Election Between Contractual Rights: Reconciling the Authorities by Recognising Differences

The below is the unedited manuscript for an article that was published in the Law Quarterly Review at (2024) 140 LQR 198.

Introduction

Where a party to a contract has two inconsistent rights it must elect between them, and an election to exercise one means the other is irrevocably lost. This applies where a party has a right to bring the contract to an end, such as through termination or rescission (collectively, “disaffirmation”). The party can either disaffirm the contract or affirm[2] it, but not both. Once it does one it cannot do the other. This is the doctrine of election in contract law.

But how does one know when a party has elected? And what is the basis for this doctrine? Such questions have caused a great deal of judicial[3] and academic[4] angst; and have arguably led to a divergence between the common law of England and Wales, and that of Australia.

This article begins with the law as it presently is and explains where the confusion arises. It then returns to the genesis of the doctrine of election and traces its development from the 16th century through to the 20th. As will be seen, most of the doctrinal confusion is the result of obiter statements attempting to create a unified doctrine from what are really disparate situations. When analysed in context, most of the apparent conflicts in the authorities fall away.

The article concludes by arguing that the historical approach to these questions has been misconceived. A solution to the conflict in the authorities is then proposed, by reference to the different categories of cases in which an election may arise.

The Law as it Stands

The Australian Position

The leading Australian decision on election is Sargent v. ASL Developments Ltd.,[5] which concerned contracts for sale of land. The contracts permitted either party to rescind if it was discovered prior to the date for settlement that a planning scheme applied which was not disclosed in the schedule to the contracts. The relevant land was in fact affected by a scheme which was omitted from the schedule. This was known by the vendors at the date of contract. After the contract was entered into, the purchasers made payments to the vendors of principal and interest, and both parties took steps to bring the land under the Torrens Title scheme.[6] The vendors later sought to rescind because of the planning scheme issue. The High Court of Australia (“HCA”) unanimously held that the vendors had elected to affirm the contract and so lost the right of rescission.

Stephen J. (McTiernan A.C.J. agreeing) observed that the authorities varied on the knowledge an elector must possess for an election to be effective, as well as on the nature of the act giving rise to an election. His Honour observed that some authorities did not discuss the nature of the requisite knowledge at all, others stated that knowledge of facts alone was sufficient while expressly denying the need for knowledge of legal rights, and still others required actual knowledge of the right to elect.[7] 

While it was unnecessary to determine, Stephen J. suggested that these conflicting views could potentially be reconciled on the grounds that a party is taken to know the express terms of its contract—so where the right to elect arises from the express terms, knowledge of the facts must be sufficient—but a different test may apply in other contexts.[8] 

As for conduct amounting to election, his Honour held that the conduct must be “unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other”, although there was some support in the HCA’s decision in Elder’s Trustee & Executor Co. Ltd. v. Commonwealth Homes & Investment Co. Ltd.[9] for the view that “less unequivocal conduct, only providing some evidence of an election, may suffice if coupled with actual knowledge of the right of election”.[10] His Honour held accordingly that the vendors in Sargent had elected to affirm the contracts through the unequivocal conduct of accepting payments and taking steps to bring the land under Torrens title, with knowledge of the material facts. While his Honour held that election (as distinct from estoppel) does not require any detriment to the other party, were that a necessary element it would have been satisfied.[11]

Stephen J. did not attempt a doctrinal justification for election, save for the (apparently circular) observation that “an election is the effect which the law attributes to conduct justifiable only if such an election had been made”.[12]

Mason J. held that a party would make a binding election to affirm where it exercises rights under the contract despite being aware of circumstances entitling it to terminate the contract, and regardless of knowledge of the right to terminate.[13] His Honour observed that the justification for this doctrine was that, “having a knowledge of the facts sufficient to alert him to the possibility of the existence of his alternative right, [the electing party] has acted adversely to the other party and that by so doing, he has induced the other party to believe that performance of the contract is insisted upon”.[14] His Honour held accordingly that the actions of the vendors, being “unequivocal actions, adverse to the [purchaser], justifiable only on the basis that the contracts were continuing on foot” and with actual knowledge of facts giving rise to a right to rescind, constituted an election not to exercise such rights. His Honour also observed that the case could have been determined on the grounds of estoppel, because the various payments by the purchaser had constituted a detriment.[15]

Sargent thus leaves election in a state of some confusion. Stephen J.’s test requires an unequivocal act with knowledge of facts, or (possibly) an equivocal act with knowledge of the facts and the right, and a different test perhaps applying to cases not involving contractually conferred rights. Mason J.’s test requires an exercise of contractual rights with knowledge of the facts. Stephen J. gives no doctrinal justification, while Mason J.’s justification seems directed more towards estoppel (which requires the other party to have been induced into a belief and acted to its detriment) than election (which applies regardless of the other party’s beliefs or conduct).

Since Sargent was decided the HCA has not been called on to determine the scope or operation of the doctrine of election; but there have been statements in obiter confirming that Sargent remains the leading Australian case on election.

In Khoury v. GIO,[16] the Court referred to Stephen J.’s decision in Sargent as authority that an election between inconsistent rights requires an unequivocal exercise of one set of rights that is inconsistent with the exercise of the other; although where the rights arise under the terms of a single contract a party may be held to have elected with knowledge only of the facts giving rise to the right to avoid the contract and not of the right to avoid it.[17] In that case the innocent party had made no election because it had no knowledge of the facts giving rise to the right to determine the contract.[18] 

In Immer (No 145) Pty. Ltd. v. Uniting Church in Australia Property Trust (NSW),[19] the plurality observed that election may apply to “a party to a contract who is aware either of the right to rescind or of facts giving rise to a right to rescind”, without further discussion as to when one or other of those things is required.[20]

In Agricultural and Rural Finance Pty. Ltd. v. Gardiner,[21] in the course of explaining different meanings of the term “waiver” Gummow J., Hayne J. and Kiefell J. referred to Sargent as authority that “waiver” may refer to an election between inconsistent rights.[22] Their Honours held that there had been no election by the relevant defendant in that case because there were not relevantly any inconsistent rights.[23] 

Most recently, in Allianz Australia Insurance Limited v. Delor Vue Apartments CTS 39788,[24] the Court declined to expand the operation of election to a decision by an insurer not to rely on a particular statutory defence to a claim by the insured (where no question of avoiding the contract arose). In the course of considering the principles of election their Honours referred to Stephen J.’s decision in Sargent, as well as the decisions in Khoury and Immer, as authority than an election to affirm will only be irrevocable where the electing party has “knowledge of the circumstances giving rise to the alternative, inconsistent set of rights”[25]—although their Honours went on to observe that the dominant rationale for the doctrine of election did not explain the necessity for this requirement.[26] 

The English Position

A decade after Sargent, but without reference to it, the English and Welsh Court of Appeal (“EWCA”) decided Peyman v. Lanjani.[27] Peyman had agreed purchase a restaurant business from Lanjani including a lease of the commercial premises and apartments upstairs, in exchange for a cash payment and the transfer of a house owned by Peyman. Unbeknownst to Peyman, Lanjani, who did not speak English and presented poorly, had obtained the lease by arranging for an associate, Moustashari, to meet with the landlord’s agent and impersonate Lanjani.

Peyman found out about this deception but also had other misgivings about the transaction. However, Peyman’s solicitor, who had been referred by and recently acted for Lanjani, advised Peyman that it would be difficult to get out of the transaction. Accordingly, Peyman agreed to an arrangement whereby he paid part of the purchase price and, pending the landlord’s approval of the assignment, took possession of the restaurant premises as Lanjani’s “manager”. The contract permitting possession of the premises was a bare licence at will, and included a clause saying that Peyman would not, by taking possession, be deemed to have accepted Lanjani’s title.

After consulting other solicitors, Peyman purported to rescind the agreement on the grounds that Lanjani could not deliver good title where the lease of the restaurant was voidable because it had been obtained through fraud. Lanjani argued that Peyman had irrevocably elected to affirm the contract by the part-payment of the purchase price and taking possession of the restaurant.

Stephenson L.J. held that knowledge of facts giving rise to the right of rescission was not sufficient for election, and the electing party must have had knowledge of the alternative rights between which it must elect.[28] May L.J. likewise held that the only justification for holding a party to have irrevocably elected not to rescind is if the party knows of the alternative rights.[29] 

In so holding, their Lordships considered the oft-cited dicta of Lord Diplock in Kammins[30] that where an electing party “has knowledge of the facts which give rise in law to these alternative rights and acts in a manner which is consistent only with his having chosen to rely on one of them, the law holds him to his choice even though he was unaware that this would be the legal consequence of what he did”.[31] 

Both Stephenson L.J. and May L.J. held that this was not authority that knowledge of the facts alone was sufficient for election, absent knowledge of the alternative rights. Stephenson L.J. explained this on the basis that Lord Diplock’s reference to “the legal consequences of what he did” was not to the right to affirm or disaffirm the contract, but to the irrevocability of selecting either course.[32] May L.J. observed that Kammins was not concerned with election, and thus held that Lord Diplock’s dicta did not bear on the application of the doctrine.[33] Each of their Lordships preferred to follow other authorities suggesting that the electing party must have “full knowledge of the various rights amongst which he elects”[34] (although, as noted below, those authorities were decided based on statutory construction or merger, and it is questionable whether the reliance on them in Peyman was sound).

The Court in Peyman ultimately held that no election had occurred because Peyman had not done anything which unequivocally affirmed the contract, given the terms of the licence at will.[35] Thus the question of knowledge did not arise on the facts.

