Duncombe v Parker

[4]

The second count in the declaration alleged an agreement by the plaintiff to sell to the defendant and by the defendant to buy from the plaintiff all that lucerne hay contained in five stacks as inspected by the defendant situated at Kingsfield, derrick pressed, estimated to contain 500 tons for the price of £13 5s. 0d. per ton. The count, after stating certain terms of the alleged agreement for sale and making the usual allegations of readiness and willingness and fulfilment of conditions precedent, alleged a refusal on the part of the defendant to accept portion of the hay and claimed £1,225 damages. To this declaration the defendant pleaded as to the first count never indebted, as to the second count non assumpsit and a special plea setting out terms and conditions of the bargain, a refusal by the plaintiff to be bound by the agreement and rescission by the defendant. The defendant's fourth plea was the plea by way of cross-action which leads to the demurrer. By this plea the defendant alleged that the plaintiff promised to sell certain hay, the quality whereof was to be as inspected by the defendant and all rain-damaged hay to be discarded. The plea proceeded to allege that the plaintiff's promise was that the defendant would only be responsible to accept all sound, dry hay in good merchantable condition and that the plaintiff would deliver the said hay as promptly as trucks were available. After alleging the performance of conditions precedent, the plea alleged that in purported fulfilment of the agreement the plaintiff delivered to the defendant a quantity of hay which was not of the quality as inspected by the defendant and that all rain-damaged hay was not discarded and that it was not dry hay in good merchantable condition but was mouldy and unfit for use. The plea further alleged that the plaintiff did not make delivery of the balance of the hay as trucks were available. The plea concluded that thereby that quantity of hay which was mouldy and unfit for use was of no value to the defendant and that the defendant lost the benefit of the contract and the profits which he could and would have made on the resale of the whole of the said hay and was injured in his business as a produce merchant and claimed the sum of £1,000 as damages.

[5]

To this plea by way of cross-action the plaintiff filed replications which first pleaded that he did not agree as alleged, and, secondly, that he did not commit the breaches alleged. The last of the plaintiff's replications to the plea by way of cross-action took up the allegations in the plea that the plaintiff delivered to the defendant in purported fulfilment of the agreement a quantity of hay which was not of a quality as inspected by the defendant and that all rain-damaged hay was not discarded and that it was not sound dry hay in good merchantable condition but was mouldy and unfit for use. To those allegations the plaintiff pleaded specially. It is to this replication that the defendant demurs. The demurrer therefore affects only so much of the cross-action as relates to what may be called the breach of warranties as to the hay actually delivered. It does not directly affect so much of the cross-action as relates to the allegation that the plaintiff did not make delivery of the balance of the hay as trucks were available and that the defendant lost the benefit of the contract. In other words, it does not relate to so much of the cross-action as seeks general damages for loss of profits on the undelivered quantity of hay. Needless to say it does not directly affect the causes of action on which the plaintiff sued. What the plaintiff's replication to the defendant's cross-action did was first to set out fully the memorandum of agreement in writing constituting the contract. The memorandum of agreement which is set out states the agreement of the parties in the form of a recital. It recites that "whereas" the parties thereto have agreed to the sale of all that lucerne hay contained in the five stacks as inspected by the purchaser situated at Kingsfield, Aberdeen, derrick pressed, estimated to contain 500 tons at a price and upon certain conditions. It then sets them out. The condition contained in the first clause is expressed thus: - "Quality to be as inspected and all rain-damaged hay to be discarded and the purchaser shall only be responsible to accept all sound dry hay in good merchantable condition". The second clause is as follows: - "The purchaser's agent shall have the right to accept or reject at the stacks but in the event of the buyer's representative not being present when any hay is loaded at the stacks no objection shall be taken by the purchaser to the quality of the hay delivered at rail". Clause 3 provides that the price of £13 5s. 0d. per ton shall be f.o.r. Scone and/or Aberdeen. Clauses 4 and 5 deal with the price, payment and weights. Clause 6 says that delivery shall be as prompt as possible as trucks are available.

