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Present: Viscount Haldane, Lord Wrenbury, and Lord Blaneshurgh*NOORBHAI et al. v. KARUPPAN CHETTY.
C. Colombo, 8,290.
Contract—Sale of goods—Repudiation of contract—Consensus ad idem.Plaintiff entered into a contract 'with defendant to buy sugarat Rs. 37 • 50 per bag. A few days later, in the course of a letterto the defendant, the plaintiff gave the price as Rs. 34, which thedefendant promptly corrected. The defendant declined to deliverthe sugar on the ground that the contract was no longer binding.In an action for damages for breach of contract brought by theplaintiff—
Held, that there had been no repudiation of the contract, as thedefendant did not accept plaintiff’s attempt to revoke the contract.
A PPEAL from a judgment of the Supreme Court.1 The facts areset out in judgment of the Judicial Committee of the PrivyCouncil. *
July 13, 1925. Delivered by Lord Wrenbury :—
For brevity the plaintiffs are in the following judgment referredto as the buyer and the defendant as the seller.
This is the buyer’s action for damages for breach of a contractfor the sale of sugar. He claims repayment of Rs. 7,500, which hepaid as an advance on the price of the goods, and damages fornon-delivery of the goods sold. The question in the case, and theonly question, is contract or no contract. The trial Judge held thatthere was no contract. Two of the Judges in the Supreme Courtwere for affirming his decision, but were not agreed on the groundswhich they assigned for that conclusion. One held that there wasa contract, but that the buyer was estopped from relying upon it;the other that there was no contract and that no question of estoppelarose. The Chief Justice, on the contrary, held that there was aconcluded contract, and was unable to see how there could be anydoubt in the case. Their Lordships are of the same opinion as theChief Justice.
For the decision of the case there is no need to travel beyond thevery elementary proposition of law that a contract is concludedwhen in the mind of each contracting party there is a consensus adidem, and that a modification or revocation of the contract requiresa like consensus.
The facts lie in a very small compass. On February 16, 1923,Kandappa Pillai, a broker, was instructed by the buyer to arrange
1 26 N. L. R. 161.
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Noorbhai >Karuppan< hefty
for him a purchase of sugar. The authority of the broker is not indispute. He went on that day to the seller, arranged with him forthe purchase of 1,500 bags at Rs. 37*50 per bag, and gave him acheque for Rs. 7,500 as an advance, at the rate of Rs. 5 per bag.The seller cashed the cheque the same day. He signed and gave thebroker the document D 1, which was the seller’s memorandum ofthe contract and acknowledgment of the receipt of the Rs. 7,500.That document is as follows :—
16. 2. 1923.
The receipt rewritten and granted to T. A. J. Noorbhai by S. P. L. K. R.Karuppan Chetty. I acknowledge receipt of a sum of Re. 7,500 by CharteredBank cheque as advance for the sale to you of 150 tons of Java s t 'ar atRs. 37 * 50 per bag c. i. f. to be delivered to you as follows :—
* Fifty tons as February shipment, 50 tons as March shipment, 50 ; ons asApril shipr’.'jnt in terms of the conditions of the Indent entered intoby me with Messrs. Carson & Co.
On the arrival of each shipment the entire value should be paid anddelivery taken.
(Signed) S. P. L. K. R. KARUPPAN CHETTY.
There was, therefore, a contract signed by the defendant, theseller, and part payment made by the plaintiffs, the buyer. Therewas a concluded contract between the parties. The broker gave D 1to the buyer on the same February 16, and it seems to haveremained in his possession for three days, until February 19.On February 19 the broker took D 1 back to the seller to have somewords added as to delivery by “ weighing without slackage andmoisture, as usual ” (upon which nothing turns). The words wereadded and signed by the seller, and the broker took the documentback again and handed it to the buyer. Whether it reached thebuyer’s hands until after February 20, when he wrote the letter ofthat date next stated, does not appear.
On February 20 the buyer wrote the letter D 2, which is asfollows :—^
Colombo, February 20, 1923.
S. P. L. K. R. Karuppan Chetty, Esq.,
Dear Sir,—With reference to the contract purchasing from you 1,500 bagsJava sugar (February, March, and April shipment of 500 bags monthly), atRs. 34 per bag ex bond through broker Kandappa, we have to inform you thatalthough we made an advance of Rs. 7,600 by C. B. cheque dated February16, 1923, towards the contract, we have not yet received the contract signedby you.
We would, therefore, ask you to send the contract duly signed by youwithout any further delay, to avoid unnecessary steps being taken on thematter.
(Signed) T. A. J. NOORBHAI & CO.
P.S.—We are daily inquiring from broker re delay of the contract, and inreply he says that he was told by your Manager that you are gone to estateand expected to-day. Therefore we write you now this letter.
In fchis letter the buyer states that the price was Rs. 34 per bag.ItwasnSt. It was Rs. 37-50. Whether the buyer had forgottenthe price, and not having D 1 before him at the moment, madethis statement innocently (which is improbable), or whether heintentionally stated a lower price makes, in their Lordships’ opinion,no difference. The seller promptly corrected him by his letter ofFebruary 21, D 3, in which he says, and correctly, that thecontract price is Rs. 37-50 There is no possible question ofestoppel. The misstatement which the buyer made was not actedupon by the seller in the faith that it was accurate. He knew itwas not accurate, and immediately said so.
But the buyer’s letter of February 20, the seller says, was arepudiation. Their Lordships find in it no trace of repudiation.It speaks of “ the contract ” (naming, it is true, an erroneous price),states that the buyer has made an advance of Rs. 7,500 towards thecontract, and says that the buyer has “ not yet received the contractsigned by you ” (which was hot the fact, unless “ the contract ”means D 1 with the additional words at the end which possiblyhad not yet reached his hands). There was, in their Lordships’opinion, no repudiation.
But, further, if that letter can be read as a repudiation by thebuyer, he as one of the parties to the contract could not avoid itof his own mere motion. The seller might either accept or rejectthe buyer’s attempt to revoke it. The seller promptly replied onFebruary 21, insisting on the contract and requiring the buyer tosend the contract duly signed by the buyer. There was no consen-sus ad idem, to a revocation. On February 23 the buyer wrote againasking for “ the contract signed by you.”
This really makes an end of the case. The fall in the price ofsugar which the seller suggests was the incentive to the buyer toseek to get out of the contract to buy at Rs. 37 -50 was followed bya rise, which made it to be the seller’s interest to seek in his turn tosay there was no contract. On March 22 the seller returned theRs. 7,500 and wrote that he was disposing of the goods. On thesame March 22 the buyer sent the seller’s cheque back again andinsisted on the contract. The subsequent letters add nothing whichin any way affects the question at issue. In April the first consign-ment of the sugar arrived. The buyer asked for delivery, the sellerrefused to give it, and on April 21 this action was commenced.
From that which has been stated it results that the buyer isentitled to recover. The appeal succeeds. There must be judgmentfor the plaintiffs for the Rs. 7,500 which they have paid and fordamages. The case must go back to the District Court to assessthe damages. The plaintiff must have their costs in the Courtsbelow and before this tribunal. Their Lordships will humbly adviseHis Majesty accordingly.