Scottish Court of Session Decisions

At advising on 31st October 1946,—

LORD PRESIDENT (Normand).—The appellants and defenders in the present case are fish merchants and buyers carrying on business in Buckie and Lossiemouth. The respondents and pursuers are fish salesmen carrying on business in Lossiemouth. The respondents sued for a balance of £57, 18s. 4d., being the difference between the sum for which white fish had been sold by them to the appellants in the fish market at Lossiemouth, between 13th December 1944 and 24th August 1945, and the price paid to them by the appellants. The appellants met the claim by an averment that the sum sued for represents a discount of 3d. in the £ deducted by them when settling accounts with the respondents in accordance with a well-recognised and established custom and usage in the fish market at Lossiemouth. They further averred that it has for at least thirty years been the recognised custom and usage for the buyers, when settling weekly accounts, to deduct from their total a discount of 3d. in the £ in respect of sales of white fish. The respondents denied the alleged custom and stated that the deduction of discount at 3d. in the £ on purchases of fish at Lossiemouth had for a number of years been allowed by the salesmen, but that on 28th November 1944 a letter was sent from the secretary of the Inshore White Fish Producers Association (Lossiemouth Branch) to the secretary of the Lossiemouth Wholesale Fish Merchants' Association, intimating that discount would be discontinued on and after Monday, 11th December 1944. That is admitted, but it is said by the appellants that on 5th December 1944 they informed the respondents that discount would continue to be deducted, and that the respondents continued to do business with the appellants after 11th December 1944 in accordance with the custom and usage of the trade. The appellants have a plea of acquiescence based on this averment. Both parties plead to the relevancy, but a proof before answer was allowed in which the appellants were ordained to lead. Findings of fact were pronounced by the learned Sheriff-substitute (Nos. 1–16 in the interlocutor), all of which, subject to certain minor criticisms, have been accepted by the parties. There are also findings in fact and in law: (1) that there was no custom or usage of trade by virtue of which the appellants were entitled to deduct discount after 11th December 1944; (2) that the respondents gave due notice of their intention to discontinue allowance of discount from 11th December 1944; (3) that the respondents did not acquiesce in the deduction of discount after 11th December 1944; and (4) that in any event any such custom or usage would be unreasonable. The Sheriff-substitute therefore decerned against the appellants for the sum sued for.

It appears from the findings in fact that in the Moray Firth, till about 1890, the fishermen sold their herring direct, but that about 1890 fish salesmen were introduced by the fishermen to sell their fish to the buyers. The salesmen charged the fishermen 5 per cent commission, and, to attract buyers and expedite payment, the salesmen offered to give buyers discount. The white fish trade gradually increased and prospered until it became almost the exclusive fish trade gradually increased and prospered until it became almost the exclusive fish trade in the Moray Firth ports and especially at Lossiemouth. Nevertheless, the allowance of discount continued at Moray Firth fishing ports, and was adopted at Macduff and Whitehills in 1919 and 1940 respectively. The amount of discount was not the same at all the ports. At some, including Lossiemouth, it was always 3d. in the £ at others it was 2d. in the £; and by general practice no discount was allowed on sales under £3 in value. There were abortive negotiations in 1931 and 1941 between the salesmen and the buyers at Lossiemouth on the question whether the discount allowance should continue. Then, on 28th November 1944, the respondents intimated by letter to the appellants that discount would be discontinued from 11th December 1944. On 5th December the appellants replied that they would continue to deduct the discount in settling the accounts after 11th December 1944. The respondents, however, by a letter dated 25th January 1945, reiterated that the position as regards white fish remained unchanged, no discount being allowed as already intimated. There is no reply to that from the appellants. Thereafter, the salesmen rendered their accounts for the full amount as they always had done. The purchasers deducted the amount of discount and paid the balance by cheque, and the sellers accepted the cheques towards payment of the account, but carried over the unpaid balance in their next account.

