Krelinger v New Patagonia Meat Company [1914] AC 25

House of Lords

Basic Facts: W agreed to lend £10,000 to Y, a meat-preserving company, secured by a floating charge. The agreement included a provision restricting Y from selling sheepskins to anyone other than W for five years. Y repaid the loan early and began selling to others.

Issue for the Court: When does a collateral benefit clog or fetter the right to redemption?

Held: The court upheld that collateral advantages could survive the redemption of the mortgage.

• Viscount Haldane LC stated that a mortgage cannot be made irredeemable. Collateral benefits are permissible if they do not clog or fetter the right to redemption. If the collateral benefit is independent of the mortgage and does not impair the right to redeem, it is enforceable. Lord Parker agreed, noting that collateral advantages must not be unfair, unconscionable, or contrary to the right of redemption.