Scottish Court of Session Decisions

This action was raised in the Sheriff Court at Haddington by the North Berwick Gas Company against John B. Robertson & Company, chemical manufacturers, Dunbar, for payment of £68, 18s. 6d. as the amount of an account from April 1882 to August 1883 alleged to be due to them for gas tar and ammoniacal liquor supplied to the defenders. The debt was admitted, “but under deduction always therefrom of the defenders' counter claim of damages.”

The defenders averred—“(Statement 2) For several years prior to the 31st day of July 1883 the defenders had an annual contract with the pursuers for the supply to the former of the gas tar and ammoniacal

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liquor produced at the pursuers' works. In particular, in or about August 1878 the defenders entered into such a contract with the pursuers for the year from July 1878 to July 1879, and a similar contract between the parties was duly and effectually renewed from year to year thereafter, and that both by writing and verbally.”

They further averred—“(Stat. 5) Apart altogether from the contract condescended upon and alleged by the defenders, it is the invariable custom of the trade to enter into such contracts for a period of not less than one year, so as sufficiently to guard against and meet the exigencies of the trade. It is likewise the custom of the trade, &c., besides subject of common law regulation, that due or reasonable notice is given by the one party to the other of the termination of the contract or dealings between them, and such was not done in the present case. (Stat. 6) In these circumstances the pursuers have been guilty of a grievous violation of the contract between them and the defenders, to the serious loss and damage of the latter. Said loss and damage is estimated at the sum of £40 sterling.”

They calculated that during the remaining four months of the contract ending July 1883 they should have been supplied by the defenders with 5500 gallons of gas tar and ammoniacal liquor, which at 12s. 6d. per ton, including carriage and empty casks, would have amounted to £22,19s. 6d., which deducted from the estimated market value (£63,11s. 3d.) of the manufactured products would have left a balance of loss to them of £40, 12s. 5d.

The pursuers denied that there was any contract between them and the defenders during the year 1882–3 for the supply of the tar and liquor produced at their works, as the defenders averred and stated that the supply given was given during their pleasure only.

The defenders pleaded that there was a legal, solemn, and binding contract for the year from 31st July 1882 to 31st July 1883, and that they were entitled to plead the same as against the account sued for or amount thereof, and that by way of compensation.

The Sheriff-Substitute ( Sherriff) decerned against the defenders for the sum of £68, 18s. 6d., concluded for. The facts are fully explained in the note appended to this interlocutor, as follows:—“By letter, dated 9th August 1878, addressed to Mr Webster, then the manager of the North Berwick Gas Works, John B. Robertson & Company, chemical manufacturers in Dunbar, offered the sum of 12s. 6d. per ton for all the tar and ‘ammoniacal liquor produced at the gas works for one year from the expiry of their last contract, or for any longer period, as may be mutually agreed upon.’ On 12th August Mr M'Culloch, the secretary of the Gas Coy., wrote in reply that the offer ‘for one year from date of expiry of last contract’ had been laid before the directors, and the writer was directed to accept the offer on condition that John B. Robertson & Coy. supplied all casks and paid all carriages, and that all accounts be paid quarterly.

The parties continued to deal on the same terms till 24th March 1883, when the manager of the Gas Company wrote to Messrs Robertson & Co. stating that the Gas Company had contracted with a Glasgow firm for the sale of their tar and ammoniacal liquor, as from 1st April 1883, and that Messrs Robertson & Co. would only be supplied to the end of the following week.

The Gas Company have raised this action against J. B. Robertson & Co. for the sum of £68, 18s. 6d., being the value of the gas tar and ammoniacal liquor supplied to the defenders from 8th August 1882 to the 3d of April 1883.

In defence it is maintained—1st That there was a current contract for the year from 31st July 1882 to 31st July 1883, and the defenders have a claim of damages against the pursuers for failure to implement said contract, on which they plead compensation. 2d That, in any view, the notice given by the pursuers that they would cease to supply the defenders with gas tar and ammoniacal liquors was ‘insufficient’ according to the practice of the trade and common law…

I. The contract between the parties was constituted by the letters above referred to, and clearly was only for the year ending 31st July 1879. The pursuers continued to send their tar and ammoniacal liquors to the defenders on the same terms as was contracted for, but it cannot be maintained that by so doing the pursuers entered into any new contract after the contract for the year to 31st July 1879 expired. The pursuers were free to refuse to furnish the gas tar and liquor to the defenders, and the defenders were equally free to refuse to take them. The argument for the defenders seemed to be that the pursuers, by continuing to supply the tar and ammoniacal liquor, and sending in their accounts at stated intervals, as was done during the subsistence of the contract, and settling up annually in July, made yearly a new contract, which is acknowledged by the statement in the post-card dated 20th July 1880, addressed by the pursuers' manager to the defender, to the effect that ‘the contracts are up.’ That this writing proved, scripto, the existence of a contract which could only be overcome by the writ or oath of the defenders. The defenders' agent adduced many authorities for holding that in rebus merca—toriis parties may bind themselves without the the use of all the solemnities essential to some other contracts, but that is all the length the authorities cited by them go.

