Plaintiff v Defendant

Supreme Court of Victoria|2011-04-05|Before: Pagone J

CONTRACT - Whether legally binding agreement was entered into - Damages - Goods Act 1958 (Vic) s 56(3) - Available market rule - Difference between market price and contract price.

1 Cargill Australia Limited ("Cargill") seeks damages against Cater Oil Company Pty Ltd ("Cater") for alleged breaches and repudiation of an agreement said to have been made on 11 June 2008. The principal contention between the parties was whether a legally binding agreement between them was entered into. Cargill maintained that an agreement was made with Cater on 11 June 2008 by which Cater was obliged to buy 750 metric tonnes of cottonseed oil at the price of $2,355 per metric tonne spread evenly over a period of 10 months. That agreement was said to have been constituted in part by email correspondence and in part by telephone communications between Ms Jody Scaife of Cargill and Mr William Cater of Cater on and around 11 June 2008. The agreement was also said to be partly implied by the conduct of the parties arising from Cater ordering quantities of cottonseed oil at the agreed price between 15 August 2008 and 2 October 2008, the supply of cottonseed oil by Cargill and its payment by Cater.

2 The existence of a contract is to be determined objectively. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[1] the High Court said:

This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.[2]

The ascertainment of the existence of a contract by reference to objective criteria is important for business by promoting certainty. It avoids the possibility of a party to a contract being able to avoid obligations on the basis that that party had a subjective belief or an undisclosed intention that might unilaterally defeat the reasonable expectations of the other party. In this case Cater contended that such agreement as had been reached around 11 June 2008 did not amount to a binding contract because the parties did not intend to be bound by the terms relied upon by Cargill.

3 Cater has been in business since its formation in 1967. Mr Cater has been the managing director of Cater since its formation in that year. The company was incorporated after 10 years of trading by a preceding business connected with Mr Cater. Mr Cater has been involved in the mineral oil and food oil businesses for a considerable number of years. He also gave evidence of having academic qualifications, including familiarity with commercial law and in particular with the law of contract.

4 The dealings between Cargill and Cater began before 11 June 2008. The whole of the background leading to that date is not relevant except to note that by 11 June 2008 the parties had had some dealings and were to some extent on guard about each other. Employees at Cargill had expressed some concern about the way in which Mr Cater had dealt with them and Mr Cater had expressed concerns about the way in which he had been treated by Cargill. More particularly, in May 2008 there had been some discussions between Cater and Cargill about the acquisition by Cater of cottonseed oil at a price which, according to Cargill, lapsed, but which according to Cater, had not been honoured by Cargill. These discussions were an important backdrop to the communications on 11 June 2008. Both Cater and Cargill wanted the other to be bound to a bargain of some kind.

5 It is also relevant background that Cater was anxious to secure the supply of cottonseed oil for sale to its customers. Australia had been experiencing a drought and the price of cottonseed oil had increased significantly. In the past Cater had been able to order cottonseed oil from other suppliers as its customers required. It had never previously acquired cottonseed oil from Cargill nor had it previously secured a volume of cottonseed oil at a fixed price for a period of time.

6 In May 2008 Mr Cater had been quoted by Cargill $2,030 per tonne for cottonseed oil. The quote was given to Mr Cater orally on 19 May in a telephone conversation with a Mr Ben Tiller of Cargill and Mr Cater purported to confirm this price in an email to Mr Tiller on 23 May stating:

Just a short note to confirm our previous telephone communications namely your quoted price of RBD Cottonseed Oil of $2,030 per tonne ex works, for delivery commencing June 2008 and our acceptance of your offer for an amount as advised of 750 tonnes for 10 months, in an even monthly spread until 31st March 2009.

The email from Mr Cater also referred to a question by Mr Tiller about lowering the quantity. Mr Cater's response to that question was that the quantity could not be lowered but that the start date could be changed to July 2008 if that helped.

7 There seemed to have been no response from Cargill to the email from Mr Cater until 5 June 2008. In the meantime the price of cottonseed oil continued to increase and, from Cargill's point of view, it was not obliged to supply cottonseed oil to Cater at that price. Cater, therefore, lost the benefit of a lower price than it could subsequently secure from Cargill. Mr Cater's view of those dealings was that Cargill ought to have honoured the price quoted on 19 May and in an email on 12 June 2008 Mr Cater expressed the view that "it would naturally be expected that our email would be interpreted as an acceptance of the original offer". Cargill was not of that view.

