Darley, Butler & Co. V. Saheed Et Al.,

Present: Ennis A.C.J. and Porter J. 1928.

DARLEY, BUTLER & CO. v. SAHEED et al.

173-D. C. Colombo, 4,168.

Insurance-C. i, f. and c. contract-Indent for goods from abroad-No policy of insurance tendered to indentor-ls defendant bound to accept the goods ?

The commercial traveller of a foreign firm saw the defendants and entered into a bargain with them for the purchase of certain goods at a price agreed upon. Thereafter, the defendants entered into a c. i. f. and c. contract with the plaintiff company, whereby the plaintiffs agreed to indent for these goods from the foreign firm for the defendants. The goods duly arrived in Colombo and were tendered to the defendants, but no policy of insurance was tendered.

Held, that the defendants were bound to accept the goods, even though no policy of insurance was tendered.

" There is no reason why the plaintiffs should be regarded as other than agents of the defendants for the purpose of accepting a policy of insurance, and even if they had not accepted a policy of insurance under a c. i. f. contract of sale, the defendants would have to indemnify them, if, in the exercise of their discretion they accepted the goods as their agents."

Hayley & Kenny v. Kudhoos[1 (1922) 24 N. L. R. 267.] distinguished.

THE facts are set out on the judgment of the District Judge (A. St. V. Jayewardene, Esq.):-

The indent contract entered into by these parties is contained in the document D 1, and on this indent the defendants ordered, through the plaintiffs, seven pieces of flowered art silk and two varieties of crepe georgette-six and four pieces of each. The goods arrived in Colombo in two shipments, and the defendants took delivery of what arrived by the first shipment, viz., the seven pieces of flowered art silk and one piece each out of the crepe georgette. The balance of the goods, consisting of eight pieces of crepe georgette., arrived later, but the defendants refused to take delivery of these. Subsequently the eight pieces were sold, and after giving defendants credit for the price realized by the sale, the plaintiffs claim the balance of the price which includes, besides the cost of the goods, the charges for freight, insurance, and commission, the goods having been purchased on c. i. f. terms. To this claim the defendants raised various defences which were embodied in the issues framed, but at the end of the trial their counsel abandoned all these defences except the one which is contained in the fifth issue, which is as follows :-

Did the plaintiffs duly tender to defendants the proper policy of insurance and the other necessary shipping documents in respect of the goods indented for ?

As corollaries to issue 5, the plaintiffs' counsel suggested, and 1 adopted, two issues marked 5 (b) and 5 (c), which are as follows :-

5 (b) "Were the plaintiffs bound to tender any policy of insurance or any other shipping document ?

 5 (c) And even if they were so bound, can the defendants disclaim liability to pay the amount claimed in the plaint ?

Mr. Hayley's contention for the plaintiffs is that the contract between the parties was a contract of agency, and that if the plaintiffs failed to insure the goods as defendants' agents, the defendants could only recover such damages as might result to them by such failure, and that the defendants were not entitled to reject the goods which had arrived safely and had been offered to them ; this they could do only if the parties were vendors and purchasers on a c. i. f. contract. All the terms of the contract, he urged, should be read together, and that, as by the indent in question, the defendants had expressly agreed to take delivery of such of the goods as are delivered from the vessel or vessels in which they are shipped ; the absence of a policy of insurance or of the other shipping documents would not justify their refusal to take delivery of goods arriving at

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