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[1927] HCA 20
High Court of Australia
1927-07-01
Starke JJ, Powers JJ, Higgins J, By Starke J, Gordon J
Original judgment source is linked above.
H.C. or A. was suggested that the additional tax was properly assessed. That ele failing, the appeal should be allowed with costs.
Leathe at Solicitors for the appellant, Biddulph & Salenger. "Solicitor for the respondent, Gordon H. Castle, Crown Solicitor
PLAINTIFF, AND P. ODAY PROPRIETARY LIMITED. . RESPONDENT. DEFENDANT,
ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.
H.C. or A, Sale of Goods - C.i.f. contract - Action for non-delivery - Readiness and willingness of buyer - Refusal to take up draft - Goods shipped not in accordance with
Re contract - Invoice not covering goods. ee By a contract in writing the respondent agreed to sell and the appellant to "Niay 6 | - _- bay "150 bales first selection Liverpool wheat-sacks " of a specified quality at acertain price per dozen "c.i.f.e. Sydney." Delivery was to be during November TsktOE Ting, 1925 and the terms were "'net cash against bill of lading or ship's order which Rowers and will enable buyers to obtain delivery of the goods." On 10th November 1925
the respondent shipped in Melbourne certain sacks for delivery in Sydney in alleged performance of the contract, but the sacks were in fact not in accordance with the contract. On the same day the respondent sent to the appellant an invoice in which the goods were described as "150 bales Liverpool sacks," and drew on the appellant through a bank for the amount
of the invoice, the bill of lading and insurance policy being attached to the H. C. or A. draft. 'The appellant did not accept the draft. In an action in the Supreme 1927.
Court of New South Wales by the appellant against the respondent to | "~ recover damages for the non-delivery of the goods the respondent pleaded aes
that the appellant was not ready and willing to perform the contract. & Sons The trial Judge having found a verdict for the appellant, the Full Court on (SYDNEY)
appeal set the verdict aside and entered a verdict for the respondent, being '7P-
of opinion that the appellant was not ready and willing to perform the P. O'Day ptance of the draft, PTY. Lrp.
contract inasmuch as it insisted, as a condition of
on having inspection of the goods. On appeal to the High Court,
Held, by Knox C.J., Higgins and Starke JJ, (Isaacs and Powers JJ. dissenting), that the verdict of the trial Judge should be restored: *
By Knor C.J. and Higgins J., on the ground that under a c.i.f. contract providing for payment against documents the purchaser is under no obligation to take up documents that do not in fact relate to goods of the description contracted for, and therefore the appellant's refusal to take up the draft did not prove that it was not ready and willing to perform the contract ;
By Starke J., on the ground that, although, if the appellant had refused to accept any documents tendered to it under the contract unless it had an inspection of the goods, such refusal would have established that it was not ready and willing to perform the contract, yet, upon the evidence, the appellant had not refused to take up the draft, but before taking it up, having a reasonable doubt as to whether the invoice represented goods of the description contracted for, required, as he properly might, assurance that the goods were of that description ; and accordingly that, upon the evidence, the appellant was ready and willing to perform the contract.
Decision of the Supreme Court of New South Wales (Full Court) reversed.
An action was brought in the Supreme Court by Henry Dean & Sons (Sydney) Ltd. against P. O'Day Pty. Ltd. in which the plaintiff claimed £375 damages for the breach by the defendant of a contract for the purchase by the plaintiff from the defendant of certain wheat-sacks, the breach alleged being a refusal to deliver the sacks in accordance with the terms of the contract. One of the defendant's pleas was that the plaintiff was not ready and willing to perform the contract. The defendant, also, by way of cross- action, claimed damages for the breach of the same contract by the plaintiff, the breaches alleged were refusal to accept the goods or to pay for them and repudiation of the contract. The action was heard by Gordon J. without a jury, and he found a verdict for the
H.C. or A. plaintiff for £343 5s. and dismissed the cross-action. On appeal ea by the defendant the Full Court made an order setting aside the
~ Henry verdict of Gordon J. and ordering that a verdict be entered for the Dran & Sons defendant. (SypNEy) = mi A Lr. From that decision the plaintiff now appealed to the High Court.
P. O'Day The other material facts are stated in the judgments hereunder. Pry. Lrp.
Halse Rogers K.C. (with him Owen), for the appellant. Under a c.if. contract the seller's first duty is to ship goods which are in accordance with the contract. If he fails to carry out that duty no obligation is imposed upon the buyer to be ready and willing to perform the contract. The decision in EZ. Clemens Horst Co. v. Biddell Bros. (1) does not conflict with that proposition. What the appellant did in the present case did not amount to a breach of his duty to be ready and willing to pay for the goods contracted to be sold on tender of the proper documents. All that is proved is that the appellant was unready and unwilling to take up the documents relating to the particular shipment of goods on the Suva, and, since the goods shipped on the Suva did not comply with the contract, the appellant's refusal to take up those documents did not establish unreadiness and unwillingness to take up documents representing goods which were contracted to be sold. In an action for goods sold and delivered the buyer need not give evidence of his readiness and willingness to pay until the seller gives evidence that he was ready to deliver (see Great Northern Railway Co. v. Harrison (2)3 Chalmers' Sale of Goods, 9th ed., p. 81). If it is proved that no goods were shipped in accordance with the contract, the buyer's readiness and willingness would be of importance only if the seller could show that he was exonerated; but there is no question of exoneration in this case. [Counsel also referred to Arnhold Karberg & Co. v. Blythe, Green, Jourdain & Co. (3); British and Beningtons Ltd. v. N.W. Cachar Tea Co. (4).]
[Isaacs J. referred to Hansson v. Hamel & Horley Ltd. (5).
(1) (1912) A.C. 18. (3) (1916) 1 K.B. 495, at p. 510. 2) (1852) 12 C.B. 576, at p. 599. (4) (1923) A.C. 48, at p. 64. (5) (1922) 2 A.C. 36.
E. M. Mitchell K.C. (with him Barton), for the respondent. H.C. or A. Where a plaintiff sues for non-delivery of goods it is obligatory upon i
him to show that if the goods and the documents had been in order eere he was ready and willing to do his part. If the position is one in & Sons
which there must be a concurrence of readiness and willingness of Me) both parties, then if neither is ready and willing neither can sue P: O'Day
for a breach by the other (Chitty on Contracts, 17th ed., p. 830; Pry. Lr. Cohen & Co. v. Ockerby & Co. (1) ). Upon a proper construction axe of the letters and telegrams and the effect of the oral evidence the proper conclusion is that, whether the goods shipped were or were not in accordance with the contract, the appellant insisted on something to which he was not entitled under the contract, namely, that before taking up the documents he should have inspection of the goods or proof that they were in accordance with the contract. All that the appellant was entitled to have were the customary shipping documents, and those documents are sufficient if their terms are not inconsistent with the contract (Re Denbigh, Cowan & Oo. and R. Atcherley & Co. (2); Ireland v. Livingston (3); Manbre Saccharine Co. vy. Corn Products Co. (4) ).
An invoice is sufficient if it indicates to the buyer that the goods to which it refers are the goods which have been contracted to be sold. In every action for breach of contract the onus is on the plaintiff to establish his readiness and willingness (Jefferson v. Paskell (6); Forrestt & Son Ltd. v. Aramayo (7) ).