The Sheriff-Substitute does not think he can concur in the view urged for the defenders. The use of the word ‘contract’ in the post-card sent by the pursuers’ manager is scarcely sufficient to constitute a contract, and there is not even any averment that there was any communing between the parties regarding a renewal of the written contract. It may be that after the expiry of the contract, the pursuers continuing to send the gas tar and ammoniacal liquors as formerly without any fresh bargain, the pursuers were only entitled to charge the defenders the price agreed on under the contract and not the market price; that question is not raised by the pursuers, but the Sheriff-Substitute is clearly of opinion that after the expiry of the contract in July 1879, the pursuers were entitled at any time to cease to supply their goods to the defenders.

II. The defenders maintain that they were entitled to longer notice that the pursuers were to cease supplying gas tar and ammoniacal liquor. The Sheriff-Substitute thinks this is an important matter, and it has caused him some difficulty. There is no doubt that manufacturers with large

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works and heavy payments to make to workmen, are much inconvenienced if suddenly deprived of the materials used in their manufacture; but their remedy is, if they enter into contracts for supplies, to see that these contracts are regularly renewed and made binding. The defenders have averred that the notice was too short, according to the usage of trade, but they do not aver that according to the usage of trade any particular length of notice is given, or make any averment relevant to be admitted to probation. The Sheriff-Substitute is of opinion that after the expiry of the contract either party was at liberty at any time to cease dealing on the terms contracted for.” …

The defenders appealed to the Sheriff.

In their reclaiming petition they stated that they desired to found upon a verbal contract between the parties, and were prepared to amend their record if necessary. They did not formally tender a minute of amendment.

The Sheriff dismissed the appeal.

“ Note.—The contract made in 1878 was quite distinctly for one year only. The defenders aver that a similar contract was renewed from year to year thereafter, both by writing and verbally—by writing in the offer of 1878, and the subsequently yearly accounts, &c. But the offer in 1878 for more than one year was not accepted, and the subsequent yearly accounts &c., do not constitute or imply any continuing contracts. The defenders do not condescend on the particulars of any verbal contract. They ask to be allowed a proof, but there are no facts stated to go to proof. After 1879 the parties were dealing without a contract for certain specified or implied periods, and their dealings might have been ended by either at any time, and without the necessity of notice, however proper some notice may in the circumstances have been. Of course it was the business of the defenders to secure themselves by contract against the stoppage of a precarious supply.

It is not unimportant that in their written communication to the pursuers in March 1883 the defenders did not state that they could not be summarily disposed of, as the pursuers proposed to do, in respect of an existing contract up to the end of July 1883.”

The defenders appealed to the Court of Session, and at the calling of the cause on the Short Boll proposed to amend their record by adding the following averment—“On or about 7th August 1882 the pursuers sold to the defenders, and the defenders bought from the pursuers, all the gas tar, &c., to be produced at the pursuers' works during the year ending 31st July 1883, at the price of 12s. 6d. per ton. The said contract was entered into at North Berwick on same date by Mr Black, the pursuers' manager, on their behalf, and Mr Robertson, sole partner of the defenders' firm. Thereafter the pursuers, in implement of said contract, delivered to defenders the quantities of gas tar, & c., mentioned on record.”

Section 24 of the Sheriff Courts Act 1876 provides—“The Sheriff may at any time amend any error or defect in the record in any action, upon such terms as to expenses and otherwise as to the Sheriff shall seem proper, and all such amendments as may be necessary for the purpose of determining in the action the real question in controversy between the parties shall be so made.”

They argued—A verbal contract from year to year was relevantly averred on record. The Sheriff ought to have given effect to the proposal to amend contained in the reclaiming petition, but he had not taken notice of it. He was bound to allow it—(1) from the imperative terms of sec. 24 of the Sheriff Court Act; (2) because it was merely a specification of what was, though imperfectly, already set forth on record. Failing the Sheriff's having complied with the Act, it was the duty of the Court now to set the case right by allowing the amendment.

The pursuers replied—To allow the amendment now after the opportunity to make it before the Sheriff had been lost, and final judgment taken in the Inferior Court, was incompetent. Besides, the defenders were refuted out of their own mouth, for their own letter of 26th March, which proposed a new contract, negatived any belief in the subsistence of a contract then. [This letter was to the following effect:—“Dear Sir,—Referring to the conversation our Mr R. had with you to-day, we now beg formally to make offer of the sum of 22s. per ton for your production of gas tar and water, as from 1st April till 31st July, that being, we presume, the close of your financial year, and, we may add, the time at which any alteration in the existing arrangements would naturally have been made. Considering that we have now done business with your Co. for eight or nine years, we think your directors might have afforded us the opportunity of tendering for a new contract before treating with a stranger, especially as all our business relations hitherto have been of a most amicable nature, and if not too late, we trust they may still see their way to do so, in which case we are prepared to continue our offer for an extended period. Trusting you will kindly lay the case before such of the directors as you may most easily approach, and hoping for your most favourable support.”]

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