Noorbhai & Co. V. Karuppen Chetty

Present: Bertram C.J., Ennis J., and Jayewardene A.J.

NOORBHAI & CO. v. KARUPPEN CHETTY

426-D. C. Colombo, 8,290

Contract of sale at a fixed price-After price of article had gone down, pretension by buyer that the contract price was less-After price of article had gone up, repudiation of contract by seller-Action for damages.

The defendant agreed to deliver to plaintiffs 1,500 bags of sugar at Rs. 37.50 a bag. The price of sugar then went down, and the plaintiffs pretended that the contract price was Rs. 34 a bag, and not Rs. 37.50. The defendant repudiated the suggestion, and held the plaintiffs to the bargain. The price of sugar then went up, and the defendant thereupon asserted that the contract no longer subsisted, and, notwithstanding the protests of the plaintiffs, disposed of the goods. The plaintiffs claimed Rs. 17,250 damages for breach of contract.

The defendant set up the defence that there was no contract, and in the alternative that if there were a contract that the plaintiffs had repudiated it and were estopped from claiming the benefit of it.

Held (Per Ennis J. and Jayawardene A.J., dissentiente Bertram C.J.) that there was no binding contract, and even if there was such a contract, it had been rescinded.

Bertram C.J.-In spite of the fact that plaintiffs have sought to repudiate the contract, yet if they are held to it by the other party, they may insist on its performance.

THE facts are set out in the judgment.

Drieberg, K.C. (with him Hayley and Choksy), for plaintiffs, appellants.

Elliott, K.C. (with him Samarawickreme), for defendant, respondent.

Cur. adv. vult. July 15, 1924. Bertram C.J.-

In this case we have to determine the rights of the parties to a sugar contract. The legal issues we have to determine are unfortunately clouded with moral considerations. The buyers, after the contract had been concluded, found that the price of sugar was going down. They thereupon unscrupulously and dishonestly

pretended that they had bought at a lower figure than the actual contract price. The seller repudiated the suggestion, and held him to his bargain. The price of sugar then went up. The seller thereupon, with equal unscrupulousness and dishonesty, pretended that the contract no longer subsisted, and, notwithstanding the protests of the buyers, disposed of the goods which he had already sold. These, as I see the case, are the simple facts. I cannot see that there can be any reasonable doubt as to the legal result of these facts. I think that the legal position is demonstrably clear, if the story is considered in stages.

The first stage relates to the original negotiations, and the contract said to have been concluded. The first question is, was contract concluded ? The facts are as follows: The first plaintiff, who was the managing partner of the firm of T. A. J. Noorbhai & Co., in February, 1923, wanted to buy about 2,000 bags of sugar, and asked a broker, Candappa, to arrange about it. Candappa went to the defendant, and after some negotiations obtained the offer of 1,500 bags (or 150 tons) at Rs. 37.50 per bag. The broker, as I understand the facts, reported this offer to his principal (whom I will refer to as the buyers). The latter approved of the proposal, and gave the broker a cheque for Rs. 7,500, which was an advance or part payment at the rate of Rs. 5 per bag, and instructed him to conclude the bargain.

It is not definitely stated that the cheque was written out after the offer was reported. The seller speaks in one place as though the broker had the cheque with him while they were negotiating, but I think it is clear that the cheque was written out after the offer was reported, as, till this was done, the buyers did not know how many bags they could secure. But nothing seems to me to turn on this point.

On receipt of the cheque the seller drew up a formal contract note, setting out the terms of the bargain, and gave it

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