Halse Rogers K.C., in reply, referred to Johnson v. Taylor Bros. & Co. (8); Wilks v. Atkinson (9).
The following written judgments were delivered : - Kyox C.J. By a contract in writing dated 30th October 1925 the respondent agreed to sell and the appellant to buy " 150 bales
first selection Liverpool wheat-sacks . . . turned mended and (1) (1917) 24 C.L.R, 288, (5) (1862) 31 LJ. Q.B. 296. (2) (1921) 125 L.'T. 388, at p. 390. (6) (1916) 1 K.B. 57. (8) (1872) L.R. 5 HL, 395, at p. 406. (7) (1900) 83 L.T. 335, at p. 337. (4) (1919) 1 K.B. 198, (8) (1920) A.C. 144, at p. 165.
sound. Price - 9s. per dozen c.i.f. & e., Sydney. Delivery - duri November 1925. Terms - net cash against bill of lading or ship's order which will enable buyers to obtain delivery of the goods." On 10th November 1925 the respondent shipped in Melbourne 150 bales of sacks for delivery in Sydney in alleged performance of the contract and on the same day sent to the appellant an invoice for "150 bales of Liverpool sacks at 9s. c.if.e. £1,687 10s. - Per s.s. Suva." and drew on the appellant through a bank for the amount of the invoice, the bill of lading and insurance policy being attache to the draft. On 12th November the appellant wrote to respondent as follows : - ' This boat will not be in until next Monday j Meanwhile will you please let us know whether these sacks have been cleared in Melbourne, i.e., whether they have been passed by the inspectors. Otherwise we may have difficulty in getting them | landed here without the original invoice and declaration of freedom from disease. We would like you to send us the original invoice showing that they are first selection bags packed by Messrs. Martin or Levy Bros. & Knowles according to our purchase." ~ Next Monday " was 16th November. On 13th November the respondent replied by telegram: " Liverpools cleared Customs here. All you~ have to do is pay wharfage. Bags are in accordance with contract." The appellant did not accept the draft, and on 16th November respondent telegraphed to appellant as follows, namely: "Ba advises payment draft refused. Please note unless docu
now lying Commercial Bank Sydney are accepted and paid before three same will be sold against you." On the same appellant replied by telegram: "We have not refused paym your draft. Your documents do not identify goods as be according contract. Draft will be accepted soon as goods pro equal description purchased. Boat due to-day. Expect e amine to-morrow. We wrote you for oversea invoices which you have not provided." And on the same day respondent replied by telegram:
with." On 19th November appellant inspected the goods shipped and found they were not of the description contracted for, and
20th November wrote to the respondent a letter containing the H- ©. oF 4-
following passage, namely : - '' Altogether they are a very inferior lot and certainly not according to contract and we have consequently refused to accept them against our contract. If you have imported these bags yourself or if you knew anything about Liverpool bags, you must have known that these were not first selection Liverpool wheat-sacks. Your refusal to give us the evidence we asked for, namely, the overseas invoices describing the pack, leads us to believe that you had knowledge that these bags were not what you sold us. This class of business is no use to us and, unless you can give us a satisfactory explanation of your actions over this shipment, we shall have to avoid doing business with you in future." On 24th November appellant telegraphed to respondent: ' Referring contract 30th October 150 bales first selection Liverpool wheat-sacks sold to us delivery during November when are you delivering ? Reply." On 25th November respondent replied by letter : - ' This telegram is apparently an afterthought. We had one contract with you which we carried out and under which you refused to do your part." On 25th November appellant wrote confirming the telegram of the 24th and asking by what steamer respondent intended delivering, and on 26th November wrote in reply to the letter of 25th November that unless respondent delivered sacks in accordance with the contract appellant would claim damages for breach of contract.
The appellant having sued for damages for non-delivery, the respondent pleaded (inter alia) that the appellant was not ready and willing to perform the contract. On the trial of the action before Gordon J. without a jury a verdict was found for the appellant for £343 5s. On appeal by the respondent to the Supreme Court in Full Court the verdict was set aside and a verdict entered for the respondent. This is an appeal from that decision, and the only question is whether on the evidence the appellant was ready and willing to perform the contract.
At the trial the managing director of the appellant was cross- examined as to his attitude. I agree with the learned trial Judge in thinking that the oral evidence was in accordance with the correspondence above referred to. He found, and it is not now
denied, that the goods shipped were not in accordance with the contract. The meaning of the averment of readiness and willingness is that the non-completion of the contract was not the fault of the plaintiff and that he was disposed and able to complete it if it had not been renounced by the defendant (Cort v. Ambergate &e. Railway Co. (1) ). The demand for delivery contained in the letter of the appellant dated 26th November is prima facie evidence - that the appellant was ready and willing to perform the contract (Squier v. Hunt (2)). The question is whether that evidence is rebutted by the refusal of the appellant to take up the documents. The inference which I draw from the whole of the evidence is that the appellant in refusing to accept the draft acted on the belief or suspicion that the goods shipped were not goods of the description contained in the contract. This belief may have been induced by the form of the invoice sent by the respondent, but, however that may be, the appellant took the risk and the belief proved to be well founded. The position, then, is that the only documents presented to the appellant did not in fact relate to goods of the description required by the contract and no such goods had in fact been shipped by the respondent. In these circumstances is the refusal of the appellant to take up the documents evidence that the appellant was not ready and willing to perform the contract ? I think not. It was argued for the respondent that the appellant was under an obligation to take up the documents tendered in this case because they were proper or usual shipping documents, being documents of the nature required, namely, invoice, bill of lading and policy of insurance, and containing a description of the goods to which they related not inconsistent with the description contained in the contract. In my opinion something more is necessary to constitute them proper shipping documents - -they must in fact relate to goods of the description contained in the contract which have been shipped. The purchaser under a c.if. contract providing for payment against documents undertakes to pay the contract price of the goods on presentation to him of documents relating to goods of the description contained in the contract which have in fact been shipped. If no such goods had in fact been shipped. (1) (1851) 17 Q.B. 127, at p. M44, (2) (1816) 3 Price 68. :
the purchaser, in my opinion, is under no obligation to take up documents presented to him, even if such documents purport to represent goods of that description. If the goods shipped, not being goods of the contract description, were truly described in the invoice and other documents, it would be apparent that the goods to which the documents related were not the goods which the purchaser had agreed to buy, and in that case it would be ridiculous to treat a refusal to pay the contract price on presentation of those documents as a breach of contract by the purchaser, or as evidence that he was not ready and willing to perform the contract. If this be so, I am at a loss to understand why the position of the purchaser in this respect should be changed for the worse by the fact that the documents contain an incorrect description of the goods to which they relate. This view is, I think, supported by the decisions in the two cases Tamvaco v. Lucas (1). Inthe first case the description contained in the invoice was in accordance with the contract but the description in the bill of lading showed a quantity in excess of that agreed to be purchased, and it was held that the purchaser was entitled to refuse to accept the documents. In the second case the documents represented the cargo to be in accordance with the contract, but the purchaser pleaded that the cargo was in fact below the minimum quantity contracted for and that therefore he was not bound to accept the documents, and this was held on demurrer to be a good plea. In delivering judgment Wightman J. said (2): - 'In the case which came before us upon a precisely similar contract (3), the shipping documents themselves showed, upon the face of them, an excess above the prescribed maximum ; and we held that the purchasers were not bound, upon the tender of those documents, to accept them, or liable to pay for the cargo. In the present case the shipping documents, upon the face of them, show a quantity within the prescribed limits; but the amount actually shipped is below them: and the question here, therefore, is whether, if the shipping documents untruly represent the cargo as being within the limits, and the cargo, as the plea alleges, is really not within them, the purchasers are bound to accept the cargo. If,
(1) (1859) 1 E, & E. 581, 592. (2) (1859) 1 EB. & B., at p. 595. (3) (1859) 1 EB. & B. 581.
