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[1923] 2 K.B. 261 Page 11923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)*261 Rose and Frank Company v. J. R. Cromptonand Brothers, Limited, andOthers.In The Court of Appeal.CABankes L.J., Scrutton L.J. and Atkin L.J.1923 Feb. 8, 9, 12; March 23.In the King's Bench DivisionBailhache J.1922 Nov. 9, 10.Contract--Animus Contrahendi--Agreementbinding in Honour--Ousting the Jurisdiction--Repugnancy.An English firm who manufactured and dealt inpaper tissues of various kinds had for several yearsdone business with an American firm. All goods ofone kind sold in the United States, all goods ofanother kind sold in the United States or Canada,and all goods of a third kind wherever sold, weresold to the American firm, and that firm placed allorders for goods of the third kind with the Englishfirm. These relations were at first made to continuefor one year, but were renewed from time to time.A great part of the tissues so sold were in factmanufactured by another English firm. In thecourse of time the American firm proposed a newarrangement, and a document was drawn up andsigned by the three*262 firms whereby the twoEnglish firms expressed their willingness that thepresent arrangements with the American firm,which were then for one year only, should becontinued on the same lines for three years, and soon for another period of three years, subject to sixmonths' notice by any of the parties. The document,after purporting to set out the understandingbetween the parties, including severalmodifications of their previous arrangement,proceeded in these words:"This arrangement is not entered into, nor is thismemorandum written, as a formal or legalagreement, and shall not be subject to legaljurisdiction in the law courts either in the UnitedStates or England, but it is only a definiteexpression and record of the purpose and intentionof the three parties concerned to which they eachhonourably pledge themselves with the fullestconfidence, based on past business with each other,that it will be carried through by each of the threeparties with mutual loyalty and friendly cooperation."Then followed a clause relating to prices.The English firms having definitely determinedthese relations without notice, the American firmbrought an action for breach of the contract allegedto be expressed in the document:-Held, by Bankes, Scrutton and Atkin L.JJ., thatthe document did not constitute a binding contractand that the action would not lie.The question whether, assuming the formerrelations were contractual, they were abrogated bythe document, was left undecided.Before relations between the parties had beenbroken off the plaintiffs had given and thedefendants had accepted orders for goods. Some ofthese orders were executed; others were not.Held, by Bankes and Scrutton L.JJ. (Atkin L.J.dissenting), that the orders and the acceptancethereof were alike referable to the document, andthat the non-fulfilment of them did not constitute abreach of contract.Judgment of Bailhache J. reversed.APPEAL from the judgment of Bailhache J. in anaction tried before the learned judge without a jury.The action was for breach of an alleged contractin writing signed by the defendants respectively onJuly 11 and July 8, 1913, a counterpart of whichwas signed by the plaintiffs on August 12, 1913.The plaintiffs were an American companycarrying on business in New York. The defendantsJ. R. Crompton & Brothers, Ld., and Brittains, Ld.,carried on business at Bury in Lancashire and atCheddleton in Staffordshire respectively.The facts were as follows: J. R. Crompton &Brothers, Ld., were manufacturers of carbonizingtissue paper. Messrs. Rose & Frank, who were laterincorporated as the Rose & Frank Company, weremerchants who dealt in this paper.*263 Businessrelations between these two firms began in 1905. J.R. Crompton & Brothers, Ld., sent the paper toRose & Frank, who added some work by way offinishing it and sold it in America. The firstarrangement between these parties was contained ina letter of March 7, 1905, written by J. R.Copr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 21923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)Crompton & Brothers, Ld., to Rose & Frank inthese terms: "As arranged with your Mr. Frank wenow beg to confirm the arrangement made withhim in regard to the 7 lbs. substance 'R & Fcarbonizing paper,' namely that in the event of yourfinding this paper suitable for your purpose we willconfine the sale of it to you for the United Statesand Canada for the 12 months ending March 31,1906." In December, 1908, a further arrangementwas made between J. R. Crompton & Brothers, Ld.,and Rose & Frank concerning another descriptionof paper; and on December 24, 1908, J. R.Crompton & Brothers, Ld., wrote, "We discussed atsome length with Mr. Campbell" - who representedRose & Frank -"matters relating to carbon tissues, and havesince then given some further thought to the matter,and agree now to your suggestion to confine for thetime being our carbon tissues in America to you.By this we mean so long as this arrangement lastswe will open no new accounts in America forcarbon tissues, in addition to which we will, ingiving any quotation for such paper here, do ourbest to ascertain if the paper is or is not required forAmerica, and where we find it is will bear yourinterest in mind and, so far as we can do so, declineto quote."After these arrangements had been continuing forsome years Rose & Frank found that there was ademand for carbonizing tissues of a blue colour,upon which on November 9, 1911, a furtherarrangement was made by a letter from J. R.Crompton & Brothers, Ld., to Rose & Frankcontaining these words: "Please take the paragraphin our letter 'this particular kind of blue paper inquestion' to mean all blue carbonizing tissue whichwe now agree to make only for your firm, upon theunderstanding that all your orders for such paperare given to us, subject to 12 months' notice oneither side to terminate the agreement." The learnedjudge at the*264 trial held that these arrangementswere binding contracts, the effect of which was thatRose & Frank had the sole agency, not confined tothe United States and Canada, of the bluecarbonizing paper, subject to a twelve months'notice on either side, the sole agency of the 7 lbs.substance in the United States and Canada, subjectto a similar notice, and the sole agency of all othercarbonizing tissues in the United States only (withan exception in favour of one customer in Boston).During the continuance of these relations, whichwere renewed from time to time and resulted in aprofitable business to both parties, J. R. Crompton& Brothers, Ld., were in close commercialrelations with Brittains, Ld., who produced papertissues differing in quality from those of J. R.Crompton & Brothers, Ld., and a considerablequantity of the tissues supplied by J. R. Crompton& Brothers, Ld., to Rose & Frank, and to the Rose& Frank Company after its incorporation in March,1911, were in fact manufactured by Brittains, Ld.;but there were so far no direct dealings betweenBrittains, Ld., and Rose & Frank or the Rose &Frank Company.These relations continued until the end of 1912.Then the Rose & Frank Company, in order to givemore permanence and stability to their business,proposed that an agreement should be drawn upbetween themselves, J. R. Crompton & Brothers,Ld., and Brittains, Ld., whereby the last namedcompany should come into direct contractualrelations with the Rose & Frank Company for aperiod of three years and thereafter for a furtherperiod of three years unless notice to the contrarywere given by any of the parties to the others. Anagreement to this effect dated January 1, 1913, wasactually drafted but was never executed. [FN1]FN1 For a copy of this draft see note on p. 299,post.Instead of that agreement the following documentwas drawn up. It was signed by Brittains, Ld., onJuly 8, and by J. R. Crompton & Brothers, Ld., onJuly 11, and a counterpart thereof was signed bythe Rose & Frank Company on August 12, 1913. Itwas in these terms:-*265 "As the business in carbonizing tissueswhich is now being done between Messrs. Rose &Frank Co. of New York as purchasers and Messrs.J. R. Crompton & Brothers Ld. of Bury,Lancashire, and Messrs. Brittains Ld. Cheddleton,Staffordshire, as manufacturers, has attained to aconsiderable volume, and Messrs. Rose & FrankCo. are of opinion that in the interests of the tradersthey represent assured arrangements for the supplyof these papers should be made for someconsiderable period ahead, Messrs. J. R. Crompton& Brothers Ld. and Messrs. Brittains Ld. herebyexpress their willingness that the presentarrangements with Messrs. Rose & Frank Co. forthe sale of these papers, which are now for one yearonly, shall be continued on the same lines as atpresent for a period of three years, say until March31, 1916, with the understanding that if it is desiredby any of the three parties to alter or abrogate thisarrangement at the expiration of that period sixmonths' notice shall be given before that date. If nonotice be given by either party the arrangementshall be regarded as continuing for a second periodof three years subject to the same six months'notice for alteration or abrogation as in the firstCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 31923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)period of three years."The agreement between the three parties withrespect to the business in carbonizing tissues is asfollows, and any alteration or extension shall besubject to the mutual agreement of the threeparties:-"Messrs. J. R. Crompton & Brothers, Ld. with theconsent and concurrence of Messrs. Brittains Ld.agree to confine the sale of all tissues forcarbonizing exclusively to Messrs. Rose & FrankCo. as at present for the United States of Americawith the exception of:"(1.) The F. S. Webster Co. of Boston, Mass.