Scottish Court of Session Decisions

The Sale of Goods Act 1893 (56 and 57 Vict. cap. 71), enacts—Section 11, sub-section 2 — “In Scotland, failure by the seller to perform any material part of a contract of sale is a breach of contract, which entitles the buyer either within a reasonable time after delivery to reject the goods and treat the contract as repudiated or to retain the goods and treat the failure to perform such material part as a breach which may give rise to a claim for compensation or damages.” Section 35—“The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.” Section 56 — “Where by this Act any reference is made to a reasonable time, the question what is a reasonable time is a question of fact.”

A. Bennet & Son, millwrights and engineers, Foundry Street, Dunfermline, of whom Alexander Bennet junior was the sole partner, raised in March 1909 an action in the Sheriff Court at Glasgow against Alexander Munro & Company, artesian well engineers, Bothwell Street, Glasgow, of whom the sole partner was Alexander Munro, “for payment of the sum of £44, 10s. sterling for goods sold and supplied to the defenders.”

Alexander Munro & Company in May 1909 raised a cross action against A. Bennet & Son “for payment of the sum of £152, 7s. 9d. sterling, being amount of loss and damage sustained by the pursuers through the defenders' breach of a contract entered into between the parties in or about January 1907 for the supply by the defenders of a deep-well pump and gearing to the pursuers.”

Munro & Company averred that the pump and gearing were disconform to contract, and made up their claim for loss and damage sustained by them as follows:—

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“(1) Account against the Lismore Rural District Council for supplying and erecting said pump and gearing, pumping, &c.	£80	2	6
Less pursuers' account .	39	9	6
£40	13	0
(2) Visits of pursuers' representatives and workmen to Lismore on five separate occasions as condescended on	66	13	0
(3) For removing pump from bore hole, carriage of plant, pump, and gearing to and from Lismore and Glasgow	21	15	0
(4) Law agents' expenses, Dublin and Glasgow, in respect of action against Lismore Council	23	6	9
	£152	7	9”

Alexander Munro & Company contracted to supply a pump for an artesian well which they had bored for the Lismore Rural District Council, Ireland. Munro & Company did not make the pump themselves, but on 23rd January 1907 they sent a rough sketch and specification of the pump in conformity with the requirements of the Lismore Council to A. Bennet & Son, and entered into a contract with them to supply the pump. The specification was in the following terms:— “The Council requires a quotation for a suitable deep-well pump, with all connection rods, standard, &c., to lift from 6 to 8 gallons per minute from 112 feet. It should be easily worked by a lad of sixteen years, by wheel and gearing.…” In fulfilment of this contract Bennet & Son duly supplied a pump, but after it had been erected by Munro & Company at Lismore, the engigineer of the Lismore Council complained to Munro & Company that it was not giving the results required, and on 20th May Munro & Company communicated this complaint to Bennet & Son. In their reply of next-day Bennet & Son said—“If you fit the pump up properly and put everything where it should be it will be all right,” and Munro & Company then suggested that Mr Bennet, a member of the firm of Bennet & Son, should himself go to Lismore to examine everything and put the pump to rights. Mr Bennet accordingly went to Lismore, and following on his visit there Bennet & Son wrote a letter on 5th June to Munro & Company, in which they made these statements—“We put the pump right at Lismore,” and “Mr O'Riordon (the Lismore Council's engineer) was satisfied as to the easiness of working.” The Lismore Council, however, continued to be dissatisfied with the pump, and although Munro & Company attempted themselves to put it to rights they refused to accept it. In December 1908 Munro & Company raised an action against the Lismore Council for payment of the price in the High Court of Justice in Dublin. In the course of preparing for this action Munro & Company, with a view to ascertaining whether the pump was really capable of fulfilling the conditions which the Lismore Council had specified, wrote on 12th January 1909 to Bennet & Son asking Mr Bennet to make certain calculations regarding it. Bennet & Son replied next day, 13th January, and in their reply they said—“We have yours of yesterday's date about Lismore pump. We will forward all particulars in the course of a day or two. In the meantime a lad is unable to pump 6 to 9 gallons per minute from a depth at which said pump is working.” Thereupon Munro & Company at once rejected the pump as being disconform to contract, and settled the action against the Lismore Council after having first ascertained from Bennet & Son that the latter did not wish to continue the action on their own behalf. Munro & Company had throughout their correspondence with Bennet & Son taken up the position that they would keep the matter open as regards them until payment was obtained from the Lismore Council, and Bennet & Son did not in writing at anyrate repudiate this view, and when Bennet & Son now made a peremptory demand for payment Munro & Company refused to pay. [For more detailed narrative of facts see Lord Mackenzie's opinion infra].