In The Kanchenjunga,[36] Lord Goff while referring to the requirement for full knowledge of the material facts, also observed that there had been “certain cases in which it has been held that, as a prerequisite of election, the party must be aware not only of the facts giving rise to his rights but also of the rights themselves”. However, his Lordship held that this was unnecessary to consider in that case because there was no dispute that the electing party was aware of its rights.[37] 

Mance J. in Insurance Corporation of the Channel Islands Royal Insurance (UK) Ltd. v. The Royal Hotel Ltd[38] noted that the point had been left open in The Kanchenjunga, but determined that he should follow the decision in Peyman, such that knowledge of the right is a requirement for election.[39] His Honour then took the knowledge requirement even further, holding that not only should the electing party have knowledge of the alternative rights, in the context of affirmation “[t]he communication itself or the circumstances must demonstrate objectively or unequivocally that the party affirming is making an informed choice”.[40]

In Kosmar Villa Holidays Plc v. Trustees of Syndicate 1243,[41] Rix L.J. referred to Lord Diplock’s dicta in Kammins as “[t]he classic statement for the difference between waiver by election and waiver by estoppel”,[42] and quoted extensively from Lord Goff’s speech in The Kanchenjunga;[43] but also followed Mance J.’s decision in The Royal Hotel as regards the requirement of the electing party to objectively demonstrate the making of an informed choice.[44] Rix L.J. did not, in the course of his Lordship’s reasons, refer to Mance J.’s consideration of Peyman and The Kanchenjunga, or otherwise to the point that had been left open by Lord Goff. More recently, in Delta Petroleum (Caribbean) Ltd. v. British Virgin Islands Electricity Corpn,[45] the Privy Council, in obiter, quoted certain passages from Kammins, The Kanchenjunga, and Kosmar with apparent approval; but again did so without reference to Peyman or to the point left open by Lord Goff in The Kanchenjunga.[46]

The position in England and Wales thus seems to be that the principles stated in Peyman remain authoritative for the time being, although there is at least a possibility that a later court will decline to follow them. Notably, since Peyman was decided, several Australian courts have indicated that they prefer the test in Sargent to that in Peyman, even in cases involving fraud[47] (although the applicability of the test to fraud was left open in Sargent[48]). No ultimate appellate court has yet grappled with these issues.

The History of Election

Although now accepted as applicable to any situation where a party is faced with inconsistent rights, election’s origins can be traced to two lines of cases, which came together in the late 19th century. The first (the lease cases) concerned situations where a lessee had a right to determine a lease. The second (the undisclosed principal cases) concerned the right a vendor of goods had to hold either the purchaser or its agent to account for goods that had been sold, where the principal’s existence had not initially been disclosed. As will be seen, however, the undisclosed principal cases may arguably be better explained through the doctrine of merger, rather than election.

The Elizabethan Lease Cases

The first of the lease cases to be reported may have been Green's Case,[49] in which a lessee had been late in paying rent. The lessor accepted the late payment and granted an acquittance which recited that the lessee was the lessor’s farmer; but then sought to determine the lease based on the late payment.

The Queen’s Bench held that merely receiving rent late was no bar to determining the lease, but for the lessor to distrain[50] for rent or to receive a further payment of rent is an affirmation of the lessee’s right to possession. The acquittance was held also to be an affirmation of that type, and thus the re-entry by the lessor was unlawful. It is apparent that, although no earlier cases on this point are referred to, the Court in Green considered itself to be applying an existing principle to new facts, rather than establishing a new principle.

Green's Case was followed in Pennant's Case[51] which concerned an “anti-alienation” condition in a lease preventing the alienation of the lease by the lessee without the licence of the lessor. The lessee granted a sub-lease without the lessor’s consent. The lessor accepted payments of rent before he learned of the breach, but upon discovering it he determined the lease. The Queen’s Bench held that the receipt of rent without knowledge of the breach was not an affirmation, because otherwise the lessee could “take advantage of his own fraud”, and avoid the landlord’s right to terminate by breaching the clause in secret and then paying rent.[52] Conversely, in Dumpor’s Case,[53] where a lessors had dispensed with an anti-alienation condition by deed, the Queen’s Bench held that they had thereby permanently waived the condition and could not determine the lease for subsequent breaches of it.

The rationale in Pennant for holding that the landlord could not have affirmed the contract without knowledge of the breach is important. It is a relatively straightforward application of a well-established principle, and yet the explanation appears to have been lost in subsequent years.

Lease Cases in the Late 18th and Early 19th Centuries

As with much of the common law, the development of the lease cases stalled during the revolutionary upheavals in England, before resuming towards the end of the 18th Century.

Further development of the relevant principles resumed in earnest with Goodright.[54] This was another case concerning a breach of an anti-alienation clause, but this time the lessor had accepted rent with knowledge of the sub-lease. Lord Mansfield held that it was “the intention of the parties” that the lessor had thereby waived the right of forfeiture. His Lordship said “[the lessor] had full notice of the breach, and does not take advantage of it; but accepts rent subsequently accrued. That shews he meant the lease should continue.”

Similarly, in Doe v. Batten,[55] where the lessor received rent after giving an eviction notice, Lord Mansfield held that whether this was a waiver of the termination was a question of fact for the jury, and depended on the parties’ intentions. On the other hand, in Roe (d Gregson) v. Harrison,[56] the King’s Bench found that a lessee had not waived a right of forfeiture by receiving rent, because the lessor had no notice of the breach when the rent was received.

In Doe (d Boscawen and Tower) v. Bliss,[57] the King’s Bench distinguished Dumpor’s Case and held that a lessor having once permitted a sub-lease did not preclude him from terminating the lease where there was a subsequent breach of the anti-alienation clause.

Rede v. Farr[58] concerned a proviso that a lease was void if rent was unpaid for 40 days. The lessee argued that this meant that the lessor could not call on a security bond after the rent had been unpaid for 40 days, because the lease was void. Lord Ellenborough C.J. held that the proper construction of the clause was that the lease was voidable by the lessor, rather than automatically avoided, because otherwise the lessee could take advantage of its own wrong.

Bliss and Rede were both followed in Doe (on the demise of Bryan) v. Bancks,[59] which concerned a provision that a lease would be void if the lessees ceased mining on the land for a period of two years. The lessees had ceased work for six years; and rental payments had continued for a few years and then ended. The lessor eventually commenced proceedings to recover unpaid rent. The lessees argued that the lease had been void after the mining had ceased for two years, such that no rent was subsequently payable. The King’s Bench held that, as in Rede, the clause made the lease voidable and not void, while as in Bliss, the waiver of a prior breach did not preclude determination of the lease for a further breach of the same covenant.

Victorian Extension of the Lease Doctrine

In the middle of the 19th century, the lease cases began to evolve into election cases, as recognisable today. Before turning to them, it is worthwhile pausing to consider the lease doctrine at the dawn of the Victorian era. In Goodright and Batten, Lord Mansfield made clear that the receipt of rent with knowledge of a breach of the lease was an affirmation by the lessor because that was the objective intention of the parties. Meanwhile, the requirement for knowledge of the breach had been explained in Pennant’s Case on the grounds that otherwise the lessor would take advantage of its own breach. Rede and Bancks had then reaffirmed the centrality of that principle to the doctrine of election.

The transition began in Jones v. Carter.[60] A lessor had brought an action in ejectment in relation to breaches of covenants in a lease, but had abandoned the action before judgment. The lessor then sued the lessee for rent which became due after the ejectment action had been commenced. Referring to Rede and Bancks, Parke B. observed the lease was voidable at the option of the lessor, and while in those cases the receipt of rent had rendered the lease valid, “[i]n like manner, the lease would be rendered invalid by some unequivocal act, indicating the intention of the lessor … and notified to the lessee”. His Lordship thus held that the ejectment action was sufficient to avoid the lease.

This appears to be the origin of the requirement for an “unequivocal act” to effect an election, a term that would go on to cause much confusion in later years. It is important to note that Parke B. was considering what was necessary to determine the lease for breach, rather than to affirm it.

These principles were further developed in Croft v. Lumley.[61] A lessor who had purported to terminate a lease accepted a payment from the lessee which the lessee said was for rent, but the lessor said was compensation for the lessee’s trespass. The Queen’s Bench held that by accepting the payment the lessor had waived the right of forfeiture. On appeal, the Exchequer Chamber held that no right of forfeiture had accrued and so the waiver question was unnecessary to decide.

The lessor then brought a writ of error to the House of Lords. Nine judges of the Queen’s Bench and the Exchequer Chamber gave opinions on the writ. Of them, all but two found that there was no breach giving rise to a right of re-entry, such that the waiver question did not arise.[62] Nevertheless, all went on to express an opinion on the waiver issue. Eight held that had there been a breach there would have been a waiver, because the lessee was entitled to appropriate the payment as rent,[63] or because that was the only lawful basis on which it could have been received by the lessor.[64] Crompton J., one of the two who had found a right of termination to have arisen, disagreed. In his view the Landlord was entitled to receive the payment while denying that any rent remained owing.[65]

The House of Lords accepted the advice that no right of forfeiture had arisen, and thus found it unnecessary to determine the waiver point;[66] but Lord Wensleydale doubted whether there had been a waiver, and preferred the view of Crompton J.[67] 

Accordingly, Croft was not determined on grounds of election, and to the extent there was a controversy about waiver it was confined to the characterisation of the lessees’ payment. Nevertheless, Croft is notable for the following statement of principle by Bramwell B.:[68]

“The common expression ‘waiving a forfeiture,’ though sufficiently correct for most purposes, is not strictly accurate. When a lessee commits a breach of covenant on which the lessor has a right of re-entry; he may elect to avoid or not to avoid the lease, and he may do so by deed or by word ; if with notice, he says, under circumstances which bind him, that he will not avoid the lease, or he does an act, inconsistent with his avoiding, as distraining for rent …, or demanding subsequent rent, he elects not to avoid the lease; but if he says he will avoid, or does an act inconsistent with its continuance, as bringing ejectment, he elects to avoid it. In strictness, therefore, the question in such cases is, has the lessor, having notice of the breach, elected not to avoid the lease? Or has he elected to avoid it? Or has he made no election?”

That passage was set out and affirmed by the Court of the Exchequer Chamber in Clough v. London and North Western Railway Co,[69] which concerned an attempt to enforce a contract for the sale of pianos. The defendant pleaded in defence that the contract had been induced by fraud and should be avoided. The Court’s judgment was delivered by Mellor J., although Lord Blackburn later claimed its authorship.[70]

After setting out Bramwell B.’s statement of principle in Croft, the Court said:[71] 

“In all this we agree, and think that, mutatis mutandis, it is applicable to the election to avoid a contract for fraud.

In such cases the question is, has the person on whom the fraud was practised, having notice of the fraud, elected not to avoid the contract? or has he elected to avoid it? or has he made no election?

We think that so long as he has made no election he retains the right to determine it either way, subject to this, that if in the interval whilst he is deliberating, an innocent third party has acquired an interest in the property, or if in consequence of his delay the position even of the wrong-doer is affected, it will preclude him from exercising his right to rescind.

And lapse of time without rescinding will furnish evidence that he has determined to affirm the contract; and when the lapse of time is great, it probably would in practice be treated as conclusive evidence to shew that he has so determined.”

