108-NLR-NLR-V-18-THE-ATTORNEY—GENERAL-v.-ABRAM-SAIBO-&-CO.pdf
( 417 )
[Full Bench.]
Present; Ennis, Shaw, and De Sampayo JJ.
THE ATTORNEY-GENEBAL v. ABBAM SAIBO & CO.
369—Z). C. Colombo, 35,575.
Contract for ^thesaleofgoods—Consideration—rBng lish law—Roman-
Dutch law—Implied covenantr-^Penelty.
It was agreed, inter alia,between theGeneral'Manager of the
CeylonGovernmentRailwayand thedefendantthatdefendant
shouldsnpply ricefor oneyear at aspecifiedprice" in such
quantities as may from time to time he required for the generalservice of the railway*'; that the deliveries should be made uponorders signed- bythe Railway Storekeeper;thattheGeneral
Manager should jay for the rice supplied on the 15th day of themonth following .the delivery; that should the defendant fail tosupply the rice ordered the General Manager should be at libertyto purchase elsewhere, and the defendant should pay a certain,penaltyforsuch, default, andalso pay as damagesthedifference
between the agreed price and the price at which the General- Manager bought the rice elsewhere. The defendant supplied ricefor afewmonths and then made defaults The Attorney-General
sued defendant for damages for breach of contract and for forfeitureof the deposit of Be. 350. The District Judge held that, in theabsenceofany undertaking by the General Managertogive any
orders,there wasa failureof consideration fortherespondent’s
promisetosupply during the fixed period, and thattheagreement
was nothing more than a continuing offer, which would become acontract when each separate order was issued.
Held,inappeal (per ShawJ. and Db SampayoJ.),that the
question whether there was consideration to support the contractfor the sale of goods was governed by the English law.
Per Shaw J. and Db Sahpaio J.—-That the terms of the tenderand acceptance were such. as to impose upon the General Manageran obligation to order all the rice required 'for the railway during theyear, and that there was, therefore, consideration for the contract.
Per curia.—That even if the document amounted to offer- only,it must, nevertheless, be considered as having been accepted in itsentirety by the General Manager as soon as the first order was givenby him, and that the contract became thus complete.
T
HE facts are set out m Hie judgment of Ennis J. The contractbetween the General Manager of the Ceylon Government
Bailway and the defendant was as follows.:—
Contract for the supply of Bice to the Ceylon Government Railway.
This Indenture, made this 11th day of October, 1011, between X.Abram Saibo, of Colombo (on behalf of himself, his heirs, Ac.), herein-after designated – *’ the contractor," of &e one part, and * GeoffreyPhilip Greene ■ (General Manager,Ceylon GovernmentBadway, on
ms.
14g. H. Amos (8/60)( 418 )
* 1911vbehalf of himself his successors in office for the time being, and on
Attorneti°*Majesty the King), . hereinafter designated '* the General
manager," of the other part, which cannot lie assigned or sublet
Manager,” of the other part,
Abrwn Saibo without the authority* of the Government :
&&>. e
Witqgsseth,that'in considerationof the covenantsandagreements,
hereinaftercontained onthe part ofthe GeneralManager, thecontractor
■ does hereby? for himself,his heirs, &c., covenant andagree with the
General Manager, and his successors in office as Genp^d Manage? forthe time being, in manner following, that is to say: —
That the contractor shall supply therice rationedjn theannexed
schedule,insuchquantitiesas mayfrom Vhne to timeberequired for
the general service ofthe CeylongovernmentBailway, fromthe 1st
day of November, 1911,to the SlstOctober, IS12,of thequality
describedintheschedule,and inall respects equaltothe sample
deposited and accepted by the General Manager.
ft *4*h9 deliveries shall be made by the said contractor from one to-Shree days after each andevery ordershall have beendeliveredto him.
according to thetime more fullyspecifiedintheschedule, andat the
places andat the pricespecified inthe said schedule, upon orders signed
by the Bailway Storekeeper! '
Audthe GeneralManager agrees withthe aforesaidcontractor
that payment shall be made to the contractor for the rice supplied underthis contract by-means of crossedcheques,atthegeneralofficesof the
railway, on the 13th day ofthemonthfollowing that inwhich the rice
has beensupplied,upon hisproducingreceipts duly signedbythe Eaiiway
Storekeeper or his representative, and on production of claim vouchersproperly prepared in accordance with forms to be supplied on applicationat the office of the Bailway Storekeeper, and duly certified by the eaidBailway Storekeeper. And itisfurtheragreed that noclaim shall be
entertained unless preferred in proper time and on or before the 33thday of November, 1912.
