Electronic Industries Ltd v David Jones Ltd [1954] HCA 69; (1954) 91 CLR 288 (26 November 1954)

HIGH COURT OF AUSTRALIA

ELECTRONIC INDUSTRIES LTD. v. DAVID JONES LTD. (1954) 91 CLR 288

Contract

High Court of Australia
Dixon C.J.(1), McTiernan(1), Webb(1), Kitto(1) and Taylor(1) JJ.

CATCHWORDS

Contract - Variation of terms - Television demonstration - Fixed period - Period changed - Consent - Forbearance - Effect on contract.

HEARING

Sydney, 1954, November 15, 16, 26. 26:11:1954
APPEAL from the Supreme Court of New South Wales.

DECISION

November 26.
THE COURT delivered the following written judgment:-
The amount at issue in this appeal is 1,086 pounds awarded by Kinsella J. to commercial cause in which the respondent was defendant and the appellant was plaintiff. The judgment of Kinsella J. was reversed by the Full Court of the Supreme Court, to which the defendant appealed. From the decision of the Full Court of the Supreme Court the plaintiff now appeals to this Court, which is asked to restore the judgment of Kinsella J. (at p293)

2. The contract in question was negotiated in the months of April and May 1949, and was in the result expressed in correspondence concluding with a telegram of 20th May 1949. The defendant conducts a large departmental store in Sydney and the plaintiff conducts an electrical business in Melbourne. At that time the plaintiff was prepared to give demonstrations or exhibitions of television in commercial and other establishments and, to that end, to install temporarily the necessary equipment. The material terms of the contract between the parties were that the plaintiff, for a charge of 2,500 pounds, would install its apparatus or equipment in the defendant's store and there give demonstrations of television for a period from 11th July to 23rd July 1949 inclusive. The purpose of the defendant was to provide an attraction which would draw customers to the store. It was of course obvious that on either side a good deal must be done over a period immediately preceding the date when the exhibition of television commenced. On the defendant's side it would be necessary to advertise the display of television and also to arrange part of the interior of the store so as to make the required space available. On the plaintiff's side its equipment must be freed from other uses, brought to Sydney and set up in the store. The details of all this had been the subject of discussion between the parties. Unfortunately, before the date the parties had fixed, viz. 11th July 1949, a rather serious coal strike began in New South Wales. As a result of the coal strike it appears that there was a considerable falling off in the number of shoppers coming into the city and the defendant decided that it had become most inopportune to proceed with the display of television. Over the telephone the plaintiff in Melbourne was informed of the situation in Sydney and asked if it would postpone the demonstration until another date could be fixed. For the defendant it was stated that after the strike was over it would require two or three weeks for the store to become sufficiently busy and that it would take two or three weeks more to carry out the arrangements for the exhibition. This conversation evoked from the plaintiff a letter dated 30th June 1949 which began by noting the defendant's inability to proceed with the demonstration of television at that stage or within a period of two or three weeks after the end of the coal strike. The letter proceeded: - "We appreciate the difficulties you face and although it involves considerable reshuffling of our own arrangements, we will be pleased to vary our agreement with you by an alteration of the dates of the demonstration." Then followed some information as to certain arrangements which the plaintiff had already made for the use of the equipment in Brisbane and a suggestion that afterwards, viz. on Monday, 22nd August 1949, the demonstration for two weeks in Sydney should commence. To this letter the defendant did not reply until after the date, 11th July 1949, had passed which the contract fixed for the commencement of performance. The plaintiff did not of course make any attempt in fact to begin the installation of the equipment with a view to begin the television exhibition on that day. In pursuance of the communications from the defendant, the plaintiff simply awaited further information as to the time or times which would prove suitable to the defendant. Thus the situation at the time when performance according to the tenor of the contract was due simply was that the plaintiff, though ready and willing to perform, had refrained from tendering actual performance at the request of the defendant. It had expressed its willingness to agree on a variation of the contract by substituting a new date but no agreement of variation had been made. The original agreement therefore stood but, without any breach of contract on the part of the plaintiff, the date for performance had gone by. Up to this point at all events, the parties had not agreed on a variation of the contract. The plaintiff had simply complied with a request on the part of the defendant to forbear from punctual performance, awaiting meanwhile an answer to the defendant's proposal for a variation of the contract by fixing a new date. The result of such a request followed by forbearance was to dispense the plaintiff from any actual tender of performance on the due date, the parties remaining bound nevertheless within a reasonable time to give and accept performance. If it be possible at all to infer that up to this point the parties had agreed on any variation, it could only be an agreement to the limited extent of removing from the contract the fixed day named for the commencement of the fortnight's exhibition. The difference between the two positions is not of importance in the present case. For the transaction is not one to which the Statute of Frauds applies and on either view there was a contract on foot requiring performance at a reasonable time to be worked out by the implications which the law makes when the co-operation of the parties is necessary to effect performance and there is no exact time appointed by the tenor of their mutual obligation. (at p295)