Applying those principles, the Court held that the defendant had elected to rescind by pleading the fraud defence, because “after succeeding by means of such a plea, the person pleading it could never successfully set up the contract as still valid”.[72] The words “after succeeding” are important, because it can be inferred that no binding election is made until the case has run to judgment. That is of course inconsistent with Jones, but then the Court in Clough only said the principles applied “mutatis mutandis”; and all else was not equal. There is a significant conceptual distinction between a lessor with a contractual right of termination and a victim of fraud.[73] Regretfully, the Court in Clough did not express this with the clarity it probably required, and the significance of the distinction was lost for many decades.

The Agency Cases

As noted above, as well as the lease cases, in order to understand the development of election one must have regard to the agency cases. These concerned the rule that:[74]

“a person may sue or be sued upon a contract although the other party to the contract did not know that the person with whom he was contracting was acting as an agent, if in fact that person was acting as agent for an undisclosed principal, unless the terms of the contract are inconsistent with the known person being an agent.”

The rule has been recognised as “an anomalous legacy of eighteenth and nineteenth century jurisprudence, which survives in the modern law on account of its antiquity rather than its coherence.”[75] It is anomalous because it is an exception to the principle of privity of contract, viz, that only the express parties to a contract are bound by it; but the rule is “justified on grounds of commercial convenience”.[76] 

That the obligations of principal and agent are alternative, rather than joint or several, means the other party cannot have a remedy against both, and must pursue one or the other. The party must thus elect between inconsistent rights.

The applicability of election in this context has been traced back to Paterson v. Gandasequi,[77] but that was not a case about an undisclosed principal. A Spanish merchant, Gandesequi, engaged London agents, Larrazabal, to purchase certain goods from Paterson. Paterson knew that Larrazabal were Gandesequi’s agents, but sold the goods on Larrazabal’s credit without a guarantee from Gandesequi. Larrazabal became insolvent, so Paterson sought payment from Gandesequi. The Court held that he could not do so because he had known of the agency when the goods were sold, and had elected to give credit to the agent and not the principal.

While the word “elected” was used, this was not an election between inconsistent rights. Paterson’s election was to form a contract with the agent only, notwithstanding that he could have demanded that the principal be liable instead. In other words, it was an election as to the terms on which he would agree when the contract was formed, rather than the subsequent exercise of a right arising from those terms.

A better candidate for the first agency case on election may be Thomson v. Davenport.[78] There a vendor had sold goods to a purchaser whom the vendor had known was an agent for unnamed persons in Scotland. The agent then became insolvent, and the vendor sued the principal for the purchase price. The King’s Bench held that, after discovering the principal’s identity, the vendor could elect to hold the principal liable, unless the justice of the case otherwise required. But as Bayley J. observed, the justice of the case there was “all on one side”. The person who bought the goods should pay for them and the person who sold the goods should be paid. The alternative would be for the price of the goods to be distributed amongst the agent’s creditors—and there is no good reason why the other creditors should receive the money.[79]

The closest the reasons in Thomson come to resembling the doctrine of election as now understood is Littledale J.’s reliance on the “general principle” that “the seller shall have his remedy against the principal, although he may by electing to take the agent as his debtor, abandon his right against the principal”.[80] But the ratio of Thomson was that the vendor had made no election prior to discovering the identity of the principal, and the case says nothing about the circumstances in which an election becomes irrevocable.[81]

Perhaps more significant was Priestly v. Fernie,[82] in which a master of a ship signed a bill of lading as agent for the undisclosed owner of the ship, in respect of goods being shipped by a company. The goods were not delivered. The company then sued the master on the bill and obtained judgment; but the master became bankrupt. The company then sought to sue the owners of the ship as undisclosed principals. Bramwell B. held that “the contractee has an election to sue agent or principal” but “can only sue one of them, that is to say, sue to judgment”.[83] Thus the company had lost its right to sue the owners after obtaining judgment against the master.

In Curtis v. Williamson,[84] vendors of goods sought to prove in the liquidation of the agent, then almost immediately sent a telegram to the liquidator withdrawing the proof. When the telegram was received the proof had been registered by the liquidator but no subsequent steps had been taken. The vendors then sought to pursue the undisclosed principal for the price of the goods. The Court cited Priestly as authority that “no legal proceedings short of judgment” would be a conclusive election,[85] and held accordingly that the vendors had not, by submitting the proof of debt, made an irrevocable election to hold the agent accountable, and it thus remained open for them to pursue the principal.

Kendall v. Hamilton [86] concerned whether a plaintiff who had sued two of three partners for a joint partnership debt, and obtained judgment, could afterwards sue the third partner. Earl Cairns L.C. decided the case on two bases—first, by analogy to the undisclosed principal cases;[87] and second, by applying the rule in King v. Hoare[88] (that a cause of action against co-contractors merges in a judgment against one of them), which his Lordship held had survived the Judicature Acts .[89] The other Lords determined the case based on the King v. Hoare point, and did not consider the undisclosed principal analogy.[90] 

In his speech, Lord Blackburn observed that it was immaterial when the plaintiff first discovered that the third partner existed, but said in obiter that this would have been material to an election “for I assent to the argument that there cannot be election until there is knowledge of the right to elect”.[91] 

Similarly, the Lord Chancellor made a passing remark that an election “would imply that … the fact of both courses being open was known”.[92] His judgment too did not say much about election; but it did explain the decision in Priestly. As his Lordship observed, it would be unjust for the creditor to be prevented from pursuing the principal who really had the benefit of the loan after discovering that person’s identity, but it would be equally unjust to permit the creditor to sue first the agent and then the principal on the same cause of action, creating two (possibly inconsistent) judgments on the same debt.[93] In other words, his Lordship explained the decision on grounds of merger.

Since Kendall was decided, merger has become the orthodox explanation for the undisclosed principal cases.[94] Election appears to have no real role to play in that respect.

Election Unified (Scarf v. Jardine)

A pivotal decision in the development of election was Scarf v. Jardine,[95] which temporarily united these two historical strands of authorities.

Scarf and Rogers had carried on a partnership and had purchased goods from Jardine. The partnership dissolved, whereupon Rogers found a new partner, Beech, and continued trading under the same name.

At first, Jardine was not notified of the change. The partnership then went into liquidation. Jardine sought to prove in the liquidation and was admitted as a creditor. He later sought to hold Scarf liable for the goods purchased by the new partnership before he had been notified of the original’s dissolution.

The House of Lords held that the two partnerships could both be held liable, but on different grounds. Beech and Rogers were liable because they had in fact ordered and received the goods. Scarf was estopped from denying liability, because the agency he had conferred on Rogers continued until revoked. Thus, Jardine could hold liable either Beech and Rogers, or Scarf and Rogers, but not all three.[96] He was accordingly put to an election analogous to the undisclosed principal cases.

Lord Selborne L.C. held that Jardine had elected to pursue Rogers and Beech through a series of acts culminating in the proof of debt in the liquidation. His Lordship found that Jardine’s conduct had occurred “with full knowledge of all the facts”,[97] but gave no indication that this was a necessary element of election. His Lordship also distinguished Curtis, because in Scarf the election had been deliberate and the creditor had been admitted to proof, whereas the proof in Curtis had merely been filed but not acted upon.[98]

Lord Blackburn referred to Clough and Jones, and took from them a principle:[99]

“Running through all the cases as to what is an election … that where a party in his own mind has thought that he would choose one of two remedies, … that alone will not bind him; but so soon as he has … communicated it to the other side in such a way as to lead the opposite party to believe that he has made that choice, he has completed his election and can go no further ; and whether he intended it or not, if he has done an unequivocal act—I mean an act which would be justifiable if he had elected one way and would not be justifiable if he had elected the other way—the fact of his having done that unequivocal act to the knowledge of the persons concerned is an election.”

His Lordship thus held that a binding election had occurred when Jardine sued Beech, the issuing of a writ being an “unequivocal” act of election.

Lords Watson and Bramwell expressed general agreement with the decisions of the other Lords, but did not elaborate on the principles governing election in any great detail.[100]

There is thus a tension between the decisions of Lord Selborne L.C. and Lord Blackburn. The Lord Chancellor’s decision was a straightforward application of the principles in Priestly and Curtis—admission to proof in a liquidation is analogous to a judgment, and thus when Jardine’s proof was admitted his rights had merged as though he had pursued them to judgment. On the other hand, Lord Blackburn’s decision seems to be in direct conflict with Curtis, which his Lordship neither distinguished nor purported to overrule.

Lord Blackburn’s decision is also curious in that it was the first suggestion that the principles discussed in the lease cases ought to apply in the agency context—and it is far from obvious why that should be so. Further, the principle his Lordship identified as “running through all the cases” does not seem consistent with what was determined in Clough and Jones. Neither of those cases turned on whether the innocent party had done an “unequivocal act to the knowledge of the persons concerned”.

Nevertheless, much of the subsequent election jurisprudence relied heavily on Lord Blackburn’s dicta. It is respectfully submitted that such reliance is misplaced. Lord Blackburn’s decision was conceptually difficult and in conflict with established authority. Lord Selborne L.C.’s reasons did not have those issues and should be preferred.

The 20th Century

An authoritative statement[101] of the doctrine of election as it now stands was given by Parker J. in Matthews v. Smallwood.[102] A lessee had mortgaged a leasehold estate to secure certain debentures, in breach of the lease. The lessor had continued to receive rent for some years afterwards. Parker J. held that this was not a waiver of the right of re-entry because the lessor had no knowledge of the breach. His Honour explained the principles thus:[103]

“Waiver of a right of re-entry can only occur where the lessor, with knowledge of the facts upon which his right to re-enter arises, does some unequivocal act recognizing the continued existence of the lease. … Therefore we get the principle that, though an act of waiver operates with regard to all known breaches, it does not operate with regard to breaches which were unknown to the lessor at the time when the act took place.”

His Honour cited no authority for that formulation of the relevant principle, which also does not seem to be derived from any of the relevant cases cited in argument.[104]

Parker J. went on to consider whether Pennant’s Case[105] was authority that the lessee had the onus of proving its lack of knowledge, as opposed to the onus resting on the lessor to prove that the lessee had affirmed the lease with knowledge of the breach—holding that whatever the law may have been when Pennant’s Case was decided, the lessor now bore the onus.[106] His Honour therefore held that waiver had not been established because there was no evidence of the lessor having knowledge of the leasehold mortgage (ie of the facts giving rise to the right).[107] The question of whether knowledge of the right too was required thus did not arise.

