Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221
Contract; performance; divisible contracts.
Facts: Phillips was employed to work as a manager for Ellinson Brothers for a period of two years. At the end of his employment, he was to be paid a percentage of the profits made by the company during that period. Under the agreement, Phillips was obliged to spend 160 hours each month working for Ellinson Brothers. However, after an initial period, Phillips reduced his work for Ellinson Brothers to 60 hours per month. This was done by informal arrangement between the parties, but the original contract was not varied. At the end of the two year period, Phillips claimed the agreed payment.
Issue: Was Phillips entitled enforce the contract and claim payment?
Decision: Phillips was not entitled to claim payment by enforcing the contract because he had not performed his obligations as specified under the contract.
Reason: The court treated the agreement as a single, indivisible contract for a period of two years, during which Phillips was required to work 160 hours each month. His failure to work these agreed hours for the whole period meant that he had not performed his obligations. Starke J said (at 233 - 4):
"It is a principle of English law that parties having contracted to do an entire work for a specific sum can recover nothing unless the work be done or it can be shown that it was the other party's fault that the work was incomplete or that there is something to justify the conclusion that the parties have entered into a fresh contract.... If the contract be indivisible and not severable, then nothing can be recovered under the contract unless it be completed according to its terms or a new contract is made or is to be implied from the acts of the parties, giving rise to new rights."
Note: This does not mean that Phillips was not entitled to any payment at all, only that he could not claim the amount as specified in the original contract.