United Kingdom House of Lords Decisions

In February and March 1895 Messrs Hugh Paton & Son, printers, Edinburgh, entered into negotiations with Messrs David Payne & Company, Ltd., printers' engineers, Caxton Works, Otley, Yorkshire, for the supply of a two-colour Wharfedale printing machine, to be constructed according to a specification furnished by Messrs Paton, and to include any further improvements known to Messrs Payne & Company. The machine was of exceptionally large size, and of novel construction. After some correspondence, in which nothing was said as to time, Messrs Payne & Co. offered to construct the machine at a certain price, subject to an allowance of £30 for an old “Perfecter” Machine which Messrs Payne & Co. were to remove from Messrs Paton's works. Thereafter the following telegrams and letters passed between the parties:—

1. Telegram, Paton & Sons to Payne & Co., Limited.

“11th March 1895.

Caxton, Otley.—How soon could you supply machine? Price for old machine, of course, holds good, although not mentioned by you.

Paton.”

2. Telegram, Payne & Co., Limited to Paton & Sons.

“11th March 1895.

Paton, St James Sq., Ed.—Can supply machine six weeks.

Caxton.”

3. Letter, Payne & Co., Limited, to Paton & Sons.

“11th March 1895.

Gentlemen,—On recept of your telegram this afternoon we wired you as follows: ‘Can supply machine six weeks,’ which we now beg to confirm, and add that the price of the old Perfecter holds good with us, as per our letter of the 7th inst.” …

4. Letter, Paton & Sons to Payne & Co., Limited.

“11th March 1895.

Dear Sirs,—In reply to yours of the 9th we understand that you are prepared to suppy a double-colour printing machine, conform to our specification, with the additional improvements that you suggested, and every other improvement that is known to exist upon such a machine, and this at a price of £353 sterling, subject to a discount of 2 1 2 per cent. cash payment when the machine is working to our satisfaction, and further with an allowance of £30 sterling for the old perfecting machine which you saw here. We received your telegram to-day in confirmation of this arrangement, with the explanation that the machine can be supplied in six weeks. Above being correct, we herewith give you the order to proceed.—Yours truly,” &c.

5. Letter, Payne & Co., Limited, to Paton & Sons.

“12th March 1895.

Gentlemen,—We are in receipt of your favour of the 11th, in which you hand us order for quad-royal two-colour printing machine, and thank you for same. We agree to make the machine to your specification of the 22nd ult., except points and moulds mentioned by you in your letter of March 5th (our patent pyramid inking has reciprocating drums), and to add every improvement suggested by us in our correspondence and conversation, or known by us to be beneficial in this class of machine. The price for this machine to be £353 sterling, subject to a discount of 2 1 2 per cent. for cash, on machine running to, your satisfaction, and further agree to make you an allowance of £30 sterling for the old Perfecter. We have put the machine in hand, and will use our best endeavours to make this machine the best it is possible to make.” …

6. Letter, Payne & Co., Limited, to Paton & Sons.

“17th April 1895.

We are sorry to say that we are meeting with much delay in getting the castings for your machine, but are doing our very best to get it out quickly. — Yours faithfully,” &c.

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7. Letter, Paton & Sons to Payne & Co.

“18th April 1895.

Dear Sirs,—In reply to yours of the 17th, we hope you will not disappoint us about the machine being up to the time stated, as our busy season is just about to commence. No doubt you will allow us an extra discount for any delay that may arise, as we will be put to extra expense.—Yours faithfully,” &c.

8. Letter, Paton & Sons to Payne & Co.

“6th May 1895.

Dear Sirs,—You are a very long time behind with our machine, and as our busy time is now on, it is possible that we cannot take it in for about twelve months, and this will be a serious loss to us. We refused another contractor because of the time they asked to make the machine, and depended upon your giving it at the time you stated. In any case we will want a very large deduction and discount if we take the machine at all.—Yours faithfully,” &c.

9. Letter, Payne & Co. to Paton & Sons.

“7th May 1895.

We are now hard at work upon your machine, working until eight and ten o'clock every night. For all this overtime we have to pay time and quarter and time and half. In fact, we are bound to be losers by the bargain as originally made, so we hope you will not act as you say in your letter by requesting considerable reductions. Everything in our works has to stand aside for your machine, and we are doing our utmost to expedite delivery. Our fitter will be with you early next week to remove old machine, and will also bring ground plan and particulars for fixing new one. He is at present in London fixing a special quad-demy two-colour, but is expected home this week. We only ask you to leave your final decision until you have seen the machine, and if you will only do this we have no fear of the result. Assuring you of our particular attention.—We are, yours obediently,” &c.

10. Letter, Payne & Co. to Paton & Sons.

“20th March 1895.