8 On 5 June 2008 Mr Tiller responded to Mr Cater's email of nearly 2 weeks previously. Mr Tiller's email stated that the previous email from Mr Cater did not confirm any transaction undertaken between the two companies and that the conversation to which Mr Cater's email referred had occurred, not on 23 May, but on 19 May and that the offer then communicated was an offer that "was valid for that day only, as advised" to Mr Cater by Mr Tiller at that time. The email from Mr Tiller went on to indicate a continuing openness to discuss the possibility of supply of cottonseed oil but that the market had moved considerably since their last discussion. At that time the market had risen to about $2,250 per metric tonne.

9 On the following day an offer was sent by Mr Tiller to Mr Cater in a form that was to be repeated on 11 June 2008. On that day the price offered had risen to $2,330 per metric tonne. The form made clear that the offer was valid until 5.00pm on 6 June 2008 and identified the goods, the quantity, the delivery, the terms of payment, the quality, the price, the delivery, the specifications and other matters. Mr Cater's response was a request to hold open the offer until close of business on the following Tuesday, 10 June 2008, at a price of $2,330 per metric tonne. That email gave as the reason for that request that Cater needed to consider its position more closely. Mr Tiller responded by email agreeing to hold the offer until close of business on Tuesday 10 June 2008.

10 On 11 June 2008 there was a telephone conversation between Ms Jody Scaife of Cargill and Mr Cater. There is a difference between the two accounts of the telephone conversation by the only two participants to that conversation. The account given by Ms Scaife was that she had been careful to ensure that she explain the terms and conditions under which Cargill would contract with Cater. This is consistent with the sending of an email by Ms Scaife to Mr Cater setting out the terms in the same form as the email sent to him on 6 June 2008 which set out the terms upon which Cargill was then prepared to contract with Cater. It is also consistent with the first paragraph of that email which recorded an acknowledgment "that for various reason we do not have a sales contract in place". That acknowledgment indicated an awareness of a concern about there having been disagreement about whether there ought to have been a binding sales contract in place. I think it likely that Ms Scaife did make clear to Mr Cater the terms upon which Cargill was prepared to contract with Cater as she testified.

11 Mr Cater's version of the conversation was different. His account was that there had been no detailed discussion about the terms upon which Cater and Cargill would contract and that the only thing about which he agreed was an acceptance on behalf of Cater of an offer to acquire a specified quantity of cottonseed oil for a specified price. This version is consistent with an email he sent the following day, 12 June 2008, referring to Cargill's offer and indicating Cater's acceptance "relating to price and quantity as detailed" in the earlier email.

12 The conversation ended with Ms Scaife having to determine whether Cargill was able to obtain the amount of cottonseed oil required by Cater and the price at which it would sell the oil to Cater. Ms Scaife made those inquiries and later that day sent an email setting out Cargill's terms of trade, confirming that it would supply the quantity sought by Cater and quoted a new price of $2,355 per metric tonne. The email of 11 June 2008 from Ms Scaife to Mr Cater indicated that the offer was valid only until 6.00pm that day. The only offer made by Cargill which was capable of acceptance on that day was that set out in her email as follows:

COMMODITY: AUSTRLIAN REFINED, BLEACHED AND DEODORISED COTTONSEED OIL

QUANTITY: 750 MT

DELIVERY: 75 MT PER MONTH 1 JULY 2008 - 30 APRIL 2009 EVEN SPREAD

PAYMENT: PREPAYMENT PRIOR TO EACH LOAD RELEASE PENDING THE APPROVAL OF A CREDIT LIMIT

QUALITY: AS PER ATTACHED SPECIFICATIONS

PRICE: AUD 2,355 PER MT

DELIVERY: EX WORKS CARGILL NEWCASTLE PLANT

SPECS: AS PER ATTACHED CARGILL SPECIFICATIONS

OTHER: OTHER TERMS AS PER CARGILL GENERAL SHORT FORM TERMS AND CONDITIONS 2005 (available at www.cargill.com.au)

The email gave Ms Scaife's mobile number and identified preferred channels of communication.

13 The evidence of both Ms Scaife and Mr Cater agrees that he attempted after receipt of the email to phone her on her mobile phone and that he left a message on her voicemail message bank. Their evidence, however, disagreed about what that message said. Mr Cater said that his message confirmed agreement as to quantity and price but said nothing about agreeing to the offer on the other terms it had been made. Ms Scaife gave evidence that the message on her voicemail indicated an acceptance of the offer which she had sent in the email and that there was no qualification or other objection in the message to Cargill's terms.

