| Citation | (1925) AC 445 |
| Appellant | J.R. Crompton and Bros. |
| Respondent | Rose and Frank Co. |
| Court | House of Lords |
| Bench | Lord Atkinson, Lord Phillimore, Earl of Birkenhead, Lord Summer |
| Court of Jurisdiction | England & Wales |
| Area of Law | Commercial arrangements, Enforcement of promises |
BACKGROUND:-
In 1915, two companies had entered into a contract to manufacture and sell carbonizing tissue, but when one of the two companies broke the contract, Rose and Frank Co. filed a suit.
FACT OF THE CASE:-
Two companies were in the business of manufacturing and selling carbonizing tissue. The first was Rose and Frank Co. which was an American company. The second company was J.R. Crompton & Bros. Ltd. It was a British company and this company was making carbonizing tissue. Both the companies were working together in making and selling carbonizing tissue since the year 1905.
But in 1913 there was a renegotiation between the two companies and both the companies entered into an agreement. It was said in the agreement that Crompton & Bros. company will make carbonizing tissue and selling to Rose and Frank company but there was a condition that Rose company will buy carbonizing tissue only from that company, at the end it was written that “the agreement will not be registered in formal legal from nor will it be legal in the court of the law will be subject to within”.
This agreement will last for 3 years and 3 month notice will be given before ending it. In August 1918, both the companies were extended for another three years with the same term and condition. The second term was about to end in 1920, but before that in 1919, Crompton & Bros. company said that the company was not doing business properly. As it should have been done saying this Crompton & Bros. terminated the company agreement. After that the Rose and frank company filed a suit on 9 November 1919.
LEGAL ISSUE:-
- Whether the agreement between the two parties in 1913 legally binding?
- Whether the clause mentioned in the agreement is sufficient to deny the legality of the agreement?
APPELLANT’S ARUGEMENT:-
The appeal argued that the agreement entered into by Crompton & Bros. company bridged the contract has to be compensated.
RESPONDENT’S ARUGEMENT:-
The respondent argued that their agreement was not binding contract, hence the respondent said Crompton & Bros. company is not liable for any loss suffered by Rose and Frank company.
JUDGMENT OF TRIAL COURT:-
While giving judgment in the trial court, Justice Bailhache said that the agreement reached with both the companies was a binding contract. The trial court gave judgment in favor of the Rose and Frank company.
JUDGMENT OF APPEAL COURT:-
Lord Justice Atkin, J.Bankes, and Scrtten all the judges said, this agreement is not legally binding. Further Justice Atkin said that when the agreement was being made it was clearly said that this agreement will not be recorded in formal or legal form. In order to create a contract, there must be a common intention of both the parties to the legal obligation, which is expressed and implied. Such intention arises when two parties to a contract agree to it. Indirect negative can be done as can be seen in case of family agreement between family people in Balfour VS Balfour.
JUDGMENT OF HOUSE OF LORDS:-
Lord Phillimore, speaking for the House of Lords, said that registering their agreement thus further the House of Lords said that the contract that was made in 1913, was not legally binding but the agreement that was made before 1913, was by mutual consent but give and accepted work order. An enforceable contract is formed, so there is a valid contact between the two companies and there is also legal binding. On the basis of this principle, Crompton & Bros. company defines breach of contract.
CONCLUSION:-
This case was a landmark law of contract case, which concluded that the court held the parties to a general clause rather than a legal contract, which meant that the agreement was not enforceable by law, that the contract was not created legally but by intention. This case was made clear that not all agreements can be contract and the consideration of both the parties determines whether there is a legally binding contract or not.
REFERENCE:-
- https://legalstudies.in
- https://en.m.wikipedia.org
- www.lawteacher.net
- https://lawle.org
- https://thelegallock.com
ABOUT THE AUTHOR:-
This article is written by Dhiraj Kumar Saw, student of University Law College Hazaribagh, (VBU) Jharkhand. Intern at Legal Vidhiya.
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