Sale of goods=-Parol evidence rule-English Sale of Goods Act 1893, section 4

Account-s-Account stated-CLaim to reopen Oil ground of errors and omissions
Contract-Parol evidence rille-Sale of goods

Reception-Foreign statutes-English Sale of Goods Act 1893-1urisdictioll of
Sudan Courts to import foreign statute

From 1930 to 1935 H. Manics constantly sold gum arabic to the
Boxall Co., becoming their chief supplier. There was close personal con-
tact, and frequent parol agreements for sale. followed within a day to a
fortnight by formal written contracts. The Boxall Co. made advances to
H. Manics on such sales. and these were subsequently accounted for.
The machinery was that H. Manics gave the Boxall Co. a delivery order on
a Port Sudan forwarding agent whenever a consignment was available, and
then made out an invoice allocating the gum to a particular contract. de-

* Court: Bennett A.G., Evans and Flaxman JJ.

ducting any advance. Later H. Manics began making out the invoices in
batches: his invoices did not always follow the chronological order of the
contracts. Sra.ernerus of account, vouched by debit notes, were. from lime
to time given to H. Manics by the Boxall Co. On March 4, 1935 H. Manics's
son and agent, S. Manics, signed an account stated showing that at Octo-
ber 31, 1934 H. Manics was indebted to the Boxall Co. to the extent of
£E.3,828.188 m/ms.

On July 1 I, 1935, the Boxall Co. began their suit, claiming the
£ E.3,828.188 m/ms. and certain smaller sums. H. Manics by his defence
claimed to reopen the account on the ground of material errors and omis-
sions. In particular H. Manios claimed to strike out certain items to his
debit in the account as not contemplated by the written agreements.

Held: (I) An agreement to an account stated does not of itself create
an estoppel to maintain subsequently that no obligation existed as to some
of the items listed in the account stated.

(2) The parol agreements under which certain of the items objected
to were charged were intended to vary arid not to rescind the written agree-
ments.

(3) Section 4 of the English Sale, of Goods Act 1893 was not appli-
cable in the Sudan so as to render the parol agreements unenforceable.
The Sudan courts are not enabled by section 9 Civil Justice Ordinance
1929 to adapt or adopt special provisions of foreign statutes, but only to
apply general principles underlying the enactment. The only such principle
derivable from section 4 of the English Act was that no contract should be'
enforceable unless in writing. That principle was wholly inapplicable in the
Sudan.

(4) Even if the English law were applicable, the parol agreement could
be proved, for H. Manics's verbal promise to pay could be supported by
past consideration comprised in an unenforceable contract.

(5) A buyer who accepts early delivery from the seller is not entitled,
in the absence of agreement or trade practice, to debit the seller with stor-
age charges.

British and Beningtons, Ltd. v. N. W. Cachar Tea Co. [1923] A.C. 48

distinguished.

Morris v, Baron and Company [1918] A.C. 1 distinguished.
Joseph Evans & Co. v. Heathcote [1918] 1 K.B. 418 applied.
Cocking I'. Ward (1845) 1 C.B. 858, 135 Eng. Rep. i81 applied.
Lampleigh. v. Braithwait (1615) Hob. 105,80 Eng. Rep. 255 cited.

Civil Justice Ordinance 1929, s. 9.

English Sale of Goods Act 1893, 5.4.

Appeal

Henein Hanios, the defendant, appealed from a decree of the
Khartoum High Court (Creed J.) dated June 1, 1936. The facts are
set out in the judgement of Bennett A.G.

Advocates: Labib Sorial ... for the appellant; A. J. Claxton
. for the respondent.

quantity abovementioned on or not more than 7 days before the
date abovementioned.

The buyer is not bound to accept less than the whole quan-
tity nor delivery elsewhere than named in this contract.

In default of punctual fulfilment of the contract by either
party the other party shall have the right after giving notice in
writing or by telegraph to the other party, in the case of tbe seller
to sell the goods to anotber purchaser, and in the case of the buyer
to purchase other goods elesewhere and the party in default shall
make good the loss if any consequent on such sale or pufchase,
but the party not in default need not exercise this right but may.
claim damages for breach of the contract.

