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Present: Bertram C.J. and Schneider J.1982.
ADAMJEE IiUKMANJEE v. FBADD & CO.
D. C. Colombo, 488.
Contract—Agreement to deliver oil f.o.b. at a fixed price—-Payment,against mate’s receipts—In the event of shipment being hinderedby the buyer, payment to be not later than three days after noticethat oU teas ready for shipment—Duty of buyer to nominate steamerwithin reasonable time.
The -lefendant agreed to deliver in December, 1920, 100 tons ofoil in pipes in good merchantable condition. The price was Axedf.o.b. Payment was to be against mate’s receipts, but in theevent of shipment being in any way hindered by the buyer,payment was to be not later than three days after notice wasgiven to the buyer that oil was ready for shipment.
Held, that as the contract was that delivery shall be made withina certain time f.o.b., it was implied that the buyer will nominatea steamer on board which the delivery was to be mado, and thatthe nomination shall be given within a reasonable time so as toallow of the goods being put into a deliverable state.
Held, further, that the clause as to payment did not render itnecessary for. the defendants to put the oil into a deliverable state *before the expiration of December 31, and to put it at defendantsdisposal before that time, if the buyer had failed to give reasonablenotice of the steamer for shipment.
^ HE lacts appear from the judgment.
Drieberg, K.C. (with him F. H. B. Koch, M. W. H. de Silva, andGarvin), for appellants.
Hayley (with him Loos), for respondent.
September 20, 1922. Bertram C.J.—
This is an action for the recovery of Bs. 6,500 as damages allegedto have been sustained by reason of the wrongful failure of thedefendants to provide freight, or to give due notice for the delivery,or to take delivery of 100 tons of coconut oil ordered by the defend-ants from the plaintiff.
I am unable to see that the appellants have made out any case.Defendants ordered from plaintiff 100 tons of oil for delivery in thecourse of the month of December. The contract provided that theoil should be in pipes with small packages as customary to suitstowage; delivery was to be made in December, 1920, in good mer-chantable condition, and the price was fixed f.o.b. ' The plaintiff,
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therefore, was under an obligation to deliver the oil, packed in themanner described, on board the steamer. Defendants were givento understand that the oil would be ready towards the end of themonth. Acting on this understanding, they made provisionalarrangements for freight, and the steamer, by which they expectedto ship the oil, was due on the 31st. On the 31st or the- 1st thedefendants received an invoice indicating that the goods were attheir disposal. No nomination of any steamer was, in fact, given bythe defendants to the plaintiff until January 1st, and it is obvious,to say the least, that it would be extremely difficult for the oil tobe put in a state to enable it to be delivered on a steamer at suchshort notice as these facts would imply. Every effort was made bythe defendants to get the oil shipped by the steamer. Their originalarrangements had been provisional, but, on receiving the invoicedated December 31, they booked freight definitely. But the oilwas, in fact, not ready for shipment until January 2, and by thattime the steamer had sailed. The oil had been inspected by thedefendants’ Manager, but at that time it was not packed in themanner provided for by the contract, but was in various receptaclesready for inspection. The arrangements for shipping the oil havingthus broken down, defendants refused to accept the oil as a deliveryunder the December contract, and this action was brought to enforcethe claim of the defendants.
Before considering the law on the subject, it may be well to say afew words on the facts. The defendants were no doubt naturallyannoyed that their arrangements for shipping the oil had brokendown, but they themselves were really to blame for this result.Had they made any inquiry from the plaintiff as to the precisedate when the oil would be available, or had they intimated to theplaintiff the provisional arrangements they had made with regardto freight, there seems little doubt that the oil might have beenready in good time. There is, indeed, a peculiar circumstance in therelation of parties to such a contract. The buyer may nominate aship, but the seller may decline to get the goods ready, or to supplythem at all up to the end of the month. The solution is that it isimplied that there will be between the two parties an interchange ofinquiries either by post, or by word of mouth, or by telephone, sothat the necessary arrangements may be mutually adjusted. Thebqyer might inquire: “ When is the oil likely to be ready?” Theseller might intimate: ” I am making arrangements to ship fhe oilon a certain date, will it be ready at that time?” But in the presentcase nothing of this sort was done. It was understood that the oilwould be ready in the last few days of the month, and both buyer andseller left the question of further adjustment to drift. We haveconsequently to inquire, -what is the strict legal position?
Now, in this case, the plaintiff to a certain extent rests his caseupon custom. He claims that by the local mercantile custom certain
Fradd db Co.
