Wakilii

Overman Reid and Company and Another v Karim (C.C. 42-1931 (Mombasa).)

East African Court of Appeal · [1934] EACA 26 · 1934 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for damages for failure to take delivery of goods under a C.I.F. contract
Decision
Plaintiffs' claim dismissed; defendant not liable for failure to take delivery

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the plaintiffs could sue on a subsidiary contract under which they undertook to pay sight drafts and the defendant undertook to provide promissory notes. A buyer under a C.I.F. contract is entitled to actual physical presentation of shipping documents as a condition precedent to payment. The alleged local usage of tender by notice was not proved. The defendant's acceptance of such notice in previous transactions did not constitute waiver of his right to actual presentation. The plaintiffs were not relieved from tendering documents despite the defendant's improper demand to inspect goods, as they continued to treat the contract as subsisting.

Outcome

Plaintiffs' claim dismissed; defendant not liable for failure to take delivery

Facts

The defendant ordered fifty tons of Australian flour from the plaintiffs' predecessor firm on C.I.F. terms, payment nett cash against documents. The plaintiffs agreed to pay sight drafts themselves and draw on the defendant at ninety days. When a consignment of ten tons arrived in Mombasa in January 1931, the plaintiffs sent an invoice and promissory note to the defendant for signature. The defendant refused to sign without first examining the flour, which was not his contractual right. The plaintiffs arranged testing but the defendant demanded further tests. The plaintiffs threatened to sell the flour if the promissory note was not signed. The defendant then offered to sign upon receiving the shipping documents. By this time the plaintiffs had paid the sight draft to the bank and handed the documents to another company to clear and sell the flour at Dar es Salaam. The shipping documents were never actually presented to the defendant and he never signed the promissory note. The plaintiffs sued for damages for failure to take delivery.

Issues

  1. Whether the plaintiffs could sue on a subsidiary contract between themselves and the defendant for payment of sight drafts and provision of promissory notes.
  2. Whether a buyer under a C.I.F. contract is entitled to actual physical presentation of shipping documents as a condition precedent to payment.
  3. Whether an alleged local usage in Mombasa, by which notice of arrival of documents constitutes sufficient tender, was established.
  4. Whether the defendant waived his right to actual presentation of shipping documents by accepting such notice in previous transactions.
  5. Whether the defendant was estopped from demanding presentation of shipping documents after the plaintiffs had parted with them to clear the goods.

Orders

  • Judgment for the defendant.
  • Costs awarded to the defendant, including costs of the application for security for costs.

Rules and key headnotes

Contract Law — Agency — Subsidiary Contracts — Right of Agent to Sue
Where an agent agrees with a buyer to pay the seller's sight drafts and the buyer agrees to provide promissory notes to the agent for the same amount plus interest and expenses, this constitutes a subsidiary contract upon which the agent can sue independently of the principal contract of sale.
Commercial Law — C.I.F. Contracts — Tender of Shipping Documents — Actual Presentation Required
A buyer under a C.I.F. contract, if standing upon his strict rights, is entitled to insist upon actual physical presentation of the shipping documents to him as a condition precedent to being called upon to pay the price, as a C.I.F. contract is a contract for the sale of goods to be performed by delivery of documents.
Commercial Law — Trade Usage — Proof Required — Universal Acquiescence
An alleged local usage of trade must be proved to be so universally acquiesced in that everybody in the particular trade or place knows it or might know it if they took the pains to inquire. Evidence that banks followed a particular practice in many but not all cases is insufficient to establish such a usage.
Contract Law — Waiver — Course of Dealing — Standing on Strict Rights
The fact that a buyer has accepted tender of documents by notice without objection in previous transactions does not constitute an agreement to dispense with the right to actual presentation in a case where each party is standing on their strict contractual rights.
Contract Law — Estoppel — Change of Position — Election to Treat Contract as Subsisting
Where a buyer makes an improper demand to inspect goods before payment and the seller does not immediately repudiate but continues to treat the contract as subsisting and represents that documents are within their procurement, the buyer is not estopped from demanding presentation of documents merely because the seller has in fact parted with them.

Legislation cited (7)

  • Indian Contract Act s.38
  • Indian Contract Act s.39
  • Indian Contract Act s.51
  • Indian Contract Act s.230
  • Indian Transfer of Property Act s.130
  • Bills of Exchange Ordinance s.45(4)
  • Bills of Exchange Ordinance s.52(4)

Cases cited (21)

  • Jordeson and Kahn v London Hardwood Co (110 LT 666)
  • Plaice v Allcock (4 F & F 1075)
  • Malmberg v Evans (30 Comm Ca 107)
  • Tyrer v Hessler (84 LTR 653)
  • Keland v Livingstone (5 HLC 395)
  • Biddell Bros v Horst [1911] 1 KB 214
  • Braithwaite v Foreign Hardwood Co [1905] 2 KB 543
  • Bank of China v American Trading Co [1904] AC 273
  • Jones v Barkley (99 ER 434)
  • Plauck v Colburn (131 ER 305)
  • Hochster v De La Tour (118 ER 922)
  • Alexander v Gardiner (131 ER 1276)
  • Johnson v Taylor Bros [1920] AC 144
  • Stein Forbes and Co v County Tailoring Co (115 LTR 215)
  • Platau Dick and Co v Keeping (36 Comm Ca 243)
  • Diamond Alkali Corporation v Bourgeois [1921] 3 KB 443
  • Wilson Holgate v Belgian Grain Co [1920] 2 KB 7
  • Hansson v Hamel and Harley [1922] 2 AC 36
  • Brandt v Dunlop [1905] AC 454
  • Adamji v Thomsen (CC 97 of 1932)
  • Arnold Karberg and Company v Blythe [1916] 1 KB 510

Full judgment

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Overman Reid and Company and Another v Karim (C.C. 42-1931 (Mombasa).) [1934] EACA 26 (1 January 1934)
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.