The earnest money shall be repayable on demand at any
time 24 hours after failure to offer good delivery on, or within 7
days before, the agreed date, but if delivery is not made on ac-
count of the buyer's default the earnest money is not recoverable.

The buyer is allowed 3 days, if delivery is to take place in
Khartoum or South, and 15 days, if delivery at Port Sudan, after
delivery within which to examine the goods. Public Holidays
shall be excluded. If be does not give notice of rejection within
that time, he is considered to have accepted them.

All disputes between the buyer and seller arising out of this
contract shall be referred to arbitration by the Sudan Chamber
of Commerce under the following rules.

Then follow certain rules for the conduct of the arbitration.
During the first two or three years the respondents sometimes
paid the appellant a part of the purchase price payable under a par-
ticular contract in advance; later he occasionally received a payment
which, while it represented an advance against the gum which the re-
spondents under various contracts had agreed to purchase, was not im-
mediately allocated to the price payable under any particular contract
or contracts of sale.

After the agreement for sale had been made the appellant for-
warded the gum to a forwarding agent at Port Sudan and handed the
respondents a delivery order on the forwarding agents. The appellant
would then make out his invoice allocating the gum the subject of the
delivery order to a particular contract, and deduct the amount of any

payment in advance received against that particular contract, and the
respondents would thereupon pay him the balance shown on the in-
voice. At first these invoices were made out by the appellant and
handed to the respondents at the same time as the delivery orders.
Later invoices were Dot always made out at the time the appellant
handed over the delivery orders, but were made out subsequently and
sometimes in a batch. In such cases the respondents paid the appel-
lant an approximate figure on the delivery orders, and when the in-
voices were eventually made out paid him any outstanding balance, or
if general advances on account bad been made, they might effect pay-
ment by crediting him in their books with the amount of such balance.
It appears that in invoicing deliveries of gum to particular contracts the
appellant did not always follow the chronological order of contracts
and deliveries, and he admitted in cross examination that there were
forty to sixty cases when he had so invoiced out of chronological order. .

That part of the course of business which is in dispute relates to
the delivery by the respondents to the appellant of statements of ac-
counts and debit notes. The respondents alleged that statement of
accounts were handed to the appellant on or shortly after June 30,
1931, December 31,1931, December 13, 1932, June 30, 1933, Octo-
ber 24,1933, March 31,1934, June 30,1934 October 31,1934, April
30. 1935, May 18, 1935 and June 30, 1935, and that every entry in
such statements of accounts, whether shown as a debit or a credit,
was backed by a debit or credit note the original of which had been
handed to the appellant in accordance with general commercial prac-
tice on or shortly after the date thereof. The appellant denied that
he received any statement of account prior to September or October,
1934.LI:fe admitted that he received the statements of account above
referred to either in September or October 1934 or in February
1935, he is not sure which, and he denied that in regard to certain
items any debit notes were handed to him prior to February 1935.

It will be noticed that from October 1934 onwards the appellant,
according to these statements of account, was indebted to. the re-
spondents in a considerably larger sum than had previously been the
case.

On March 4, 1935, a document was signed by Suliman Manics in
the office of the respondents. That document reads as follows:

"Omdurman, 4th March 1935.

Messrs. Boxall & Co.,
Khartoum

We have received your statement of our account with you up
to 31 st October 1934 and beg to inform you that we are in agree-
ment with same and confirm that the balance due to you as at that
date (31st October 1934) is exactly £E.3828.188 m/ms. (i.e.
Three Thousand Eight Hundred and Twenty Eight Pounds Egyp-
tian and One Hundred & Eighty Eight Milliemes). With nothing
further.

(Signature) Salman Manios
March 4, 1935 (Initialled)
S.D.

(S. Dale, of
Russell & Co.)".

On March 20, 1935, the appellant wrote to the respondents:

"Messrs. BoxaU & Co.,
Khartoum

We confirm our conversation and beg to inform you that we
agree to deliver to you tbe following goods belonging to us as
security against part of the amount we owe you:

and we enclose Delivery Order on Messrs. Trucco & Co. which
please accept."