It is hereby agreed that should the rice, or any portion thereof,
offered by the contractor beobjected toby the GeneralManager or his
Assistant, or bythe Bailway Storekeeper,asnotequalto thequality
contracted for, or being ofaninferiorquality to thesample deposited
with the aforesaid Bailway Storekeeper, the contractor shall forthwithremove at his own expensetherejectedrice and replacethe same with '
a like quantityof * unexceptionalquality within aperiodof two days.
The decision of the General Manager as to the quality in all cases to befinal andconclusive,aud shall bebindingonthe Ceylon Government
and the contractor.
Should the aforesaid contractor fail to supply the rice demandedof him within the period specified in clauses 2 and 4 of these articles ofagreement,or on .theorder for delivery, or should he fail to replaceany
rejected article with a like quantity of approved quality within theperiod allowed in clause 4 of this contract, the General Manager shall beat libertyto purchase elsewhere, orprocureatwhatever price hemay
deem fit, such quality of rice as the contractor may have failed to supplyor replace, and the contractor shall be liable to a penalty of Be. 10 perday until the order is completed, or for every such case of default or.delay, in addition toany additionalpaymentforwhich he may beheld
by the General Manager liable or required to make good under clauses4 and 6 of this contract.
( 41» )
•
Should the articlesso purchasedby the General Manager to1016.
replace any* quantity which the contractor may have' (ailed to deliver’
at replace cost more than the price agreed upon under this contract?
the said contractor hereby agrees to pay to the General Manager, on Abram Saibobehalf o( His Majesty theKing, the fullamount of such excess ofcost,<S-Co.
together with all expensesattending thepurchase and* procuring ^of- the
same, in addition to the penalty stated in clause 6.
It is hereby stipulated that the payments to which tile contractor
has made himself liable under clauses 6 and 6 of these articles of agree-ment shall be deducted bythe General Manager from any moneysdue,
or which may hereafter become due, to tire aforesaid contractor underthis or any oiler contract ha may hold with the Ceylon Government, orthat each sum may be recovered by such means or manner as may seemfit to tiie said General Manager.
In case the contractor shall foil to supply on two or more occasionstire rice demanded of him, or shall repeatedly offer an article of inferiorquality, or (Ml to replace the some when rejected, he shell be held tohave failed in tire doe performance of this contract, and be bound topay or forfeit to tire .General Manager, on bqhalf of His Majesty the King,the sum of Bs. SCO which he has deposited as security for tire doeperformance of this contract os penalty for such total failure of thisagreement.
In witness whereof, 4c.
Signed and witnessed.
Qarvin, 8.-0. (with him Fernando, G.C.), for the appellant.—TheDistriot Judge is wrong in holding that there is no mutuality andconsideration for the agreement. The law applicable to the questionof the validity of the agreement is. .the Roman-Dutch law, andnot the English law. Under the Roman-Dutch law considerationwithin the meaning of the English law is not necessary to supportthe agreement. Jvata causa is enough. Upton v. Buchanan.'
There must first be a contract for the sale of goods before theEnglish law can be applied to it, in terms of section 58 of the Sale ofGoods Ordinance of 1895. To decide the question whether there isa valid contract or not, we must turn to the common law, viz., theRoman-Dutch law. .
The section (58) does not say that the rules of the English lawshall apply' to the subject of the sale of goods; the words of the
section are: “ The rules of the English law shall apply to
contracts for the sale of goods, ” that is to say, English law regulatestiie results arising from a completed contract for the sale of goods.
Counsel referred to National Bank of India v. Stevenson.* Theabsence of consideration is not " an invalidating cause ” within themeanihg of that expression in section 58.
