Principles

·  SALE OF GOODS — Warranty — Sale by description Merchant until In ordinary transit goods reach defendant and can be sold.

Plaintiff in Khartoum bought potatoes by description from defendant, a firm in Holland, to be delivered in Khartoum. The potatoes arrived rotten.
Held: When goods are sold by description there is an implied warranty that they will be merchantable until such time as in the ordinary course of transit they should reach the defendant and he should have reasonable opportunity to sell them

Judgment

M. Y. Mudawi, P. J. August 12, 1963 :— Plaintiff, Abdel Aziz Abdalla Sharawani, a merchant of Khartoum, instituted these proceedings against first defendants, Slot Frans and Company of Holland, second defendants, United British Company in London, third defendants, Jack Korthals Atlas and Co. in Holland, and against fourth defendant, Dwek, a merchant of Khartoum. Plaintiff alleges that he bought from first defendant 2500 bags of potatoes of 50 kilos net each at the price of ES.21 per ton C.I.F. Port Sudan, In pursuance of the said contract, plaintiff alleges, first defendants arranged for an insurance policy to cover the goods from Holland to Khartoum; the insurers being second and third defendants.. It is further alleged that the goods were insured for the sum of £S.2888.000 m/ms. and that fourth defendants Dwek and Sons of Khartoum, the agent of the insurance companies, personally undertook to meet the obligation of second and third defendants under the insurance policy.

The proceedings against first defendants are based on the allegation that the sale is a sale.by description, that the first defendants are dealers in potatoes, and that therefore a condition of merchantability is implied. It is said that this implied condition was broken because the goods on arrival at Khartoum were found to be putrid, rotten and unfit for human consumption. Second and third defendants are sued as insurers. Fourth defen dant is sued as an agent who personally undertook to pay. Second and third defendants through their advocate, Mr. Greenwood, objected at first to the jurisdiction of the Court of the Sudan but when the Court decided against”the objection they put in their defence on the merits and denied liability. In the light of the pleadings the following issues were framed:

1.Were 803 bags out of the goods in question found on arrival at

Port Sudan to be ‘rotten’?                                              (Plaintiff) 2.     Does this ‘rottenness’ render them of unmerchantable qualify?                                                                             (Law)

3.         Were the goods rotten at the time the contract of sale was made       ?                                                                    (Plaintiff)

4.Or did they go rotten on the journey from Noordescharwouds to Khartoum?                                                                                            ( Plaintiff)

1. Is this damage covered by the insurance policy?

6. Did third defendants jointly with second defendants, insure the goods, subject matter of this dispute?  (Plaintiff)

7.  Is or was fourth defendant agent of second or third defendant or both in Khartoum?

8. Did he (fourth defendant) personally undertake to cover any damages due on the insurance policy concerned?

9. To what relief, if any, is plaintiff entitled?

Issue No. 1: A letter sent by first defendants to plaintiff shows that the ship Windhuk’ was due to sail from Holland to Port Sudan on August 29, 1960. The bill of charges suggests that the ship reached Port Sudan on or about September 13, 1960. The customs receipt tells us that plaintiff’s agent paid custom duties on September 19, 1960. The goods reached Khartoum on September 21, 1960 and were received by plaintiff on Sep tember 22, 1960. We have no evidence as to the condition of the goods on arrival at Port Sudan, but we are pretty sure that at least 803 bags out of the 2500 bags of potatoes reached Khartoum in a putrid and rotten condition and were therefore unfit for human consumption. We are in clined to believe that the deterioration took place on the journey from Port Sudan to Khartouflt.

Issue No. 2: Sale of Goods Act, s. 14(2) provides that “where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality.” To have the benefit of this section the plaintiff must prove that

a) the goods were bought by description, and

b) they were bought from a seller who deals in goods of that descrip tion.

In the opinion of this Court, plaintiff Sharawani bought the potatoes by description. He never saw the goods and he never bought specific potatoes. He bought goods described as “Dutch new crop table potatoes, Lady Brand, best selected quality from clay soil, size 45 m.m. upwards.” In Varley v. Whipp (1900) 1 Q.B. 513, Channell, J. stated that the term sale by description “must apply to all cases where the purchaser has not seen the goods and is relying on the description alone.” In a pro-forma sent by Slot Frans and Co. to Sharawani the first defendants described themselves at the head of the pro-forma as dealers in food potatoes, seed potatoes, onions, etc. This is enough to prove that first defendants are dealers in goods of the description of the subject matter of the contract now before the Court.