(Signature) Honein Manics
20.3.1935.

This gum was delivered to the respondents and so far as the rec-
ord shows is still held by them upon the terms of this letter.

From letters which passed between the parties between May 31
and July 4, 1935, it is evident that the respondents had been pressing
the appellant to give them further security for his debt and that during
May 1935 a draft mortgage of immovable property was prepared and
agreed. At the beginning of June, however, the appellant refused to
complete the accounts and no account had been agreed between the
parties.

By letter dated July 2, 1935, the respondents through their advo-
cate delivered a further statement of account showing a balance owing
to them as of June 30, 1935 of £E.3683.228 m/ms., and called upon
the appellant to pay this sum, to fulfill certain outstanding contracts,
and threatening action. By letter dated July 4, 1935, the appellant
replied that he was still auditing his accounts and that the contracts of
sale were also under revision. The respondents commenced this ac-
tion on July 11, 1935. Delivery of pleadings was ordered and in their
statement of claim the respondents claimed:

(i) In accordance with the account stated by the appellant
the balance due to them as at October 31, 1934, i.e.
£E.3828.188 m/rns;

(ii) balance of account from November 1, 1934 to date of
petition £E.186.157 m/rns; and

(iii) balance of account on items accrued due subsequent to the
date of petition £E.7.535 m/ms.

By his defence the appeJlant contended:

(i) that the statement of account as to the alleged balance was
obtained from him by fraud;

(ii) that alternatively he was entitled to reopen the account on
the ground that the statement contained material errors
and ommissions;

(iii) he disputed the accounts subsequent to October 31, 1934,
and the balance alleged to be due thereon; and counter-
claimed

(a) for £E.5396.638 m/ms the balance alleged to be due to
him and resulting from the transactions between the parties
from 5th March 1930 to 31st July 1935; and

(b) for delivery of 375.700 tons of gum which he alleged he
had deposited with the respondents or for payment of the
value thereof which he estimated at £E.8901.084 m/rns.

By their reply the respondents joined issue and contended that
the appellant was estopped from disputing the account stated by his
alleged conduct in the reception of the abovementioned statements of
account and debit and credit notes without demur, by which conduct
he was alleged to have induced the respondents to continue business
with him.

It is to be remarked that the appellant did not counterclaim for an
account to be taken, but set up accounts alternative to those relied
upon by the respondents and undertook the burden of proving those
accounts. At a late stage of the trial his advocate in effect applied
for leave to amend his counterclaim by adding a claim for an account.

The learned judge found against the appellant on all the issues,
and there is no appeal from his finding on the issue of fraud or from
his rejection of the accounts upon which the counterclaim for £E.5396.
638 m/ms. was based.

The basis of that part of the counterclaim having disappeared, the
appellant was forced in this court to rely on his claim for an account,
and the appeal was heard on that basis.

The issues for decision on appeal to this court, therefore are

( 1) Has the appellant proved in evidence any material errors
and mistakes as, apart from the issue of estoppel, entitle him
to reopen the accounts prior to October 31, 1934? and

(2) If so, is tbe appellant estopped from so doing
(3) Have the respondents proved their claim

(a) to the £E.186.157 m/rns. balance of account from No-
vember 1, 1934, to July 11, 1935?

(b) to the £E.7.535 m/ms. balance of account from July
12 to December 31, 1935?

(4) Is the appellant entitled to the delivery of the 375.700 tons
of gum alleged to have been deposited by him with the
respondents?

As to the first issue on appeal, the particulars of alleged errors

and mistakes fall into the following five classes:

Port Sudan Expenses
Allowances in Europe
Storage Charges
Adjustment of Weight

Amount of cheque wrongly credited in the respondents accounts.

The appellant's objections to the items included in the first three

classes, namely, Port Sudan Expenses, Allowances in Europe, and
Storage Charges, are not as to amount, but as to the class of charge,
and, subject to the question of the proper inclusion of such classes of
charge, the amounts are admitted.