Even ^f this, case is governed by the English law, there is con-sideration for the agreement to stipply the rice, because there is animplied covenant on the part of the General Manager of the Railway
i (1904) 8 If. L. R. 49.» (1919) 18 N. L. R. m.
32
mby
AttorneyGeneral u.Abram 8dbo<fe Ge.
I 420 )
to order all the rice required for the purposes of the Railway fromthe defendant, and pay at fixed price for the rice delivered in termsof the agreement.« See The Moorcock,1 Hamlyn v. Wood,2 Fordv.NewVh*
Thi&is in effect a contract to deliver by instalments.
The case relied on by the respondents at the first argument (Queenv. Demers *) is not a binding authority for the proposition that theGeneral Manager, was not bound to buy rice from, the defendant.The exact terms of the contract which was construed in that caseare not set out in the report; and the case turned merely on theconstruction of the document.
The case relied on by the District Judge—Great Northern RailwayCompany v. Witham 5—is no authority for holding thht there is nomutuality and consideration for the contract. The consideration neednot appear on the face of the document. Sven if the documentamounted merely to an offer, on the part of the defendant, it must beconsidered as having been accepted by the General Manager in itsentirety, and for the whole period, as soon as the General Managergave tiie first order for rice in terms of the contract. After oneorder was given it was not possible for the defendant to withdrawhis offer.
Counsel referred to Benjamin on Sales 69, Moon t>. Cumberwell
Samarawickrama (with him Keuneman), for the defendant, re*spondent.—Section 58 of the Sale of Goods Ordinance makes it clearthat the question whether there is consideration for the contract isgoverned by tile English law. Want of consideration is “ aninvalidating cause."
Counsel cited Latchimie v. JamisonJ National Bank of India e.Stevenson.9,
There is no mutuality to support the contract, as the GeneralManager is not bound to give any order for rice to the defendant.
The case of The Queen v. Demers 9 is indistinguishable from thepresent case.
The obligation to deliver rice arises with each order. Till theorder is given {here is no contract; it is only an offer on the part ofthe defendant which he can withdraw before it is accepted.
Counsel cited Leake on Contracts, p. 6. (6th ed.); Hahhuryfvol. XXL, pp. 6 and 7.
Garvin, S.-GK, in reply.
Car. adv. vult.
1 14 Probate Die. 64.
asm 9 Q. B. m.
(Ml) 1 K. B. 683.
(1900) A. c. m.
L. R. 9 C. P. 26..
89 L. T. 595.®
1 (1913) 16 N. L. R. 986.» (1929) 20 N. L. R. 498.
• (1900) A. c. m.
( 421 }
November 80, 1915. Ennis J—
The Attorney-General, the appellant, sued the respondents tgrBs. 2,544.47 and interest, Seing damages for breach of contract *forthe supply of rice to the Ceylon Government Bailway.
On October 11, 1911, the General Manager of the Ceylon govern-ment Bailway entered into a contract with the respondents, by whichthe respondents agreed, inter alia, to supply rice “ in such quantitiesas may be required for the general service of the Ceylon GovernmentRailway from November 1, 1911, to October 81, 1912, ” and theGeneral Manager agreed to pay for the rice at the agreed price. Itwas also agreed that deliveries were to be made .upon orders signedby the Government Railway Storekeeper, and should the respondentsfail to deliver within a specified time, the Genera] Manager shouldbe '* at liberty to purchase elsewhere, ” in which contingency therespondents undertook to pay the General Manager the amount ofthe excess.
A number of orders were given in pursuance of the agreement*,until on June* 18 the respondents wrote cancelling the contract asfrom May 2, 1912, and failed to fill any of the orders given afterMay 2.
The learned District Judge held that, in the absence of any under-taking by the General Manager to give any orders, there was a failureof consideration for the respondents promise to supply during thefixed period, and that the agreement was nothing more than acontinuing offer, which would become a contract when each separateorder was issued. He decreed accordingly in favour of the plaintiffin respect of one order given prior to the respondents* letter of June18. From this decree the plaintiff appeals.
