Kwei Tek Chao v British Traders and Shippers: QBD 1954

In testing whether a buyer of goods has acted inconsistently with the rights of the seller so as to lose the right of rejection where as in this case, property in the goods has passed to the buyer, the ownership of the seller with which the buyer must not act inconsistently is the reversionary interest of the seller which remains in him arising from the contingency that the buyer may reject the goods.
Devlin J said: ‘I do not think that that claim can succeed, first, because there is no evidence that that measure of damage was contemplated by the parties. It is perfectly true that the defendants knew that the plaintiffs were merchants who had bought for re-sale, but everybody who sells to a merchant knows that he has bought for re-sale, and it does not, as I understand it, make any difference to the ordinary measure of damage where there is a market. What is contemplated is that the merchant buys for re-sale, but if the goods are not delivered to him he will go out into the market and buy similar goods and honour his contract in that way. If the market has fallen he has suffered no damage; if the market has risen the measure of damage is the difference in the market price. There are, of course, cases where that ordinary measure of damage is not applicable because something different is contemplated. If, for example, a man sells goods of special manufacture and it is known that they are to be re-sold, it must also be known that they cannot be bought in the market, being specially manufactured by the seller. In such a case the loss of profit becomes the appropriate measure of damage. Similarly, it may very well be that in the case of string contracts, if the seller knows that the merchant is not buying merely for re-sale generally, but upon a string contract where he will re-sell those specific goods, and where he could only honour his contract by delivering those goods and no others, the measure of loss of profit on re-sale is the right measure.
In my judgment there is no evidence that the defendants had any knowledge that the plaintiffs intended to re-sell those very goods; indeed, I am not at all sure that the plaintiffs did intend to re-sell those very goods. I think that the highest that the case can be put is that the plaintiffs, if they did anything at all, appropriated those goods subsequently to the contract with Nam Hua. But there is no evidence that there was any system of string contracts; or that the defendants knew anything more than that the plaintiffs were buying for re-sale generally, and no evidence to show that it could ever have been contemplated that if the goods were not delivered it would be necessary for the plaintiffs to do anything except go out into the market and buy similar goods which would have taken their place.’

Devlin J
[1954] 2 QB 459
England and Wales
Cited by:
CitedClegg v Olle Andersson (T/A Nordic Marine) CA 11-Mar-2003
Right oReject Survived Attempted Repair
The claimant agreed to purchase a yacht from the defendants with a keel to the manufacturer’s standard specifications. The keel actually installed was rather heavier. After correspondence, the claimant rejected the yacht and required the return of . .
CitedScottish and Newcastle International Limited v Othon Ghalanos Ltd HL 20-Feb-2008
The defendant challenged a decision that the English court had jurisdiction to hear a claim in contract saying that the appropriate court was in Cyprus. The cargo was taken by ship from Liverpool to Limassol. An English court would only have . .

Lists of cited by and citing cases may be incomplete.

Contract, Consumer

Updated: 20 December 2021; Ref: scu.180702