A trading company were anxious to purchase a ship for their business, and got in touch with a ship company which owned two ships, one free, one under requisition, and was willing to sell. The ship company, however, refused to sell the free ship alone, and after negotiations the trading company agreed to purchase both ships at pounds 100,000. The brokers made out a separate written contract for each ship, dividing the pounds 100,000 without consulting the sellers, which contracts were duly executed. Before the ships were delivered the Government put the free ship under requisition. The trading company refused to go further, and the ship company took action against them. Held (1) that it was competent for the trading company to prove by extrinsic evidence that the written contracts were not the real contracts of parties, but were merely the machinery for carrying out the real contract, which was for the sale of both the ships together; (2) that the purchase by the trading company of the one ship was of a free ship for their own trade, and the ship company could not insist on the purchase when the ship was no longer free; and (3) that the ship company being thus unable to fulfil the contract so far as the one ship was concerned could not insist on fulfilment in the case of the other.
Viscount Finlay, Viscount Cave, and Lords Dunedin, Shaw, and Wrenbury
[1919] UKHL 619, 56 SLR 619
Bailii
Scotland
Contract
Updated: 04 January 2022; Ref: scu.632786