The appellants submitted the startling proposition that, if there was a custom of trade before 11th December 1944 by which the purchasers were entitled to deduct discount, it was impossible that the right to deduct discount should be brought to an end except by agreement between the parties, and therefore that they were entitled after 11th December 1944 to buy fish landed on the quay at Lossiemouth on such conditions as would permit the deduction of discount by them, and that this right would continue indefinitely unless it was discharged by the consent of the appellants. The implication was that each of the successive contracts of sale which took place when the fish were on the quay for sale should be regarded as if it were an instalment of a general contract of indefinite duration by which these associations agreed to deal with one another on the footing that the members of the appellants' association should be entitled to deduct a discount of 3d. in the £. All of this was supposed to be the consequence of a proof of the custom of trade averred. The learned Sheriff-substitute has not found whether or not a custom of trade had been established by 11th December 1944, and, as I shall show, he was entitled to reserve that question as not being material to the issue. On that question, however, I think that the practice alleged by the appellants seems to have been nearly, though not entirely, uniform. I may say also that I do not think that a practice by which discount is allowed is necessarily unreasonable. But a discount at a fixed rate, notwithstanding any change of circumstances which may take place, may raise a somewhat different question about which I need say nothing since it becomes immaterial in the present case. It is plain, nevertheless, that, in all the long series of contracts, and there must have been thousands of them between 1890 and 1944, the allowance of discount to purchasers was an implied condition of sale. Now, the sole effect of proof of the custom of trade would be just the implication of this condition in every contract in the absence of any stipulation or condition expressed to the contrary. The question whether the custom averred is proved therefore itself becomes immaterial. But assuming this implied condition of all the contracts preceding 11th December 1944, it was nevertheless the right of the respondents to exclude it from all future contracts, if they chose to do so. The rule is that an implied condition or term, whether derived from a custom of trade or in any other way, must necessarily yield to a contrary express condition or term in any future contract entered into between the parties. It was thus open to the respondents to decline to sell their fish under the implied condition which had prevailed up to December 1944, and the withdrawal of this implied condition did not need the appellants' consent. Now, the notice of a change from the implied condition to an express condition was given by the respondents, and, since the sellers of goods are entitled to lay down the conditions upon which they are to part with their property, the appellants then had the option of buying on the new condition or of declining to deal, but, if they bought after the intimation, they must be held to have done so on the respondents' conditions. It is said, however, that, by making a protest and intimating that they would continue to deduct discount, they had somehow made of no effect the respondents' intimation of the conditions on which they were prepared to sell. I could conceive a case in which the purchasers, having received such an intimation and having said they would continue to deduct discount, then contended after concluding a purchase that there was no consensus in idem. I think that such a contention would certainly fail. But here there is no attempt to say that there was no consensus, and therefore the contention is that, after receiving a notice in express terms that the deduction was to cease, the appellants, by writing the letter in which they said they would continue to deduct, became entitled to deal with the sellers on their own conditions. It is a proposition which I unhesitatingly reject. It is as if someone went into a shop and said "I am not going to pay 6s. for the article which is ticket at 6s. I am buying it for 5s. as I have always done"—and claimed that he had the right to complete the bargain at his own price.

In my opinion, the true question is what was the condition as respects discount under which sales took place after 11th December 1944 ?It is, in my opinion, clear that they took place under the condition that no discount should be deducted by the buyers.

There is no foundation in fact for the appellants' plea of acquiescence, and the respondents' letter of 25th January and their manner of dealing with the payments made to account are inconsistent with acquiescence.

The findings in fact and in law should be affirmed except, for the reasons already given, the finding No. 4. The first of these findings does not deal with the question whether a custom of trade was established before 11th December 1944, but it does affirm that no such custom affected the sales of fish after that date. Findings (2) and (3) might, I think, have been included without impropriety among the findings in fact.

I move your Lordships to refuse the appeal and to affirm the interlocutor with the exception of the fourth finding in fact and in law.

LORD CARMONT .—I agree with your Lordship and I have very little to add. The case is one in which fish salesmen, selling on behalf of the seamen and fishermen, sell in the market of Lossiemouth to the defenders and other buyers of fish. In answer to a claim for a sum due in respect of sales of fish, the pursuers are met by the defenders with a case in which it is claimed that there is a custom of trade which prescribes a fixed discount deductible on each transaction, amounting to the sum that is sued for in this case. In the record and in the correspondence, there is a good deal said, not only about white fish, but about herring and the discount on sales of herring, but all that, I understand, is quite beside the issues which are raised before us, which are solely confined to claims to deduct a discount of 3d. in the £ on sales of white fish. The next thing that I would draw attention to is the fact that there was during the war period a control, and it was said that this Government control prescribed allocations of fish from the producers to the buyers at a maximum price. It might have been urged, I suppose, that this control, being Government control, did not give the purchasers a free hand to go where they wanted in order to make their purchases, and accordingly that the sellers could not innovate in regard to previously established terms of dealing. I think that such suggestions are not material and can be laid aside because of the thirteenth finding in the case by the Sheriff-substitute which states that, during the period in question between the parties, the defenders bought about £1000 worth of fish from the pursuers at ordinary auction sales and not through the medium of controlled allocation. Indeed, the question of the discount is presented to us as a general one apart from any question of the Government control having affected the relations of the parties to transactions in the market, and it has been so dealt with by us.