14 On 11 June 2008 Ms Scaife sent another email to Mr Cater after having heard the message left for her. Her second email that day included a copy of her earlier email with the offer she understood Mr Cater had accepted. The second email said:

Confirming you have accepted the offer as outlined in the email below. We will communicate the sales contract reference number tomorrow.

Have a good evening and thanks for the business.

Regards, Jody

It was to this email that Mr Cater responded the following day at about 4.30pm. His response was in the following terms:

Hello Jody,

Reference your email 11/6/08 and subsequent message left on your mobile voice mail.

Your offer of RBD Cottonseed Oil is accepted relating to price and quantity as detailed in your email. I would have thought that an allowance in price would have been a gesture of goodwill resulting from the unfortunate circumstances surrounding the matter.

As regards to no transaction being in place, let it be known we responded to an offer communicated verbally by your Mr Ben Tiller on the 2/5/08 by our email dated 23/5/08, which is attached indicating acceptance of price and quantity discussed. With no other price communicated to us until 5/6/08 by Mr. Ben Tiller, it would naturally be expected that our email would be interpreted as an acceptance of the original offer. This debate might have to wait for a later outcome when you have had a chance to look further into the matter.

Meanwhile, your support in making supply available is very much appreciated.

Kind regards,

William H. Cater

It was contended by Cater that this email was consistent with not accepting the offer as put by Cargill through Ms Scaife and that it amounted to Cater only accepting an offer about quantity and price.

15 It is possible that Mr Cater had the subjective intention of not accepting Cargill's offer upon the terms which had been made. Such a subjective intention may be consistent with his email of 12 June 2008 stating that the offer was accepted "relating to price and quantity as detailed" in the email from Cargill the day before. It may also be consistent with his recollection of the message he left on Ms Scaife's mobile voicemail. However, the question of whether a contract had been entered into is not determined by reference to subjective intentions but objectively upon all of the facts and circumstances. The dealings between Cargill and Cater were entered into for the purpose of securing the supply of cottonseed oil at a price over a period of time. The specific context in which those dealings occurred was the assertion by Cargill that it had not been bound to supply the goods at a price which had been communicated to Mr Cater previously. Mr Cater was anxious to ensure that the price be fixed for an identified quantity of cottonseed oil deliverable to him over an identified period of time. It was foremost in the minds of both parties that they were to be bound by a bargain of some kind. The offer was put by Cargill upon expressly specified terms and the acceptance by Cater was, at very least, to accept a quantity of cottonseed oil at a particular price. Mr Cater well knew that the price of the cottonseed oil varied from day to day and that it was increasing. He had secured from Cargill its agreement to supply sufficient quantity of cottonseed oil for the company at the best price he could obtain in a rising market and, from that point, the parties had allocated the risks of further movement in the cost of the cottonseed oil. There was no doubt of a common intention that the parties would be bound by something and all subsequent purchases by Cater from Cargill were at the price agreed on 11 June 2008.

16 Mr Cater maintained that the agreement did not bind Cater to purchase the whole of the quantity over the period stipulated in the offer from Cargill. In my view that is untenable even if one were to construe his email of 12 June 2008 at its narrowest. On any view what Cater was accepting was "price and quantity as detailed" in the email from Cargill of the previous day. The quantity so detailed was 750 metric tonnes to be delivered at 75 metric tonnes per month from 1 July 2008 to 30 April 2009.

17 Mr Cater contended, however, that the obligation to take the full 750 metric tonnes was conditional upon credit arrangements being agreed between them. There was nothing in his email of 12 June 2008 to suggest any such reservation or to make the terms of any agreement between Cater and Cargill conditional upon agreement about terms of credit or upon anything else. Mr Cater made a note of the conversation he had had with Ms Scaife on 11 June 2008 but recorded nothing in his note that any binding agreement between their companies would be conditional upon agreement as to credit terms. Mr Cater's note was short but described the conversation as having been long. He recorded that their conversation had covered issues "of ethics and threats", Ms Scaife's agreement that their communications needed to be improved and that she had taken his comments seriously. Mr Cater also recorded that Ms Scaife had informed him that the oil was not available but that she would look to see "what imported oil [was] available" and what price she could quote. He then noted that he did not hold out any hope that the original quote of $2,030 per metric tonne might be available. His note ended by recording that Ms Scaife would send him an email. It is clear from Mr Cater's own note of the conversation he had had with Ms Scaife that she was to send an email to him dealing with the availability of quantity and the price. They were the only two matters that she needed to confirm and which she did confirm in the email she sent him later that day. His email in response accepting "price and quantity" was without reservation or in any way conditional upon agreement as to terms of credit or anything else.

