Kassam Jivraj and Company Limited v Gulamhussein and Company Limited (Civil Case No. 42 of 1947 (Mombasa)) [1951] EACA 337 (1 January 1951)

## ORIGINAL CIVIL

## Before de LESTANG, J.

# KASSAM JIVRAJ AND COMPANY, LIMITED, Plaintiff

# GULAMHUSSEIN AND COMPANY, LIMITED, Defendants

#### Civil Case No. 42 of 1947 (Mombasa)

Contract for sale of goods by shipments—Failure to pay under letters of credit— Delay in shipment-Whether equitable set-off-Whether waiver of delay-Measure of damages-Perishable goods-Whether resale with reasonable time—Sale of Goods Ordinance, section 51 (1), (2) and (3), section 30 (2) and (1) and section 48 $(3)$ —Interest.

The plaintiffs, a Mombasa trading company, on 29th October, 1946, contracted to purchase from the defendants who carried on business in Lourenço Marques, large quantities of grain; and terms of the contracts were that the plaintiffs should telegraph Rs. 125,000 to defendants' Bombay office and open irrevocable letter of credit in Lourenço Marques for the balance, payable against shipping documents and allowing partial drawings for partial shipments. The telegraphic deposit was in fact not made until 8th November, and defendants were unable to draw on the letters of credit (which were opened on 5th, 7th and 8th November for part only of the balance) as they required certain markings on the goods which could not be put on them as the goods were already shipped. Two of the credit letters stated the price of goods incorrectly, it was uncertain whether they were irrevocable, and they expired long before the stipulated time for delivery of the goods. The plaintiffs' representative visited Lourenço Marques and on 12th November a new contract was entered into for the purchase of a further 200 tons of chora at £30 per ton and some 217.700 kilos of millet already shipped were freed from the original contract and 250 tons of chora were to be shipped "per first available steamer".

The plaintiffs paid for the goods in the amended contract in good time, i.e., the millet and the 250 tons chora: they also paid 20 per cent of the price of the 200 tons of chora. On 1st November two of the original letters of credit regarding juar and chora already shipped, were amended, the requirement for markings being withdrawn; the other two letters were not amended. But all four letters were extended till 15th December. On 23rd November plaintiffs had established a further letter of credit for £20,620 expiring on 31st December covering the balance of goods left unprovided for in the first and second contract. It was rectified on 27th November as it was not originally irrevocable. Four out of the five letters were not fully utilized when they expired and plaintiffs admitted they had no intention of extending them.

Meanwhile between 14th and 16th November there was a further contract to purchase 800 tons of maize. The plaintiffs paid 25 per cent of the purchase price but failed to establish the letter of credit for the balance. On 20th November and 16th December defendants shipped 693 tons and 93 tons of maize, sight drafts were drawn on plaintiffs who failed to honour them.

By 17th January, 1947, plaintiffs were concerned with defendants' failure to ship the 250 tons of chora for which they had been paid, whilst defendants adopted the attitude "No payment for maize, no chora". On 18th January the plaintiffs' and defendants' representatives agreed to pay the sight drafts

v.

(£12,310-1-8) immediately on receipt of a cable from Lourenço Marques that they hold documents covering shipment of the 250 tons of "Cow peas". The cable was never sent and a month later the defendants instructed their bank and plaintiffs that the chora shipping documents would only be delivered to them against payment of all outstanding drafts and not of maize drafts only. The plaintiffs did not pay nor did they receive the maize and chora.

The defendants obtained payments from letters of credit for all goods shipped except in respect of three consignments, the plaintiffs not having honoured the final sight drafts. These goods including the maize and chora were disposed of by the defendants elsewhere.

Of the 800 tons of chora (excluding the 250 tons contract) some 397 tons. remained to be shipped and of this quantity some 251 tons were shipped in three lots on 15th January, 16th January and 5th February and consisted of 221 tons chora and 30 tons tuer. Some 786 tons of maize of different quantity were shipped in two lots on 30th November and 16th December. The defendants. contended that the 250 tons of chora was included in the parcel of 297 tons. shipped in November.

Held (24-8-51).—(1) There were on 12th November three contracts in existence. (a) and (b)were entire contracts for the whole quantities of goods mentioned therein but divisible in performance, as regards payment the deposit of 20 per cent and the establishment of the letter of credit for the balance were conditions precedent. As regards (c), the 250 tons of Chora, it was a contract to deliver the whole quantity in one parcel by the first available ship.

(2) That the shipment of 297 tons Chora shipped on 30th November was clearly made not in performance of the contract to supply the 250 tons.

(3) That the contract for maize was entirely distinct and separate from that of the Chora and other goods and the breach of the former by the plaintiffs could not justify the defendants in refusing to perform the latter.

(4) Chora and Tuer are two distinct commodities and the contract for delivery of 250 tons of the former is not performed by delivery of a mixture of Chora and Tuer.

(5) There is no equitable set-off as regards the purchase money for the 250 tons. Chora against the unpaid purchase price of maize and other goods as equity does not allow a set-off between mutual independent debts unless there is some special equity justifying a set-off. A breach by the plaintiffs of one contract cannot justify the defendants. in failing to perform another distinct contract.

(6) The plaintiffs are entitled to refund of the purchase price of the Chora paid in. advance by them, with interest from 1-1-47 till filing of the suit.

(7) The plaintiffs are also entitled by way of damages for non-delivery of 250 tons. of chora to the difference between the purchase price and market price at that date.

