Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd
98 CLR 93(Decision by: DIXON CJ, FULLAGAR J)
Between: TALLERMAN & CO PTY LTD
And: NATHAN'S MERCHANDISE (VICTORIA) PTY LTD
Judges:
Dixon CJWilliams J
Fullagar JKitto J
Taylor J
Subject References:
Contract
Subsequent agreement
Earlier contract
Abrogation
Contract made outside State
Implied rescission
Intention
Judgment date: 18 February 1957
MELBOURNE
Decision by:
DIXON CJ
FULLAGAR J
The appellant was plaintiff and the respondent was defendant in an action in the Supreme Court of New South Wales which was tried by Clancy J. Clancy J. gave judgment in favour of the plaintiff. The defendant appealed to the Full Court of New South Wales, which allowed the appeal and ordered that judgment be entered for the defendant. From that judgment the plaintiff appeals to this Court. The action arose out of two alleged contracts for the sale by the plaintiff to the defendant of a large quantity of Hungarian .22 long rifle bullets. These contracts were made in Victoria, and unfortunately, as will be seen, the Supreme Court of New South Wales, by reason of real or supposed limitations on its jurisdiction, was called upon to deal with the case on a conventional and restricted basis. The plaintiff placed itself in the position of suing not upon those contracts but upon a contract supposed to have been made much later in New South Wales. The result is, as it seems to us, that the merits of the real dispute between the parties have never been investigated.
The plaintiff is a company incorporated and carrying on business in New South Wales. It is registered as a company in Victoria, where it is also carries on business. The defendant is a company incorporated in Victoria. So far as appears, it does not carry on business outside Victoria. The two relevant original contracts, which are alleged, were made by communications between the defendant company and the Melbourne office of the plaintiff, which was managed by a Mr. Bell. The first was made on 14th May 1951, and the second on 2nd August 1951. It would seem that in each case an order was given orally in the first place. In each case the plaintiff acknowledged the order by a letter which said: "We thank you for your valued order covering .22 long Hungarian rifle bullets and have pleasure in enclosing herewith our contracts in duplicate. Please sign and return the original copy ... and retain the duplicate for your own records." The enclosed "contract" in each case consisted of the plaintiff's printed form of order with the particulars typewritten therein. The first is headed "Order No. M58" and the second "Order No. M73". Each is for 1,000,000 bullets at 110/- per thousand. Each contains the following terms: "Prices quoted are ex store. D.I.S. Subject to acceptance. Payment net seven days or cash on delivery at seller's option. Date of delivery about earliest". The letters D.I.S. mean "delivery into store". The curious expression "delivery about earliest" is partly explained by the fact that the words "delivery about" are part of the printed form, the word "earliest" being typewritten in. Probably the words should be interpreted as providing for delivery as soon as possible. We do not know what significance, if any, is to be attached to the words "subject to acceptance". The defendant has at no stage relied upon them. In each case the order was signed on behalf of the defendant by Mr. Baird, who was in charge of the defendant's merchandise department in Melbourne, and was then returned to the plaintiff's Melbourne office.
So far the position seems plain enough. We have two contracts in writing each for the sale of 1,000,000 bullets. Each contract was clearly made in Melbourne, delivery is to be made in Melbourne, and it was doubtless also contemplated that payment should be made in Melbourne.
No delivery was made under either contract until 12th February 1952, when the plaintiff consigned by rail from Sydney to the defendant in Melbourne 1,800,000 bullets. Freight was prepaid. The invoice identified the bullets as delivered in pursuance of Orders M58 and M73 and also of another order (No. M53) which had been given on 20th April 1951. It is possible to infer from a notation on Order No. M53 (which was put in evidence) that 2000,000 of the bullets consigned on 12th February 1953 were intended to be delivered in pursuance of Order No. M53, but the position is not clear. Nor does it seem material to clear it up. There may or may not have been a small balance outstanding under M53, but there is nothing to show that there had been any delivery before 12th February 1952 of any of the 2,000,000 bullets comprised in M58 and M73. It is not clear why 1,800,000 bullets and not 2,000,000 were consigned to Melbourne.