18 There were subsequently discussions, and disagreements, between Cargill and Cater about the terms of credit which were to apply between them. The offer from Cargill in the emails was that Cater would need to prepay prior to each load being released pending the approval of a credit limit. A credit limit was subsequently approved by Cargill which was, however, unsatisfactory to Cater. Perhaps the terms of credit ought to have been more prominent in the discussions between Mr Cater and Ms Scaife at the time they were seeking to be bound about "quantity and price". Mr Cater gave evidence that between July and April 2009 Cater could not have afforded to prepay for 75 metric tonnes of cottonseed oil per month. Given that financial position it may have been prudent for Mr Cater to object in his discussions with Ms Scaife, or in his dealings previously with Mr Tiller, to Cargill's requirement of prepayment prior to the approval of a credit limit. It was clear, however, that prepayment until approval of a credit limit was a clear term in Cargill's offer to Cater which Mr Cater was keen to secure as to quantity and price.

19 Cater submitted a credit application to Cargill and was offered a credit limit of $50,000. The submission of the credit application is consistent with the terms of the offer to Cater. Mr Cater was unhappy with the limit given to Cater and required more. On 4 July 2008 he was told that Cater would be given a $75,000 credit limit on 7 day terms. This would permit Mr Cater to take delivery of the oil without prepayment but required payment within 7 days of delivery. From Cargill's point of view it may have been a substantial concession because they would lose possession of the goods before payment, but it was not sufficient from Cater's point of view because its customers were unlikely to have paid it within the 7 day time period between delivery by Cargill to Cater even assuming that Cater delivered the oil to its customers in that 7 day period. What Cater needed, in effect, was a credit limit large enough and long enough to enable Cater to obtain sufficient oil for a period extending up to the time when its customers paid for the oil that Cater would deliver to them. Mr Cater testified that, in effect, what Cater needed was a credit limit for purchases that would have amounted to about $175,000 of credit per month.

20 Mr Cater raised his concerns in discussion with Mr Gavin Joyce of Cargill. Mr Joyce was in a position to approve a higher credit limit than had previously been extended to Cater. Mr Cater recorded various conversations he had with Mr Joyce about the terms of credit. In conversations on 11 July 2008 and 18 July 2008 Mr Cater asserted that the contract with Cargill had only been about price and quantity but not to credit terms. On 18 July 2008 Mr Cater specifically asserted that the agreement between Cater and Cargill was "on the basis of standard or normal credit terms otherwise there [was] no contract". His note also recorded his assertion that Cater would not have a gun held to their head. Mr Joyce was not called to give evidence but Mr Cater's note does not record an acceptance by Mr Joyce of Mr Cater's assertion that the parties were not contractually bound according to the terms of the email sent by Cargill on 11 June 2008.

21 The test of whether the parties entered into a contract is not whether one of the parties ought not to have made the bargain struck. It may be that Mr Cater thought that the terms of credit Cater would receive would be better than they turned out to be. That hope does not detract from the fact that he sought and secured agreement from Cargill to provide a specified quantity of cottonseed oil at a specified price over a specified period of time in return for Cater's promise to acquire that oil at that price over that time. That contract was not stated to be subject to agreement about terms of credit. The credit terms ultimately available to Cater were a $95,000 credit limit payable on 30 days from the end of the month of delivery. This, as explained by Ms Perkins for Cargill, gave Cater effectively 2 months credit but confined the maximum credit exposure at any point of time to $95,000. That might still not have been enough for Cater because it may have needed more credit to secure more cottonseed oil to enable it, in turn, to extend credit terms to its customers before ultimately having to pay Cargill.

22 The objective facts lead me to conclude that on 11 June 2008 Cater and Cargill agreed to be bound upon the terms of the email sent by Ms Scaife on that date. Cater subsequently ordered, accepted and paid for cottonseed oil between 15 August 2008 and 2 October 2008 at the agreed price of $2,355 per metric tonne in six separate deliveries. Each of these transactions is consistent with, and affirmed, the contract made between the parties on 11 June 2008.

