White and Carter (Councils) Ltd v McGregor
| Jurisdiction | Scotland |
| Judgment Date | 17 November 1960 |
| Date | 17 November 1960 |
| Docket Number | No. 31. |
| Court | Court of Session (Inner House - Second Division) |
2ND DIVISION.
ContractBreach of contractAgreement to display advertisements for three yearsRepudiation of contract by advertiser immediately after completion of contractSubsequent execution of contract by other partyWhether other party entitled to execute contract and sue for payment of whole stipulated consideration notwithstanding advertiser's repudiation.
DamagesContractBreach of contractAgreement to display advertisements for three yearsRepudiation of contract by advertiser immediately after completion of contractClause in contract requiring payment of whole instalments outstanding in event of any breach of contractWhether penalty clause or genuine pre-estimate of damages.
A firm of advertising contractors entered into an agreement with the representative of a garage proprietor to display, for a period of three years, advertisements of the garage on litter baskets. Later in the day on which the contract was completed, the garage proprietor instructed a letter to be written to the advertising contractors, asking them to cancel the contract on the ground that his representative had been mistaken as to his wishes.
The advertising contractors refused to cancel the contract. It was a condition of the contract that in the event of an instalment being due for payment and remaining unpaid for a period of four weeks, or in the event of the garage proprietor being in any way in breach of contract, then the whole amount due for the three years, or the balance thereof still outstanding, would immediately become due and payable. Five months after the date of the contract, the advertising contractors began to display the advertisements, and thereafter brought an action against the garage proprietor for payment of the whole amount payable as consideration for three years advertising.
Held (1), following Langford & Co. v. Dutch, 1952 S. C. 15, that the action, in so far as it was an action for payment of a stipulated contract consideration in respect of services no longer wanted, was irrelevant, and (2) that, as the condition of the contract relating to the consequences of breach of contract imposed a penalty and was unenforceable, the action, in so far as it was an action for payment of damages for breach of contract, was irrelevant; and action dismissed.
White & Carter (Councils), Limited, brought an action in the Sheriff Court at Dumbarton against William M'Gregor for payment of 196, 4s.
The parties averred, inter alia1:(Cond. 2) "On 26th June 1957, the defender through the agency of his then sales manager, Mr R. Ward, entered into a contract with the pursuers whereby he agreed to take from the pursuers advertising space to be provided by them on litter receptacles in twelve positions in Clyde-bank for a period of one hundred and fifty-six weeks at a cost of
two shillings per week per advertising plate payable annually in advance, together with the sum of five shillings per annum towards the cost of each plate or replacement plate fixed. Under the terms of the said contract, the first payment was due seven days after the first display of the advertisement. The said advertisement was first displayed in terms of the contract on 2nd November 1957, when a previous contract between the parties expired. Under clause 8 of the conditions of sale incorporated in the contract, in the event of an instalment being due for payment and remaining unpaid for a period of four weeks or in the event of the defenders being in any way in breach of the contract then the whole amount due for the one hundred and fifty-six weeks immediately became due and payable. The pursuers duly implemented their part of the said contract but the defender failed to make payment of the first instalment on the due date in terms of the contract. The pursuers are still displaying the said advertisement in terms of the said contract and are prepared to continue doing so for the remainder of the period of the said contract. The defender is accordingly due and owing to the pursuers the sum of 187, 4s. being the cost of advertising space on twelve sites at two shillings per week for one hundred and fifty-six weeks and 9 being five shillings per annum in respect of each advertising plate for a period of three years, a total of 196, 4s. Said contract is produced and founded upon. Admitted that a letter dated 26th June 1957 was sent to the pursuers and bore to be signed by a J. D. S. Lockhart. The said letter is produced and referred to for its terms. Not known and not admitted what position the said J. D. S. Lockhart occupied in the defender's firm or whether he had authority to write the said letter. Quoad ultra the averments in answer are denied so far as not coinciding herewith. On the assumption that the said letter of 26th June 1957 amounted to a repudiation of the said contract by the defender, by writing the said letter of repudiation, and, in any event, by failing to withdraw the said repudiation, he was in breach of the said contract and accordingly by virtue of the provisions of the said clause 8, of the said conditions of contract, the pursuers are entitled to payment of the sum sued for." (Ans. 2) " Explained and averred that on 26th June 1957 a representative of the pursuers called at the defender's place of business during the defender's absence therefrom and persuaded an employee of the defender, Mr R. Ward, to sign an order form for taking up advertising space provided by the pursuers. Later that day the defender's accountant, Mr J. D. S. Lockhart, was informed of what had taken place, and, on the instructions of the defender, wrote to the pursuers on said date explaining the position and cancelling said order. The pursuers are called upon to produce said letter. Quoad ultra the pursuers averments in so far as not coinciding herewith are denied. Separatim, esto said alleged contract is binding on the defender (which is denied) it was repudiated by him on the same day as it was signed by the said Mr R. Ward and before the pursuers had taken any steps to carry it into effect, and the defender thereafter maintained the said repudiation. The pursuers had not put in hand any part of the advertising process or incurred any expense in the preparation of advertising plates before receipt of the said letter cancelling the alleged contract. Notwithstanding receipt of said letter the pursuers proceeded with the preparation of the advertising plates, which were not exhibited until 2nd November 1957, and made no effort to procure another advertiser to take up the advertising space included in said alleged contract and so minimise their loss which they were bound to do. The pursuers were not entitled in face of the defender's continued repudiation ofsaid alleged contract to proceed as if said alleged contract was in full force and effect."Clause 8 of the contract was in the following terms :"In the event of an instalment or part thereof being due for payment, and remaining unpaid for a period of four weeks, or in the event of the advertiser being in any way in breach of this contract, then the whole amount due for the one hundred and...
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The White & Carter Principle: A Restatement
...i ts contractual rights in a reasonable3White& Carter above n 1.4First by the Sheri¡ Court and then:White & Carter(Councils)Ltd vMcGregor 1960SC 276 Court ofSession Inner House (CSIH).5(unreported 21 May 1958, CA). The only factual di¡erence with McGregor was that in Hardingrepudiation occu......