Agency-Liability of local agent for foreign principal-Whether personally liable
for principal's deioult=Eailure of agent to qualify his signature

ASsignment-N otice-C ommercial contract-Whether notice required-Assignee's
right to sue in his own name

Civil Practice and Procedure-Consolidation of actions-Where cause of
action is -similar and defendant the same

Contract-Commercial contract-Time of essence-Contract written in a language

                foreign to signatory                                                                        ,

Damages-Measures of-Sale of Goods-No available market-Special damages
Sale of Goods-Delivery-Failure to deliver at the 'Stipulated time-Whether time

                is of the essence of' the contract                               .

Sale of Goods-Sale by sample-Position where sample not sufficiently identified

The second defendant, Hakim was a merchant and commission agent
for the first defendant, Cotonoficio, an Italian firm. On December 16,
1919, he entered into two contracts for the sale of specified quantities of
Cabot mark giraffe with the plaintiff Haddad and a firm of Omdurman
merchants by the name of Aziz el Gomus and Luka Culta, The contract
was signed by Iiakim in his own name, but it started by the words:

"On behalf of Cotonoficio . . . . I sell." The sale was c.i.f. Port Sudan
and delivery was to be effected not later than April 3D, 1920.

Sometime before April 3D, 1920, A.- el Gomus and L. Gulta assigned
their rights under the contract to the plaintiff, Manious. When no goods
arrived on April 3D, Manious wrote to Hakim informing him that he had
become the assignee of the benefits of the contract between Hakim and
A. -el Gomus and Gulta, and threatening to take legal proceedings if the
goods were not forthcoming. Hakim wrote two letters in reply to' this
and in neither of them did he raise any objection to the assignment.

The goods did not arrive till September 1920 and Haddad and Manious
refused to take delivery and brought the present two actio.!ls asking for:
( a) Damages for breach of contract. In addition to ordinary damages
Haddad claimed as special damages, the profit he would have J!Ulde
on a subsale to one Sidawi and a penalty of £E.3OD which he had ,tn
pay to the said Sidawi for failure to deliver the goods; and

• Court: Peacock J. The court consolidated' and heard this case with
the case of Hunein Manious & Co. v. Cotonoficio Veneto & Yusif Hakim,
HC-CS-173-1920. (b) That Hakim should be held personally liable as a local agent for a
foreign principaL

Held: (i) Time was of the very essence of the contract, and the
defendants by their failure to deliver at the stipulated time were guilty of

               a breach of contract.                        

(ii) In the absence of an available market for the goods described in
the contract the measure of damages must be determined by reference to
the 'reasonable profit' or 'ordinary commercial profit' which the plaintiffs
could have expected to make on resale. In determining this amount the
court may use the selling price, at the time of the breach, of similar goods
bearing a trade mark of corresponding quality.

( iii) Special damages arising. from the loss sustained by plaintiff
Haddad on a subsidiary contract to resell the goods could not be proved
as the special circumstances were not in the contemplation of the de-
&endants at the time the contract was entered into.

( iv ) The Sudan agent was not liable as a principal as it was shown
from the wording of the sale contract and the conduct of plaintifis that
the contract was for the account of the Italian· firm. The Sudanese agent
of a foreign principal is not liable on the contract unless such was the
intention of the parties.

(v) That the assignment was valid since the benefits of commercial
contracts can always be assigned in the absence of a personal element
in the contract.

Krikor v. Fawaz AC-APP-24-1921 1 S.L.R.--, followed.

Gambour Brothers v. Alessandro Revelli and Ohanion & Aiello :A.C-APP-

38-1921 1 S.L.R.--, followed.

Kemp v. Baerselman (1906) 2 K.B. 604 distinguished.
Sanders v. Maclean (1883) 11 Q.B.D. 327 distinguished.

Hadley v. Baxendale (1854) 9 Ex. 341, 156 Eng. Rep. 145, applied.
Gadd v. Houghton (1876) L.R.I. Ex. D. 357 followed:'

Glover v. Langford (1892) 8 T.L.R. 628 followed.,

Green v. Kopkt (1856) 18 C.B. 549, 139 Eng. Rep. 1484 followed.
English Sale of Goods Act 1893. ss. 51 and 54,

Action

The material facts sufficiently appear in the judgement of Peacock
J. and are further supplemented from the case record in the headnote.

