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 satisfy any liability arising. He now argued that there was no consideration and therefore no contract, and that any such promise was unenforceable under the 1677 Act as an oral guarantee.
Held: There had been consideration in the claimant’s acceptance of the proposal which had allowed other aspects to proceed. ‘Not every interest in the transaction would serve to take the promise out of the statute; there had to be more than a motive for offering the promise; there had to be a real interest in the subject matter of the contract. If the promisor had no real interest in the subject matter of the contract but only a motive for offering his promise, the promise would be a contract of guarantee.’ Here, the guarantee stood alone, and as such as unenforceable unless in writing.
Ward LJ, Smith LJ, Wilson LJ
[2007] EWCA Civ 1301, Times 19-Dec-2007
Bailii
Staute of Frauds 1677 4
England and Wales
Citing:
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 – 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 – Harburg India Rubber Comb Co v Martin CA 1902
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 . .
Lists of cited by and citing cases may be incomplete.
Company, Contract
Updated: 10 December 2021; Ref: scu.261817