(whose business shall be left undisturbed as atpresent) but should the F. S. Webster Co. duringthe currency of this agreement offer for sale thepaper they buy from Messrs. J. R. Crompton &Brothers Ld. in its unprepared state objection shallbe raised to it by Messrs. J. R. Crompton &Brothers Ld., their assumption being that all thepaper purchased*266 from them by the F. S.Webster Co. is used by them in making carbonpapers by their own plant; and"(2.) The Dominion of Canada, where bothMessrs. Rose & Frank Co. and Messrs. J. R.Crompton & Brothers Ld. shall be equally free tosell upon the arrangements at present existingbetween them,upon the understanding that the Rose& Frank Co. will, as far as possible confine theirpurchases of all grades of carbonizing tissues soreserved to them by Messrs. J. R. Crompton &Brothers Ld. and Messrs. Brittains Ld. exclusivelyto Messrs. Crompton and Messrs. Brittains and,whilst doing their best to increase the business stillfurther, undertake that the volume of business inthe present grades shall not fall in any year belowthat of the average of the last three years, viz. 1910,1911, and 1912, without such explanations as shallbe considered satisfactory by Messrs. J. R.Crompton & Brothers Ld. and Messrs. Brittains Ld.Messrs. J. R. Crompton & Brothers Ld. andMessrs. Brittains Ld., whose position is in theiropinion soundly assured, will subject to unforeseencircumstances and contingencies do their best, as inthe past, to respond efficiently and satisfactorily tothe calls of Messrs. Rose & Frank Co. fordeliveries both in quantity and quality, and it isfurther understood and agreed that any otherspecial and distinctive grades of paper forcarbonizing which shall be made at the suggestionof or introduced by the Rose & Frank Co. shallduring the currency of this agreement be confinedexclusively to them for the United States ofAmerica and Canada without any exceptionsotherwise than by common agreement between thethree parties. It is understood and agreed that thecheaper carbonizing papers which have alreadybeen the subject of discussion shall be covered bythe special and exclusive arrangement of thisclause, but that the value of these or any freshgrades that may be introduced shall not be includedin the average of the three years which applies onlyto the grades of paper supplied during the threeyears 1910, 1911, and 1912. The special R. & F.papers as hitherto*267 manufactured and suppliedby Messrs. J. R. Crompton & Brothers Ld. are alsoincluded in this special exclusive arrangement asheretofore, the volume of business in these papersbeing governed by the clause for the three yearsaverage as in the case of the other grades."It is further clearly understood that the bluecarbonizing tissues are absolutely and entirelyreserved to Messrs. Rose & Frank Co. without anyexceptions during the currency of this agreement."With the single exception of these bluecarbonizing tissues this agreement applies only tothe United States of America and Canada, and doesnot admit of these carbonizing papers being offeredor sold by Messrs. the Rose & Frank Co. in theirunprepared state outside the United States ofAmerica and Canada."This arrangement is not entered into, nor is thismemorandum written, as a formal or legalagreement, and shall not be subject to legaljurisdiction in the Law Courts either of the UnitedStates or England, but it is only a definiteexpression and record of the purpose and intentionof the three parties concerned to which they eachhonourably pledge themselves with the fullestconfidence, based on past business with each other,that it will be carried through by each of the threeparties with mutual loyalty and friendly cooperation."Prices. - Prices, (which on the present occasionare being advanced 10% after April 30, 1913, forthe rest of the current year by mutual consent onaccount of the increased cost of production) shall infuture be quoted for periods of six months' durationonly. Any alterations in price which themanufacturers require on account of increases ordecreases in cost of production shall take effect atthe end of March and at the end of September inany year, notice of any alteration to be given by theend of the previous February or Augustrespectively."The arrangement contained in this document wasextended to March 30, 1920. In May, 1919, thedefendants J. R. Crompton & Brothers, Ld., andBrittains, Ld., became*268 discontented with theway in which the plaintiffs, the Rose& FrankCompany, were conducting their business inCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 41923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)America. In the defendants' view the plaintiffs weredemanding prices for their goods whichencouraged competition and was injuring thebusiness of the defendants. They sent a telegraminviting a representative of the plaintiffs to comeover to England, but the invitation was notaccepted. On May 7, 1919, the defendantsdefinitely determined the arrangement between theparties.The plaintiffs then brought this action. The writwas issued on November 19, 1919.The statement of claim contained twenty-oneparagraphs. Of these paras. 1 to 9 related to thearrangements between Messrs. Rose & Frank, theplaintiffs, and the defendants J. R. Crompton &Brothers, Ld., before July, 1913; the document ofJuly, 1913, and the agreement to continue relationsunder that document till March 30, 1920. It alsoalleged (para. 12) that in the autumn of 1918 andduring 1919 the defendants in breach of the allegedagreement of July, 1913, supplied persons otherthan the plaintiffs in America with carbonizingtissues and in Canada with special and distinctivegrades of paper for carbonizing suggested orintroduced by the plaintiffs and with bluecarbonizing tissues and supplied the tissues atprices lower than those at which they had been orwere supplying the plaintiffs: (para. 13) that bycables on May 5 and 9, and by letter of May 10,1919, the defendants refused to make any furtherdeliveries to the plaintiffs and wrongfullyrepudiated the alleged agreement of July, 1913;(para. 14) that between March 31, 1919, and March30, 1920, the plaintiffs would have required 200cases of paper from the defendants J. R. Crompton& Brothers, Ld., and 800 cases from the defendantsBrittains, Ld., and that their estimated loss on thenon-delivery of these goods was 10,146l. on the200 cases and 112,977l. on the 800 cases. Theyalso claimed (para. 15) 2867l. for depreciation ofunsold stock owing to the defendants havingsupplied other firms at prices lower than thosecharged to the plaintiffs.*269 By para. 16 the plaintiffs pleaded that if thealleged agreement of July, 1913, was not valid, theearlier agreements not having been terminated bytwelve months' notice were still in force, and thatthe defendants J. R. Crompton & Brothers, Ld., hadbroken and repudiated those agreements and that inaddition to depreciation of unsold stock theplaintiffs would suffer damage through beingunable to deliver tissues sold by them to customers;that their estimated requirements for twelve monthsfrom May, 1919, were 700 cases, and theirestimated loss thereon 86,186l.Para. 17 contained a claim for 244l. 3s. 2d. forgoods delivered in 1918 not in accordance withwarranty. The defendants did not contest this claim.Para. 18 stated that by thirty-two orders inwriting, the numbers of which were specified, theplaintiffs ordered from the defendants a number ofcases of tissues for delivery at various dates set outin the orders at prices which the defendants werethen charging the plaintiffs for the said tissues or atfair and reasonable prices; that the said orders werecontained in letters from the plaintiffs datedJanuary 23 and 24, February 7, and March 11,1919, and were accepted by the defendants byletters dated February 21 and 25, and March 29,1919.Para. 19 stated that the defendants made partdeliveries in respect of four of the thirty-twoorders, but in breach of the terms of the said salesfailed to deliver the balance of those four ordersand in respect of the remaining orders made nodeliveries at all.The defence contained the following paragraphs:-"18. The whole of the arrangements made by theletters and documents referred to in paragraphs 3,4, 6, 7, 8, 9 and 18 of the statement of claim werearrangements made without consideration and wereexpressly or impliedly intended to be of no legallybinding effect save in so far as the actual deliveryof tissues by the defendants would raise a legalobligation on the plaintiffs to pay a reasonableprice therefor and were expressly or impliedlymade by the plaintiffs in the interest of the tradersin America and Canada whom theyrepresented*270 and there were express or impliedterms thereof that the plaintiffs would act in theinterests of the defendants as much as in their owninterests and would charge reasonable prices tosuch traders and would do nothing calculated tojeopardize the sale of such tissues or by chargingunduly high prices or otherwise to encourage thecompetition of rival manufacturers or dealers butwould honourably and loyally co-operate with thedefendants in developing the market for suchtissues which terms the plaintiffs failed to observeas is hereinafter set out. ...."19. Alternatively if the defendants J. R.Crompton & Brothers Ld. made any of theagreements alleged in paragraphs 3, 4, 6 and 7 ofthe statement of claim all such agreements weredetermined by mutual consent by virtue of or at thedate of the signing of the document referred to inparagraph 8 of the statement of claim" - i.e. thedocument of July, 1913.Copr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 51923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)"20. If the defendants or either of them made anyof the agreements alleged in paragraphs 3, 4, 6, 7,8, 9 and 18 of the statement of claim there were inthe said agreements the express or implied termsset out in paragraph 18 hereof and the plaintiffswere by the said agreements constituted the agentsof the defendants and the plaintiffs in breach of thesaid agreements and of their duty as the defendants'agents acted contrary to the interests of thedefendants in that they charged excessive prices tothe traders in America and Canada who were theircustomers and thereby seriously prejudiced the saleof the defendants' tissues and involved thedefendants in the danger of losing the whole or apart of their market in America and Canada and thedefendants were justified in determining theagreement or agreements."The defendants also counterclaimed 2124l. 18s.8d. the reasonable price of tissues actuallydelivered on March 24 and April 3 and 17, 1919.On February 8, 1922, an order was made inchambers that the action should be transferred tothe Commercial List and that the Court should tryall questions of liability, except the issue whetherin fact the plaintiffs did any of*271 the actsalleged in para. 20 of the defence, and construe allagreements; and that all questions of damages andof the matters alleged in para. 20 of the defence (ifthey should become material) should be referred toan Official Referee.The case was heard on November 9 and 10, 1922.R. A. Wright K.C. and Conway for the plaintiffs.Disturnal K.C., Eastham K.C. and James Wylieforthe defendants.Nov. 10. BAILHACHE J.