The court considered whether a release of one of joint contractors released the other contractors. He said: ‘An original lessee or intermediate assignee of the lease who had given a direct covenant to pay rent and observe the covenant is released from liability following an agreement between the lessor and the occupying assignee of the lease under which the lessor takes surrender of the lease and some of the assignee’s goods in return for releasing the assignee from all claims under the lease. In short, does the release, by accord and satisfaction of one covenanter, release the other covenanters undertaking the same obligation?’ and
‘From this long review of the cases, I draw the following conclusions. First, a release of one joint contractor releases the others. There is only one obligation. A release may be under seal or by accord and satisfaction. A covenant not to sue is not a release. It is merely a contract between the creditor and the joint debtor which does not affect the liabilities of the other joint contractors or their rights of contribution and indemnity against their co-contractors. It is a question of the construction of the contract between the creditor and joint debtor in the light of the surrounding circumstances whether the contract amounts to a release or merely a contract not to sue. Secondly, the same principles apply to the contract between the creditor and one of the joint and several debtors. If one joint and several covenanters is released by accord and satisfaction, all are released. Some have seen this as illogical, and so it would be if the only reason for the rule that the release one of joint contractor is that there is only one obligation. Professor Glanville Williams sees the reason for the extended rule to have been an early uncertainty as to the nature of a joint and several obligation: see Joint Obligations , p.135, para.63. Two other reasons can be adduced. First, where the obligations are non-cumulative, i.e. the obligation of each is to perform in so far as it has not been performed by the other party, the acceptance of some other performance in lieu of the promised performance relieves the others. The covenantee cannot have both the promised performance and some other performance which he agrees to accept. Secondly, unless the co-covenantors were released following an accord and satisfaction, they could claim a right of contribution or indemnity. Thus, by suing the co -contractor, the creditor commits a breach of the contract with the released covenantor, for such an action will inevitably lead to the very claim from which the release has been purchased by accord and satisfaction. Thirdly, the reasoning in the preceding paragraph applies equally to a number of second covenanters each liable to perform the same obligation as in the case before me. Indeed the dictum of Younger LJ in Mattee v Curling [1922] (2AC 180 at 208 already averted to is consistent with this). ‘
Judges:
His Honour Judge Paul Baker QC
Citations:
[1993] Ch 151, [1992] 3 All ER 945
Cited by:
Cited – Johnson and Another v Davis and Another CA 18-Mar-1998
The court was asked: ‘whether or not the appellants were released from their obligation under a covenant to indemnify the respondents against claims arising under a lease by reason of the terms of an individual voluntary arrangement made under part . .
Cited – Chelsea Building Society v Nash CA 19-Oct-2010
The defendant customer of the Society appealed against an order as to the sum due under a joint mortgage. She said that the ‘full and final settlement’ of the debt with Ms Nash’s former husband and joint mortgagor had the effect of releasing Ms Nash . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 30 April 2022; Ref: scu.224361