The bullets were packed in cases, each containing 10,000 bullets. The 180 cases consigned from Sydney were picked up by a carrier, apparently on instructions from the defendant, at the railway station in Melbourne, and were taken by him to the defendant's store. Mr. Baird, however, immediately telephoned Mr. Bell and told him that the defendant would not take delivery, and on 15th February the defendant returned the whole of the consignment by rail to Sydney. Freight was not prepaid. The goods were there placed by the plaintiff "without prejudice" in Young's store in Sydney. On 31st March 1952 twenty cases (200,000 bullets) were taken by the plaintiff to fulfil a local order. It should also be mentioned here that at the end of March 1952 the defendant took delivery from the plaintiff's Melbourne store of 200,000 bullets and some time later paid for these. The balance of 160 cases (1,600,000 bullets) were still in Young's store at the time of the trial of the action. When the plaintiff commenced its action, it sued in respect of 1,600,000 bullets, i.e. the 2,000,000 comprised in M58 and M73 (of which, however, it had tendered delivery only of 1,800,000) less the 200,000 delivered and accepted in Melbourne and the 200,000 taken by the plaintiff from Young's store in Sydney.
Pausing here for a moment, one would have thought that the two substantial questions between the parties were (1) whether the defendant, by taking the goods into its store, had accepted them and become bound to pay for them, and (2) if it had not, whether it could justify a refusal to accept them on the ground that they had not been delivered within the time required by the contract. It might well have been open to the defendant (which may well have been surprised by the sudden delivery without warning of goods ordered nine and six months before) to contend that, because delivery had not been made "at earliest" or "about earliest", it was not bound to take delivery, but was entitled to rescind both contracts. However, in the lengthy correspondence which followed the return of the goods to Sydney, no such point was ever raised. Nor was there any mention until a very late stage in that correspondence of an allegation made at the trial of the action that there had been a cancellation by mutual consent of the second of the two contracts. It is necessary now to examine this correspondence, which for the most part was between the plaintiff's solicitors in Sydney and the defendant's solicitors in Melbourne. It is in the course of this correspondence that the contract on which the plaintiff ultimately sued is alleged to have been made.
The first letter, which is dated 3rd March 1952, was from the plaintiff's solicitors to the defendant. It referred to the contracts, to the "delivery" in Melbourne, and to the reconsignment to Sydney. It said that "180 cases comprising the contract" were "now lying at the Darling Harbour Railway Stores", and it "required" the defendant to "accept these goods". In fact, anticipating the defendant's acquiescence, the plaintiff had caused Young's to take the cases into store on 25th February. The letter said that, "failing a satisfactory solution", their client would take the necessary steps to enforce its rights. The defendant's solicitors replied on 6th March 1952, saying that it had been agreed in the beginning between the defendant and the Melbourne representative of the plaintiff that, "irrespective of the provisions for delivery contained in any order for bullets", delivery should be made only as and when the defendant required bullets to fulfil orders received from its customers. Such an agreement could, of course, have no legal effect, being clearly inconsistent with the written contract: cf. Hoyt's Pty Ltd v Spencer. [F1] The same letter also raised the point that delivery at a railway station in Melbourne was not a delivery in accordance with the contracts. By letter of 18th March 1952 the plaintiff's solicitors denied the making of any agreement for delivery on request, and suggested that the defendant should instruct Young's, Sydney, to take the goods into their store, the question of liability for railway charges to be "thrashed out later". The defendant's solicitors replied to this letter on 21st March 1952. The letter of that date is one of the two letters which are of primary importance in the case. It re-asserted the making of a qualifying oral agreement and refused to give any instructions to Young's. It also said: "We informed you in our letter of 6th instant that our client intended to carry out the agreement for delivery" (i.e. presumably to require delivery of bullets only if and when it ever wanted bullets) "but it is prepared without prejudice to its legal rights to depart therefrom to the extent that it will undertake that delivery instructions covering the balance of bullets will be given so that the final delivery will be made not later than 30th September next".