(8) As to the counter-claim for balance of goods shipped and maize it is settled law that a purchaser is not bound to accept goods not tendered in time unless he has waived his right to do so. In the present case the plaintiffs did agree to accept the balance (which they were entitled to reject as it was greatly in excess of the contracted quantity) of goods. except the juar and must be deemed to have waived their rights as they had undertaken to accept the goods in full knowledge of all the facts; the plaintiffs are liable for the loss by defendants on resale.

(9) As regards the maize the contract was silent as to whether $(a)$ it was to be supplied in one lot or in instalments (b) as to time of delivery. There being nothing in the documents to show that the parties intended more than one shipment, the rule is that the complete quantity must be delivered. As the maize was shipped in two lots which fell short by 13 tons of the contracted amount, the plaintiffs were entitled to reject it, but

10) In the case of the maize the plaintiffs with full knowledge of the facts provided to pay for the maize with full knowledge of the manner in which it had been shipped the plaintiffs waived their rights to reject it.

(11) The agreement and document of the 18th January was a mere arrangement regarding payment which did not affect the legal rights of the parties. There was no binding consideration for the respective promises of the parties and the parties promised to do nothing more than they were bound to do in previous contracts.

(12) As to damages, maize is a perishable article and it is the duty of the seller to mitigate damages by selling within a reasonable time. The maize was finally rejected on 1st March; the defendants are only entitled to the loss on resale up till the sale by East.

African Milling and Trading Co., and any subsequent loss was due to defendants' unreasonable delay in reselling.

(13) Interest was allowed on claim and counter-claim from 1st January, 1947, till filing the suit and thereafter at court rates.

Cases referred to: Wetheim v. Chicoutini Pulp Co. (1911) A. C. 301, 307; Barrow v. Arnaud (1846) 8 Q. B., 604, 609 and 610.

$N. M.$ Budhdeo for plaintiffs.

J. E. L. Bryson (with J. Christie) for defendants.

JUDGMENT.—The plaintiffs are a trading company carrying on business and having their registered offices in Mombasa in the Colony of Kenya. The defendants are also a company carrying on business inter alia in grain and having their registered offices in Lourenço Marques in Portuguese East Africa. On the 29th of October, 1946, the plaintiffs contracted to purchase from the defendants and the defendants contracted to sell to the plaintiffs large quantities of grain. The terms of the agreement were reduced into writing in the form of a letter addressed by the defendants to the plaintiffs and confirmed by the plaintiffs. This letter reads as follows: —

"Ref. Produce/399/1

Lourenço Marques, 29th October, 1946.

Gentlemen,

As per our to-day's verbal discussion we hereby confirm the sale of the undermentioned commodities, subject to export licence to be arranged by $us:$

## Quantities, Commodities and Prices

(a) 500 (five hundred) tons Kaffir corn (Juvar) at the price of £25-0-0 (twenty-five pounds) per metric ton of 1,000 kilos gross weight.

(b) 500 (five hundred) tons millet (Bajri) at the price of £25-0-0 (twentyfive pounds) per metric ton of $1,000$ kilos gross weight.

(c) 600 (six hundred) tons Kaffir beans (Chora) at the price of £27-10-0 (twenty-seven pounds and ten shillings) per metric ton of 1,000 kilos gross weight.

(d) 100 (one hundred) tons 'Beri' beans (Tuver) at the price of £30-0-0 pounds) per metric ton of $1,000$ kilos gross weight.

(e) 100 (one hundred) tons 'Val' beans at the price of £29-0-0 (twentynine pounds) per metric ton of $1,000$ kilos gross weight.

(f) 5 (five) tons 'Mung' beans at the price of £30-0-0 (thirty pounds) per metric ton of 1,000 kilos gross weight.

*Prices.*—All the above prices are in British sterling, f.o.b Lourenço Marques, Beira or Mozambique.

Shipment.—In one or more shipments according to the availability of the shipping space, during November/December, 1946.

*Weight.*—Railway weigh-bridge or Customs certificates are final.

Payment.—Telegraphic transference immediately in advance Rs. 125,000 (one hundred twenty-five thousand rupees) to our Bombay office, Mr. Ismail Jhinabhai, 247 Bazaar Gate, Fort, Bombay No. 1, balance by Irrevocable Letter of Credit in British sterling, payable against shipping documents here, allowing partial drawings for partial shipments.

If you find the above conditions in order please return the DUPLICATE duly signed by you for which we thank you in advance.

## Yours faithfully,

### GULAMHUSSEN & Co., LTD.,

Messrs. Kassam Jivraj & Co., Ltd., P. O. Box 408, Mombasa."

Sd. $(?)$ .

It will be noted that the contract was subject to export licence being obtained by the defendants and it is convenient to state here that as regards millet the defendants were only able to secure an export licence for 270 tons and that they so informed the plaintiffs by telegram on 31st October.

There is conflict of evidence as to the date and place where the letter was signed by the plaintiffs but as this question cannot affect the decision of this case in any way but is only relevant as to credibility I shall content myself with expressing my view that accepting the version of the defendants in preference to that of the plaintiff I find that it was signed on 29th October at Lourenco Margues and not in Mombasa several days afterwards as stated by Mr. Kassam Jivrai.

The plaintiffs did not immediately make the deposit in Bombay or open the letter of credit for the balance of the purchase price as agreed. Nevertheless the defendants shipped on 31st October per s.s. Nashua Victory approximately 500 tons of grain as follows: —

> Juvar: 195,593 kilos. Millet: $217.700$ kilos. Chora: 80.910 kilos.