Three points only were- urged for the appellant on the appeal.First, that in any event the agreement sued upon was a good andvalid contract by Roman-Dutch law> and that Roman-Dutch lav/would govern the case; secondly, if English law applied, there wasin the agreement an implied covenant by the General Manager toorder from .the respondents all the rice required for the service ofthe Railway during the term; and thirdly, if not, there was a goodconsideration for the whole contract when the first order Was given.
The first point turns on .the construction of section 58 of the Saleof Goods Ordinance, No. 11 of 1896. This section is taken, withslight variation, from the English Common law, and makes it stillapply to contracts for the sale of goods in all matters upon whichthe Act was silent. The Ceylon section runs :“ The rules of
English law' shall apply to contracts for the sale of goods.
It was argued that .there must first be a contract before English,law cofild apply under this, and that to ascertain whether there wasa contract one must turn to the law of the country, the Roman-Dutch law. “ A contract of sale of goods ” is defined by section 1of the Ordinance to be & contract whereby the seller transfers, or
-jsC
General v.Abram Saibo• gtOo.
O-
t 432 )
<*£'15. > agrees .to transfer, the property in goods to the buyer for a price.
KfoyqTj. A* ** contract ** has been defined (jPollock on Contracts) to be an—t- . agreement which ^produces an obligation. An agreement is0 voidable *’ when it is enforceable by law at the option of one ofA6m&8aibo*the parses but not of the other; it is said to be void when it is not^ ***' enforceable by law. A voidable agreement is valid ’so long as it ishot cancelled* by the party who can avoid it, but a void agreementhas no legal existence. Section 58 of the Ordinance No. 11 of 1806expressly says, with regard .to the application of English law, that
“ in particular the rules relating to the effect of* fraud, ……
duress mistake, or other invalidating cause shall apply, ”
invalidating causes can have no reference to void agreements, fmvnothing could validate a void agreement.
It cannot be contended that the agreement in the present ease isvoid ab initio. There is nothing illegal in it, it is clearly an agree-ment entered into with the free consent of the parties, and is enforce-able, it is conceded, when an order is given. The point has beenobscured by the use of the term “ mutuality. ” As my brotherDe Sampayo pointed out, want of mutual consent would constitute *a failure to make any agreement at all, but the want of reciprocalobligations would at the most be but a ground for making theagreement voidable. The term / want of mutuality ” is used toexpress bothxof these positions, but, strictly speaking, it can applyto the first only. If, then, there is an agreement (which is not void),no question of Roman-Dutch law can arise.
On the second point argued for the appellant, that a covenantbythe General Manager of the Railway must be implied from the .terms of the contract itself, several cases were cited (The Moorcock,*Hamlyn v. Wood,* Ford v. Newth *) to support the proposition that ‘where it is reasonable and necessary to give efficacy to the contracta covenant will be implied. The general rule is found in the case ofThe Moorcock.l * “ The law raises an implication from the presumedintention of both the parties, with the object of giving to the trans-action such efficacy as they both must have intended that- at allevents it should have. ” Whether or not a covenant will be impliedwill turn on the circumstances of each case. If the agreement be aformal written one, as in the present case, the terms of the documentonly can Ik* looked into. This considerably narrows the field forimplication. On this point the respondents rely mainly on thecase of The Queen v. Demers.4 In that case Demers sued upon anagreement made with the Government of Quebec for damages forbreach of contract. In the. contract Demers covenanted to printand bind certain specified public documents for a term of years.He executed the work, and was paid for it, up to a certain time, butthereafter the Government cancelled the contract and did not give
l14 Probate Dit. 04.
* (mi) 8 Q. B. 488.
