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Associated Newspapers Ltd v Bancks

(1951) 83 CLR 322; [1951] HCA 24

Overview

The Court considered whether a term in a contract was a 'condition' that entitled the non-breaching party to terminate in the event of breach.

The defendant (Bancks) agreed to produce weekly 'Us Fellers' (featuring Ginger Meggs) or other comics for the plaintiff's newspaper. The Plaintiff undertook to present the comic on the front page of its comic section on Sundays.

Bancks alleged that the plaintiff had repeatedly broken its undertaking to publish his comic on the front page and gave notice terminating the contract.

The case turned on whether the obligation to print the comic on the front page was a condition. The Court noted that this depends on whether term is an essential one and one way to determine this is to ask if the innocent party would have entered into the contract without assurance of a 'strict and literal performance of the promise'.

In this case, the Court observed that the obligation to supply the comic and the obligation to print it on the front page were 'concurrent and correlative promises'. It was also clear that the obligation of the Bancks to supply the comic was a condition - it was the thing he was engaged to do. It would be odd, the Court found, if that promise was a condition but the 'concurrent and correlative promise' to publish on the front page was not. Regardless, the defendant 'would not have made the promise unless he was assured that his work would be published in a particular manner.'

The Court found the obligation to print on the front page was a condition, that it had been breached and that Bancks had validly rescinded the contract as a result.

Comic words

 

Facts

The defendant (Bancks) agreed to produce weekly 'Us Fellers' (featuring Ginger Meggs) or other comics for the plaintiff's newspaper. The Plaintiff undertook to present the comic on the front page of its comic section on Sundays.

Banks alleged that the plaintiff had repeatedly broken its undertaking to publish his comic on the front page and gave notice terminating the contract.

The company had complied with the clause until February 1951 when a shortage of newsprint resulted in it printing the comic in a different way, including having it appear on the third page of the comic section. This occurred fro three weeks in February 1951. It was then that Bancks purported to rescind the contract. The following week the comic section was printed differently again. Bancks had protested the various changes.

Although the company denied breach, the Court found that they had breached the clause by publishing the comic on the third page.

The issue became whether or not Bancks had the right to rescind the contact at the end of February. This depended on whether the term requiring the company to place the drawings on the front page was a 'condition'.

 

Judgment (the Court)

The Court held that if there was a right to rescind at the end of February then Bancks had effectively rescinded the contract.

[7] The first question is whether the company's undertaking to present the defendant's drawings on the front page of the comic is a condition or essential term of the contract going to its very root, the breach of which would immediately entitle the defendant at his option to rescind the contract and sue for damages for the loss of the contract, or a mere warranty or non-essential and subsidiary term the breach of which would entitle the defendant to damages. Various tests have been advanced by the courts from time to time to determine what is a condition as opposed to a warranty. In Bettini v Gye (1876) 1 QBD, at p 186 Blackburn J ... said that to determine this question the court must ascertain the intention of the parties to be collected from the instrument and the circumstances legally admissible with reference to which it is to be construed. Later in the same case his Lordship said that in the absence of any express declaration by the parties, as in the present case, "we think that we are to look at the whole contract and applying the rule stated by Parke B to be acknowledged in Graves v Legg ... see whether the particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the plaintiff a thing different in substance from what the defendant has stipulated for; or whether it merely partially affects it and may be compensated for in damages" ... Perhaps the test is better formulated by CB Morison in his Principles of Rescission of Contracts (1916), at p 86. "You look at the stipulation broken from the point of view of its probable effect or importance as an inducement to enter into the contract." ... The test was succinctly stated by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 ... "The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor ... . If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight."

[8] ... it is clear that the obligation of the defendant to supply a weekly full-page drawing of "Us Fellers" and the plaintiff's undertaking to present the drawing each week on the front page of the comic section are concurrent and correlative promises. And it would not seem open to doubt that the obligation of the defendant is a condition. He was not an ordinary employee of the plaintiff. He was employed as a comic artist and his true work was to produce this weekly drawing. It was for this production that his substantial weekly salary was principally payable. It was what he was really engaged to do. It would be strange if his obligation was a condition of the contract while the undertaking of the plaintiff was a subsidiary term the breach of which would only sound in damages. The undertaking is really a composite undertaking comprising three ingredients: (1) to present a full-page drawing; (2) to present it weekly; and (3) to present it on the front page of the comic section. It is impossible to attach different values to the defendant's obligation and the plaintiff's undertaking. The plaintiff would not have employed the defendant unless it had been assured that the defendant would perform his promise, and the defendant would not have made the promise unless he was assured that his work would be published in a particular manner. Obviously it was of prime importance to the defendant that there should be continuity of publication so that his work should be kept continuously before the public, that his work should be published as a whole and not mutilated, and that it should be published on the most conspicuous page of the comic section. ...

[9] ... In the present case the undertaking of the plaintiff company that each weekly full-page drawing would be presented on the front page of the comic section formed a condition a substantial failure in the performance of which would enable the defendant to treat the contract as at an end. The plaintiff committed three successive breaches of this condition and thereupon the defendant was certainly entitled to treat the contract as discharged. Such a failure of the plaintiff to perform the condition went to the root of the contract and gave the defendant as the injured party the right immediately to treat the contract as at an end ...

[10] The defendant had not to prove, as in the case of a breach or breaches of non-essential terms of a contract, that the conduct of the plaintiff was such as to amount to a refusal to be bound by the contract. But when the circumstances are considered they would appear to constitute such conduct. ...