                  Advocates: Mr. Tryfon Francoudi. ................... for both plaintiffs.

                                         Mr. Claxton .................................. for defendants.

March 11, 1922. Peacock J.: In each of these actions the
plaintiff claims damages for breach of a contract to deliver cabot
mark giraffe. The contracts in both cases bear the same date, viz.,
December 16, 1919, and the same phraseology is used in both. The
plaintiffs in each action are different, but there are in both the same

two defendants, one of them, when. I shall for the sake of brevity
refer to as Cotonificio, being a firm whose place of business is in Italy,
the other,' Hakim, being a merchant and commission agent whose
place of business is at Omdurman. Cotonificio was sued as a principal,
and Hakim was sued as an agent for a foreign principal, though at
a very late .stage of the case (too late, in my opinion, to entitle plaintiffs
to introduce the plea) it was averred that he was not an agent of
Cotonificio at all.

The three main issues are the same in both cases, viz., (1) Did
defendants, or either of them, commit a breach of contract by their
failure to deliver at the stipulated time; (2) If so, what damages are
plaintiffs entitled to, and (3) Is Hakim liable as agent for a foreign
principal? There are two subsidiary issues--one of them peculiar
to the case of Haddad, viz., (4) Is the court entitled, in assessing
damages, to take into consideration an alleged sub-sale by plaintiffs
to Sidawi?-the other peculiar to the case of Manius, viz., (5) Was-
an alleged assignment to plaintiff by the original purchasers effective
for the purpose of transferring to plaintiff the purchaser's rights under

. the contract? I propose to deal with these issues in the order in
which they are stated, save 'that I shall first dispose briefly of the'
question of assignment. and I shall treat issue 4 as part of issue 2.

Issue 5. Assignment. It is difficult to understand why this
objection should have been raised. It can make no difference to the
defendants whether they are sued by the assignor or assignee. There
is no danger of the assignor suing them again as, apart from other
considerations, he has come into the witness-box and sworn that he
has transferred his rights to the plaintiff Manius. But to take the plea
on its merits I believe I am right in saying that the benefits of a com-
mercial contract can always be assigned unless there is a personal
element in it. It is the absence of that personal element which dis-
tinguishes the present case from the case cited' by Mr. Claxton,
Kemp v. Baerselman (1906) 2 K.B. 604. I am further of opinion
that defendants' letters of May 4 and May 24 amount to an acceptance
by them of the assignment of the purchaser's rights to plaintiff.

Issue No.1. Breach. Under the contract delivery was to be
in January, February and March 1920, but the time was by consent
extended to April 30, 1920. Delivery was not tendered until July
and September, when goods alleged to be the goods contracted for
were tendered and refused. In these circumstances defendants submit,that time was not of the essence of the contract, that· the existence
of labour difficulties in Italy made the delay not Unreasonable, aDd
that the subsequent tender relieves them from liability for breach.
In a contract of this sort the time of delivery appears to me a matter
of the very greatest importance. The market for this .elass of goods
is fluctuating, the goods are bought for resale and it is essential for a
purchaser to know when he cap deliver under his subcontracts. More-
over, unless the seller were held strictly to the terms of his contract,
he might by delaying till prices fell inflict most serious "loss upon his
purchaser. The case cited by the defendants' counsel, Sanders v.
Mactean (1883) 11 Q.B.D. 327, was of a very different type to this.
It was a case in which a purchaser refused delivery on the ground
that the bills of lading could not arrive until after the goods and that
charges would thereby be incurred in respect- of the goods., Brett
M.R., expressed the opinion that the bills should arrive as soon as
the goods, a breach of it would not be a breach of a condition ot the
contract. The two other judges preferred to decide the case on' other
grounds. A few days,' delay in the arrival of the bills of 'lading is
one thing, several months' delay in the arrival of the goods themselves
is "quite another thing, and in the present instance, . amounts in' my
opinion to a breach of an essential condition of the contract, render-
ing the plaintiffs entitled to damages.