[after stating the facts]. The question has beenargued before me on the construction of thedocument of 1913 alone. Another question hasbeen raised on the pleadings - namely, that if as amatter of construction the defendants were not atliberty to determine the arrangement as suddenly asthey did, they were justified in so doing by theaction of the plaintiffs. No evidence was called insupport of this position; it is reserved for thedefendants to make it good, if they can, by callingthe necessary evidence. All I have now to deal withis the document of July, 1913.The contest turns upon the clause whichimmediately precedes the statement of prices; it isin these words,"This arrangement is not entered into, nor is thismemorandum written as a formal or legalagreement and shall not be subject to legaljurisdiction in the Law Courts either of the UnitedStates or England but it is only a definiteexpression and record of the purpose and intentionof the three parties concerned to which they eachhonourably pledge themselves with the fullestconfidence, based on past business with each other,that it will be carried through by each of the threeparties with mutual loyalty and friendly cooperation."The point taken by the defendants is that thearrangement was not intended to be and was not acontract; that if I look at the whole of it and treat itas a whole I shall see plainly that the partiesintended nothing in the nature of a bindingcontract, nothing more than a mutualunderstanding; that therefore it was quite open tothem to*272 provide that there should be no legalobligation on either party and consequently norecourse to the Courts of Law. On the other handthe plaintiffs also contend that if I take thedocument as a whole I must come to the conclusionthat it was intended to be and is a binding contractwhich, apart from the clause I have read, wouldgive either party a right of recourse to the Courts ofLaw if that contract was broken. Pursuing theirargument they say where a contract binding in lawis to be found in an instrument, if the parties in thesame instrument violate that contract by a clausewhich stipulates that there shall be no legal liabilityon either side, that clause is void because it isrepugnant to the terms of the instrument, and thecontract remains. They say if that clause means thatthere is to be no legal liability on either side, theclause is repugnant, because it goes further thanmerely qualifying, it actually defeats the mainpurpose of the contract. They further say that if theclause means that there shall be no recourse to theCourts it is still void, because it is contrary topublic policy to give effect to that intention.I approach the construction of this documentremembering that the business which these threeparties carried on was a large, profitable andimportant business to them all, probably moreimportant to the plaintiffs than to the defendants;that the relations between the plaintiffs and thedefendants J. R. Crompton & Brothers, Ld. -Brittains, Ld., had not yet come into direct relationwith the plaintiffs - were terminable, with oneexception, upon a reasonable notice, and were notfor any definite length of time; and that it was thewish of the parties, and particularly of theplaintiffs, to place the business upon a surerCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 61923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)foundation.Approaching the document with these facts inmind I find that it says: "As the business incarbonizing tissues which is, now being done" -[The learned judge read the document to the words"as in the first period of three years, " andproceeded:] As I have said that arrangement wasdefinitely continued till March 31, 1920.Pausing there a moment, I take it to be quite clearthat*273 what they have agreed to in this first partof the memorandum is that the three contracts,which were only for one year and which wereterminable on reasonable notice, were to be put ona different footing to this extent, that instead ofbeing subject to reasonable notice, they were tocontinue for a period of three years, subject to sixmonths' notice being given before that date, and fora further period of three years if no notice weregiven. It is quite clear that the parties intended notto weaken the existing contracts but to strengthenthem; not to alter them except in this respect, thatthey should continue for a definite time and for afurther period unless six months' notice were givento determine them. If the memorandum ended thereI should not have the slightest doubt in saying thiswas as clear a contract as there could well be thatthe three contracts which were running shouldcontinue to run for a period of time.The memorandum goes on: "The agreementbetween the three parties with respect to thebusiness in carbonizing tissues is as follows, andany alteration or extension shall be subject to themutual agreement of the three parties:-" In whatfollows the parties, as I gather their intention, arebeginning to sweep into one document theprovisions of the three letters which formed thethree then existing contracts, and to express in thatone document what the course of business is to be.The rest of the document reads exactly as I havesuggested, except as regards some small matters,relating to such special and distinctive grades ofpaper as may be indicated by the plaintiffs, whichwere not comprised in the three letters. There isnothing in this portion of the memorandum to showthat the contracts then existing should cease to becontracts and should become simply arrangementshaving no legal force or effect, an alteration whichwould be directly contrary to the plaintiffs' objectnot to weaken but to strengthen the ties whichbound the defendants to them.Then comes the clause which raises the question.If the first part of the document expresses anarrangement which is only to be binding in honourand not in law, a hope or*274 expectation andnothing more, the clause undoubtedly excludes thejurisdiction of the Courts. But I have come to theconclusion that is not the proper way to read thedocument. I cannot think that three business firmshave taken the trouble to write out a memorandumwhich is not to be worth the paper it is written on;that notwithstanding the fact that the threeagreements were to be extended for three yearscertain, any of the parties might the day aftersigning this document have altered their minds andwould yet have committed no breach of contractagainst the other or others. That seems to me animpossible position. It is difficult to understandhow the plaintiffs allowed this clause to beinserted; but having come to the conclusion that thememorandum recites contracts which were thenbinding and binds the defendants to continue thosecontracts for three years, and then possibly foranother three years, I have also come to theconclusion that, if this clause means thatnotwithstanding this the parties are to be under nolegal obligation, then it is repugnant to the mainintention of the memorandum and I must reject it. Imust equally reject it if it merely purports to oustthe jurisdiction of the Courts. My own view is thatit has the larger meaning, that the parties shall beunder no legal obligation to each other. That beingso, and the earlier part of the document beingcontractual and not merely expressive of a hope orexpectation, the clause, strange as it is and I thinkplain as it is, is repugnant to the main object andscope of the contract and must be rejected.That disposes of the case so far as I amconcerned; but if I am wrong, the plaintiffs haveanother and a smaller claim. At the end of January,1919, before the defendants' sudden change ofattitude, the plaintiffs had, as was their custom, sentorders for specific kinds and quantities of tissuepaper based on their proximate requirements for thenext three months or more. They claim that,whatever the document of July, 1913, may mean,those orders, which were accepted before thedefendants put an end to that document, constitutecontracts and must be fulfilled by the defendants.The defendants point out that there must be somememorandum*275 in writing containing all theterms of these so-called contracts before they canbe enforceable; that the acceptance is a simpleacceptance of the orders as sent, and that the ordersdo not sufficiently give the terms to satisfy s. 4 ofthe Sale of Goods Act. The orders are allsubstantially in the same form: "Please enter ourorder for the following goods and ship as soon aspossible Toronto, Canada"; then follows thedescription of the goods; then "Send all documentsto our New York office. Price ." It is said that thecontract between the parties contained terms whichought to be, and are not, inserted in thememorandum: First, that the mode of delivery isCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 71923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)not stated; but the words are "Enter our order andship." I understand that to mean "Deliver f.o.b."Next, that the prices are not specified; but no priceswere definitely agreed; they were left to thedefendants, which means that they were to be fairand reasonable in the circumstances. That is whatthe law implies when a contract is silent as to theprice. Obviously such a contract may be made, andthere can be no memorandum of that upon whichthe contract is silent. Therefore the fact that theprice is not definitely mentioned does not matter.Thirdly, it is said that no time is named forpayment; but the next words are "Send alldocuments to our New York office." If the goodswere to be shipped f.o.b. I should take this to meanthat payment would be made after the documentsreach the New York office. That is precisely thecourse of business that was followed in this case.Therefore I have come to the conclusion that, if Iam wrong upon the first point, there were sufficientmemoranda in writing of the orders sent in January,1919, to constitute those orders, when accepted,contracts for non-fulfilment of which thedefendants must pay damages.The formal judgment of the learned judge wasdrawn up as follows:-(a) It was adjudged and declared that theagreement of July, 1913, mentioned in para. 8 ofthe statement of claim was a legally bindingagreement against both defendants and that theorders mentioned in para. 18 of the statement ofclaim constituted legally binding*276 contractsagainst the defendants J. R. Crompton & Brothers,Ld.;(b) It was adjudged that judgment should be forthe plaintiffs and that they should recover againstthe defendants the sum of 244l. 3s. 2d. mentionedin para. 17 of the statement of claim with costs ofthat issue up to the date of admission;(c) It was ordered and directed that all otherissues remaining to be tried and the issues as todamages should stand over for trial by Bailhache J.or, if he could not take it, by another judge takingthe Commercial List; and that the plaintiffs shouldhave the costs of the hearing in any event;(d) It was adjudged that there should bejudgment for the defendants J. R. Crompton &Brothers, Ld., on the counterclaim and that theyshould recover against the plaintiffs the sum of2124l. 18s. 8d. with costs up to the date ofadmission;(e) It was ordered and directed that the taxationof costs should stand over and that execution on thecounterclaim should be stayed until the finaljudgment or further order;(f) And it was further ordered that a commissionshould proceed to America to take evidence uponthe issue raised in paras. 