Tallerman & Co Pty Ltd V Nathan'S Merchandise (Vic) Pty Ltd (1957)

Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd (1957)

98 CLR 93

PART I

Summary of Facts

The dispute occurred in Victoria between a registered company, Tallerman & Co Pty Ltd ("the plaintiff") and an incorporated company, Nathan's Merchandise Pty Ltd. ("the defendant), where both parties operated their business. Two previous binding contracts (orders No. 58 and No. M57) were made in communications on 14th May 1951 and 2nd August 1951 respectively, each for the sale by the plaintiff to the defendant of 1,000,000 Hungarian .22 bullets. A consignment of 1,800,000 bullets for the above orders was dispatched from Sydney to the defendant by rail on the 12th February 1952 and was received by a carrier employed by the defendant in Melbourne who stored the bullets in the defendant's warehouse, where they resided for three days. Claiming that under the contractual terms, those bullets should only be delivered when requested, the defendant refused to take the delivery, and thus reconsigned the bullets back to Sydney by rail. On 3rd March 1952 a letter by the plaintiff's solicitor was sent out requiring the defendant to accept the "contractual goods" and that otherwise necessary steps would be taken to enforce the plaintiff's legal rights. On 6th March the defendant's solicitors responded by reasserting the stance that it had been settled from the start that delivery of bullets should be made only when the defendant required them, to fulfill its customers' orders. In addition the defendant's solicitors raised the further point that the location of delivery in Melbourne was inconsistent with the contractual terms.

However in correspondence of 21st March1952 the defendant instigated an alteration to the legal position of both parties, by offering to commence "without prejudice" the delivery instruction covering the balance of bullets, provided that the final delivery would not be made later than 30th September 1952. The plaintiff first repudiated this offer on the 3rd April, but by the 4th of June 1952, a second critical letter was sent out by the plaintiff's solicitor stating its acceptance of the defendant's offer. On 8th July 1952, the defendant propose that it will only purchase 800,000 bullets as opposed to the contracted amount of 1,800,000(less 200,000 which had been delivered and paid) as the contract on the 2nd August had not been accepted by the plaintiff which denied it. And no delivery instructions were given by the defendant on or before the 30th September.

Procedural History

In the first instance, Clancy J held in the Supreme Court that a new contract for 1,600,000 bullets had been formed in Sydney by the correspondence, and the plaintiff sought to recover damages from the defendant who then appealed to the Full Supreme Court of New South Wales, which allowed the appeal and ordered that judgment be entered for the defendant. The subsequent action arose when the plaintiff further appealed for two breaches of contract by the defendant, for the sale of Hungarian .22 long rifle bullets. Having believed that previous contracts were to be rescinded, the plaintiff argued that the contract was made in New South Wales when it is accepted on the 4th June 1951.

PART II

Issues and reasoning

In settling whether the defendant was in breach of contract, the principal matter in question was to consider whether the 21st March 1952 and June 4th 1952 letters of agreement constituted a new and independent contract. In reaching such a conclusion, it was necessary to identify in which jurisdiction, if not the Victorian courts, should the trial be held. Adapting the postal acceptance rule, which asserts the validity of acceptance at the time of posting, it was found that the contract was conceded to be formed in Sydney since the offer made on the 21st March was accepted by a letter dispatched by the Plaintiff from Sydney; thus this allowed the plaintiff to set its trial wholly in New South Wales. As a result, the Plaintiff had voluntarily confined itself to the two correspondences above-mentioned.

The next matter involved the question of whether the 'new' contract constituted a variation of the two original contracts or whether it had the effect of rescinding the original contracts. Kitto J. verified that whether or not an existing contract is considered to have been rescinded, depends on the intention of the parties involved. When examining the two critical correspondences of 21st March 1952/ June 4th 1952, it was held that no intention by the defendant to discharge the previous 1951 contracts was found; the letters of offer and acceptance did not constitute a new and substituted contract, and hence all conditions of the earlier contracts were to be binding. Assuming that the contracts is of variation, the final substantial issue to be anlaysed was whether the Plaintiff's acceptance of the original contracts was effective for the Defendant to be in breach of its terms.

Decision

The appeal failed. As the plaintiff voluntarily confined itself to the two correspondences and thus chose not to sue in Victoria, these two letters, under New South Wales law, did not amount to a new contract, and the plaintiff was not protected