Several telegrams were exchanged between the parties regarding payment. The defendants were urging the plaintiffs to make the deposit and establish the letter of credit in accordance with the contract pointing out that their failure to do so would result in the loss of an opportunity of securing shipping space for 1,000 tons of goods, while the plaintiffs were assuring them that they had made the deposit and were arranging for the letters of credit and finally they informed the defendants that they had arranged the letter of credit. In point of fact the deposit of Rs. 125,000 was not received by the defendants in Bombay until 7th or 8th November and as regards the letter of credit for the balance of the purchase price the defendants received advice from the banks of the establishment of four letters of credit for only part of the balance of the purchase price as follows: -

On 5th November letter of credit No. $31/498$ for £2,350 covering 100 tons-chora expiring 30th November.

On 7th November letter of credit No. 934 for £2,650 covering 100 tons chora expiring 30th November.

On 8th November letter of credit No. 31/519 for £4,000 covering 200 tons juar expiring on 30th November.

Also on 8th November letter of credit No. 31/518 for £4,400 covering 200 tons chora expiring 30th November.

The defendants were unable to draw on these letters of credit because they required the goods to bear certain markings which they did not bear and which could not be put on them as they had already been shipped. The letters of credit were also open to the following criticisms, namely, two of them stated the price of the commodity incorrectly; it was uncertain whether one of them was irrevocable or not; further they expired long before the time stipulated for the delivery of the goods.

This was the position when Kassam Jivraj, the plaintiffs' representative, visited Lourenco Marques on 12th November and had an interview with the defendants. There can be no doubt that at that interview the defendants must have complained to Kassam Jivraj regarding his failure to establish the letters of credit both in time and for the full amount of the purchase price, as they had already done so in correspondence which had passed between them; but Kassam Jivraj must have succeeded in explaining away the plaintiffs' default because we find the plaintiffs entering into a new contract with the defendants for the purchase of a further 200 tons of chora at £30 per ton but in other respects on terms identical to those of the first contract. At the same time the first contract of the 29th of October was varied by freeing from the letter of credit 217.700 kilos of millet already shipped and 250 tons of chora "to be shipped per the first available steamer". This agreement was reduced into writing there and then in the form of a letter which was confirmed by the plaintiffs and reads as follows: $-$

## "GULAMHUSSEN & Co., LIMITED

Ref. Produce/ $399/3$

# Lourenço Marques, 12th November, 1946.

Gentlemen.

$\mathcal{L}_{\mathcal{A}}$

Hereunder, we mention the details of the commodities free from the respective Letters of Credit: $-$

| (a) 217.700 Kilos nett weight Millet (Bajri) shipped per<br>s.s. Nashua Victory to Mombasa, documents of<br>which duly handed to you to-day, on your visit to | | | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------|--------------| | our office, value F. O. B. L. M. $£5,442-10-0$ , 80% | ${\pounds}4.354$ | $\mathbf{0}$ | $\mathbf{0}$ | | Plus freight as per B/Lading No. 4 $\frac{1}{2}$<br>$\cdots \cdots$ | 318 3 6 | | | | | £4.672 | $3\quad 6$ | | | (b) 250 metric tons Kaffir Beans (Chora) account 600<br>tons, to be shipped per the first available steamer,<br>of the first contract at $£27-10-0$ F. O. B. L. M.<br>Value £6,875-0-0 80% £5,500 0 0<br>£618 10 $\theta$<br>Plus freight<br>$\mathcal{L}_{\bullet,\bullet} \mathcal{L}_{\bullet,\bullet} \mathcal{L}_{\bullet,\bullet} \mathcal{L}_{\bullet,\bullet} \mathcal{L}_{\bullet,\bullet} \mathcal{L}_{\bullet,\bullet} \mathcal{L}_{\bullet,\bullet}$ | | | | | | 6,118 10 $\degree$ | | | | (c) 20% of the total value £6,000-0-0 of the new con- | | | | | tract of 200 tons Kaffir Beans (CHORA) | $1,200$ 0 | | $\mathbf{0}$ | | Total | 11,990 13 6 | | | | $Less:$ — | | | | | Your payment-order on Messrs. Popatial & Company<br>relative to your transference of Rs. $50,000$ —to their<br>Bombay Agent Mr. Lalji Dayal, at $7\$425$ = | | | |

# 3,712 10 0 $\cdot$ .

#### £8,278 $3$ 6

£8,278-3-6 British Sterling at the buying rate of Esc.98\$80 to a $£$ British Sterling = Esc.817,883\$69 at 7\$40 to a rupee = Rs. 110.525 (one hundred ten thousand five hundred twenty-five) to be transferred by you telegraphically to Mr. Ismail Jhinabhai, 247 Bazaar Gate, Fort, Bombay, No. 1, immediately as soon as you reach Mombasa, not later than the 16th instant.

$\sim$ $\sim$

Please let us have the DUPLICATE of this letter if you find the above in order, for which we thank you in advance.

# Yours faithfully. GULAMHUSSEN & Co., LTD., Sd. Director.

Messrs. Kassam Jivraj & Co., Ltd., P. O. Box 408, Mombasa."

Esc. $371.250\$00$ equivalent ...

I pause here to consider the nature of the agreements between the parties. In my view, there were on 12th November three contracts in existence—(a) one for the goods described in the first contract of 29th October (Ex. 1) minus the millet and 250 tons of chora; (b) one for 200 tons of chora at £30 per ton (Ex. 4) and $(c)$ one for the 250 tons chora to be paid for in the manner stipulated in the amended contract (Ex. 5). In my opinion contracts (a) and (b) were entire contracts for the whole quantities of goods therein mentioned but divisible in performance so that the defendants were entitled to ship by instalments and the plaintiffs were bound to accept any instalment tendered in due course of performance. As regards payment, in my view, the deposit of 20 per cent and the establishment of the letter of credit for the balance were conditions precedent.

