Updates and background for this project (Digest)
2.1 The rule has developed in many ways since its original statement four centuries ago. The areas considered in the Chapter are:
- the types of documents covered;
- classification of alterations;
- types of persons making the alteration; and
- the effect of the alterations.
TYPES OF DOCUMENTS COVERED
2.2 The rule initially applied only to deeds. It was first extended to other contractual documents in 1791 when Lord Kenyon noted, in Master v Miller,1 that previous cases had expressly applied to deeds simply because at the time most written “engagements” were by deed:
Therefore those decisions, which were indeed confined to deeds, applied to the then state of affairs: but they establish this principle, that all written instruments which were altered or erased, should be thereby avoided.2
Master v Miller, however, dealt with bills of exchange,3 which can be treated as a separate category to other instruments,4 so the rule was not clearly extended to all written instruments until Davidson v Cooper5 in 1843.
2.3 Commentators have considered that there was little reason for extending the rule to include documents other than deeds (and possibly bills of exchange),6 although some have acknowledged that the move was justifiable on the grounds of public policy.7 One has suggested that the rule ought to have been confined to those “deeds and other instruments which constitute obligations, as opposed to merely evidencing them”.8
2.4 This can be contrasted with the position in the United States where the rule is limited to documents that are “integrated” agreements (that is, subject to the parol evidence rule9 ) or documents that satisfy the Statute of Frauds.
2.5 The question of the application of the rule to documents other than deeds has not come up in New South Wales in recent times. Of the New South Wales cases in the last ten years where the rule in Pigot’s Case has been raised as an issue (whether successfully or not) all have been in relation to contracts that can be classed as deeds – whether a guarantee,10 a lease11 or a deed of settlement of a dispute.12
2.6 The extent to which the enlarged coverage of the rule has caused problems will be discussed below (in relation to the effect of alterations).13
CLASSIFICATION OF ALTERATIONS
2.7 Since the decision in Pigot’s Case not all alterations have been subject to the rule. The basic distinction is between alterations that are found to be “material” and those that are judged to be “immaterial”. In Pigot’s Case it was held that an immaterial alteration by a stranger was not subject to the rule. However, it was still the case that immaterial alterations by a party to the contract were subject to the rule.
2.8 The first significant departure from this original statement of the rule occurred in 1868 when it was held that an immaterial alteration to a document by the promisee could not render it void since the material added would have been supplied by the law in any case. The case in question involved the addition of the words “on demand” to a promissory note which did not state a time for payment.14
2.9 It is now the case that immaterial alterations, even if by the promisee, will not avoid an instrument.15 This brings the law with respect to immaterial alterations by promisees into line with the law with respect to alterations by strangers. The question of materiality is, therefore, in issue in just about every instance of alteration of a document after execution.
Materiality
2.10 Whether an alteration will be treated as “material” depends on the circumstances of the individual case, including amongst other things, the nature of the instrument altered. There is a vast collection of case law and commentary relating to materiality.16 For example, Norton on Deeds defines a material alteration as including:
An alteration which, if made before execution, would have affected the position, rights or obligations of any person claiming under the deed.17
Halsbury’s Laws of Australia makes the following statement:
The question of materiality depends on whether the altered writing purports to affect the legal relations previously existing, that is, whether the alteration would result in a change in the contractual obligations between the parties, as they previously existed, so as to vary injuriously the rights against, and the duties to, the party making the alteration.18
Another often quoted statement is that of Lord Justice Brett in 1882:
Any alteration of any instrument seems to me to be material which would alter the business effect of the instrument if used for any ordinary business purpose for which such an instrument or any part of it is used.19
Alterations held to be material have included, in certain circumstances, the insertion of a date as the expressed date of execution;20 and, in respect of a guarantor, an alteration increasing the interest payable on a mortgage.21
2.11 It is possible that the statements outlined above may be departed from in some circumstances, for example, where a promisee has made a material alteration that has not been detrimental to the promisor.
Effect on the liability of the person against whom the alteration is made
2.12 The traditional position appears to be that it is not relevant that the alteration is to the benefit of the party seeking to avoid the document.22 This is still the case in Victoria where in 1988 Justice Tadgell of the Victorian Supreme Court23 considered himself bound by an 1880 decision of the Victorian Full Court:
The question is really... whether the altered instrument would operate differently from the original, whether to the prejudice of the other party or not. The argument that this alteration would be to the advantage of the defendant is not tenable. The question is, will the instrument, as altered, have a different operation from that of the instrument in its original condition? 24
2.13 However, the commentary in Halsbury’s Laws of Australia states that “in Australia it appears that an alteration which does not prejudicially affect any party liable will be regarded as immaterial and as such will not render the deed void”.25
2.14 This was supported in South Australia by Chief Justice Bray26 who did not consider the traditional position to be well founded. He preferred to follow Darcy and Sharpe’s Case27 and rely on Chief Justice Latham’s (dissenting) judgment in Brunker v Perpetual Trustee Company Ltd.28
2.15 Darcy and Sharpe’s Case, a decision from 1584, seems to have turned on the point that the alteration was in favour of the obligor.29 The South Australian Full Court concluded that a party should not be “entitled to avoid a written instrument because of an alteration made in good faith to that document by the other party wholly in the interests of the would-be avoider”.30
2.16 Another key case is that of Aldous v Cornwell31 which has been stated by Chitty to stand for the proposition that the rule in Pigot’s Case does not apply where the alteration does not “impose a greater liability on the promisor”.32 In Aldous v Cornwell the Court concluded:
We think we are not bound by the doctrine in Pigot’s case, or the authority cited for it; and not being bound, we are certainly not disposed to lay it down as a rule of law that the addition of words which cannot possibly prejudice any one, destroys the validity of the note.33
Anson has also suggested that “in most cases ... a material alteration will be one which imposes a greater liability on the promisor”.34
2.17 In Farrow Mortgage Services Pty Ltd v Slade the New South Wales Court of Appeal held that the question of the legal effect of documents is “to be determined by reference to the principles relating to the alteration of deeds, and other written contracts, after execution”:
Considerations which are relevant to those principles include the materiality of the alteration, the circumstances in which it occurred, and whether it operated in any way to the disadvantage of the party sought to be made liable.35
In that case the sum stated in the mortgage and deed of guarantee was altered, without the guarantor’s knowledge, after execution from $3,804,100 to $3,760,000. The alteration reduced the guarantor’s financial exposure and since the reduction would in no way threaten the financial viability of the project that was being financed, the alteration was held not to be a material one.36
2.18 By the same token, an alteration which prejudices one of the parties will most likely be considered material. So Chief Justice Gleeson in Farrow agreed with Justice Giles at first instance that “a variation of the agreement between a creditor and a debtor, of a kind which could prejudice a surety, will discharge the surety from liability”.37
2.19 This position has now also received the support of the English Court of Appeal when Lord Justice Potter in 1999 reviewed the above authorities and concluded:
In light of the conflict apparent in the authorities... to take advantage of the rule, the would-be avoider should be able to demonstrate that the alteration is one which, assuming the parties act in accordance with the other terms of the contract, is one which is potentially prejudicial to his legal rights or obligations under the instrument.38
2.20 At least one commentator has construed the principles laid down by Chief Justice Bray as requiring materiality and the impact on a party’s liability to be considered separately.39 A reading of some of the authorities could lead to the conclusion that the question of the impact on the promisor must be considered quite separately from the question of materiality. Certainly the statement in Farrow (above) could be interpreted as saying that materiality is a separate consideration to the impact on a party’s liability.