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conditions are annexed to contracts of this description. Theseconditions have, indeed, recently been codified by the Chamber ofCommerce, and it is definitely stated by two mercantile witnessesthat this codification crystallizes the existing custom. Thatcodification, however, took place after the breach complained ofin this action, and we must look to the definite oral evidenceof custom called by the plaintiff, and, in particular, to that of Mr.Prei. Mr. Prei states clearly that in contracts of this description,the custom is for the buyer to nominate a steamer, and for the sellerto get the goods ready for shipment by that steamer. The goods,according to Mr. Frei, are, according to the custom, not made readyuntil the nomination is received. The nomination must be givenwithin a reasonable time, so as to allow the sellers to put the goodsInto a deliverable state. There is some difference between the twowitnesses called by the plaintiff. Mr. Frei contemplates two notices—one, a notice to inspect the goods; another, a notice that the goodsare ready for delivery. The other witness called by the plaintiffseems to contemplate only one notice, but the difference is not reallymaterial, because, in the present case, it is clear that two notices arecontemplated. The evidence of Mr. Frei seems to be quite clear, thatcustom does annex to a contract of this description a condition thatthe buyer shall give notice of the steamer to the seller, but even inthe absence of such evidence, I should be of opinion that this wasimplied by the terms of the contract. When the contract says thatdelivery shall be made within a certain time f.o.b., it is clearlyimplied that the buyer will nominate a steamer on board which thedelivery is to be made. It seems also implied from the circumstancesof the case that the nomination will be given within a reasonabletime, so as to allow of the goods being put into a deliverable state.
We are, therefore, in this position:Plaintiff was ready and
willing, at a time within the interval stipulated for, viz., the monthof December, on receiving reasonable notice that freight had beensecured on board a steamer, to deliver the goods free on boardthe steamer. The defendants failed to give the necessary notice.They did, indeed, after the month had expired, give a notice, whichwas not a reasonable notice. I express no opinion' on the pointwhether the ssellers might have refused altogether to accept thisnotice. However, they did accept it, and endeavoured to get thegoods ready, but the goods could not be got ready in time. Theythen bring this action calling upon the defendants to pay for theoil which they had ordered. The defendants, on their side, set up anentirely different interpretation. They say, on this contract it wasfor the sellers to take the initiative; we could not fix anything; itwas for the seller to tell us that the oil was ready; it was for them todeclare the oil ready for inspection or shipment, and for us then to findfreight; and, indeed, the contract itself provided that if defendantsdid not find freight, the sellers, having given us notice of inspection,
Fradd da Co.
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could put the oil into a deliverable state and call upon us to paywithin three days. I will not say that this is not a possible inter-pretation of the contract, but if it were the true interpretation ofthe. contract, then the codification of local mercantile custom recentlyenacted by the Chamber of Commerce would not be a crystallizationof that custom, but a revolution. The experts are clear that it isa crystallization, and it appears to me that the evidence of customgiven by Mr. Frei must be accepted, and that, if the contract be readin the light of that custom, it is dear that the true interpretationof the contract is that which I . have above stated, and not theinterpretation which, not without plausibility, is suggested bythe defendants.
Mr. Drieberg, however, carries the argument further. He says,even though it be assumed they were bound to give reasonablenotice of the steamer and failed to do so, nevertheless, even so, theplaintiffs have failed in their obligations. They were under anobligation, so he contends, to put the oil into a deliverable statebefore the expiration of December 31, and to put it at defendants*disposal before that time. This obligation, he says, was the essence. of the contract. If this had been done, and if the oil had been readypacked as contracted for by the end of December 31, it could easilyhave been shipped on the. steamer for which defendants had securedfreight. From what source does Mr. Drieberg get this supposedobligation on the part of the plaintiff to have the oil ready for ship-ment by the evening of December 31? He gets it from a clausein the contract, which runs as follows::—
“ Payment against mate’s receipts; but, in the event of shipmentbeing in any way hindered by buyers, payment shall bemade not later than three days after notice has been givenbuyers that the oil is ready for shipment, due notice beinggiven them when it is ready for inspection. ”
From this clause Mr. Drieberg wishes us to deduce the obligationsuggested. This argument, however, is based upon what in myview is a misconception of the place of the clause in the scheme ofthe contract. This clause merely deals with the question of pay-ment. Payment ordinarily is to be made on mate’s receipts, but, inthe event of anything being done by the buyers to hinder shipment,the contract gives the sellers the right, after first giving due noticethat the oil is ready for inspection, to get it ready for shipment, and,having given notice of shipment, to call upon the buyers to paywithin three days. This is a privilege which the clause confersupon the sellers; it is not an obligation which it imposes upon them.
I do not think any such obligation can be. deduced from this clause,all the more so, as the suggested obligation is quite inconsistent withthe course of business described by Mr. Frei, who says explicitly that ’it is usual for inspection to take place before the goods are madefinally ready for shipment.
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Only one other point was raised : the question of. damages. Thiswas a forward contract. The only evidence of the loss sustained bythe plaintiff was evidence of. another forward contract made byhimself early in January for delivery at the end of February. Mr.Drieberg argues that he ought to have evidence of the free market,price at the date of the breach. But the evidience is that there wasno such market price. It is agreed that the market was falling,and It appears clear that the only method of testing the .extent towhich the market had fallen, and consequently the loss of the plaintiff,was by comparing the price of this forward contract with a similarforward contract. I think, therefore, that the learned District Judge,who has gone very fully into the matter, was justified in acting onthis evidence.
In my opinion, therefore, the appeal must be dismissed, withcosts.
Schneider J.—I agree.
Fradd <b Co.
ADAMJEE LUKMANJEE v. FRADD & CO