Issue 2. Damages. In a recent case decided" in tho Court of
Appeal, Krikor v. Fawaz+, AC-APP-24-1921 I had occasion to go
partly over the same ground as has been trodden in this "case so"ra;
as the measure of damages is concerned, and' I therefore make .no
apology for repeating, mutatis mutandis, the language I then employed
in referring to the subject generally. It has not been suggestedthat
the court should depart from its practice of applying 'generally' the
principles, of English law in questions of contracts, and" I, therefore,
think We must go to English law in order to find out the measure, of
damages. Until 1893 English law was based entirely on .decided cases,
i1l'?particular on the principles laid down in the leading case 'of Hadley v.
Baxendale? These principles were more or less embodied in the Sale
pf Goods Act (1893) and itis in section 51 and. 54 of that Ad that
we must in the first place seek 10r an answer. Section 51 (ii) lays

1 Reported in this volume, see also Digest of Decistons iD the_ CoUrt fiE
Appeal and of the' Sudan 1915-19~6, p. 42.

2 (1854) 9 Ex.D. 341. 156 Eng. Rep. 145.

the measure is to be the "estimated loss directly: and natunilly ~t-
ing, in the ordinary course of events" fro~ breach. That sectioa,
however, must be read in conjunction with section S4' which says
that nothing in the Act shall affect the right to recover spedal. ~ges'
in any case where by law special damages may be recoverable.
Section .51 (iii) provides-a criterion where there is an available
market, but as I am of opinion that in this case there was no -avail-
able market I propose to consider only the bearing of Section SI (ii)
and 54 upon the arguments that have been put forward. In the case
of Manius special damages are not claimed' and in his case therefore
the court has to consider only the estimated loss directly and DllturaUy
resulting, in the ordinary course of events. In Haddad's case special
damages are claimed on the ground that on February 8, 1920, be
entered into a- subsale with Sidawi under which he would have made
a profit of about 20% and by which he became liable to pay a sum
of lE.300 in the event of his failure to deliver. That sum be alleges
he has paid, and he claims that it, as well as his 10$S of profit, should
be included in the damages.

The' Sale of Goods Act does not in its terms give the court any
assistance in determining the circumstances under which special dam-
ages can be recovered nor the measure of such damages,' and recourse
must, therefore, be had to the rule enunciated by Baron Alderson in
Hadley v. Baxendale and followed in subsequent cases. The first part
of that rule has been adopted by the Legislature in the' sub-se¢op
of the Sale of Goods Act . which I have already quoted, . and I shan.
deal with it presently. It has nothing to do with special damages,
and where special damages are claimed, we must look for our standafd,
to the second part of the rule, the part which says that the datnages
must be such as may reasonably be' supposed to have been in tbc
contemplation of both parties at the time they made the contr~ I Ii
the probable result of the breach of it. After enunciating tllia rule
Baron Alderson goes on to say:

"It the special circumstances under which the. contract w.as
a~any made were communicated by the plaintiffs to the de-
.fendants, and thus known to both parties, the damage"s ~
from the breach of such a contract, which they woUld ~
contemplate, would be the amount of injury' whic:h 'WOUld
ordinarily follow from a breach of a contract under .these spJdaJ
circumstances so known and communicated. But, 011. tDe odIIet hand, if these special circumstances were wholly unknown to
the party breaking the contract, he, at' the most could only be
supposed to have had in his contemplation the amount of injury
which would arise generally, and in the great multitude of cases
not affected by any special circumstances, from such a breach
of contract."

