Wakilii

Pan African Trading Agencies v Chande Brothers Limited (Civil Appeal No. 13 of 1952)

East African Court of Appeal · [1952] EACA 141 · 1952 Appeal Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from the decision of the High Court of Tanganyika
Decision
Respondents entitled to refund of purchase price of rejected beans and nominal damages only; awards of interest and substantial damages for loss of profit set aside

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court held that fair average quality was an implied term of the contract based on the history of negotiations and samples provided. The respondents were entitled to accept beans conforming to contract specification and reject those that did not under section 32(3) of the Sale of Goods Ordinance. Inferiority in quality can constitute a difference in description as a question of fact. The respondents were entitled to a refund of the purchase price of rejected beans but only to nominal damages for breach, as they failed to prove the existence of a market for assessing loss.

Outcome

Respondents entitled to refund of purchase price of rejected beans and nominal damages only; awards of interest and substantial damages for loss of profit set aside

Facts

In January 1949, appellants offered to sell 410 tons of mixed coloured beans of Belgian Congo origin to respondents, providing samples of fair average quality. The offer was not accepted. In March 1949, after selling some beans elsewhere, appellants offered the remainder (approximately 370 tons) describing them as mixed coloured beans of fair average quality. Respondents made a counter-offer at a lower price, omitting reference to fair average quality, which appellants accepted. Payment of Sh. 129,500 was made. During weighing, it was discovered that of 4,562 bags, 2,504 were of fair average quality while 2,508 were damp and mouldy. Respondents accepted the good quality beans and rejected the remainder. Respondents sold the accepted beans at a profit of Sh. 100 per bag. Appellants knew the beans were required for export.

Issues

  1. Whether the contract for sale of beans included an implied term that the beans should be of fair average quality.
  2. Whether the respondents were entitled to accept part of the goods and reject the remainder under section 32(3) of the Sale of Goods Ordinance.
  3. Whether inferiority in quality constitutes a difference in description for the purposes of section 32(3).
  4. What damages were recoverable for breach of contract, including whether loss of profit on resale was too remote.

Orders

  • Appeal dismissed so far as it relates to paragraphs (a) and (e) of the High Court judgment.
  • Appeal allowed in respect of paragraphs (b), (c) and (d) of the High Court judgment.
  • Judgment for the respondent for Sh. 30,101/50 by way of repayment of the price paid for the rejected beans upheld.
  • Costs of the suit and interest thereon at 6 per cent per annum from the date of decree until payment upheld.
  • Interest on the decretal amount from 19th March 1949 till date of suit set aside.
  • Judgment for Sh. 15,300 by way of damages for breach of contract set aside.
  • Interest on damages set aside.
  • Each party to bear their own costs of the appeal.

Rules and key headnotes

Contract Law — Implied Terms — Fair Average Quality — Incorporation from Prior Negotiations
Where parties negotiate for the sale of specific goods previously described as of fair average quality and provide samples of that quality, the term fair average quality may be implied into the final contract even if omitted from the final offer and acceptance, having regard to the surrounding circumstances and the history of negotiations.
Contract Law — Sale of Goods — Interpretation of Written Contracts — Surrounding Circumstances
In interpreting a written contract, the court may look at the surrounding circumstances and the conduct of the parties to ascertain what the parties meant by the words used, while the formal document remains the primary source of the contract terms.
Contract Law — Sale of Goods — Partial Rejection — Goods of Different Description
Under section 32(3) of the Sale of Goods Ordinance, where a seller delivers goods contracted for mixed with goods of a different description, the buyer may accept goods in accordance with the contract and reject the rest. Whether inferiority in quality amounts to a difference in description is a question of fact in each case.
Contract Law — Sale of Goods — Description — Quality as Part of Description
A stipulation in a contract for goods to be of a particular quality forms part of the description of the goods. In a sale by description, there is an implied condition that the goods will correspond with the description, and a material deviation in quality may constitute goods of a different description.
Contract Law — Damages — Non-Delivery — Measure of Damages
Where a seller breaks a contract to deliver or delivers contracted goods mixed with goods of another description, the buyer is entitled to a refund of the purchase price of rejected goods and, apart from special damages, to the difference between the contract price and the market or current price of the goods at the time of delivery.
Contract Law — Damages — Remoteness — Loss of Profit on Resale
Loss of profit on a contemplated resale is too remote to be recoverable as damages for breach of contract where the buyer has failed to prove the existence of a market for the goods at the relevant time. In the absence of proof of a market, the buyer is entitled only to nominal damages.
Contract Law — Interest — Pre-Suit Interest — Statutory Basis
A court has no power to award interest prior to the date of suit unless authorized by statute. The Indian Interest Act 1839 does not apply to Tanganyika Territory and cannot be relied upon to support an award of pre-suit interest.

Legislation cited (7)

  • Sale of Goods Ordinance (Tanganyika) s.32(3)
  • Sale of Goods Ordinance (Tanganyika) s.5
  • Sale of Goods Ordinance (Tanganyika) s.51(3)
  • Sale of Goods Ordinance (Tanganyika) s.15
  • Sale of Goods Ordinance (Tanganyika) s.15(2)
  • Sale of Goods Act 1893 s.30(3)
  • Indian Interest Act 1839

Cases cited (9)

  • Aitken, Campbell & Co., Ltd. v Boullen and Gatenby (1908) S.C. 490
  • William Barker (Jnr.) & Co. v Ed. T. Agius, Ltd. (1927) 43 T.L.R. 751
  • Moore & Co. v Landauer & Co. (37 T.L.R. 452)
  • London Plywood & Timber Co. Ltd. v Nasic Oak Extract Factory and Steam Sawmills, Ltd. (1939) 2 K.B. 343
  • Arcos Ltd. v E. A. Ronaasen & Son (1933) A.C. 470
  • Raahe O/Y Osakeytio v Goddard (1935) 154 L.T. 24
  • Rodocanachi v Milburn (1886) 18 Q.B.D. 67
  • Dunkirk Colliery Co. v Lever (1878) 9 Ch. D. 20
  • Inglis v Buttery (1878) 3 A.C. 552

Full judgment

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Pan African Trading Agencies v Chande Brothers Limited (Civil Appeal No. 13 of 1952) [1952] EACA 141 (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.