Wakilii

Campling Bros and Another v United Air Services Ltd (Civil Appeal No. 63 of 1951)

East African Court of Appeal · [1952] EACA 155 · 1952 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from decision of the High Court of Tanganyika challenging findings on breach of contract and counter-claim
Decision
Appeal dismissed; judgment for respondents on counter-claim for reduced damages of Sh. 16,000

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that no term could be implied requiring the principal to supply unlimited working capital to its managing agent. A term can only be implied if necessary in the business sense to give efficacy to the contract. The trial judge's finding that the appellants were not compelled by lack of funds to cease operations on 4 May 1949 was supported by evidence. The appellants committed a breach by stopping business, and the respondents were entitled to terminate the agreement. Damages on counter-claim reduced because deterioration of aircraft after handover could not be attributed to the appellants.

Outcome

Appeal dismissed; judgment for respondents on counter-claim for reduced damages of Sh. 16,000

Facts

The appellants were managing agents for the respondents, an air carrier company incorporated in Tanganyika. Under an agreement dated 24 June 1947, the appellants were responsible for the entire administration of the respondents' business. The respondents' directors had no expertise in aircraft operations and were entirely dependent on the appellants. On 4 May 1949, the appellants suspended flying operations, claiming the respondents had failed to provide sufficient funds. The respondents terminated the agreement under clause 18(d), alleging breach by the appellants. The appellants sued for breach and loss of anticipated profits; the respondents counter-claimed for loss of profits, goodwill, and capital assets. The trial judge found that the appellants were not compelled by lack of funds to cease operations and had committed a breach. The respondents had never defaulted on specific expenses or agency fees, and had offered a conference before the appellants ceased operations. After cessation, the company's technical representative took possession of all property in good order, but subsequent deterioration occurred due to lack of expert care.

Issues

  1. Whether the defendants committed a breach of the agreement by failing to supply the plaintiffs with sufficient funds so that the plaintiffs were compelled to suspend flying operations.
  2. Whether a term must be implied in the contract that it was the duty of the respondents to supply sufficient finance to ensure that the business would run satisfactorily.
  3. Whether the appellants were justified in ceasing operations on 4 May 1949.
  4. Whether the respondents were entitled to terminate the agreement under clause 18(d) for breach.
  5. What damages, if any, flow from the appellants' breach of contract.

Orders

  • Appeal dismissed.
  • Judgment entered for the respondents for Sh. 16,000 on their counter-claim.
  • Damages reduced by Sh. 30,000 (aircraft deterioration) and Sh. 14,000 (spare parts deterioration).
  • In the Court below, the defendants-respondents awarded costs on the claim; on the counter-claim they are entitled to one-third of their taxed costs.
  • In the Court of Appeal, the defendants-respondents awarded three-quarters of their taxed costs.

Rules and key headnotes

Contract Law — Implied Terms — Test for Implication
A term can only be implied in a contract if it is necessary in the business sense to give efficacy to the contract, such that if at the time of negotiation the parties were asked what would happen in a particular case, they would both reply that the answer is too clear to require express statement.
Contract Law — Agency — Principal's Duty to Supply Funds
Where a managing agent is employed to run a principal's business for a percentage of profits plus a fixed fee, there is no implied term that the principal must supply unlimited working capital merely to provide the agent with an opportunity to earn commission, absent express provision or business necessity.
Contract Law — Co-operation — Implied Duty Not to Prevent Performance
Where B is employed by A to do work requiring A's co-operation, there is an implied term that A will not prevent B from performing by destroying the subject-matter or withholding necessary co-operation. However, this principle does not extend to requiring A to supply unlimited funds where the contract does not expressly or by necessary implication impose such a duty.
Contract Law — Damages — Remoteness and Causation
Where a party in breach hands over property in good order and subsequent deterioration occurs due to the other party's failure to maintain it, the deterioration cannot be assessed as damages flowing from the original breach.

Cases cited (5)

  • Lazarus v Cairn Line of Steamships Ltd (1912) 106 LTR 378
  • Reigate v Union Manufacturing Co (Ramsbottom) [1918] 1 KB 592
  • Luxor (Eastbourne) Ltd v Cooper [1941] AC 108
  • Inchbald v Western Neilgherry Coffee Co (1864) 17 CB NS 733
  • Burchell v Gowrie and Blackhouse Collieries Ltd [1910] AC 614

Full judgment

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

Campling Bros and Another v United Air Services Ltd (Civil Appeal No. 63 of 1951) [1952] EACA 155 (1 January 1952)
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.