2.21 However, this is hardly of consequence because in either case the operation of the rule is defeated. This is rightly observed to be a matter of “mere semantics”.40
Alteration of document or its legal effect?
2.22 There has been some debate as to whether an alteration must affect the terms of the instrument itself or whether an alteration can also be material if it changes the legal effect of a document.41 For example, in the Victorian case of Vacuum Oil Co Pty Ltd v Longmuir42 the addition of a duty stamp to make a document admissible in evidence was held to have materially altered its legal effect and therefore to have materially altered it for the purposes of the rule.43 This was confirmed in Victoria by Justice Tadgell who, in Birrell v Stafford44 distinguished the decision in Vacuum without over-ruling it. One commentator has noted that:
it seems ironic that the honest acts of a person to make a document legally enforceable render the document unenforceable.45
Indeed, the conclusion in Vacuum was rejected by Chief Justice Bray in Armor on the grounds that the promisee had implied authority to do what was necessary to make the document legally effective.46 It has been suggested that this position and further developments in the area of implied authority47 may solve some of the problems in the area.48
Intention of the alterer: fraud and good intentions
2.23 The question of intention is clearly relevant, in the opinion of some, to the issue of materiality. Some have argued that the presence or absence of fraud is an indication of materiality. However, others have suggested that motive is an irrelevant consideration.49 Indeed it has been suggested that the materiality test itself can be interpreted “as merely an expression of concern for possible fraud”.50 It has also been argued that the question of whether an alteration was to the advantage of the promisor, which is seen by some as relevant to materiality,51 is also relevant to the detection of fraud.52
2.24 The British Columbia Court of Appeal has suggested that while fraud may be justly penalised by the operation of the rule, the intention of the person altering the instrument may be relevant:
But, if it is apparent from all the evidence that the purpose was innocent and well-intentioned, then it seems too simple, in today’s welter of documents, to release the promisor from an obligation for which he is likely to have received a commensurate benefit, just because a clerk in the employment of the promisee fills in a blank in a way that causes some alteration in the legal effect of some clause in the document.53
This view can also find some support in a judgment of the South Australian Full Court:
There is authority both ways, but none, I think, that binds me to hold that a party is entitled to avoid a written instrument because of an alteration made in good faith to that document by the other party wholly in the interests of the would-be avoider.54
The Queensland Supreme Court has also suggested that the rule should not extend to non-fraudulent alterations.55
2.25 There is also some support for a related position, namely that “immaterial alterations fraudulently made by a party to the deed seem to be treated as material”.56
2.26 In most jurisdictions in the United States the operation of the rule historically depended on the absence of fraudulent intent from the party making the alteration.57 In general an alteration has not invoked the rule if it has been done innocently to express the intention of the parties more clearly or to correct a real or supposed mistake.58 The reason traditionally given for this approach was that such alterations are immaterial.59 More recently this approach has been adopted in the American Law Institute’s Restatement of the Law of Contracts which states that an alteration must be both fraudulent and material for an agreement to be discharged.60
2.27 Notwithstanding the statements about alterations made in good faith, some modern writers have considered that there is still a danger that alterations made in good faith may void written agreements.61 Certainly history shows that the law in England relating to alterations has not been solely concerned with punishing fraud, but has at least also been concerned with carelessness and ensuring the identity of documents.62 There has even been a 1992 case in New South Wales in which Justice Cole noted:
the disinclination of the Court of Appeal in Warburton formally to reject Pigot’s Case as qualified by Aldous v Cornwell, or adopt the position in the [American Law Institute’s Restatement of the Law of Contracts63 ] (which discharges an instrument only where the alteration is both fraudulent and material).
and held that a material alteration, although neither “fraudulent nor criminal”, rendered a guarantee void.64 The English Court of Appeal has also recently held that the motive of the person making the alteration is broadly irrelevant.65
2.28 However, most of the support for the continued operation of the rule generally seems to be on the basis that it operate only with respect to alterations made with a fraudulent intention.66 There is certainly a strong argument that the penal aspects of the rule are inappropriate in cases not involving fraud.67
2.29 In any case it has been suggested that the law already is that accidental cancellation does not affect a deed.68 This position appears also to extend to alterations to written contracts.69 This sits well with the general approach to fraudulent alterations since the party who has accidentally altered the document can show that the alteration was made without fraudulent intent.70
2.30 Some commentators have argued against the complete abolition of the rule, suggesting that the carelessness or well-meaning ignorance of some parties to a contract, even when not fraudulent, should not be a reason for risking the possibility of fraud.71 This, however, overlooks the possibility of the operation of the rule being restricted to situations involving fraud.
THE PERSON MAKING THE ALTERATION
2.31 When discussing the persons making alterations it is convenient to consider them in two broad situations, namely in situations where the alterations have been made with the consent of the parties to the agreement and where they have been made without the consent of the parties to the agreement.
Alterations without consent
2.32 There are four categories of person to consider in relation to alterations without consent: the promisor; the promisee; a delegate of the promisee; and strangers to the transaction.
Alteration by the promisor
2.33 It probably goes without saying that a promisor cannot escape his or her obligations under an agreement simply by altering the document.72 This would also be true if an agent of the promisor were to make the alteration.73
Alteration by the promisee
2.34 It also goes without saying that, on the current state of the law, when a promisee makes a unilateral material alteration to a document after execution, that alteration will avoid the agreement against the promisor.74
Alteration by an agent of the promisee
2.35 Sometimes an alteration can be made by a person who is not the promisee but an agent or employee of the promisee. This is one type of “third person” to an agreement between two parties. Situations where the third person is a complete stranger to the parties are discussed below.