LORD RUSSELL .—I am of the same opinion. It appears that the pursuers sold to the defenders, between December 1944 and August 1945, quantities of white fish in a series of sales in the fish market at Lossiemouth. Invoices were delivered to the defenders as buyers recording the price at which the respective sales had been arranged. In paying the accounts represented by these invoices the defenders made a deduction, by way of discount, of 3d. in the £. The sums so deducted during the period in question amount in all to £57, 18s. 4d. In this action the pursuers sue the defenders for payment of that amount, and the question for decision is whether the defenders were legally entitled to make, and the pursuers were legally bound to allow, the said deductions by way of discount.

The defenders aver and plead that their right to make that deduction is based upon a long-standing custom of trade or commercial usage which has operated in the fish market at Lossiemouth since about 1890 and has regulated all transactions in the sale of white fish between sellers and buyers. They maintain that that custom or usage applied to each of the transactions covered by the present action and operated so as to introduce into each of the contracts of sale an implied term authorising the discount in question.

In the averments of the parties the origin of the custom founded on by the defenders is narrated. It seems that about 1890, when for the first time the fishermen who plied their calling in catching the fish availed themselves of the services of fish salesmen, there grew up a practice, initiated by these fish salesmen, of allowing the buyer a discount by way of deduction from the sale price. No doubt it was to their interests, as the salesmen then conceived it, to allow the buyer that discount. That practice continued to be applicable to and was acted upon in all the sales of white fish subsequently carried out in Lossiemouth fish market until 1944. Some time prior to 1944, the parties conducting those transactions in the fish market—the salesmen on the one hand and the purchasers on the other—had respectively formed associations; and negotiations had taken place in an attempt to arrive at an agreement between these two associations, representing their respective constituent members, to end this practice and to stop the discount which had hitherto been allowed by the sellers in these transactions in the fish market. It had proved impossible to get the agreement of the buyers' association to stop the discount. The sellers' association then decided to intimate on behalf of all their constituents to the association representing the buyers that, from a date which was specified, 11th December 1944, the practice hitherto observed of allowing a deduction of 3d. in the £ by way of discount on invoiced prices of white fish would be discontinued; and on 28th and 30th November 1944 they formally gave written intimation to that effect. No doubt the association representing the buyers intimated in reply that they were to continue to deduct the discount, but the salesmen's association thereupon repeated their intimation adhering to the decision previously notified. After 11th December 1944 the defenders bought white fish from the pursuers, the invoiced price of the various sales amounting by August 1945 to over £5800. In paying these accounts the defenders deducted the discount of 3d. in the £. The pursuers accepted the sums paid as payments to account and in each succeeding account inserted as an item due for payment the discount previously deducted.

It is in that situation that the defenders maintain that the intimations given by the sellers' association, expressly discontinuing after 11th December 1944 the allowance of the discount, were intimations which in law were ineffective. The defenders have argued that the "discount" practice followed between 1890 and 1944 constituted a custom of trade or a commercial usage which could not legally be departed from by the seller except as the result of the mutual agreement of buyer and seller. In my opinion, that contention is unsound. Like your Lordship, I do not find it necessary in the present case to express any opinion whether the practice followed up to December 1944, of allowing the discount of 3d. in the £, is properly to be described as a custom of trade with all the legal incidents thereof. Whether it was a custom of trade or not, its legal effect upon the contracts entered into between the parties up to 1944 was simply that the allowance of the discount was implied in every contract as an implied term to which the parties were held to have assented. I am of opinion that the sellers' express and unambiguous intimations of discontinuance of the discount negatived the right of the defenders thereafter to maintain that the allowance of a discount continued to be an implied term of contracts entered into subsequent to that date. I consider that no such implied term could be read into a contract in face of an express contrary stipulation communicated ab ante by one party to the contract to the other party. Accordingly, I hold, with your Lordship, that there is no relevant answer to the pursuers' claim in so far as the defence is stated to be founded on the existence of a so-called custom of trade which is represented as introducing an implied term into the contracts where, as here, the sellers had ab anteexpressly stipulated that such a term was not to be a part of the contractual conditions.

The only other point which was argued by the defenders, in support of their refusal to pay the full amount and to keep the deductions which they had made, was that, in any event, the pursuers must be held to have acquiesced in the continuance of the allowance of the discount by reason of the defenders having intimated that they were going to continue to make the usual deductions by way of discount. In my opinion, each transaction entered into after December 1944, between the pursuers as sellers and the defenders as buyers, was a separate contract and was conditioned inter alia by the reiterated and final intimation made by the sellers to the effect that in future they were notallowing but were discontinuing the discount deduction. Having regard to the letters which passed between the associations and to the way in which the sellers acknowledged the payments made as payments to account, I am of opinion that no facts or circumstances are disclosed upon which it could reasonably be held that the pursuers acquiesced in the discount deductions so as to forfeit their right to obtain payment of the sum sued for.

For these reasons, I agree with your Lordships in holding that the present appeal fails and must be dismissed.