3. On 14th July the defendant did reply to the plaintiff's letter of 30th June. After excusing himself for the delay in writing on the ground of the uncertainty of the position created by the coal strike which the writer said would, it appeared, be of long duration, he said his company wished to postpone any fixed date for the intended television show in the store. The letter added that a good deal of preparation was necessary and the defendant would certainly prefer to discuss the matter when the industrial position had become clear and in the meantime not to make any decision as to the date proposed by the plaintiff, viz. 22nd August. To this letter the plaintiff on its side did not reply until 1st September. The reply began by acknowledging the defendant's letter and stating that the plaintiff had appreciated the position in which the defendant found itself and, although it meant a considerable reshuffling of the plaintiff's plans at some expense, had been happy to meet the defendant's wishes in the matter. The plaintiff's letter then proceeded: - "In view of the settlement some weeks ago of the coal strike and the fact that the general position is now rapidly returning to normal, we would like to ask if you are yet able to indicate your wishes as to dates &c., so that we might complete an itinerary for our television equipment." This letter produced from the defendant a letter declining to proceed with the television show, at what the defendant called "this late date". The writer gave the reason in the following passage: - "I have discussed the matter of television with my co-directors and they would like me to point out that the main reason we wished to have television in the store was as an attraction during a certain period of the winter months when we would be able to efficiently handle the crowds which it would bring into the store. At the present time, and during the summer period we find that the store is crowded each day and therefore if we were to install television during this period we would overcrowd the store, which would naturally have a detrimental effect on our trade." The plaintiff wrote asking the defendant to reconsider its decision but after some further interchange of letters the defendant restated the grounds of its refusal to go on and said that it felt sure that the plaintiff would appreciate that the falling through of the proposed demonstration was due entirely to causes beyond the defendant's control. The plaintiff thereupon treated the contract as repudiated by the defendant and sued for damages. (at p296)

4. The contention of the defendant is that in the events that happened the contract became unenforceable for lack of a time certain for its performance. According to this argument the circumstances of the parties and the very character of the transaction demanded that by agreement they should appoint a time against which the one would make available its store and the other would install its equipment and as from which the fortnight's exhibition or demonstration would commence. Without this, so it was said, the agreement was uncertain and insufficient to form the source of binding and enforceable contractual obligations. Originally the missing term was there but subsequently the parties removed it and this meant that until by agreement it was replaced by the fixing of a new date the contract was void for uncertainty. (at p296)

5. Another form of the argument was that the parties had exhibited clearly enough an intention to make their contract depend upon the existence of an agreed date, fixed in conformity with their respective essential needs; an intention to make the contract depend upon it as something so fundamental to the bargain as to amount in effect to part of the description of the services which formed the subject matter. Thus, it was said, when the date originally fixed went by, whether as a result of a contractual variation or of a forbearance by the plaintiff at the defendant's request to tender performance punctually, thereupon an indispensable part of the contract was eliminated. Whether the parties did or did not intend to keep the contract on foot as a binding obligation, whether they did or did not intend to rescind the original contract in the expectation of subsequently agreeing upon another, and whatever they may or may not have supposed, so in effect the argument ran, there was in truth an end of all contractual rights and obligations between them. (at p297)

6. Of course if the parties did intend to keep the original agreement no longer on foot, to rescind it, that is the end of the matter. The defendant's plea of exoneration and discharge would be made out and there is no more to be said. (at p297)