On 9th June 1909 the Sheriff-Substitute ( Boyd) conjoined the two actions, and on 15th October 1909 pronounced the following interlocutor—“Finds that the party Bennet & Son contracted to deliver to the party Munro & Company a deep-well pump which should deliver from 6 to 8 gallons of water per minute from 112 feet, and should be easily worked by a lad of sixteen years by wheel and gearing; that the pump supplied by Bennet & Son could not deliver the specified quantity of water when worked by a lad of sixteen with wheel and gearing, and that Munro & Company rejected the same as disconform to contract: Finds that they were justified in so doing, and that the rejection was timeous: Finds that Munro & Company incurred loss through the failure of Bennet & Son amounting to £144, 12s. 9d., and that they are entitled to payment thereof: Therefore assoilzies the party Munro & Company from the conclusions of the action against them, and decerns against the party Bennet & Son for the said sum of £144, 12s. 9d. sterling in the action against them: Finds the party Munro & Company entitled to expenses in both actions, &c.”

With regard to the amount of the loss which the Sheriff-Substitute found Munro & Company had suffered, in his note he said—“Munro & Company submit a statement of loss occasioned to them by Bennet & Son's failure, and I think that it is sufficiently proved, except the estimated expenditure in removing the pump and returning it to Glasgow. This amounts to £21, 15s., and the actual expenditure was £14. Accordingly from £152, 7s. 9d., which appears as the total, there falls to be deducted the difference between £21, 15s. and £14, namely, £7, 15s., which leaves a result of £144. 12s. 9d.”

Bennet & Son appealed to the Sheriff ( Millar), who on 27th December 1909 pronounced this interlocutor—“… Recals

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the interlocutor of 15th October last: Finds in fact that the party Bennet & Son contracted to deliver to the party Munro & Company a deep-well pump which would deliver from 6 to 8 gallons of water per minute from 112 feet, and should be easily worked by a lad of sixteen years by wheel and gearing; that the party Bennet & Son supplied a pump similar to that which had been contracted for on 18th April 1907; that towards the end of May 1907 Mr Bennet, sole partner of Messrs Bennet & Son, went to Lismore, where the pump had been erected, and executed certain alterations and repairs, and intimated to Messrs Munro & Company by letter that he had put the pump right at Lismore; that thereafter the party Bennet & Son made frequent application to the party Munro & Company for payment; that the party Munro & Company intimated that they could not do so until the pump had been accepted by their customers at Lismore; that the party Munro & Company finally intimated that they rejected the pump upon 15th January 1909: Finds in law that the pump was not rejected within a reasonable time after delivery in terms of the Sale of Goods Act 1893: Therefore assoilzies the party Bennet & Son from the conclusions of the action against them, and in the action Bennet & Son against Munro & Company decerns as craved against the party Munro & Company: Finds the party Bennet & Son entitled to expenses in both actions (including the expenses of the appeal),” &c.

Note.—[ After narrating the facts]—“The question that arises is, Is that rejection within a reasonable time? The only case with regard to rejection after several months which was referred to was that of Aird & Coghill v. Pullan & Adams, 7 F. 258. The contract there was different from that in the present case. The Lord Justice Clerk says — ‘This machine was ordered for a particular work to be done, and was bought under an agreement whereby the defenders were to put it into and leave it in good order in the pursuers' premises. Now I think the evidence is quite clear and distinct to the effect that that was never done. It is quite true that there was a very long time occupied between the time when the machine was first put in and the time when the pursuers rejected it, but during the whole of that time the defenders, through Mr Pullan, were professing their ability to put matters right, and to bring the machine the pursuers had paid for into such working order that they could not reject it.’ And Lord Trayner says—‘The next objection was that the machine was retained too long. If the machine had been kept as accepted for the period stated it would certainly have been too late to reject it. But why was it kept so long? From the very outset it was apparent to the pursuers that the contract of the defenders had not been fulfilled, and they called on the defenders time after time to fulfil the contract by putting that machine into thoroughly good working order. The defenders accepted liability for doing that, and they tried to do it month after month, and when the pursuers had lost their patience over these innumerable trials, which were of no avail, and intimated to them that they would wait no longer for the machine, the defenders again asked “Give us another chance and we will see what we can do. We are certain that we can put it right.” That was done. Well, the thing could not be accomplished. But the reason for the retention of that machine was not to enable the pursuers to make up their mind whether they were to keep it—for it would have been too long a time to retain merely for that purpose—but to enable the defenders to fulfil their obligation.’ That seems to me a very different case from the present, for Mr Bennet had intimated in June 1907 that he had put the machine right, and the long delay after that was due to the attempt by Messrs Munro to put it right, and to get the engineer of the Parish Council to accept it. Mr Bennet was not called upon after June to put it right, nor was the delay through any request of his. Accordingly I think Messrs Munro have not rejected the machine within a reasonable time under the statute.

