Contract-Carriage af goods-When contract concluded-Rise in freight cMgea
before issue af bill of lading ,

Contract-Trade custom-A recognised trade custom may be incorporated Into
a contract

The respondents wanted to send certain goods from Port Sudan to'
Suez. They inquired of the appellants and were told by them that the
freight was PT.65 per 1000 kilos. They handed the '.~oods to the
appellants and got from them letters· addressed to the consignees acknowl-
edging receipt of the goods and approximate date of shipment. Shortly

. after that and both before actual shipment of the goods or the issue of
the bills of lading, the rate was increased to PT.&5 per 1000 kilos. The
appellants insisted that the respondents' goods· were to be carried at the
increased rate because no contract was concluded before the issue of the
bills of lading. The respondents paid at the increased rate under protest
and argued that the contract was concluded when the letters were handed .
to them. Peacock J. held that the respondents were entitled to recover
the difference between the increased rate and the old rate. On appeal

Held: ( 1) That a binding contract was concluded when the goods
were accepted and the letters written by the appellants.

(2) That the note of freight contemplated was the rate, then in
force, viz., PT.65 per 1000 kilos, and that if the. appellants wanted to
charge a higher rate they should have reserved a right to do so.

Appeal

The material facts of this case as far as they appear from the
case record and the judgment of the Chief Justice are shortly the
following:

·Court: R. H. Dun C.J . The appellants were the Port Sudan agents of the Khedival Mail
Line Co. which had a practical monopoly over the Port Sudan"":"
Suez route. The respondents, who were Khartoum- merchants, . had.,
three consignments of goods which they wanted to ship from Port
Sudan to Suez. Towards the end of August 1915 the respondents
inquired from the appellants about the rate of freight between Port
Sudan and Suez and were told that it was PT.65 per 1000 kilos.

Early in September 1915 the respondents handed over to the
appellants the documents necessary to .enable 'them to collect the first
consignment of goods to be shipped from the Sudan Railways at
Port Sudan. On ' receipt of these documents the appellants handed
to . the respondents letters addressed to the consignee, the Anglo
Egyptian Bank, to the effect that they had received from the respon-
dents railway policies concerning "the goods specified hereafter which
will be shipped to Suez to your r order probably by steamer 10th
instant. The bill of lading' and insurance policy will be handed to
you after shipment of the above goods." . Policies concerning th~ other
two consignments were handed, to the appellants shortly after this
and letters similar to the above and in which it was stated' that the
goods "were to be shipped probably by the steamer 20th instant,"

        'were handed to the respondents.                                                         .

Shortly after these letters were written, but before the bills of
·lading were made out, the appellants notified the respondents that
the Khedival Mail Line had increased their rates to PT.85 per 1000
kilos, and that . the respondents would have to pay the freight at
the increased rate. The respondents.. having no practical alternative
open to them,· paid the freight at the increased rate. and almost
immediately, brought an ,action to recover the difference/between the
increased and old rates: They argued that a binding contract to
carry the goods at the old rate was concluded the moment the appellants
handed to them the letters addressed to the consignee.. The appellants,
on the other hand argued that no contract was concluded until the
bills of lading were issued, and that since the rate went up before
that, the! were entitled to change the freight at the increased rate.

Peacock 1: decided in favour of the respondents ..

'February 20, 1918. R. H. Dun C.J.: This is an appeal from
the judgement of Judge Peacock and the question is what interpre-
tation is the court to put on certain facts.

The plaintiffs say that when they handed the railway- policies to the defendants and the defendants handed to them the letters

addressed to the Anglo 'Egyptian Bank a contract was at that time
entered into by which the defendants undertook to ship to Suez by
Khedivial Mail Line from Port Sudan the goods mentioaed in the
policies at the rate current at the date of the delivery of the policies,
by the steamers mentioned in the letters or failing such steamer so
soon as accommodation was available: the rate current at the date of
the delivety of the policies was PT.65 per 1000 kilos;

The defendants say that the policies were received as represent-
ing goods .for shipments, but that there was no contract to
ship by any definite ship or at any .definite rate until the bills
of lading were prepared and issued. Before the bills of lading were
issued the Khedivial Mail Company had notified the defendants that
freights had been increased to PT.85.

The learned judge decided in favour of the plaintiffs and in my
opinion he was right.

It is admitted that the plaintiffs made an inquiry towards the
end of August as to the rate of freight and were informed it was.
PT.65; the policies by which the defendants were enabled to take
delivery of the goods at Port Sudan were handed to the defendants
in the first half of September before any change was made in the

.rate of freight; and the defendants handed to the plaintiffs letters
addressed to the Bank to the effect that they had received from the
plaintiffs railway policies of which particulars were' specified "which"
(meaning the goods referred to) "will be shipped to Suez to your
order probably by steamer i Oth ' instant. The, bill of lading and
insurance policy will be handed to you after shipment of the above

           goods."                                                            

These letters appear to me to show that when the policies were,
delivered' there was a binding contract between the plaintiffs and
defendants that the latter should ship the goods by the steamer men-
/ tioned or other steamer as soon as accommodation was available.

                                                                         .                                                   

The only term not stated is the rate of freight and it seeins to
me that the rate contemplated was the PT.65 rate then ·bi fQree;_'
if the defendants had wanted' to charge' another rate they .should '
in some way have made known to the plaintiffs that they reserved
the right to charge whatever rate might be in force at the date of

          shipment, but there is no evidence that they did so.                                      

It was argued that these letters do not constitute any a8!'eeQleDt between the parties nor that they are evidence of an agreement; I
agree that they are not the agreement between the parties, but in the
absence of strong evidence inconsistent with them, I think they
constitute convincing evidence that there was an agreement and
what its terms were so far as they. are expressed in them.

This disposes of the first part of the case: the second par.
relates to exactly similar transactions except that in the letters addressed
to the Bank and handed by the defendants to the plaintiffs the goods
were to be shipped "probably by the steamer 20th instant," but
these letters were all written before the rate of freight was increased.

I think these letters are evidence of existing contracts to ship by
the steamer of the date mentioned subject to the same proviso as
to accommodation being available, and I think that the PT.65 rate
then in force must apply to such contracts also.

I wish to add a few words on some subsidiary points. It was
argued that there was no contract until the bill of lading was signed:

I agree that the contract of carriage by sea is almost always embodied
in a bill of lading, but every written contract is merely the record of
a previous verbal agreement.

It was said the plaintiffs need not have paid the extra freight,
but could have reclaimed their goods; that is not a business proposi-
tion: the Khedivial Mail Line have a practical monopoly of the
carrying trade from Port Sudan to Suez, the goods were required
in Egypt and the only alternative route would have been by rail and
river involving the loss of railway charges between Atbara and Port
Sudan both ways. The plaintiffs were therefore. entitled to pay the
extra freight under protest and to sue to recover the difference.

I am therefore of opinion that the judgement of the High Court
must be affirmed and this appeal dismissed with costs.

Fleming J.: I agree. The contract for the carriage of the goods
to Suez was entered into when plaintiffs handed the railway policies
to the defendants. The plaintiffs handed lhe railway policies to the
defendants on the strength of, or at all events within a few days
of, the receipt of information from the defendants that the rate of
freight was PT.65, and that was in fact the rate at the date when
the policies were handed over. If there was an understanding between
the parties or a recognized trading custom that the rate might be
altered between the date of the contract of carriage and the issue of
the bill of lading the position would be different, but it is for the