18 and 20 of the defence.The defendants appealed against this judgmentexcept paras. (b) and (d) thereof.Sir John Simon K.C., Eastham K.C. and JamesWyliefor the appellants. The learned judge waswrong in holding that the document of July, 1913,constituted a binding contract. Not every agreementis a contract. A contract results from a combinationof agreement and obligation. It is that form ofagreement which directly contemplates and createsan obligation. The contractual obligation is thatform of obligation which springs from agreement:Anson on Contract. [FN2]FN2 14th ed. (1917), p. 2."The agreement must be, in our old English*277phrase, an act in the law: that is, it must on the faceof the matter be capable of having legal effects. Itmust be concerned with duties and rights which canbe dealt with by a Court of justice. And it must bethe intention of the parties that the matter in handshall, if necessary, be so dealt with, or at least theymust not have the contrary intention. Anappointment between two friends to go out for awalk or to read a book together is not an agreementin the legal sense: for it is not meant to produce,nor does it produce, any new legal duty or right, orany change in existing ones": Pollock, Principles of Contract. [FN3] "Theagreement must purport to produce a legallybinding result": Holland, Jurisprudence. [FN4]Thus if the scope or area of agreement does notinclude or contain submission to Courts of law andreference to legal standards and sanctions, and afortiori if it excludes these, there is no contract.Balfour v. Balfour [FN5] is an example. There thewife of a man resident in Ceylon had to return toEngland for health; the husband agreed to allow hera certain sum per month during separation, and itwas held that she could not sue him on thisagreement for it was merely a domesticarrangement not intended to be legally binding.Taking the document of July, 1913, as a whole theparties have very clearly expressed their intentionnot to be bound legally by its terms.FN3 9th ed. (1921), pp. 3, 4; and see note (d) on p.4.Copr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 81923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)FN4 12th ed. (1916), p. 278.FN5 [1919] 2 K. B. 571 .The learned judge has held this expression ofintention to be repugnant to the main scope andpurpose of the document. No doubt a clause maybe repugnant to the rest of a contract, and if it is, ithas no effect, and the contract is still binding. Forexample in Furnivall v. Coombes [FN6]churchwardens covenanted to pay for repairs to theparish church with a proviso that they were not tobe personally liable, but only as churchwardens,and it was held that the covenant to pay being apersonal covenant the proviso was repugnant andvoid. Again in Watling v. Lewis [FN7]on thedivision of a partnership estate the trustees of onepartner*278 took as his share certain land subjectto a mortgage, and covenanted "as such trustees,but not so as to create any personal liability on thepart of them or either of them" with the trustee ofthe other partner to pay the mortgage debt andinterest and to keep him indemnified from claimsand demands on account thereof, and thecovenantee having been called upon to make gooda deficiency on the mortgage debt sued thesurviving covenantor; and it was held that thedefendant was personally liable. But where bothparties express their intention to be bound not inlaw but in honour that intention is part of theiragreement and cannot be said to be repugnant to it.The mistake the learned judge has made is inconsidering the document piece-meal. He has takenthe first paragraph of the document and discoveredin that an intention to strengthen the previousrelations, which he holds to have been contractualrelations, between the parties. But in the first placethere never were any previous contractual relationsbetween the respondents and Brittains, Ld. Theywere entitled to enter into such relations as suitedthem. In the second place there is considerabledoubt whether the relation between the respondentsand J. R. Crompton & Brothers, Ld., wascontractual. Thirdly it is not to be inferred from thefact that the period of relations is extended that thearrangement is necessarily a binding agreement;and fourthly it is not a proper canon of constructionto consider part of a document and, having inferredan intention from that part, discard as repugnantevery indication to the contrary in the rest of thedocument: Hussey v. Horne- Payne. [FN8]FN6 (1843) 5 Man. & G. 736.FN7 [1911] 1 Ch. 414.FN8 (1879) 4 App. Cas. 311, 316.The invalidity of the document of July, 1913, as alegal contract does not involve the legal validity ofthe previous engagements. It is not admitted thatthey constituted binding contracts; that questionhas yet to be decided; but if they did the contractswere superseded by the document of 1913; for anagreement, though not a binding contract, may yetoperate to rescind an existing contract:*279 Morrisv. Baron & Co. [FN9]; British and Beningtons v.North Western Cachar Tea Co. [FN10]FN9 [1918] A. C. 1.FN10 [1923] A. C. 48.The orders mentioned in para. 18 of the statementof claim were referable to the document of July,1913, and their non-fulfilment involves no legalconsequences.R. A. Wright K.C. and Conway for therespondents. The argument for the appellantswould preclude all possibility of repugnancy. Ifevery clause in a document to which the parties settheir hands contributes its part towards the resultantagreement, no clause can be repugnant to thatagreement. But the doctrine that repugnant clausesmust be rejected still exists: Forbes v. Git. [FN11]The words of a document are not of themselves theultimate and conclusive test of the intention of theparties. The Court in gathering that intention doesnot confine itself to the words used: Ford v. Beech[FN12], per Parke B.; but considers also therelation between the parties and the circumstancesin which the words are used. The same form ofwords may have one effect when used by ahusband and wife and another when used by twobusiness men seeking profit. What intention willthe Court draw from the circumstances that J. R.Crompton & Brothers, Ld., were entitled to thewhole output of Brittains, Ld.; that the respondentswere the sole agents of the blue paper supplied byJ. R. Crompton & Brothers and the sole agency inAmerica and Canada of their 7 lbs. substancesubject to a twelve months' or other reasonablenotice? Was it their intention to renounce theseprofitable agencies for an agreement which mightbe terminated by a cable message at a moment'snotice? Their intention was the opposite. It was, asthe learned judge said, to strengthen not to weakenCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 91923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)the ties that bound the appellants J. R. Crompton &Brothers, Ld., to them; and to bring themselves intodirect relation with Brittains, Ld., and so obtainpower to enforce the obligations of Brittains, Ld.,to J. R. Crompton & Brothers. If that was theintention, then clearly the clause beginning"This*280 arrangement is not entered into" isrepugnant to that intention and should be rejectedut res magis valeat quam pereat: Furnivall v.Coombes [FN13]; Williams v. Hathaway [FN14];Watling v. Lewis [FN15]; Forbes v. Git [FN16];Scott v. Avery. [FN17]FN11 [1922] 1 A. C. 256.FN12 (1848) 11 Q. B. 852, 866, 868.FN13 5 Man. & G. 736.FN14 (1877) 6 Ch. D. 544.FN15 [1911] 1 Ch. 414.FN16 [1922] 1 A. C. 256.FN17 (1856) 5 H. L. C. 811.In executing the document of July, 1913, theparties never intended that the former contractsshould be abrogated. Their intention was that thosecontracts should continue and be made morepermanent and secure. The last thing they intendedwas that if the document failed as a contract itsinvalidity should infect the contracts it wasdesigned to confirm and strengthen.[BANKES L.J. The learned judge's view of thatdocument made it unnecessary for him to decidewhether the earlier arrangements, assuming them tohave been contracts, were superseded. The questiondepends on the intention of the parties, a questionof fact: Noble v. Ward [FN18]; which we cannotdecide without hearing evidence.]FN18 (1867) L. R. 2 Ex. 135.Sir John Simon K.C. in reply. The questionwhether the arrangements before July, 1913,assuming they were contractual, were supersededby the document of that date is no doubt a questionof fact; but the evidence on the question consists ofcorrespondence between the parties and the effectof the document - matter which can veryconveniently be considered in this Court. Thechanges introduced by that document lead to theinference that the former relations were abrogated.The introduction of Brittains, Ld., the continuanceof relations for three years, the objection to beraised by J. R. Crompton & Brothers, Ld., if theWebster Co. of Boston should offer for purchase inits unprepared state paper which they have boughtfrom J. R. Crompton & Brothers, Ld., theunderstanding that the respondents will confinetheir purchases to the appellants, the undertakingby the appellants as to the body of business to bedone between the parties, the provision relating tothe cheaper carbonizing papers, and the alterationin prices and in the period for which prices are*281to be quoted; these numerous provisions lead toone conclusion, that the former relations wereterminated and that a new course of business was totake their place.Cur. adv. vult.March 23. The following written judgmentswere delivered:-BANKES L.J.This is a curious case. The plaintiffs carry onbusiness in New York as dealers in carbonizingpapers, and the defendants are manufacturers ofthis class of papers in this country. For a number ofyears before July, 1913, the plaintiffs and thedefendants, Cromptons, had done business togetherin the export of these papers to the United States.The terms upon which the business was carried onare referred to in correspondence which passedbetween the two firms. It is a matter in disputewhether this correspondence constituted a contract,or a series of contracts, between these parties - thisis a matter which has yet to be tried - but for thepurpose of my judgment, and in order to test themain question from the point of view mostfavourable to the respondents, I will assume(without deciding) that these business relations atthat time between these parties were contractualrelations, using that expression in its strict legalsense as involving a legal liability upon the partiesto perform their agreements. A quantity of thepaper supplied by the defendants Cromptons to theplaintiffs was manufactured by the defendantsBrittains. In the early part of 1913 the plaintiffswere apparently anxious to get into direct businessrelations with the defendants Brittains, and toCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 101923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)secure some assurance of a longer continuance ofbusiness relations than they at that time had withthe defendants Cromptons. A draft of an agreementwas prepared, apparently by the plaintiffs, or ontheir behalf, which bears date January 1, 1913.