Now in the present case the special circumstances of this sub-
contract were wholly unknown to the defendants. They, therefore,
could only be supposed to have had in their contemplation the amount
of injury which would arise generally and that would certainly 'not
include a loss of a 20% profit, coupled with a payment of iE.300.
The special circumstances, therefore, in which the court can award
special damages do not in my opinion exist, and the court must
consequ'ently be guided; in the case of Haddad as well as that of
Manius, by the part of the rule which has been adopted in the Act
and consider the estimated loss directly and naturally resulting in the

          ordinary course of events from the breach.                                                '

Had there been a market in which cabot with the .mark 'giraffa'
could have been purchased, the fixing of damages would" have been
easy enough, but there was no such market and we must, therefore,
look in another direction for the estimated loss. The Court of Appeal
case which I have already cited, Krikor v. Fawaz, is authority for the
proposition that the court is entitled to take into account the pur-
chaser's loss of profit, provided that profit be reasonable. To quote
from the Chief Justice's judgment: "A reasonable profit to the trails-
action must, I think, have been within defendants' contemplation."
'Ordinary commercial profit' is the expression used in my own
judgment. It means much the same thing. All that the seller can be
supposed in the absence of evidence to the contrary to have con-
templated is that the purchaser would derive from the contract the
ordinary commercial profit associated with such transactions.

'What, then, was 'reasonable', or 'ordinary commercial' profit

, in jhe cases we are dealing with? I think we can best arrive at
the answer by ascertaining the real value of the goods at the time
the breach took place. The Sidawi subcontract, had it been a normal
contract, might have been useful as evidence - of the real value, but,
although in the, absence of any proof of fraud the court cannot ignore
it altogether, the circumstances surrounding - it on which defendants'
counsel animadverted in his closing address diminish materially its                                                                                                                             /.                                                   I

value as evidence, and I prefer to rely mainly on ~ther sources of

information.

An important preliminary. point has to be decided in this con-
nection, viz., what exactly was the article that was sold? The contract
desrribes it as 'cabot mark giraffe' of a specified length and width
and it goes on to say that "the goods are according to the sample
already seen" by the purchasers, Plaintiff's counsel at one stage of
the case took the line that this. was a sale "partly by sample and
mainly by description", but in his closing address he said, "It was
purely a sale by description". Defendants say it was a sale by sample.
In view of the language I have quoted _ from the contract it seems
to be impossible for the court to hold otherwise than that this was a
sale by sample, but at the same time I hold that the sample has not
been sufficiently identified and that we must, therefore, look to the
description in order to find out what the sample was. The sample
produced by the defendants bore no mark of any kind,· and defendants
admit that it remained throughout in the sole custody of Vita Hakim
who is the agent of one, if not both, of the defendants. Vita Hakim
swears that it is the sample, Haddad swears it is not, and there is
no other evidence on the point. The burden of proof being in this
respect on defendants, I must, therefore, hold that the sample pro-
duced is not proved to be the sample, and endeavour to ascertain from
the description in the contract, as explained by the evidence.. what
the sample was.

Beyond the words 'cabot mark giraffe' there is nothing in the
contract but the length and width and the number of pieces per bale .
to indicate what: kind of cabot was meant, and it is not' contended
that any of those three things throw any light on the point. We
have, therefore, to enquire what the words 'cabot mark giraffe'
implied to Omdurman merchants in 1919. Three specimens of
giraffe have been produced by defendants, marked A, B & C.. A is-
produced as a specimen of pre-war giraffe. The animal of that name
is depicted on it and the words 'made in Venice Giraffe Sheeting' are
written, and at the top 'Cotonificio Veneziano. Venezia'. ~ is alleged
by defendants to be the sample 'on which the contract is based.
Neither the animal nor the words appear on it. C according to
defendants is a tob of B which arrived in pursuance of contract. The
animal giraffe is depicted on it, but it is not facing- the same way
as in A and a man is holding it. The word 'giraffe' does not appear,but in its place 3 noughts and the heading at the top is 'Caton ate
Italiane'.