(1901) 1 K. J3. 683.
am) a. c. io3.( 423 J
•
him any more orders. He claimed damages for the failure of theGovernment to give him the work. It. was found, as a fact, thatthe contract did '* not purport to contain any covenant or obligationof any sort on the part of the Crown. ” The document upon which
the finding is based is not, however, set out in the report*/ pnd the nAbramratio decidendi in the case was: *‘ Assuming the contract to be a <&Ce.good and valid contract, the respondent has not shown that therewas any breach on the part of the Government. ” The case, then, iano authority for the proposition that no covenant can be impliedfrom, the terpas of the contract in this case, because we do not knowthe exact terms of the contract* in Demers1 case, and the questionis one of construction. Demers* case is the converse of the presentcase, and it seems to me-undesirable to decide the point here, andunnecessary because, in my opinion, the contract , shows a sufficientconsideration for the respondent’s promise without implying anycovenant, which is the appellant’s final contention. The contractrecites the following consideration:—“ In consideration of the cove-nants and agreements hereinafter contained on the part of the GeneralManager. ” One of the covenants, contingent upon an order being,given, was to pay a certain fixed price for the rice when delivered.
That price must have been arrived at on a contemplation that theagreement should be in force for the full term, namely, one year;and although the respondents might have withdrawn from thecontract before it was accepted by an order being given, theconsideration for the contract as a whole was perfected, and therespondents could not then put an end to the contract. Thisposition finds some support in certain observations in the case of theGreat Northern Railway Company v. Withamand seems to be th£view taken by Mr. Benjamin.® A contract of the formal nature ofthe document A must, it* seems to me, be regarded os a whole, andshould not be spilt up and considered as a series of contracts severallyperfected each time an order is given.
I would accordingly allow the appeal.
° 1915,*
o
Emns J.
Shaw J.—
The following points were taken on behalf of .the appellant:—
First.—That the question whether or not a binding contract hasbeen entered into must be determined by Boman-Dutch law andnot by English law, and that by Boman-Dutch law considerationwithin .the meaning of the English law is unnecessary, jusla causabeing all that is required.
Second.—That even supposing that English law applies, and thatconsideration is necessary for the contract, .there was* in fact, con-sideration for the agreement to supply the rice during the wholeperiod, because the contract must be construed && containing a 1
1 L, R. 9 €. P. 16.3 Benjamin on Sales, dLk p. 69.
£ 424 )
r J^* 0 promise on the part of the General Manager of the Bailway to orderShaw j. pay for all the rice required for the purposes of the Bailwayduring the period motioned.0
General v.°Third.—That even if there was no complete contract in the
Adocument itself, ahd if that document, merely amounted to an offer,it must, nevertheless, be considered as having been accepted by theGeneral Man&ger in its. entirety, and for .the whole period mentionedin it, as soon as any orders were given pursuant to it.
With regard to the first point, I am clearly of opinion that thequestion must be determined by English and not by Boman-Dutchlaw. Section 68 (2) of the Sale of Goods Ordinance, 1896, providesthat “ the rules of the English law, including the Law Merchant,save in so for as they are inconsistent with the express provirions ofthia Ordinance, and in particular the rules relating to the law ofprincipal and agent and the effect of fraud, misrepresentation,duress, coercion, mistake, or other invalidating cause, shall apply tocontracts for the sale of goods. **
The object of this Odinance, taken as a whole, seems clearly tobe that, apart from any express provisions to the contrary, the *English law relating to the sale of goods, both as to the inception ofthe contract and as to its effect and performance, shall apply in thisIsland. Moreover, want of consideration, which is an invalidatingcause under English law, appears to be one of the particular mattersreferred to in the section I have quoted.
With regard to .the second point, absence of consideration amountsto a want of mutuality, which is essential to a binding contractunder English law. Cook v. Osdey,1 Adams v. Lindsell,2 and thecases of Great Northern Railway Gomprny v. Witham,* Burton v.Great Northern Railway Company * and Moon v. Camberwell Vestry,3show that when a fonder is made-for the supply of such goods as theintending purchaser may subsequently order, the mere acceptanceof the tender does not amount to a binding contract, because ^the"intending purchaser has not bound himself to order all. or indeedany, of the goods. Notwithstanding this, the terms of the tenderand acceptance may be such as to impose upon theN acceptor an^obligation to order all the goods required for the particular businessor purpose during the period specified. – Ford v. Newth,6 IslingtonVestry v. Brentnall and Cleland.7
In the present case the tender and acceptance have been incor-porated into a formal document signed by both parties. By it therespondents undertake to supply rice at the price mentioned, “ insuch quantities as may from time to time be required for the generalservice of the Ceylon Government Bailwav ” durmg the period
1 3 T. R. m.
i b. m.