By letter of 26th March 1952 the plaintiff's solicitors repeated their denial of the alleged qualifying agreement and refused to agree to the suggested "arrangement for delivery" on instructions to be given before 30th September, but offered to extend the time for payment to three months or, alternatively, to make an allowance of 2 per cent for prompt payment, provided that delivery was taken and responsibility for railway charges and storage accepted by the defendant. They also said that they would store the goods with Young's in the defendant's name pending arrangements being made for delivery. On 3rd April 1952 the defendant's solicitors refused to agree to either of the two alternative suggestions as to payment and said that the defendant was "not prepared to vary the proposal for delivery made in our letter of 21st March". This letter was headed "without prejudice". There the matter rested for some two months. On 4th June 1952 in a letter, also headed "Without Prejudice", the plaintiff's solicitors wrote: "We refer to your letters of 21st March and 3rd April and have now been instructed to accept your client's offer contained in the letter of 21st March to the effect that delivery of the balance of this order for bullets will be accepted not later than 30th September next". This is the second of the two letters which are of primary importance in the case.
This letter of 4th June was not acknowledged by the defendant's solicitors, and there was no further relevant communication until 8th July 1952, when the defendant itself wrote a letter direct to the plaintiff. This letter commenced: "We have been informed by our solicitors that you have accepted the offer we made to take delivery of the balance of our contract, 600,000 bullets, by the end of September". The reference to 600,000 bullets, instead of 1,600,000, is explained by a later passage in the letter, in which the defendant asserts definitely for the first time that the second contract (Order No. M73) for 1,000,000 bullets had been (in effect) cancelled by mutual agreement shortly after its making. The letter, after asserting that the defendant has been "shabbily treated" by the plaintiff, says: "We would like to make it clear at this stage that we cannot under any circumstances accept responsibility for the last order of 1,000,000 bullets .... The situation has deteriorated since our offer was made to you over three months ago. We are holding substantial stocks, and sales are slow. The present position is that we do not anticipate being able to take delivery of the balance of 600,000 bullets on 30th September but will do so at the earliest opportunity". A good deal of further correspondence followed, but it does not appear to affect any matter now in question. It should be mentioned, however, that on 20th October 1952 the defendant's solicitors wrote to the plaintiff's solicitors a letter which was headed "Without Prejudice" and which said: "We are now instructed to make the following without prejudice offer in full settlement of all agreements relative to the undelivered balance under contract herein, amounting to 1,600,000 Hungarian bullets as mentioned in your letter: (1) Our clients to take immediate delivery of 600,000 bullets and pay for same within seven days after delivery; (2) Contract for the balance of 1 million bullets to be cancelled. We shall be glad if you will submit this offer to your clients and advise us in due course". It is to be noted that this letter refers to the contract as covering 1,600,000 bullets and not 600,000. This "offer" was rejected in forceful terms.
It must also be mentioned that the defendant's solicitors, after a threat of legal proceedings, wrote on 6th November 1952 offering to accept service of a writ issued out of the Supreme Court of Victoria. To this the plaintiff's solicitors replied on 21st November 1952 saying: "We acknowledge your letter of 6th instant. It is not our client's intention to issue process out of a Victorian Court, but to sue on the agreement made in Sydney. We therefore propose to issue a New South Wales Supreme Court writ and have it served on your client under the provisions of the Service and Execution of Process Act". The defendant's solicitors in their reply of 25th November 1952 said: "Our client will contest your right to issue a writ out of the New South Wales Supreme Court and will submit that it has no jurisdiction in this matter."
The writ was issued out of the Supreme Court of New South Wales on 8th December 1952. It was indorsed as follows: "The Plaintiff claims the sum of Eight thousand eight hundred pounds (PD8,800.0.0) in respect of a contract made between the Plaintiff and the Defendant whereby the Plaintiff undertook to supply and the Defendant undertook to accept and pay for inter alia 1,600,000 bullets at the price of PD5.10.0 per thousand. Alternatively the Plaintiff claims from the Defendant damages for breach of a contract made between the Plaintiff and the Defendant for delivery to the Defendant by the Plaintiff of certain bullets of which the Defendant has either failed to take delivery or alternatively failed to pay for" (sic). The writ also bore the indorsement required by s. 5 of the Service and Execution of Process Act, and it was served on the defendant in Melbourne on 15th December 1952. A conditional appearance was entered on 8th January 1953, and on the following day a summons was issued by which the defendant sought to have the writ set aside on the ground that the Supreme Court of New South Wales had no jurisdiction in the matter. The summons was supported by an affidavit showing that the contracts for the sale and purchase of the bullets had been made in Melbourne and were to be performed in Melbourne.