As regards contract $(c)$ this was not in my view an instalment contract but a contract to deliver the whole quantity in one parcel by the first available ship. Like the other two contracts payment in the manner stipulated was a condition precedent.

To revert to the facts it is common ground that the plaintiffs made the payments which they had undertaken to make in the amended contract in good time. In other words they paid for the 217.700 kilos millet shipped per s.s. Nashua Victory and received the goods. They paid for the 250 tons of chora fully. They also paid 20 per cent of the purchase price of the 200 tons chora of the new contract as regards which it only remained for them to establish a letter of credit in respect of the balance of 80 per cent.

The defendants, however, for the reasons which I have already given were unable as yet to draw on the letters of credit which the plaintiffs had established in respect of the juar and chora already shipped but on 15th November two of the letters of credit, namely Nos. $31/519$ and $31/518$ , were amended, the requirement regarding the special markings being withdrawn, and on the same day the defendants drew on these letters of credit for the balance of the purchase price of the juar and chora shipped on the s.s. Nashua Victory. For some undisclosed reason the other two letters of credit were not amended. All four letters of credit were, however, on 5th December extended till 15th December. While on this subject of the letters of credit I might add that on 23rd November the plaintiffs established a further letter of credit for £20,620 expiring on 31st December and covering the balance of the goods left unprovided for in the first and second contracts. This letter of credit was clearly defective as it was not irrevocable and was rectified on 27th November. Although four out of the five letters of credit had not been fully utilized when they expired the plaintiffs despite numerous promises in answer to numerous requests from the defendants failed to extend them. They have indeed admitted in the evidence that they never had any intention of extending them at all.

Meanwhile by an exchange of telegrams between 14th and 16th November the plaintiffs contracted to purchase from the defendants 800 tons of fumigated "local maize 1946 crop" in transit Mombasa at £22-10 per 1,000 kilos gross, payment to be effected as to 25 per cent in advance at Bombay immediately and as regards the balance by irrevocable letter of credit. It has been forcibly contended by Mr. Budhdeo on behalf of the plaintiffs that there was no concluded contract regarding the maize. I am unable to agree and I am satisfied that a binding contract resulted from the exchange of telegrams which are to be found in Exhibits 6 (19), 6 (23) and 6 (24) which contain respectively an offer, a counteroffer and an acceptance of the counter-offer. The relevant parts of these telegrams read as follows: —

Telegram 6 (19) from the defendants to plaintiffs: $-$

"Offer subject our confirmation 800 tons local maize 1946 crop fumigated with Export Licence Tanganyika in transit price £22-10 sterling 1000 kilos gross payment 25 per cent advance to be transferred Bombay immediately on conclusion of business balance irrevocable letter of credit reply very urgent this offer as sellers have other buyers."

Telegram 6 (23) from the plaintiffs to defendants: $-$

"Accepting 800 tons maize please arrange shipment for Mombasa in transit instead Tanganyika reply.

Telegram 6 (24) from the defendants to the plaintiffs: $-$

"Maize confirmed Mombasa in transit stop transfer telegraphically account maize if possible rupees one hundred thousand Hasham Premji 191 Harrison Road Calcutta stop will deduct excess amount from first shipment bajri steamer 19th otherwise remit 25 percent stop cable name bank Calcutta transference."

It will be seen that in the last telegram the defendants suggested another mode of payment to suit their convenience and there was a further exchange of telegrams concerning this, namely, Exhibits 6 (24), 6 (26), 6 (27), 6 (28), 6 (29), $\frac{1}{2}$ 6 (30), 6 (31), 6 (32), 6 (33), 6 (34), 6 (39), and 6 (40). I do not consider it necessary to set out all these telegrams and letters at length and will content myself with stating what I consider to be their effect. In my view, the defendants were asking the plaintiffs to assist them by paying for the maize in a different way than had been agreed and the plaintiffs were quite agreeable to meet the defendants' request but could not do so fully and eventually the defendants withdrew their request and the parties reverted to the original mode of payment. If I am wrong in the view I take of these telegrams and if the negotiations regarding payment had the effect of reopening the bargain I would still say that the parties did eventually agree that payment should be effected in the manner first agreed upon because thereafter the plaintiffs paid the deposit in accordance with the original agreement and to the defendants' repeated demands for the letter of credit the plaintiffs never once replied that they had not agreed to establish it. On the contrary they replied that they were trying their best to establish letters of credit and subsequently when they found that they could not do so they asked the defendants to draw sight drafts on them for the balance of the price of maize. I am further fortified in my view that there was a binding contract in regard to maize by the conduct of the parties, namely, the shipment of the maize by the defendants, part payment by the plaintiffs and the absence of any suggestion until the trial of this case that there had been no concluded contract in regard to maize.

Although the plaintiffs paid 25 per cent of the purchase price of the maize in advance in Bombay in accordance with the contract they failed to establish the letter of credit for the balance. Nevertheless on 20th November and 16th December the defendants shipped about 693 tons and 93 tons of maize respectively to the plaintiffs and at their request drew sight drafts on them for the unpaid balance. The plaintiffs failed to honour the drafts and were accordingly unable to obtain the maize. It would seem that the plaintiffs by then were somewhat concerned with the failure of the defendants to ship the 250 tons chora for which they had paid in full and they adopted the attitude "No chora no payment for the maize". The defendants in their turn said "No payment for the maize no chora". Such was the position when on 17th January the defendants' representative Mr. Gulamrasul arrived here and interviewed Kassam Jivraj. Gulamrasul claimed payment for the maize to which Kassam Jivraj replied that unless he received his chora he would not pay. Gulamrasul assured him that preparations were on hand to ship the chora when he had left Lourenço Marques about two or three weeks previously. Kassam Jivraj, however, was not prepared to believe him and even said that he was not prepared to accept

as true the information which had been telegraphed to him by the defendants that chora had already been shipped. After some discussion they came to an understanding which was reduced in writing in the bank and signed by Kassam Jivraj and confirmed by Gulamrasul. This document is in the form of a letter to the manager of the bank and reads as follows: $\rightarrow$

"18th January, 1947.

