The defendant had been a member of a syndicate which owed money to the plaintiff. The plaintiff obtained judgment against the syndicate and tried (unsuccessfully) to execute a writ of fi fa. The defendant then gave an oral promise that, if the plaintiff would desist in execution, he would issue bills of exchange to satisfy the syndicate’s liability.
Held: The Court considered whether a promise given orally by the defendant was a guarantee (unenforceable on account of the Statute of Frauds) or a contract of indemnity, as contended by the plaintiff.
Vaughan Williams LJ said: ‘I think, the form of the promise given by the promisor has never been held to be conclusive of the matter. He may, or he may not, promise in terms to answer for the debt of another; but, whether he does so or not, it is the substance, not the form which is regarded. . I wish to mention one other class (of case), which. . I think does not come within the section (that is section 4) at all. I mean the cases which have been spoken of as ‘indemnity cases’. Of course in one sense all guarantees, whether they come within s.4 or not, are contracts of indemnity. But the difference between those indemnities which come within the section and those which do not is very shortly thus expressed in the notes to Forth v Stanton: ‘These cases establish that the statute applies only to promises made to the person to whom another is already or is to become answerable’.
That, to my mind, is an accurate definition of a guarantee or indemnity which comes within section 4 of the statute as distinguished from an original liability which is not within the section, and which has no reference to the debt of another, but creates a new liability which is undertaken by the promisor, and has been called in the course of the argument a contract of indemnity.’
Vaughan Williams LJ
[1902] 1 KB 778
Statute of Frauds 1677 4
England and Wales
Citing:
Cited – Guild and Co v Conrad CA 25-Jun-1894
A promise by the defendant in consideration of the plaintiff accepting certain bills of exchange, to indemnify him from liability to make payments in respect of such bills is not within s. 4 of the Statute of Frauds. The defendant orally promised . .
Cited – Sutton v Gray CA 28-Nov-1893
The plaintiff stockbrokers agreed with the defendant that he would introduce business to them which they would conduct on the stock exchange. If any profit were made it would be shared equally; if losses resulted, the defendant would be liable to . .
Cited by:
Cited – Actionstrength Limited v International Glass Engineering, In Gl En SPA, Saint-Gobain Glass UK Limited CA 10-Oct-2001
The claimant sought payment for works undertaken. They had been given a promise that in return for not withdrawing their workforce from the site, the second defendants would redirect payments due to the first defendant to the claimant. When it came . .
Cited – Pitts and others v Jones CA 6-Dec-2007
The defendant shareholder provisionally agreed for the sale of his shares without regard to a right of pre-emption in favour of the claimants. He then made an oral promise to indemnify the claimants against any losses should the purchaser fail to . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 10 December 2021; Ref: scu.180430
