Charnock v Liverpool Corporation [1968] 3 All ER 473

Key point

  • The fact that the third party to a contract will be indemnified by one of the contracting parties does not prevent the inference of a collateral contract between the third party and the other contracting party

Facts

  • When C’s car was damaged, C’s insurer sent it to repair at D’s garage
  • The insurer entered into contract with D to pay for the cost of repairs with D
  • C sued D for breach of contract for delay in repairs
  • D argued there was no contract between them

Held (Court of Appeal)

  • C claim allowed
  • There was a collateral contract between C and D to repair the car within reasonable time

Harman LJ

  • When a man asks the garage to repair his car and the garage accepts, there a contract is made to do the repairs with reasonable skill and in a reasonable time
  • The fact that the insurance company will indemnify the car owner is well known in all insurance cases to both parties
  • That does not, in my view, at all rule out the existence of a contract between the person who owns the car and the repairer

Salmon LJ

  • In my view, there was a clear contract to be inferred from the facts between the garage proprietor and the car owner that in consideration of the car owner leaving his car with the garage for repair the garage would carry out the repairs with reasonable expedition and care, and that they would be paid by the insurance company