2.36 An apparently anomalous situation arises where an agent or employee of the promisee makes a material alteration to a document after execution by the parties. From recent New Zealand authority it would seem to be the case that a promisee may be liable for the acts of his or her agent or employee even when the agent or employee is acting independently without direction from the promisee.75 This also seems to have been the basis on which the earlier Victorian judgment of Vacuum Oil Co Pty Ltd v Longmuir proceeded.76
2.37 This means that a contract can be declared void even when the promisee has no intent (fraudulent or otherwise) in relation to the alteration because the acts of his or her agent or employee are imputed to the promisee. This is the case even when the employee or agent has been fraudulent to his or her own ends.77
2.38 In Canada it also seems to be the case that alteration by an agent renders a contract void “despite an absence of proof of fraudulent intent on the part of the agent’s principal”78 although the courts there appear to be cautious in finding agency.79
2.39 The situation is clearly anomalous and the application of vicarious liability to an employer in this situation, at least where there is no damage, may be unfair. Part of the difficulty seems to lie with the approach of the English law which does not see fraud as a necessary element to the operation of the rule. This has implications also for situations where a stranger makes a material alteration to a document.80
2.40 The Court of Appeal in British Columbia recognised the problems caused by imputing the acts of an employee to the promisee, taking the example of clerks dealing with a large volume of documents and making alterations in the course of their daily work.81 In such circumstances it was suggested:
in addition to considering whether there was any alteration in the legal effect of the document, there should be some additional balancing of the interests of justice; some flexibility in the concept of materiality of the alteration; and some recognition of the principles of unjust enrichment.
2.41 It has been suggested that the real question should be whether there was express or implied authorisation from the promisee.82
Alteration by strangers
2.42 Sometimes an alteration will be made by a person who is not the promisor, promisee or an agent of either. The alteration is then said to be by a “stranger”.83 It appears to be generally accepted that a material alteration to an instrument by a stranger, while the instrument is in the custody of the promisee, will bring the rule into operation. This arises from the original statement of the rule:
when any deed is altered in a point material ... by any stranger, without the privity of the obligee ... the deed thereby becomes void.84
This position was confirmed by Lord Denman in Davidson v Cooper:
The strictness of the rule on this subject, as laid down in Pigot’s case, can only be explained on the principle that a party who has the custody of an instrument made for his benefit, is bound to preserve it in its original state... The party who may suffer has no right to complain, since there cannot be any alteration except through fraud, or laches on his part.85
This was despite submissions that it could not be the case that “a right of action already vested can be taken away by the tortious or careless act of a stranger”.86
2.43 The application of this aspect of the rule to alterations by a stranger who can be characterised as an “officious burglar” has been consistently questioned over the past two centuries.87 Text book writers have particularly called for its abolition at least in this respect. 88
2.44 Glanville Williams has commented on the absurdity of this aspect of the rule when compared with situations where a document is totally lost or otherwise destroyed:
If a burglar steals a written contract, secondary evidence of its contents can be given. But if the burglar, with a perverted sense of humour, adds a nought to some material figures in the contract, he makes it hopelessly void (at the option of the promisor), and the promisee can, for all that the authorities show, do nothing about it.89
This is still apparently the position in Australia. In the recent Victorian case of Birrell v Stafford Justice Tadgell accepted the position in Davidson v Cooper that the rule applied to the case of a material alteration by a stranger while the instrument was in the custody of the promisee.90 However, Justice Tadgell’s statement in this regard was not necessary to the decision.
2.45 In New South Wales Justice Cole, after a discussion of the issue by the New Zealand Court of Appeal in Chilcott v Goss,91 concluded:
There is no reason in principle why a lender receiving a validly executed guarantee which has been altered, prior to delivery to him, by a stranger to the transaction should bear the loss of the security. Responsibility for delivery of a deed in the form in which it was executed by a promisor should lie with that promisor.92
This judgment again did not deal directly with the situation where the document was in the custody of the promisee. And in any case it was found that there was no material alteration so the rule as regards strangers did not apply.
2.46 Notwithstanding the Victorian decision, Halsbury’s Laws of Australia notes that it has been suggested that “if an alteration is made in fraud of, and against the will of, the party having custody of the instrument, and who is entitled to benefit under it, the document will not necessarily be invalidated”.93 This has been derived from Halsbury’s Laws of England and is a reference to the question ultimately left unanswered by Lord Herschell in Lowe v Fox94 whether “a document is invalidated even if the alteration be made against the will and in fraud of the person who has charge of it and who has to rely upon it”.
2.47 There is a remote possibility of action against the stranger, where the stranger’s identity can be established. Markham v Gonaston95 is an early authority for the proposition that the promisee “may afterwards have an action on the case against the person who made the alteration, and recover damages”.
2.48 In some other jurisdictions the rule no longer applies to alterations made by strangers, whether in the custody of the promisee or not.
2.49 In Canada the law has been said to be that “alteration by a stranger not authorised by a party will not excuse the parties from performance of their obligations”.96 This is supported by the Supreme Court of British Columbia’s adoption of the relevant parts of the statement in Halsbury’s Laws of England.97
2.50 In the United States, the making of alterations by strangers without the knowledge or consent of the promisee is referred to as “spoliation” and has no effect on the instrument.98 The alteration of an instrument by strangers is clearly excluded from the Restatement which, amongst other things, requires that an alteration must be by one to whom a duty is owed under a contract and that the alteration must be both fraudulent and material.99 This approach was supported by Chief Justice Bray of South Australia in Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd.100
2.51 In New Zealand it seems that the courts may be moving towards treating alterations by strangers more leniently than alterations by agents where liability can be imputed to the promisor.101
2.52 Some commentators have suggested that it would be better to deal with alterations by strangers as an issue of express or implied authorisation.102 This approach would sufficiently deal with the question of fraudulent motives of the parties to an agreement without penalising them for the unilateral (and possibly fraudulent) act of a complete stranger.103
Alterations with the consent of both parties
2.53 The general position is that an alteration made with the consent of the parties to the transaction will not fall within the rule.104 Such an arrangement is essentially a new agreement if there is consideration for it.105 However, it is not always the case that the consent is express – sometimes it can be implied.