It is convenient to deal first with a point raised by Mr. Claxton on
behalf of the respondents more particularly in regard to storage charges,
but which is relevant to all of the first three classes of alleged errors
and omissions. He urged that inasmuch as the appellant's objections
were only as to the class of charge, and as the respondents based the
charges relating to these three classes upon previous verbal agreements
with the appellant, and the charges were themselves included under
their class heading in the account stated, that document was at once
confirmation and ratification of the previous verbal agreements, and
that consequently it was not open to the appellant to dispute the pre-
vious verbal agreements or consequently the class of charge. In my
opinion this contention is fallacious. It is in reality a plea of estoppel,
but in fact none of the ingredients of an estoppel are present in the case
so stated. No doubt, it is peculiar that a man should come forward
and say-HI admit that I agreed an account under various heads of
debit, but in fact I was under no obligation in respect of some of those
heads," and his admission is strong prima facie evidence of his obliga-
tion, but that such an admission, unless in the circumstances it amounts
to a representation so as to raise an estoppel, operates as a bar to any
subsequent denial of his obligation is not in accordance with any prin-
ciple of law of which I am aware.

It is not immaterial to the weight which this court is asked to
give to the appellant's evidence as to the alleged errors and mistakes to
bear in mind that in the court below the appellant alleged other errors
and mistakes under the headings of Weighing Charges, Mogren Ex-
penses, Accounts Debited with no details and Amounts Wrongly Deb-
ited, as to which there is no appeal. If a party, upon whom lies the

onus of proof of material errors and mistakes for the purpose of re-
opening a stated account, puts forward some items as to which, as in
.one of the above cases, he says merely ''Jhere are no details and conse-
quently I cannot tell whether the items are correct or not", he must not
be surprised if he thereby lays open to suspicion both the accuracy of
the other items and the purpose for which he is disputing the account.

Dealing first with the items under the heading "Port Sudan Ex-
penses" which cover the cost of reconditioning various consignments of
gum, the respondents' witnesses stated that these charges were incurred
in respect of gum that was not up to contract quality, that the recondi-
tioning in each case was carried out in pursuance of a verbal agreement
under which the respondents agreed to accept the gum provided that
it was reconditioned at Port Sudan at the appellant's expense, and that
in each case a debit note covering the cost of reconditioning, to which a
voucher was usually attached, was handed to the appellant or one of
his sons at or shortly after the date when they themselves received a
debit note from Port Sudan, and that these expenses were included in
the statements of account sent to the appellant from time to time, to
which debit notes and accounts the appellant never at any time
demurred.

The appellant firstly denied that any such verbal agreement was
made, and secondly contended that inasmuch as every transaction of
sale and purchase of any gum was the subject of a written cOJ?tract
which purported to cover the whole of such transaction, and as the al-
leged verbal agreement constituted a variation of such written agree-
ment, evidence of the verbal agreement was inadmissable. The sec-
ond contention was made in regard, and applies equally to the second
class of errors and mistakes under the heading of "Allowance in Eu-
rope" and it is I think convenient to dispose of it here. The material ~
provision of the contract reads "The buyer is allowed 3 days, if deliv-
ery is to take place in Khartoum or South, and 15 days if delivery at
Port Sudan, after delivery within which to examine the goods. Public
Holidays shall be excluded. If he does not give notice of rejection
within that time, he is considered to have accepted them."

It was urged on behalf of tbe appellant, firstly, that as in the ab-
sence of any notice of rejection the buyer is deemed under the contract
to have accepted the goods, a parol agreement attaching a condition,
extraneous to the contract, to the acceptance of the gum is necessarily
a variation of the contract; secondly, that having regard to the wording

of the contract there could be no breach until after notice of rejection;
thirdly, that the contract provides that all disputes shall be referred to
arbitration and the alleged agreement as to reconditioning is a depar-
ture from the remedies provided for in the contract in case of breach;
fourthly, that in equity, justice and good conscience the provisions of
section 4 of the English Sale of Goods Act should apply to the contract
and the contract therefore treated as one which is required to be in
writing, which consequently cannot be varied by a subsequent parol
agreement, evidence of any such parol agreement being inadmissible;
and finally, that even if it can be said that the alleged parol agreement
was made after breach, it had not been satisfied so as to operate as an
accord and satisfaction of which evidence is admissible, evidence of an
accord after breach without satisfaction being inadmissible.

