Associated Newspapers Of Ceylon, Ltd. V. Hendrick

1935   Present  : Macdonell C.J. and Poyser J.

ASSOCIATED NEWSPAPERS OF CEYLON LTD. v. HENDRICK.

 314-D. C. Colombo, 46,067.

Liquidated damages-Contract for inserting advertisements-Agreement to pay higher rate if the space contracted for is not taken-Liquidated damages and not a. penalty.

The plaintiff company, who are newspaper proprietors, contracted with the defendant to insert advertisements on his account in their newspapers at a special rate, it being agreed that the defendant would insert not less than a stated number of column inches of advertising matter during the period of agreement.

It was also provided in the agreement that " when the space or number of insertions under the contract is less than originally agreed upon the higher rate for the lesser space must be paid " The defendant sent in advertisements during the period and paid for them at the special contract rate.

It was found at the end of the period, that the defendant had inserted much less than the space contracted for.

Held (in an action by the plaintiffs to recover the difference between the contract rate and the higher rate), that the provision for the payment of a higher rate must be regarded as an agreement to pay liquidated damages and not as a penalty.

APPEAL from a judgment of the District Judge of Colombo.

N. Nadarajah (with him H. N. G. Fernando), for defendant, appellant.

H. V. Perera (with him J. R. Jayewardene), for plaintiff, respondent.

Cur. adv. vult.

105

January 29, 1935. MACDONELL C.J.-

In this case the plaintiffs are the proprietors of three newspapers, and they made with the defendant on February 5, 1929, three written contracts as to the insertion in each of their papers of advertisements by the defendant in the following terms :-

" Subject to your confirmation and to the tariff and terms and conditions overleaf, I have pleasure in requesting you to insert my advertisements as per under-noted contract.

" Space .. 1000 column inches minimum.

" Price .. Re. 1 per column inch.

" Period .. One year.

" Position .. Unspecified.

" Insertions as required, provided space is evenly distributed over the contract period.

" To commence in February 1929.

"Remarks .. Deposit of Rs. 100 in advance as security for prompt payment of accounts and for due fulfilment of terms and conditions."

The two other contracts were identical in terms save that in one of them the contract rate per column inch was 75 cents instead of Re. 1. Each of the three written contracts is stated to be subject " to the tariff and terms and conditions overleaf". The tariff overleaf specifies what the particular paper charges per 100 column inches as its ordinary price for advertisements where there is no special contract as there was in the present case. The prices are on a sliding scale. Thus for one of these three newspapers the tariff names Rs. 4 per column inch if the advertiser takes, less than a 100 column inches, whereas if he takes between 250 and 500 he gets each inch of advertisement at Re. 1.87J. But the tariff is quite definite, and if the advertiser knows what space his advertisements will take, he knows from the tariff exactly what he will have to pay for them. The conditions referred to in the contract, also printed overleaf, contain the following: No. 8, " All the space contracted for must be used within the specified period, and excess space, whether used during or after the specified period, must be paid for at the contract rate. When the space or the number of insertions under the contract is, less than originally agreed upon, the higher rate for the lesser space must be paid", the ' higher rate' clearly meaning the tariff rate as set out above.

It was argued that under such a contract the advertiser need not send in any advertisements at all, but this argument fails to give effect to the phrase ' 1,000 column inches minimum' or to the r

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