Mercantile Agency V. Ismail

Present: Ennis J. and Jayewardene A.J.

MERCANTILE AGENCY v. ISMAIL.

59-D. C. Colombo, 5,795.

Sale of goods-Breach of contract-Assessment of damages-Rate of exchange.

Where upon the breath of a contract the person in default becomes liable for the payment of a sum of money in foreign currency, the damages, for the purpose of the judgment, must be assessed as at the date of default, and the sum payable must be converted to local currency at the rate of exchange prevailing at that date.

The defendant committed a breach of his contract when the failed to pay the bill on maturity and take delivery of the goods, and not when the goods were sold at his risk.

THIS was an action arising out of a contract for the sale of goods. The defendant contracted to purchase from the plaintiffs 27 boxes of embroidery for the price of £212. 19s. 11d. with

interest at 8 per cent, per annum from April 20, 1920. Payment was to be made by bills drawn on the defendant1, who agreed to accept them on presentation and pay on maturity. The defendant failed to pay the bills on maturity and to take delivery of the goods. In terms of the contract plaintiffs sold the goods in July, 1921, and they realized a sum of Rs. 1,900 equivalent to £121. 14s. 4hl. Plaintiffs sued to recover the balance 6119. 3k. 3½d. being the amount of the deficiency. In converting the amount due to local currency, the plaintiffs did so at the rate of exchange prevailing at the date of the plaint. The defendant contended that the conversion should be at the rate of exchange ruling at the date he committed the breach of contract. The District Judge held that the amount due to the plaintiffs must be ascertained according to the rate prevailing at the day the goods were sold by the plaintiffs, viz., July 28, 1921.

Drieberg, K.C. (with him Choksy), for defendant, appellant. Croos Da Brera, for plaintiffs, respondents.

October 20, 1924. Ennis J.-

This was an action for the price of goods sold and' delivered. The plaintiffs drew a bill on the defendant for £212. 19s. 11d. payable in one month's time which the defendant accepted. On tin-arrival of goods the defendant refused to take delivery, and refused to pay the bill on maturity (i.e., August 30, 1920). The, contract contains a special provision by which the plaintiffs could sell the goods in such an event. The goods were sold in July, 1921. The learned Judge gave Judgment for the plaintiffs, and directed that the sterling sum should be calculated in rupee currency as on the date of the sale of the goods.

On the appeal there is but one question for decision, viz., whether the rate of exchange should be taken as on August 30, 1020. or as in July, 1921, as directed by the learned Judge.

Primarily the rate of exchange must be taken as at the date of default in payment, viz., August 30, 1920, when the bill of exchange became payable, but it was urged that the defendant had asked for time for payment. The learned Judge on this point says that- " the goods were not sold earlier owing to the negotiations between the parties which were mainly at the defendant's instance," and so he directed the exchange to be calculated as on the day of the sale of the goods. The Ceylon authority on the subject is the case of Harrison & Crosfield v. Adamally, [1. 5 C. W. If. 32.] which cites the English case of Ogle v. Earl Yane [2 (1868) L. R. 3 Q. B. 272.].

The present case is very similar to Harrison & Crosfield v. Adamally (supra). It has not been established in the present case that there was a request on the part of the defendant- to extend the time

for delivery, and the evidence does not support the suggestion that there was a new contract subsequent to the breach. Some negotiations for a reduced price were entered into, but no agreement was arrived at. In the circumstances the price realized on the sale of the goods goes in reduction of the amount due on the date of defa

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