It is at least consistent with the indorsement on the writ that the plaintiff was originally seeking to enforce by action at law the two contracts made in May and August 1951. There was no lack of jurisdiction in the Supreme Court of New South Wales to deal with such a claim, although both contracts were made outside New South Wales. The issue of the writ was, therefore, perfectly proper. English and Australian Courts, however, do not claim or exercise jurisdiction in an action unless their writ or other originating process can be served on the defendant within the territorial jurisdiction. The position has been modified by statute or Rules of Court made under statute. In New South Wales provision for service out of the jurisdiction of a Supreme Court writ in certain limited classes of case is made by s. 18 of the Common Law Procedure Act 1899, and the Service and Execution of Process Act 1901-1953 (Cth.) makes general provision for the service in any State of the process of the courts of any other State. If the matter had been free of authority, one would have thought that the power given in general terms by s. 4 of that Act ought to be regarded as limited by implication to the classes of case specified in s. 11. (An action in New South Wales on the contracts of 1951, whether for the price of the goods or for damages, would not fall within any of those classes.) Great difficulty, however, is occasioned by the decision of three justices of this Court in Luke v Mayoh, [F2] in which it is important to note that a conditional appearance had been entered by the defendant. A practice, which has much to recommend it, but is difficult to reconcile with Luke v Mayoh, [F3] appears to have become established in New South Wales by Ex parte Walker; Re Caldwell's Wines Ltd, [F4] at p. 192; see also Blunt v Collingwood Pty Tin Mining Co , N.L.; [F5] Clarke & Co Pty Ltd v Kerin; [F6] Braemar Woolen Mills Co-op. Ltd v Poinsettia Hosiery Mills Pty Ltd; [F7] Re Fowles [F8] (in which an escape was found from the dilemma which Luke v Mayoh [F9] might be thought to pose) and Friedman v Kemp's Nurseries Ltd. [F10] That practice is to follow the same course as that provided for cases where a writ has been served out of the jurisdiction under a State law: see General Rules of the Supreme Court of New South Wales 1952, Order IX, r. 6, and cf. Rules of Supreme Court of Victoria, Order XII, r. 30; Annual Practice 1956, pp. 144, 145. The defendant enters a conditional appearance, objecting to the jurisdiction, and then applies by summons to have the writ set aside. If the defendant establishes that the case does not fall within any of the classes specified in s. 11 of the Service and Execution of Process Act, an order is made setting aside the writ. (Strictly speaking, it would seem that the service of the writ, and not the writ itself, should be set aside.) If it appears that the case falls within one of the classes mentioned in s. 11, the appearance becomes unconditional.
It may well be that Luke v Mayoh [F11] will some day have to be reconsidered, but, by reason of what actually happened in this case on the defendant's summons, it is unnecessary to pursue this matter further. By an order made by the Prothonotary by consent on 5th March 1953 the summons was dismissed. The order, however, recited that the defendant's consent was given "without prejudice to its right to dispute the jurisdiction of the Court in respect of any cause of action based on any contract other than the contract alleged in the indorsement on the writ". It has not been disputed that it was understood and agreed by counsel for both parties that the "contract alleged in the indorsement on the writ" was a contract alleged to have been made in Sydney by the "acceptance" on 4th June 1952 of an "offer" made on 21st March 1952 - that is to say, by the letters written on those dates by the defendant's solicitors and the plaintiff's solicitors respectively. The order of the Prothonotary was made conditional on the plaintiff's making certain slight amendments to the indorsement on the writ, the amendments being designed to make it clear that all the causes of action on which the plaintiff sued were based on the same alleged contract. These amendments were in fact made.