On behalf of the respondents, Mr. Claxton contended, firstly, that
if notice of rejection was required, the existence of the alleged parol
agreement was itself equivalent to notice of rejction; secondly, that
the alleged parol agreement could not amount to a variation of the
written contract, since the tender of gum not up to contract quality
was a breach of the contract, which was thereby discbarged and con-
verted into a claim for damages, which claim was discharged by the
parol agreement which operated as an accord and satisfaction; and
that, alternatively, and even if the parol agreement was only an accord,
the subsequent reconditioning and acceptance of the gum operated as
satisfaction.

In my opinion, if any force is to be given to the abovementioned
provision of the contract, it must be deemed to exclude any allegation
of breach after delivery of the goods on account of quality unless notice
of rejection is given, I do not think that the contention that the exist-
ence of the alleged parol agreement is equivalent to notice of rejection
is sound. There is no evidence that, prior to the making of the alleged
parol agreement, the respondents verbally rejected the gum, the most
that can be urged on their behalf is that the quality of the gum was
under discussion. and that they would have rejected had the alleged
parol agreement not been made. That is not enough, the court cannot
speculate upon the might have been.

The case of Morris v. Baron and Company [1918] A.C. 1 was
cited on behalf of the respondents. I did not understand Mr. Claxton
to argue that the alleged parol agreement operated as a rescission of
the written agreement, but in case I misunderstood the object of the

citation, I ought perhaps to say that the proposition established by that
case that a contract required to be in writing by section 4 of the Sale of
Goods Act 1893, may be impliedly rescinded by a parol contract for
the sale of goods, though unenforceable by reason of its non-compli-
ance with the Statute of Frauds, is subject to an important qualifica-
tion expressed in the judgements in that case and insisted on in the
later case of British and Benningtons, Ltd. v. N. W. Cachar Tea Co.,
[1923] A.C. 48, namely that there must be a clear intention or ex-
pression to rescind the written contract absolutely as compared with a
mere intention to vary. In my opinion, the proper inference as to the
intention of the parties to the parol agreement here alleged is that it
was intended only to vary the written agreement and not to rescind
it absolutely.

That being so, the appellant would appear to succeed in his con-
tention that evidence of the alleged parol agreement was inadmissible,
if under section 9 of the Civil Justice Ordinance it is open to this court
to apply, and if it considers that in justice equity and good conscience
it should apply, section 4 of the English Sale of Goods Act, 1893, to
this written agreement, and to hold consequently that the so-called
parol evidence rule should be followed in the Sudanese courts.

For the reasons which appear hereafter I think that the appellant
would fail in his contention 'that evidence of the alleged parol agree-
ment was inadmissible, even if this court could and would hold that
section 4 of the English Sale of Goods Act, 1893, and the parolevi-
dence rule should be applied by the Sudanese courts. The application
of the Act, however, was argued before us, and as the matter is one of
great general importance upon which there ought not to be any doubt
as to the state of the law I think I should express my opinion thereon.

Whatever may be the scope and meaning of section 9 of the Civil
Justice Ordinance, it does not enable this court to set itself up as a leg-
islative body, free to adapt or adopt and so in effect to.enact any foreign
statute or any statutory enactment of its own imagination that may
recommend itself. It is confined so far as any body of foreign law is
concerned to the application of the general principles underlying that
law. The court may determine and apply the principles, but it cannot
borrow any artificial qualifications which may have been grafted on
the principle by foreign statute. Thus in the case of section 4 of the
Sale of Goods Act, 1893, the underlying principle is that a contract for
the sale of goods shall not be enforceable by action unless it is in writ-

ing. The court may, if it thinks it is in accordance with justice, equity
and good conscience, apply that principle, but it cannot borrow the
artificial qualification which section 4 of the English Sale of Goods Act,
1893, attaches to the principle, namely, the limitation of its application
to contracts of £EI0 or upwards. Nor in my opinion can the court
introduce an artificial distinction of its own and apply the principle to
contracts for the sale of goods between certain persons only, for in-
stance, between traders.