Implied authority
2.54 It appears to be the case that authority will be implied to make alterations in situations where the executed document does not adequately or correctly reflect the agreement between the parties.106 In Warburton v National Westminster Finance Australia Ltd it was also held that if the person making the alteration was in error, rectification will be available to correct the mistake.107
2.55 The most common situations where authority to alter a document is implied are those where one party executes a document with blanks and hands it over to the other party.108 By extension, it seems that where the parties execute a document that they intend to register under the Torrens title system, there is an implied authority to vary the document in a way that does not depart from the original agreement in order to achieve registration.109
2.56 Implied authority is not always found in cases where blanks are left in documents. In Keysen v Gregg the majority of a full court of the Supreme Court refused to allow that there was a general rule that an implied authority to alter an executed document existed merely because blanks were left in it.110 However, courts now seem more ready to find implied consent in such circumstances. The New South Wales Court of Appeal has recently suggested that the effect of cases relating to the filling of blanks has been that:
where alterations were made for the purpose of carrying out the express or implied intention of the parties, but not to alter the document in a material way, the alterations did not vitiate the document.111
2.57 However, such statements run the risk of confusing the question of materiality with the question of consent of the parties. The correct position must be that if implied consent to an alteration is found, the question of its materiality is irrelevant. It is only when an alteration turns out to be unauthorised that materiality becomes relevant.112 This position is desirable for reasons of practicality, if nothing else, especially in relation to instruments requiring registration:
For it to be otherwise would be impractical and extremely expensive, as documents would then have to be redrafted, re-executed and then relodged.113
2.58 Most mortgages apparently contain clauses allowing parties to alter the instrument to give effect to intentions already agreed between the parties. This gives express authority without the need to find it implied.114
2.59 However, others would argue against allowing findings of implied consent except in certain prescribed circumstances, preferring that express consent be obtained where ever possible. For example, it has been suggested that relief should not be granted unless it can be shown that the party tried to obtain consent but could not do so due to circumstances beyond his or her control.115 Presumably where parties expressly consent, it will not be necessary to re-draft or re-execute any instruments.116 The obtaining of express consent, while possibly “embarrassing” or “inconvenient” in some situations, should, nevertheless be encouraged.117
2.60 There is a limit to the extent to which authorisation to alter a document can be implied. In South Australia the Supreme Court considered that a promisor did not have authority to “interfere with the document for an indefinite period in the future” and concluded that an implied authority to fill up blanks could be “exhausted by its exercise”.118 The power to alter in such circumstances may be extended by express, rather than implied, authorisation.119
Fraud by both parties
2.61 Courts will not recognise an alteration, even where both parties agree, where the alteration is fraudulent. This approach, however, is based on the doctrine of illegal purposes and not the rule in Pigot’s Case. An example would be where two parties agree to backdate a document to defeat creditors.120
EFFECT OF ALTERATION
2.62 In considering the effect of an alteration that comes within the rule there are a number of inter-related considerations. These include whether the alteration merely affects the written instrument or the underlying agreement also; whether voidness in fact results and then whether the contract is void or voidable at the election of the innocent party; and whether there is a difference between the treatment of deeds and other written instruments.
Contract or underlying agreement?
2.63 The question whether a material alteration vitiates a document or the document and the agreement underlying it has been said to be a “vexed” one.121 This issue is considered here in light of the question whether the rule has the same result for other instruments as it does for deeds.
Deeds
2.64 It is generally agreed that the rule, if successfully invoked, has the effect of making at least deeds void. The avoidance of a deed under the rule has no retrospective effect – and therefore cannot affect any estate that has already passed by a deed.122 For example, the rule cannot affect a deed (or part of a deed) that only conveys property – since the conveyance takes effect immediately on execution.123 In such circumstances the deed is even admissible in evidence to prove that the conveyance actually took place.124
2.65 However, if a deed contains covenants or contracts to be carried out after the conveyance, these will be affected by the rule, because the avoidance is prospective (in futuro) not retrospective (ab initio). For example, Lord Campbell said:
There is no ground for saying that if a deed be altered in a material part it is rendered void from the beginning. It ceases to have any new operation; and no action can be brought in respect of any pending obligation which would have arisen from it had it remained entire; but it may still be given in evidence to prove a right or title created by its having been executed, or to prove any collateral fact.125
2.66 The same can be said for dealings under the Torrens system so far as the actual passing of title goes. Certainly it seems to be the case that registration under the Torrens system, in the absence of fraud, cures what would otherwise be a void instrument,126 especially in light of the High Court’s adoption of immediate indefeasibility.127 However, it seems that not all terms in a registered instrument will be preserved. For example, in the case of leases, only covenants affecting the term of the lease and its extent are indefeasible.128 Other clauses, such as covenants to repair, would not be so protected.129 This is not to say that any registration or recording of an instrument will necessarily be of help. Indeed, registration under the Torrens system, because of its special nature, is probably an exception to the general proposition that the recording of an instrument, if it has been altered after execution, cannot preserve it.130
Other instruments
2.67 Is there a difference between deeds and other instruments when it comes to the effect of an alteration? If deeds that have been altered are void – are other instruments? Or are the contracts just enforceable according to their terms prior to alteration?
2.68 Clearly the extension of the rule to instruments other than deeds is problematic. It is perhaps easier, given their history and development, to accept that if deeds are void the obligations arising from them are at an end. However, the situation is different when we are dealing with instruments that are only one form of evidence of an obligation which may not need to be in writing. If the only consequence of the alteration is that the document is not admissible in evidence against the one claiming under it, it may still be possible to prove the underlying contract by other means.131 For example, it may be possible that a contract can be proved by recourse to an unaltered duplicate.132
2.69 In any case, an agreement evidenced by an instrument other than a deed may be unenforceable simply because, once the instrument is prevented from being used in evidence, there is usually insufficient evidence on which to ground a claim.133 This would be particularly so in cases where the parol evidence rule applies.
2.70 Written contracts may also be subject to the parol evidence rule which, put simply, is a rule which operates, when an agreement has been reduced to writing, to exclude extrinsic (particularly oral) evidence which would have the effect of altering the terms of the agreement as recorded. However, it appears only to operate when the document has been “integrated”, that is, the parties intended the writing to be the complete record of the whole bargain between them or a particular aspect of it.134 The parol evidence rule is important to an understanding of the effect of the rule on some contractual documents.
2.71 On this basis, oral agreements only partly evidenced in writing appear more likely to be enforced by recourse to other evidence.135
2.72 In Victoria it has been held that an unaltered duplicate original may be relied on in evidence when an instrument has been altered after execution. In Vacuum Oil Justice Sholl stated in relation to the operation of the rule:
Where the true terms of the contract can be proved by another original, of equal authority with that altered, why should the law impose so great a penalty?136
Justice Sholl’s decision was, however, also premised upon an absence of fraud in the case before him.137
2.73 Although authority is slender on this point, it has been suggested that courts will be willing to follow the position of Justice Sholl if only because the existence of multiple copies would make detection of an alteration extremely likely, to the extent that few would attempt a fraudulent alteration for fear of detection.138
2.74 It can be argued more strongly that if an instrument is altered after a copy has been registered or recorded by some formal process, then the recorded copy can be produced as evidence of the agreement.139 This view has been put by Justice Young who claims that the proposition is “self evident”:
because the rationale for the rule is to prevent a person, in whose custody a document is, from committing a fraud by proffering an altered deed in court. Once a genuine copy of the instrument is registered there is no purpose to be served by applying the rule.140
2.75 The American Restatement confines itself to alterations in situations where the writing is an “integrated agreement” or “satisfies the Statute of Frauds with respect to that contract”.141 Such a position is a little difficult to relate to New South Wales since the relevant provisions of the Statute of Frauds 1677 (Imp) have been repealed142 and there are other statutory enactments requiring some contracts to be evidenced in writing.143
2.76 Justice Young in Zisti v Ryde Joinery Pty Ltd follows what appears to be the American approach, at least with respect to deeds:144
2.77 There does not appear to be any direct support for the above proposition in Australia.145 The Court of Appeal did not deal with this aspect of Justice Young’s judgment.146
2.78 The New Zealand Law Commission, in its review of the Property Law Act 1952 (NZ) considered the law in relation to the alteration of instruments other than deeds to be “that the alteration is ineffective unless it has been agreed upon by the parties to the contract or gives rise to an estoppel”.147 Accordingly they recommended, with respect to deeds:
The rule that a deed becomes invalid if there has been a material alteration to it after its execution is abolished, but the abolition of that rule does not validate any such alteration if it is invalid on any ground other than that rule.148
2.79 In absence of any clear judicial statement, the effect of the rule with respect to documents other than deeds is uncertain in New South Wales. The assumption that the rule has the same effect that it does for deeds has led some to suggest that the document alone and not the obligation should be vitiated and that other evidence should be allowed, where appropriate, to prove the content of the original contract.149
Consequences of the alteration: void or voidable?
