056-NLR-NLR-V-26-MERCANTILE-AGENCY-v.-ISMAIL.pdf
( 326 )
1924.
Present : Ennis J. and Javewardene A.-J.MERCANTILE AGENCY v. ISMAIL.
59—D. C. Colombo, 5,795.
Sale of good*—Broach of contract—Assessment of (hi mages—Hale ofexchange.
Where upon the breach of, a contract ’ tlw person in defaui;becomes liable for the payment of a sum of money in foreigncurrency, the damages, for the purpose of the judgment, must beassessed as at the date of default, and the sunT payable must 'beconverted to local currency at the rate of exchange prevailing atthat date.
The defendant committed a breach of his contract when !«•failed to pay the bill on maturity and take delivery of the goods,and not when the goods were sold at his risk.
/
T
HIS was an action arising out of a contract for the sale, ofgoods. The defendant contracted to purchase from tin*
plaintiffs 27 boxes of embroidery for the price of .€212. 19*. lid. with
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interest at 8 per cent, per annum from April 20, 1920. Paymentwas to be made by bills drawn on the defendant', who agreed toaccept them on presentation and pay on maturity. The defendantfailed to pay the bills on maturity and to take delivery of the goods.In terms of the contract plaintiffs sold the goods in July, 1921, andthey realized a sum of Ks. 1,900 equivalent to €121. 14#.Plaintiffs sued to recover the balance €119. 3#. %/. being theamount of the deficiency. In converting the amount due t-o localcurrency, the plaintiffs did so at the rate of exchange prevailingat the date of the plaint. The defendant contended that the fconversion should be at the rate of exchange ruling .at the date hecommitted the breach of contract. The District Judge held thatthe amount due to the plaintiffs must be ascertained according tothe rate prevailing at the day the goods were sold by the plaintiffs,viz., July 28, 1921.
Drieberg, K.C. (with him Choksy), for defendant, appellant.
Croos Da Brcra, for plaintiffs, respondents.
October 20, 1924. Exnis J.—
This was an action for the price of goods sold and delivered. Theplaintiffs drew a bill on the defendant for €212. 19#. lid. payablein one month’s time which the defendant accepted. On thearrival of goods the defendant- refused to take delivery, and refusedto pay the bill on maturity (/.#., August 30, 1920). The contractcontains a special provision by which the plaintiffs could sell thegoods in such an event. The goods were sold in July, .1921. The*learned Judge gave judgment for the plaintiffs, and directed thatthe sterling sum should be calculated in rupee currency as nu thedate of the sale of the goods.
On the appeal there is but one question for decision, viz., whetherthe rate of exchange should be taken as on August 80. 1920. or asin July, 1921, as directed by the learned Judge.
Primarily the rate of exchange must be taken as at the date ofdefault in payment, viz., August 30, 1920, when the bill of exchangebecame payable, but it was urged that the defendant had aske<l fortime for payment. The learned Judge on this point says that “ thegoods were not sold eaVlier owing to the negotiations between theparties which were mainly at the defendant’s instance/' and so hedirected the exchange to be calculated as on the day of the sale ofthe goods. The Ceylon authority on the’subject is the case ofHarrison <6 Crosfield v. Adamally/ which cites the English case ofOgle v. Earl Vane.-
The present case is very similar to Harrison «C Crosfield v. Adanudly(supra). It has not been established in the present case thatthere was a request on the part of the defendant to extend the time1 S C. IV. B. 32.2 U8$8) L. It. 3 Q. B. 272.
1024.
Mercat/fihc
Afftncy r.I*wnit : *•
( 328 )
IStfKIS J.
MercantileAgency v.J&nail
for delivery, and the evidence does not support the suggestion thatthere was a new contract subsequent to the breach. Some negotia-tions for a reduced price were entered into, but -no agreement wasarrived at. In the circumstances the price realized on the sale ofthe goods goes in reduction of the amount clue on the date of default,taken at the rate of exchange on that date.
I would allow the appeal to this extent, with costs, on the appeal.