[11]

It was suggested that the Supreme Court had begun by treating the contract as a sale by description in which was accordingly implied a condition that the hay should be of good merchantable quality and that, having begun in that manner, the court had rejected any limitation on the right to recover damages for breach of the condition so implied in a sale by description when the condition is turned into a warranty by delivery of the goods on the ground that very clear language is necessary to effect such a result. I read the reasons given in the Supreme Court as meaning that the condition that the hay should be in good merchantable condition is found on the face of the contract, but I am by no means prepared to say that this is not a contract for the sale of goods by description within the meaning of s. 19 (2) of the Sale of Goods Act 1923-1937 N.S.W.. It is true that the sale is one of ascertained goods, but the provision is not limited to unascertained goods. A buyer may buy specific or ascertained goods by description within the meaning of the provision. That is shown by Varley v. Whipp [1] ; Wren v. Holt [1] ; by a New Zealand case, Boys v. Rice [1] ; a Victorian case. H. Beecham & Co. Pty. Ltd. v. Francis Howard & Co. Pty. Ltd. [2] ; and the case in this Court of David Jones Ltd. v. Willis [3] ; and by Morelli v. Fitch [4] ; and Grant v. Australian Knitting Mills Ltd. [5] . If the buyer of goods which he has identified or selected relies in doing so upon their correspondence to a description, then they may be regarded as bought by description, notwithstanding that the goods are ascertained or specific. In the present case the goods are described as lucerne hay and, if they in fact were already derrick pressed, as derrick pressed. The defects complained of apparently do not seem to be such as ought to have been revealed by examination. But, however this may be, there is a clear promise that the quality of the hay will be as inspected and that all rain-damaged hay will be discarded. The words "the purchaser shall only be responsible to accept all sound dry hay in good merchantable condition" literally mean that he is bound to accept hay in that condition and no other hay. But plainly the reason for this is that hay which does not comply with the requirement is hay which the purchaser has not bargained to accept and pay for, and that, I think, notwithstanding the fact that the contract is initially expressed as a sale of ascertained goods, is the same as saying that the purchaser has not bargained to buy it. The natural meaning to attribute to the words "quality to be as inspected and all rain-damaged hay to be discarded" is that the seller so undertakes and I so interpret them. In this view it is of small importance whether the hay was sold by description so that prima facie a condition would be implied that the goods were or would be of merchantable quality. The suggestion that the purpose of the words was only to fix the quantity so that the price might be calculated and that the defendant bought the five stacks independently of their condition does not seem to accord with any probable intention of the parties. The strongest support which the plaintiff's contention finds in the document is the use of the words "no objection" in cl. 2. No doubt there is a good deal to be said for the view that a buyer who seeks to recover compensation for the defective condition of goods actually delivered to him which he has accepted literally does object to the quality of the goods when he makes his claim. But there are several considerations which make it right in my opinion to treat the logical susceptibility of the word "object" to this meaning as insufficient to justify a construction depriving the buyer of his right to claim damages after the delivery of the goods. First and foremost is the general rule which is expressed by Scrutton L.J. in Szymonowski & Co. v. Beck & Co. [1] . Scrutton L.J. [1] describes it as a principle repeatedly acted upon that if a party wishes to exclude the ordinary consequences that would flow in law from the contract that he is making he must do so in clear terms. His Lordship had before him a clause providing that goods delivered should be deemed to be in all respects in accordance with the contract, and the buyer should be bound to accept and pay for the same accordingly unless the sellers within fourteen days after the goods arrive at the destination receive from the buyers notice of any matter or thing by reason whereof they allege that the goods were not in accordance with the contract. Of this clause Scrutton L.J. said that he had to consider whether it was clear that if the goods are not in accordance with the contract a claim for damages is excluded unless the notice of the defect is given within a specified time. His Lordship said that the clause was obscurely drawn and asked the rhetorical question whether having regard to the fact that it mentioned one particular consequence, and bearing in mind the principle he had stated, could he say that the sellers had used language which to the mind of an ordinary commercial man clearly excludes the buyer's right to claim damages as well as their right of rejection. The provision which his Lordship interprets was unlike the present contract but the principle invoked appears to me to be applicable.

