Court allows damages for late shipment breach, rejecting defendant's lower offer as mitigation attempt.

[*3] 1983 May 30

(KOURRIS, P.D.C. AND S. NICOLAIDES, D.

J. )

IN THE DISTRICT COURT OP NICOSIA

N.K. Shacolas (Merchants) Ltd.,

Plaintiffs,

v.

Tage Andersons Partiaffar AB. Ulricehamn, Sweden,

Defendants.

(Action No. 1495/80).

Contract

- Time of performance - Shipment "around 9/12th May" - It includes a day or two before the 9th and after the 12th - Sale of goods - Purchasers by their conduct waived their right to insist on the strict observance of the contractually stipulated shipment of the goods,

Damages - Mitigation of - Breach of contract for sale of goods - Defendants offering to buy the goods at 10 dollars per metric ton less than the agreed price - Damages could be assessed at 10 dollars per metric ton had above offer been made by a party in breach but defendants never held themselves to be in breach of contract - Proper measure of damages is the difference of the contract price from the sale price after the breach.

P. Ioannides for T. Papadopoulos, for the Plaintiffs.

L. Papaphilippou, for the Defendants.

JUDGMENT

The judgment of the Court was delivered by:-

KOURRIS. P.D.C.:- The plaintiffs' claim [*4] against the defendants is for damages resulting from a breach of contract for the sale of goods.

The plaintiffs is a company established in Cyprus and amongst other things are exporters of agricultural produce and the defendants is a company established in Sweden.

In about the middle of April, 1973, an agent acting on behalf of the defendants made enquiries of the plaint iff s whether they could sell spring potatoes to the defendants. After an exchange of telexes the parties reached an agreement for the sale of about 500 tons of potatoes at 227 US dollars per metric ton to be shipped around 9/l2th May, 1973 from Famagusta and payment to be made through an irrevocable letter of credit.

Counsel for the defendants contended that the contract reached between the parties is contained in Exhibit 1, red 11, dated 4. 5.1973 whose relevant part reads as follows:-

"We accept for delivery 9/12 May or earlier 500 tons Arra Banner” and/or "Up-to-date" C.I.F., Gothenburg on direct boat. Customer is Tage Andersons Partiaffar Ulricehamn Sweden who today has opened a L/C in your favour -through Bank of Cyprus Ltd., Nicosia on 500 tons potatoes at US dollars

227 per metric ton." [*5]

He went on to say that red and 13 of Exhibit 1 are confirmatory of the agreement reached between the parties, whereas, Mr. Ioannides appearing for the plaintiffs, contended that the agreement concluded is contained in the telexes red 12. and

13 of exhibit 1.

Telex red 12, dated 4. 5.73 in reply to telex red 11, reads as follows:-

"Your todays telex, we can only confirm shipment not delivery of about 500 tons C.I.F., Gothenburg on a vessel without transhipment not a direct vessel because may be vessel will go first to Norway and thence to Gothenburg. But it will be our option as we can find anothervessel direct to Gothenburg from Famagusta. Shipment around 9/12th May. We must have your confirmation latest by tomorrow Saturday morning here and letter of credit duly opened and amended as above here during Monday.”

On the same day the agent of the defendants sent the following telex which is red 13:-

"We confirm these all details your above telex. We have today opened a I/C to your favour telegraphic message to your Bank in Nicosia. Please try to ship the potatoes as soon as possible." [*6]

We have no difficulty in upholding the contention of counsel for the plaintiffs that the agreement concluded between the parties is contained in the telexes red 12 and 13, set out hereinabove.

According to the evidence of Pericles Georghiou, the Managing Director of the plaintiff company, the plaintiffs loaded 500 metric tons of potatoes on the ship "Transcanada" Famagusta, on 14. 5.73 which was a Monday. He said that they loaded the potatoes on this ship which was a fast one and could reach Gothenburg earlier than another ship called "Nenya" which was available at Famagusta harbour on 9.5.1983. In point of fact, he said, "Nenya" arrived at Gothenburg later than "Transcanada".

The defendants alleged that the plaintiffs shipped the goods outside the contract time and as potatoes by that time were coming into the market from different countries they asked for a reduction of 10 dollars per metric ton to which the plaintiffs refused and contended that the shipment was within the agreed time and they invited the defendants to accept delivery of the potatoes. The defendants refused; hence the present action.