The only question for the court, therefore, is whether in accord-
ance with justice, equity and good conscience it shall bold that subject
to such exceptions as arise upon a similar test, a contract for the sale
of goods shall not be enforceable by action unless it is in writing. The
answer is obviously 'No'.

Little or no publicity is given to the judgements of this court, the
population of the country is largely illiterate, and only the greatest
confusion and injustice could follow an attempt by the civil courts to
require that all contracts for the sale of goods should be in writing in
order to be enforceable by action.' The so-called parol evidence rule
owes its inception solely to the Statute of Frauds, refusing to allow
evidence or thereby effect to be given of or to verbal contracts in mat-
ters where a written contract was required by the Statute. If we re-
ject the Statute, therefore, we reject equally the rule of evidence
founded thereon.

In truth, however, the appellant in the particular facts of tbis
case, would fail in this plea even if we applied thereto the Sale of
Goods Act, 1893, and the parol evidence rule. In English law a past
consideration executed on request is a good consideration for a sub-
sequent promise to pay. Lampleig}i v. Braithwait (1615) Hob. 105;
80 Eng. Rep. 255. This has been held, and the pro!l!i_§_e __ to pay en-
forced, where the past consideration was executed under a contract
which, owing to its conflicting with some rule of law, could not be en-
forced. Thus, in Cocking v. Ward, (1845) I C.B. 858, 135 Eng. Rep.
781, where B. orally promised to pay A. £E.I00 if A. would sur-
render a farm to V. and endeavour to induce V. to accept B. as tenant,
an action on the agreement for the £ E.l 00 was held unenforceable
by reason of the Statute of Frauds, as the agreement related to an in-
terest in land, but an action based on an account stated, a subsequent
admission of liability by the defendant, succeeded. So, in Joseph Ev-
ans & Co. v. Heathcote [1918] I K.B. 418, where the general principle

is admirably and clearly stated by Scrutton L.J. at pp. 434-7, it was
held by the Court of Appeal that an agreement unenforceable as ill
restraint of trade, though, by the operation of ss. 3 and 4 of the Trade
Union Act, 1871, not void, could properly form the foundation for an
account stated.

The question remains whether the alleged parol agreement was in
fact made. Whilst the onus of proof lay upon the appellant to prove
errors and mistakes, I think that he prima facie discharged that burden
if he showed that certain items in the account are not in accordance
with the written contract, and that the burden thereupon shifted and
it was, therefore, for the respondents to satisfy the court that the alleged
parol agreements as to the Port Sudan Expenses and Allowances in
Europe were in fact made. The learned judge said that he believed
the evidence of the respondents' witnesses, and that he did not believe
the evidence of the appellant.

[The court next reviewed the facts at length, supporting the re-
spondents' position. It was therefore found unnecessary to decide
whether the appellant was estopped from reopening the account. The
court also reviewed certain questions of fact which disposed of issues
(3) and (4) as framed by the court.]

[The judgement also included the following paragraph.]

Some questions arose during the hearing of the appeal as to the
agreement on which these storage charges were based. It is clear from
the statement of the appellant in chief, to which I have already re-
ferred, that it was not in issue in the court below. Mr. Claxton sub-
mitted, firstly, that a promise to pay storage is to be implied in every
agreement between merchants where a seller delivers to the buyer be- __
fore the due date, and, secondly, that in this. case an express agreement
was in effect alleged by Mr. Bittar in his evidence in chief, namely:

"Defendant sometimes sent in gum before the contract time of delivery.
In such cases we should keep it at Port Sudan and charge him with the
storage charges," and that his evidence is corroborated by the receipt
by the appellant without objection of the debit notes covering each
charge for storage and the statements of account, and by the appellant's
assent to the account stated. The first ground appears to me to be in-
correct; if a buyer chooses to accept early delivery without making an
express agreement for the payment of storage until the due date, I can
see no reason whatever why a promise to pay such storage should be
implied in the agreement of sale. I have already stated my reasons