[46]

It is true that the agreement commences by describing the intended sale as a sale of all the hay contained in the five stacks inspected by the purchaser, and that the first five words of cl. 1 "quality to be as inspected", are quite apt for the expression of a promise. But the rest of the clause appears to me to show that it is not intended as a promissory provision at all. It describes a state of affairs to exist at a future time. This, of course, is to be expected since the hay is to be delivered at rail at times dependent upon the availability of trucks; the price is agreed at a rate per ton to be conclusively determined by railway weighbridge tickets; and payment of the price is to be made on receipt of the railway consignment notes. Clearly enough, the title is to pass on delivery at rail. But what hay is it intended that the purchaser shall acquire and become liable to pay for on delivery at rail? Not, I should have thought, the whole of the hay in the five stacks, regardless of any failure to conform to the quality existing at the time of the purchaser's inspection; for the effect of the second provision of cl. 1 is to exclude from the hay to be delivered at rail any of the hay in the stacks which may be damaged by rain, and the effect of the third provision of that clause is to relieve the purchaser from any obligation to take any hay which is not sound, dry and in good merchantable condition. These two provisions thus operate as qualifications upon the initial description of the sale as comprising all the hay in the five stacks, and they show that the purchaser is not buying all the hay in the stacks in reliance upon its being of a stipulated quality so that defects of quality shall give rise to a right to recover damages, but is interested only to buy hay which is of the quality that he wants. In this context the first of the three provisions of cl. 1 appears simply as an explanatory introduction to a clause the function of which is to exclude from the sale so much of the hay in the stacks as may be found, when the time for delivery arrives, to be no longer of the quality which alone the purchaser is content to accept, because it is rain-damaged or for some other reason not sound, dry and in good merchantable condition. Clause 1 thus protects the purchaser in regard to quality, and cl. 2 modifies the extent of that protection in order to save the vendor the expense and trouble of loading hay and carting it to the rail, only to have it then rejected for defects of quality. Clause 2 shows that the only defects of quality which are to exclude hay from the sale are such as exist at the time of loading for cartage to the rail. Its meaning appears to me to be that the purchaser is precluded from refusing on the ground of defective quality to accept as sold to him under the agreement any hay which his agent fails to reject at the stacks at the time of loading, the agent being present and accepting it either expressly or by not rejecting it, or being absent when he might have been present.

[55]

The present case does not, I think, fall into the same category for the provisions of cl. 2 do not relate to acceptance or rejection after delivery. Nor, on the other hand, do they provide that the contractual goods shall be taken with all "defects" (cf. Shepherd v. Kain [1] ) or "without allowance for any defect or error" (cf. Taylor v. Bullen [1] ). The obligation of the defendant under this contract was to pay on railway weights for such hay as was delivered and the primary purpose of cll. 1 and 2 appears to me to have been to exclude from deliveries to the defendant such portions of the five stacks of hay as he might properly "reject". But whilst cl. 2 conferred upon the defendant the right to reject hay at the stacks, it is completely silent as to the basis upon which this right is exercisable. Obviously the basis upon which it is exercisable is that the standards prescribed by cl. 1 have been departed from so that he may reject hay which is not of the "quality as inspected", which is "rain-damaged" or not "sound dry hay in good merchantable condition". If it were not for the presence in the agreement of cll. 1 and 2 the defendant would, subject to any implications pursuant to the Sale of Goods Act, have been bound to take and pay for the whole of the five stacks of hay, and no action for breach of warranty would have accrued to him. Is the plaintiff's position, then, any weaker because he has, in effect, agreed to give to the defendant the right to make a further examination of the hay, as it is being loaded, and to exclude from deliveries under the agreement hay which does not conform to the specified standards? I think not. The plaintiff has in my opinion done no more than sell to the defendant five stacks of hay and agreed to give to him the right to exclude as and when it is being loaded, and before delivery, such hay as does not conform to the standards specified in cl. 1. But on this view the plaintiff did not warrant the quality or condition of any hay "accepted" or not "rejected" by the defendant. If the defendant did not exercise his right to reject he is, I think, bound to pay for hay delivered from the five stacks. And, even if the clause had not contained the provision that "in the event of the buyer's representative not being present when any hay is loaded at the stacks no objection shall be taken by the purchaser to the quality of the hay delivered at rail" the defendant would have been in no better position. For if he was given the right, upon specified grounds, to exclude hay from deliveries under the agreement and did not choose to exercise it his primary liability under the agreement remained. The words which I have quoted were, I think, merely intended to make it clear that this result was intended and that no warranty of quality or condition was intended in respect of hay delivered pursuant to the agreement. For the same reason I am of the opinion that there is no room for the implication in the contract of any warranty of quality or condition.

Duncombe v Parker - [1953] HCA 78 - HCA 1953 case summary — Zoe

At a glance

Court

Decision date

Before

Source

Judgment (57 paragraphs)

Parties

Cited By (1)