The defendant’s car was damaged in a collision. It was taken to the plaintiff’s garage for repair. The defendant’s insurers contracted with the defendant to pay for the repairs for a specified amount. The plaintiff carried out repair work, and the defendant collected the car. The defendant did not agree that the repairs were satisfactory, and so the insurers refused to pay.
Held: The defendant’s appeal succeeded. The repair works were undertaken pursuant to two contracts: first, a contract with the insurer, under which the insurer agreed to pay for all the work covered by the insurance; second, a contract with the defendant, under which the plaintiff was obliged to carry out the works efficiently and expeditiously and the defendant was obliged to pay such part of the cost as was not covered by insurance, including the policy excess. When the insurer became insolvent, the defendant was not liable for the balance of the price.
Cairns LJ said: ‘In order to imply a promise by the owner to pay for these repairs, it is necessary to say not merely that it would be a businesslike arrangement to make but that any other arrangement would be so unbusinesslike that sensible people could not be supposed to have entered into it. It appears to me that it is very doubtful whether it could be said that it would be a businesslike arrangement to make, and I certainly am not prepared to say that it was so obvious a term that it ought to be implied in order to give business efficacy to the transaction. This being so, in my opinion it is not established that the owner ever contracted to pay for these repairs beyond the amount of the excess . .’
Buckley LJ agreed, saying: ‘Now, the inference of such an implied contract [i.e. that the defendant would be liable to pay the full amount] can, in my judgment, only be drawn if it is a matter of necessary inference, that is to say, if it is an inference which the business realities of the situation really make necessary to make sense of the dealings between the parties so that they can be implemented in a sensible manner. In my judgment, there is no sufficient material to be found either in the documentation in this case or in the oral evidence of the witnesses to support such an inference. On the contrary, it seems to me . . that all the indications, such as they are, are to the contrary. None of them individually is such as to make the matter clear beyond a peradventure, but taking them together, in my judgment, they clearly indicate that the arrangement between the parties was that the repairers would look to the insurance company for payment for the repairs, except to the extent of the excess . . That view of the agreement or agreements between the three parties is . . consistent with the documentary history of the matter, and particularly with the way in which the work was invoiced by the repairers. Of course, things which occur after the date at which the contract must have been entered into cannot alter the nature of the contract, but they may very well form valuable evidence showing what the parties conceived the contract to be.’
Cairns LJ, Buckley LJ
[1972] 1 WLR 997
England and Wales
Cited by:
Cited – AJ Building and Plastering Ltd v Turner and Others QBD 11-Mar-2013
An insurance company had engaged a main contractor to handle repairs to houses insured under its policies. The contractor had engaged the claimant subcontractor to carry out the works at the defendants’ homes, but then went into insolvent . .
Lists of cited by and citing cases may be incomplete.
Contract
Leading Case
Updated: 02 November 2021; Ref: scu.471873