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Twentsche Overseas Trading Company, Limited v Uganda Sugar Factory, Limited, Uganda Sugar Factory, Limited, v Twentsche Overseas Trading Company (Privy Council Appeal No. 26 of 1943)

East African Court of Appeal · [1945] EACA 1 · 1945 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated appeals from the Court of Appeal for Eastern Africa concerning breach of contract for supply of railway rails
Decision
Appeal and cross-appeal dismissed; decision of Court of Appeal for Eastern Africa affirmed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Privy Council held that the contract for supply of railway rails was not frustrated by the outbreak of war. The appellants failed to prove a collateral oral agreement requiring the rails to come from Germany. The written contract contained no term defining the source of supply, and the origin of the rails did not constitute the basis or foundation of the contract. The contract was not frustrated merely because one of many possible methods of performance became illegal and impossible.

Outcome

Appeal and cross-appeal dismissed; decision of Court of Appeal for Eastern Africa affirmed

Facts

By written contract dated 12 August 1939, the appellants, a Dutch company with a branch in Kampala, agreed to supply three miles of railway rails to the respondents, a British company operating a sugar factory in Uganda. The rails were specified to fit existing Krupp rails. Deliveries were to occur in November, December and January. On 3 September 1939, Great Britain declared war on Germany. The appellants failed to deliver, claiming the rails were to come only from the German firm Ferrostaal and that war made performance impossible and illegal. The respondents sued for breach of contract. The trial court found for the appellants on the basis of frustration. The Court of Appeal reversed, holding the respondents entitled to damages but deciding the price issue in favour of the appellants.

Issues

  1. Whether there was a collateral oral agreement that the railway rails were to be manufactured by and procured from the Ferrostaal Company in Germany.
  2. Whether the contract was frustrated by the outbreak of war between Great Britain and Germany, rendering performance impossible and illegal.
  3. Whether the clause 'Prices without engagement unless otherwise stated in this report' in the contract meant the defendants were not bound to supply at the stated price of £390 per mile.

Orders

  • Appeal dismissed.
  • Cross-appeal dismissed.
  • Costs of the respondents in the appeal reduced by set-off of one-eighth part thereof on account of costs of the cross-appeal.
  • Decision of Court of Appeal for Eastern Africa affirmed.

Rules and key headnotes

Contract Law — Collateral Agreements — Requirements for Proof
A collateral oral agreement must be proved strictly, including proof of an animus contrahendi on the part of all parties, and must constitute a complete legal contract capable of varying or adding to the terms of the written contract.
Contract Law — Frustration — Basis or Foundation of Contract
A contract is not frustrated merely because one of many possible methods of performing it has become illegal and impossible; frustration applies only when the origin or method of performance constitutes the basis or foundation of the contract within the meaning of the frustration doctrine.
Contract Law — Frustration — Express Terms Required
Where a written contract contains no express term defining the source of goods to be supplied, the convenient method of performance contemplated by the seller does not constitute a contractual obligation, and supervening impossibility of that method does not frustrate the contract.
Contract Law — Interpretation — Printed and Written Terms
A printed clause stating 'Prices without engagement unless otherwise stated' operates as a general warning that a quoted price does not bind the seller unless words indicate it is a firm price, and such a clause is not necessarily repugnant to the mention of a specific price earlier in the document.
Contract Law — Formation — Counter-Offer
A document containing new and different terms from an earlier offer constitutes a counter-offer rather than an acceptance, and when signed and returned by the offeree, that document alone constitutes the contract between the parties.

Legislation cited (5)

  • Law Reform (Frustrated Contracts) Act 1943
  • Sale of Goods Ordinance s.6
  • Sale of Goods Ordinance s.10(2)
  • Evidence Ordinance s.91
  • Civil Procedure Code Order VI rule 5

Cases cited (14)

  • Heilbut Symons and Co v Buckleton (House of Lords 1913)
  • Fibrosa Spolka Achoyjna v Fairburn Lawson Combe Barbour, Limited (House of Lords 1943)
  • Constantine S.S. Line v Imperial Smelting Corporation (House of Lords 1942)
  • Re Badische Company, Limited (Chancery Division 1921)
  • Brutton v Branson (Queen's Bench Division 1898)
  • Roe v Naylor (King's Bench Division 1918)
  • L'Estrange v Graucob (King's Bench Division 1934)
  • Furnival v. Coombes (134 E.R. 756)
  • Glynn v Margetson (House of Lords 1893)
  • Kauffman v. British Surety Insurance Company (45 T.L.R. 399)
  • Forbes v Git (House of Lords 1922)
  • Salmon v. Duncombe (11 A.C. 627)
  • Greaves v. Ashlin, (170 E.R. 1433)
  • Bailey v. Woolstone (42 Law Journal Magazine, p 457)

Full judgment

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

Twentsche Overseas Trading Company, Limited v Uganda Sugar Factory, Limited, Uganda Sugar Factory, Limited, v Twentsche Overseas Trading Company (Privy Council Appeal No. 26 of 1943) [1945] EACA 1 (1 January 1945)
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.