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JJ Savage v Blakney

(1970) 119 CLR 435, High Court of Australia

Overview

JJ SavageBlakney entered into a contract with Savage to have a boat built. 

During the negotiations Savage said that the boat would, when fitted with a particular engine,  have an estimated speed of 15 mph. 

No reference was made to this speed in the subsequent written contract. The boat did not go 15 mph and Blakney sued for breach.

The High Court held that the statement was not promisorry; it was neither a term of the main contract nor a collateral contract.

 

Facts

Blakney entered into a contract with Savage to have a boat built. 

During the negotiations Savage said that the boat would, when fitted with a particular engine, have an estimated speed of 15 mph. 

No reference was made to this speed in the subsequent written contract. The boat did not go 15 mph and Blakney sued for breach.

 

Trial Judge

Statement of speed was estimate only and not an ‘unequivocal promise of a future speed.’

 

Supreme Court of Victoria (Full Court)

In a joint judgment the Court held that there was a collateral contract and this was broken. 

Blakney would not have contracted to have the boat built had the statement as to speed not been made. If it can be shown that the main contract would not have been made without the statement then this is enough to establish that the statement is in fact a collateral contract.

 

High Court

The Court

Disagreed with the Full Court’s reasoning. The question is whether there was a promise that the boat would attain the stated speed – there will be a collateral contract only if the statement is promissory – this is the central issue.

Whether or not the contract would have been made without the statement having been made is a fact to be considered in deciding if the statement was promissory – it is not sufficient in itself:

That the statement actually made by the appellant was intended to have some commercial significance upon a matter of importance to the respondent can be conceded; that the respondent was intended to act upon it, and that he did act upon it, is clearly made out. But those facts do not warrant the conclusion that the statement was itself promissory. [para 13, p 443]

The Court observed (para 12, p 443) that piror to finalisation fo the contract Blakney could have done one of three things:

  • require the speed provision to be incorporated in the specifications. Then it would have been a term of the main contract.
  • sought a promise that the speed would be attained. If given then this would have been a collateral contract
  • form his own judgment. Then the statement would not be contractual.

In this case the Court found he had formed his own judgment and the statement was not contractual/not promissory.

So far from being a promissory expression, ‘estimated speed 15 mph’ indicates, in our opinion, an expression of opinion as a result ‘of approximate calculation based on probability’ … The words in themselves tend, in our opinion, against the inference of a promise that the boat would in fact achieve the nominated speed. [para 10, page 442]