With regard to the claim of damages, it is made up by the cost of the journeys of the workmen to the pump in Ireland, and of the legal expenses of the action in Dublin. Mr Bennet gave no authority for either of these expenses being incurred, and I think Messrs Munro would require some authority from Messrs Bennet before they could incur costs to the extent of £144, 12s. 9d. in connection with a pump that was to cost £36. Accordingly I think that Messrs Bennet & Son's claim should be sustained, and that they should be assoilzied from the action at the instance of Messrs Munro & Company.”

Munro & Company appealed, and argued, inter alia — (1) Timeous rejection. — The pump was disconform to contract and they were entitled to reject it “within a reasonable time after delivery”—Sale of Goods Act 1893 (56 and 57 Vict. cap. 71), section 11 (2), and what was a reasonable time was a question of fact—section 56. Impossibility of performance was no defence— Gillespie & Company v. Howden & Company, March 7, 1885, 12 R. 800, 22 S.L.R. 527; Thorn v. Mayor of London (1876) 1 A.C. 120. The appellants had timeously rejected the pump, because any delay in the rejection was caused by the respondents themselves. They had led the appellants, who were entitled to rely on their skill, to believe that the pump was conform to contract. Moreover, the respondents never seriously pressed for payment, but allowed the appellants to postpone making a decision as to their accepting the pump until it should be seen whether payment could be got from the Lismore Council. The mere fact that an attempt had been made to put the pump to rights could not bar rejection. The respondents themselves had shared in these attempts, and the correspondence showed that the respondents acquiesced in what had been done by the appellants. In

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the case of machinery the rejection need not be made so soon as in the case of other classes of goods, because machinery could not be tested without a considerable amount of use — Fleming & Company (Limited) v. Airdrie Iron Company, January 20, 1882, 9 R. 473, 19 S.L.R. 405; Aird & Coghill v. Pullan & Adams, December 14, 1904, 7 F. 258, 42 S. L. R. 292; Pearce Brothers v. Irons, February 25, 1869, 7 Macph. 571, 6 S.L.R. 372. The cases of The Electric Construction Company, Limited v. Hurry & Young, January 14, 1897, 24 R. 312, 34 S.L.R. 295; Croom & Arthur v. Stewart & Company, March 14, 1905, 7 F. 563, 42 S.L.R. 437; and Lupton & Company v. Sculze & Company, June 30, 1900, 2 F. 1118, 37 S.L.R. 839, were different from this one. In all those cases there had been timeous rejection, but after the buyer had validly rejected the goods he had continued to retain and use them, or, as in Lupton & Company's case, had refused to return them, and thus had disentitled himself from founding on the rejection. The case of Aitken, Campbell, & Company, Limited v. Boullen & Gatenby, 1908 S.C. 490, 46 S.L.R. 354, was also different from this one, because in that case the question was not whether the buyer had timeously rejected the goods, but whether he was entitled to reject part only of the goods. (2) Expenses of their action against the Lismore Council.—These expenses flowed directly from the breach of contract. The appellants had been induced by the respondents to believe that the pump was conform to contract, and therefore it was a reasonable proceeding on their part to raise the action— Agius v. Great Western Colliery Company, [1899] 1 QB 413; Hammond & Company v. Bussey, 1887, 20 Q.B.D. 79. Reference was also made to Duff & Company v. Iron and Steel Fencing and Building Company, December 1, 1891, 19 R. 199, 29 S.L.R. 186; Grèbert-Borgnis v. Nugent (1885), 15 QBD 85; Millar v. Bellvale Chemical Company, December 14, 1898, 1 F. 297, 36 S.L.R. 214.

Argued for the respondents—(1) Timeous rejection. — The rejection was not timeous. On a fair construction of the correspondence the appellants had intimated their acceptance of the pump. Further, an act which was inconsistent with the ownership of the sellers was to be deemed acceptance—Sale of Goods Act 1893, sec. 35. The attempt to repair the pump was such an act and barred rejection— Mechan & Sons, Limited v. Bow, M'Lachlan, & Company, Limited, 1910 S.C. 758, 47 S.L.R. 650. In any event the rejection was unduly delayed, and was not made within a reasonable time after delivery— Hyslop v. Shirlaw, June 29, 1905, 7 F. 875, 42 S.L.R. 668. There was aduty on the appellants to make an early inspection of the goods — Pini & Company v. Smith & Company, May 29, 1895, 22 R. 699, 32 S.L.R. 474. (2) Expenses of the action against the Lismore Council. — These expenses were incurred through the laxity of the appellants themselves. They were not damages which could fairly and reasonably be considered to arise naturally from the breach of the contract itself, nor such as might reasonably be supposed to have been contemplated by the parties at the time they made the contract, as the probable result of breach. Accordingly the respondents were not liable for them. Reference was made to Parker v. Palmer, 1821, 4 B. and AId. 387, and Loutill's Trustees v. Highland Railway Company, May 18, 1892, 19 R. 791, 29 S.L.R. 670.

At advising—