L. R. 9 C. P. 26.
r 71 J. P. 407.
Ev. 507.
89 L. T. 595.e (1901) 1 K. B. €83.
( 426 )
specified, but the Generals Manager does not, in so many words,^
agree to prder or pay for the rice. On behalf of the appellant it is shaWJ.contended that such an aggeemdht, which is necessary to give effdbt*—*
to the dear intention of the contract, must* be*taken to be impliedand must be read into it, and the case of The Moorcock 1 was cited^tre^a Baihoas authority for die proposition. I think the contention iff sound. **
The contract is for the supply of all die rice .that may be requiredfor die service of the railway during .the specified period, and notfor the supply of such as may be ordered, as in the cases of GreatNorthern Railway Company v. Witham8 and Burton t>. Great NorthernRailway Company* The intention of the parties seems to be clearthat one party should supply and the other buy the whole of .the ricestipulated for, and this seems especially demonstrated by die clausewhich empowers the General Manager to buy elsewhere in .the eventof failure to supply by the respondents. It seems to me to beimmaterial whether the contract is in the form of a formal contractor not, if die term must necessarily be implied to give effect to it.
The view I have come to on the second point renders the decisionof the third unnecessary, but I think that, even supposing that there.was no consideration for the respondents’ original agreement to 'supply rice during .die entire period, and the document was there-fore only a continuing offer so long as it remained unrevoked, sosoon as die first order was given it was thereby accepted by theGeneral Manager of the railway in its entirely. The price wasfixed and die offer made on die assumption that the supply wasto be all the rice required by the railway during the whole of a fixedperiod, and I do not think it could have been accepted in part bythe General Manager, and his order for the first- instalment, therefore,must be taken as an acceptance of the offer as a whole. See Fordv. Newth.*
I have felt some difficulty with regard to both the second andthird points, in consequence of the decision of the Privy Council inQueen v. Demers * In that case, under facts which apparently werevery similar to those of the present case, it was held that the Crown,who had accepted a tender for certain work, was not bound becauseit had not specifically contracted to order the work. If this wereso in the present -base there would be a want of mutuality, and therespondents would not be bound,, and would he at liberty to withdrawtheir offer at any time.
Queen v. Demers is not a very satisfactory case, and the facts arenot very fully reported. It appears that the point on which thecase Was decided was never referred to in the argument, which wasdirected to quite another matter, but was taken by their Lordshipsin their judgment for the first time, and none of the authorities
i°L. J2. )A P. I>. 64.* 9 A& 607.
* L. R. 9 C. ¥ 16.* i1901} 1 K. B. $83.
* (1900} A. C. m.
( 436 )
bearing on the point were cited to theog- Nevertheless, if it weredirectly in point in the present case it would be binding .upon us,and would have to be followed. The actual terms of the contract,aZrtv. however, in that caae ere not set out in the report, and every case .must ^e determined on the wording and intent of the particular"contract under consideration; and it may well be that if we had theexact wording of the contract in that case it might show a verydifferent intention to that in the present.,
I would allow tiie appeal with costs and set aside the judgmentof the District Judge, and enter judgment for the plaintiff for thesum of Rs. 2,194.47, with costs as prayed for in the plaifit.
Db Samfayo J;—
In 1911 the General Manager of the Ceyon Government Bailwayealled for tenders for the supply of rice for the use of “the railwayfor one year. In answer to the advertisement the defendant, madea tender, which was accepted, and a formal contract dated October11, 1911, was entered into between the General Manager and thedefendant, whereby it was, inter alts, agreed that the defendantshould supply the rice, the quality and price of which were specifiedm the schedule, “ in such quantities as may from time to time berequired for the general service of the Ceylon Government Hallway, 99the. deliveries to be made upon orders signed by the Baalway Store-beeper; that the General Manager should.pay for the rice suppliedon the 15th day of the month following the delivery, upon theproduction of receipts signed by the Boflw&y Storekeeper; thatshould the defendant fail to supply the rice ordered, or to replaceany rice rejected as being inferior in quality, the General Managershould be at liberty to purchase elsewhere, and the defendant shouldpay a certain penalty for such default, a^.d also pay as damages thedifference between the agreed price and the price at which theGeneral Manager might purchase or procure elsewhere; and thatshould the defendant fail to supply on two or more occasions therice demanded, he should be held to have failed in the performanceof the contract, and be bound to pay or forfeit to the General Manageron behalf of the Grown the sum of Bs. 850 which he had deposited-aa security.