as I suggested in the course of the argument, the plea had expressly alleged that the shipping documents, by mistake, stated a cargo within the limits, and that the actual cargo was below them, that would surely be a substantial defence, and the plaintifis could not contend that the documents were conclusive for the purpose of acceptance of and payment for the cargo. The plea here does not expressly allege such misstatement in the documents : but I think that, as it stands, it substantially raises the same defence, and shows that the purchasers were not bound to accept." In Benjamin on Sale, 6th ed., at p. 846, it is said: " When delivery is to be made by a bill of lading, the rule is that the seller makes a good delivery if he forward to the buyer, as soon as he reasonably can after the shipment, a bill of lading, whereunder the buyer can obtain delivery, duly indorsed and effectual to pass the property in the goods, made out in terms consistent with the contract of sale, and purporting to represent goods in accordance with the contract, and which are in fact in accordance therewith." This passage is quoted, apparently with approval, by McCardie J. in Diamond Alkali Export Corporation v. Fl. Bourgeois (1). The decision in the second case of Tamvaco v. Lucas (2) seems to show that a purchaser under a c.if. contract commits no breach of his obligations by refusing to take up documents _ which do not in fact relate to goods of the description contained in the contract. The reason for this must be that he is under no obligation to take up such documents ; and if this be so I am unable to understand how his refusal to take them up can be regarded as evidence that he was not ready and willing to perform the contract. A purchaser who refuses to pay on presentation of documents purporting to relate to goods of the contract description no doubt takes the risk that the description contained in the documents may prove to be correct, but in the present case the risk taken was justified by the result. The respondent in this case committed @ fundamental breach of its contract by failing to ship the goods which it had contracted to sell. Adapting the language of Lord Atkinson in Johnson v. Taylor Bros. & Co. (3), the respondent by doing 8° made the creation, and of course the tender, of the shipping
(1) (1921) 3 K.B, 443, at p, 451. (2) (1859) 1 E. & E. 592. (3) (1920) A.C., at p. 158.
documents impossible, that being a necessary consequence of the H- ©. or A.
main and substantial breach of its contract. In other words, "proper shipping documents " were not and could not have been tendered to the appellant and his refusal to take up documents which were not proper shipping documents affords no evidence that he was not ready and willing to perform the contract or that it was his fault that the contract was not performed.
For these reasons I am of opinion that the appeal should be allowed and the verdict found by Gordon J. restored.
Isaacs J. In my opinion the unanimous judgment of the Full Court of New South Wales was correct and should be affirmed.
When resolved into its simplest elements this case is, as I think, of an elementary character. It ultimately raises no question but this: Is the buyer of goods c.if. who on tender of proper shipping documents persistently refuses to receive them and pay the stipulated price except on inspection of the goods, or other proof of their compliance with the contract, entitled to recover damages from the seller because it is afterwards discovered that the goods shipped were not in accordance with the contract? Hewever great the failure of the vendor to perform his primary duty, the question I have stated must, in my opinion, be answered in the negative. Cross-actions were brought: seller sued buyer for non-acceptance, and properly failed ; buyer sues seller for non-delivery, and claims that the seller's breach of his duty to ship the goods, not only disentitles the seller to recover damages for the buyer's refusal above stated, but also prevents that refusal from being wrongful. This is a rather novel and, from a mercantile standpoint, a somewhat disturbing contention, and so needs a little careful examination. First, it is said that, where under a c.i.f. contract the seller fails to ship goods in conformity with
the contract, the " documents " never can be proper, because they cannot in the nature of things represent contractual goods, and therefore, whatever reason actuates the buyer in refusing to pay, that refusal is rightful within the contemplation of the contract. No authority was, or could be, cited for that position. No doubt the formal accuracy of the documents would be unavailing to the
seller if, after provisional acceptance and payment, the buyer found
H.C.or A. that the goods were not in fact in conformity with the contract
and had exercised its undoubted right to reject the goods and demand a return of the money paid (see sec. 37 (1) of the Sale of Goods Act 1923 (No. 1 of 1923) (N.S.W.) ; and Polenghi v. Dried Milk Co. (1) ). In that sense, the main provision being broken by the seller, the documents would be worthless. But that is not the same as saying they were defective as "ordinary and usual shipping documents" (see per Cockburn C.J., in Tamvaco v. Lucas (2) ), and therefore not the documents contracted for. I am very distinctly of opinion that to say so is wholly inconsistent with the true notion of a cif. contract. Doubtless any refusal by the buyer to accept and pay on receipt of the shipping documents may escape pecuniary consequences, if it be shown that the seller by his own breach has disentitled himself from complaining. But that does not divest the buyer's failure of any wrongfulness which it may have, when judged by the standard of the obligations he has assumed. The propriety of the documents as documents must be judged of apart from such a consideration. If, on their face, they show a departure from the contract, they are not such as are contemplated by the bargain. If they are in the usual form of such documents, and would be proper if the contract were so far performed as to ship goods in conformity with the contract, then no objection can be made on the ground only that the documents are not those stipulated. Any objection made to the documents must be considered on its own footing. An objection may be to something which a reasonable man might fairly question and require to be cleared up - as, for instance, an apparent alteration. Or, if the invoice were such that a merchant buyer could, according to mercantile practice, - reasonably require it to be more explicit and he did require it to be made more explicit, no one would regard such objections as any evidence of want of readiness and willingness on the part of the buyer to perform the contract.
But here the position is wholly different. First of all, there was nothing wrong, or even apparently wrong, with the documents. Even now no particulars of disconformity with the contract are pointed to with respect to the policy and the bill of lading. The
(1) (1904) 10 Com. Cas. 42. (2) (1861) 1 B. & S. 185, at p. 197.
invoice is the only possible source of complaint. The contract was H.C. or A.
for " 150 bales, first selection Liverpool wheat-sacks. When new 41 in. x 23 in. 8 porter 9 shot. 300 to the bale. Original weight about 2} Ibs. shipped at Calcutta fair average. Turned mended -and sound." Now that is the description of the sacks, all of which -could be insisted on by the buyer. Then the contract said: " Price
sacks which have been shipped to Sydney per -of your esteemed order through Messrs. (. H. Wood & Co." As no challenge was made and no evidence was given with respect to the necessity of saying in the invoice " first selection," I am not, nor -can a Court possibly be, in a position to say whether those words were essential according to mercantile custom, or whether they would have been sufficient. No such issue was raised. So far as I "can see, even apart from the appellant's failure to raise it at the trial, "the invoice was sufficient for its purpose. It indicated the class of
Henry Dran & Sons (Sypyey) Lap. v. P. O'Day Pry. Lrp.