The Manager,

Standard Bank of S. A., Ltd.,

Mombasa.

Dear Sir.

# Ref. Sight Drafts Gulamhussen & Co., Ltd. on us for £12,310.1.8 $\pm$

In conformity with arrangements we have made with Mr. Gulamrasul Ahmad, Secretary of the Drawers of the above bill we hereby confirm that the above bill plus all exchange, etc., will be paid by us immediately on receipt of a cable from your Lourenço Marques Branch stating that they hold documents covering a shipment of 250 tons Cow Peas to Mombasa which are to be delivered to us free of all charges.

(Sgd.) Kassam Jivraj & Co., Ltd.,

K. Jivrai. Director.

Confirmed.

Sd. Gulamrasul."

The promised cable mentioned in this document was never sent and instead we find the defendants after the lapse of about a month instructing their bank and informing the plaintiffs that the documents for the chora for which the. plaintiffs had paid nearly four months previously would only be delivered to them against payment of all outstanding drafts and not of the maize drafts only. Suffice it to say that the plaintiffs did not pay as required and did not get either the chora or the maize.

I think that this is all I need say about the maize at this juncture. To complete the facts I will now show how the goods of the contracts were shipped.

I have already dealt with the first shipment on the *Nashua Victory* on 31st October. Thereafter the defendants made the following shipments: —

"On 30/11/46 and $1/12/46$ per s.s. Sampan: —

Juvar: 237.376 kilos. Chora: 297,180 kilos. Val (Pulse): $65.380$ kilos. Maize: 693.050 kilos.

On 12/12/46 per s.s. Mandarin: — Juvar: 60,000 kilos. Chora: 24.940 kilos.

On $16/12/46$ per s.s. *Cabrita*: — Juvar: 7.031 kilos. Maize: 93.093 kilos. On $13/1/47$ per s.s. African Dawn: — Chora: 51.745 kilos. Val (Pulse): 34.361 kilos.

On $16/1/47$ per s.s. Fort Carillon: — Chora: 4.860 kilos.

On $5/2/47$ per s.s. Fort Carillon: — Chora: 195.300 kilos.

Reri Beans (Tuer): 100,000 kilos.

The defendants were able to obtain payment from the letters of credit for all the goods shipped except those in the three last shipments. As regards the latter shipments the defendants were unable to draw on the letters of credit because they had all expired and as I have said before, despite frequent requests by the defendants and numerous promises by the plaintiffs they were never extended. The defendants consequently drew sight drafts on the plaintiffs in respect of those goods but as they were not honoured the goods were not delivered to them. Eventually the goods for which the plaintiffs had not paid as well as the 250 tons of chora for which they had paid were disposed of by the defendants elsewhere. Thus the position in February/March, 1947, was as follows: —

| | | <i>Ouantity</i> | Supplied and | | | | |----------------|---------|------------------|--------------|----------------|---------|---------| | Commodity | | <b>Purchased</b> | paid for | | | Balance | | Juvar | $\cdot$ | 500,000 $Kg$ . | 492.969 | $\cdot$ | $\cdot$ | 7.031 | | Chora | $\cdot$ | $800.000$ Kg. | 403.030 | $\overline{a}$ | $\cdot$ | 396.970 | | Val | $\cdot$ | $100.000$ Kg. | 65.380 | | $\cdot$ | 34.620 | | Tuer<br>$\sim$ | $\sim$ | $100.000$ Kg. | NIL | $\cdot$ | . . | 100,000 | | Mung | $\cdot$ | $5.000$ Kg. | NIL | $\cdot$ | | 5.000 | | Maize | . . | 800.000 Kg. | NIL | $\cdots$ | . . | 800,000 |

I have left out millet altogether as there is no dispute concerning this commodity. As regards the balance of the goods not delivered to the plaintiffs the seven tons odd juvar was shipped on 16th December mixed up with a larger consignment of approximately 20 tons which was in excess of the contract; of the 397 tons odd chora due only approximately 251 tons were shipped in three lots on 13th January, 16th January and 5th February and consisted of 221 tons chora proper and 30 tons tuer; the balance of the val was shipped on 13th January; the 100 tons juar was shipped in a lot of 130 tons on 5th February; the mung was never shipped but nothing arises out of this omission in this suit. Some 786 tons maize were shipped in two lots of different quality on 30th November and 16th December. In respect of the balance of the goods which I have detailed the defendants had received from the plaintiffs the following payments—(a) full payment for 250 tons chora; (b) 20 per cent of the purchase price of the other goods under the original contracts of 29th October and 12th November; and $(c)$ 25 per cent being the advance purchase price of the maize. For the difference the defendants drew sight drafts on the plaintiffs which were not honoured and subsequently the defendants made the delivery of the chora subject to payment of all the outstanding drafts. This the plaintiffs refused to do and in the end the defendants resold the balance of the goods and the maize.

