Gatty v. Maclaine 1921 S.C. (H.L.) 1
Citation:Gatty v. Maclaine 1921 S.C. (H.L.) 1
Rule of thumb 1:Can you make an agreement orally, but then change your mind because it was not put in writing? If a person puts in writing that they will do something, but then changes their mind, if another person has acted upon this to their prejudice in the meantime this is an actionable case.
Rule of thumb 2:If you allow a person to pay late a few times, does this become the new standard in the contract? No, it does not become the new standard. You can still insist upon punctual payment in the future.
Background facts
The basic facts were that there was a mortgage contract. At various times over the years late payment was allowed. However, later on in the contract, the bank insisted that the timeline for payment was stuck to.
Parties argued
The defender argued that the times had been extended by oral contract formed. The bank argued that these late payment periods were not done with enough regularity and consistency to superseded the terms of the agreement.
Judgment:
The Court in this case affirmed a seminal rule relating to consumer personal bar. The seminal formulation of what is meant by personal bar is that personal bar is essentially where if someone clearly says or writes something, or repeatedly acts in a certain way, towards another person, and this person then reasonably relies on this to their prejudice, the person who wrote, said or acted in this way towards this can then no longer change their mind - they are personally barred from being able to change their position. There can often be a difference of opinion on whether the writing, speech or conduct is put to the person sufficiently clear for the personal bar principle to be invoked.
However, the Court held that where there is a written agreement, this only overrides the written term if it is done clearly and consistently, and it was not in this case, so the late payment was a breach of contract.
The Court therefore upheld the arguments of the bank. The Court affirmed that just because a person is let off with late payment a few times it does not mean in the future that the exact dates cannot be insisted upon.
Ratio-decidendi:
‘The learned counsel cited various authorities in which these doctrines have been discussed, but the rule of estoppel or bar, as I have always understood it, is capable of extremely simple statement. Where A has by his words or conduct justified B in believing that a certain state of facts exists, and B has acted upon such belief to his prejudice, A is not permitted to affirm against B that a different state of facts existed at the same time. Whether one reads the case of Pickard v. Sears (1837) 6 A.& E. 469, or the later classic authorities which have illustrated this topic, one will not, I think, greatly vary or extend this simple definition of the doctrine’, Lord Birkenhead L.C. at p. 7
'Where A has by his words or conduct justified B in believing that a certain state of facts exists, and B has acted upon such belief to his prejudice, A is not permitted to affirm against B ... different... simple definition of the doctrine', Lord Birkenhead
‘My mind cannot comprehend the elasticity of punctuality. I know of no method of construction of a contract by way of contradiction of it. Further, once you introduce in a matter of construction questions of circumstances, of motive, of ability or inability to pay, or of shortness or length of delay—once you do that the terms of the bargain might vary with the view taken of these things by judges from time to time, and the whole solid contract relations of the parties might disappear. The ground of these relations may be hard, but that is better than that it should be slippery… That might be so in a clear and continuous case. This was not such a case of clearness and continuity’, Lord Shaw of Dunfermline.
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.