Under the agreement the defendant duly supplied- rice as orderedfrom November, 1911, to May, 1912,- but on June 18, 1912, hewrote to the General Manager stating that owing to the abnormalrise in the price of rice had suffered loss in executing the orders,and requesting that the contract be considered as cancelled as fromthe end cl May, .1912. The proposal to cancel the contract was notaccepted, and the defendant having made default in executeorders issued to him between May 81 and September 19, 1912. theAttorney-General, on behalf of the Crown, brought this action for
{ 4^7,
ss f(^, breach of contrast an^ for forfei Sure of the deposit^of 33850. The defendant, inter alia, pleaded that the agreement ^
was v if foi’ absence of muiual^y and want of wusideratiou, as a* .jlGener, Manager 1 1 not*on his part agreed purchase uny »rice Aut?n$i>-from tie defondan The Diotn^t Judge upheld this convention, '/fofoa^d consitfcwd tiu*i toe agreement anioiuititf ’only to aa offer? A Go.wbiu might* ha ^Udrsvm before a pitrticular ordejr was given, andaeeot Jingly he gave judgment for plaintiff for dan!ages only hirespe it of the order of May 31, J012, and dismissed the claim inreape d of the orders since the defendant's letter of June J3, 1912.cancc nag the contact, and he also gave judgment iu reconventionfor ti>i defendant foe the sum of®*. 350 deposited as security. TheAttorrey- G ene ml has appealed. *
Tfo Solicitor-General. who appeared for the appellant, in the firstplace wntosded- that the law applicable to the question of thevalidity of the agreement was the Roman-Dutch law, which did notrequire the existence of a consideration to support a contract in thesome sense' as the English law, and that the defendant was, therefore,bound to supply rice under the agreement, even though the GeneralManager might not be bound to purchase from him. I do notthink this argument is sustainable. The law now governing thesale of goods is the Ordinance No. 11 of 1866, which is wholly takenfrom the English Sale of Goodfe Act, and the effect of the Ordinanceis to introduce the English law on the subject into Ceylon, . exceptin certain particulars, which are specially provided for in the Ordi-nance, and which do not affect the present question. The Ordinance,after generally adopting the various clauses of the English Act.provides by section 58 (2) as follows: “ The rule6 of the Englishlaw,, including the Law Merchant, save in so far as they are inconsis-tent with the express provisions of this Ordinance, and in particularthe rules relating to the law of principal and agent and the effectof frauds misrepresentation, duress, or coercion, mistake, or otherinvalidating cause, shall apply to contracts for the sate of goods."
I should say that the whole spirit of the legislation was toabolish the. Roman-Dutch law on the subject of contracts for thesale of goods; but it appears to me that the sub-section I havequoted puts the matter beyond doubt. It is, however,^ contendedthat when the above sub-section enacts that the rules of Englishlaw shall apply to “ contracts for the sale of goods," it means torefer to completed contracts and to the results arising therefrom,and that for toe requisites for toe formation of valid contracts wemust still look to the Roman-Dutch law. In my opinion there isno good ground for this contention, and 1 think that the- word" contract " is used in too largest sense, and that the effect of thepremia is to make English law applicable to all matters relatingto or in. respesl of con tracts for the sale of goods. There niust>therefore, be consideration to support such contracts, even with us.
( 428 .)
iPi&o .« There is xribre substance in^he Hexb contention oca behalf of theTk.n.^ appellant, namely, that on a true' construction of the agreement theGeneral Manager must be tfldcen to <Jiave bound himseuf to* order ofjttoftZqj. the9 defendant all ti)e rice required durihg the period in question.