A declaration was delivered on 8th May 1953 containing three counts. The first count was based on the common money counts of goods bargained and sold, goods sold and delivered, money paid and accounts stated, and the plaintiff claimed PD8,800 as the price of 1,600,000 bullets and PD124 19s. 6d. for storage and insurance charges. The second count was based on an alleged contract for the sale of 1,600,000 bullets by the plaintiff to the defendant and a promise by the defendant to take delivery of and pay for those bullets not later than 30th September 1952. The third count alleged (in effect) a contract for the sale of "certain bullets" by the plaintiff to the defendant, a dispute about the terms of the contract, and a compromise whereby the defendant promised to take delivery of the "balance of the said bullets" and pay PD8,800 for them not later than 30th September 1952. After the delivery of the declaration certain correspondence took place with regard to what were thought by the defendant's solicitors to involve possibly a departure from the "arrangements made between counsel". It is unnecessary to set this out or to refer to it beyond saying that it is made clear that, as to all the counts, the contract on which the plaintiff was relying was "the one arising from the correspondence between the respective solicitors of the parties subsequent to the making of the original contract". The position created by the reservation contained in the Prothonotary's order and the "agreement" or "arrangement" of counsel is not, we think, in doubt. Actually, it seems to have been more a matter of mutual assumption than of agreement. It was assumed that the service of the Supreme Court writ was unauthorized by law in the particular case unless the plaintiff established a cause of action based on a contract made in New South Wales. It was assumed that the original contracts of May and August 1951 were made in Victoria, and it was also assumed that no relevant contract was ever made in New South Wales unless such a contract could be found in the correspondence of 1952. It was further assumed that, if such a contract could be found in that correspondence, that contract, because the letter of 4th June was posted in Sydney, was made in New South Wales. It was accordingly agreed that the plaintiff should be regarded as suing on a contract to be found in that correspondence and on no other contract.
Clancy J. gave judgment for the plaintiff for PD8,800-apparently as the price of goods sold. He held that a new and independent contract had been made in Sydney by the letters of 21st March and 6th June 1952. He rejected the contention of the defendant that the new contract related only to 600,000 bullets and not to 1,600,000. Only two comments need be made on his Honour's judgment. It would seem that he was clearly right in holding that the correspondence, on its true construction, must be regarded as relating to 1,600,000 bullets and not merely to 600,000. But it would seem that he was clearly wrong in holding that the plaintiff's remedy (if it had a remedy available in the action) was for the price of goods sold. On the view which he took, the plaintiff's remedy was not by way of action for the price but by way of action for damages. It was not established that the bullets were valueless at the material date.
The Full Court, on appeal, assumed, without deciding, that the letters of 21st March and 4th June affected the contractual obligations of the parties, but allowed the appeal on the ground that those letters did not create a new and independent contract made in Sydney for the sale of the goods. The view of their Honours is made clear by the following passage from their judgment: "It is sufficient for us to say that in our view the new contract preserved the rights of the parties under the original contract and merely agreed that a mode of performance would be accepted by both parties in lieu of that provided for under the original contract but without prejudice to their rights thereunder". [F12]
We are very far from being satisfied that the two letters of 21st March and 4th June affected the legal position as between the parties in any way whatever. In the first place, both letters were expressed to be without prejudice. It is, of course, clear that, if, during a dispute, an offer of a compromise is made "without prejudice" and is accepted simpliciter, the fact that the offer was made without prejudice ceases to have any significance. The common sense view, and the view of the law, is that the offeror is saying: "I make you this offer in the hope of avoiding legal proceedings between us. If you accept it, we shall both be bound. But I make no admissions, and, if you do not accept it, our legal position remains unaffected." But it might well be said that no corresponding interpretation can be given to an acceptance without prejudice. Do not the words "without prejudice" mean that there is no real acceptance? We pass over this point, however, because we think, as will be seen, that in the particular case effect could be given to those words in the letter of 4th June if, apart from them, it would be right to hold that agreement had been reached.