[FN19] The parties appear to have worked on thisdraft, and by the end of June, or the beginning ofJuly, the three parties had agreed upon the terms ofthe*282 document upon which the main questionin the action turns. The plaintiffs allege that thedocument is a contract in the strict sense of theword, involving each of the parties to it in a legalobligation to perform it. The defendants, on theother hand, say that the document is nothing of thekind, because it expressly provides that it shall notinvolve any of the parties in any legal obligation toperform any of its terms. There is, I think, no doubtthat it is essential to the creation of a contract,using that word in its legal sense, that the parties toan agreement shall not only be ad idem as to theterms of their agreement, but that they shall haveintended that it shall have legal consequences andbe legally enforceable. In the case of agreementsregulating business relations it follows almost as amatter of course that the parties intend legalconsequences to follow. In the case of agreementsregulating social engagements it equally followsalmost as a matter of course that the parties do notintend legal consequences to follow. In some cases,such as Balfour v. Balfour [FN20], the law will,from the circumstances of the case, imply that theparties did not intend that their agreement shouldbe attended by legal consequences. It no doubtsounds in the highest degree improbable that twofirms in this country, arranging with a firm in theUnited States the terms upon which a veryconsiderable business should be carried on betweenthem over a term of years, should not haveintended that their agreement as to those termsshould be attended by legal consequences. It cannothowever be denied that there is no reason in lawwhy they should not so provide, if they desire to doso. The question therefore in the present caseresolves itself into a question of construction. I seenothing in the surrounding circumstances whichcould justify an interpretation of the language usedby the parties in the document of July, 1913, in anyother than its ordinary meaning. The documentitself is a curious one from a drafting point of view.A skilled draftsman could easily have rendered thediscussion which has taken place in the Courtbelow and in this Court impossible. As it is, thedraftsman*283 appears at times to haveremembered, and at times to have lost sight of, theobject he is alleged to have had in view. Forinstance, the document opens with a clauseapparently studiously worded to avoid the usualappearance of a contract. The draftsman thenadopts language which at times is stronglysuggestive of a contract, and at times indicatessomething other than a contract. Then follows whatis said to be the governing clause, and thedocument concludes with language suggestive of acontract. What I have called the governing clause isnot couched in legal phraseology. A great dealmore is said than need have been said in order torecord the intention of the parties. I read it as agenuine attempt by some one not a skilleddraftsman to go much further than merelyproviding a means for ousting the jurisdiction ofthe Courts of law. There is no ground forsuggesting that the language used in the clause isnot a bona fide expression of the intention of theparties. If so, it appears to me to admit of but oneconstruction, which applies to and dominates theentire agreement. The intention clearly expressed isthat the arrangement set out in the document is onlyan honourable pledge, and that all legalconsequences and remedies are excluded from it. Ifthis is the true construction of the clause, it mustgovern the entire arrangement, and there isconsequently no room for the principle upon whichthe learned judge decided this part of the case. Itwould no doubt have simplified matters if theclause in question had been inserted at the head ofthe document, or even at the end, rather than in theposition it occupies. I attribute its position to thewant of that skill in drafting of which the documentaffords plenty of evidence, rather than to any wantof bona fides in the language used. Once it isestablished that the language of the clause is thebona fide expression of the intention of the parties,the matter is in my opinion concluded, and itbecomes manifest that no action can be maintainedupon the agreement contained in the document of1913.FN19 See note on p. 299, post.FN20 [1919] 2 K. B. 571 .The next point which arises for decision iswhether the pre-1913 arrangements are still inexistence, and if in*284 existence, whether theyare enforceable. The point was partly argued beforeus, and reference was made to Noble v. Ward[FN21]and to what Willes J. there said in referenceto rescission of one agreement by the substitutionof another. His view of the law that the questionwould be one for a jury was cited with approval inMorris v. Baron & Co. [FN22] When this point wasurged before us, we did, I think, intimate to counselthat this point must be tried, and that we did notpropose to decide it. Whether this was a wisedecision on our part I am not prepared to say, butCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 111923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)after consideration I am satisfied that it is better toleave the matter as it stands than to direct anyfurther argument upon it.FN21 L. R. 2 Ex. 135.FN22 [1918] A. C. 1.The last point involved in the appeal is as to theso-called orders referred to in para. 18 of thestatement of claim. Bailhache J. has decided thatthese orders were accepted by the defendantsCromptons, and when accepted became contractslegally binding upon these defendants, though notupon the defendants Brittains. The bulk of theseorders were given in January, one in February, andthe rest in March, 1920. It appears from thecorrespondence that in December of 1918 thedefendants Cromptons were applying to theplaintiffs as to their probable requirements for thecoming year, because when they were ascertainedMessrs. Brittains "would do their best to make themost helpful arrangements possible." (SeeCromptons' letter, December 3.) On January 23,1919, the plaintiffs write to Messrs. Brittainssaying that they had not made up their season'sorders, as they were awaiting Messrs. Brittains'view of the situation and the probabilities of thequantities that they could furnish for the comingyear. On the next day, the 24th, the plaintiffs sendto the defendants Cromptons twenty-four orders forpapers of Brittains' make, and eight orders forpapers of Cromptons' make, and on the same daythey send to the defendants Brittains copies of theorders for their make of paper sent to thedefendants Cromptons, and they end their letter asfollows: "We have made no mention of price, as wetake it for granted that you will adjust*285 these inaccordance with conditions which we hope aresuch that there will be no further advance, butprobably gradual reduction." On February 7 theplaintiffs write to the defendants Cromptonsinclosing one order for their make of paper, andtelling them that they were awaiting advice fromMessrs. Brittains as to the possibility of productionduring the coming year." On February 12 thedefendants Cromptons acknowledge the receipt ofthe plaintiffs' letter of January 24 containing thethirty-two orders. The letter is in these terms:"Dear Sirs, we beg to acknowledge receipt ofyour favour of the 24th ulto., contents of which areduly noted. We also thank you for the 24 orders for286 cases of Messrs. Brittains' papers, and 8 ordersfor 64 cases of our paper, to all of which we willgive our best attention, and Messrs. Brittains writeus with regard to the orders for their papers thatthey are endeavouring to let you have deliveriesthis year up to at least the full 100% for thestandard year ending February 28, 1918, but that atthe moment conditions are particularly uncertain.Nevertheless, they would like us to assure you thatthey would give their most careful attention to yourrequirements, and endeavour to let you have thefullest output they possibly can, and they add thattime will make the position clearer."During all this time the parties were discussing theperiod for which the 1913 arrangement was tocontinue, and on March 11 the plaintiffs in theirletter of that date, which enclosed the last sixorders relied on, say this: "We agree with thesuggestion of Messrs. Brittains acquiesced in byyou, that the agreement between us be extended toMarch 30, 1920, and that notice to amend orterminate the agreement must be definitely givenby any of us before September 30, 1919."Under these circumstances it appears to memanifest that these so-called orders were reallyrequisitions under the existing 1913 agreement,intended to be orders to be executed by both thedefendants under that agreement, theacknowledgment of the receipt of which by thedefendants Cromptons did not give them thecontractual force against one of the two defendantsonly which, but for the existence of theagreement,*286 they might certainly have had.Had the orders been executed, the price at whichthey would have been executed would have beenregulated by the terms of the 1913 agreement, andthis is no doubt what the plaintiffs had in mindwhen they wrote their letter of January 24. No caseis made by the plaintiffs that the defendants oreither of them are bound by any estoppel in relationto these orders, or any of them. The case made is asimple one of offer and acceptance.For the reasons I have given, I think that this casefails. The appellants in my opinion succeed both onthe point as to the legal effect of the document ofJuly, 1913, and as to the legal effect of the ordersmentioned in para. 18 of the statement of claim,and the judgment of Bailhache J. must be varied bymaking the declaration contained in the firstparagraph of the formal judgment in the negativeinstead of in the affirmative on both points, and theappellants must have the costs of this appeal and inthe Court below of the two issues on which theyhave now succeeded, and the stay upon the taxationof costs, so far as it relates to those issues, must beremoved. In other respects, the judgment of theCourt below is to stand.SCRUTTON L.J.Copr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 121923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)The facts giving rise to the present dispute areclearly stated by Bailhache J., and I do not repeatthem. Down to 1913 there were agreementsbetween Messrs. Rose & Frank Co. in the UnitedStates and Messrs. Crompton in England which inmy opinion gave rise to legal relations, thoughowing to the vagueness of the language used theremight be considerable difficulty in ascertainingwith exactitude what those legal relations were. In1913 the parties concurred in signing a documentwhich gives rise to the present dispute. I agree thatif the clause beginning "This arrangement" wereomitted, the Courts would treat the rest of theagreement as giving rise to legal relations, thoughagain of great vagueness. An agreement thatMessrs. Brittain & Crompton "will subject tounforeseen circumstances and contingencies dotheir best, as in the past, to respond efficiently andsatisfactorily to the calls of Messrs. Rose & FrankCo. for*287 deliveries both in quantity andquality," is not very helpful or precise. But theclause in question beginning "This arrangement" isnot omitted and reads as follows:"This arrangement is not entered into, nor