Savjani v Kenya Garage (Civil Appeal No. 45 of 1951) [1953] EACA 24 (1 January 1953)

# APPELLATE CIVIL

#### Before CONNELL, J.

## R. B. SAVJANI, *Appellant*

*v.*

## KENYA GARAGE, *Respondent*

## Civil Appeal No. 45 of 1951

Contract-Sale of Goods Ordinance (Cap. 290)-Section 6 (!)--Oral contract to purchase motor-car-Whether enforceable-Whether a deposit earnest or part-payment.

Jn a suit by the appellant for damages for a breach of contract, the magistrate found that an oral contract had been entered into by the respondent to supply the appellant with a motor-car and the appellant had made a deposit of money. The magistrate ruled that the contract was not enforceable because of the provisions of section 6 (1) of the Sale of Goods Ordinance (Cap. 290) since the deposit did not amount to an earnest or a part-payment. The appellant appealed.

*T-leld* (5-9-52).-(1) The deposit amounted either to an earnest or part-payment and the contract was accordingly enforceable.

(2) The appellant was entitled to general damages because the car which he had contracted to buy had ceased to be on the market.

Appeal allowed.

Cases cited: *Davis v. Phillips, Mills* & *Co.,* (1907-8) 24 T. L. R. 4: *Parker v. Crisp* & *Co ..* (1919) I **K. B.** 481. I/

Cited: *Be11jami11 011 Sale,* 8th Ed. p, 281; *Fr.v 011 Specific Perfor111a11ce,* 6th Ed. p. 670.

*D. Doshi for appellant.*

*811ddheo for respondent.*

JuoGMENT.-Mr. D. D. Doshi takes certain points in his 1nemorandum of appeal seeking to set aside the judgment of the lower court.

Mr. Buddheo, who appeared for the respondent, argued a number of points attacking the lower court's judgment. What, however, Mr. Buddheo wanted was that the Appeal Court should dismiss the original suit (as was done by the lower court) under Order 41 rule 20 notwithstanding the fact (as Mr. Buddheo submitted) that the lower court "has proceeded wholly upon some ground other than that on which the court to which the appeal is preferred proceeds.''

. I think it will be convenient first to deal shortly with the pleadings and then to deal with the submissions of Mr. Buddheo. The amended plaint was a claim for breach of contract entered into about 30th January, 1951, to supply the plaintiff with a new. Austin Saloon motor-car A.70 by the end of February, 1951; an allegation of a deposit of Sh. 2,000 in furtherance of the contract and at the request of the defendants; a failure to supp!y the said Austin A.70; and a claim for Sh. 1,500 damages.

In the defence the defendants admitted the deposit and objected to the plaint as being bad in law as it did not contain the value of the subject matter of the suit. They made an admission of non-delivery of the Austin and a denial that the defendants had made any such contract as was alleged or that the defendants had committed any breach of any contract. There are other defences under the Sale of Goods Ordinance, and, finally an allegation "without prejudice" that the only agreement was to sell a new Austin A.70 "only if and when they should be allocated one by the manufacturer's agents at Nairobi, at the price prevailing at the time of delivery, and that as the defendants were not allocated by the Nairobi agents any such car up to the time the plaintiffs filed the suit they are not liable to the plaintiffs in any way at all for omission to give delivery".

The lower court proceeded to hear the case and pass judgment dismissing the claim on the ground that the deposit receipt (exhibit 1) was not a sufficient memorandum of the contract under the Sale of Goods Ordinance.

Mr. Budheo contended that on the evidence, the lower court should have held there was no complete contract between the parties as the parties were never ad idem; in particular, he submits, both parties had different notions as to what price should be paid.

The learned magistrate found there was a contract and I will quote what he said: "I find as a fact therefore that the defendants believing, whether with or without foundation, that the car in question was going to be allocated to them, rashly promised that car to the plaintiff and accepted a deposit from him." He also found that the price payable was the price at the time of delivery of the car. The learned magistrate, however, dismissed the suit on the ground that the contract was merely oral and there was no writing such as was required by section 6 of the Sale of Goods Ordinance, the price in particular not being stated in writing.

I agree with the learned magistrate's contention that, generally speaking, where there is an agreement as to price, and there is no note or memorandum thereof in writing, then the Sale of Goods Ordinance applies and the contract is rendered incapable of enforcement.

Mr. Doshi, however, for the appellant, has contested most strenuously that<br>the deposit receipt and the payment of Sh. 2,000 shows clearly an "earnest" or "part payment" and therefore he is entitled to set up a contract established by oral evidence. It was the view of the learned magistrate that the deposit of Sh. 2,000 "amounted to no more than something done in the course of performance of the contract, and as such cannot be considered as earnest or part payment within the meaning of the Sale of Goods Ordinance". I do not think the case relied on supports such a wide proposition.

In the instant case I would say that the deposit amounted either to part-payment or earnest; the receipt (exhibit 2) contained the words "deposit against A.70"; the deposit itself was made on 30th January and was not returned until 22nd March. The law on the subject of part-payment is stated at page 221 of Benjamin on Sale, 8th Ed. "Part-payment must be made under circumstances showing a recognition by the seller of the existence of a contract, but his acceptance of payment need not be unqualified. Thus the receipt of money and a refusal to carry out the contract would be a part payment whereas a prompt return of the money simpliciter would not." The two leading cases on the point are Davis v. Phillips, Mills & Co., 24 T. L. R. 4 and Parker v. Crisp & Co., (1919) 1 K. B. 481. In my view, the deposit was a part-payment.

If the deposit was not a pa1tt~payment, I -certainly think it was an earnest; it was given at the time of the contract (the magistrate found there was a contract) and the terms "deposit" and "earnest" are often used synonymously; *see Fry on Specific Performance,* page 670, 6th :Ed. "The deposit unless paid on any special terms is not merely part-payment, .but is .an -earnest." ·

The learned magistrate found there was a verbal contract, may be a rash one, on the part of the vendor which he was unable to fulfil. I see no reason to disturb that finding; I think a verbal contract may be proved where there is an earnest or part-payment.

The next question which remains is whether the plaintiff can claim general damages. I think he can. There was. evidence that that particular type of Austin A.70 ceased to be on the market after the defendant did not fulfil bis contract. Under ·such •circumstances, the plaintiff ,could not buy another similar Austin A.7O.

The general damages .appear to me ,to be reasonable and I allow .them as c"laimed at Sh. 1,500.

In the result, the appeal must succeed and the plaintiff is entitled to costs in this Court and the lower court.