Questions of onus aside, it is unfortunate that even though his attention had been drawn to Pennant’s Case, which clearly explained the rationale behind the requirement for knowledge in an affirmation, Parker J. expressed the requirement as “knowledge of the facts upon which his right to re-enter arises” without reference to the rationale in Pennant and without qualification. As Stephenson L.J. observed in Peyman, there is a sound basis to hold a lessor to know the terms of the lease[108]—and Parker J.’s statement of principle cannot be criticised in that context. But the manner in which it was expressed may unfortunately have led subsequent courts to apply the same principles to broader circumstances than may have been intended (although Parker J himself did not purport to be referring to anything beyond the context of a landlord affirming a lease).

After Matthews, the law of election was further developed in several decisions concerning workers’ compensation.

Bennett v. L and W Whitehead Ltd[109] concerned a provision in the English workers’ compensation legislation, which provided that a worker could have compensation under the Act or under the common law, but not both. A worker commenced proceedings seeking both remedies as alternatives, then withdrew the proceedings and commenced fresh proceedings seeking statutory compensation only. The question was whether he had elected to pursue common law compensation and thereby precluded himself from pursuing statutory compensation. The majority of the EWCA held that he had made no effective election.

The decision turned on the construction of the statute and whether the commencement and subsequent withdrawal of the initial proceedings was an act capable of amounting to an election. Atkin L.J. said in obiter that “it is essential to a binding election that it should be made with full knowledge of the material facts”, without referring to any requirement for knowledge of the alternative rights.[110] For that proposition he cited Curtis and Lord Selborne L.C.’s decision in Scarf, and also referred to his own decision in Codling v. John Mowlem and Co. Ltd.[111] The latter concerned the same statute as Bennett and further cited Lord Blackburn’s dicta in Scarf and Kendall,[112] but also did not turn on the question of knowledge of the electing party.[113] The other member of the majority in Bennett, Bankes L.J., cited the same cases, but made no reference to the worker’s knowledge.[114] None of the decisions cited by Atkin L.J. in Bennett or Codling support the proposition that “full knowledge of the material facts” is, without more, sufficient for a binding affirmation.

The dicta in Bennett and Codling can be contrasted with Young v. Bristol Aeroplane Co. Ltd[115]—an English worker’s compensation case which was one of the decisions relied on in Peyman. In Young, while referring with approval to the outcome in Bennett, the majority of the House of Lords held in relation to a similar provision of later legislation that the worker in that case had irrevocably elected to pursue the statutory remedy and not damages at common law because he had done so with knowledge of his alternative rights and not just the underlying facts.[116] However, the decision in Young turned on a question of statutory construction, and not necessarily the doctrine of election at general law.

The next important workers’ compensation case was the decision of the Full Court of the Supreme Court of New South Wales in O’Connor v. S P Bray Ltd.[117] The case concerned a worker who had claimed statutory worker’s compensation for a workplace injury and had then commenced proceedings against his employer for negligence and breach of statutory duty for the same injury. Jordan CJ engaged in a lengthy excursus on the principles of election, in the course of which he said that the knowledge that has to be proved to establish election is “knowledge of the facts upon which the alternative right arises”.[118] In support of that proposition his Honour cited Matthews,[119] Fuller’s Theatre and Vaudeville Co. Ltd. v. Rofe[120] (which affirmed Matthews) and Bennett. But the entire discussion of election in O’Connor was obiter because Jordan CJ ultimately determined that election had no application to the case, and that the worker was precluded from bringing a further claim for the same injury because his claim had been satisfied.[121] O’Connor was thus determined on grounds of merger, not election.[122]

Another important Australian case was Elder's Trustee & Executor Co. Ltd. v. Commonwealth Homes & Investment Co. Ltd,[123] which concerned a contract for subscription of shares. The contract was voidable under statute because the shares were issued without a minimum number of subscriptions. The shareholder was not aware of that at the time. He sought to avoid the contract some eight years later when the company was on the verge of liquidation. He had done nothing in the intervening period in his capacity as shareholder save holding the shares.

The HCA referred to statements in O’Connor[124] and Ewart[125] to the effect that for election between inconsistent contractual rights, it is necessary to show knowledge of the facts giving rise to the right but not of the right itself. The Court distinguished those statements on the grounds that the plaintiff’s conduct in Elder’s had been equivocal, and thus held that there had been no election. Their Honours remarked in obiter that the plaintiff’s conduct may have amounted to an election to affirm had he had actual knowledge of the right to elect.[126]

Elder's was followed by the Full Court of the Supreme Court of Victoria in Coastal Estates Pty. Ltd. v. Melevende.[127] The plaintiff had purchased several properties in September 1960 because of fraudulent misrepresentations by the vendor’s agent as to the existence of plans to construct a boatel and houses nearby. The purchaser strongly suspected the representations to be false by about April 1961, and formed the view they must have been false by the following year; but he continued making payments of interest and principal, and did not purport to rescind until he consulted a solicitor in September 1962.

Herring CJ observed[128] that, insofar as Ewart said that knowledge of the facts only was necessary and not of the right, this was obviously not intended to go beyond rights arising under contract.[129] His Honour observed that it may be proper in such cases to attribute knowledge of the right to the contracting party, but held that a right stemming from the fraud of the other party “stands … on a very different footing” and in such cases no affirmation is binding unless the party knows of the right to elect.[130] His Honour thus held that the plaintiff had not elected to affirm the contract, because none of the conduct said to have constituted affirmation took place before he knew of the right to rescind.[131]

Sholl J held that in the absence of knowledge of the right to rescind, a party can be precluded from rescinding only by an estoppel arising from the exercise of rights adversely to the other party.[132] His Honour doubted whether it was possible to reconcile all the relevant cases, but held that the principles as he expressed them were “at least capable of logical application” and were not inconsistent with the “important authorities”.[133] 

Adam J likewise held that there is no election to affirm in causes of fraud without knowledge of the alternative rights.[134] However, his Honour held that where the innocent party has knowledge of the facts but not of the right, there a distinction between the exercise of rights under the contract adversely to the other party—which amounts to a binding election—and conduct that recognises the contract as still subsisting but without prejudicing the other party. His Honour observed that this view gives full meaning to the word “justifiable” in Lord Blackburn’s description in Scarf of an “act which would be justifiable if he had elected one way and would not be justifiable if he had elected the other way”.[135] 

Return to Sargent and Peyman

The above analysis permits us to return to the leading cases of Sargent and Peyman and consider the basis for the decisions in them.

Read in context, Mason J.’s decision in Sargent appears to apply the approach taken by Sholl J. and Adam J. in Melevende. In particular, his Honour’s reference to the “justification for imputing to the affirming party a binding election” of the party having “acted adversely to the other party”[136] mirrors the language used by Adam J.[137] But Adam J. identified that this “may be explained as an application of the doctrine of estoppel” rather than “election to affirm”.[138] Sholl J made a similar observation.[139] Mason J did not refer to that aspect of their Honours’ decisions, but with respect it is clearly correct.[140] Thus Mason J.’s decision in Sargent may be best explained as an application of estoppel, not election.

Stephen J.’s decision too was arguably based on estoppel, insofar as his Honour determined that it had been shown that the purchasers had suffered detriment.[141] Thus his Honour’s observations regarding election without detriment to the other party were obiter.[142] However, his Honour clearly favoured the view of Herring CJ in Melevende, distinguishing between express contractual rights to terminate—where a party is taken to know the terms of its contract—and other rights of disaffirmation.[143]

On close analysis, therefore, Sargent can be seen as an application of the decision in Melevende. That seems curious, given that the Court in Peyman also followed Melevende,[144] and Australian judges have expressed the view that there is a conflict between Sargent and Peyman.[145]

In truth, the difference between the two decisions is more apparent than real. As Stephen J observed in Sargent, a failure to distinguish between contractually conferred rights and other instances of election may have “led to misunderstandings”.[146] 

Thus, Stephenson L.J. in Peyman observed, by reference to Matthews, that “perhaps every lessor, must be taken to know of the right of re-entry given him by the express terms of his lease”.[147] The same reasoning is what led Stephen J in Sargent to hold that knowledge of an express contractual right need not be proved because it is deemed to exist.[148] That is not a doctrinal distinction, but an evidentiary one. It was an application of the principle that a party that has expressly agreed to a written contract cannot rely on ignorance to avoid the application of its terms.[149] In other words, knowledge of the right remains a necessary element, but if the right is an express contractual one then, absent any vitiating factor (such as fraud or misrepresentation), such knowledge is presumed.

Consideration

As the above analysis shows, the doctrine of election may have fewer difficulties than first appear. The various conflicting statements and inconsistencies in the authorities are predominantly obiter and can, for the most part, be explained when viewed in context.

In that respect, much of the confusion in the authorities also stems from misguided attempts to distil from previous authorities a unified common law doctrine of election that applies in all circumstances. Such attempts are misguided because they overlook important differences between various situations in which election may arise. The remainder of this article examines those situations and explains how the authorities indicate they should be approached.

Affirmation and Disaffirmation

The first common error is a failure to acknowledge the difference between an election to affirm and an election to disaffirm. The exercise of a right of disaffirmation is substantially different from conduct which leads to the loss of such a right. There is no reason why the same test would apply to both, and indeed there is a principled basis for the contrary to be the case.

The effect of termination is that, while accrued claims survive, both parties are discharged from further performance.[150] The effect of rescission is that the contract is taken as having never been made.[151] In either case, the disaffirmation immediately alters the parties’ rights and obligations.[152] This can be reversed only by agreement of the parties, effectively constituting a new contract.[153]

A party may disaffirm a contract either by following an express[154] or implied[155] contractual mechanism; or, in lieu of such mechanism, by communicating to the other party unequivocally that the contract is at an end.[156] A party may then rely on any valid ground of disaffirmation, regardless of whether it was known to the party at the time.[157] Thus, unlike affirmation, the electing party’s knowledge is irrelevant to disaffirmation.[158] 

Another way of arriving at the same conclusion is by reference to the rationale for the knowledge requirement in an affirmation explained in Pennant. It makes sense that a party should not be permitted to breach the contract in secret and then argue that the innocent party has forever lost the right of disaffirmation because of a failure to exercise that right in reliance on the breach that had been concealed from it. But it is difficult to see how the breaching party would be taking advantage of its own wrong if the contract is held to have ended after the innocent party purported to disaffirm on an invalid ground but, unbeknownst to that party, a valid one was available.

