The Attorney General V. Abram Saibo & Co.,

[FULL BENCH.]

1915. Present  : Ennis, Shaw, and De Sampayo JJ.

THE ATTORNEY-GENERAL v. ABRAM SAIBO & CO.

369-D. C. Colombo, 35,575.

Contract for the tale of goods-Consideration-English law-Roman-Dutch law-Implied covenant-Penalty.

It was agreed, inter alia, between the General Manager of the Ceylon Government Railway and the defendant that defendant should supply rice for one year at a specified price " in such quantities as may from time to time be required for the general service of the railway "; that the deliveries should be made upon orders signed by the Railway Storekeeper; that the General Manager should pay for the rice supplied on the 15th day of the month following the delivery; that should the defendant fail to supply the rice ordered the General Manager should be at liberty to purchase elsewhere, and the defendant should pay a certain, penalty for such default, and also pay as damages the difference between the agreed price and the price at which the General Manage; bought the rice elsewhere. The defendant supplied rice for a few months and then made default. The Attorney-General sued defendant for damages for breach of contract and for forfeiture of the deposit of Rs. 350. The District Judge held that, in the absence of any undertaking by the General Manager to give any orders, there was a failure of consideration for the respondent's promise to supply during the fixed period, and that the agreement was nothing more than a continuing offer, which would become a contract when each separate order was issued.

Held, in appeal (per SHAW J. and DE SAMPAYO J.), that the question whether there was consideration to support the contract for the sale of goods was governed by the English law.

Per SHAW J. and DE SAMPAYO J.-That the terms of the tender and acceptance were such as to impose upon the General Manager as obligation to order all the rice required for the railway during the year, and that there was, therefore, consideration for the contract.

Per curia.-That even if the document amounted to offer only, it must, nevertheless, be considered as having been accepted in its entirety by the General Manager as soon as the first order was given by him, and that the contract became thus complete.

THE facts are set out in the judgment of Ennis J. The contract between the General Manager of the Ceylon Government Railway and the defendant was as follows:-

Contract for the supply of Rice to the Ceylon Government Railway.

This Indenture, made this 11th day of October, 1911, between K. Abram Saibo, of Colombo (on behalf of himself, his heirs, &c.), herein-after designated " the contractor," of the one part, and Geoffrey Philip Greene (General Manager, Ceylon Government Railway, on

behalf of himself his successors in office for the time being, and on behalf of His Majesty the King), hereinafter designated "the General Manager," of the other part, which cannot be assigned or sub-let without the authority of the Government;

Witnesseth, that in consideration of the covenants and agreements hereinafter contained on the part of the General Manager, the contractor does hereby for himself, his heirs, &c, covenant and agree with the General Manager, and his successors in office as General Manager for the time being, in manner following, that is to say:-

That the contractor shall supply the rice mentioned in the schedule, in such quantities as may from time to time be required for the general service of the Ceylon Government Railway, from the 1st day of November, 1911, to the 31st October, 1819, of the quality described is the schedule, and in all respects equal to the sample deposited and accepted by the General Manager.

2. The deliveries shall be made by the said contractor from one to three days after each and every order shall have been delivered to him according to the time more fully specified in the schedule, and at the places

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