Gentlemen,—

P.S.—Enclosed we hand you elevation and ground plan of two-colour. Kindly have a stout wood framing made, and keep it together, as this makes a good groundwork for machine. Also please note remarks on tracing, re ‘having the framing firm under the pedestal of driving wheels.’ You will notice from elevation that all the working parts in bottom of machine are each solid in one firm bed-plate.—We are, yours faithfully,” &c.

11. Letter, Paton & Sons to Payne & Co.

“4th June 1895.

In connection with the latter (the two-colour Wharfedale), we have received a very serious complaint from a customer regarding the delay in getting out the work, which has been solely caused through your not having this machine forward when promised. Had we known the time you would take, we certainly would not have entrusted you with the order, and as we have been put to a very heavy outlay through your negligence, we must look to you to compensate us for the extra expense thus entailed. — Yours truly,” &c.

12. Letter, Paton & Sons to Payne & Co.

“21st June 1895.

Dear Sirs,—It is simply absurd to expect us to wait longer for the machine. We must ask you now what you are willing to allow us for each month that we have to do without it if we accept it when finished? This will require to be arranged now, and failing a satisfactory settlement, we will cancel the machine, and order elsewhere, claiming upon you for the loss. The order was given on the 11th March, and the machine was to be supplied in six weeks, consequently it is now two months late.—Yours truly,” &c.

The machine was fitted up in Messrs Paton & Sons' works in July 1895, and disputes then arose between the parties whether Messrs Paton & Sons were entitled to reject the machine and claim damages for a total breach of contract, either ( a) on the ground that the machine had not been supplied by Messrs Payne & Co. within the time stipulated in the contract, or ( b) on the ground that the machine supplied was defective in construction for the purpose for which it was designed.

These questions were the subject of two cross actions in the Court of Session, which were subsequently conjoined (14th March 1896). The Lord Ordinary ( Low), on 24th November 1899, held that Messrs Paton & Sons were not entitled to reject the machine, but that they were entitled to damages (which he assessed at £50) in respect of the failure of Messrs Payne & Co. to supply the machine within the time stipulated. He therefore decerned for the price under deduction of said sum of £50.

It is not necessary to deal with the second ground of action (defective construction), which raised merely a question of fact. The Lord Ordinary's note, so far as dealing with the condition as to time in the contract, was as follows:—

Note.—“It was argued for Payne & Company that it was not part of the contract that they should supply the machine in six weeks, but that they only mentioned that time as an approximate indication of the period within which they hoped to be able to have it ready. I am of opinion that that view is not sound. Mr Paton, before either accepting or rejecting their offer of 9th March, asked how soon they could supply the machine, and they replied unequivocally that they could supply it in six weeks and it was upon that footing that Mr Paton accepted their offer. I am therefore of opinion that it was a term of the contract that the machine should be supplied in six weeks.

It does not follow, however, that Mr Paton could refuse to take the machine if it was not ready in six weeks. In the case of Macbride v. Hamilton & Son ( 2 R. 775) the Lord President, dealing with a similar

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contract, stated the law thus:—‘It the machinery is good, it would be a very unusual course for the employers to refuse to allow it to be put up in their premises because it was not put up within the time stipulated. Such a course would in general be very inexpedient for both parties. Accordingly it is well understood that if a breach of contract occurs in point of time, that gives rise, not to the rejection of the subject, hut to a claim of damages for any loss occasioned by the delay.’

And that, indeed, seems to have been the view which Mr Paton himself took at the time, because although he complained strongly of the delay which took place, threatened to reject the machine, and intimated that in any case he would claim an abatement from the price, he allowed it to be fitted up in his works when it was ready.”

This judgment was adhered to by the First Division on 19th February 1897.

The following opinions were delivered —[ The portions are omitted which deal with the question of defects in construction]:— Lord M'Laren—Now, it is fair to Messrs Payne to notice that this was to some extent a new machine. Messrs Paton were not content to take one of the machines of which apparently the makers had a considerable number of the parts prepared, and where nothing was required but fitting. But encouraged by the desire of the makers to have a perfect specimen of their art and skill, they wished such a machine as would have to be made from the beginning. I should have thought it would be known to both parties that it was impossible to construct such a machine within so short a period as six weeks, and that in the understanding of both six weeks was only an approximate time. Nevertheless we have to deal with the actual contract as expressed in writing, and I agree with the Lord Ordinary when he says in his note that he considers that the period of six weeks was a term of the contract. Messrs Payne accordingly, by allowing it to be stipulated as a term of the contract, put themselves to a certain extent in the power of the other party, for if they chose to be troublesome in the matter of time, a claim might be made against the makers. Now, when a period of nearly two months had elapsed Messrs Paton began to be impatient about the delay, and wrote several letters, which have been read in the course of the argument, complaining of the delay, and claiming damages or an abatement of the price, but I cannot read any of these letters as amounting to a notice that they claimed the right to reject on the ground that time was of the essence of the contract. There are two considerations which appear to me to make it plain that time was not of the essence of the contract, and that Messrs Paton did not, until after the dispute had arisen, ever claim to reject the printing machine on that ground.