7. But it is certain that they did not intend to rescind the original contract and that they never did so. The plaintiff always meant to perform it and hold the defendant bound to it. Never for a moment did the plaintiff mean to exonerate the defendant from the contract. All it meant to do, and all it did do, was to accede to the defendant's request for a postponement in order to oblige the defendant and consult the interests of the defendant. An inference may possibly be open that the parties impliedly made a preliminary mutual agreement to vary the contract by dropping the old date pending their agreement on a variation substituting a new. If it were so, for the reason already stated it would not matter. But it does not seem to be the true inference. The truth was that the plaintiff expressed its willingness to vary the contract by substituting a new agreed date, and awaited an answer to its proposal, forbearing in the meantime in pursuance of the defendant's request to tender actual performance. (at p297)

8. In the situation which resulted both parties remained bound by the contract. The fact that there was no longer a fixed date for performance brought into application the principles which impose on parties, in all cases where the performance of their obligations requires co-operative acts, the duty of complying with the reasonable requests for performance made by the other. In Mackay v. Dick (1881) 6 App Cas 251 Lord Blackburn says: - "I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect" (1881) 6 App Cas, at p 263 . What it was reasonable for the plaintiff to demand was that within a specified time when the plaintiff's apparatus was not unreasonably committed elsewhere the defendant should name a time for the plaintiff to commence the fortnight's exhibition or demonstration and should make available its store for a reasonable period in advance of the date for the plaintiff to install its equipment and make the necessary preparations. Of course the plaintiff could not give the defendant an unreasonably short period of time or one specially inopportune to the defendant, having regard to the purposes to be served by the exhibition. All that the plaintiff was bound to do was to take reasonable measures to obtain from the defendant a time when he might enter the store for the purpose of performing his part of the contract and no doubt there were more ways than one in which the plaintiff might have acted. By any appropriate demand the plaintiff was entitled to require the defendant to make its store available to the plaintiff to perform its obligation at some proper and reasonable time. It is hardly necessary to repeat the commonplace statement that what is reasonable depends on all the circumstances including the nature and purpose of the express stipulations. (at p298)

9. But there is no ground for the supposition that once the named date was allowed to go there could be no implications binding the parties to performance of the co-operative acts necessary to carry out the contract. Nothing could be more certain than that clear and definite contractual obligations undertaken by the parties were intended by them to continue in force notwithstanding that at the instance of one of them the specified day was allowed to pass. It would be absurd for the law to say that nevertheless they were discharged from their obligations. On the contrary the law supplies the means of ensuring the performance of the contract by making very simple and natural implications. Example after example could be given of commonplace contracts for the performance of work or the rendering of services where one man must make himself or his premises or his goods available to another at some mutually convenient time which is left unfixed or if fixed is allowed to pass. A contract to tailor a suit of clothes, to decorate the interior of a building or to repair a ship's hull is not unenforceable because no time is fixed for the attendance of the customer upon the tailor or for the commencement of the decorator's work or for the entry of the ship into a dry dock when it may become available. (at p298)

10. When it is said that this is a different case because the parties made the fixing of a date the sine qua non of their obligations, it is enough to answer that at no time did they stipulate expressly or impliedly that unless they agreed upon a new date the contract should be at an end. The intention was that the contract should go on as a binding obligation notwithstanding that performance on the named date was pretermitted. (at p299)

11. In the Full Court of the Supreme Court the view was adopted that the contract had either been varied or rescinded and, in the former case, it had become unenforceable for want of a specified date. The foregoing reasons state why, with respect, it has been found impossible to concur in this view as one which the facts support or which is consistent with the legal consequences flowing from the facts as they appear to have existed. (at p299)

12. The appeal should be allowed with costs: the order of the Full Court of the Supreme Court should be discharged and in lieu thereof it should be ordered that the appeal from the judgment of Kinsella J. to that court be dismissed with costs. (at p299)

ORDER

Appeal allowed with costs. Order of the Full Court of the Supreme Court of New South Wales discharged. In lieu thereof order that the appeal from the judgment of Kinsella J. to that court be dismissed with costs.