Charnock v Liverpool Corporation [1968]

Court: Court of Appeal

Facts: After Charnock's car was damaged, his insurer sent it to Liverpool Corporation's garage for repairs. The insurer entered into a contract with Liverpool Corporation to cover the cost of the repairs. Charnock, the car owner, subsequently sued Liverpool Corporation for breach of contract due to delays in the repair process. Liverpool Corporation argued that there was no direct contract between them and Charnock.

Issue: Whether a collateral contract existed between Charnock and Liverpool Corporation for the repair of the car, despite the involvement of an insurance company that would indemnify Charnock.

Held: The Court of Appeal allowed Charnock's claim. The court found that there was a collateral contract between Charnock and Liverpool Corporation for the timely and skillful repair of the car.

Key Judicial Statements:

• Harman LJ: Emphasized that when a car owner requests a repair and the garage accepts, a contract is formed to carry out the repairs with reasonable skill and within a reasonable time. The involvement of the insurance company to cover the cost does not negate the existence of a separate contract between the car owner and the repairer.

• Salmon LJ: Concurred with Harman LJ, asserting that there was a clear contract inferred from the facts between the garage and the car owner. The contract implied that, in exchange for the car owner leaving the car for repair, the garage would perform the repairs promptly and with care, with the cost being covered by the insurance company.

💡 Leveluplaw: This case highlights that the existence of a collateral contract is not precluded by the involvement of a third party, such as an insurer. The decision confirms that a direct contractual relationship can exist between the original parties (e.g., car owner and repairer) even if the cost is covered by a third party. It underscores the importance of recognizing and enforcing such collateral contracts, ensuring that contractual obligations are met regardless of third-party indemnification.