I have tried to describe as clearly as I could the complicated dealings between the parties and now come to their respective claims. I shall deal first with the plaintiffs' claim. The plaintiffs contend that the defendants committed a breach of contract in failing to deliver to them the 250 tons chora for which they had paid and claim damages for such breach. They point out that under the contract the chora was to be shipped by the first available steamer after 12th November

and that not only was it not shipped as agreed but that when it was eventually shipped it was not delivered to them and it was not then even according to contract since it was mixed up with 30 tons tuer. To this the defendants reply that (a) they did ship the 250 tons chora in time in the parcel of 297 tons shipped on 30th November, (b) that the delay in shipping the chora was entirely due to the plaintiffs' delay in establishing the letter of credit and to the defects in the letters of credit when they were eventually established, (c) that they had a right to set off the purchase price of the chora against the purchase price of the maize and other goods which had not been paid in full owing to the failure of the plaintiffs to establish letters of credit for maize and to the defendants' inability to draw on the letters of credit for other goods shipped; and $(d)$ that tuer and chora are the same thing and in fact tuer is a better quality chora and more expensive. The defendants' contention can in my judgment be disposed of in a few words. Firstly, the shipment of 297 tons chora was clearly made not in performance of the contract to supply the 250 tons since none of it was delivered free of charge to the plaintiffs in accordance with the contract but on the contrary the defendants drew for payment thereof on the letters of credit which the plaintiffs had established for chora other than those 250 tons in question. Besides there was never any suggestion in the correspondence that the 250 tons chora was included in the 297 tons. In fact the defendants repeatedly stated that the chora had not been shipped, that it could have been shipped earlier if the plaintiffs had paid for the maize and finally Mr. Gulamrasul admitted in his evidence in cross-examination that the 250 tons chora were shipped on $13/1$ , $16/1$ and $5/2$ . The suggestion therefore that it was shipped on $30/11$ is without foundation. Secondly, the contract for maize was, in my view, entirely distinct and separate from that of the chora and other goods and the breach of the former by the plaintiffs could not justify the defendants in refusing to perform the latter. Each contract stands on its own and must be performed independently of each other. Thirdly, it is abundantly clear on the evidence that chora and tuer are two distinct commodities and consequently the contract of 250 tons of the former is not performed by the delivery of a mixture of the two.

As regards the delay in establishing the letters of credit and the defects in them it is conceivable that this might excuse the defendants from delivering goods covered by the same contract so that they might possibly have been good answers to the plaintiffs' claim if the contract for the 250 tons chora formed one entire contract with the rest of the goods. But as I have already said this was not so, the 250 tons chora was the subject-matter of a special contract. As regards the right to an equitable set-off, if I understand the defendants' contention correctly it is that they were entitled to set off the purchase money of the 250 tons chora against the unpaid purchase price of the maize and other goods. No authority has been quoted to me for this proposition which frankly I do not follow. A right of set-off exists in equity when there are mutual debts and it is natural that they should compensate each other so that the difference is the only sum which is justly due. Equity, however, does not allow the set-off as between mutual independent debts unless there is some special equity justifying a set-off (vide Hailsham, Vol. 13, p. 203; Chitty on Contract, 20th Edn., p. 382). In the present case there were, in my view, no mutual debts nor was there any equity which would call for a set-off. The defendants were not indebted to the plaintiffs but were merely under an obligation to deliver to them chora for which they had paid and in the circumstances I do not see how there can be any set-off between them. I cannot also see how the breach by the plaintiffs of a certain contract could justify the defendants in failing to perform another distinct contract.

The position in my view is that the plaintiffs carried out their part of the contract in paying for the chora in the manner and within the time stipulated but the defendants in failing to deliver the goods either in time or at all committed a clear breach of the contract. The plaintiffs are accordingly entitled to the refund of the purchase price paid in advance amounting to Sh. 149,870 with interest thereon as claimed from 1st January, 1947 till the filing of the suit. On the question of damages the plaintiffs allege that they had contracted to resell 250 tons of chora in Ceylon at a profit of £15-15-0 per ton and they claim Sh. 78,750 by way of damages for loss of profit. In fact the evidence shows that the plaintiffs had contracted to purchase from the defendants altogether 800 tons chora and elsewhere 400 to 500 tons and that they had contracted to resell approximately 1,000 tons in Ceylon. Although they had purchased locally 110 tons in small quantities with a view to performing their sub-contracts they were unable to supply 250 tons. They were not sued by any of their purchasers because apparently there was a glut of chora in Ceylon and the price dropped considerably. Accepting the plaintiffs' own figures and evidence they were only able to supply 650 tons to their purchasers in part performance of their contracts for 1,000 tons. It is, however, proved that they received from the defendants 400 tons under the original contracts. Therefore they could not have received more than 250 tons under their other contract of 400 to 500 tons. That being so I cannot see why the plaintiffs should attribute their loss of profit on the 250 tons entirely to the defendants' failure to deliver the chora. I think that this loss should be apportioned, assuming of course that it is a proper measure of damage in this case, between the 250 tons and the total quantity short supplied to the plaintiffs which come to approximately 650 tons. In my view, however, this is not a proper measure of damage in a case of this nature. The damages recoverable for non-delivery of goods are prescribed in section 51 of the Sale of Goods Ordinance as follows: -

"51. (1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery.

(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller's breach of contract.

(3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered, or, if no time was fixed, then at the time of the refusal to deliver."