is thismemorandum written, as a formal or legalagreement, and shall not be subject to legaljurisdiction in the Law Courts either of the UnitedStates or England, but it is only a definiteexpression and record of the purpose and intentionof the three parties concerned to which they eachhonourably pledge themselves with the fullestconfidence, based upon past business with eachother, that it will be carried through by each of thethree parties with mutual loyalty and friendly cooperation."The judge below thinks that by itself this clause"plain as it is" means that the parties shall not beunder any legal obligation to each other at all. Butcoming to the conclusion that without this clausethe agreement would create legal obligations, hetakes the view that the clause must be rejected asrepugnant to the rest of the agreement. He alsoholds that if the clause merely means to excluderecourse to the Law Courts as a means of settlingdisputes, it is contrary to public policy as oustingthe jurisdiction of the King's Courts.In my view the learned judge adopts a, wrongcanon of construction. He should not seek theintention of the parties as shown by the languagethey use in part of that language only, but in thewhole of that language. It is true that in deeds andwills where it is impossible from the whole of thecontradictory language used to ascertain the trueintention of the framers, resort may be had, butonly as a last expedient, to what Jessel M.R. called"the rule of thumb" in In re Bywater [FN23]ofrejecting clauses as repugnant according to theirplace in the document, the later clause beingrejected in deeds and the earlier in wills. But beforethis heroic method is adopted of finding out whatthe parties meant by assuming that they did notmean part of what they have said, it must be clearlyimpossible to harmonize the whole of the languagethey have used.FN23 (1881) 18 Ch. D. 17, 20.*288 Now it is quite possible for parties to cometo an agreement by accepting a proposal with theresult that the agreement concluded does not giverise to legal relations. The reason of this is that theparties do not intend that their agreement shall giverise to legal relations. This intention may beimplied from the subject matter of the agreement,but it may also be expressed by the parties. Insocial and family relations such an intention isreadily implied, while in business matters theopposite result would ordinarily follow. But I cansee no reason why, even in business matters, theparties should not intend to rely on each other'sgood faith and honour, and to exclude all idea ofsettling disputes by any outside intervention, withthe accompanying necessity of expressingthemselves so precisely that outsiders may have nodifficulty in understanding what they mean. If theyclearly express such an intention I can see noreason in public policy why effect should not begiven to their intention.Both legal decisions and the opinions of standardtext writers support this view. In Balfour v. Balfour[FN24]the Court declined to recognize relations ofcontract as flowing from an agreement betweenhusband and wife that he should send her 30l. amonth for her maintenance. Atkin L.J., speaking ofagreements or arrangements between husband andwife involving mutual promises and considerationin form, said "They are not contracts because theparties did not intend that they should be attendedby legal consequences." In the early years of thewar, when a member of a club brought an actionagainst the committee to enforce his supposedrights in a club golf competition, I non-suited himfor the same reason, that from the nature of thedomestic and social relations, I drew the inferencethat the parties did not intend legal consequences tofollow from them: Lens v. Devonshire Club.[FN25] Mr. Leake says [FN26] that "an agreementas the source of a legal contract imports that theone party shall be bound to some performance,which the latter (sic) shall have a legal right toenforce." In Sir Frederick Pollock's*289 language[FN27]an agreement to become enforceable at lawmust "be concerned with duties and rights whichcan be dealt with by a court of justice. And it mustCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 131923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)be the intention of the parties that the matter inhand shall, if necessary, be so dealt with, or at leastthey must not have the contrary intention." SirWilliam Anson requires in contract "a commonintention to affect" the legal relations of the parties.FN24 [1919] 2 K. B. 571.FN25 Unreported. See The Times Newspaper,December 4, 1914.FN26 7th ed. (1921), p. 3.FN27 9th ed. (1921), p. 3.Judged by this test, I come to the same conclusionas the learned judge, that the particular clause inquestion shows a clear intention by the parties thatthe rest of their arrangement or agreement shall notaffect their legal relations, or be enforceable in aCourt of law, but in the words of the clause, shallbe "only a definite expression and record of thepurpose and intention of the three parties concernedto which they each honourably pledge themselves," "and shall not be subject to legal jurisdiction." Ifthe clause stood first in the document, the intentionof the parties would be exceedingly plain.The cases cited to us to the contrary were cases inwhich the form of the other part of the document,as a covenant in a deed, or a grant of a right inproperty in legal terms, clearly showed an intentionto create a legal right, and where subsequent words,purporting not to define but to negative the creationof such a right, were rejected as repugnant. InEllison v. Bignold [FN28], where the parties underseal "resolved and agreed and did by way ofdeclaration and not of covenant spontaneously andfully consent and agree, " Lord Eldon laid aside"the nonsense about agreeing and declaring withoutcovenanting." An agreement under seal is quiteinconsistent with no legal relations arisingtherefrom. And in the present case I think theparties, in expressing their vague and looselyworded agreement or arrangement, have expresslystated their intention that it shall not give rise tolegal relations, but shall depend only on mutualhonourable trust. This destroys the decision ofBailhache J. so far as it is based on the view thatthe document of 1913 gives rise to legal rightswhich can be enforced.FN28 (1821) 2 Jac. & W. 503, 510.*290 It was unnecessary for the judge below todecide the next point, whether, if the 1913document gave rise to no legal rights, the earlieragreements which contained no similar clausecould be enforced. This turned on whether theparties in coming to the agreement of 1913intended to rescind the earlier agreements except inso far as they were incorporated in the newagreement, and even then only to continue them ashonourable obligations. It follows from Morris v.Baron & Co. [FN29] that a valid contract may berescinded by an agreement unenforceable in law,the test being whether the parties intend to rescindthe old agreement, replacing it by a new agreementwhich may incorporate many of the old terms, ormerely to vary the old agreement which remainseffective except in so far as it is varied: see perLord Sumner, British and Beningtons v. NorthWestern Cachar Tea Co. [FN30] Morris v. Baron &Co. [FN31] also says that the intention of theparties would be a question of fact, though theHouse of Lords themselves decided the question offact: see per Lord Haldane. I have carefullyconsidered the documents and the forcibleargument of Sir John Simon on this point, and havecome to the conclusion that the parties whotransformed a contract between two parties into anhonourable arrangement between three partiesincorporating some parts of the old arrangement,varying others, and adding fresh terms, clearlyintended to abandon or rescind the old arrangementand leave their relations depending on the newhonourable understanding of 1913. Any alternativeclaim on the documents before 1913 therefore fails.FN29 [1918] A. C. 1, 21.FN30 [1923] A. C. 67.FN31 [1918] A. C. 1, 21.I should have been prepared, if the other membersof the Court had thought it right, to hear counsel forthe respondents further on this point. We intimatedduring their argument that we were with them onthis point but this, of course, could not be final aswe had not then heard Sir John Simon in reply. Onhearing him I was much impressed by hisargument, though I needed to look at thedocuments carefully to form a final opinion. I madea mistake in not asking Mr. Wright to complete hisargument, and should*291 have been ready torectify it by hearing any further arguments hewished to add; but as my Lord thinks it better tohave a new trial on this point, I can only say thatmy own opinion is as above stated. ThoughCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 141923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)rescission is a question of intention and therefore offact, the House of Lords decided it in Morris v.Baron & Co. [FN32]without sending the matter fora new trial. What the document containing theengagement of honour means is not a question onwhich evidence is admissible; nor is the questionwhat the earlier letters mean; and what the twotogether mean can, I think, be decided withoutfurther evidence. Nor am I impressed by theargument that Bailhache J. reserved furtherquestions to himself. He did not intend to decidethis question at any time, for his original decisionhad rendered it unnecessary. If it rested with me, Ishould decide the question in favour of theappellants.FN32 [1918] A. C. 1, 21.The remaining question is the claim in para. 18 ofthe statement of claim, for damage for the nondeliveryof the whole of the undelivered part of thegoods said to be legally due under some thirty-twospecified orders. As to these, a question was raisedby the defendants at the trial under the Sale ofGoods Act, 1893, which was abandoned before us.The judge below, deciding that the agreement of1913 was legally enforceable, held that any factsgiving a legal answer under the agreement wouldalso give a legal answer to the claim under theseparate orders. But he said that had he held thearrangement of 1913 not enforceable in law hewould have held that a legal claim arose under thespecific orders. As I have held the agreement of1913 not enforceable in law, I have now toconsider the position of the separate orders. For ifthey were given under an unenforceablearrangement, they may so far as not executedpartake of the character of the overridingagreement under which they came into existence.The clause in the agreement of 1913 relating tothe supply of goods to Messrs. Rose & Frank forwhich they have the sole agency in the UnitedStates appears to run as follows:*292 Rose &Frank agree that the volume of business in any yearshall not fall in any year below the average of threeyears, 1910 to 1912, "without such explanations asshall be considered satisfactory" by Cromptons andBrittains. The latter two firms on their part agreethat they will "subject to unforeseen circumstancesand