Counsel for the plaintiffs contended that the shipment was within the contract time because the agreement reached between the parties was that the shipment was around" 9/12 th May" and that the construction of t he word "around" meant at least three days before the 9th and three days after the 12th. [*7]

In support, he relied on the case Blackett v. Clutterbuck Bros. (Adelaide) Ltd.. (1925) State Reports, South Australia, 301. This was a case where the appellant sent an order on 7th June, 1922 to the respondent to sent to him on hire a Massey-Harris binder, to be delivered on/or about 1st October, 1922. The respondent forwarded by rail the binder to the appellant on the 2nd September, 1922 who refused to take delivery of it. Murrey C.J., said at pages 306 and 307 as follows:-

"The words 'on or about’ in the context in which they are used, do not, in my opinion, allow of much latitude. If the expression had been 'in or about the first week in October', possibly a week on either side would be included, but I should have no hesitation in holding that twenty-nine days would not. The whole circumstances have to be considered. Here, from the moment the machine was consigned, it was to be at the hirer’s “risk. That appears to me to be a substantial reason why the hirer should not wish to have It sent to him many days before the date mentioned in his order. If early delivery had been desired, or had been a matter of indifference to him, he would have said 'on or before the 1st day of October'. Again, by the endorsement on the order, the appellant had the right to cancel it by giving notice by registered post at least thirty days prior [*8] to ’ the date set for delivery' in the order. If “ on or about the 1st day of October 1922' included 2nd September on the one side, it would also include 29th October on the other, so that a notice of cancellation posted as late as 29th September, or two days before 1st October, would be in time. I cannot think that any such absurdity was within the contemplation of the parties, A day or two on either side, or perhaps three - because 1st October, as it happens, was a Sunday - would, in my judgment, be the most that could reasonably be held to be covered by the expression".

He also cited to the Court Article 40(c) of the Uniform Customs and Practice for Documentary Credits (1974) Revision) of the International Chamber of Commerce set out in the Bankers’ Documentary Credits by F.M. Ventris, 1980 Edition which reads as follows:-

"The expression 'on or about' and similar expressions will be interpreted as a request for shipment during the period from five days before to five days after the specified date, both end days included".

He suggested that the word "around" has the same meaning as the word "about" and that it should be interpreted to cover three days before the 9th of May and three days after the 12th of May. [*9]

Counsel for the defendants contended that the expression "around 9/l2th May" should be interpreted as meaning "between the 9th and 13th May" in as much as the goods were perishable and the prices of the potatoes were fluctuating from day to day and even at different times of the same day. He went on to say that this is supported by the fact that the letter of credit which is Exhibit 3, expired on the 13th May.

We do not agree with counsel for the defendants that the word "around" should be interpreted to mean "between" because "between" does not mean "around" and if the parties meant that the shipment was to be made between 9/l2th May they should have stated so. Instead, they used the word "around" which should be given its ordinary meaning.

Bearing in mind all the circumstances of this case and particularly bearing in mind that time is of the essence of the contract and that potatoes were perishable goods and that the prices fluctuate from day to day, we think that a day or two before the 9th and after the 12th, or perhaps three because 13th May was a Sunday, would, in our judgment be the most that could reasonably be held to be covered by the expression.

For these reasons we find that the plaintiff shipped the potatoes within the agreed time and that since the defendants refused to take delivery and pay for them are guilty of a breach of contract. [*10]

Counsel for the defendants took up the point that the agreement provided that the ship would go either direct to Gothenburg or first to Norway and then to Sweden as stated in the telex red 12. He said, that there is evidence that "Transcanada" called first at Leith, Scotland and stayed there for two days before proceeding to Gothenburg. As it appears from red 12, the plaintiffs had the option to ship the potatoes on a vessel either going directly to Gothenburg or going first to Norway and then to Gothenburg. In this case the ship called at Leith, Scotland instead of Norway and we do not think that the plaintiffs contravened the agreement because the ship called at Leith instead of Norway before going to Gothenburg. In any event, it is in evidence that "Transcanada" reached Sweden earlier than the vessel "Nenya" which was available for loading at Famagusta the 9th May, 1973. What the defendants really wanted was to take delivery of the potatoes as soon as possible and had the plaintiffs shipped the potatoes on the vessel "Nenya" they would have arrived later in Sweden than they actually arrived in this case.