The principles underlying these provisions have been clearly stated by the Privy Council in Wetheim vs. Chicoutini Pulp Coy., 1911 A. C. 301 at p. 307, as follows:-

"It is the general intention of the law that, in giving damages for breach of contract, the party complaining should, as far as it can be done by money, be placed in the same position as he would have been if the contract had been performed. The rule which prescribes as a measure of damages the difference in market prices at the respective times above mentioned is merely designed to apply this principle... but is intended to secure only an indemnity. The market value is taken because it is presumed to be the true value of the goods to the purchaser. In the case of non-delivery, where the purchaser does not get the goods he purchased, it is assumed that these would be worth to him, if he had them, what they would fetch in the open market; and that, if he wanted to get others in their stead, he could obtain them in that market at that price. In such a case, the price at which the purchaser might in anticipation of delivery have resold the goods is properly treated, where no question of loss of profit arises, as an entirely irrelevant matter. The purchaser, not having got his goods, should receive by way of damages enough to enable him to buy similar goods in the open market. Similarly when the delivery of goods purchased is delayed, the goods are presumed to have been at the time they should have been delivered worth to the purchaser what he could then sell them for, or buy others like them for, in the open market, and when they are in fact delivered they are similarly presumed to be, for the same reason, worth to the purchaser what he could then sell for in that market."

In other words the damages which the buyer may recover in a breach of contract like the present one are, where there is a market for the goods the difference between the contract price and the market value of the goods at the time when the contract was broken (vide Barrow vs. Arnaud 1846 8 O. B. 604 at pp. 609, 610, Tindle, C. J.) and where there is no available market, the profits which the purchaser would have made if the contract had been carried out. In the present case there was clearly a market for the chora and the existence of that market excludes the special damages claimed by the plaintiffs on account of loss of profit and the plaintiffs are only entitled to the difference between the purchase price and the market value of chora on 1st December, 1946, which is the date when it ought to have been delivered. My difficulty has been to ascertain the market price of the chora on that date as the evidence on this vital issue is almost non-existent. In October the plaintiffs purchased from the defendants chora at £27-10-0 per ton f.o.b. Lourenço Marques; in November they purchased a further 200 tons at £30 per ton f.o.b. Lourenço Marques. In November/ December according to the plaintiffs the defendants offered chora to them at prices ranging from £35 to £38 per ton f.o.b. Lourenco Marques (vide Kassam Jivraj's evidence, p. 20). The only records of any offers of chora, however, are to be found in Ex. 6 (22) and Ex. 6 (68B) and relate to Angola chora at £32-10 and £40 per ton respectively. The first offer was on 15th November and the second on 28th December. Also between 24th and 31st December the plaintiffs purchased locally at prices ranging from $£40-6-0$ to $£44-6-0$ in small quantities. The chora which the defendants failed to deliver was Portuguese East Africa chora and there is unfortunately no evidence as to the difference in prices between it and Angola chora. The only evidence is that Angola chora is more expensive. In these circumstances I am unable to say with accuracy what was the market price of chora on 1st December, 1946, and I think that the only thing for me to do is to direct an inquiry to be made by the Deputy Registrar to ascertain the market value of chora on 1st December, 1946. The plaintiffs will be entitled by way of damages for the non-delivery of the 250 tons of chora to the difference between the purchase price and the market price at that date. In ascertaining the market value, however, I consider that the numerous sales by the plaintiffs to Ceylon at prices varying from £45 to £52 per ton should be ignored. In my view, if there had been no market for the chora these prices may have been good presumptive evidence of its value but as there was a market they are irrelevant in ascertaining that market. In any case the Ceylon market was not a fair market as it was essentially a sellers' market and exceptional.

I shall now deal with the defendants' counter-claim which is also founded on alleged breaches of contract by the plaintiffs in refusing to accept and pay for the balance of the goods shipped to them and for the maize. I shall deal with maize separately later because it is clearly the subject of a matter of a separate contract. I think I have made it clear already, and it is indeed common ground, that the plaintiffs refused to accept and pay for the balance of the goods under the first two contracts and those goods were resold by the defendants at a loss. The defendants contend that although the goods, with the exception of

seven tons odd juvar which was shipped within the stipulated time, were shipped after the time had expired the plaintiffs having agreed nevertheless to accept them were bound to do so and pay for them.

It is well settled as a matter of law that a purchaser is not bound to accept goods not tendered in time unless he has waived his right to do so. The plaintiffs here deny such waiver and deny the defendants' allegation that they had agreed to accept the goods although not tendered in time. There is, fortunately, correspondence between the parties on this subject. On 31st January the defendants. wrote to the plaintiffs explaining the position in detail and informing them of the shipments that had been made to date including the shipment dated 5th February which had apparently been made earlier although the bill of lading bore that date (*vide* Ex. 6 $(83)$ to 6 $(89)$ to which the plaintiffs replied by their letter of 4th February (Ex. $6(90)$ ) agreeing to accept all goods up to the quantities contracted which had been shipped except juvar. The plaintiffs were so well aware that tuer was in excess of the contract that they even offered to purchase the excess. In these circumstances I am forced to the conclusion that the plaintiffs did agree to accept the balance of goods except in regard to juvar and that they must be deemed to have waived their rights to refuse the goods both for late shipment and as being in excess of the stipulated quantities as they had undertaken to accept the goods in full knowledge of all the facts. As regards the juar although it was shipped within the stipulated time the plaintiffs never agreed to accept it and were entitled to reject it as it was greatly in excess of the contracted quantity. That being the position as I understand it I hold that the plaintiffs were entitled to reject the juvar but were in default in rejecting tuer and val and that they must compensate the defendants for the loss which they have sustained on the resale of these two commodities. I accept the defendants' evidence of such loss as stated in their accounts, namely £1,253-0-5 for the tuer and £528-16-5 for the val making a total of £1,781-16-10.