2.80 Some authorities have stated that a contract, where the instrument has been materially altered, will be void150 while others state that it is merely voidable.151 The expressions are used confusedly. In this context voidable simply means that the innocent party can choose to invoke it and that otherwise the contract remains on foot. For example, Halsbury’s Law of Australia, relying on an 1875 decision,152 states that an innocent party can choose to sue on a document that has been altered provided the instrument can be proved in its original form.153 However, this statement in Halsbury’s appears to apply only to “instruments under hand” and not to deeds and in any case related to a claim for quantum meruit for work already done in a building case, that is, that some obligations had already been performed.154 It has also been suggested that there is a distinction between deeds and simple contracts:
it can at least be put forward that a bilateral contract in English law is not rendered void by a material alteration, but is, at most, voidable, at the option of the injured party, who must either perform his obligation as if it had not been altered, or rescind both obligations. 155
By contrast, on this view, a deed that has been altered becomes void.
2.81 So, while it is clear that the party who has made the alteration cannot be in a position to enforce the contract against the innocent party,156 it is less clear whether the innocent party can choose to keep the contract on foot.157
2.82 Whatever the true position is, it has been suggested that voidability should be considered preferable on the ground that “automatic nullification of a contract ... may therefore penalise the innocent contracting party”158 for example, in situations where it is in the innocent party’s economic interest to keep the contract on foot.
Subsequent revival
2.83 Some of the problems arising from the operation of the rule rendering instruments void rather than voidable relate to situations where the possible revival of the instruments becomes an issue – for example where the innocent party attempts to ratify the alteration or where an alteration has been erased or where a material alteration subsequently becomes immaterial.
2.84 When an innocent party subsequently ratifies an alteration it may in fact not be possible to revive the instrument159 at least if the agreement is already operative when the alteration is made.160 However, it has also been suggested that in principle there is no reason why a subsequent ratification should not be possible in relation to a previously unauthorised alteration.161
2.85 The traditional position in the United States seems to be that a subsequent ratification can have full effect,162 with the possible exception of cases of forgery.163 The Restatement of Contracts has confirmed this position:
§287. Assent to or Forgiveness of Alteration
(1) If a party, knowing of an alteration that discharges his duty, manifests assent to the altered terms, his manifestation is equivalent to an acceptance of an offer to substitute those terms.
(2) If a party, knowing of an alteration that discharges his duty, asserts a right under the original contract or otherwise manifests a willingness to remain subject to the original contract or to forgive the alteration, the original contract is revived.
These provisions appear to allow ratification by an innocent party even in cases of fraud.164
2.86 Similar problems may exist in relation to the restoration of instruments that were previously altered and had become void by operation of the rule. So, for example, where an interlineation has been erased or where erased text is written back in, it would seem to be the case that the obligations under the instrument cannot be restored, at least without the agreement of the promisor.165
2.87 A related situation is where a material alteration subsequently becomes immaterial. The British Columbia Supreme Court has held that the question of materiality is to be determined at the time the alteration is made and the fact that it may later become immaterial is irrelevant.166 The only justification for such a position would appear to be to punish fraud regardless of whether the attempt succeeds or not.167
Is voidness appropriate in any case?
2.88 Treating a document as void, whether a deed or other written instrument, has been criticised on the grounds that in many cases this will amount to an over-reaction and is unnecessary in light of other options available.
2.89 For example, one submission has suggested that:
in modern times it is very difficult to argue against the proposition that the only sanction there should be in relation to an alteration made to a contract without the consent of the other party, is that the alteration should be ignored. ... I can see no justification, however, for a conclusion that in the event there is an alteration made to a contract without the consent of the other party then the effect is the entire contract is void. Such a result may well work a far greater injustice than the vice it seeks to respond to.168
2.90 Justice Hope has suggested that:
If alterations have been made, there is ample scope within the principles of law and equity to do justice to the parties without destroying the document.169
2.91 Similarly, Chief Justice Bray, in Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd, has held:
Unless I am constrained to do otherwise by authority binding on me I prefer to follow those cases which have interpreted the rule as liberally and reasonably as possible. There is, in my view, little reason for preserving, in a rational system of law, a rule which instead of adjusting the equities of the case to the circumstances and nature of the alteration visits the document with total nullity.170
Availability of restitution
2.92 Even when a contract is declared void, it may be possible for a promisee, when an instrument has been altered, to claim restitution from the promisor. In the New Zealand case of Goss v Chilcott the Privy Council considered a situation where restitution was claimed by a promisee because alterations to the mortgage document had discharged the liability of the promisors.171 The Privy Council held that the alteration had the effect of discharging obligations under the contract but that the promisors “had nevertheless been enriched by the receipt of the money, and prima facie were liable in restitution to restore it”.172 This approach appears to answer the British Columbia Court of Appeal’s call for “some recognition of the principles of unjust enrichment” in relation to the effect of the rule in Pigot’s Case.173
2.93 However, restitution is not a panacea in all circumstances in which the rule applies. Restitution is available only in narrowly defined circumstances where there has been performance of the contract by one party only and the other party stands to be unjustly enriched. There may also be other problems, for example, if the claim for restitution is defeated because an order for restitution would be unjust174 or if tracing and proprietary remedies turn out not to be available.175
FOOTNOTES
1. (1791) 4 TR 320; 100 ER 1042.