contingencies do their best .... to respondefficiently and satisfactorily to the calls of Messrs.Rose & Frank Co. for deliveries both in quantityand quality. " Accordingly in December, 1918, theEnglish manufacturers are asking for Rose &Frank's "prospective requirements," and on January24, 1919, Messrs. Rose & Frank send some thirtytwoorders for deliveries, for various dates, some asfar ahead as October 1, 1919. They say they havenot yet determined the full quantity of paper theywill require in the year, but send orders which willcover part of their wants. Messrs. Crompton, onFebruary 12, 1919, write a letter which appears tome fully to carry out the vague arrangements inhonour which I have held to be constituted by thearrangement of 1913, but, as made under thatarrangement in honour, to give rise to no legalobligation. It runs as follows:"We beg to acknowledge receipt of your favourof the 24th ulto. contents of which are duly noted.We also thank you for the 24 orders for 286 casesof Messrs. Brittains papers, and 8 orders for 64cases of our paper, to all of which we will give ourbest attention, and Messrs. Brittains write us withregard to the orders for their papers that they areendeavouring to let you have deliveries this year upto at least the full 100 per cent. for the standardyear ending February 28, 1918, but that at themoment conditions are particularly uncertain.Nevertheless they would like us to assure you thatthey would give their most careful attention to yourrequirements, and endeavour to let you have thefullest output they possibly can, and they add thattime will make the position clearer."This I cannot construe as a binding acceptance of alegal proposal. It is, in my opinion, an assurancethat the suppliers will do their best to comply withthe probable requirements of the agents, but do notbind themselves as conditions are particularlyuncertain. So far as delivery was made and*293accepted, legal consequences as to payment ofprice would follow, but I think there is no legalremedy for non-delivery.In my view, therefore, the judgment of BailhacheJ. ordering that the issue of liability for damagesunder the "legally binding agreement" of 1913 andthe special orders shall be tried by himself, shouldbe reversed.The judgment for 224l. 3s. 3d. for the plaintiffs,and 2124l. for the defendants with costs stand. Thedefendants should have the costs of the hearing todate here and below.ATKIN L.J.The first question in this case is whether thedocument signed by the defendants on July 11,1913, with a counterpart signed by the plaintiffs onAugust 12, 1913, constituted a contract between theparties. To create a contract there must be acommon intention of the parties to enter into legalobligations, mutually communicated expressly orimpliedly. Such an intention ordinarily will beCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 151923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)inferred when parties enter into an agreementwhich in other respects conforms to the rules of lawas to the formation of contracts. It may benegatived impliedly by the nature of the agreedpromise or promises, as in the case of offer andacceptance of hospitality, or of some agreementsmade in the course of family life between membersof a family as in Balfour v. Balfour. [FN33] If theintention may be negatived impliedly it may benegatived expressly. In this document, construed asa whole, I find myself driven to the conclusion thatthe clause in question expresses in clear terms themutual intention of the parties not to enter intolegal obligations in respect to the matters uponwhich they are recording their agreement. I havenever seen such a clause before, but I see nothingnecessarily absurd in business men seeking toregulate their business relations by mutualpromises which fall short of legal obligations, andrest on obligations of either honour or self-interest,or perhaps both. In this agreement I consider theclause a dominant clause, and not to be rejected, asthe learned judge thought, on the ground ofrepugnancy.FN33 [1919] 2 K. B. 571 .*294 I might add that a common instance of effectbeing given in law to the express intention of theparties not to be bound in law is to be found incases where parties agree to all the necessary termsof an agreement for purchase and sale, but subjectto a contract being drawn up. The words of thepreliminary agreement in other respects may be aptand sufficient to constitute an open contract, but ifthe parties in so agreeing make it plain that they donot intend to be bound except by some subsequentdocument, they remain unbound though no furthernegotiation be contemplated. Either side is free toabandon the agreement and to refuse to assent toany legal obligation; when the parties are boundthey are bound by virtue only of the subsequentdocument. On this, the main question, I agree withthe judgments of the other members of the Court.The plaintiffs have an alternative claim against thedefendants, J. R. Crompton & Bros., Ld. They saythat before 1913 they had been for years doingbusiness with these defendants on the terms ofbinding agreements terminable on notice, and thatif the arrangements made in August, 1913, did notresult in contractual relations, the contracts inexistence at that date have never been terminated,and they sue for their breach. The defendants,Cromptons, by their defence, para. 12, contentthemselves with a denial that the agreements inquestion were in force in 1919, the date of thealleged breach. They do not allege notice toterminate; nor do they allege rescission, as I thinktechnically they should; but their case in substanceis that the former agreements were rescinded bymutual consent when the arrangement of August,1913, was made. If the document of August, 1913,were a contract, there would, I think, be no doubtthat the true inference in law would be that byentering into fresh contractual obligations coveringthe whole field of the former contracts, the partiesmust be taken to have agreed to rescind the formercontracts. But we have now to assume that therewere no contractual obligations undertaken in1913, and the question is, What was the effect ofthe new arrangement upon existing contracts?*295This seems to me to be the point reserved by LordAtkinson in Morris v. Barron & Co. [FN34], wherehe is considering the effect upon a written contractfor the sale of goods of a subsequent parol contractinconsistent with the terms of the first. "If the parolagreement were absolutely void it might possiblybe otherwise; but owing to the terms of s. 4 of theSale of Goods Act, 1893, this latter question doesnot arise in this case, and it is not, in my view,necessary to decide it. " There seems to be nodifference in principle between a void contract andan agreement which is not a contract; the essenceof the matter is that in neither case do the purportedstipulations result in legal obligations.FN34 [1918] A. C. 1, 30.The question raised appears to me difficult. I thinkit quite conceivable that a man whose expressobject was that "assured arrangements should bemade for the supply of paper for some considerableperiod ahead" might assent to an honourableunderstanding extending the period of agency, butmight be unwilling to relinquish the onlysubstantial rights he had in his existing agreements;and I think the repeated reference in the record ofthe honourable understanding to the continuedexistence of present arrangements would encouragethis view. On the other hand, I also think itconceivable, though I personally should think itimprobable, that a man having the avowed objectreferred to would abandon his legal rights for thebenefits he hoped to get under the newarrangement. But whatever the true view is, I am ofopinion that this Court is not in a position to decidethe question for three reasons.It is plain from the decision in Morris v. Baron &Co. [FN35], adopting the judgment of Willes J. inthe Exchequer Chamber in Noble v. Ward [FN36],that the question of rescission is a question of fact;in Noble v. Ward [FN37] a question for the jury:see per Lord Finlay [FN38] and Lord Haldane.[FN39] On this question of fact I do not think weCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 161923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)are sufficiently informed of the relevantcircumstances to pronounce. It*296 would benecessary to consider what the actual existingcontracts were, as constituted by letters andmodified, if at all, by subsequent correspondenceand course of business. It would be furthernecessary to consider the circumstances underwhich the arrangement of July, 1913, was made,and the conduct of the parties under it. Thequestion, though raised in the pleadings andmentioned to the learned judge, was not consideredby him, as his construction of the contract made itunnecessary. Some, but very few, of the relevantletters were read before us, the discussion beinglimited on behalf of the plaintiff for the reasonhereinafter given. Under the circumstances, Ishould come to the conclusion that this mattershould be ordered to be retried, even if the twofollowing considerations were not, as I think theyare, conclusive.FN35 [1918] A. C. 1.FN36 L. R. 2 Ex. 135.FN37 L. R. 2 Ex. 135.FN38 [1918] A. C. 10.FN39 [1918] A. C. 18.The judgment in this case provides for adeclaration that the agreement of July, 1913, is alegally binding agreement, and that the ordersmentioned in para. 18 of the statement of claimconstitute legally binding contracts against thedefendants, Crompton & Bros., Ld., and thenprovides that all other issues remaining to be triedshould stand over for trial by Bailhache J. or otherjudge taking the Commercial List. This latterprovision gave effect to the agreement of theparties expressed at the trial after the judgment wasgiven. If the learned judge's judgment is reversed asto the declaration of the validity of the agreementof July, 1913, the point as to rescission is an issueremaining to be tried. It never has been tried by thelearned judge and, in my opinion, should be triedby him, or some other judge taking the CommercialList, according to the terms of the judgment, andshould not be tried by the Court of Appeal.On the hearing of the appeal we stopped Mr.Wright, counsel for the plaintiff on this point, andintimated that we should send the action back to thelearned judge for hearing on the question ofrescission. Sir John Simon, in reply, adducedreasons why we should decide this point in hisclients' favour, but he did not, as far as I am aware,alter our decision, and Mr. Wright was given noopportunity to discuss*297 the matter further. Ican see no justification under the circumstances fordeciding the point in this Court, and I agree withthe judgment of Bankes L.J. in this respect.The question of the orders given in 1919 requiresseparate consideration. I myself am at a loss tounderstand how the provisions of the arrangementof 1913, whether binding or not, affect the matter.The general relation of the parties was that theplaintiffs were to be the sole vendors