As regards the maize I have already stated that in my opinion the plaintiffs. had contracted to purchase 800 tons of that commodity from the defendants. It will be noted, however, that the contract was silent on two important points— (a) whether the maize was to be supplied in one lot or in instalments as in the case of the other goods, and $(b)$ as regards the time of delivery. The latter does not give rise to any difficulty since in such a case the goods must be supplied within a reasonable time (section 30 (2) of the Sale of Goods Ordinance) and there is no complaint that the maize was not shipped promptly. As regards the manner of delivery there is nothing in the documents constituting the contract to show that the parties intended more than one shipment and in such a case the rule is that the complete quantity must be delivered at one time (section 32 (1), Sale of Goods Ordinance). As the maize was shipped in two lots which fell short of the contracted amount by 13 tons the plaintiffs might in the absence of agreement to the contrary have rejected it altogether. Unfortunately here again the plaintiffs with full knowledge of all the facts promised to pay for the maize-(vide Ex. 6 (71) and Ex. 16). They wrote to the defendants explaining that they were unable to obtain transferable sterling and offered to pay in Bombay and Johannesburg. They also offered to pay in local currency but notwithstanding the acceptance of both offers the plaintiffs failed to make any payment. In my view by promises and offers to pay for the maize with full knowledge of the manner in which it had been shipped and of the deficiency in weight the plaintiffs waived their right to reject it on the ground of short delivery or delivery by instalments. It was also contended that the plaintiffs were entitled to reject the maize because it was not uniform in quality. It is true that there is some slight evidence to show that the two parcels of maize were of different quality. That does not mean, however, that the maize was below the contracted quality. In fact the

quality of the maize was not stipulated in the contract at all. According to the contract the maize had to be of the 1946 crop and fumigated and there is nothing to show that it was not as described therein. It is not difficult to imagine that maize of a given crop from a large country like Portuguese East Africa cap easily be of different qualities. I can therefore see no substance in this contention of the plaintiffs.

I must now consider the effect of the document signed by Kassam Jivraj and Gulamrasul in the bank at Mombasa on the 18th of January, 1947. This document has already been set out earlier on in this judgment (Ex. 6 (78)). The plaintiffs say that it constituted a binding contract between them and the defendants which had the effect of relieving them of their obligation to pay for the maize so long as the defendants refused to part with the documents for the chora. The defendants on the other hand say that it was a mere arrangement regarding payment which did not affect the legal rights of the parties. I agree with the defendants' interpretation of this document. In my view, it was not a binding contract because there was no valuable consideration for the respective promises of the parties. The plaintiffs were bound to pay for the maize and the defendants were similarly bound to supply the chora. That being the case they promised to do nothing more than they were bound to do in previous contracts between them and promises of this nature do not amount to consideration in law. I need hardly quote authority for the proposition that a promise to perform an existing duty cannot afford good consideration. I therefore hold that this document which was a record of a mere arrangement between the parties in an attempt to settle their differences did not in any way affect their respective rights under the contract for the sale of maize.

I now come to the question of damages for the non-acceptance and nonpayment of the maize. The Sale of Goods Ordinance gives the unpaid seller a right to resell. The section of the law applicable to this case is in my view section 48 (3) of the Ordinance which reads as follows: —

"48. (1) $\ldots$

$(2) \ldots \ldots \ldots$

(3) Where the goods are of a perishable nature, or where the unpaid seller gives notice to the buyer of his intention to re-sell, and the buyer does not within a reasonable time pay or tender the price, the unpaid seller may re-sell the goods and recover from the original buyer damages for any loss occasioned by his breach of contract."

I say that this section is applicable because maize is obviously a perishable article and in any case notice of re-sale was given by the defendants to plaintiffs. Under that section the seller is entitled as damages to the difference between the contract price and the re-sale price. It is, however, the duty of the seller to mitigate damages and he must re-sell within a reasonable time. The maize was finally rejected on the 1st of March, 1947 (Ex. 6 (88)). Within a week the defendants gave notice of intention to re-sell (Ex. 6 (104)). Messrs. Haji Ibrahim Haji Issak were instructed to re-sell the maize and they in turn employed Mr. M. P. Dalal as broker to do so. On 14th May, 1947, 224 bags of maize were sold to Adamjee Walji & Sons for Sh. 6,730/62. On 19th May, 1947, two lots of 7,342 and 1,023 bags of maize, being the balance of the maize, were sold to Messrs. East African Milling and Trading Co., Ltd., at Sh. 310 and Sh. 285 respectively per ton. The purchasers failed to carry out the contract but apart from forfeiting their deposit no attempt was made to enforce the contract against them. Two lots of maize were subsequently disposed of on account of Messrs. East African Milling and Trading Co., and finally in December the balance of the maize was re-sold at great loss because it had deteriorated in the meantime and was then unfit for human consumption. In my view, on those facts the defendants are not entitled to recover from the plaintiffs any loss sustained subsequently to the sale to Messrs. East African Milling and Trading Co., because the re-sale of the maize was then complete and in any event any subsequent loss was due to their unreasonable delay in re-selling the maize. I therefore allow the defendants by way of damages on the maize the difference between the contract price and the re-sale price of the maize to Messrs. Adamjee Walji and Co. and East African Milling and Trading Co., Ltd., and direct the Registrar as in the case of the chora to make an inquiry to ascertain this figure.

Judgment will be entered accordingly on both claim and counter-claim with costs and interest at 6 per cent in each case from 1st January, 1947, till the filing of the suit and at 6 per cent thereafter till payment.