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[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. <strong>Rose</strong> & 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
Page 1 and 2: [1923] 2 K.B. 261 Page 11923 WL 182
Page 3: [1923] 2 K.B. 261 Page 31923 WL 182

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