1. LEGISLATIVE HISTORY
2.1 The Usury, Bills of Lading, and Written Memoranda Act 1902 consolidated certain Imperial enactments already in force in New South Wales. The certificate of the Commissioner for the Consolidation of the Statute Law, appended to the Bill, stated:
The various subjects here placed together have this in common that they are of interest to mercantile men and deal with some mercantile instruments. On the whole, it has seemed better to join them in one Act than to make four or five separate and very short Acts ... I certify that this Bill solely consolidates, and in no way alters, adds to, or amends the law as contained in the enactments therein consolidated.1
2.2 One of the enactments consolidated in the Usury, Bills of Lading, and Written Memoranda Act 1902 was the Written Memoranda Act 1834 which adopted and re-enacted the Statute of Frauds Amendment Act 1828 (Imp), generally known as Lord Tenterden's Act.2
2.3 The preamble to the Written Memoranda Act 1834, after referring to Lord Tenterden's Act, stated as follows:
And whereas it is expedient to adopt and apply the said recited Act of Parliament in the Administration of Justice in New south Wales Be it therefore enacted by His Excellency the Governor of New South Wales with the advice of the Legislative Council thereof That the said recited Act of Parliament and every clause revision and enactment therein contained shall e and the same is and are hereby adopted and directed to be applied in the Administration of Justice in the said Colony and its Dependencies in like manner as other Laws of England are therein applied and as if the same and every part thereof had been repeated and re-enacted in this Act or Ordinance.
2.4 Thus the provisions of Lord Tenterden's Act were introduced and adopted in New South Wales without any amendment.
2.5 Section 10 of the Usury, Bills of Lading, and Written Memoranda Act 1902 with which this report is concerned reproduced s6 of Lord Tenterden's Act. The section survives in its original form.
2.6 Section 6 of Lord Tenterden's Act states that a representation as to "the character, conduct, credit, ability, trade, or dealings of any other person" should be made in writing signed by the representor for that representation to be enforceable. The full text of the section is as follows:
No action shall be brought whereby to charge any person upon or by reason of any representation or assurance made or given concerning or relating to the character, conduct, credit, ability, trade, or dealings of any other person, to the intent or purpose that such other person way obtain credit, money or goods upon [sic]3, unless such representation or assurance be made in writing, signed by the party to be charged therewith.
2.7 Lord Tenterden's Act was as its short title clearly states, an amendment to the Statute of Frauds 1677 (Imp).
2.8 Section 6 of Lord Tenterden's Act was enacted specifically to supplement the second limb of s4 of the Statute of Frauds 1677 (Imp).4 Section 4 states (emphasis added):
And be it further enacted that from and after the said 24th day of June [1677] no action shall be brought whereby to charge any executor or administrator upon any special promise, to answer damages out of his own estate; or whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriages of another person; or to charge any person upon any agreement made upon consideration of marriage; or upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them; or upon any agreement that is not to be performed within the space of one year from the making thereof , unless the agreement upon which such action shall be brought, or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized.
The second limb of s4 refers to contracts of guarantee.5
2.9 Section 4 of the Statute of Frauds 1677 (Imp) enabled a defendant sued in respect of any of the contracts enumerated therein to raise a successful defence if the contract did not conform to the requirement of writing set out in s4.
2.10 In 1789, however, it was decided in Pasley v Freeman6 that where there was no guarantee in writing a plaintiff could bring an action in tort for deceit at common law for a fraudulent oral representation of the defendant. Damages could thus be obtained not for breach of contract but for commission of a tort.
2.11 The decision in Pasley v Freeman had the practical effect of allowing a plaintiff to circumvent s4 of the Statute of Frauds 1677 (Imp). This was the "mischief" that s6 of Lord Tenterden's Act sought to remedy.
2.12 Both the Statute of Frauds 1677 (Imp) and the Statute of Frauds Amendment Act 1828 were received into Australia under s24 of the Australian Courts Act 1828 (Imp).7
2.13 Amongst Australian jurisdictions only Tasmania8 and the Northern Territory9 have retained in its entirety s4 of the Statute of Frauds 1677 (Imp). That part of s4 dealing with contracts of guarantee continues to operate in Western Australia10 and, in modernised form, Queensland11 and Victoria.12 Section of the Statute of Frauds 1677 has been repealed in New South Wales,13 South Australia14 and the Australian Capital Territory.15 The Credit Act 1984 contains a provision similar to s4 of the Statute of Frauds 1677 so far as it relates to contracts of guarantee.16 There are corresponding provisions in other Australian jurisdictions.17
2. 14 Section 6 of the Statute of Frauds Amendment Act 1828 (Imp) (Lord Tenterden's Act) remains in force as part of the received law in South Australia, Western Australia and the Northern Territory. it has been re-enacted in the same form in New South Wales, as discussed above in paras 2.1-2.5, by s10 of the Usury, Bills of Lading, and Written Memoranda Act 1902, in Tasmania by s 11 of the Mercantile Law Act 1935 (Tas), in Victoria by s128 of the Instruments Act 1958 (Vic), and in the Australian Capital Territory by s16 of the Mercantile Law Ordinance 1962 (ACT). It has been repealed expressly only in Queensland by s3 of the Statute of Frauds 1972 (Qld).