We shall now turn to the question whether the defendants waived their right to insist on the strict observance of the contractually stipulated shipment of the goods, if it were held that we were wrong in the interpretation of the expression "around the 9/12th May". [*11]

Counsel for the plaintiffs contended that even if the plaintiffs were out of time in shipping the goods, the defendants waived their right to insist on the strict observance of the contractually stipulated shipment dates and they are estopped from alleging that the plaintiffs shipped the potatoes out of time.

The salient facts on this matter are as follows:-

On the 8.

5.73 the plaintiffs sent to the agents of the defendants 15 the following telex, which is red 18 on exhibit 1:-

"Have arranged vessel to load your #irder of about 500 tons per ’Transcanada’ or substitute "around 12/14th May Famagusta direct Gothenburg expected arrive there 25/27th May".

To this telex the plaintiffs received no reply and on the 11th May, 1973 they sent the following telex which is red 19:-

"Vessel ’ Transcanada' arriving Sunday morning loading Monday and Tuesday direct to Gothenburg as we advised you by our telex 8th instant Reft./9740. She is going first to Gothenburg directly and thence to Norway. Please amend credit to read shipment 12/14th and validity for negotiation documents 16th May. This is a fast vessel." [*12]

The plaintiffs on 14. 5.73 sent another telex to the defendants which reads as follows:-

"Transcanada commenced loading today sailing tomorrow or Wednesday morning direct to Gothenburg."

To this telex the agent of the defendants replied on the same day by a telex, which is red 21 as follows:-

"These potatoes were supposed to be shipped latest on the 12th of May. This delay is causing us quite some trouble as a load of other potatoes from different countries are coming into the market. We hope that you can reduce the fee price with a few dollars due to this delay."

The plaintiffs replied on the same day by telex red 22 stating, inter alia, that they regretted they were unable to make any discount on the price.

Other telexes followed between the parties blaming each other that they were at fault.

Counsel for the defendants said that the telex red 19 dated 11. 5.73 was sent by the plaintiffs at 4.25 in the afternoon which was a Friday and that the agent of the defendants by that time closed for the weekend, as they do not work on Saturdays in Sweden and he received the telex on the following Monday morning, that is, on 14. 5.73 when he sent the telex [*13] red 21 , protesting for the shipment of the potatoes on the 14.5.1973.

Thus, he contended, the defendants did not waive their right to insist on the strict observance of the contractually stipulated shipment of the goods and therefore they are not estopped from asserting this point.

We have examined the arguments of both counsel and we are of the view that the defenants waived their right to insist on the strict observance of the contractually stipulated shipment of the goods because the plaintiffs sent telex red 19 on 11.5.1973 informing the defendants that they were going to ship the goods on Monday the 14th May and the defendants kept silent and they only replied on Monday the 14th May contending that the potatoes were supposed to be shipped latest on the 12th May.

We cannot accept the statement of Mr. Papaphilippou that the agent of the defendants closed his office on Friday afternoon the 11th of May and that he did not work on Saturday, because there is no evidence before us to this effect. What we have before us is a telex sent by the plaintiffs to the defendants on 11.5.73 and a reply thereto on [*14]

the 14. 5.1973 after the potatoes were loaded on the vessel "Transcanada".

Furthermore, the plaintiffs informed the defendants of their arrangement to ship the potatoes on the "Transcanada" around 12/13th May as from 8. 5.1973 (See red 18), to which the defendants did not reply.

For all the above reasons we are of the view that the defendants waived their right by their conduct and they are estopped from insisting on the strict observance of the contractually stipulated shipment of the goods.

The contract was C.I.F., Gothenburg and the payment was through a letter of credit. On 7. 5.1973 the plaintiffs were informed by the Bank of Cyprus that the defendants opened a letter of credit but they did not know of its full particulars and particularly of the date of expiry which was the 13th May, until the 11th May, 1973 when they received the letter of credit. When they realised that the date of expiry was the 13th May they sent a telex on 11. 5.73 which is red 19, asking for the amendment to read shipment 12/l4th and validity for negotiation documents l6th May. The defendants failed to amend the letter of credit accordingly and so the plaintiffs were not paid for the potatoes shipped. They also sent to the defendants all the relevant documents for the delivery of the potatoes but the defendants failed to take delivery. [*15]

Now, what is the amount of damages.

