In a contract for the sale of goods, the buyer has a duty to mitigate its loss in the event of a breach by the seller. The buyer must take reasonable steps to purchase the goods elsewhere at the prevailing market rate and can only claim damages for the difference between the contract price and the market price at the time of the breach.

Headnote:
CONTRACT - BREACH - DAMAGES - MEASURE OF DAMAGES - CONTRACT FOR DELIVERY OF GOODS F.O.R. KANPUR - FAILURE TO DELIVER - BUYER'S DUTY TO MITIGATE LOSS - PROOF OF MARKET RATE AT KANPUR ON DATE OF BREACH NECESSARY.
Fact of the Case:

The respondent, a firm, sued the appellant firm for breach of contract for the sale of canvas at Re. 1/- per yard, to be delivered through railway receipt for Calcutta f.o.r. Kanpur. The appellant failed to deliver the railway receipt and informed the respondent that the contract had become impossible of performance due to the closure of booking from Kanpur to Calcutta. The respondent claimed damages at the rate of Rs. 1/8/3 per yard, the rate prevalent in Calcutta on the date of breach.
Finding of the Court:

The court held that the contract had not become impossible of performance as the closure of booking from Kanpur to Calcutta was not proved. However, the respondent was not entitled to damages as it failed to prove the rate of similar canvas prevalent in Kanpur on the date of breach. The court held that the respondent had a duty to mitigate its loss by buying the goods in Kanpur and railing them to Calcutta, and if it suffered any damage due to the rise in price, it would be entitled to be reimbursed.
Issues: 1. Whether the contract had become impossible of performance due to the closure of booking from Kanpur to Calcutta. 2. Whether the respondent was entitled to damages at the rate claimed by it.
Ratio Decidendi: 1. The court held that the contract had not become impossible of performance as the closure of booking from Kanpur to Calcutta was not proved. 2. The court held that the respondent was not entitled to damages as it failed to prove the rate of similar canvas prevalent in Kanpur on the date of breach. The court held that the respondent had a duty to mitigate its loss by buying the goods in Kanpur and railing them to Calcutta, and if it suffered any damage due to the rise in price, it would be entitled to be reimbursed.
Final Decision: The appeal was allowed, the decree of the High Court was set aside, and the decree of the trial court was restored with costs to the appellant throughout.

Judgment

WANCHOO, J. : This is an appeal by specia1 leave from the judgment of the High Court of Madhya Bharat. A suit was filed by firm Messrs. Harishchandra Dwarkadas (hereinafter called the respondent) against the appellant firm Messrs. Murlidhar Chiranjilal and one Babulal. The case of the respondent was that a contract had been entered into between the appellant and the respondent through Babulal for sale of certain canvas at Re. 1/- per yard. The delivery was to be made through railway receipt for Calcutta f.o.r. Kanpur. The cost of transport from Kanpur to Calcutta and the labour charges in that connection were to be borne by the respondent. It was also agreed that the railway receipt would be delivered on August 5, 1947. The appellant however failed to deliver the railway receipt and informed the respondent on August 8 1947, that as booking from Kanpur to Calcutta was closed the contract had become impossible of performance; consequently the appellant cancelled the contract and returned the advance that had been received. The respondent did not accept that the contract had become impossible of performance and informed the appellant that it had committed a breach of the contract and was thus liable in damages. After further exchange of notices between the parties, the present suit was filed in November, 1947.

2. Written statements were filed both by the appellant and Babulal. The contention of Babulal was that the contract had become incapable of performance and was therefore rightly rescinded. Further Babulal contended that he was not in any case liable to pay any damages. The appellant on the other hand denied all knowledge of the contract and did not admit that it was liable to pay any damages. Certain other pleas were raised by the appellant with which we are however not concerned in the present appeal.

3. Three main questions arose for determination on the pleadings of the parties. The first was whether Babulal had acted as agent of the appellant in the matter of this contract; the second was whether the contract had become impossible of performance because the booking of goods from Kanpur to Calcutta was stopped; and the last was whether the respondent was entitled to damages at the rate claimed by it.

4. The trial court held that Babulal had acted as the agent of the appellant in the matter of the contract and the appellant was therefore bound by it. It further held that the contract had become impossible of performance. Lastly it held that it was the respondent s duty when the appellant had failed to perform the contract to buy the goods in Kanpur and the respondent had failed to prove the rate prevalent in Kanpur on the date of the breach (namely, August 5, 1947) and therefore was not entitled to any damages. On this view the suit was dismissed.

5. The respondent went in appeal to the High Court and the two main questions that arose there were about the impossibility of the performance of the contract and the liability of the appellant for damages. The High Court held that the contract had not become impossible of performance as it had not been proved that the booking Kanpur and Calcutta was closed at the relevant time. It further held that the respondent was entitled to damages on the basis of the rate prevalent in Calcutta on the date of breach and after making certain deductions decreed the suit for Rs. 16,946/-. Thereupon there was an application by the appellant for a certificate to appeal to this Court, which was rejected. This was followed by an application to this Court for special leave which was granted; and that is how the matter has come up before us.

6. The same two questions which were in dispute before the High Court have been raised before us on behalf of the appellant. We think it unnecessary to decide whether the contract had become impossible of performance, as we have come to the conclusion that the appeal must succeed on the other point raised on behalf of the appellant. The necessary facts in th

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