Corbisa sold maize to Pagnan on cif terms, with extensions, the shipment period ended on 22 August 1965. The sellers failed to ship in time. On 21 September 1965 the parties met and the buyers agreed to accept a consignment on a named vessel if satisfied with its condition on arrival at Venice. Part was in bad condition when it landed, and was rejected. A decree also sequestred part of the cargo for the recovery of freight and premiums advanced and for reimbursement of damages for non-fulfilment. The sellers repaid the advances, and the sequestration was lifted pro tanto, leaving 700 metric tons under sequestration in relation to the claim for damages. The parties went on to agree that the buyers would purchase the rejected goods ex silo Trieste, at a price which the arbitrators found was unduly depressed by reason of the sequestration: so much so that it was below the market price. The arbitrators also found: ‘The purchase of 13 November 1965 formed part of a continuous dealing with the situation in which the buyers found themselves, and was not an independent or disconnected transaction. By such purchase the buyers diminished and mitigated any loss which they might have suffered.’ The arbitrators dismissed the claim. The buyers appealed by case stated. At first instance Roskill J. upheld the award.
Held: The award stood. Section 51(3) was not applied because the buyers had in fact been able to go out into the market and purchase a substitute cargo at a lesser price than the contract price or the market value at the relevant time.
Salmon LJ: ‘The principle of law is that where a buyer wrongfully neglects or refuses to accept and pay for the goods or a seller wrongfully neglects or refuses to deliver the goods to the buyer, the innocent buyer or seller as the case may be may maintain an action for damages for breach of contract. The measure of damage in each case is the estimated loss directly and naturally resulting in the normal course of events from the breach of contract. Where there is an available market for the goods, the measure of damage is prima facie to be ascertained by the difference between the contract price and the market price at the date of the breach: see section 50 and 51 of the Sale of Goods Act, 1893. The two authorities relied on by Mr. Goff do no more than illustrate instances in which the prima facie rule relating to the measure of damage applies. In such cases the innocent party is not bound to go on the market and buy or sell at the date of the breach. Nor is he bound to gamble on the market changing in his favour. He may wait, if he chooses; and if the market turns against him this cannot increase the liability of the party in default; similarly if the market turns in his favour, the liability of the party in default is not diminished. Normally if the innocent party goes on to the market and buys or sells after the date of the breach, this is res inter alios acta so far as the party in default is concerned. The present case, however, is quite different. The purchase of 13 November 1965 was certainly not inter alios acta ; it was between the self-same buyers and sellers who were parties to the contract of 20 May 1965 and it related to the self-same goods that were the subject-matter of that contract. Moreover, as already stated, the tribunal found that it was not an independent or disconnected transaction but formed part of a continuous dealing between the parties; and these findings of fact cannot be challenged in this court. Accordingly the prima facie rule for ascertaining the measure of damages cannot apply because the buyers suffered no loss or damage but instead made a handsome profit in spite of the sellers’ breach.’ and
‘But the buyer cannot have his cake and eat it, as these buyers are seeking to do. They went through the motions of rejecting the goods in October 1965. Indeed they did, in law, reject them. They did so, however, in the confident expectation that, as a result of their rejection and the sequestration order, they would be able to negotiate a new agreement under which they would acquire the goods at a price favourable to themselves. This they did by their purchase of November 13. The price was substantially below the market price and their resulting profit certainly exceeded the difference between the May contract price as varied and the prevailing market price at all relevant times. Damages for breach of contract are awarded for loss suffered. Here the buyers suffered no loss. It is only by looking in isolation at the sellers’ failure to deliver sound goods that the buyers’ claim is even arguable. This failure cannot in my view properly be looked at in isolation because together with the purchase of November 13 which arose out of the situation in which the buyers found themselves, it formed one continuous dealing between the same parties in respect of the same goods. As a result of this dealing, looked at as a whole, the buyers, notwithstanding the sellers’ breach, made a profit and no loss. To allow the buyers’ claim would in my view be contrary alike to justice, common sense and authority. I would accordingly dismiss the appeal’
Judges:
Salmon LJ
Citations:
[1970] 1 WLR 1306
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Jamal v Moolla Dawood, Sons and Co PC 3-Nov-1915
The plaintiff claimed damages from the buyer for his failure to accept shares contracted to be taken on a particular date. Two months after that date the sellers began to re-sell the shares on a rising market.
Held: Damages for breach of . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 12 April 2022; Ref: scu.242130
