Case Summary

Factual and Procedural Background

In 1898 the Appellant, who owned chalk quarries in The City, entered into a written agreement with Company B for the supply of at least 750 tons of chalk per week (and any additional quantity required) for fifty years for use at cement works situated on land recently purchased by Company B. The agreed price was fixed and payment was to be made monthly.

In 1900 Company B entered voluntary liquidation and sold its entire business, including the benefit of the 1898 contract, to Company A. The Appellant refused to continue deliveries to the purchaser, claiming the liquidation had terminated the contract.

Two actions were commenced in the Commercial Court—one by the Appellant against Company A, and another by Company A against the Appellant. Judge Matthew gave judgment for the Appellant. The Court of Appeal (comprising Judge Collins, Judge Jeune, and Judge Cozens-Hardy) reversed that decision, finding in favour of Company A. The present appeal was brought by the Appellant to the House of Lords.

Legal Issues Presented

1. Whether the 1898 supply contract, which does not mention “assigns,” could be assigned so that Company A could enforce it after purchasing Company B’s business.
2. Whether voluntary liquidation and sale of assets by Company B rescinded or otherwise terminated the contract.

Arguments of the Parties

Appellant's Arguments

• The contract was expressly tied to the manufacturing “requirements” of Company B; because Company B no longer manufactured cement, its requirements had ceased, so performance could not be demanded by a successor.
• The agreement imposed personal and non-assignable obligations; the identity of the purchaser was crucial to the bargain.
• If any obligation survived, it was limited to the weekly minimum of 750 tons, and the more elastic “requirements” clause could not benefit a third party.

Respondent's Arguments

• The contract concerned the sale and delivery of a commodity and contained no personal element; therefore its benefits were freely assignable with the business.
• The fifty-year term and commercial context showed the parties intended the agreement to attach to the cement works rather than to the particular corporate identity of Company B.
• The absence of the word “assigns” is not dispositive; equity recognises assignment of contractual benefits when no personal skill or confidence is involved.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The majority—Judge Macnaghten, Judge Lindley, and the Lord Chancellor—focused on the language and commercial context of the 1898 agreement:

• Nature of the contract: It was a commercial supply agreement, not one dependent on personal skill or confidence. Any owner of the quarries could perform the supply obligations.
• Intent deduced from duration and context: A contract spanning fifty years plainly contemplated possible corporate changes; tying performance solely to Company B would undermine that business purpose.
• Assignability without express words: Where no personal elements exist, contractual benefits pass with the business despite the omission of the word “assigns.”
• Effect of liquidation: Voluntary liquidation does not by itself rescind a contract; the contractual rights validly transferred to Company A, which can enforce them directly.
• Conduct of the Appellant: By making no claim in the liquidation and allowing the transfer, the Appellant treated the contract as continuing and could not later repudiate it.

Judge Robertson dissented, holding that the contract’s reference to the “requirements” of Company B made the obligations non-transferable; asking the Appellant to meet Company A’s requirements would be enforcing a different contract.

Holding and Implications

APPEAL DISMISSED. The House of Lords affirmed the Court of Appeal, declaring that the 1898 supply contract survived liquidation and could be enforced by Company A.

The ruling confirms that long-term commercial supply contracts lacking personal elements are generally assignable with a business and are not revoked by voluntary liquidation. It reinforces commercial certainty without establishing a new principle of law.