(HIGH COURT)

AHMED EL BAKHEIT v. SARKIS IZMIRLIAN

HC.CS-538-1957

 Principles

·  Contract—Sale of goods—Delivery——Time of—Waiver of buyer’s right in respect of late delivery in consideration of seller’s extending date of payment

·  Contract—Hire purchase—Owner’s right to seize the goods by lawful means

·  Damages—Contract—Hire purchase—unfit goods—Foreseeable damages

Waiver of a right of action in respect of delayed delivery by the buyer in a contract for the sale of goods, in consideration of the seller’s extending the date of payment, amounts to a new collateral contract, and the buyer cannot sue for such delayed delivery.
An unpaid seller Who obtains possession of the goods by lawful means is entitled to seize the goods for non-payment of the price, but a contract clause giving seller the right to sue for the unpaid balance after repossession is a penalty clause and is unenforceable.
Obiter dicta: (i) As regards an unlawful taking of possession of the goods, any provision in a hire-purchase agreement which gives the owner the right to enter and seize the goods hired is void.
(ii) The measure of damages recoverable by a buyer for unfitness of the goods are those which arise naturally from the breach or which are in contemplation of the parties at the time of the agreement.

Judgment

Advocate: Mubarak Zarroug ... for defendant

T. S. cotran D.J. February 15 1960:—On April 27, 1957, the plaintiff agreed to buy from the defendant a tractor and a plough at a price  of £S.I400. The plaintiff paid in cash £S.480 and on May 5 1957, ‘he subscribed two promissory notes for £S.480 and £S440 maturing on October 4, 1957, and October 4, 1958. respectively. Later he subscribed two more  notes which represented some spares and extra freight which he undertook to pay on account of the goods coming via the Cape due to blockage of the Suez Canal,

There is no mention of any delivery date. However, delivery must be within a reasonable time after the conclution  of the Contract because it is clear that the “season” starts between the end of May and the middle of July depending on the district, so that delivery in August or September

cannot possibly be held to be reasonable. The tractor was delivered on May 10, 1957. there is no doubt that, to be useful, the delivery of the plough or ridger must accompany the tractor. Although there is no term in the contract about the delivery date I am prepared to accept plaintiff’s testimony that there was a representation on the part of the defendant to deliver both items together. The plough or ridger was delivered on June 7, 1957, i.e., about a month after delivery of the tractor. This ‘may be a technical breach of contract, but in my opinion plaintiff has waived whatever right he had when defendant agreed to postpone payment of the bill that matured on October 4, 1957, until a month later, i.e., until November 1957. It therefore appears to me that  a new contract was concluded between the parties in which the defendant undertook (in consideration of the delayed delivery of the plough) to extend the date of maturity of the bill from October 4, 1957, to November 4, 1957. There is some dispute between the parties as to the extension granted by the defendant. The plaintiff maintains that the extension was until November 30, 1957. The defendant says it was one month from date of maturity which period corresponds roughly to the delay in the delivery of the ridger. I prefer the evidence of the defendant on this point. The plaintiff’s learned advocate, in a statement submitted to court, stated that “the balance of £S.920 be recovered by two promissory note one for £S.480 and the second for £S.440 due respectively on November 4. 1957, and October 4, 1958, etc In truth the first matured on October 4. 1957, and not on November 4, 1957, so that if the extension was granted it was until October 30, 1957 or at most November 4, 1957. This point is very important because the defendant seized the tractor on November 21, 1957 (when it was brought into defendant’s workshop for repairs), because plaintiff failed to honour the bill. Again there is disagreement between the parties as to when seizure took place. The plaintiff maintains that the date of seizure was October 11, 1957, before the extended maturity date of the bill, whereas the defendant maintains that the tractor was seized by him on November 21, 1957. Again I prefer the evidence of the defendant about the date. He has produced to me the invoice of the spare parts supplied to the tractor when it was brought to him for repair, as well as the job card, both of which show the date to be after November 20, 1957 This conclusion is supported by the fact that the date of the statement of claim is October 22, 1957. If the seizure actually took place on October 11, 1957, as alleged by the plaintiff, then it stands to reason that he would have claimed damages for wrongful seizure and this would have been the main item in the statement of claim. It is not; damages for wrongful seizure were added later when plaintiff asked to amend on Jannaiy 6, 1958. I think I need not repeat here that any provision in a hire-purchase agreement which gives the owner the right to enter and seize

the goods hired is void by Hire Purchase Act, s. 5 and the Statute of forcible  Entry, which laws I hold to be applicable in the Sudan on the equity, justice and good conscience principle. But there the defendant got into possession of the tractor through lawful mean and he did not enter into anybody’s property to retake possession. In my opinion he is perfectly enthied to withhold the tractor for non-payment and the plaintiff is not entitled  to any damages at all. The defendant has certainly taken advantage of the tractor being in his workshop but he was acting within his right under the contract because he is the rightful owner until the payment of the last instalment. The defendant undertook to grant plaintiff quiet possession only as long as he fulfils his part of the contract by paying his rentals promptly.