(1) After the machine had been fitted up by Messrs Payne, and was believed to be ready for use, it was found on trial that one of the small cylinders connected with the inking apparatus was a little too narrow in diameter, and when put in motion would not touch the inking table. Now, no doubt it would be annoying to find a little imperfection of this kind in a machine supposed to be ready for work, and irritated apparently by the long delay Messrs Paton telegraphed on 13th August to Messrs Payne to send a man at once to complete the machine. I hardly think that that was a telegram intelligible to the person receiving it. If Messrs Paton had said that the ductor was too small, or had told what the defect was, I do not doubt that there was every disposition on the part of the makers to meet them and have it put right. On receiving this telegram they replied that they did not understand the telegram, and were ‘writing to-night.’ But without even waiting for Messrs Payne's letter, which contained their answer, Messrs Paton proceed at once to say that their patience is exhausted, and that they wish the machine to be taken away. That is on the 13th August. I think the facts that up to this time nothing had been said by Messrs Paton to indicate a doubt that they meant to keep the machine, and that they only wrote Messrs Payne to take away the machine at a time when they were irritated by a small imperfection show clearly that there was no fixed purpose in their mind to reject the machine on the ground of delay, and that they had not laid a foundation for a claim of rejection on that ground.

(2) The other circumstance which also weighs with me is, that previous to this rejection Messrs Paton had allowed the printing machine to be fitted up in their premises. Now, surely if the buyers are entitled to reject they must do so with some consideration to the sellers, and so as to avoid loss to them. Notice was given by the makers that the machine was ready, and instructions were given to Messrs Paton to prepare the foundations for it. No hint was given to Messrs Payne that the machine was only to be put up on trial, and I think it is impossible to admit that if the machine was fitted up with Messrs Paton's consent, they were entitled to reject upon grounds which existed before its departure from Yorkshire.

I therefore come to the conclusion that Messrs Paton were not justified in rejecting on the ground of delay. But I may say that it would only be in a very extreme case that the remedy of rejection would be open to a purchaser under an executory contract because of delay in executing the contract. Looking to the very distinct and authoritative exposition given of the law in Macbride's case, I should think that even if Messrs Paton had written in good time they would have been going beyond their legal rights in claiming to reject a machine which had been made to their order, and where no reasons had been given for attaching very great importance to the period of six weeks allowed for its completion.

Lord Kinnear—I agree. I do not think it doubtful that there was a bargain that the machine should be made and delivered

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within a period of six weeks from 11th March, and that a breach of that stipulation on the part of the makers would give rise to a claim of damages to the purchaser. But then I think that that stipulation was not of the essence of the contract for the construction and sale of the machine. It was a subsidiary stipulation, the breach of which entitles to damages, but not absolutely to reject the machine. That is a question which depends upon the construction of the contract. But in reading a series of letters such as we have here, forming a contract for making and selling a new machine, we must have regard both to the subject-matter of the contract and also to the principles of law and to the practice expounded by the Lord President in Macbride's case. I agree with what Lord M'Laren has said upon that case, and I have therefore come with him and the Lord Ordinary to think that the defenders' remedy is not to reject the machine but to claim damages for delay. I also agree with Lord M'Laren that if that point were doubtful, the purchasers have a duty to the makers which prevents their rejection if they treat the makers as the defenders did, because I think they plainly allowed the machine to be delivered and put up in their premises, and the whole course of the correspondence appears to me to show that the position that they took up was this, that they were entitled to have an abatement from the price, or, in other words, that they were not claiming to reject the machine itself, and I think that position was reserved when they brought their action in this Court. As to the amount of damages, and indeed as to the liability for damages, the parties are agreed that the Lord Ordinary's judgment must stand, and therefore it is unnecessary to consider that point further.

The Lord President concurred.

Lord Adam was absent.

Messrs Paton & Sons appealed against this judgment to the House of Lords.

The following authorities were cited by the appellants in the House of Lords:—Sale of Goods Act 1896 (56 and 57 Vict. c. 71), sec. 10, sub-sec. 1; sec. 11, sub-sec. 2; and secs. 53 and 62; Whitson v. Nelson, 6 S. 579; Colvin v. Short, 19 D. 890; Turnbull v. M'Lean, 1 R. 730; Grieve, Son, & Company v. Konig, &c., 7 R. 521; Bowes v. Shand, 2 App. Cas. 455; Roberts & Company v. Yule, 23 R. 855.

The respondents were not called upon. In their printed case they cited MacBride v. Hamilton & Son, 2 R. 775, per Lord President, p. 780; and Dick & Stevenson v. Woodside Steel and Iron Company, 16 R. 242, per Lord Rutherfurd Clark, p. 245.

At delivering judgment—