H.C. or A. ground. The letter of refusal said (inter alia): " Your refusal to
give us the evidence we asked for, namely, the overseas invoices . describing the pack," é&c. At the trial before Gordon J., the appellant's case was that hal 'i seller's failure to ship goods in accordance with the contract was decisive as to the buyer's right to recover damages. The learned Judge said: " Assuming, but without deciding the point, that the request by the purchasers (the plaintiffs) for further proof was not such as they were entitled to make under the contract, I am of the opinion that by so doing . . . they have not precluded themselves from maintaining the present action." It is fair to the learned Judge to say that he adds, " the question is not free from difficulty." The breaches of contract by the sellers, as found by the learned Judge are: (1) Disconformity of goods shipped; (2) tender of documents not covering any goods coming within the contract. The second breach was regarded as a necessary consequence of the first, the learned Judge saying : "the vendors had already shipped and forwarded goods not as specified in the contract." But his Honor also found, with respect to the buyer's attitude, what to my mind is ultimately decisive against the buyer. He found: " The purchasers refuse to accept these documents and pay for the goods under the contract on the ground that they decline to accept the documents or pay for the goods without an inspection of the goods themselves, which is undoubtedly @ wrong position by the purchasers. to take up under such a contract as the present: one." Gordon J. could not have held the position of the purchaser "a wrong one" if he had thought the invoice itself an insufficient document. The dilemma is, either its insufficiency was not raised or the learned trial Judge has decided against it. The first alternative is, T think, correct, the action being conducted on the basis that the only objection of the buyer was the disconformity of the goods, and that. it was entitled to some proof of conforming beyond the usual documents before payment. I extract the following from the judgment of Gordon J., and italicize certain words. After referring to demand for payment, the judgment proceeds :-~* The plaintiffs. refused to do so and asked for proof to be furnished to them that the goods shipped on board the Suva were goods in accordance:
with the description contained in the contract. Ralph Wilson Dean, H. C. or A.
managing director of the plaintiff company, gave evidence and in answer to Mr. Barton, counsel for the defendants, stated as follows :
Tf he could so insist, then the accidental omission or insertion of a word by a clerk, a mistake easily rectified, would seriously alter the distinctive nature of the contract and embarrass mercantile operations. Each party to a contract is entitled to all it gives him ; if he insists on something plainly outside the bargain, he declines to be bound by the contract, and is not ready and willing to perform it.
T have first to test the contention that documents are necessarily defective if the goods turn out to be in discenformity with the contract. To test that, we must assume the goods themselves were, when shipped, in conformity with the contract. If they were, there is no question the bill of lading protected the buyer throughout, and would have entitled the buyer to obtain them, pursuant to his contract, the identification of the goods shipped with those described in the bill of lading not being challenged. Nor is there any suggestion that if the goods as shipped were lost, the buyer would have met with any obstacle in recovering on the insurance policy. The invoice,
H. C. or A. as it seems to me, described the goods in a manner that no merchant
could misunderstand or fail to see that they had reference to the goods contracted for, for there is no suggestion of any other contract to which they could be referable. If it did not as a matter of law, then it must be because the goods must be fully described, for in lay one part of the description is as vital as another, and every particle of the description of the goods should have been inserted. short, but for the fact that the goods as shipped did not answer to the contractual description, the seller must have succeeded in its action. This conclusion is so important to the mercantile community _
that I venture to refer to some legal authorities, including some
The standard repositories of the seller's obligations under a c.if. contract are : Ireland y. Livingston (1), and E. Clemens Horst Co. v. Biddell Bros., in the various Courts, culminating in the House of Lords _ (2). To those should now be added the recent authority of a - unanimous House of Lords in Hansson v. Hamel & Horley Lid. (3). Nevertheless, room seems left for the argument to which I have referred ; and therefore it is not undesirable to state why I consider the decided cases support the conclusion I have arrived at. It is not unimportant to observe that where the relation between the parties is simply that of seller and buyer, no commission being charged by : seller against buyer, there is no question of trust or agency bene a them (Houlder Bros. & Co. v. Public Works Commissioner (4)). - The contract of sale is, in that case, itself the sole measure of their mutual rights. Again, the nature and contents of the documents - must be such as are appropriate to the particular contract (Yangtsze ; Insurance Association Ltd. v. Lukmanjee (5)). This particul contract contains two relevant express statements. First, it declares the price is "cif. & e. Sydney." Next, it states: "Net cash against bill of lading or ship's order which will enable buyers to obtain delivery of the goods." I will assume - since it is not necessary to do more - that the combined effect of these two provisions - is that the ordinary c.i.f. documents are required, with one possible
(3) (1922) 2 A.C. 36. (4) (1908) A.C. 276, at p. 290. (5) (1918) A.C. 585, at p. 589.
variation at the option of the seller, namely, the substitution of a H.C. oF A.
ship's order for the bill of lading. The primary result of that is that "the ordinary shipping documents" were to be delivered to the purchaser (per Lord Cairns L.C. in Hickox v. Adams (1) ). The modified result is that, in the absence of any express stipulation and in the absence also of any proved mercantile usage to the effect that any other documents are deliverable for the purpose (see Wilson, Holgate & Co. v. Belgian Grain and Produce Co. (2); and per Serutton LJ. and Atkin L.J.in Malmberg v. H.J. Evans & Co. (3)), the documents required to be delivered are (says Bailhache J. in Wilson, Holgate & Co. v. Belgian Grain and Produce Co. (4) ) " a bill of lading, an invoice and a policy of insurance, and it is well under- stood that under a contract of that kind these are the documents Naturally, the invoice is for
which the seller is required to tender.' purposes which are confined to the personal relations of buyer and seller, which are already definitely settled by the terms of the contract itself. But the other two documents have probably other purposes and may have to bring the buyer into possible relations with other persons. It is as to these that Lord Summer, in his judgment in Hansson v. Hamel & Horley Ltd. (5), refers in a passage of import- ance. His Lordship says : - '' When documents are to be taken up the buyer is entitled to documents which substantially confer protective rights throughout. He is not buying a litigation, as Lord Trevethin (then A. T. Lawrence J.) says in the General Trading Co.'s Case (6). These documents have to be handled by banks, they have to be taken up or rejected promptly and without any opportunity for prolonged inquiry, they have to be such as can be re-tendered to sub-purchasers, and it is essential that they should so conform to the accustomed shipping documents as to be reasonably and readily fit to pass current in commerce." There is not a word there about any assurance in the shipping documents that the goods are in conformity with the contract between buyer and seller. Such an assurance, even by description, would be out of place between shipowner and seller, or between insurer and seller, and equally so.
(1) (1876) 34 LP. 404, at p. 407. (4) (1920) 2 K.B., at p. 7. (2) (1920) 2 K.B. 1, at p. 8. (5) (1922) 2 A.C,, at p. 46. (3) (1924) 41 T.L.R. 38, at pp. 39, 40. (6) (1911) 16 Com. Cas. 95, at p. 101.