Plaintiff Haddad in his evidence says Hakim told him at the
time of the contract that he was selling him the well known giraffe
which was introduced before the war. Plaintiff Hanein when shown
'C' said "It was drawing of' a giraffe, but it is not' mark giiaffe-Only
giraffe mown was pre-war". Gumos, who assigned the, contract to
plaintiff Manius, gave his evidence unfortunately before the samples
were produced" but he said the, giraffe mark was well-known in
Omdurman. Plaintiffs' witness Hilal said he had not seen any giraffe
for 3 or 4 years, and that the giraffe he then knew was the same as
best quality sphinx. Another witness of plaintiffs, Sidawi, says the
cabot most nearly resembling giraffe is best quality sphinx. Vita
Hakim giving evidence for defendants, said "I was selling cabot bear-
ing mark giraffe. Before the war there was another manufacturer
supplying cabot bearing mark giraffe" . Ducik, a witness for de-
fendants, said that before the war 'A' was in existence and another
kind with picture of giraffe and man catching bridle. "Latter was
PT. 5 less". , Further on he says, "'A' was best known ... Both
were known as giraffe, but the second was sometimes known as
'giraffe with a man'."

Above is a summary of the principal evidence given on both sides
bearing ~:m the question-s-what would the words 'Cabot mark Giraffe'
imply to an Omdurman merchant in 1919?-and the conclusion I
draw is that they would imply the cabot which was evidently much the
best-known, the cabot known as pre-war cabot, the cabot of which 'A'
is a sample, the cabot which resembles best quality sphinx, the cabot
which bears a picture of a giraffe alone and the word 'giraffe' and' not
that in which the animal is held by a man and on which the word
'giraffe' does not appear at all. I therefore hold that the sample
referred to in the contract, was cabot of that description.

The next point to be considered is this, as there was no market
in Omdurman for giraffe at the date of the breach, what was the
cabot most nearly resembling giraffe for which there was such it
market, and at what price was such cabot selling? From a careful
review of the evidence on both these points, and being satisfied on
the evidence that there was a distinct fall in prices towards the end
of April, I have reached the conclusion that the cabot on the Omdur-
man market at the end of April most nearly resembling cabot soldunder this contract was best quality sphinx, and that it was selling

          at' about PT.190 per tob.                                 .

The result: of this conclusion is that if defendants had delivered
at Port Sudan at the end of April plaintiffs could have paid them
PT.150 a tob under the contract and sold at about PT.190 a tob at
Omdurman. From the profit which this represents the freight & c.
from Port Sudan has to be 'deducted, and I think it would be fair to
say that the profit they would have made would have been PT.20 per
tob, or iE.5 a bale. That is the profit he lost by the breach, and
as, if my reasoning be correct, it is based on the real value of the
goods at the time of the. breach, and as, if my reasoning be correct,
it is based on the real value of the goods at the time of the breach, it
must, I think, be regarded by the court as the reasonable or ordinary
commercial profit to which the Court of Appeal in Krikor v. Fawaz
held a purchaser to be entitled.

I accordingly estimate the damages at iE.I000\ in the case of
Haddad, and £E.250 in the case of Manius,

Issue 3. Agency. This being a very important element in these
cases I have thought it advisable before giving judgment to await the
decision of'.the Court of Appeal in the case of Gambour v. Alessandro
Revelli and Ohanian and Aeillo, A.C. AC-APP-38-1?21 \ HC-CS-
205-1920, in which a similar situation existed, and in which the
question of the liability of the agent of a foreign, principal was con-
sidered at some length by the court below. The Court of Appeal
agreed, with the High Court, to quote the Chief Justice's language,

, that "it was intended the foreign manufacturer should be the contract-
ing party and that the local agents should' not be parties to the con-
tract," and I, therefore, feel at liberty, as occasion requires, to use
the language I employed in that case in the court below.

In the present cases the contracts are signed by Yusif Hakim.

He does not' sign as an agent, but the contracts begin "On behalf

of Cotonificio ... I sell". It is impossible to mistake the meaning
of these words, and in view of their presence the -Iact that, Hakim
signed in his own name is of no importance. A similar situation arose
in the case of Gadd v. Houghton (1876) L.R. 1 Ex. D. 357 where
some brokers in England signed a ·'sold note' in their own name with-
out any addition, but it was stated in the body of the note that they

1 Reported in this volume, also in 1926 Digest 18, 19.sold 'on account of a named ~ in Spain. The Court of Appeal
held that the words 'on account of showed an intention to make the
foreign principals, and not the brokers, liable, and that the brokers
were not liable upon the contract. Mellish L.J. said in. the I course of
his judgment:

"I can see no difference between a man writing 'I, A. B.,
as agent for C. D., have sold to you,' and signing 'A.B.,' and
his writing, 'I have sold to you' and signing 'A. B. :~6r--+.,D. the
seller.' When the signature comes at the end you. apply it to
everything. which occurs throughout the contract."