In the second place, the so-called acceptance by the letter of 4th June was given after the "offer" of 21st March had been rejected by the letter of 26th March. It could, no doubt, be suggested that the offer was, in effect, renewed by the defendant's solicitors' letter of 3rd April, in which, after rejecting a counter-offer, they say that the defendant "is not prepared to vary the proposal for delivery" made in their letter of 21st March. We think it is very doubtful whether the letter of 3rd April should be regarded as renewing the offer of 21st March. But in any case the "acceptance" did not follow until more than two months after 3rd April. We should have thought it impossible to maintain that the offer had been accepted within a reasonable time. There was no acknowledgment of the letter of 4th June until the defendant itself wrote its letter of 8th July. That letter was (not unnaturally) regarded by the plaintiff as a general repudiation of admitted obligations, and it did no doubt amount to a "repudiation", if the plaintiff's view of the defendant's obligations was correct. But, in our opinion, it was not so intended and cannot be so construed. We think that its real effect was to intimate to the plaintiff that, the position having "changed for the worse" in the meantime, its "acceptance" of the "offer" of 21st March was too late, and that the defendant did not regard that acceptance as creating any obligation. The defendant was, in our opinion, fully justified in taking up this attitude. It then proceeded to reassert the position (which it had never really abandoned) that delivery under the original contracts was to be made as and when required-a position which, as we have said, does not seem to us to have been legally tenable.
However, passing over the foregoing points, we will assume, as the Full Court assumed, that the letters of 21st March and 4th June 1952 did effect some alteration in the legal position of the parties. On those assumptions we are of opinion that the Full Court was clearly right in deciding that the plaintiff must fail.
The case was dealt with by the Full Court on the footing that the two critical letters effected a permanent alteration in the legal position of the parties-that is to say, that, whereas before 4th June 1952 their rights and duties were governed by the terms of Order No. M58 and Order No. M73, after 4th June 1952 their rights and duties were governed, and continued at all subsequent times to be governed, by the terms of those orders and the terms of the two letters. On this footing it was, of course, conceded that the contracts constituted by the two orders were made in Melbourne. But it was said that, because the second of those letters "accepted" an "offer" contained in the first, a new contract came into existence, and, because that letter of acceptance was posted in Sydney, that new contract was made in New South Wales. The assumption that the posting of that letter in Sydney meant that, if a new contract was made, it was made in New South Wales, was the whole basis of the agreement or arrangement made between counsel when the summons to set aside the writ was dismissed. One would have thought that that whole basis was misconceived. The general rule is that a contract is not completed until acceptance of an offer is actually communicated to the offeror, and a finding that a contract is completed by the posting of a letter of acceptance cannot be justified unless it is to be inferred that the offeror contemplated and intended that his offer might be accepted by the doing of that act: see Henthorn v Fraser, [F13] at pp. 35, 36; per Kay L.J. In that case, as in Household Fire & Carriage Accident Insurance Co (Ltd ) v Grant, [F14] it was easy to draw such an inference, but, in such a case as the present, where solicitors are conducting a highly contentious correspondence, one would have thought that actual communication would be regarded as essential to the conclusion of agreement on anything. However, the understanding of counsel was plainly based on a contrary assumption, and the case must be dealt with on that assumption.
Dealing with it on that assumption, it may be regarded as established that, where a contract is made by the posting of a letter accepting an offer, and it becomes, for any purpose of the law, material to determine where it was made, it must be taken to have been made at the place where the letter of acceptance was posted. The case generally cited in this connection is Cowan v O'Connor, [F15] see also Benaim & Co v L. S. Debono, [F16] at p. 520. The rule seems sound enough in principle, because, in the cases with which it deals, the contract is actually made-the binding obligation between the parties actually comes into existence-by virtue of the posting of the letter of acceptance. It seems necessarily to follow that the place of the making of the contract is the place where that letter is posted: cf. Anson on Contracts, 10th ed. (1903), p. 34. The rule with regard to contracts made by correspondence is indeed only a particular application of a more general rule that a contract is to be regarded as made at the place where that act or thing was done or said which finally created the contractual obligation: cf. Muller & Co 's Margarine Ltd v Commissioners of Inland Revenue. [F17] But what is the position where a contract is concluded in one place and subsequently varied by agreement in another place? There is only one contract, and one would think it clear that that contract must, if it ever becomes material to inquire where it was made, be regarded as made at the place where it was originally concluded. The variation affects the content of the obligation but not the obligation itself. The place where the parties assumed that obligation, and became bound to one another, is the place where their contract was really made.
