Scottish Court of Session Decisions

On 26th March 1890 the Pumpherston Oil Company, Limited, 24 St Vincent Street, Glasgow, agreed to sell to Richard Higgin, tallow chandler, Manchester, 20 tons of paraffin wax, conform to the following contract-note:—“ March 26, 1890.—Sold this day, in accordance with the regulations of the Scottish Mineral Oil Association, to Mr R. Higgin, 255 Great Ancoat Street, Manchester, 20 tons of semi-refined paraffin wax, of usual good merchantable quality, guaranteed melting point 118/20° Fahrenheit, at threepence and five thirty-seconds of a penny (35·32d.) nett per pound. To be delivered free by us to Manchester during the next twelve months, in about equal monthly quantities. The wax to be taken delivery of when tendered, and paid for by cash within fourteen days from date of delivery.” The next clauses contained stipulations as to the melting point of the wax, and a condition that the wax sold under the contract was for the express purpose of candlemaking. “If on the part of the producers there should be any failing, in the opinion of the Executive Committee of Candlemakers, to carry out their undertaking, then the candlemakers holding contracts will be free to cancel the same. Should any question arise with regard to melting point or colour of any delivery made on this contract, a certificate furnished by Mr Boverton Redwood shall be conclusive between the parties. Each delivery shall constitute a separate contract. Should strikes of workmen, fire, or other unexpected and exceptional causes suspend or partially suspend manufacturing operations, the deliveries under this contract may be postponed until such interruption is removed, the buyer having the option of cancelling the portion of the contract of which delivery has been so suspended by giving written notice to the seller within thirty days following the month during which the suspension took place. Any dispute arising under this contract to be settled by arbitration in the usual way.— For The Pumpherston Oil Coy., Limited—W. W. M'Millan.”

Under this contract one ton of wax was delivered in September 1890 and two tons in February 1891, both of which were paid for.

On 7th March 1891 Mr M'Millan, salesman for the Pumpherston Oil Company, wrote to Mr Higgin in the following terms—“We hereby beg to tender you delivery of 17 tons 118/20° wax, due this month under contract of March 26th /90, and we shall be glad if you will favour us with early forwarding instructions.” In his reply dated 14th March Mr Higgin ordered on the 17 tons. But on 16th March the company replied as follows—“We are in receipt of your favour of 14th inst. We observe that we have inadvertently tendered you 17 tons while you are only entitled to one month's delivery in terms of your contract with us. We sold you 20 tons wax, to be delivered in about equal monthly quantities over the year, so that all we have now to send you is the March delivery. We endorse invoice for 2 tons, which we shall send on, in receipt of your remittance. We would not ask for cash for this, but you took excessive credit before, which we cannot permit.” On 24th March Mr Higgin intimated to the company by letter that he had paid the value of the 17 tons into the bank, and that if delivery was not given before the end of the month he would buy against them and claim damages as well. The company replied in course renewing their offer to deliver the quantity of wax they considered Mr Higgin was entitled to claim, viz., one month's proportion.

In June 1891 Mr Higgin presented a petition against the company in the Sheriff Court of Lanarkshire at Glasgow, in which he averred that in consequence of their refusal to implement their contract, he had to supply himself with 17 tons of wax, the undelivered portion of his contract, in the open market at an enhanced price, and craved decree for £74, 7s. 6d., being the difference between the contract price and that paid by him. The defenders pleaded that the action was irrelevant, and this plea was sustained by the Sheriff-Substitute and the Sheriff; but, on appeal to the First Division of the Court, their interlocutors were recalled and a proof was allowed.

The import of the proof appears from the following findings of the Sheriff-Substitute ( Guthrie)—“Finds that the letter from the defenders to pursuer of March 7th 1891 was written and sent by Mr M'Millan, salesman for defenders, in error as to the contract between defenders and pursuer, and was corrected by the defenders in their letter of 16th March, and finds that their offer of 17 tons to be then delivered is of no effect in law: Finds that there is nothing in the correspondence or communings of the parties from which a mutual intention to postpone the deliveries of wax may be inferred: Finds that, according to the true construction of the contract, the wax was to be delivered within the twelve months following the date thereof, in about

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equal monthly quantities, each monthly delivery being a separate contract: Finds that the pursuer not having ordered, and not having complained of the defenders' failure to tender the monthly quantities of wax beyond those above specified, and the defenders not having tendered, and not having complained of the pursuer's failure to order on the several monthly quantities except as aforesaid, mutually passed from and abandoned their claims under the contract or contracts as to each monthly delivery up to February 1891: Finds that in March 1891 the defenders wrongfully refused to deliver the last monthly delivery to which pursuer was then entitled except for payment in cash, the pursuer being entitled by the contract to pay only in fourteen days: Finds that the pursuer is entitled to damages in respect of this breach of contract; Assesses the damages at the sum of £7, 4s. 5d. sterling, for which decerns against the defenders, with interest as craved.”

