Coulls v Bagot’s Executor and Trustee Co Ltd

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Citation: Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 199 CLR 460

This information can be found in the Textbook: Paterson, Robertson & Duke, Principles of Contract Law (Lawbook Co, 3rd ed, 2009), pp. 78 [4.40], 172 [9.215], 206 [11.15]

Contents

Background facts

  • Plaintiff grants a company the ability to quarry stone from his property in exchange for royalties
  • Agreement signed by Plaintiff and his wife, although wife not mentioned in agreement title
  • Agreement authorised company to pay royalties to him and his wife as joint tenants.
  • Plaintiff died, executor wanted to know whether the company has a contractual obligation to the wife

Legal issues

Judgement

Privity – Benefit to a third party

Majority opinion:

  • Company owed no obligation to the wife: she wasn’t a party to the agreement
  • Contract was expressly between Plaintiff and the company
  • Company made no promise to pay wife
  • Wife signing did not make her a party

Dissenting opinion:

  • Signature did make the wife a party
  • The Company’s promise was made to the Plaintiff and his wife jointly.

Estoppel post contractual variations (breach of a contract as detriment)

  • “It is…a faulty analysis of legal obligation to say that the law treats a promisor as having a right to elect either to perform his promise or pay damages. Rather…the promisee has ‘a legal right to the performance of the contract’[1].
    • This means a party cannot claim to have suffered a detriment by losing the opportunity to breach a contract – they never had that ‘right’.

Consideration - Joint-Promisees

  • If the wife was a party to the contract, and specified as a joint-Promisee, the consideration of her husband would have applied to her as well.

References

  1. (1967) 199 CLR 460, 504
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