Javewardexe A.J.—
This is an action arising out of a contract for sale of goods. Thedefendant on an agreement contained in letters that passed betweenthe parties and embodied in indent P 2 contracted to purchase fromthe plaintiffs 27 boxes of embroidery for the price £212. 19*. lid.with interest at 8 per cent, per annum from April 20, 1920. Paymentwas to be by bills drawn on the defendant who agreed to accept themon presentation and pay on maturity. The goods duly arrived, butthe defendant failed to pay the bills at maturity and to take deliveryof the goods. Under a term of the contract the plaintiffs sold thegoods in July, 1921, and they realized a sum of Rs. 1,900 equivalentto £121. 148. 4d. The plaintiffs now seek to recover the balancewhich they say amounts and £119 3s. 3d.*t .£91 58. 6Jd. being theamount of the deficiency and £28. 3*. 9d. being interest up to June30, 1922. These facts are not seriously disputed. The plaintiffs inconverting the amount due to local currency seek to do so at therate of exchange ruling at the date of the plaint. The defendantcontends that the conversion should he at the rate of exchangeruling at the date he committed the breach of his contract. *Thelearned District Judge has held that .the amount due to the plaintiffsmust be ascertained according to the rate prevailing on the day -the goods were sold by the plaintiffs, namely'. July 28, 1921. Thisis the main question argued on appeal. As regards the contentionof the defendant that the goods were purchased by him accordingto an agreement entered into between the parties after the breach, andthat the payment of the sum of Rs. 1,900 as the price of the goodsextinguished his liability on the contract, the learned Judge hason the facte found that that sale was not to the defendant, but to athird party, and I see no reason to doubt the correctness of hisdecision on the point. On the question of the rate of exchangeapplicable, I am not certain* that the learned Judge has come to aright conclusion. It has been held in numerous cases thatwhere upon the breach of a contract the person in default—whetherbuyer or a seller—becomes liable for the payment of a sum of moneyin a foreign currency, the damages, for the purpose of . a judgment,must be assessed as at the date of default, and the sum payable mustbe converted into local currency according to the rate of exchangeprevailing at that date: Bary v. Van den Hurk,l Labeaupin v.
1 [1920) 2 K. B. 709.
( m )Richard Crispin tfc Co., 1 ZM Ferdinando v. Simon Sviits %C Co.; 2 and
«s. Celia v. ss, Valtoma 3, where the previous cases were approved by .Jaybwar*
the House of Lords. Therefore in this case the amount the PENE A-J<
defendant has to pay must be calculated according to the rate of Mercantile
exchange prevailing at the date the breach was committed. In my
opinion, the defendant committed a breach of his contract when he
failed to pay the bill on maturity and take delivery of the goods.
.This happened in July, 1920. From July, 1920, till the sale of thegoods on July 28, 1921. negotiations went on between the parties.
The defendant positively refused to pay the amount appearingon the bill of exchange and wanted a reduction.. Correspondencepassed between the parties for the purpose of a settlement, but theyfailed to arrive at an agreement, and the goods were sold on July 28,
1921, at the defendant’s risk. There was, therefore, no variation ofthe terms of the original contract, and the rights and liabilities ofthe parties must be decided according to the terms of the contract.
But the plaintiffs’ counsel contends that the breach must beregarded as having taken place when the goods were sold on thefailure of the negotiations, and he relies on the principle laid down inthe case of Ogle v. Earl Vane (supra) and Hickman v. Haynes. 41 haveexamined these cases, but I cannot find in them any principleapplicable to the question arising here. In Ogle v. Earl Vane (supra)there was a breach of contract to deliver certain iron. The purchaserat the request of the seller granted an extension of time for thedelivery of the iron. Ultimately, the seller failed to deliver the ironcontracted for, and the purchaser bought in the open market. Atthis time the price of iron was much higher than what it had been atthe date of the breach. It was held that the buyer was entitled torecover as damages the difference between the contract price and theprice he actually paid for the iron. Hickman v. Haynes (supra) wasthe converse case; there the seller abstained from delivering the goodsat the request of the buyer made both before and after the date fordelivery under the contract. The seller was held entitled to thedifference between the contract price and the price prevailing at thetime when the buyer finally refused to accept the goods. Postpone-ment of delivery* in these cases was held to be mere forbearance hyone party at the request of the other, and not the formation of a newcontract nor an abandonment of the original one,. and that eitherparty might at any time have insisted upon his rights under theoriginal contract. In the present case there was no mere post-ponement of delivery at the request of the buyer, but a refusal onhis part to pay the price agreed upon. The parties were nego-tiating about the reduction -of the price, and if the.negotiations hadbeen successful, a new contract would have been formed. In takingthe view that the original contract was still subsisting * and not
3 {1921) 2 A. C. 9224, SSI, SS2.
* (1S7S) L. R. 10 G. P. SOS.
(1920) 2 K. B. 714.
(1920) 3 K. B. 409.
1924.
.1AYBWAU*
I*KNK A. J.
Mercantile
A<m>r,y'v.
iwttail
( 330 )
abandoned, the Court lias taken a view very favourable to theplaintiffs, and it is fortunate for them that the defendant had notraised tire defence that the original contract had been rescinded.There is no evidence that the plaintiffs had suffered any damageby having to sell the goods in a falling market. I cannot seemi what principle they could ask that the rate of exchange at whichthe pound sterling should be converted should be the rate prevailingat the date when the goods were sold to a third party and not at thedate the defendant committed a breach of his contract and becameliable in damages. The plaintiffs, as I have pointed out, did not askllmt the rate should be fixed as allowed by the Court, but that theamount due to them in sterling should be converted according to therate prevailing at the date of the institution of the action. This,as I have pointed out cannot be the basis of conversion according tothe authorities. The rate according to them is the rate prevailingwhen the breach occured. The amount due to the plaintiffs will becalculated on this basis.
The defendant will have the costs of appeal, but he will pay theplaintiffs’ costs in the lower. Court as decreed.
Judgment varied.