“ Note.—I cannot accept the pursuer's somewhat peculiar view of the contract. He received and retained the sold-note of March 26th 1890, and when it suits his purpose he refers to it in writing to the defenders. It is impossible, in my view, to deal with the controversy between the parties except on the footing that this written contract is the foundation and the rule of the relation between them. There was therefore, at 26th March 1890, a sale by the defenders to the pursuer of 20 tons of paraffin wax, to be delivered by instalments as set forth. The question is, whether the conditions of that sale as to deliveries were modified by the mutual agreement or actings of parties. The case of Tyers v. Rosedale has been appealed to as showing, as I understand the argument, that postponement of deliveries is to be presumed, where deliveries do not take place at the stipulated times, that the parties remain bound by the contract, and that when a breach takes place at any time the party refusing to perform is liable in damages, usually calculated, as found in Ogle v. Vane, according to the market price at the time of the breach.

I am humbly of opinion that the case cited is not similar to this. There was there a postponement at the express request of the buyers, and it was held as the effect of the evidence that the conduct of the parties indicated not an intention to be free from the contract, but only to postpone the deliveries to subsequent months. It is still more important that the contract was different, being, and being regarded in the judgment as a single indivisible contract for the sale of one quantity by deliveries in lots. The correspondence was also quite different in its effect. Here the sale-note expressly provides that ‘each delivery shall constitute a separate contract,’ a clause which did not occur in any of the previous reported cases. On the contrary, they all have been decided on the distinct ground that the contract for the whole quantity sold was one and the same.

It was suggested that the stipulation that each delivery shall constitute a separate contract is inserted only for a special purpose—namely (if I remember aright), to govern the immediately preceding arbitration clause. But it is more consistent with principle to give the words their full and fair meaning, viz., that there are to be twelve distinct contracts under this sale-note.

It appears to me that in this contract time was essential. Although it was not pleaded or insisted on in argument, it is a very pregnant circumstance that, as appears incidentally, the price of paraffin wax is fixed by trade combination annually, and remains the same for a year. It naturally follows that contracts are made, as in this case, for a year, and so I think the indefinite prolongation of the contract by mere silence into another year is negatived.”

The pursuer appealed, and argued—The view taken by the Sheriff-Substitute that the contract was severable was not adopted by either party, as the evidence showed; it was not pleaded on record, and it was not well founded in law. The pursuer acted on the belief that he was bound to take the wax within the year, but that he could take it when he liked, and he was encouraged by the defenders in that opinion. The executory clause in the contract, “the wax to be taken delivery of when tendered,” put the onus on the seller to show that he had tendered delivery, or to explain the reason why he had not done so. The rule adopted in Scots law was that where one party refused or failed to perform anything that was material or of the essence of the contract, the other party was entitled either to insist for implement, claiming damages for the breach, or to rescind the contract altogether— Turnbull v. MacLean, March 5, 1874, 1 R. 730. A slight delay in giving delivery or in making payment under a contract providing for delivery over the year could not be held to indicate an intention to repudiate the contract— Mersey Steel Co. v. Naylor, 1884, 9 App. Cas. 434. The principles applicable to such a contract were similar to those applied in the case of a future contract— Frost v. Knight, 1872, 7 Ex. 111; Roper v. Johnson, 1873, L.R., 8 C.P. 167; Tyers v. Rosedale Company, 1875, 10 Ex. 195 (Exchequer Chamber); Mersey Steel Company (supra). On the proper measure of damages, Warin & Craven v. Forrester, Nov. 30, 1876, 4 R. 190, was referred to.

Argued for the defender—The Sheriff-Substitute was right in basing his judgment on the original contract note, and passing by any misunderstandings of the parties which did not amount to the setting up of a new agreement or to a plea in bar. The opening clause was not an entire contract for 20 tons; it only fixed a limit; it was followed by a stipulation which contemplated the delivery of a proportionate quantity at the end of each month. The Mersey case did not apply, for there the contract was dealt with as an entire contract for the purchase of a quantity

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of iron—see p. 439. It was not the seller's duty to tender delivery; the purchaser's order was, according to the evidence, to be the initial step. The effect of the cases was that if the date was exceeded in a contract where time was of the essence, the lapse of time was sufficient to extinguish the contract and to put an end to the right to enforce delivery, except where there was an arrangement or request to postpone delivery. In this case the seller did not tender delivery because the buyer did not want delivery, and it must be held that there was a waiver of the contracts from month to month. If not, and if the defenders were in breach in not tendering delivery, then the pursuer was bound either to go into the market as each periodical breach occurred, and buy in against them, or to intimate his claim of damage from month to month. If he had done so, it was admitted that the wax could have been procured at the contract price; but in fact he only made his demand when the price of wax rose. The following additional authorities were cited— Ogle v. Earl Vane, 1868, 2 Q.B. 275; 3 Q.B. 272; Brown v. Muller, 1872, L.R., 7 Ex. 319; ex-parte Llansamlet Tin Plate Company, 1873, L.R., 16 Eq. 155.

At advising—