The plaintiff, in argument before the Full Court and before this Court, sought, in effect, to escape from this position by saying that the letters of 21st March and 4th June 1952 had the effect of rescinding the contracts of May and August 1951 and bringing into existence a new and different contract. The argument thus tended to centre round the distinction drawn between "rescission" and "variation" in Morris v Baron & Co [F18] and British and Beningtons Ltd v North Western Cachar Tea Co Ltd. [F19] In these cases a distinction is drawn, for the purposes of the Statute of Frauds, between a mere parol variation of an original contract in writing on the one hand and on the other hand a parol rescission of an original contract in writing: the parol rescission may or may not be accompanied or followed by a new substituted parol contract. In the former case the parol variation cannot be enforced, and the original contract in writing stands unaffected. In the latter case the original contract in writing is discharged. It is not a satisfactory distinction. It appears to be a matter of degree. Thus we find Lord Atkinson in the British and Beningtons' Case [F20] saying: "A written contract may be rescinded by parol either expressly or by the parties entering into a parol contract entirely inconsistent with the written one, or, if not entirely inconsistent with it, inconsistent with it to an extent that goes to the very root of it". [F21] His Lordship went on to say that in the particular case no such rescission could be found, the purpose of the parol contract being "merely to vary the written contract with respect to one of its provisions". [F22]
If that is the test to be applied here, the plaintiff must, as the Full Court held, fail. On the conventional basis on which the action was tried, it could not succeed unless it established a new and independent contract made in 1952. It proved, at most, a contract made as to some of its terms in 1951 and as to some of its terms in 1952. This was a contract other than that to which it had agreed to limit itself, and a contract in respect of which the defendant was entitled, by the reservation contained in the Prothonotary's order, to object to the jurisdiction. It is impossible, in our opinion, to maintain that a new and independent contract was made in New South Wales in 1952. The two material letters are unintelligible without reference to the original contracts of May and August 1951, and it seems almost absurd to say that those contracts were being rescinded and replaced by a new and different contract for the sale of bullets.
So far we have dealt with the case, as the Full Court dealt with it, on the footing that the rights and duties of the parties were permanently altered by what was contained in the two material letters-in other words, that there was a true variation of the original contracts of sale. But this was not, in our opinion, really the position. What was brought about by those letters was, in our opinion, no new contract-not even a varied contract-but a mere accord executory, and, when that accord was not executed, but was repudiated, the parties were relegated to their position under the original contracts, which became, as they had been before the accord, the exclusive charter of their rights and duties.
The rules of law relating to accord and satisfaction are explained by Dixon J., as he then was, in McDermott v Black, [F23] at pp. 183 and following, and Fullagar J. had occasion to consider them in Scott v English. [F24] The substance of the matter is thus stated by Dixon J. in the earlier case: "The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired". [F25] In the present case, we feel no doubt that what the plaintiff intended to take in satisfaction was not a promise but an act or thing promised. The plaintiff was threatening to sue the defendant on the contracts of May and August 1951, and we think that what it was saying, and all that it was saying, when it purported to accept the "offer" contained in the letter of 21st March, was that it would not seek to enforce whatever rights it had under the original contracts if the defendant accepted delivery of the goods on or before 30th September. We think that this would have been the position even if the words "without prejudice" had not been used. But those words seem to us to put the matter beyond doubt. They make it perfectly clear that the plaintiff is not abandoning at all its existing legal position. It is not taking a new promise in discharge of any right which it may have. If the promise is not performed, it is to be where it was before. It is not really material to consider whether, if it had sued on the original contracts before 30th September, the letters of 21st March and 4th June could have been pleaded in bar-as to which reference may be made to Ford v Beech, [F26] at pp. 699, 700]. But, in our opinion, they could not have been so pleaded. It is in any case clear, to our minds, that the plaintiff after 30th September was not merely at liberty to sue on the original contracts, but had no other cause of action on which it could sue.
The appeal, in our opinion, fails. We think, however, that the plaintiff should not be left in any danger of being held to be precluded by the judgment in this action from asserting any right which it might, apart from the conventional basis on which this action was fought, have been able to assert against the defendant. We think accordingly that the judgment in this action should be a judgment of non-suit. Subject to that variation, the appeal should be dismissed with costs.