H.C. or A. between buyer and his sub-purchaser. In each of those cases
description of the goods must be relative to the particular contra it is connected with. As between the buyer and seller the ship documents must give the proper protection to the seller in respec of the dangers of carriage and the perils insured against, and of course they must not be inconsistent with the buyer's rights. documents must be such as are customary as between the shipowner or insurer on the one hand, and the owner of the goods on the ot But by the nature of the contract of sale the buyer must trust t the seller's promise that the proper goods will be shipped and to whatever is customarily included in the documents to show the have been shipped. If he mistrusts the seller, then he may the risk of refusing to pay on presentation of documents in proper - form. The refusal may turn out to be actionable or to be non- actionable by the fault of the seller. But even if non-actionable for that reason, it may be a refusal that affords unanswerable evidence of inability or unwillingness to pay, whatever the seller - has done. Suppose, for instance, the present appellant on presenta- tion of the documents had said expressly: " We are neither in position to pay, nor are we willing to pay, and therefore we refuse _ acceptance of the documents." Then, suppose they discovered a - week afterwards that the seller's goods were not up to the contract No doubt the seller must fail, as it has failed, in a claim for dan But could the buyer succeed in a cross-action? And if not, wh can it succeed now ? Gordon J., as I have shown, has found as a fact why the buyer refused: not because it found any fault in th documents, not because the goods shipped were not in accordance w the contract, but because, as the goods might not be in accorda with the contract, the buyer required inspection of the goods them selves. This attitude was maintained for many days, and althou the vendor made more than one attempt to overcome the refusal it was adhered to; and finally the vendor declared the transaction at an end. At that time there was no knowledge that the goo were not in accordance with the contract, and therefore there mus have been some other reason for the buyer's persistent attitude. The reason was that stated, namely, insistence on inspection of goods that might or might not be up to contract. That was legally
unjustifiable (#. Clemens Horst Co. v. Biddell Bros. (1) and per - C. or A.
Scrutton L.J. in Malmberg's Case (2)). Ultimately the seller terminated the contract, as it had a right to do. On a turn of the market the buyer demanded performance, but, in the circumstances, necessarily without relation to the document tendered and refused. T see no escape from the conclusion that the refusal, which became irrevocable, cannot be regarded in law as anything but want of readiness and willingness on the buyer's part to perform an essential obligation on its part - the most characteristic duty of a buyer under such a contract - even though the seller had not done all that the contract demanded cf it. The subsequent demand for performance, besides being a pure afterthought and deserving no consideration, was utterly ineffectual to influence the contract or its performance. The appeal, in my opinion, should be dismissed.
Hicerns J. A purchaser of wheat-sacks brings an action against the vendor for not delivering the goods. The only plea of the vendor with which we are concerned is the third - that the purchaser was not always ready and willing to perform the agreement. Every- thing but one points to readiness and willingness on the part of the purchaser to take and pay for the wheat-sacks in pursuance of the contract ; and that one thing is that he hesitated and delayed in taking up the usual papers - the bill of lading and the policy of insurance - and in honouring the draft of the vendor for the price until he made sure that the goods were of the description for which he contracted. It turns out that the goods were not of that descrip- tion, but inferior ; and now it is urged that the purchaser must be treated as being not ready and willing to carry out his contract because he failed to accept and pay for goods for which there was no contract. He contracted, as it were, to buy cement; and he was offered sand. Is it true, as the vendor insists, that we are bound by the authorities to hold under such circumstances that the purchaser was not "ready and willing to perform the agreement ?"
It seems to be assumed that under what is called a c.i.f. contract
(1) (1912) A.C. 18, (2) (1924) 41 T.L.R. 38, at p. 40,
H.C. or A. of the purchaser to pay the purchase-money and take up
documents sent by the vendor when they arrive at the destination, whether the goods contracted for are sent or not. It must follow that even if the purchaser learn by accident that the goods shipped are not the goods contracted for, he is not at liberty to refuse to pay and to take up the documents. No case has been cited which directly establishes such an extraordinary result; but there are cases which show that delivery of the goods to the master of the ship on behalf of the purchaser is delivery to the purchaser, and that it is the duty of the purchaser, under ordinary circumstances, to pay when he is advised of the consignment. But these cases apply only on the assumption that the proper goods, the goods the subject of the contract, have been put on board.
In the case of Wait v. Baker (1) the position was explained clearly by Parke B. The contract was for the sale of 500 quarters of corn of a certain description. The vendor was free to select any 500 quarters that answered the description in the contract ; and therefore no property in any corn passed by the mere contract. Parke B. said (2): "It may be admitted, that if goods are ordered by a person, - although they are to be selected by the vendor, and to be delivered to a common carrier to be sent to the person by whom they have been ordered, the moment the goods, which have been selected in pursuance of the contract, are delivered to the carrier, the carrier becomes the agent of the vendee, and such a delivery amounts to a delivery to the vendee ; and if there is a binding contract between the vendor and vendee . . . then there is no doubt that property passes by such delivery to the carrier. It is necessary, course, that the goods should agree with the contract."
The same qualification of the rule appears in Benjamin on Sale, 5th ed., at p. 743: " When delivery is to be made by a Dill of lading, the rule is that the seller makes a good delivery if he forward to the buyer, as soon as he reasonably can after the shipment, a bill of lading, duly indorsed and effectual to pass the property in the goods, purporting to represent goods in accordance with the contract, and which are in fact in accordance therewith." As for the
case of E. Clemens Horst Co. v. Biddell Bros. (1) on which so much 4: ©: oF A
reliance has been placed, it is absolutely consistent with these statements of the law. The primary Judge, Hamilton J. (now Lord Sumner), laid down the five duties of the vendor on c.i.f. terms who claims payment on tender of the documents; and he puts in the forefront, as an essential condition, his duty "to ship at the port of shipment goods of the description contained in the contract" (2). "Such terms," he adds, " constitute an agreement that the delivery of the goods, provided they are in conformity with the contract, shall be delivery on board ship at the port of shipment." The case turned on the fact that no time was specified in the contract when the cash price was to be paid. Sec. 28 of the (English) Sale of Goods Act says that payment is to be against delivery ; and it was held in the House of Lords, which accepted the views of Hamilton J., and in the Court of Appeal of Kennedy L.J., that the delivery of the bill of lading when the goods are at sea can be treated as delivery of the goods themselves. In that case there was no question as to the goods at sea answering the description in the contract; but the phrase used by Lord Loreburn, " when the goods are at sea," does not apply when other goods than the goods are being sent to the destination. The case of Arnhold Karberg & Co. v. Blythe, Green, Jourdain & Co. (3), before the Court of Appeal, was a war case. War had broken out between Germany and England. The bill of sale had been made void by the War; and it was held that it was not a sufficient compliance with the usual c.i.f. rule to tender such a bill of sale; for the documents tendered must be valid and effective documents - that is to say, valid and effective to pass to the purchaser the goods contracted for. In the present case, the documents, if taken up by the purchaser, would not have been valid and effective to pass to the purchaser the goods for which he had contracted. If the proper goods have been shipped, and if they have been lost at sea, the purchaser has to look to his policy of insurance to secure to him payment for the value; "if the vendor fulfils his contract by shipping the appropriate goods in the appropriate manner under a proper contract of carriage, and if he also obtains
(1) (1911) 1 K.B. 214, 934; (1912) (2) (1911) 1 K.B., at p. 220. AC. 18, (3) (1916) 1 K-B. 495. VOL. XXXIX. 24
the proper documents for tender to the purchaser, I am unable 0 see how the rights or duties of either party are affected by the los of the ship or goods" (per McCardie J. in Manbre Saccharine Oc v. Corn Products Co. (1) ).