2.15 The second limb of s4 of the Statute of Frauds 1677 (Imp) and s6 of Lord Tenterden's Act are still in force in England.18
II. THE NATURE OF THE REPRESENTATION
2.16 The section provides that no action may be brought charging any person by reason of any representation made or assurance given concerning the character, conduct, credit, ability, trade or dealings of any other person in order that the other person may obtain credit, money or goods, unless the representation is made in writing. To fall within the scope of the section the representation has to be in respect of "the character, conduct, credit, ability, trade or dealings of any other person". This means, in effect, the representation must be in respect of the credit of a third person.
2.17 The representation need not be a guarantee. it is sufficient if the statement induces the person to whom it is made to rely and act on it and thereby suffer damage. The statement must be untrue to the maker's knowledge. Judicial interpretation of the section has limited its application to fraudulent, as opposed to innocent or negligent, misrepresentation.19 In Pearson v Seligman20 it was held that a representation made in order that its maker may obtain a benefit from the credit allowed to the third party, was within the section. In Swann v Phillips21 the defendant represented to the plaintiff that he held the title deeds of a third party thereby inducing the plaintiff to lend money to the third party. The representation was held to be within the section. In Devaux v Steinkeller22 a representation by a partner as to the credit of his firm was held to be a representation as to the credit "of another person".
2.18 The representation must be in writing. It may, however, be partly verbal and partly written provided the plaintiff was substantially induced to give credit by the written representation.23
2.19 The representation must be signed by the principal and not by an agent. This raises a fundamental issue as to the liability of a corporation in respect of representations made by its agents. This issue is yet to be settled satisfactorily.
FOOTNOTES
1. The Statutes of New South Wales (1902 Vol VI) at 544.
2. Named after Lord Tenterden who drafted the Act.
3. There is some controversy as to the word which has been omitted from the Section by a clerical error. It is generally believed that the word was "credit": Lyde v Barnard (1836) 1 M & W 101 at 115, 150 ER 363 at 369. It has also been suggested that "upon" read originally as "thereupon": Id at 372.
4. In Tatton v Wade (1856) 18 CB 371, 139 ER 1413, Pollock CB at 1417 stated:
Lord Tenterden told me that his motive for introducing that provision into the bill, was that he was struck with the remarkable fact, that, numerous as actions of the sort were, - actions for false representations as to the character and credit of third persons, - the plaintiff almost invariably succeeded; which induced him to think there was some latent injustice, which required a remedy. That is the true history of that enactment.
5. A contract of guarantee has to be distinguished from a contract of indemnity:
Although a contract of guarantee may be described as a contract of indemnity in the widest sense of the term, yet contracts of guarantee are distinguished from contracts of indemnity ordinarily so called by the fact that a guarantee is a collateral contract to answer for the default of another person, and thus is a contract that is ancillary or subsidiary to another contract, whereas an indemnity is a contract by which the promisor undertakes an original and independent obligation: Halsbury's Laws of England (4th ed) Vol 20 para 108.
For a recent Australian statement see Sunbird Plaza Pty Ltd v Maloney (1988) 62 ALJR 195 at 196.
6. (1789) 3 Term Rep 51, 100 ER 450.
7. The Act, which was passed on 25 July 1828, provides in s24:
All Laws and Statutes in force within the Realm of England at the Time of the passing of this Act ... shall be applied in the Administration of Justice in the Courts of New South Wales ... so far as the same can be applied within the said [colony].
Lord Tenterden' s Act was assented to on 9 May 1828 but only took effect , by virtue of s 10, on 1 January 1829. In South Australia at least Lord Tenterden's Act was inherited as part of the law of England which was regarded as applicable to local conditions: De Garis v Dalgety & Co Ltd [1915] SALR 102.
8. Mercantile Law Act 1935 (Tas), s6.
9. Statute of Frauds 1677 (Imp).
10. Statute of Frauds 1677 (Imp) as amended by the Law Reform (Statute of Frauds) Act 1962 (WA), s2.
11. Property Law Act 1974 (Qld), s56.
12. Sale of Goods (Vienna Convention) Act 1987 (Vic), s8.
13. Imperial Acts Application Act 1969, s8.
14. Statutes Amendment (Enforcement of Contracts) Act 1982 (SA), s3.
15. Imperial Acts (Substituted Provisions) Ordinance 1986 (ACT), s3.
16. Section 136 (paras 3.12-3.14 below).
17. Credit Act 1987 (Qld), s133 (not yet proclaimed); Credit Act 1984 (Vic), s136; Credit Act 1984 (WA), s136; Credit Ordinance 1985 (ACT), s136.
18. Following upon the recommendations of the First Report of the Law Reform Committee (Cmd 8809), published in 1953, the Law Reform (Enforcement of Contracts) Act 1954 (UK) s 1 amended s4, preserving the second limb but repealing the rest of the section. Section 6 of Lord Tenterden's Act has not been amended since its enactment.
19. Banbury v Bank of Montreal [1918] AC 626; Mutual Life and Citizens' Assurance Company Limited v Evatt (1968) 122 CLR 556.
20. (1883) 48 LT 842.
21. [1838] 8 Ad & El 457, 112 ER 912.
22. (1839) 6 Bing NC 84, 133 ER 33.
23. Tatton v Wade (1856) 18 CB 371, 139 ER 1413.