2. Master v Miller (1791) 4 TR 320 at 330; 100 ER 1042 at 1047.
3. These are now governed by statute in any case: see Bills of Exchange Act 1909 (Cth). See also para 4.2-4.6.
4. See Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 282.
5. Davidson v Cooper (1843) 11 M&W 778; 152 ER 1018; on appeal: (1844) 13 M&W 343; 153 ER 142.
6. O W Holmes, “The Path of the Law” (1897) 10 Harvard Law Review 457 at 473; S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 112. See also Zisti v Ryde Joinery Pty Ltd (1996) 7 BPR 15,217 at 15,225; and Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 274-275 (Bray CJ).
7. J C Sheahan, “Use and Misuse of Legal History: Case Studies from the Law of Contract, Tort and Restitution” (1998) 16 Australian Bar Review 280 at 283.
8. J C Sheahan, “Use and Misuse of Legal History: Case Studies from the Law of Contract, Tort and Restitution” (1998) 16 Australian Bar Review 280 at 282.
9. On the parol evidence rule, see below at para 2.70.
10. Citibank Savings Ltd v Executors of the Estate of Vago (New South Wales, Supreme Court, No 50443/1991, Cole J, 1 May 1992, unreported); Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636; and Woods v Commonwealth Bank of Australia (New South Wales, Supreme Court, No 4252/1988, Needham J, 30 January 1990, unreported).
11. Zisti v Ryde Joinery Pty Ltd (1996) 7 BPR 15,217; Ryde Joinery Pty Ltd v Zisti (1997) 7 BPR 15,233; and Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313.
12. Dahlenburg v Dahlenburg (New South Wales, Supreme Court, No 2605/1996, Young J, 24 July 1996, unreported).
13. Para 2.63-2.87.
14. Aldous v Cornwell (1868) LR 3 QB 573. See also Bishop of Crediton v Bishop of Exeter [1905] 2 Ch 455; J Chitty, Chitty on Contracts (28th edition, Sweet & Maxwell, London, 1999) at para 26-021; and C E Odgers, Odgers’ Construction of Deeds and Statutes (5th edition, Sweet & Maxwell, London, 1964) at 21.
15. Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238 at 244; Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636 at 639-640, 649; Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 265 (Bright J) and at 275 (Bray CJ). See also R F Norton, A Treatise on Deeds (2nd edition, Sweet & Maxwell, London, 1928) at 46; A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 289; L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 270.
16. See, for example, H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 46-57.
17. R F Norton, A Treatise on Deeds (2nd edition, Sweet & Maxwell, London, 1928) at 44. See also Keysen v Gregg (1932) 32 SR(NSW) 288 at 292.
18. Halsbury’s Laws of Australia (Butterworths) at para 140-250.
19. Suffell v Bank of England (1882) 9 QBD 555 at 568. See Birrell v Stafford [1988] VR 281 at 285; Keysen v Gregg (1932) 32 SR (NSW) 288 at 292; and Crossseas Shipping Ltd v Raiffeisen ZentralBank Osterreich AG (England and Wales, Court of Appeal, 21 December 1999, unreported) at para 6.
20. Birrell v Stafford [1988] VR 281 at 287.
21. Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636 at 649-650.
22. Gardner v Walsh (1855) 5 E&B 83 at 89; Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 281. See also H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 55-56. This can be compared to the situation where a creditor and debtor have agreed to vary materially a loan agreement to the prejudice of the guarantor: See Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 559-560. But see Crossseas Shipping Ltd v Raiffeisen ZentralBank Osterreich AG (England and Wales, Court of Appeal, 21 December 1999, unreported) at para 25.
23. Birrell v Stafford [1988] VR 281 at 285-286.
24. Colonial Bank of Australasia v Moodie (1880) 6 VLR (L) 354 at 356.
25. Halsbury’s Laws of Australia (Butterworths) at para 140-250. See also Walsh v Westpac Banking Corporation (1991) 104 ACTR 30 at 35.
26. Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 281-282.
27. (1584) 1 Leon 282; 74 ER 257.
28. (1937) 57 CLR 555 at 592.
29. There is, however, another case from the same period to the contrary, that is, an alteration even where it is to the advantage of the obligor, allowed a plea of non est factum: Markham v Gonaston (1598) Cro Eliz 626; 78 ER 866.
30. Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 280-281.
31. (1868) LR 3 QB 573.
32. J Chitty, Chitty on Contracts (28th edition, Sweet & Maxwell, London, 1999) at para 26-021. See also Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 283 (Walters J).
33. Aldous v Cornwell (1868) LR 3 QB 573 at 579.
34. W R Anson, Anson’s Law of Contract (27th edition, Oxford UP, 1998) at 554. See also Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636 at 640.
35. (1996) 38 NSWLR 636 at 639 (Gleeson CJ).
36. Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636 at 649 (Cole JA). See also A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 295.
37. Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636 at 637 (Gleeson CJ).
38. Crossseas Shipping Ltd v Raiffeisen ZentralBank Osterreich AG (England and Wales, Court of Appeal, 21 December 1999, unreported) at para 27.
39. S MacCallum, “A New Approach to the Unilateral Alteration of Instruments” (1981) 7 Adelaide Law Review 274 at 279. But see also Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 284-285 (Walters J).
40. S MacCallum, “A New Approach to the Unilateral Alteration of Instruments” (1981) 7 Adelaide Law Review 274 at 279.
41. Sims v Anderson [1908] VLR 348 at 351 (Cussen J); and Birrell v Stafford [1988] VR 281 at 285. See also A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 290.
42. [1957] VR 456.
43. See Birrell v Stafford [1988] VR 281 at 286.
44. Birrell v Stafford [1988] VR 281.
45. A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 290. See also H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 53-54.
46. Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 278-279.
47. See para 2.54-2.60.
48. A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 290.
49. See, for example, Crossseas Shipping Ltd v Raiffeisen ZentralBank Osterreich AG (England and Wales, Court of Appeal, 21 December 1999, unreported) at para 29.
50. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 272.
51. See para 2.12-2.21.
52. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 274.
53. Canadian Imperial Bank of Commerce v Skender [1986] 1 WWR 284. See also L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 273. But see Crossseas Shipping Ltd v Raiffeisen ZentralBank Osterreich AG (England and Wales, Court of Appeal, 21 December 1999, unreported) at para 29.
54. Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 280-281.
55. However, in this case it was found that the alteration had been made by consent and the rule, therefore, had no operation: Kaffe Pty Ltd v Vasta (Queensland, Supreme Court, No 949/1992, Kiefel J, 4 August 1994, unreported) at 22. See also J C Sheahan, “Use and Misuse of Legal History: Case Studies from the Law of Contract, Tort and Restitution” (1998) 16 Australian Bar Review 280 at 285.
56. R F Norton, A Treatise on Deeds (2nd edition, Sweet & Maxwell, London, 1928) at 47.
57. See S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 115; and H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 53.
58. S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 115 and annotation to Klundby v Hoyden 73 AmLR 648 (1930) at 657.