The plaintiff then claims damages from the defendent on the ground that the tractor bought was unfit for the purposes for which it was intended because it was unfit, had a latent defect which could not have been revealed on examination, and was not of merchantable quality.” The onus of proof is on plaintiff here. He has not, in my opinion, discharged the burden of proof placed on him about the tractor. Nothing less than a fully qualified engineer’s evidence is enough in such cases because a machine may become useless from a multiplicity of reasons, for example, ignorant or careless use. It is only in the minority of cases- that the machine is defective when it comes from the factory. The fact that something went wrong with a machine, does not necessarily mean that it is unfit. The defective part could be replaced. Similarly with the plaintiff’s tractor. In any event the plaintiff clearly has accepted the goods. The only point in favour of the plaintiff is that the ridger which was supplied by the defendant broke down very often and was in fact defective. It seems that several cultivators (some of them gave evidence) have complained about these ridgers. It will not be necessary to go into great detail about the origin of these ridgers, suffice it to say that plaintiff’s ridger was not of the same kind as the tractor. Although it is not necessary- that the ridger should be of the same kind as the tractor (Mr. Chanian says that there—are no Zetor ridgers), it is essential, in my judgment, that there should be at least some conformity of specifications between the two parts. From the evidence before me the ridgers appear to have been of Egyptian manu facture. I hope I will not be understood  to mean that Egyptian goods generally bad, but I think I am not much mistaken in sayng that Egypt is not well known as a manufacturing country of agricultural machinery.

The defendant admits that I957 was their first year of operations in the Gezira, and their representative admits that there were several complaints about the ridgers and he also admits that they undertook to supply new American made ridgers to cultivators in part exchange of the original Egyptian ones. This is by itself, if not an admission, at least a recognition

that all was not well with the Egyptian ridgers. On the evidence I hold that the ridger or plough supplied was unfit for the purpose and plaintiff is entitled to damages. The next thing to consider is the damages suffered by the plaintiff from the supply of a defective ridger. The damages which plaintiff claimed were:

1. £S.500 for breach of contract for the delayed delivery of the plough. I have already said that there is no term as to date of delivery in the contract, and, in any event even if there was, the plaintiff has waived his rights to anything in consideration of the defendant extending the date of payment.

2. £S.1800 for wrongful seizure. It has already been explained that the seizure was lawful and proper and took place after the promissory note was dishonoured.

3. £ S.520  for the supply of a defective tractor. It has been seen that there is no evidence that there was anything manifestly wrong with the tractor itself, but that its accessory, viz., the ridger, was unfit and defective. A ridger is not a standard part of a tractor. The damages which the plaintiff is entitled to recover under this head are those that arise naturally from the breach or which were in contemplation of the parties at the time of agreement. (Hadley v. Baxendale (1854) Exch. 341 and the Sale of Goods Act)

Unfortunately the court is in the dark as to the damages plaintiff suffered. He claims £S.520 and says that a tractor brings in £S.45 per day. In my opinion the damages that arise naturally from such breach is the cost of replacement of the ridger plus the necessary expenses incurred in getting the same fitted plus any expenses incurred in transport. Assuming that the ridger was returned to the defendant with the tractor I assess the damages as £S.250 which is the cost of replacement and ancillary expenses.

The defendant counterclaims for the balance of the price of the tractor and ridger (which were secured by four promissory notes, for various sums). He invokes sections 7 and 8 of the agreement which gives him a right to take possession of the goods and also to sue for the balance unpaid of the price. In this case the defendants are counterclaiming for £S.944. I think it is essential to look at these sections carefully and consider whether or not they are penalty clauses. The necessity for doing this has been decided by our Court of Appeal in Rouchdi Boutros v. Christos Simos, AC-REV-234-1957 (1957) S.L.J.R. 8, which followed the latest view of the English courts on the subject as propounded in Cooden Engineering Co. v. Stanford [953] Q.B.  86 and Lamdon Trust v. Hurrell [1955] All ER. 839 In the former case the facts were: By a hire-purchase agreement the plaintiffs agreed to hire a motor-car to the defendant for the term of 30 months and the defendant agreed to pay in respect of the hire a sum of £412 7S. 6d. payable in monthly instalments. By clause ii of the contract the owners were entitled, under certain conditions, to determine the hiring and retake possession of the car, and on such determination the full balance then remaining unpaid together with all costs, charges and expenses whatsoever which the owners might incur, should at once become payable to and be recovered by them together with interest thereon at the rate of 10 percent. The hirer defendant having fallen into arrears with the instalments, the owners retook possession of the car and sued the hirer, under clause ii, for the unpaid balance of the instalments which amounted to £297 ios. 9d The Court of Appeal held (by majority) that the sum was a penalty and was not recoverable.

Here the defendant is claiming nearly a thousand pounds under the contract. The whole price of the tractor is £S.I400. He has already been paid about £S.500 and he retook possession of the goods after only four months effective use by the plaintiff. Defendant does not allege that he took the tractor as a wreck and he has always maintained that there was nothing wrong with the tractor. For these reasons I hold that clauses 7 and 8 of the agreement are penalty clauses and the defendant cannot recover the unpaid purchase price.

Judgment will be given in plaintiff’s favour for £S.250 with costs on this ratio.

Sayed Mubarak Zarroug says that plaintiff still has the ridger, in which case he must either return it or the damages must be reduced.

Court: My impression was that the defendant took possession of the tractor including the ridger. If he has not taken possession of the ridger, the amount of damages awarded will have to be reduced, but I am afraid I can do nothing about it except by leave of the Judge of the High Court.

I think an application should go to him in the first instance.