Wakilii

Budaka Ginners Limited v Hathi (Civil Appeal No. 51 of 1955)

East African Court of Appeal · [1950] EACA 65 · 1950 Appeal Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from decision of the High Court of Uganda on claim for balance of purchase price and counter-claim for losses
Decision
Appeal partly allowed with counter-claim reduced and costs apportioned between the parties

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court held that where a seller delivers goods not of merchantable quality, the buyer's loss on resale is the proper measure of damages if the buyer took reasonable steps to mitigate. Arbitration costs and related expenses reasonably incurred are recoverable. A genuine offer of payment before action should be treated as tantamount to tender in commercial cases when exercising discretion on interest. Costs should be apportioned where both parties succeed in part, not awarded entirely to one party.

Outcome

Appeal partly allowed with counter-claim reduced and costs apportioned between the parties

Facts

The appellant sold two parcels of groundnuts to the respondent. The respondent resold the groundnuts to Ralli Bros., who refused to accept them on the ground that they were not of merchantable quality. The matter went to arbitration and the goods were ultimately disposed of to the sub-buyer at a reduced price. The respondent paid a sum representing the difference between the claim and counter-claim after proceedings commenced. The appellant claimed the balance of purchase money. The respondent counter-claimed for losses sustained, including the difference in price received from the sub-buyer and expenses incurred in the arbitration. The High Court gave judgment for the plaintiff on the claim and for the defendant on the counter-claim, awarding all costs to the defendant and disallowing the plaintiff's claim for interest.

Issues

  1. What was the proper measure of damages for loss sustained on resale of goods not of merchantable quality?
  2. Whether arbitration costs and related expenses should be recoverable as damages?
  3. Whether an offer of payment before action should be treated as tantamount to tender for the purpose of exercising discretion on interest claims?
  4. What was the proper allocation of costs where both parties succeeded in part?

Orders

  • Appeal allowed in part.
  • Counter-claim reduced by Sh. 630 from Sh. 11,366/98 to Sh. 10,736/98.
  • Decree of the High Court varied with consequential amendments to figures.
  • Half the defendant's costs of the High Court proceedings to be paid by the plaintiff.
  • Respondent to have the costs of the appeal.

Rules and key headnotes

Contract Law — Sale of Goods — Measure of Damages — Loss on Resale
Where a seller delivers goods not of merchantable quality and the buyer resells at a reduced price after arbitration, the loss on resale is the proper measure of damages if there is no evidence the buyer could have obtained a better price and the buyer acted reasonably to mitigate loss.
Damages & Quantum — Assessment — Arbitration Costs and Expenses
Costs reasonably incurred in arbitration proceedings to resolve a dispute over defective goods, including brokerage, legal representation, telegrams, arbitration fees, and reasonable travelling expenses and accommodation, are recoverable as damages.
Damages & Quantum — Assessment — Duplication of Loss of Profit
Where the measure of damages based on loss on resale already includes the profit the buyer would have made, a separate award for loss of profit on the transaction amounts to double recovery and should not be allowed.
Contract Law — Interest — Offer of Payment Before Action as Tantamount to Tender
In commercial cases, a genuine offer of payment made before action is commenced should be treated as tantamount to tender for the purpose of exercising discretion as to whether to allow a claim for interest, even where the sum or cheque was not physically tendered.
Civil Procedure — Costs — Discretion Exercised on False Premises
Where a trial judge awards all costs to a defendant who succeeds on a counter-claim but overlooks the plaintiff's right to judgment for a balance remaining due, the discretion as to costs is exercised on false premises and should be set aside on appeal.

Legislation cited (2)

  • Sale of Goods Ordinance (Cap. 213 of the Laws of Uganda, 1954) s.16
  • Sale of Goods Ordinance (Cap. 213 of the Laws of Uganda, 1954) s.36

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Budaka Ginners Limited v Hathi (Civil Appeal No. 51 of 1955) [1950] EACA 65 (1 January 1950)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.