That the shipping of the proper goods is a condition precedent to the right of the vendor under a c.i-f. contract to claim the price is quite clear. But what is the position when the purchaser for som reason has become suspicious that goods of the description for whi he contracted are not on their way, but other goods, and docu which on their face are consistent with the contract, are present to him? If he decline to pay when the documents are tender he takes the risk of breaking his contract if the goods turn out be right; but he cannot be treated as not ready and willing to perform his contract if the goods turn out to be wrong. The here have turned out to be wrong. This is clearly laid down in Sanders v. Maclean (2). In that case, there were three bills of lading from Russia, and two only were presented to the purchaser in London. Cotton L.J. said (3): " If the purchaser chooses to refuse to accept the cargo, because he does not know whether in fact the tender does comply with the terms of the contract, and whether the other part of the bill of lading has been parted with or not, . . . and if it should turn out on investigation that in fact what was tendered to him y an effectual bill of lading effectual to pass the property in the then he broke his contract by not paying the money and by refusing to accept the cargo when such effectual bill of lading was tend to him." In that case, the third bill of lading was in the hands of the shipper, unendorsed and ineffective ; and it was held that tender of the only effective originals of the set was a sufficient te and put the purchaser in the wrong. As Bowen L.J. said (4) "The person who rejects effective and adequate documents of ti on the ground that another document may possibly be outsta does so at his own risk. If his surmise turns out to be well foun his rejection of the tender would be justified. But if it is a surmise and has no foundation in fact, he has chosen, by excess of caution, to place himself in the wrong."
(1) (1919) 1 K.B., at p. 203. (3) (1883) 11 Q.B.D., at p. 339. (2) (1883) 11 Q.B.D. 327. (4) (1883) 11 Q.B.D., at p. 343.
Now, in the present case, the purchaser, when the invoice was H- C. or A-
sent to him, and he was asked to honour the draft through the Commercial Bank, and to take up the bill of lading and the insurance policy, did suspect that something was wrong. The invoice was certainly consistent with the description in the contract; but it spoke of " 150 bales Liverpool sacks," and did not say " 150 bales first selection Liverpool wheat-sacks," as the contract said. In acknowledging the letter of the vendor with the invoice, before the boat reached Sydney, the purchaser wrote: " We would like you to send us the original invoice" (the goods came from England) " showing that they are first selection bags packed by Messrs. Martin and Levy Bros. & Knowles according to our purchase." The vessel reached Sydney on 16th November, and payment of the draft was refused ; and the vendor telegraphed that unless the documents were "accepted and paid for before three same will be sold against you." This threat led the purchaser to telegraph immediately (16th Novem- ber) : - * We have not refused payment your draft. Your documents do not identify goods as being according contract. Draft will be accepted soon as goods proved equal description purchased. Boat due to-day. Expect examine to-morrow. We wrote you for oversea invoices which you have not provided." The vendor telegraphed at once to the purchaser that its action was a breach of contract, and that the vendor was "selling documents unless our conditions of to-day complied with." On the 17th the goods on the vessel were inspected, and were found not to be "first selection" bags, but rejections from the " first selection," including, as it appears, malt bags, flour bags, pea bags, potato bags. The trial was before a Judge, without a jury, who found for the plaintiff; it is our duty to weigh the evidence ; and, so far as I can see, the purchaser never wavered from the position which it took up in its telegram of 16th November. It wanted to carry out the contract. The vendor had, under the contract, all the month of November in which to deliver ; and in a letter of 26th November the purchaser said : - " We still tequire you to complete your contract and deliver to us 150 bales first selection Liverpool wheat-sacks. Unless you deliver us these sacks in accordance with the contract, we shall be compelled to claim upon you for damages for breach of contract . . . as
there are only three working days left now in November, and we have to go on the market and buy to complete our engagements."
There is no doubt that the plaintiff right through the transaction was ready and willing to perform the contract in the ordinary sense of the words, and that the contract was not performed because of the defendant's fault in sending the wrong goods. The defendant contends, however, that it was the duty of the plaintiff to pay the draft and to take up the bill of lading and documents, and that, if the goods supplied were wrong, the plaintiff had a remedy only in an action to recover the money. No case has been cited which supports this contenticn ; the shipping of goods of the description in the contract is, in my opinion, a condition precedent to the liability to pay. '
It may be taken for granted that the plaintiff had no right to demand to see the overseas invoice, or to demand inspection of the goods before payment. I do not regard the letter of 12th November as a demand, but merely as an expression of what the plaintiff would "like" in view of the ambiguity of the invoice: but counsel for the defendant, by an ingenious cross-examination, e led the plaintiff's managing director to admit that " nothing short of the overseas invoice or an inspection of the goods would have satisfied him at that period" (after the ambiguous invoice). But it is not a question as to the state of mind of the managing director: it is a question as to what the plaintiff or the defendant did, or failed to do; or, finally, was the plaintiff ready and willing to perform the contract. There certainly was no repudiation of the contract in the sense of Mersey Steel and Iron Co. v. Naylor, Benzon é& Co. (1), and the vendor had no right to treat the contract as at an end after the 16th November. Mr. Mitchell has put his client's" case frankly and fairly before us; but, in my opinion, the plaintift has amply satisfied the burden of proof that he was always ready and willing to perform the contract; and the appeal should be allowed, and the judgment of Gordon J. restored.
Powers J. This is an appeal from a judgment of the Full Court of the Supreme Court of New South Wales granting the appeal by :
the respondent from a judgment for plaintiff (appellant) given by H.C. or A.
Gordon J. on 9th July 1926 for £345 5s. The Full Court of New South Wales set aside the verdict on appeal and ordered a verdict to be entered for the defendant (respondent on this appeal). The action tried by Gordon J. (without a jury) was one arising out of a contract for the sale of wheat-sacks (generally called " corn-sacks'' in England). The contract was a cif. contract, and the terms, so far as payment is concerned, were : - '* Net cash against bill of lading or ship's order which will enable buyers to obtain delivery of the goods." "Delivery during November 1925."
