Wakilii

National Produce Co. v Africa Produce Co. Kenya Ltd ('Civil Case No. 24 of 1951)

East African Court of Appeal · [1952] EACA 291 · 1952 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract
Decision
Judgment entered for plaintiffs with damages, costs and interest

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

A contract to supply a specific quantity of unascertained goods is absolute in its terms. The defence of impossibility of performance fails where it was physically possible for the manufacturer to produce the goods but chose to allocate production to other purposes. The seller cannot rely on government export licensing policy or allocation decisions as frustrating the contract. Damages are assessed as the difference between the contract price and the price the buyer paid for substitute goods.

Outcome

Judgment entered for plaintiffs with damages, costs and interest

Facts

The defendants contracted to sell 50 tons of vegetable ghee to the plaintiffs at £146 10s per ton, delivery at Kilindini Pier during April 1949, not later than 30 April 1949. The contract required the sellers to provide an export licence for the ghee to a sterling area. The defendants intended to obtain the ghee from the East Africa Industrial Management Board (I.M.B.), a Kenya Government organization and the sole manufacturer of yellow ghee in Kenya. I.M.B. had contracted to supply 150 tons of ghee for export during February, March and April 1949. Due to power cuts, plant breakdowns, steam failures and reduced coconut oil supply, I.M.B.'s production fell below expected levels. The Director of Produce Disposals issued an export licence for only 25 tons during those months, prioritizing local consumption. I.M.B. nevertheless produced over 150 tons of ghee in aggregate during January to April 1949, though this was allocated to local consumption and other purposes. The defendants informed the plaintiffs they could not deliver and offered to supply when stocks became available for export. The plaintiffs held the defendants to the contract and purchased substitute Kimbo at £152 10s per ton, £6 more than the contract price.

Issues

  1. Whether a contract to supply a specific quantity of unascertained goods can be frustrated by impossibility of performance when the manufacturer fails to supply the seller.
  2. What is the proper measure of damages for breach of a contract for sale of unascertained goods where the buyer had to purchase substitute goods at a higher price.

Orders

  • Judgment for plaintiffs for £300.
  • Costs awarded to plaintiffs.
  • Interest at Court rates awarded.

Rules and key headnotes

Contract Law — Sale of Goods — Unascertained Goods — Impossibility of Performance
Where a contract is for the sale of a specific quantity of unascertained goods, the defence of impossibility of performance fails if it was physically possible for the goods to be manufactured, even if the manufacturer chose to allocate production to other purposes or government policy restricted export licensing.
Contract Law — Frustration — Absolute Contracts — No Exception Clause
A contract absolute in its terms, containing no exception or qualifying clause, binds the seller to fulfil the contract regardless of difficulties in obtaining the goods from the intended source, unless performance has become legally or physically impossible rather than merely temporarily suspended or commercially difficult.
Contract Law — Frustration — Government Control — Export Licensing
The fact that a government authority declined to issue export licences as a matter of policy, preferring to allocate goods to local consumption, does not frustrate a contract for sale of unascertained goods where the manufacturer continued to produce the goods and allocated them to other purposes.
Contract Law — Damages — Measure of Damages — Substitute Purchase
Where a seller breaches a contract for sale of goods and the buyer purchases substitute goods at a higher price, the measure of damages is the difference between the contract price and the price paid for the substitute goods.

Cases cited (9)

  • Ashmore v Cox [1899] 1 QB 436
  • Twentsche Overseas Trading Co v Uganda Sugar Factory Ltd (1945) 12 EACA 1
  • Leavy & Co v Hirsi & Co [1944] 1 KB 24
  • Blackburn Bobbin Co v Allen [1918] 1 KB 540; [1918] 2 KB 467
  • Kearon v Pearson (1861) 7 H & N 386
  • Re Thornett & Fehr v Yuills Ltd [1921] 1 KB 219
  • Hurnandrai Fulchand v Pragdas Budhsen (1923) 47 Bom 344
  • K C Sethia Ltd v Partab Mull Ramashwar [1950] 1 All ER 51; [1951] 2 All ER 352
  • Taylor v. Caldwell

Full judgment

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

National Produce Co. v Africa Produce Co. Kenya Ltd ('Civil Case No. 24 of 1951) [1952] EACA 291 (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.