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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 the plaintiff for half. The agreement was oral.
Held: the agreement was not a guarantee caught by section 4. Lord Esher MR explained the difference between a contract of guarantee and of indemnity: ‘There the test given is, whether the defendant is interested in the transaction, either by being the person who is to negotiate it or in some other way, or whether he is totally unconnected with it. If he is totally unconnected with it, except by means of his promise to pay the loss, the contract is a guarantee; if he is not totally unconnected with the transaction, but is to derive some benefit from it, the contract is one of indemnity, not a guarantee, and section 4 does not apply.’

Lord Esher MR
[1894] 1 QB 285, [1893] UKLawRpKQB 190
Statute of Frauds 1677 4
England and Wales
Cited by:
CitedPitts 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 . .
CitedHarburg 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.

Contract

Updated: 11 December 2021; Ref: scu.262986

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