Scottish Court of Session Decisions

Lord Pearson.—The pursuers are manufacturers of floorcloth and linoleum in Kirkcaldy, and in the course of their business they have occasion to use large quantities of cork shavings. They claim that on 29th January 1907 they purchased from the defenders, who are cork merchants and importers in Leith, 300 tons of cork shavings at 87s. 6d. per ton, to be delivered at Kirkcaldy at the rate of 25 to 30 tons per month during 1907, subject to the pursuers' approval of a 20 ton lot, which was to be delivered in March, and was to be considered a standard. No deliveries were made by the defenders, and prices having risen, the pursuers bring this action of damages for breach of contract.

The defenders maintain that there was no concluded contract of sale. They say that the negotiations between the parties resulted in nothing more than an offer on the part of the pursuers to purchase the goods; that this offer required acceptance on the part of the defenders, and that they did not accept it.

The pursuers' case is that the contract was made at an interview between the representatives of the parties, which took place at Kirkcaldy on 29th January. They say that the terms of the contract were in the first instance settled verbally; that before the close of the interview they were reduced to writing by the pursuers' representative in the document No. 56 of process and that this document was then and there delivered to the defenders' representative, who took it away with him and handed it to the defenders, his principals, in Leith.

Thereafter six weeks elapsed before either party moved in the matter. The pursuers regarded it as closed, and were awaiting the appearance of the 20 ton lot which was to be delivered in March, when they received a letter from the defenders, dated 13th March, referring to what they describe as “your conditional order of 29th January.” In this letter the defenders stated that the steamer on which they had depended to bring the shavings from foreign parts had refused to carry shavings, and asking the pursuers to allow the matter to remain until their representative returned from his journey about the beginning of May. The pursuers replied on the following day, saying they “must insist on having delivery of the cork shavings as per terms of contract”; and in the course of a correspondence, which extended into the month of June, they consistently adhered to this position.

The main question in the case is whether the interview of 29th January resulted in a completed contract. The Lord Ordinary answers this in the negative on two grounds. (1) The first is, that “although No. 56 of process is said to be a record of the antecedent verbal contract, it introduces a new stipulation not referred to at the original interview between Wilson, Lawrie, and Hunter, namely, that a 20 ton lot shall be delivered in March on approval as a standard.” As I read the evidence in the case, there was really but one interview, in the course of which Mr Wilson had occasion to go into an adjoining room to consult Mr Shepherd, the manager, and obtain his approval. In giving his approval Mr Shepherd suggested the clause about a 20 ton lot to be delivered in March as a standard. But there is evidence, which I see no good reason to doubt, that this was then and there communicated to Lawrie, the defenders' representative, and assented to by him. (2) The Lord Ordinary's second ground for holding that there was no completed contract is that there was a “mutual misunderstanding.” It is, however, necessary to consider what was the subject-matter of the misunderstanding. The expression usually means that one of the parties has assented to the contract under a mistake. The language of the contract may be so ambiguous as to be unintelligible; or, short of that, one of the parties may have assented to the contract under a mistake as to the description of the thing sold, or (it may be) as to the quantity, or as to the price. None of these features is present here. They can only be present when both parties intend a contract. Here the defenders' position is that they did not intend to contract, but only to obtain an offer requiring their acceptance. Now, the Lord Ordinary is so far with the pursuers as to hold that they intended to make a contract at that interview, and he expressly says he believes them when they say that they thought a contract had been concluded. But he adds, “On the other hand, it seems to me clear that the defenders did not intend Lawrie to make a final bargain, and did not understand that he had done so.” Now, it is obvious that when the question is so put, it is not really a question as to mistake or misunderstanding in the ordinary sense, but as to the agent's authority to bind his principal. But in a question with the pursuers, that is, with the other party to the negotiations, it is not a relevant answer to say that the defenders did not intend their agent to make a final bargain, or that they did not understand that he had done so. That depends on the position of the agent.

Now it does appear to me that upon the facts of this case the pursuers were warranted in assuming that Mr Lawrie had authority to conclude the bargain. He is described on the record by the defenders themselves as “the defenders' manager.” He describes himself as their “salesman.” I hold that he was in such a position as to be within the rule stated by Professor Bell: “In general, it appears that a riding or travelling agent has not only authority to receive payment for his principal of the moneys due to him, but to take orders by which the principal shall be bound as much as if he himself had accepted and bound the contract”—(see the case of Milne v. Harris, James, & Company there referred to). Nor was there here in the surrounding circumstances anything to put the pursuers on their inquiry as to the extent of Mr Lawrie's authority. There had been previous communications and transactions between the parties during the preceding three years. But while on the one hand these hardly warrant the pursuers in saying that there was a course of dealing which was conclusive in their favour, there was, on the other hand, nothing in them to lay upon the pursuers the duty of making special inquiry as to the extent of Lawrie's powers. In this particular the present case stands distinguished from the case of The North of Scotland Banking Company v. Behn, Möller, & Company, to which we were referred; for there the agent's authority to sign bills per procuration of the firm had not only been recalled, but the bank knew that it had been recalled, and yet they discounted bills signed by the agent. The case was decided on the footing that the circumstances were such as to give rise to grave suspicion of the agent's honesty, and to throw upon the pursuers the duty of making inquiry. There is nothing corresponding to that in the present case.

Nor do I think that the defenders can succeed upon the distinction which they suggest between Lawrie's powers to contract for deliveries of cork-wood and cork on the one hand, and cork shavings on the other. They say that while they kept the former in stock, they only dealt in the latter upon commission, and as the hands of the foreign importer. It does not, however, appear that this distinction was ever brought before the pursuers. And even if it had been brought before them, the defenders would still be met with the difficulty that if they were agents for sale, they were agents for an undisclosed principal.

I have assumed down to this point that the terms of the document No. 56 of process are such as, when taken in connection with the surrounding circumstances, amount to a contract of sale. The defenders maintain that they do not. Their contention is, that although the document is in form an order, it was not intended as an order, but was merely an offer on the part of the pursuers to purchase cork shavings, which required the defenders' acceptance to make it a binding contract. I cannot so read the document. It bears to be not an offer but an order; and in my opinion it assumes the existence of a contract, and is the expression of an order in pursuance of that contract. The defenders themselves certainly did not treat it as an offer, nor had the pursuers any notice that they meant to do so. On the contrary, the defenders, having the document in their hands, allowed six weeks to elapse before making any communication to the pursuers on the subject; and when they did, it was not to accept or reject it as an offer but to ask for delay in the fulfilment of the “conditional order.” To this the pursuers promptly replied, claiming delivery of the cork shavings “as per terms of contract”; and a correspondence ensued, in which the defenders notably abstained from answering or repudiating the reiterated demands of the pursuers for fulfilment of the contract of sale.

In my opinion, therefore, the judgment of the Lord Ordinary should be recalled, and the pursuers be found entitled to damages. I understand that, in this event, the amount of damages is not in dispute.

Lord Dundas.—I concur. I have had an opportunity of reading Lord Pearson's opinion, and have nothing to add to it.

Lord M'Laren.—I also concur. I would only add this, that when it is kept in view that sale is a consensual contract, there cannot be much doubt where the justice of this case lies. There have been many alterations by statute on the details of the law of sale, but not on the principle that sale is a consensual contract, and may be proved by any evidence shewing that the parties entered into a bargain. I should be against any attempt to throw contracts of sale into categories, and to say that if a particular bargain does not fall into one of these, the parties are to be held to be only in negotiation. I have very little doubt that thousands of sales in this country are effected by manufacturers and wholesale dealers by means not materially different from the circumstances of the present case.