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April, 1908.

QUARTERLY REVIEW.

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No. XCIV. April, 1908.

NOTES.

HE Court of Appeal had to decide some very interesting points in National Phonograph Co. v. Edison-Bell Consolidated Phonograph Co. [1908] 1 Ch. 335, 77 L. J. Ch. 218. A, a manufacturer, sells goods wholesale to M, called by trade usage a factor, on the terms (among others) that (a) he must not retail them below list prices, and (b) must not sell at all to any one who has not signed A's form of retail agreement, or whom, by putting his name on a 'suspended list,' A has warned the 'factors' not to supply. (How far this list was accessible to the trade in general, or A's customers, does not seem to have been explained.) The retail agreement in like manner forbids cutting prices and dealing with persons on the suspended list. Z is a rival company put by A on the suspended list. Pis a customer of both A (through M) and Z; he does not know that Z is 'suspended' by A. As a condition precedent to obtaining A's goods from M he has signed A's retail agreement. At 7's request he obtains goods of A's make from M as for himself, pays for them with Z's money, and hands them over to Z, making no profit for himself.

Moreover, X and Y, being in fact secret agents of Z, deal with A's 'factors' in false names as retailers, having signed the retail agreement in false names, and thus obtain A's goods, the factors not knowing their real purpose, for the use of Z. Thus Z is enabled to compete with A, to the injury of A's business, in the sale of other goods for the use of which by the ultimate purchasers A's goods in question are necessary or very convenient.

On these facts what are A's remedies? In respect of P's dealing there is no cause of action against Z, and in this all the judges concerned, Joyce J., Lord Alverstone C.J., Buckley L. J. and Kennedy L. J., agreed. Even if P had contracted with A at all, which on the face of the transaction appeared to be doubtful for want of any consideration moving from 4, he did not break that contract by buying A's goods through M for persons whom he did

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not know to be on the 'suspended list'; and therefore Z did not procure him to break any contract with A, and could not be liable under the doctrine of Lumley v. Gye. But (per Kennedy L. J. explicitly, and implicitly in the other judgments in C. A.) it is not maintainable since Quinn v. Leathem, if it ever was, that the application of that doctrine is limited to contracts for personal services or performances, as Joyce J. (somewhat out of date, if we may say so) thought in the Court below. It is now too well settled for argument that a covenant cannot be made to run with goods, and therefore Z could not in any case be liable under the agreement itself.

If P had been a defendant, which he was not, it might have been more closely considered what was the true construction of the retail agreement.' We suspect that the framers of these forms intended to fix both factors' and retailers with notice of the names on the 'suspended list,' though, as at present advised, we do not think they succeeded.

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As to X and Y's dealings, they make Z, the concealed principal, liable, in the opinion of the Court of Appeal, who differed with Joyce J. on this part of the case, for wilfully procuring the factors' from whom they obtained A's goods to break their duty to A. It is really not material whether these factors,' who were not before the Court, were or were not excusable on the ground that they acted in good faith on false and fraudulent representations. Buckley L. J. thought, seemingly, there was a breach of their contract with A. Kennedy L. J. distinctly thought there was not. We may suggest that, if not, Z was estopped from saying so, for the sales to X and Y, if not actionable breaches of agreement, were prevented from being so wholly by Z's fraudulent device to conceal the fact that Z, a person to whom the factors had bound themselves not to sell, was the real buyer. But Kennedy L. J. went further and held that, apart from any question of contractual rights, it is an actionable wrong to injure one's neighbour through acts of an innocent third person procured by one's own wilful deceit of that person; and we are glad he did so, for it is a step towards the adoption of the broad rule of civil duty more than once propounded by Lord Bowen.

There was much talk in this case of contractual relation.' We would humbly submit that there is no magic in this rather inelegant term. A contractual relation' can only be a relation between parties to a contract, and accordingly such a relation exists wherever there is a contract, and does not exist where there is none. Certainly there are different incidents of different kinds of contract, but talking about contractual relation' will not help us to know what they are. F. P.

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