Contract and Litigation

The second common error is a failure to distinguish between affirmations arising in the context of litigious or quasi-litigious proceedings (such as proofs of debt in liquidation) and those arising under contract. The most prominent example of this is Lord Blackburn’s judgment in Scarf, the difficulties in which are discussed above.

As the HCA has observed, notions of abandonment or renunciation of a right in a litigious context are “overlaid by considerations of the fair and just conduct of the proceedings. Considerations of that kind are not relevant to the identification of the rights and obligations of parties to contracts”.[159] It is such considerations that underpin the undisclosed principal cases—as was explained by the Lord Chancellor in Kendall. The worker’s compensation cases such as O’Connor and Bennett fall into a similar category. So too does Evans v. Bartlam,[160] one of the authorities relied on in Peyman.[161] In such cases a party may lose one of two rights to sue as a result of merger, not as a result of election.

Contract and Statute

Another distinct situation many have failed to recognise is where the right to disaffirm the contract arises under or by reason of a statute. In such cases, whether a party will be taken to have lost the right is a question statutory construction.[162]

The worker’s compensation cases fall into this category, as does Elder’s. The statements of principle in those cases must be viewed in that context. In particular, the High Court’s observation in Elder’s that the plaintiff’s conduct may have been equivocal or unequivocal depending on his knowledge[163] may have less relevance when a contractual right is in question rather than one conferred by legislation.[164]

Contract, Equity, and Common Law

The final important distinction that has often been overlooked is between rights that are contractually conferred, compared with rights arising under common law or equity. As was explained by Ewart and quoted by Herring CJ in Melevende:[165]

“election is effective, because the parties have, in their contract, so agreed. … the right of election in the law of contracts is created by an agreement of the parties; the elector has the power given to him by the agreement; and the relationships between the parties can be affected only in the manner, and to the extent, provided for in the agreement.”

An obvious corollary of this, which, curiously, has received little attention in the authorities, is that the circumstances in which a contractually-conferred right may be either exercised or lost is a question of the construction of the contract in question. 

One case that did recognise this was Car and Universal Finance Co. Ltd. v. Caldwell,[166] where it was held that, on the construction of the particular contract there in question, it was not necessary for the decision to terminate to be communicated to the other party. The Court distinguished Scarf[167] which, as Upjohn L.J. observed, “was not a case of contract”.[168] As Sellers L.J. said, what is required for disaffirmation “has to be viewed … between the two contracting parties involved in the particular contract in question.”[169]

It is respectfully submitted that this observation should apply not only to disaffirmation, but also affirmation. Lord Mansfield’s decisions in Goodright[170] and Batten[171] may be seen to support that proposition, insofar as affirmation was held to have turned on the parties’ intentions.

Thus, for example, the question whether a party should be taken to have affirmed the contract by delaying in exercising a right of disaffirmation[172] can be seen as an application of the general principle that for any contractual right, where no time for exercise is specified, it must be exercised within a reasonable time.[173] What constitutes a “reasonable time” will depend upon the circumstances of the case.[174] 

Viewing the doctrine in this way substantially reframes the question of whether a party should be taken to have affirmed the contract, because it indicates that the elements of an affirmation will not be uniform across all cases. For example, whether what is required is knowledge of the right to elect, or only of the circumstances giving rise to the right, will depend on what the parties objectively intended at the time the contract was entered into.

That said, it should be recalled that, as was established as far back as Pennant,[175] the basis for the knowledge requirement is that the guilty party should not be permitted to benefit from its own wrong. Relevant contractual terms must be interpreted with that principle in mind. This favours a strict construction of what is required for an affirmation. Thus nothing falling short of actual knowledge of the facts giving rise to the breach will generally be sufficient unless the contract contains clear words to the contrary.[176]

On the other hand, where a right of disaffirmation arises under the common law or in equity, the circumstances in which it may be exercised or lost will be governed by the body of law whence it derives. In that context, there is no reason why all rights of disaffirmation must be treated in a uniform way. Indeed, there are powerful policy reasons for applying different tests in different cases.

For instance, as Sholl J said in Melevende, “[i]f the law in this field has developed in a manner which requires compliance with a stricter test in order to establish affirmation on the part of the victim of fraud, that is not something of which society should complain”.[177] Conversely, as Lord Mansfield observed in Goodright,  “Cases of forfeiture are not favoured in law; and where the forfeiture is once waved, the Court will not assist it.”[178] Further, the principle that a party is taken to know the terms of a contract it has signed, as adverted to by Stephen J in Sargent,[179]  does not apply in cases of fraud.[180] 

It follows that there is no conceptual difficulty in the law requiring knowledge of the right to elect in cases of fraud, and knowledge only of the material facts in cases concerning express contractual rights of forfeiture.[181]

Equivocal and Unequivocal Acts

The final area of confusion running through the authorities is what comprises an “unequivocal act” sufficient to constitute an affirmation. As noted above, the language of “unequivocal act” derives from Jones,[182] which was about disaffirmation and not affirmation. It was first applied to affirmation by Lord Blackburn in Scarf, who explained the term as referring to “an act which would be justifiable if he had elected one way and would not be justifiable if he had elected the other way”.[183] In Melevende, Adam J suggested that this may be understood as an act prejudicing the other party.[184] The HCA in Elder’s suggested that the plaintiff’s conduct may have been equivocal or unequivocal depending on his knowledge, and this was taken by Stephen J in Sargent as a statement of general principle.[185]

There are some authorities which seem to indicate that it is sufficient for a party to communicate unequivocally to the other party that it has made its choice. For example, in The Kanchenjunga,[186] Lord Goff said in obiter that an election “can be communicated to the other party by words or conduct” and it is sufficient for the electing party to have “communicated his election to the other party in clear and unequivocal terms”.[187] On the other hand, it has long been recognised that a mere statement of intent will not, without more, be sufficient to waive a right irrevocably.[188]

It is respectfully submitted that the term “unequivocal act” obscures rather than elucidates what is required. The term has led to the supposition that an affirmation could be made by a mere statement of intention to affirm, which does not seem sound in principle. If a party has a right to disaffirm a contract because of the other party’s unlawful conduct, it is difficult to see why that right should be lost merely because the innocent party represents that the contract remains on foot, in circumstances where the other party is not prejudiced in any way by that representation. A preferable test would be to require that the act of affirmation either cause some manner of prejudice to the breaching party or otherwise have a substantive effect on the rights of the parties independent of any question of election (such as a positive decision by the innocent party to exercise a contractual right or to make a demand under the contract).

Conclusion

The history of election provides strong support for the proposition that judges should confine their reasons to the point being decided in the case before them, rather than embarking on excurses on legal principles that they are not called on to consider. It is likewise cautionary against relying on seemingly convenient terms such as “unequivocal act” or “full knowledge of the facts” without regard to the doctrinal justification for the rule that is being applied.

As this article has endeavoured to show, once the election cases are placed in their proper context, most of the seeming contradictions and inconsistencies fall away. They may be reconciled not by attempting to distil a single principle running through all the cases, but by recognising that where a party has a right to disaffirm a contract, the manner in which that right may be exercised or lost depends on the nature of the right and the circumstances of the case. There are no convenient shortcuts that will provide the same answer in all cases. But there is a consistent body of case law which is, in the words of Sholl J., “at least capable of logical application”.[189] 

[1] I would like to thank Professor Gregory Tolhurst of the University of Sydney, Michael Keene of the New South Wales Bar, the Hon. Kevin Lindgren K.C., and the anonymous reviewer for their helpful input.

[2] Note that affirmation of a contract is often referred to as “waiving” the right of disaffirmation. Ewart is heavily critical of this: see, John Skirving Ewart, Waiver Distributed Among the Departments, Election, Estoppel, Contract, Release (Cambridge Mass.: Harvard University Press, 1917). Nevertheless, this article will refer to “affirmation” and “waiver” (of a right of disaffirmation) interchangeably.

[3] See, eg, Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 444 per Sholl J.: “I doubt if it is possible to reconcile all the cases on this branch of the law, which are legion”; Peyman v. Lanjani [1985] Ch. 457 at 482E; [1985] 2 W.L.R. 154 at 176 per Stephenson L.J.: “Statements of the highest authority seem at first sight to give conflicting answers”.

[4] See, eg, K.A. Handley, “Exploring Election” (2006) 122 Law Quarterly Review  82; Aleka Mandaraka-Sheppard, “Demistifying the Right of Election in Contract Law” (2006) 18 Singapore Acadamy of Law Journal 60; Qiao Liu, “Rethinking Election: A General Theory” (2013) 35 Sydney Law Review 599 at 609-11.

[5] (1974) 131 C.L.R. 634; (1974) 4 A.L.R. 257.

[6] Real Property Act 1900 (N.S.W.).

[7] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 642-3 per Stephen J.

[8] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 645 per Stephen J.

[9] (1941) 65 C.L.R. 603; (1941) A.L.R. 302.

[10] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 646 per Stephen J.

[11] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 647-8 per Stephen J.

[12] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 646 per Stephen J.

[13] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 658 per Mason J.

[14] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 658 per Mason J.

[15] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 659 per Mason J.

[16] (1984) 165 C.L.R. 622; (1984) 54 A.L.R. 639.

[17] Khoury v. G.I.O. (1984) 165 C.L.R. 622 at 633-4 per Mason, Brennan, Deane and Dawson J.J.

[18] Khoury v. G.I.O. (1984) 165 C.L.R. 622 at 634 per Mason, Brennan, Deane and Dawson J.J.

[19] (1993) 182 C.L.R. 26; (1993) 67 A.L.J.R. 537.

[20] Immer (No 145) Pty. Ltd. v. Uniting Church in Australia Property Trust (NSW) (1993) 182 C.L.R. 26 at 42-3 per Deane, Toohey, Gaudron and McHugh J.J.

[21] [2008] HCA 57; (2008) 238 C.L.R. 570.

[22] Agricultural and Rural Finance Pty. Ltd. v. Gardiner (2008) 238 C.L.R. 570 at [56] per Gummow, Hayne, and Kiefel J.J.

