J. J. SAVAGE &SONS PTY. LTD. v.

BLAKNEY
(1970) 119 CLR 435
18 March 1970

Blakney, the respondent get involved in a contract with JJ Savage & Sons (App) by
selling the engine of a boat for the applicant. JJ Savage & Sons, the appellant gave
Blakney suggestion on three distinct engines they possessed for sale and made a final
recommendation for a preferred choice.
During the negotiations process, Savage told Blakney that he estimated the boat
would have the speed of 15mph when fitted with a specific engine. Blakney then
bought an engine from JJ Savage & Sons based on the recommendation given
by Savage. No reference was applied to this speed in the follow-up written
contract . The boat did not go for 15 mph at last. Blakney claimed a breach of
collateral warranty.The warranty was "that the said cruiser when fitted with a 4/53
series diesel marine engine..." would have an estimated maximum speed of 15
miles per hour.

The question is whether there was a promise that the boat would reach the
stated speed so there will be a collateral contract only if the statement is
promissory as this is the central problem.

Whether or not the contract would have been made without the statement having
been made is a case to be think over in determining if the statement was
promissory as it is not enough in itself that the statement in fact made by the
appellant was prepared to have some commercial major upon a matter of
importance to the respondent can be admitted; that the respondent was prepared
to act upon it, and that he did act upon it, is clearly made out. But those facts do
not warrant the conclusion that the statement was itself promissory. [para 13, p
443]

The Court observed (para 12, p 443) that before finalization to the contract
Blakney could have completed one of three things:

 need the speed provision to be involved in the standard. Then it would

have been a term of the major contract.
 Seek for t a promise that the speed would be reached. If given then this
would have been a collateral contract
 Make his own judgment. Then the statement would not be contractual.

In this case the Court found he had made his own judgment and the statement
was not contractual/not promissory. So far from being a promissory expression,
‘estimated speed 15 mph’ indicates, in our opinion, an expression of opinion as a
result ‘of approximate calculation based on probability’ … The words in
themselves tend, in our opinion, against the inference of a promise that the boat
would in fact achieve the nominated speed. [para 10, page 442]

Trial Judge:
  The representation was neither a term of the contract nor a collateral warranty. The
statement was an estimate only, not an unequivocal promise of a future speed. It was
only an approximate speed referred to dictionary.

Full Court:

 Reversed the decision. Statement was a collateral warranty.

High Court:

Statements made during negotiations

 "The words in themselves tend, in our opinion, against the inference of a promise that the
boat would in fact the nominated speed[1]."

 The words indicated ‘an expression of opinion’ only.

 "So far from being a promissory expression, 'estimated speed 15 mph' indicates, in our
opinion, an expression of opinion as the result 'of approximate calculation based on
probability'[2]."

 The question is "whether there was a promise given about the speed and the entry into
the contract to purchase the boat providing the consideration to make the promise
effective[3]".

 There needed to be a condition in the in contract that the boat must reach that speed to
show the promise.
Collateral contract

 It is insufficient to use the idea that Blakney would not have ordered without the
statement.

 To establish a collateral contract, the statement needed to be promissory in nature, and

made with intent to induce the entry of the other party.

 This statement, as mentioned above, is not promissory in nature.

 Full court decision reversed.

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

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

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

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

 require the speed provision to be incorporated in the specifications. Then

it would have been a term of the main contract.
 sought a promise that the speed would be attained. If given then this
would have been a collateral contract
 form his own judgment. Then the statement would not be contractual.

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

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