of thedefendants' goods in the United States of America.Agreements constituting one party sole sellingagent in a defined area of the other party's goodsare, of course, common. Their special provisionsvary; often the agent enters into a correlativeobligation that he will not sell within his area anyother maker's goods of similar description.Sometimes the manufacturer is under no legalobligation to sell any or any particular amount ofgoods to the selling agent; sometimes the agentsucceeds in putting him under such an obligation.In this case the defendants by the honourableunderstanding entered into the vague engagementcontained in the document which had as a basis theaverage turnover for the last three years before theagreement. But whatever the terms of theagreement or understanding, it contemplated, asnearly all such agreements do, that the actualbusiness done under it should be done by particularcontracts of purchase and sale upon the terms of thegeneral agreement so far as applicable. The actualbusiness was done in this case, as in countlessothers, by orders for specific goods given by the"agent" and accepted by the manufacturer ormerchant. To see whether the orders given wereaccepted, the terms of the alleged acceptance haveto be regarded. In this case I find that after acorrespondence as to the possible requirements ofthe plaintiffs for the whole of the year, theplaintiffs, on January 24, 1919, write: "We have notyet determined the full quantity of paper that wewill require from you and Brittains, but realizingthat you have no special orders from us, we aresending you orders enclosed which will cover partof our wants for the year 1919." Enclosed wereorders all addressed to Messrs. Cromptons: "Pleaseenter our order for*298 the following goods andship .... to us at ...." The blanks were all filled up byvarious directions, "When convenient," "As soon aspossible," February 1, March 1, April 1, up toDecember 1, 1919, and the destination was eitherNew York or Toronto. The price and terms are leftblank, and I agree with the learned judge that theseCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 171923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)are sufficiently defined by the course of businessbetween the parties. No question arises before us asto the provisions of s. 4 of the Sale of Goods Act,as it was expressly waived by counsel for thedefendants. The order proceeds: "Kindlyacknowledge and state when you will ship." Thelast words obviously mean "Advise us when thetime comes of any proposed shipment." The answeris on February 12, 1919: "We .... thank you for the24 orders for 286 cases of Messrs. Brittains' papersand 8 orders for 64 cases of our paper, to all ofwhich we will give our best attention." Pausingthere, this is the common formula of acceptance inthe business world which has been treated asacceptance in countless cases since merchants firstwrote to one another. It would be understood as anacceptance passing between two merchants wherethere was no obligation at all on the part of thevendor to accept. Why it should bear a differentmeaning in a case where there is an honourableunderstanding by the merchant to accept up tosome vague limit, I am unable to understand. Theletter continues, "and Messrs. Brittains write uswith regard to the orders for their papers that theyare endeavouring to let you have deliveries thisyear up to at least the full 100 per cent. for thestandard year ending February 28, 1918, but that atthe moment conditions are particularly uncertain."This seems to me to relate to the business likely tobe done over the whole year, and particularly to theplaintiffs' statement in the letter of January 24,1919, under reply that they had not yet determinedthe full quantity of paper that they would require,and that they would send on further orders later. Iread the whole letter as saying "We definitelyaccept these orders, and as to further orders forBrittains' paper we expect to be able to executethem up to the 1918 quantity, but this is notcertain." I cannot think that any business*299 manreceiving the letter of February 12 wouldunderstand that the writers were making theiracceptance conditional on Brittains choosing tosupply the goods. If Messrs. Cromptons meant toconvey that after using the previous formula, theyshould have used much more definite language.The remaining orders are order 4661, an order forgoods "as soon as possible," sent on February 7 andaccepted on February 25: "We thank you for yourorder .... and we will endeavour to get this throughduring the next three or four weeks," and sixfurther orders for Brittains' paper sent on March 11,three "at once," and three for July 1 accepted onMarch 29, 1919: "We thank you for the six ordersfor Messrs. Brittains' paper which we have passedon to them, and the same will have their bestattention." It may be noticed that some of theorders so sent, and, as I think, so accepted, were infact executed. The dispute is as to the large balancethat remained unexecuted. In my view this is a veryplain case of acceptance of a written order, and Ientirely agree with the judgment of Bailhache J. onthis part of the claim. I should vary the order ofBailhache J. by declaring that the agreement ofJuly, 1913, is not a legally binding agreement, butotherwise I should leave the order as it is, allowingthe question of rescission to be tried under theorder as one of the "other issues remaining to betried," and I think that there should be no costs ofthe appeal, but as the other members of the Courthave come to a different conclusion, the order willbe as proposed by them.RepresentationSolicitors for appellants: Rawle, Johnstone & Co.,for Addleshaw, Sons & Latham, Manchester.Solicitors for respondents: Collins & Crosse.Appeal Allowed. (W. H. G.)NOTE.The draft agreement of January 1, 1913,mentioned above:-Agreement made and entered into this 1st day ofJanuary, 1913, by and between Brittains Limited ofCheddleton, Staffordshire, England party of thefirst part James R. Crompton & Brothers Limitedof Bury, Lancashire,*300 England party of thesecond part and Rose & Frank Company of NewYork, United States of America party of the thirdpart.1. The parties of the first and second parts dohereby constitute the party of the third part theirsale and exclusive agent, except as hereinafterotherwise provided, for the sale in the United Statesof America and the Dominion of Canada of allpapers for carbonizing purposes manufactured bythe parties of the first and second parts or either ofthem during the term of this agreement of thequalities hitherto supplied by them or either ofthem directly or indirectly to the party of the thirdpart upon the terms and conditions hereinafterspecified.2. The parties of the first and second parts agree todeliver to the party of the third part in the City ofNew York or elsewhere in the United States ofAmerica or in the Dominion of Canada as may bedesignated by the party of the third part suchquantities of paper for carbonizing purposes as mayCopr. © West 2004 No Claim to Orig. Govt. Works

[1923] 2 K.B. 261 Page 181923 WL 18206 (CA), (1923) 14 Ll. L. Rep. 519, [1924] All E.R. Rep. 245(Cite as: [1923] 2 K.B. 261)be ordered of them or either of them by the party ofthe third part for the use of the party of the thirdpart or for further sale by it in the said countriesupon prices to be agreed upon between the partiesfrom time to time during the term of this contract,but not oftener than twice in each year, subject toall usual discounts; it being the intention of theparties that the prices to be agreed upon shall be thelowest prevailing market prices and shall dependon the prices of raw material and labor (sic) for thetime being and that such prices shall not bechanged by the parties of the first and second partsexcepting after six months' notice in writing to theparty of the third part of their intention to make anychanges therein.3. The parties of the first and second parts agreenot to sell or deliver to any person or personswhomsoever wheresoever situate except to theparty of the third part or upon the order of the partyof the third part any blue carbonizing paper nor anypaper known as No. 2 Carbonizing Paper of theparty of the second part in any weight or quality,and to manufacture exclusively for the party of thethird part papers heretofore marketed by the partyof the third part by the designation 'R. & F.' and'Sheepskin' or any other similar carbonizing papermanufactured according to the same formula as thesaid last specified paper under any other namewhatsoever.4. The parties of the first and second parts agreethat they will not manufacture sell or deliver for orto any person or persons wheresoever situatedirectly or indirectly excepting to the party of thethird part any paper or papers not heretoforemanufactured or sold by the parties of the first andsecond parts or either of them the manufacture ofwhich may be suggested to them or either of themby the party of the third part.conditioned upon such purchases.*301 7. The parties of the first and second partsagree promptly to make all deliveries as and whenrequired by the party of the third part, exceptingand subject only to the act of God or unavoidablestrikes and lock outs.8. This agreement shall continue in force for theperiod of three years from the date hereof and shallthereafter be deemed to be extended and continuedfor a further period of three years unless before theexpiration of the first period of three years noticeshall have been given in writing by any of theparties to the others of a desire to terminate thesame upon such expiration.9. The parties of the first and second parts agreethat they will promptly turn over and refer to theparty of the third part all enquiries which they oreither of them may receive with reference to theuse, sale and importation into the territory coveredby this agreement of the merchandise hereinbeforespecified, and that they will not during the term ofthis agreement quote prices or offer the same forsale in the said territory excepting by and with theconsent in writing of the party of the third part.(c) Incorporated Council of Law Reporting ForEngland & WalesEND OF DOCUMENT5. Anything contained in paragraph 1 of thisagreement to the contrary notwithstanding theparties of the first and second parts may continue tosell and deliver to F. S. Webster Company ofBoston, Massachusetts, and to persons in theDominion of Canada who prior to the executionand delivery of this agreement have been customersof the parties of the first and second parts or eitherof them such papers as they have been supplying tothe said purchasers.6. The party of the third part agrees during theterm of this agreement to purchase of the parties ofthe first and second parts annually such quantitiesas will at least equal its average annual purchasesof them during the calendar years 1910, 1911 and1912; it being understood and agreed that thecontinuance of the sole agency heretofore created isCopr. © West 2004 No Claim to Orig. Govt. Works