[23] Agricultural and Rural Finance Pty. Ltd. v. Gardiner (2008) 238 C.L.R. 570 at [63]-[67] per Gummow, Hayne, and Kiefel J.J.

[24] [2022] HCA 38; (2022) 97 A.L.J.R. 1.

[25] Allianz Australia Insurance Limited v. Delor Vue Apartments CTS 39788 (2022) 97 A.L.J.R. 1 at [50]-[51] per Kiefel C.J., Edelman, Steward and Gleeson J.J.

[26] Allianz Australia Insurance Limited v. Delor Vue Apartments CTS 39788 (2022) 97 A.L.J.R. 1 at [52] per Kiefel C.J., Edelman, Steward and Gleeson J.J.

[27] [1985] Ch. 457; [1985] 2 W.L.R. 154.

[28] Peyman v. Lanjani [1985] Ch. 457 at 487 per Stephenson L.J.

[29] Peyman v. Lanjani [1985] Ch. 457 at 494 per May L.J.

[30] [1971] A.C. 850; [1970] 3 W.L.R. 287.

[31] Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd. [1971] A.C. 850 at 883 per Lord Diplock.

[32] Peyman v. Lanjani [1985] Ch. 457 at 486-7 per Stephenson L.J.

[33] Peyman v. Lanjani [1985] Ch. 457 at 494-5 per May L.J.

[34] Evans v. Bartlam [1937] A.C. 473 at 479 per Lord Atkin; quoted with approval in Peyman v. Lanjani [1985] Ch. 457 at 483-4 per Stephenson L.J. and cited at 494 per May L.J.; see also, Young v. Bristol Aeroplane Co. Ltd. [1946] A.C. 163 at 176 per Lord Russell; followed in Leathley v. John Fowler & Co. Ltd. [1946] K.B. 579.

[35] Peyman v. Lanjani [1985] Ch. 457 at 491 per Stephenson L.J., 496 per May L.J., 500-2 per Slade L.J.

[36] Motor Oil Hellas (Corinth) Refineries SA v. Shipping Corporation of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep. 391.

[37] Motor Oil Hellas (Corinth) Refineries SA v. Shipping Corporation of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep. 391 at 398 per Lord Goff (Lords Keith, Brandon, Templeman, and Griffiths agreeing).

[38] Insurance Corporation of the Channel Islands Royal Insurance (UK) Ltd. v. The Royal Hotel Ltd. [1998] Lloyd’s Rep. I.R. 151.

[39] Insurance Corporation of the Channel Islands Royal Insurance (UK) Ltd. v. The Royal Hotel Ltd. [1998] Lloyd’s Rep. I.R. 151 at 161 per Mance J.

[40] Insurance Corporation of the Channel Islands Royal Insurance (UK) Ltd. v. The Royal Hotel Ltd. [1998] Lloyd’s Rep. I.R. 151 at 162 per Mance J.

[41] Kosmar Villa Holidays Plc v. Trustees of Syndicate 1243 [2008] EWCA Civ 147; [2008] 1 Bus. L.R. 931.

[42] Kosmar Villa Holidays Plc v. Trustees of Syndicate 1243 [2008] 1 Bus. L.R. 931 at [36] per Rix L.J. (Jacob L.J. and Forbes J. agreeing).

[43] Kosmar Villa Holidays Plc v. Trustees of Syndicate 1243 [2008] 1 Bus. L.R. 931 at [37]-[38] per Rix L.J. (Jacob L.J. and Forbes J. agreeing).

[44] Kosmar Villa Holidays Plc v. Trustees of Syndicate 1243 [2008] 1 Bus. L.R. 931 at [73]-[74] per Rix L.J. (Jacob L.J. and Forbes J. agreeing).

[45] [2020] UKPC 23; [2021] 1 W.L.R. 5741.

[46] Delta Petroleum (Caribbean) Ltd. v. British Virgin Islands Electricity Corpn. [2021] 1 W.L.R. 5741, [17]-[20].

[47] See, Hoffman, Re; Ex parte Worrell v. Schilling (1989) 85 A.L.R. 145 at 151 per Pincus J. (F.C.A.); Molotu Pty. Ltd. v. Solar Power Ltd. (1989) 6 B.P.R. 13,460 at 13,465; (1989) N.S.W. Conv.R. ¶55–490 per Young J. (N.S.W.S.C.); Ellison v. Lutre Pty. Ltd. [1999] FCA 399; (1999) 88 F.C.R. 116 at 128-9; Wiltrading (WA) Pty. Ltd. v. Lumley General Insurance Ltd. [2005] WASCA 106; (2005) 30 W.A.R. 290 at [36]-[39] per Steyler P. (McLure and Pullin J.J.A. agreeing).

[48] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 644-5 per Stephen J., 659 per Mason J.

[49] Green's Case (1556) Cro. Eliz. 3; 78 E.R. 269.

[50] Ie to “seize (someone's property) in order to obtain payment of rent or other money owed: legislation has restricted the right to distrain goods found upon the premises”: Oxford English Dictionary (online at 15 October 2022).

[51] Pennant's Case (Harvey v. Oswald) (1596) 3 Co. Rep. 64; 76 E.R. 775; Harvey v. Oswald (1596) Cro. Eliz. 553; 78 E.R. 798; Harvie v. Oswel (1596) Cro. Eliz. 572; 78 E.R. 816; Harvy v. Oswold (1596) Moo. K.B. 456; 72 E.R. 692; Pennant's Case [1558-1774] All E.R. Rep. 634.

[52] Pennant's Case (Harvey v. Oswald) (1596) 3 Co. Rep. 64; 76 E.R. 775.

[53] Dumpor's Case (1598) 4 Co. Rep. 119; 76 E.R. 1110.

[54] Goodright ex dim Walter v. Davids (1778) 2 Cowp. 804; 98 E.R. 1371 (K.B.).

[55] Doe v. Batten (1775) 1 Cowp. 243; 98 E.R. 1066.

[56] Roe (d Gregson) v. Harrison (1788) 2 T.R. 425; 100 E.R. 229.

[57] Doe (d Boscawen and Tower) v. Bliss (1813) 4 Taunt. 735; 128 E.R. 519.

[58] Rede v. Farr (1817) 6 M. & S. 121; 105 E.R. 1188.

[59] Doe (on the demise of Bryan) v. Bancks (1821) 4 B. & A. 401; 106 E.R. 984.

[60] Jones v. Carter (1846) 15 M. & W. 718; 153 E.R. 1040.

[61] Croft v. Lumley (1857-58) 6 H.L.C. 672; 10 E.R. 1459.

[62] The two who found that it did arise being Crompton J. at 1475 [712] and Wightman J. at 1481 [727-8].

[63] See, Croft v. Lumley (1857-58) 6 H.L.C. 672; 10 E.R. 1459 at 1468 [694] per Channell B., 1469 [697] per Watson B., 1472-3 [705-8] per Bramwell B., 1481-2 [729-30] per Wightman J., 1483 [733-4] per Coleridge J.

[64] See, Croft v. Lumley (1857-58) 6 H.L.C. 672; 10 E.R. 1459 at 1478-9 [720-2] per Martin B., 1480 [725] per Williams J.

[65] At 1475-6 [712-4].

[66] At 1483-8 [735-46] per Lord Cranworth and Lord Wensleydale.

[67] At 1487-8 [743-6].

[68] At 1472-3 [705-8].

[69] Clough v. London and North Western Railway Co. (1871) L.R. 7 Exch. 26 at 43.

[70] Scarf v. Jardine (1882) 7 A.C. 345 at 360 per Lord Blackburn.

[71] Clough v. London and North Western Railway Co. (1871) L.R. 7 Exch. 26 at 34.

[72] Clough v. London and North Western Railway Co. (1871) L.R. 7 Exch. 26 at 36.

[73] C.f., Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 435 per Herring C.J., 443-4 per Sholl J., 452-3 per Adam J.; Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 645 per Stephen J., 657-8 per Mason J.

[74] Maynegrain Pty. Ltd. v. Compafina Bank [1982] 2 N.S.W.L.R. 141 at 149-50 per Hope J.A. (citations omitted).

[75] Playboy Club London Ltd. v. Banca Nazionale del Lavoro SpA [2018] UKSC 43; [2018] 1 W.L.R. 4041 at [12] per Lord Sumption J.S.C.

[76] Siu Yin Kwan v. Eastern Insurance Co. Ltd. [1994] 2 A.C. 199 (P.C.) at 207; [1994] 1 All E.R. 213 at 219; and see generally, A. L. Goodhart and C. J. Hamson, “Undisclosed Principals in Contract” (1932) 4(3) The Cambridge Law Journal 320.

[77] Paterson v. Gandasequi (1812) 15 East. 62; 104 E.R. 768; See, A. L. Goodhart and C. J. Hamson, “Undisclosed Principals in Contract” (1932) 4(3) The Cambridge Law Journal 320 at 324.

[78] Thomson v. Davenport (1829) 9 B. & C. 74; 109 E.R. 30; and c.f., Smethurst v. Mitchell (1859) 1 El. & El. 622; 120 E.R. 1043, where the agent entered into a composition with his creditors, including the principal, after the agency was discovered by the vendor but before the vendor sought to pursue the principal, and the King’s Bench held that the vendor’s rights against the principal had been lost as a result.

[79] See further, Kendall v. Hamilton [1879] 4 A.C. 504 at 514-5 per Earl Cairns L.C.; A. L. Goodhart and C. J. Hamson, “Undisclosed Principals in Contract” (1932) 4(3) The Cambridge Law Journal 320 at 321.

[80] Thomson v. Davenport (1829) 9 B. & C. 74; 109 E.R. 30 at 34 per Littledale J.

[81] See further, Armstrong v. Stokes (1872) L.R. 7 Q.B. 598; (1872) 26 L.T. 872.

[82] Priestly v. Fernie (1865) 3 H. & C. 977; 159 E.R. 820.

[83] Priestly v. Fernie (1865) 3 H. & C. 977; 159 E.R. 820 at 823 per Bramwell B.

[84] Curtis v. Williamson (1874) L.R. 10 Q.B. 57; (1874) 31 LT 678.

[85] Curtis v. Williamson (1874) L.R. 10 Q.B. 57 at 60.

[86] [1879] 4 A.C. 504; [1874-80] All E.R. Rep. 932 (H.L.).