This being the case I am. now convinced that there is an implied cou dition of merchantability to be observed by first defendants. But the question is to what extent does this condition follow the goods. Does the condition drop once the goods are put on board the ship in the Port of Holland in a merchantable condition? Or does it travel with the goods up to the port of destination? These questions can hardly be academic for it is on these questions that the decision of the case against first defendants depends. In my judgment there is abundant judicial authority to support the principle that the condition of merchantability in contracts such as a C.I.F. contract travels withthegoods to the port of destination and continues with them for a reasonable time thereafter. In Marsh and Murrel Ltd. v. Joseph Emanuel (1961) 1 W.L.R. 863, a case concerning potatoes that went bad, Diplock, J. stated the principle in the following paragraph:

            I have so far travelled through my legal life under the impression shared by a number of other Judges who have sat in this Court, that when goods are sold under a contract such as a C.1.F. contract or a F.O.B. contract which involves transit before use there is an implied warranty not merely that they should be merchantable at the time they are put on the vessel but that they shall be in such a state that they can endure the normal journey and be in a merchantable condition on arrival.”

In Beer v. Walker (1877), 46 L.J.Q.B. 677, well known as the case of the rabbits, some slaughtered rabbits were sent from London to Brighton. They were in good condition when they were delivered to the railway in London. But on arrival at Brighton, after a normal journey, they were found to be putrid and valueless. The question was whether the delivery of the goods in a merchantable condition in London satisfies the condition of merchantability. The Divisional Court on appeal from the county court decided that “the implied warranty extended to the time at wnich in the ordinary course of the rabbits should reach the defendant and not only to that time but that it continued until the defendant should have a reasonable opportunity of dealing with them in the ordinary course of business.” Of course the seller is not an insurer; he is not expected to meet every defect that happens to take place during the voyage. He is, I believe, responsible for the deterioration of the goods if and only if the voyage was normal and no external factors, such as an unnecessary and unexpected deviation from the usual course of the ship, interfered, to be the decisive cause of the deterioration. If the deterioration is caused by external factors the seller is absolved and the plaintiff may either bear the damages or look for his remedy elsewhere. He may perhaps be advised to pursue the insurers but not the sellers.

However in this case we have not heard scientific evidence, and we therefore relied wholly on the condition in which the potatoes arrived in Khartoum. All those who saw the goods were sure that they were so rotten and so repulsive that they were not merchantable. To use the words of Lord Wright in the case of Cammell Laird, “they were of no use for any purpose for which such goods would normally be used and hence were not saleable under that description.” Defendants themselves did not seriously dispute the evidence adduced by plaintiff. It is now an established fact that the goods were of unmerchantable quality on arrival at Khartoum. Further we have no evidence to prove that the deterioration was caused by any external factors. The journey was absolutely normal and so was the ship. Hence the only conclusion we can arrive at under the circumstances is that the potatoes were from the start unfit to undergo a normal journey from Holland to Khartoum. The seller knows that plaintiff is in Khartoum. He even entered into a contract of insurance on behalf of plaintiff to cover the goods from Holland to Khartoum. So he must be assumed to have undertaken that the goods would arrive in Khartoum in a merchantable condition and to remain so for a reasonable time to enable the plaintiff to dispose of them in the normal course of his business.

Issue Nos. 3 and 4: These issues were rendered unnecessary by the discussion on Issue No. 2 above.

Issue No. 5 : The insurance policy Exhibit A covers all risks excluding damage caused by vice propre, i.e., damage caused solely by an inheren vice in the thing insured. As suggested above the rottenness of the potatoe was in our opinion due to the defective condition of the goods themselve and it therefore comes within the exclusion clause.

Issue No. 6: I need not go into this issue as the disposal of Issue No.5 automatically disposes of this issue.

Issue No. 7: There is not a shred of evidence to support the allegation of plaintiff that fourth defendant had personally undertaken to meet the obligations of the insurers, and even if we had evidence to this effect the fact that the type of damage is excluded by the policy renders the issue superfluous.

In view of the above the case against second, third and fourth defen dants is dismissed and judgment is given in favour of plaintiff against first defendant for the claim, as modified by plaintiff in his evidence, that is:

£S. 1555.850 mms. in principle

48.150m/ms fees on the principle amount

20.000m/ms costs

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£S. 1624.000 m/ms in all