The Full Court, in its judgment, concisely sets out the position and the one question to be decided on this appeal in the following words : - ' The plaintiffs sued for non-delivery of the goods; the defendants by a plea of cross-action claimed damages for non- acceptance. The learned Judge dismissed the defendants' claim, finding on the evidence that the goods tendered by them were not 'in accordance with the contract. This finding is not challenged by the defendants. His Honor found a verdict for the plaintiffs on their claim, and assessed the damages as upon a breach committed on 30th November, the last day for delivery under the contract. The defendants appeal upon several grounds, which in effect resolve themselves into one - that the plaintiffs were not ready and willing to perform the contract." It was common ground that the " usual documents" were tendered, namely, a bill of lading, an invoice showing the price of the goods and an insurance policy. The plaintiff contended they were not " proper " documents for reasons mentioned later on. When the documents were presented it is admitted that the plaintifis refused, on 11th November 1925, and continued to refuse to accept them at all times until the contract was ended on 16th November, or to pay for the goods referred to in the documents until supplied by the respondent with further evidence that the goods were in accordance with contract, either by delivery of the overseas invoices or by inspection of the goods. The plaintiff claimed this new condition, not on the ground that the invoice submitted was not the usual one, but on the ground that it required to see from the original invoices whether the goods were first selection wheat-sacks packed by Messrs. Martin or Levey Bros. & Knowles
ae HENRY DEAN & Sons (Sypyry) Lr. P. O'Day Pry. Lrp.
whether a buyer under a c.i.f. contract (such as the one in ques can, without committing a breach of the contract, impose neW conditions when the bill of lading and usual documents are tend before paying in accordance with the contract if the invoice, alth it describes the goods correctly, does not give all the particuls the buyer thinks fit to demand; (2) whether the plaintiff in tl
case did impose new conditions and refuse to pay on tender of the H- ©. oF A.
bill of lading and usual documents until those conditions were complied with ; (3) whether the bill of lading and other documents tendered were usual and proper documents in the circumstances.
As to the first question it is not disputed that a buyer under a c.if. contract cannot impose new conditions and must pay on tender of proper documents, namely, the bill of lading, the policy of insurance and an invoice setting out the goods generally and the price of the goods.
The second question to decide is: Did the plaintiff in this case impose new conditions and refuse to pay on tender of the bill of lading and usual documents until these new conditions were complied with ? On 10th November the respondent (defendant) wrote to the plaintiff in Sydney : - ' We enclose herewith invoice amounting to £1,687 10s. for 150 bales Liverpool sacks which have been shipped to Sydney per s.s. Swva in fulfilment cf your esteemed order through Messrs. C. H. Wood and Co. We are drawing upon you through the Commercial Bank of Australia Ltd. ; with bill of lading and insurance policy attached and commend draft to your usual kind protection on presentation." On 12th November the plaintiff wrote: " We would like you to send us the original invoice showing that they are first selection bags packed by Messrs. Martin or Levey Bros. & Knowles according to our purchase." Under the contract in question the plaintiff was not entitled to the original invoices or to see them or proof that the goods were packed by Martin or Levey Brothers & Knowles. . In this letter it only asked for the original invoice but in the telegram of the 16th the original invoices were again referred to by it as a reason for the delay in payment. On 13th November the defendant telegraphed to the plaintiff as follows : - " Bank advises payment of draft refused. Please note unless documents now lying Commercial Bank Sydney are accepted and paid for before three same will be sold against you." The plaintiff on 16th November replied : - * We have not refused payment your draft. Your documents do not identify goods as being according contract. Draft will be accepted soon as goods proved equal description purchased. Boat due to-day. Expect examine to-morrow. We wrote you for oversea invoices which you have not
provided." The words "draft will be accepted soon as proved equal description purchased" are conclusive, I think, that they were insisting upon a condition not in the contract, and on they were not entitled to on the c.i.f. contract. On the same da (16th November) the defendant telegraphed : - " Draft has presented and payment in accordance contract not made. Documents are complete. Your action breach contract. Selling document unless conditions of your wire of to-day complied with." Noth was done by the plaintiff on that day but subsequently, on the 17th the goods were examined by the plaintiff and it was found that the sacks did not comply with the description in the contrae If there was any doubt from the correspondence alone about imposition of new conditions by the plaintiff and the intention of the plaintiff to require them, it is cleared away by the oral evidence of the managing director of the plaintiff company. Included in that evidence the following questions and answers appear : - "Your attitude from the first was this, wasn't it - that you wanted some evidence or proof that these sacks were in accordance wit the contract before you would take up the documents ? - Yes, quite so. . . . You understand what I am putting to you, don't you? You would not have been satisfied even if our invoice had copied out the contract description of the goods ? - I do not know; we might not have - we might have wanted to see: anyone could write anything on an invoice like that - We would have been satisfied with proof from the oversea shippers because we know the packers well. But nothing short of. the overseas invoice or an inspection of the goods would have satisfied you at that period, would it ? - No, that is generally demanded by everybody in the trade. . . . Before you would accept the goods you wanted proof that you were getting what you were paying for ? - Yes, that is so. You wanted either the overseas invoices or an inspection of the goods before you would take up the documents ? - Yes, and I might say that the overseas invoices were very necessary, too, for the Customs. . . . And a mere statement in our invoice would not satisfy you, would it?
39 C.L.R.] OF AUSTRALIA. 357 to contract; that is so? - Yes. That was your attitude from the H.C. or A. outset, was it ? - Yes, and in my correspondence ; it is all set out pad
there." It is true that after the contract had been determined on f{rnry 16th November the plaintiff, on 24th November, when the price of eae the goods had risen considerably, sent the following telegram to the ere bad) defendant: "Referring contract 30th October 150 bales first selection v.
Liverpool wheat-sacks sold to us delivery during November when are pie Day _you delivering ? Reply." The plaintiff, however, did not by that py, telegram or in any other way withdraw the new conditiohs imposed by him or agree, if the goods were offered, to pay on presentation of the usual documents without inspection or without the overseas invoices being produced.
The third question to be decided is: Were the bill of lading and other usual documents tendered in the circumstances usual and
proper documents or were they clearly inconsistent with the deserip- tion of the goods in the contract ? The description of the goods in the c.i.f. contract was " 150 bales first selection Liverpool wheat-sacks. When new 41 in. x 23 in. 8 porter 9 shot 300 to the bale. Original weight about 2} Ib. shipped at Calcutta fair average. Turned mended andsound." It is common ground that it was not necessary to put all those particulars in the bill of lading, or in the insurance policy or in the invoice setting out the price which usually accom- panies the bill of lading. The invoice which was tendered with the bill of lading and insurance policy was as follows: "To 150 bales Liverpool sacks at 9s. c.if.e. £1,687 10s. - Per s.s. Suva."
There is nothing in the invoice inconsistent with the description in the contract. In the bill of lading and in the insurance policy the description contained less information because the goods were
The objection to the "documents" tendered was confined to the wording of the invoice. It was not contended in the Supreme Court or in the Full Court that the bill of lading or the insurance policy did not describe the goods in the usual and proper way by
calling them secondhand corn-sacks. The plaintiff proved that the goods bought were wheat-sacks which had been used originally when "new to take wheat to other countries and they were then sent out
for sale again. They were therefore properly described as second- hand wheat-sacks (or corn-sacks). In the evidence of the managing director of the plaintiff company he referred te the goods in question as secondhand wheat-sacks. His principal expert witness, Christopher Edgar Holgate, did so also. No exception was taken at the trial to any witness for the plaintiff or the defendant who referred to them in the same way as secondhand wheat-sacks or secondhand corn- - sacks. The goods were therefore described in the correct and usual way in the bill of lading and in the insurance policy and in the - invoice, and they were all consistent with the description of the
It was not contended that, if the goods shipped had been in - accordance with the contract, the plaintiff would not, on the refusal to pay on tender of the bill of lading in question, have been liable to an action for breach of contract. Proper documents - * that is,. such documents as are usual and proper in c.i.f. contracts " - were tendered to the plaintiff.