According to the evidence of Pericles Georghiou, when the defendants refused to take delivery of the potatoes he flew to Sweden and entered into negotiations with them but he failed to reach a compromise and he sold the potatoes in Norway on consignment and they fetched 198 US dollars per metric ton and the plaintiffs claim the difference of the contract price from the sale price which is US dollars £15,366.53. They also claim £500.- for the expenses of Pericles Georghiou who flew to Sweden and other expenses. This amount was not disputed by the defence.

Counsel for the defendants, however, alleged that if the defendants were held to be liable for breach of contract then the plaintiffs are not entitled to more than

10 US dollars per metric ton by way of damages because the defendants by their telex red 23 of the 14th May, 1973 offered to buy the potatoes less 10 US dollars per metric ton from the agreed price. In support he cited paragraphs

222 and 223 of McGregor Damages, 13th Edition at pages 157, 158 and 159.

We have perused the citations of counsel for the defendants but we are unable to agree with him that they support his argument. These citations refer where the opportunity of mitigating damages has arisen through an offer made by the party in breach himself. In the case in hand the defendants never held themselves to be in breach of [*16] the contract. They, merely offered to buy the potatoes at 10 dollars less from the agreed price because they were alleging all along that the plaintiffs failed to ship the potatoes within the contract time. The principles stated in the citations apply when an offer was made by a party in breach of the contract. That this is so is also supported by the case of Heaven and Kesterton Ltd., v. Establishments Francois Albiac & Cie, (1956) 2 Lloyds Reports 316 where Lord Denning at page 321 said as follows:-

"Now, this, I think, is certainly the law. If goods are rejected in a c.i.f. contract for some reason that has nothing to do with quality – the ” shipment date was wrong, or documents were not in order, or something of that sort, so that the goods are properly rejected - and then the buyer goes out into the market to buy goods of the contract quality, it is open to the seller to go to him and say: 'Well, then, I tendér you these goods. These goods are of the contract quality. You are looking for goods of the contract quality. You rightly rejected them upon a basis that had nothing to do with their quality. If you are looking therefore, for goods to make good your loss, here they are, and I can supply cheaper than you would be able to buy them at the market rate outside. If the seller does that, that is a matter [*17] which must be taken into consideration in arriving at what is the proper sum of damages to award to the buyer. It may or may not be conclusive, but it has to be taken into consideration in answering the question of whether or not the buyer has acted reasonably as it is his duty to do, " in mitigating damage".

In the circumstances of this case we think that the plaintiffs acted promptly to mitigate their damages and they have proved to our satisfaction that they sustained a loss of US dollars 15,366.53 and also £500.- for the expenses of Pericles Georghiou and other expenses.

Before concluding we should like to state that the plaintiffs abandoned their claim for general damages for breach of contract and for interest at 9% from 15. 5.1973 as set out in para 6 (γ) and (δ) of the Statement of Claim.

Following the case of Miliangos v. George Frank (Textiles) Ltd., (1975) 3 All E.R. 801, which was applied in the cases of Barclays Bank v. Levin (1976) 3 All E.R. 900, Federal Commerce v. Tradex Export (1977) 2 All E.R. 41, Jean Kraut A.G., v. Albany Fabrics (1977) 2 All E.R., 116, Services Europe v. Stockholms (1977) 3 All E.R. 945, The Despina R., (1977) 3 All E.R., 874, The Folias (1979) 1 All E.R., 421, George Veflings v. President of India (1979) 1 All E.R. 380, The Desoina R.. (1979) 1 All E.R, 421, Choise Investments v, Jeromnimon (1981) 1 All E.R. 255, [*18]

Re Lines Bros Ltd., (1982) 2 All E.R., 183, we enter judgment for the plaintiffs for US dollars 15.366.53 or the equivalent of Cyprus pounds at the time of payment.

In the result there will be also judgment for the plaintiffs for another sum of £500.- as above.

Defendants to pay costs.

Costs to be assessed by the Registrar.

Judgment for plaintiff for

U.S. dollars 15,366.53

and £500.- Defendants to pay costs.