59. See annotation to Klundby v Hoyden 73 AmLR 648 (1930) at 659.
60. American Law Institute, Second Restatement of the Law of Contracts (St Paul, 1981) at § 286. See para 4.9.
61. A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 302.
62. See H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 71. See also para 3.5-3.16.
63. American Law Institute, Second Restatement of the Law of Contracts (St Paul, 1981) at § 286.
64. Citibank Savings Ltd v Executors of the Estate of Vago (NSW, Supreme Court, No 50443/1991, Cole J, 1 May 1992, unreported) at 24-25.
65. Crossseas Shipping Ltd v Raiffeisen ZentralBank Osterreich AG (England and Wales, Court of Appeal, 21 December 1999, unreported) at para 29.
66. See Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238 at 244; S M Waddams, The Law of Contracts (4th edition, Canada Law Book, Toronto, 1999) at para 351; and L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 274.
67. A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 302.
68. An intention to cancel it is required: R F Norton, A Treatise on Deeds (2nd edition, Sweet & Maxwell, London, 1928) at 47-48.
69. According to J Chitty, Chitty on Contracts (28th edition, Sweet & Maxwell, London, 1999) at para 26-019, relying on an English decision under the Bills of Exchange Act 1882 (UK): Hong Kong and Shanghai Banking Corporation v Lo Lee Shi [1928] AC 181. See also L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 278-279.
70. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 279.
71. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 270.
72. Chilcott v Goss [1995] 1 NZLR 263 at 269; and S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 115.
73. S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 115-116.
74. See Birrell v Stafford [1988] VR 281 at 285; and Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636 at 637.
75. Chilcott v Goss [1995] 1 NZLR 263 at 271-272. See also A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 291.
76. Vacuum Oil Co Pty Ltd v Longmuir [1957] VR 456. Sholl J noted that there was no evidence that the employee “had any express or implied authority” to alter the document in question. However, the employee had been put in the position of handling and dealing with the document.
77. P Butt, “Conveyancing: Restitution and the Rule in Pigot’s Case” (1996) 70 Australian Law Journal 872 at 872; and H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 61.
78. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 270. See also G H L Fridman, The Law of Contract in Canada (3rd edition, Carswell, Ontario, 1994) at 474.
79. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 283.
80. See para 2.42-2.52.
81. See Canadian Imperial Bank of Commerce v Skender [1986] 1 WWR 284 at 288.
82. H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 62.
83. Although some commentators would treat all third parties as “strangers”: see L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 284. See also H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 60.
84. Pigot’s Case (1614) 11 CoRep 26b at 27a; 77 ER 1177 at 1178.
85. Davidson v Cooper (1844) 13 M & W 343 at 352; 153 ER 142 at 146.
86. Davidson v Cooper (1844) 13 M & W 343 at 344; 153 ER 142 at 143.
87. See argument before Martin B in Crookewit v Fletcher (1857) 26 LJ Exch 153 at 159. The question was expressly reserved by Lord Herschell in Lowe v Fox (1887) 12 App Cas 206 at 217.
88. J Chitty, Chitty on Contracts (28th edition, Sweet & Maxwell, London, 1999) at para 26-019; S M Waddams, The Law of Contracts (4th edition, Canada Law Book, Toronto, 1999) at para 351; G L Williams, Joint Obligations (Butterworths, London, 1949) at 143; W R Anson, Anson’s Law of Contract (26th edition, Clarendon Press, Oxford, 1984) at 487 (but see W R Anson, Anson’s Law of Contract (27th edition, Oxford UP, 1998) at 554). See also H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 57.
89. G L Williams, Joint Obligations (Butterworths, London, 1949) at 143. See also H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 61; and S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 113.
90. Birrell v Stafford [1988] VR 281 at 285.
91. [1995] 1 NZLR 263 especially at 270.
92. Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636 at 649.
93. Halsbury’s Laws of Australia (Butterworths) at para 140-260. See also Chilcott v Goss [1995] 1 NZLR 263 at 269-270.
94. (1887) 12 App Cas 206 at 216-217.
95. (1598) Cro Eliz 626; 78 ER 866.
96. G H L Fridman, The Law of Contract in Canada (3rd edition, Carswell, Toronto, 1994) at 474.
97. Sim v Large (1980) 22 BCLR 278 at 282.
98. S Williston, A Treatise on the Law of Contracts (3rd edition, Lawyers Co-operative Publishing Co, Rochester, NY, 1972) Vol 15 at para 1885. See also H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 60; and S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 114.
99. American Law Institute, Second Restatement of the Law of Contracts (St Paul, 1981) at § 286. See para 4.9.
100. (1978) 17 SASR 259 at 275.
101. Chilcot v Goss [1995] 1 NZLR 263 at 269-272.
102. As has also been suggested with agents or employees: H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 60.
103. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 284; H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 62. See also Chilcott v Goss [1995] 1 NZLR 263 at 269.
104. Halsbury’s Laws of Australia (Butterworths) at para 140-255. See also Davidson v Cooper (1844) 13 M&W 343 at 345; 153 ER 142 at 143; Brunker v Perpetual Trustee Company Ltd (1937) 57 CLR 555 at 593 (Latham CJ) and at 606 (Dixon J); Hall v Wilson (New Zealand, Court of Appeal, CA164/98, 18 December 1998, unreported); and L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 279.
105. See W R Anson, Anson’s Law of Contract (27th edition, Oxford UP, 1998) at 554.
106. See, for example, Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 267 (Bright J) and at 277 (Bray CJ).
107. Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238 at 248-249.
108. See Birrell v Stafford [1988] VR 281 at 287.
109. See Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 278; Brunker v Perpetual Trustee Company Ltd (1937) 57 CLR 555 at 591-592 (Latham CJ); and the dissent of Halse Rogers J in Keysen v Gregg (1932) 32 SR (NSW) 288 at 294-295.
110. Keysen v Gregg (1932) 32 SR (NSW) 288 at 291-292. See also “The Conveyancer” (1932) 6 Australian Law Journal 95.
111. Ryde Joinery Pty Ltd v Zisti (1997) 7 BPR 15,233 at 15,234 (Cohen AJA). See also Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238 at 245-248; Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at para 91; and Endormer Pty Ltd v Australian Guarantee Corporation Ltd [2000] FCA 1669 at para 56-57.
112. See Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 279 (Bray CJ); and A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 293. This is also clearly the case under the American Restatement: American Law Institute, Second Restatement of the Law of Contracts (St Paul, 1981) at § 286-287.
113. A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 294.
114. A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 295.
115. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267.
116. Although initialling of alterations may be desirable: S MacCallum, “A New Approach to the Unilateral Alteration of Instruments” (1981) 7 Adelaide Law Review 274 at 282.
117. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267.
118. Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 279.
119. A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 296.
120. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 281.