23 On 16 October 2008 Cater cancelled a purchase order and stated that they would be in contact with Cargill when further orders were required. On 22 October 2008 Ms Perkins, the customer account manager dealing with the Cater account, wrote to Mr Cater (after a discussion they had had) recording that "the current cottonseed contract [had] some past due tonnes accumulating". A spreadsheet was attached detailing charges that Cargill was claiming under the general short form contract terms and conditions which would be added to the current contract. Mr Cater responded on 13 November 2008 to Mr David Carpenter at Cargill referring to the latter's telephone request and advising Mr Carpenter that further deliveries of cottonseed oil were not required by Cater. A reason given for that was the belief that Cater's customer was then being supplied directly by Cargill. The price of cottonseed oil had dropped significantly after the commencement of the global financial crisis in October 2008. Whatever may have been the motivation or cause, the position adopted by Cater from October 2008 and asserted in Mr Cater's email of 13 November 2008 was in breach of the agreement made on 11 June 2008 and a repudiation of it.

24 On 14 November 2008 Cargill accepted Cater's breach of the contract and elected to cancel the defaulted portion of the contract pursuant to Rule 17.2(c) of the National Agricultural Commodities Marketing Association Limited Trade Rules ("the NACMA rules") but reserved the rights to claim damages. The NACMA rules were incorporated by express reference into the Cargill general short form contract terms and conditions 2005 which were referred to in the email of 11 June 2008 to Mr Cater.

25 Clause 6 of the Cargill general short form contract terms and conditions 2005 gave Cargill the right to elect either to rescind the contract and claim damages or to affirm the contract and claim as liquidated damages a number of carrying charges accruing. Cargill elected to claim damages in the statement of claim in this proceeding.

26 Cargill's damages were claimed on three alternative bases two of which depend upon s 56(3) of the Goods Act 1958 (Vic). Section 56 of the Goods Act 1958 provides:

(1) Where the buyer wrongfully neglects or refuses to accept and pay for the goods the seller may maintain an action against him for damages for non-acceptance.

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

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

The prima facie measure of damage stated in s 56(3) incorporates the common law as enunciated in Barrow v Arnaud.[3] The prima facie measure in the equivalent provision in the U.K. is explained in Benjamin's Sale of Goods as follows:

The prima facie rule: the market price. The normal rule stated in section 50(3) incorporates the common law established before the Act, viz. when the buyer fails both to pay the price and to accept the goods, the seller's damages are calculated by deducting from the contract price the market price at the time and place fixed by the contract for acceptance. The doctrine of mitigation is one of the bases of this principle: it is assumed that with this additional amount of money the seller could, by selling in the market at the current price, put himself into the same financial position he would have been in had the contract been performed according to its terms.[4]

The prima facie rule is designed to capture for the successful party the economic value of performance of the contract as at the date of breach. The actual proceeds of any subsequent sale need not be taken into account because, where the prima facie rule applies, the loss, in this case the seller's loss, "at the date of the breach was and remained the difference between contract price and market price at that date".[5] It is, therefore, irrelevant to look at the actual proceeds of sale[6] unless it be as "evidence of market price".[7] The consequences of any subsequent increase or decrease in market price, with any consequential profit or loss, is assumed by the seller and is not accountable to the buyer.[8] A seller may not, therefore, recover an amount lower than the market price (if the goods are subsequently sold at less than market price) because the duty to mitigate implicit in the prima facie rule assumes that a prudent seller would have sold at the market price.[9] There may be some doubt about whether a seller should account for any sale proceeds above the market price but, by parity of reasoning, the better view is that any gain to the seller is not brought to account because any such gain is referrable to a separate risk assumed by the seller independently of the breach.[10]

27 In this case there was an available market for the cottonseed oil and there is no reason for the prima facie rule in s 56(3) not to apply. The evidence disclosed offers by Peerless Foods Pty Ltd for the cottonseed oil and actual sales by Cargill. Cargill is, therefore, entitled to the difference between contract price and market price "at the time or times when the goods ought to have been accepted, or if no time was fixed for acceptance then at the time of the refusal to accept".