I also agree with the Full Court's finding on the other questions. referred to on the appeal to that Court.
It is clear to me, from the evidence, for the reasons mentioned, that the plaintiff was not ready and willing to carry out the cif. contract or to pay on tender of documents, or to pay at all, without. imposing new conditions not in the contract. He cannot, therefore, recover damages for a breach by the defendant of that contract, - although he could not in the circumstances be made to pay damages. for his breach or be made to pay for the goods.
Srarke J. Under a c.i.f. contract a seller is bound to ship goods. according to the contract description, and a buyer is bound to pay the price on tender of the usual or customary mercantile documents. It is sometimes a question of fact whether particular documents are, or are not, usual or customary in relation to the contract (Tamuaco" v. Lucas (1) ).
In the present case the seller did not ship goods of the contract- description, but tendered to the buyer documents for the goods.
it had in fact shipped. If the buyer had paid for the goods on the HL. C. ov A. 1927.
presentation of these documents, it would not have been precluded from subsequently rejecting the goods, and recovering the moneys paid and damage for the breach of contract (Biddell Bros. v. E. Clemens Horst Co. (1) ). If the buyer had rejected the goods on tender of the documents for an untenable reason, it might still justify its act "on other and valid grounds" (Tamvaco v. Lucas (2); Manbre Saccharine Co. v. Corn Products Co. (3); Taylor v. Oakes, Roncoroni & Co. (4); Kennedy on C.i.f. Contracts, pp. 168- 169).
Owing to the form of invoice in this case, the buyer, I gather, suspected that goods had not been shipped in accordance with the contract description and it rejected the documents tendered unless it had an inspection of the goods shipped. By the terms of the contract, however, the buyer was not entitled to insist upon inspec- tion before payment (Biddell Bros. v. E. Clemens Horst Co. (5) ).
Nevertheless, it is clear upon the authorities that the buyer can, upon the facts proved in this case, justify its rejection of the documents, and that the seller cannot succeed in an action against the buyer for the price or for damages.
It is said, however, that the acts of the buyer establish the fact that it was not ready and willing on its part to pay for the goods on tender of documents, in accordance with its obligation under the contract. Now, if the proper conclusion from the acts of the buyer be that it would not accept any documents tendered under the contract unless it had an inspection of the goods, I agree that the argument is well founded, and that the buyer could not recover in this action; but that is not, I venture to think, the proper conclu- sion from the evidence. The learned trial Judge (Gordon J.) does not, I think, expressly state his opinion upon this aspect of the case, though it is clear enough that his verdict involves the necessary finding of fact in favour of the buyer. His Honor certainly negatives the view that the rejection of documents which were not in accordance with the obligations of the contract necessarily establishes any unreadiness or unwillingness on the part of the buyer
(1) (1911) 1 K.B. 934, per Kennedy (3) (1919) 1 K.B. 198, at pp. 202 ct seqq. LiJ.; (1912) A.C. 18. (4) (1922) 38 'T.L.R. 349, 517. (2) (1859) 1 E & E. 592. (5) (1911) 1 K.B, 934.
H.C. or A. to perform its part of the contract. He also relies upon the fi
Henry Dean & Sons (Sypxey) Lrp. v. P. O'Day Pry. Lrp.
that the buyer subsequently called upon the seller to fulfil contract and to ship goods in accordance with the contract that the seller refused to do so. Thus [ gather that the lea Judge did reach the conclusion that the buyer was ready and w to perform its contract according to its terms though the proce whereby he reached that conclusion is not fully stated. The learned Judges of the Full Court were of opinion that tl buyer was not ready and willing to perform its contract according to its terms. Their view, I gather, is that the buyer declined to take up any documents under the contract unless it first h 1 obtained an inspection of the goods. In this Court, however, are in as good a position as the Judges comprising the Full Cou were to reach a conclusion upon the matter and are bound to exercise our own independent judgment upon the evidence as it stands. The question is, in truth, one of fact. The goods the subject of the contract of sale were 150 bales first selection Liverpool wheat sacks. " First selection " is a most material part of that description The invoice tendered with the bill of lading and policy of insurance was as follows: "To 150 bales Liverpool sacks at 9s. cife £1,687 10s." In my opinion, any reasonable business man wot regard that description with well-grounded suspicion, and be uncerta whether the documents tendered to him represented goods in conformity with the contract. The buyer evidently was suspiciou for it wrote to the seller as follows: '* We would like you to s us the original invoice showing that they are first selection b packed by Messrs. Martin or Levey Bros. & Knowles according to our purchase." Apparently the buyer thought, as was the fact, that some, if not all, of the sacks had been imported from abroad: hence the reference to the original invoice. The seller telegraphes a reply that the bags were in accordance with contract. This was untrue. Later it threatened to sell against the buyer, which there upon defined its position in a telegram as follows : - * We have no refused payment your draft. Your documents do not identi ; goods as being according contract draft, will be accepted soon a goods proved equal description purchased. Boat due to-day expect
examine to-morrow. We wrote you for overseas invoices which 4: ©. oF A.
you have not provided." The seller insisted that this action on the buyer's part was a breach of contract and sold the goods against it.
The correspondence certainly lends no support to the view that the buyer would not accept any documents tendered under the contract unless it had an inspection of the goods. Its position was that it was ready and willing to perform the contract according to its terms but is uncertain whether the documents tendered to it related to goods of the contract description and required assurance of this before payment.
The managing director for the buyer, however, gave oral evidence, and upon the effect of a skilful cross-examination by Mr. Edmund Barton the case really turned. Some passages in his cross-examina- tion there are which do support the view that the buyer required the overseas invoices or inspection of the goods before it would take up any documents, but the general trend of the deponent's evidence is that the buyer made its position plain in the correspondence and still adhered to that position. Thus, in various questions to the witness Mr. Barton suggested that the buyer was not prepared to take up the documents tendered unless it had either the overseas invoices or inspection of the goods; the answer, in substance, was always in the affirmative: "to show us," as the witness said, These answers, however, as it seems
"what we were paying for." to me, were always given in reference to the particular documents which had been tendered to the buyer and of which he was personally suspicious owing to the form of the invoice. An early question put to the witness suggested that his attitude from the first was that he wanted some evidence or proof that the sacks were in accordance with the contract before he would take up the documents; the witness assented, but the question related to the documents actually tendered to the buyer and rejected by him. Somewhat later Mr, Barton suggested that the buyer wanted either the overseas invoices or an inspection of the goods before it would take up the documents ; again the witness assented, but again the question related to the suspected documents. The matter concluded with the question : "That was your attitude from the outset was it ?"' and the answer, "Yes, and in my correspondence : it is all set out there."
So we are again brought back to the telegram in which the be
that the documents tendered covered goods of the contract descrip
tion. In my opinion, then, the evidence supports the conclusion
the buyer was ready and willing on its part to perform the con according to its terms and therefore the verdict of Gordon J. for
Appeal allowed. Order appealed from discharge Verdict of Gordon J. restored. Respond to pay costs in Supreme Court and H Court.
Solicitors for the appellant, Sly & Russell. Solicitors for the respondent, W. C. Forsyth & Co.