Facts: In this case two yacht owners (Clarke and Dunraven) entered a regatta, agreeing in writing to be bound by all the yacht club’s rules.
Importantly, this included an agreement to pay any damages caused to another yacht by fouling.
Dunravens’s yacht caused Clarke’s yacht to sink and Clarke sued.
It was held that the contract signed with the yacht club consituted a collateral contract with ALL THE OTHER PARTICIPANTS and that Dunraven would be liable under this contract.
Point of Law: Where a contract is made with a third party, who is also contracting with others for the same purpose and on the same terms, a collateral contract will form, which will be binding on all the parties notwithstanding the fact that they have not actually contracted with each other.