[87] Kendall v. Hamilton [1879] 4 A.C. 504 at 514-5 per Earl Cairns L.C.

[88] King v. Hoare (1844) 13 M. & W. 494; 153 E.R. 206.

[89] Kendall v. Hamilton [1879] 4 A.C. 504 at 515-9 per Earl Cairns L.C.

[90] Kendall v. Hamilton [1879] 4 A.C. 504 at 519-24 per Lord Hatherley, 533-7 per Lord O’Hagan, 537-41 per Lord Selborne, 541-5 per Lord Blackburn, 545-6 per Lord Gordon, and c.f., at 524-33 per Lord Penzance (dissenting).

[91] Kendall v. Hamilton [1879] 4 A.C. 504 at 542 per Lord Blackburn.

[92] Kendall v. Hamilton [1879] 4 A.C. 504 at 515 per Earl Cairns L.C.

[93] Kendall v. Hamilton [1879] 4 A.C. 504 at 514-5 per Earl Cairns L.C.

[94] Moore v. Flanagan [1920] 1 K.B. 919 at 924-5 per Bankes L.J., 925-6 per Scrutton L.J., 928 per Atkin L.J.; [1920] All E.R. Rep. 254 at 256-7 per Bankes L.J., 257-8 per Scrutton L.J., 258-9 per Atkin L.J.; Petersen v. Moloney (1951) 84 C.L.R. 91 at 103-4; [1951] A.L.R. (C.N.) 1057 per Dixon, Fullagar and Kitto J.J.; Marginson v. Ian Potter & Co. (1976) 136 C.L.R. 161 at 169; (1976) 11 A.L.R. 64 at 70 per Gibbs and Mason J.J.

[95] Scarf v. Jardine (1882) 7 A.C. 345; [1881-5] All E.R. Rep. 651.

[96] Scarf v. Jardine (1882) 7 A.C. 345 at 350-1 per Lord Selborne L.C., 359 per Lord Blackburn, 364-5 per Lord Bramwell.

[97] Scarf v. Jardine (1882) 7 A.C. 345 at 353 per Lord Selborne L.C.

[98] Scarf v. Jardine (1882) 7 A.C. 345 at 353-4 per Lord Selborne L.C.

[99] Scarf v. Jardine (1882) 7 A.C. 345 at 360-1 per Lord Blackburn.

[100] Scarf v. Jardine (1882) 7 A.C. 345 at 364 per Lord Watson, 364-5 per Lord Bramwell.

[101] See, Fuller’s Theatre and Vaudeville Co. Ltd. v. Rofe [1923] A.C. 435 at 443; Craine v. Colonial Mutual Fire Insurance Co. Ltd. (1920) 28 C.L.R. 305 at 325-6; Owendale Pty. Ltd. v. Anthony (1967) 117 C.L.R. 539 at 557-8; 40 A.L.J.R. 446 at 453-4.

[102] [1910] 1 Ch. 777; [1908-10] All E.R. Rep. 536.

[103] Matthews v. Smallwood [1910] 1 Ch. 777 at 786.

[104] Matthews v. Smallwood [1910] 1 Ch. 777 at 780 per Romer K.C. (during argument), citing Croft v. Lumley (1855) 5 El. & Bl. 648; 119 E.R. 622; Davenport v. The Queen (1877) 3 A.C. 115; Pennant's Case (Harvey v. Oswald) (1596) 3 Co. Rep. 64; 76 E.R. 775. Matthews v. Smallwood [1910] 1 Ch. 777 at 781 per A. Grant K.C. (during argument), citing Walrond v. Hawkins (1875) L.R. 10 C.P. 342; (1875) 32 L.T. 119; Roe (d Gregson) v. Harrison (1788) 2 T.R. 425; 100 E.R. 229; Doe (d Nash) v. Birch (1836) 1 M. & W. 402; 150 E.R. 490; Fryer v. Ewart [1902] A.C. 187; [1900-3] All E.R. Rep. 577.

[105] Pennant's Case (Harvey v. Oswald) (1596) 3 Co. Rep. 64; 76 E.R. 775.

[106] Matthews v. Smallwood [1910] 1 Ch. 777 at 787-8 per Parker J.

[107] Matthews v. Smallwood [1910] 1 Ch. 777 at 788-92 per Parker J.

[108] Peyman v. Lanjani [1985] Ch. 457 at 482H per Stephenson L.J.

[109] Bennett v. L and W Whitehead Ltd. [1926] 2 K.B. 380.

[110] Bennett v. L and W Whitehead Ltd. [1926] 2 K.B. 380 at 410 per Atkin L.J.

[111] Codling v. John Mowlem and Co. Ltd. [1914] 2 K.B. 61; affirmed on appeal in Codling v. John Mowlem and Co. Ltd. [1914] 3 K.B. 1055.

[112] Codling v. John Mowlem and Co. Ltd. [1914] 2 K.B. 61 at 66-7 per Atkin J.

[113] Codling v. John Mowlem and Co. Ltd. [1914] 2 K.B. 61 at 69 per Atkin J.

[114] Bennett v. L and W Whitehead Ltd. [1926] 2 K.B. 380 at 387-90 per Bankes L.J.

[115] [1946] A.C. 163; [1946] 1 All E.R. 98.

[116] See, Young v. Bristol Aeroplane Co. Ltd. [1946] A.C. 163 at 173 (Viscount Simon), 176 per Lord Russell, 188 per Lord Porter; followed in Leathley v. John Fowler & Co. Ltd. [1946] K.B. 579.

[117] (1936) 36 S.R. (NSW) 248; (1936) 53 W.N. (NSW) 72.

[118] O'Connor v. S P Bray Ltd. (1936) 36 S.R. (NSW) 248, 262-3 per Jordan C.J.

[119] Matthews v. Smallwood [1910] 1 Ch. 777.

[120] [1923] A.C. 435; (1923) 92 L.J.P.C. 116.

[121] O'Connor v. S P Bray Ltd. (1936) 36 S.R. (NSW) 248 at 264 per Jordan C.J.; note, this was overturned on appeal in O'Connor v. S P Bray Ltd. (1937) 56 C.L.R. 464; [1937] A.L.R. 461.

[122] See further, Allianz Australia Insurance Limited v. Delor Vue Apartments CTS 39788 (2022) 97 A.L.J.R. 1 at [62]-[63] per Kiefel C.J., Edelman, Steward and Gleeson J.J.

[123] Elder's Trustee & Executor Co. Ltd. v. Commonwealth Homes & Investment Co. Ltd. (1941) 65 C.L.R. 603.

[124] O'Connor v. S P Bray Ltd. (1936) 36 S.R. (NSW) 248 at 263 per Jordan C.J.

[125] John Skirving Ewart, Waiver Distributed Among the Departments, Election, Estoppel, Contract, Release (Cambridge Mass.: Harvard University Press, 1917) at 72.

[126] Elder's Trustee & Executor Co. Ltd. v. Commonwealth Homes & Investment Co. Ltd. (1941) 65 C.L.R. 603 at 618 per Rich AC.J., Dixon and McTiernan J.J.

[127] [1965] V.R. 433.

[128] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 435 per Herring C.J.

[129] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 435 per Herring C.J.; quoting John Skirving Ewart, Waiver Distributed Among the Departments, Election, Estoppel, Contract, Release (Cambridge Mass.: Harvard University Press, 1917) at 75.

[130] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 435-6 per Herring C.J.

[131] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 436-7 per Herring C.J.

[132] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 443 per Sholl J.

[133] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 444 per Sholl J.

[134] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 453-4 per Adam J.

[135] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 453 per Adam J.; quoting Scarf v. Jardine (1882) 7 A.C. 345 at 360-1 per Lord Blackburn.

[136] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 658 per Mason J.

[137] See, Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 453.38-48 per Adam J.: (“the views I have expressed would seem to give full meaning to the word ‘justifiable’ in observations made by Lord Blackburn in Scarf v. Jardine (1882) 7 A.C. 345, at p. 361, where he describes ‘an unequivocal act’ sufficient to amount to an affirmation of a contract as ‘an act which would be justifiable if he had elected one way and would not be justifiable if he had elected the other way’. This language seems more appropriate to the exercise of rights adverse to the other party to a contract than to acts merely recognizing that a contract is subsisting”).

[138] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 453.25-32 per Adam J.

[139] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 443.32 per Sholl J.

[140] See also, Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 644 per Stephen J.: “Both Sholl J. and Adam J. regarded the presence of some detriment to the other party, a form of estoppel, as necessary before acts of affirmation of the contract could, in the absence of any knowledge of the alternative legal right to rescind, destroy the right of rescission” (emphasis added, references omitted).

[141] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 648 per Stephen J.

[142] Albeit it may have been “seriously considered”: see, Farah Constructions Pty. Ltd. v. Say-Dee Pty. Ltd. [2007] HCA 22; (2007) 230 C.L.R. 89 at [134] at [158]; Bernice Chen, “Seriously Considering ‘Seriously Considered Dicta’: Precedent after Farah Constructions” (2021) 95 Australian Law Journal 186.

[143] See, Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 644-5 per Stephen J.

[144] See, Peyman v. Lanjani [1985] Ch. 457 at 488H-491C per Stephenson L.J., 494D-G, 495G-496B per May L.J.

[145] See, Hoffman, Re; Ex parte Worrell v. Schilling (1989) 85 A.L.R. 145 at 151 per Pincus J. (F.C.A.); Molotu Pty. Ltd. v. Solar Power Ltd. (1989) 6 B.P.R. 13,460 at 13,465 per Young J. (N.S.W.S.C.); Ellison v. Lutre Pty. Ltd. (1999) 88 F.C.R. 116 at 128-9; Wiltrading (WA) Pty. Ltd. v. Lumley General Insurance Ltd. (2005) 30 W.A.R. 290 at [36]-[39] per Steyler P. (McLure and Pullin J.J.A. agreeing)

[146] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 645 per Stephen J.

[147] Peyman v. Lanjani [1985] Ch. 457 at 482H per Stephenson L.J.

[148] Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 645 per Stephen J.

[149] See, L’Estrange v. F Graucob Ltd. [1934] 2 K.B. 394 at 403-4 per Scrutton L.J., 406-7 (Maugham L.J.); [1934] All E.R. Rep. 16 at 18-9 per Scrutton L.J., 19-20 (Maugham L.J.); Toll (FGCT) Pty. Ltd. v. Alphapharm Pty. Ltd. (2004) 219 C.L.R. 165; (2004) 211 A.L.R. 342 at [67].