121. S MacCallum, “A New Approach to the Unilateral Alteration of Instruments” (1981) 7 Adelaide Law Review 274 at 282.
122. Ward v Lumley (1680) 5 H&N 87; 157 ER 1112. See also C E Odgers, Odgers’ Construction of Deeds and Statutes (5th edition, Sweet & Maxwell, London, 1967) at 19; Brunker v Perpetual Trustee Company Ltd (1937) 57 CLR 555 at 593; Chilcott v Goss [1995] 1 NZLR 263 at 274-275; S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105; A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 293.
123. R F Norton, A Treatise on Deeds (2nd edition, Sweet & Maxwell, London, 1928) at 35.
124. R F Norton, A Treatise on Deeds (2nd edition, Sweet & Maxwell, London, 1928) at 37.
125. Agricultural Cattle Insurance Co v Fitzgerald (1851) 16 QB 432 at 440-441; 117 ER 944 at 947.
126. See A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 300-301; S MacCallum, “A New Approach to the Unilateral Alteration of Instruments” (1981) 7 Adelaide Law Review 274 at 283-284; Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at para 48-60; Morton v Black (1986) 4 BPR 9,164 at 9,167; and Baron v Upton [2000] TASSC 20 at para 9-10.
127. Breskvar v Wall (1971) 126 CLR 376. See also Frazer v Walker [1967] 1 AC 569.
128. Including covenants to pay rent: Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at para 59-60.
129. Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1. See also S MacCallum, “A New Approach to the Unilateral Alteration of Instruments” (1981) 7 Adelaide Law Review 274 at 284.
130. S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 110. See also para 2.74.
131. See S Williston, A Treatise on the Law of Contracts (3rd edition, Lawyers Co-operative Publishing Co, Rochester, NY, 1972) at para 1910.
132. See A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 292b.
133. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 286.
134. See N C Seddon and M P Ellinghaus, Cheshire and Fifoot’s Law of Contract (7th Australian edition, Butterworths, Sydney 1997) at para 10.3-10.4; and J W Carter and D J Harland, Contract Law in Australia (3rd edition, Butterworths, Sydney, 1996) at para 705 and 708.
135. See A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 292b.
136. Vacuum Oil Co Pty Ltd v Longmuir [1957] VR 456 at 464.
137. See also H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 75.
138. See L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 288. But see Spector v Ageda [1973] Ch 30 at 49 where the transaction was found to be void notwithstanding the existence of duplicates.
139. S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 110.
140. Morton v Black (1986) 4 BPR 9,164 at 9,166.
141. American Law Institute, Second Restatement of the Law of Contracts (St Paul, 1981) § 286. See para 4.9.
142. In fact s 4 and 17 of the Statute of Frauds 1677 (Imp) no longer applies in any Australian jurisdiction. In New South Wales s 4 was repealed by Imperial Acts Application Act 1969 (NSW) s 8(1) and s 17 was repealed by Sale of Goods Act 1923 (NSW) s 3(1) which substituted s 9 of the Sale of Goods Act 1923 (NSW) which was in turn repealed by Sale of Goods (Amendment) Act 1988 (NSW) s 3.
143. For example, Conveyancing Act 1919 (NSW) s 54A(1). See generally J W Carter and D J Harland, Contract Law in Australia (3rd edition, Butterworths, Sydney, 1996) at ch 5.
144. Zisti v Ryde Joinery Pty Ltd (1996) 7 BPR 15,217 at 15,225.
145. See especially Farrow Mortgage Services Pty Ltd v Slade (1996) 38 NSWLR 636 at 639 where the Court of Appeal refers specifically to “a deed or other written contract”.
146. Ryde Joinery Pty Ltd v Zisti (1997) 7 BPR 15,233.
147. New Zealand, Law Commission, The Property Law Act 1952: A Discussion Paper (PP 16, 1991) at para 58.
148. New Zealand, Law Commission, A New Property Law Act (Report 29, 1994) at 51.
149. H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 76.
150. For example, Pigot’s Case (1614) 1 CoRep 26b; 77 ER 1177 at 1178. See also G H L Fridman, The Law of Contract in Canada (3rd edition, Carswell, Ontario, 1994) at 473.
151. J W Salmond and J Williams, Principles of the Law of Contracts (2nd edition, Sweet & Maxwell, London, 1945) at para 199.
152. Pattinson v Luckley (1875) LR 10 Exch 330 at 334-335.
153. Halsbury’s Laws of Australia (Butterworths) at para 140-470.
154. Bramwell B stated: “where a person claiming to be paid for work did the work under an instrument of contract, that instrument, though altered in a material part, is still the governing document to determine the rights of the plaintiff”: Pattinson v Luckley (1875) LR 10 Exch 330 at 335. See also J W Salmond and J Williams, Principles of the Law of Contracts (2nd edition, Sweet & Maxwell, London, 1945) at para 199.
155. H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 63.
156. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 284; J Chitty, Chitty on Contracts (28th edition, Sweet & Maxwell, London, 1999) Volume 1 at para 26-019.
157. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 285.
158. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 286.
159. S MacCallum, “A New Approach to the Unilateral Alteration of Instruments” (1981) 7 Adelaide Law Review 274 at 275, footnote 11.
160. Subsequent ratification of an alteration would seem to be effective if it is made before the agreement becomes operative: Amalgamated Television Services Pty Ltd v Television Corporation Ltd [1970] 3 NSWR 85 at 90. See also Koenigsblatt v Sweet [1923] 2 Ch 314; and Morton v Black (1986) 4 BPR 9,164 at 9,165-9,166.
161. H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 52.
162. S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 117.
163. S Williston, “Discharge of Contracts by Alteration” (1904) 18 Harvard Law Review 105 at 117, footnote 3.
164. American Law Institute, Second Restatement of the Law of Contracts (St Paul, 1981) Vol 2 at 399 and 400.
165. See H Tarlo, “The Unilateral Alteration of Instruments” (1959) 2 Melbourne University Law Review 43 at 54.
166. Petro Canada Exploration Inc v Tormac Transport Ltd [1983] 4 WWR 205 at 210-211.
167. L Friedlander, “Unilateral Alteration of Contracts in Canada” (1996) 11 Banking and Finance Law Review 267 at 275-276.
168. R Newlinds, Submission at 2.
169. Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238 at 247.
170. Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 276.
171. Goss v Chilcott [1996] AC 788 at 797.
172. Goss v Chilcott [1996] AC 788 at 799. See also P Butt, “Conveyancing: Restitution and the Rule in Pigot’s Case” (1996) 70 Australian Law Journal 872.
173. Canadian Imperial Bank of Commerce v Skender [1986] 1 WWR 284 at 288.
174. For example, if the promisee has changed his or her position. See A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 297-299.
175. See A Beehag, “Unilateral Alterations to Mortgage Documents” (1997) 8 Journal of Banking and Finance Law and Practice 289 at 299-300.
