1906) 22Google Scholar T.L.R. 735 (C.A.); Carter v. Salmon (1880) 43 L.T. 490 (C.A.). With regard to oral terms, it has been held further that for this purpose terms implied into a written contract (e.g., by custom) have the same effect as if they were express; on this ground attempts to prove oral terms contradicting the implied terms have failed: Fawkes V. Lamb (1862) 31 L.J.Q.B. 98, 100 (Blackburn J.). But parol evidence as to surrounding circumstances is admissible to govern the nature of the implied terms themselves, e.g., Burges v. Wickham (1863) 33 L.J.Q.B. 17, 23 (Cockburn C.J.), 28 (Blackburn J.)
42 See Halsbury, , Laws of England (3rd ed.), Vol. 11, pp. 404–405Google Scholar and Vol. 23, p. 575.
43 (1871) L.R. 6 Ex. 70 (see especially the tenant's covenant to use his best endeavours to preserve game: p. 71).
44 (1873) L.R. 8 Ch. 756.
45 (1864) 17 C.B.(n.s.) 578 (the oral agreement obliged the defendant to settle the action; the writing authorised him to do so).
46 [1901] 2 E.B. at p. 222 (lessee's covenant to do inside repairs included repairs to interior drains).
47 [1948] 2 All E.R. 127, pp. 128–129. (And see Evershed L.J., p. 180.) Compare Couchman v. Hill [1947]Google Scholar K.B. 554, p. 559 (Scott L.J.).
48 [1951] 2 K.B. 739 (C.A.). See too Couchman v. Hill [1947]Google Scholar K.B. 554: (auctioneer's and owner's supplementary oral assurances that heifer was “unserved” (as described in catalogue) actionable, in spite of written conditions of sale excluding responsibility for misstatements, faults, and errors of description).
49 They held first that the statement was a “condition”; on a construction of the printed terms contra proferentem, they did not, therefore, affect the guarantee.
50 See Everahed M.R. at p. 744: quoting Scott, L.J. in Couchman v. Hill [1947]Google Scholar K.B., p. 559, a passage which seems to use a collateral contract analysis.
51 In [1951] 2 All E.R. at p. 218, Denning L.J. appears to suggest that this would be so, and that this is the distinction between Lee v. Gray (1929)Google Scholar unreported, and Taylor v. Bullen (1850) 5 Ex. 779. But this passage does not appear in the Law Reports: [1951] 2 K.B., p. 7481
52 [1958] 2 W.L.R. 312.
53 The “High Trees” doctrine of equitable waiver to which Harman J. referred.
54 Tool Metal Manfg. Co., Ltd. v. Tungsten Electric Co., Ltd. [1955] 2Google Scholar All E.R. 657 (H.L.).
55 It is suggested that it would not be equitable to allow a withdrawal by the landlord if he has made a clear promise not to enforce this covenant over a definite period. See Lord Cairns, in Hughes v. Metropolitan Ry. Co. (1877) 2 App.Cas. 439, 448; and Denning, J. in Central-London Property Trust, Ltd. v. High Trees House, Ltd. [1947]Google Scholar K.B. 130. J. P. Wilson (1951) 67 L.Q.R. 330, suggests that the equity can never abrogate, only suspend, rights. Even if that is so (which is not yet apparent from the case law), a promisor can clearly put it out of his power for a period to reintroduce the original terms by notice, e.g., by a promise not to enforce a right “for the next six weeks” on which the promisee relies. Another way of putting the point is to say that in such a case no notice less than six weeks would be reasonable.
56 As in Webster v. Higgin [1948] 2Google Scholar All E.R. 127.
57 So far one can adopt the words of Bruce, J. in Lloyd (Edward) Ltd. v. Sturgeon Falls Pulp Co., Ltd. (1901) 85Google Scholar L.T. 162, 165: “in the ordinary case where a man is induced to enter into a contract by reason of a warranty his entering into the contract is the consideration for the warranty and there is no other consideration for the warranty and the warranty therefore forms part of the contract.”
58 (1864) 34 L.J.C.P., p. 9. See too (1910) 26 L.Q.R. 194 (on Mercier v. Campbell [1907] 14 Ont.L.R. 639).Google Scholar