In the same case, L.J. James said:

"When a man says that he is making a contract 'on account
of some one else, it seems to me that he uses the very strongest
terms the English language. affords to show that he is not binding
himself, but is binding his principal."

It . was submitted that the words 'On behalf of in these con-

• tracts lost their force by reason of the fact that the contract was
  written in: English while the purchasers knew, Arabic only and Hakim
  knew both English and Arabic. Hakim has explained that it was
  in English as he wanted to, send a copy to his principals who did
  not know Arabic. But apart from that, it was the business of the
  purchasers to get the contract independently explained to them be-
  fore they signed. It appears to me to be not only bad policy, but bad
  law, t~ encourage the plea that a document duly signed is to loseits

, force because it is written in a language that is foreign to the signatory ..

It is a plea that cannot be ignored whereas in the case. of Gellatly
cited by Mr. Francoudi 'there is reason to suspect fraud, or where the
signatory is a guileless novice whose ordinary commercial ambit does
not extend beyond the limits of his immediate' neighbourhood. But
unless there are other indications of fraud it is a plea which must be
regarded with the ut~ost suspicion when it is put forward by a mer-
chant whose operations are conducted in an international sphere. If
he does not scrutinize his contracts it is his own look-out, and 'it. is
in the worst interests of his class that the court should bolster up the
haphazard methods which if this plea were well founded would be
attributable to the plaintiffs in these cases. Apart from this, however, .
I have not the-slightest doubt that the purchasers knew they were con- .
tracting wi}h Hakim as agent of Cotonificio, They have themselves
said so ri1i oath and they instituted these actions against him, as, an agent and not as a principal, and it was not until 6 months later
that they applied that he should be added as co-defendant. More-
over in their letters of December 9, 19l9, written a week before the
contract, and written in Arabic; the plaintiffs "Authorize Yusif Hakim
to advise the cabot manufacturers" that they are prepared to buy.
These are not words which a man employs when he thinks ge is
dealing with a principal.

The English law as to the liability of an agent for a . foreign
principal was until the last 40 or 50 years somewhat unsettled, but
now there seems to be' no doubt as to its goveming principle, and
that I can best indicate by quoting from the judgment of Mr. Justice
Charles in Glover v. Langford (1892) 8 T. L.R. 628. He says with
reference to other .decisions:

"It appears that in point of law there is no distinction as to
the liability of an agent acting on behalf of an English or a foreign
principal; it is always a question of fact, and no doubt the cir-
cumstance that an. Englishman is acting for a foreigner is a
circumstance of great weight."

His Lordship then quotes the following sentence from the
judgment in Green v. Kopke (1856) 18 C.B. 5~9, 139 Eng. Rep.
1484: "In any case it is a matter of intention to be gathered ·from
the contract itself and the surrounding circumstances."

The conclusion I draw from the above and from such other
authority as I have been able to discover is that where agent and
. principal are in the same country the agent is not liable unless he has
expressly incurred a liability, but that when the principal is foreign the
intention to make him (the principal) liable must be proved. In the
present case I hold it has been proved. The terms of the contract
are for . the reasons I have stated above sufficient in themselves to
prove it, and there is nothing in the surrounding circumstances of
sufficient weight to alter the conclusion I feel bound . to draw from
the contract itself.

An attempt was made at a late stage of the case to introduce
tl,l fresh plea that, even if plaintiffs thought they were dealing wjth
Hakim as agent of Cotonificio, he was not in fact .their agent. I have
already held that that plea came too late to be. accepted. I agree
with Mr. Claxton that it would materially have aff~ed his line _ ~f
defence. It amounts to an admission that defendants Cotonificio
against whom the action was brought and against whom-In C()rijhnctioo