The sellers had agreed to sell 500 tonnes of bolita beans cif Le Havre. In the event only 445 tonnes were discharged at Le Havre and the remaining 55 tonnes were on-carried to Rotterdam. The documents in respect the 500 tonnes were presented but rejected on the ground that they did not contain a quality certificate. The documents were re-presented with a quality certificate in respect of the 445 tonnes. They were again rejected. The sellers accepted this as a repudiation of the contract and claimed damages. The 445 tonnes discharged at Le Havre were found not to correspond with their contractual description.
Held: A buyer under a cif contract could not justify a refusal to accept conforming documents on the grounds that the goods in fact shipped did not conform with their contractual description. Thus the buyers’ rejection of the documents was a repudiatory breach which the sellers had accepted as terminating the contract. Where, at the time of the buyers’ repudiation the sellers had committed a breach by shipping non-conforming goods, the buyers could counterclaim for damages caused by that breach.
Lord Diplock, said of s.13: ‘while ‘description’ itself is an ordinary English word, the Act contains no definition of what it means when it speaks in that section of a contract for the sale of goods being a sale ‘by description’. One must look to the contract as a whole to identify the kind of goods that the seller was agreeing to sell and the buyer to buy. . . where, as in the instant case, the sale (to use the words of section 13) is ‘by sample as well as by description’, characteristics of the goods which would be apparent on reasonable examination of the sample are unlikely to have been intended by the parties to form part of the ‘description’ by which the goods were sold, even though such characteristics are mentioned in references in the contract to the goods that are its subject matter.’
and ‘[The termination of the contract] had the consequence in law that all primary obligations of the parties under the contract which had not yet been performed were terminated. This termination did not prejudice the right of the party so electing to claim damages from the party in repudiatory breach for any loss sustained in consequence of the non-performance by the latter of his primary obligations under the contract, future as well as past. Nor did the termination deprive the party in repudiatory breach of the right to claim or to set off, damages for any past non-performance by the other party of that other party’s own primary obligations, due to be performed before the contract was rescinded’
Judges:
Lord Diplock
Citations:
[1984] AC 382
Statutes:
Jurisdiction:
England and Wales
Cited by:
Cited – Harlingdon and Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd CA 15-Dec-1989
The defendant auctioneer sold a painting to the plaintiff which turned out to be a forgery. The plaintiff appealed against a finding that it had not relied upon the attribution, saying that there had been a breach of the requirement that the paintig . .
Lists of cited by and citing cases may be incomplete.
Contract, Transport
Updated: 12 April 2022; Ref: scu.561152