^ this connection the defendant gives a narrow meaning to theAbrjTco. %xpressign 41 in such quantifies as may from time to time be required/’and argues that only such rice as might be requisitioned was tobe supplied. * But such a restriction is not possible. The fullexpression is, 44 required for the general service of the railway. ' * Ithink the contract provided for all the requirements of the railwayfor twelve months. It will be noticed, on the other hand, that in-certain circumstances the General Manager was given liberty toc. purchase elsewhere, and this provision, together with the generalcharacter of the written agreement, appears to me to lead to theinference that it was intended by both parties that the GeneralManager should purchase from the defendant all the rice required.If this is right, then there was mutuality in the sense contendedfor. However that may be, I am content in this part of the caseto refer to the fact that the instrument itself expressly statesa sufficient consideration for the defendant's part of the agreement,
0 for it witnesses that the defendant bound himself to supply the rice44 in consideration of the covenants and agreements herinaftercontained on the part of the General Manager.” The Court is notconcerned with the adequacy of the consideration. It will enforcethe contract if there is some consideration. There may be some-thing in the prices agreed upon, and in the manner of payment,and in the other stipulations on the part of the General Manager,which, in the estimation of the defendant himself, was a sufficientconsideration for his promise.
/ I find it difficult to construe the agreement as amounting to amere offer to supply rice by the defendant. If the matter mustneeds be so put, then it is clear to me that .there was one offer tosupply all the rice required for the whole twelve months, and thatthis offer wad accepted as a whole by the General Manager. It wasacted upon without any question for the greater part of the period,and must, I think, be kept open till the end of it. Great Northernliatlway Company v. Witkam 1 decided that in such cases as this thecontractor was. bound to honour orders actually issued to him, butthe effect of a notice before any parbicjolar order was given that hewould not perform the agreement was left undecided. The latercase of Ford v. Newth* shows that in the absence of any qualifyingcircumstance a tender and acceptance constitute a contract landingon both parties. Darling J. there said that an acceptance of atender meant ” We accept your offer to supply such articles as weintimate to you are a part of the supply wanted during the tgvelvemonths .at .the price you have stated,” and that'in such a case there
fl L,B. 9 C. P, JW,a 70 L. J. Q. B. 4b0.
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vzas an obligation on the part oi the^one to buy from the other* e IMS.Channel J. observed that the matter depended on the words of thedocuments in a particular case, aqd added “Applying one’s knowled^ J« 0of business to what we knfow was the intantiop of the parties «in Attorney-such a case as this, a very little indeed in such documents wouldbe quite sufficient to turn the transaction Into a contract.” It was ° & g0oaccordingly held that( there was contract binding on both ^partiesjmtQ it was mutually cancelled. Adopting the language of LordBowen in The Moorcock,1 I think such documents must be so readas “to give such business efficacy to the * transaction as must havebeen intended at all events by the parties, who are business men.”
As indicated above, there is sufficient in the written agreement inthis case to show that the intention of both parties was to bind eachother mutually once for all, and in my opinion the defendant couldnot alone cancel the contract as he purported to do by his letter ofJune 13, 1912. The case of Queen e. Demers 3 was cited at theargument. But Ido not think that that decision advances the case oftiie defendant. That was a case brought by the tenderer against theGrown for refusal to accept deliveries, and was, therefore, the converse,of the present case. • The Privy Council did not purport to decidethe question whether the contract was wholly void for want ofmutuality* All that it decided was that, assuming the contract tobe valid, there was no obligation on the Crown to purchase, and therewas, therefore, no breach -of contract. Moreover, the report of thedoes not set out the terms of the contract, so that I think thatease is no guide for the interpretation of the present contract.
I think the judgment appealed from is erroneous. The provisionfor the. forfeiture of the sum of Bs. 350, deposited as security, ispurely in the nature of a penalty, and I do not think that theplaintiff is entitled to the declaration of forfeiture prayed for. Iwould vary the decree and enter judgment for the plaintiff for theamount of damages claimed, with costs in that class in both Courts.
8e$ aside.
4*
* §S JL /. Pro*. T3.
* (X$00) A. C. 10$.