28 The first measure of damage maintained by Cargill depended upon determining the market value by reference to a "washout" price calculated pursuant to the NACMA rules which had been incorporated into the contract between Cargill and Cater through the email of 11 June 2008 and Cargill's general short form contract terms and conditions 2005. The NACMA rules provide a mechanism to calculate the fair market value of the undelivered goods. They also provide that the non defaulting party could claim liquidated damages, for payment within seven days of demand, for the difference between the contract price and the fair market price of the undelivered contract quantity of the goods in question. In this case Cargill relied upon the NACMA rules and under the terms of its contract with Cater was entitled to payment for the undelivered contract quantity of cottonseed oil. The measure of damage payable under the NACMA rules is materially the same as that provided for by s 56(3). However, it would make no difference if it were not, because the measure of damage arising from a default to pay upon the demand as provided for by the NACMA rules would still be that under s 56(3).

29 The evidence for Cargill was that there was an available market for the cottonseed oil and that there was an offer from Peerless Foods Pty Ltd on 27 November 2008 of a specific sum for comparable oil. That price may be taken as the basis for calculating the market value making allowances for such matters as transport and grade of oil. The market price calculated upon that basis was $1,629.67 per metric tonnes. The damages calculated upon the measure provided for by s 56(3) on that basis is, therefore, $457,407.60 (630.62 undelivered tonnes on the difference between a contract price of $2,355 and a market price of $1,629.67 per metric tonne).

30 The second method relied upon for calculating damages under s 56(3) was upon the basis of a series of monthly prices. In this case the contract had contemplated even monthly acquisitions over ten months. Cargill tendered the evidence of an expert to establish the monthly market prices for cottonseed oil for the months between October 2008 and March 2009. On this evidence the damages to Cargill by application of s 56(3) would total $538,999.78, however I would not award that amount because it assumes a continuing obligation for Cater to make monthly purchases. Cargill accepted Cater's repudiation and elected to cancel the defaulted portion of the contract claiming payment within 7 days in reliance upon the NACMA rules. Its claim for damages is, therefore, to be assessed under the first method as detailed above.

31 It may be unnecessary for me to consider the third method for calculating the damages of Cargill at common law, namely, a determination of the total remaining contract price (assuming performance) less the actual selling price of the cottonseed oil not sold to Cater. There is no reason not to apply the prima facie measure provided for by s 56(3) and relied upon by Cargill, however it may be desirable for me to set out my conclusions on this basis in case it subsequently becomes relevant. It is accepted between the parties that the total remaining contract price (assuming performance of the contract) required payment by Cater to Cargill of $1,485,110.10 (being the product of calculating 630.62 metric tonnes of cottonseed oil at $2,355 per metric tonne). It is also agreed between the parties that the actual selling price of the unpaid 630.62 metric tonnes not purchased by Cater was sold between December 2008 and March 2009 for a total of $963,398.00. The damage suffered upon that calculation is, therefore, $521,712.10.

32 Cargill also maintained that it was entitled to claim interest under clause 6 of the contract of carrying charges. I do not accept that submission. The carrying charges to which Cater was entitled under clause 6 depended upon an election not to claim damages but to affirm the contract and to claim as liquidated damages a number of carrying charges. Cargill elected to claim damages and, therefore, is not entitled to claim an amount that would otherwise be payable upon the affirmation of the contract. The total disposal of the cottonseed oil by Cargill has placed it in a position that it cannot deliver the goods and it has not purported to deliver the goods to Cater or to require Cater to accept them. The prayer for relief in the statement of claim is expressed as a claim for damages. Cargill is, however, entitled to interest pursuant to statute and its second prayer for relief is a claim for interest.

33 Accordingly, there will be judgment for Cargill in the sum of $457,407.60 plus interest pursuant to statute. I will hear the parties on any question about costs.

[2] Ibid [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ) (footnotes omitted).

[4] AG Guest (ed), Benjamin's Sale of Goods (7th ed, 2006) 1006 [16-062]; see also H McGregor QC, McGregor on Damages (18th ed, 2009) 842-3 [20-112].

[5] Jamal v Moolla Dawood, Sons & Co [1916] 1 AC 175, 180 (Lord Wrenbury).

[6] Campbell Mostyn (Provisions) Ltd v Barnett Trading Company [1954] 1 Lloyd's Rep 65.

[7] H McGregor QC, McGregor on Damages (18th ed, 2009) 846 [20-116].

[8] Shearson Lehman Hutton Inc v Maclaine Watson & Co Ltd [1990] 3 All ER 723, 726 (Webster J); AG Guest (ed), Benjamin's Sale of Goods (7th ed, 2006) 1016 [16-075].

[9] AG Guest (ed), Benjamin's Sale of Goods (7th ed, 2006) 1016 [16-075].

At a glance

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Judgment (58 paragraphs)

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Cases Cited (1)