[150] McDonald v. Dennys Lascelles Ltd. (1933) 48 C.L.R. 457 at 476-7; [1933] A.L.R. 381 per Dixon J.; Johnson v. Agnew [1980] A.C. 367 at 396; [1979] 2 W.L.R. 487 at 495 per Lord Wilberforce.

[151] Newbigging v. Adam (1884) 34 Ch. D. 582 at 592; [1886-90] All E.R. Rep. 975 at 982 per Bowen L.J.; AH McDonald & Co. Pty. Ltd. v. Wells (1931) 45 C.L.R. 506 at 512 per Rich, Starke, and Dixon J.J.; Brown v. Smitt (1924) 34 C.L.R. 160 at 169; [1924] V.L.R. 333 at 344-5 per Isaac and Rich J.J.

[152] O'Connor v. S P Bray Ltd. (1936) 36 S.R. (NSW) 248, 260-1 per Jordan C.J.

[153] Ogle v. Comboyuro Investments Pty. Ltd. (1976) 136 C.L.R. 444 at 451; (1976) 9 A.L.R. 309 at 313 per Barwick C.J.; Newbon v. City Mutual Life Assurance Society Ltd. (1935) 52 C.L.R. 723 at 733; (1935) 9 A.L.J.R. 78 per Rich, Dixon and Evatt J.J.; O'Connor v. S P Bray Ltd. (1936) 36 S.R. (NSW) 248 at 259-60 per Jordan C.J.; Evans v. Wyatt (1880) 44 JP 767; (1880) 43 L.T. 176 at 177 per Lindley J.; J. W. Carter, Carter’s Breach of Contract, 2nd edn. (Sydney: LexisNexis Butterworths, 2018) at [12-08].

[154] See, eg, Nund v. McWaters [1982] V.R. 575 at 581-3 per Brooking J. (Starke and Murphy J.J. agreeing).

[155] See, eg, Car and Universal Finance Co. Ltd. v. Caldwell [1965] 1 Q.B. 525 at 550-1 per Sellers L.J., 555 per Upjohn L.J., 558-9 per Davies L.J.

[156] O'Connor v. S P Bray Ltd. (1936) 36 S.R. (NSW) 248 at 260-1 per Jordan C.J.; Nund v. McWaters [1982] V.R. 575 at 585-6 per Brooking J. (Starke and Murphy J.J. agreeing).

[157] Shepherd v. Felt & Textiles of Australia Ltd. (1931) 45 C.L.R. 359; [1931] A.L.R. 194; Nund v. McWaters [1982] V.R. 575 at 585-6 per Brooking J. (Starke and Murphy J.J. agreeing); J. W. Carter, Carter’s Breach of Contract, 2nd edn. (Sydney: LexisNexis Butterworths, 2018) at [10-07], [11-04].

[158] O'Connor v. S P Bray Ltd. (1936) 36 S.R. (NSW) 248 at 260-1 per Jordan C.J.; Delta Petroleum (Caribbean) Ltd. v. British Virgin Islands Electricity Corpn. [2021] 1 W.L.R. 5741 at [21]-[23]; see further, Qiao Liu, “Rethinking Election: A General Theory” (2013) 35 Sydney Law Review 599 at 610-11; and see, Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 642 per Stephen J.; but c.f., J. W. Carter, Carter’s Breach of Contract, 2nd edn. (Sydney: LexisNexis Butterworths, 2018) at [11-14], criticising Peyman for promoting “an asymmetrical approach to election” by creating a different test for an election to affirm compared with one to disaffirm.

[159] Agricultural and Rural Finance Pty. Ltd. v. Gardiner (2008) 238 C.L.R. 570 at [89]; see also, Allianz Australia Insurance Limited v. Delor Vue Apartments CTS 39788 (2022) 97 A.L.J.R. 1 at [30], [62]-[64].

[160] [1937] A.C. 473; [1937] 2 All E.R. 646.

[161] See, Peyman v. Lanjani [1985] Ch. 457 at 483-4 per Stephenson L.J., 494 per May L.J.

[162] Ellison v. Lutre Pty. Ltd. (1999) 88 F.C.R. 116 at [64] per von Doussa, Mansfield and Goldberg J.J.

[163] Elder’s Trustee & Executor Co. Ltd. v. Commonwealth Homes & Investment Co. Ltd. (1941) 65 C.L.R. 603 at 618 per Rich AC.J., Dixon and McTiernan J.J.

[164] C.f., Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 644, 646 per Stephen J.

[165] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 435 per Herring C.J.; quoting John Skirving Ewart, Waiver Distributed Among the Departments, Election, Estoppel, Contract, Release (Cambridge Mass.: Harvard University Press, 1917) at 75.

[166] [1965] 1 Q.B. 525; [1964] 2 W.L.R. 600.

[167] See, Car and Universal Finance Co. Ltd. v. Caldwell [1965] 1 Q.B. 525 at 551 per Sellers L.J., 554 per Upjohn L.J.

[168] Car and Universal Finance Co. Ltd. v. Caldwell [1965] 1 Q.B. 525 at 554 per Upjohn L.J.

[169] Car and Universal Finance Co. Ltd. v. Caldwell [1965] 1 Q.B. 525 at 550-1 per Sellers L.J.

[170] Goodright ex dim Walter v. Davids (1778) 2 Cowp. 804; 98 E.R. 1371 (K.B.).

[171] Doe v. Batten (1775) 1 Cowp. 243; 98 E.R. 1066.

[172] See, Motor Oil Hellas (Corinth) Reneries SA v. Shipping Corpn. of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep. 391 at 398-9 per Lord Goff; but c.f., Aaron’s Reefs Ltd. v. Twiss [1896] A.C. 273 at 294 per Lord Davey: “Lapse of time without rescinding will furnish evidence of an intention to affirm the contract. But the cogency of this evidence depends on the particular circumstances of the case and the nature of the contract in question.”

[173] See, Canning v. Temby (1905) 3 C.L.R. 419 at 424 per Griffiths C.J. (performance of an obligation); Perri v. Coolangatta Investments Pty. Ltd. (1982) 149 C.L.R. 537; (1982) 56 A.L.J.R. 445 (fulfilment of a condition); Aberfoyle Plantations Ltd. v. Cheng [1960] A.C. 115; [1959] 3 W.L.R. 1011 (fulfilment of a condition); York Air Conditioning and Refrigeration (A/sia) Pty. Ltd. v. The Commonwealth (1949) 80 C.L.R. 11 at 62-3 (exercise of a right); c.f., Re Computer Room Solutions Pty. Ltd. [2021] NSWSC 845 at [67] per Black J.

[174] Perri v. Coolangatta Investments Pty. Ltd. (1982) 149 C.L.R. 537 at 567-8 per Brennan J.

[175] Pennant’s Case (Harvey v. Oswald) (1596) 3 Co. Rep. 64; 76 E.R. 775; Harvey v. Oswald (1596) Cro. Eliz. 553; 78 E.R. 798; Harvie v. Oswel (1596) Cro. Eliz. 572; 78 E.R. 816; Harvy v. Oswold (1596) Moo. K.B. 456; 72 E.R. 692; Pennant’s Case [1558-1774] All E.R. Rep. 634.

[176] C.f., Moore v. The National Mutual Life Association of Australasia Limited [2011] NSWSC 416 at [81] per Ball J., holding that “in order to give rise to a binding election, a person faced with a choice between inconsistent rights must know all the facts that a reasonable person in that position would consider relevant to the choice to be made.”

[177] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 444 per Sholl J.

[178] Goodright ex dim Walter v. Davids (1778) 2 Cowp. 804; 98 E.R. 1371 per Lord Mansfield; and see further, John Skirving Ewart, Waiver Distributed Among the Departments, Election, Estoppel, Contract, Release (Cambridge Mass.: Harvard University Press, 1917) at 114: “the courts, being much prejudiced against ‘forfeitures’, will seize upon next to nothing and create ‘waiver’ out of it, for the purpose of preventing the loss of a great deal because of a little fault.”

[179] See, Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 644-5 per Stephen J.

[180] See, L’Estrange v. F Graucob Ltd. [1934] 2 K.B. 394 at 403-4 per Scrutton L.J., 406-7 per Maugham L.J.; Toll (FGCT) Pty. Ltd. v. Alphapharm Pty. Ltd. [2004] HCA 52; (2004) 219 C.L.R. 165 at [67].

[181] C.f., J. D. Heydon, Heydon on Contract (Sydney: Lawbook, 2019) at [31.730] arguing that there are policy reasons against requiring knowledge of the right.

[182] Jones v. Carter (1846) 15 M. & W. 718; 153 E.R. 1040.

[183] Scarf v. Jardine (1882) 7 A.C. 345 at 360-1 per Lord Blackburn.

[184] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 453 per Adam J.; quoting Scarf v. Jardine (1882) 7 A.C. 345 at 360-1 per Lord Blackburn.

[185] Elder’s Trustee & Executor Co. Ltd. v. Commonwealth Homes & Investment Co. Ltd. (1941) 65 C.L.R. 603 at 618 (Rich AC.J., Dixon and McTiernan J.J.); and c.f., Sargent v. ASL Developments Ltd. (1974) 131 C.L.R. 634 at 644, 646 per Stephen J.

[186] Motor Oil Hellas (Corinth) Reneries SA v. Shipping Corpn. of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep. 391.

[187] Motor Oil Hellas (Corinth) Reneries SA v. Shipping Corpn. of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep. 391 at 398-9. Note that the innocent party in that case was found to have elected by asserting a right arising under the contract which was detrimental to the other party: see at 400.

[188] Stackhouse v. Barnston (1805) 10 Ves. Jun. 453, 466; 32 E.R. 921, 925-6 per Grant M.R.; Agricultural and Rural Finance Pty. Ltd. v. Gardiner (2008) 238 C.L.R. 570 at [95]-[96] per Gummow, Hayne and Kiefel J.J.; Allianz Australia Insurance Limited v. Delor Vue Apartments CTS 39788 (2022) 97 A.L.J.R. 1 at [29] per Kiefel C.J., Edelman, Steward and Gleeson J.J., but c.f., at [151]-[152] per Gageler J. (dissenting).

[189] Coastal Estates Pty. Ltd. v. Melevende [1965] V.R. 433 at 444 per Sholl J.