Cehave N.v v Bremer Handelgesellschaft m.b.H. (Hansa Nord)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE ROSKILL,LORD JUSTICE ORMROD |
| Judgment Date | 16 July 1975 |
| Judgment citation (vLex) | [1975] EWCA Civ J0716-4 |
| Date | 16 July 1975 |
| Court | Court of Appeal (Civil Division) |
[1975] EWCA Civ J0716-4
The Master Of The Rolls (Lord Denning),
Lord Justice Roskill and
Lord Justice Ormrod,
In The Supreme Court of Judicature
Court of Appeal
Appeal by sellers, Bremer Handelgesellsc haft m. b. h. from judgment of Mr. Justioe Mocatta on 6th June, 1974.
Mr. ANTHONY LLOYD, Q.C., and Mr. LEGH-JONES (instructed by Messrs. Thomas Cooper & Stibbard) appeared on behalf of the Appellants.
Mr. ANTHONY HALLGARTEN (instructed by Messrs. Richards Butler & Co.) appeared on behalf of the Respondents.
In 1970, the sellers, a German company, agreed to sell to the buyers, a Dutch company, 12,000 tons of U.S. citrus pulp pellets. Those pellets are a by-product of oranges. The juice is extracted and tinned. The orange rinds are dried and made into pellets. The pellets are used as an ingredient in making cattle food.
In September 1970, there were two contracts of sale, each for 6,000 tons, delivery in bulk to be made by six instalments of 1,000 tons each over the first six months of 1971. Under the first contract of 24th September, the price was $73.50 for 1,000 kg. Under the second contract of 28th September, the price was $73.75. In each case c.i.f. Rotterdam. Each contract incorporated the terms issued by the Cattle Food Trade Association, Form 100, for shipment of feeding stuffs in bulk tale quale c.i.f. terms. That form contained two sentences material to this dispute in Clause No. 7: "Shipment to be made ingood condition Each shipment shall be considered a separate contract"
The first three or four shipments were quite satisfactory. This case is concerned with a shipment made early in May 1971. It was by the German vessel "Hansa Nord". She took on about 3,400 tons of citrus pulp pellets at Port Manatee in Florida. Four bills of lading were issued. They were appropriated by the sellers as follows: Two were tons for 1,000 tons each on the second contract. One for 1,000/tons and one for 419.856 tons on the first contract. But there was no physical appropriation of the cargo as between the two contracts.
On 14th May the buyers paid the price and got the shipping documents. The Hansa Nord arrived in Rotterdam on Friday, 21st May, and started unloading on Saturday, 22nd May. It was finished by 25th May. The cargo was discharged into lighters. The out-turn weights Were:
Ex -hold Number 1 1260 metric tons
Ex -hold Number 2 … … 2,053 metric tons;
It is to be noticed that by this time the market price had fallen greatly. The contract price for these 3,400 tons was (when converted into sterling) about £100,000. But the market price on 24th May in Rotterdam was, for sound goods, only £86,000. This may give an explanation of subsequent happenings.
The cargo ex No. 2 hold (2,053 tons) was in good condition. But some of the cargo ex No. 1 hold (1,260 tons) was found to be damaged. on 24th May the buyers rejected the whole cargo (both No. 2 and No. 1 holds) on the ground that it was not shipped in good condition and they claimed repayment of the purchase price of £100,000. On the next day the sellers refused, saying that the goods were shipped in good condition: and that the damage must have occurred at sea and that the buyers ought to lodge their claim with the insurers. So there it was. The goods were in the lighters with both sellers and buyers disclaiming ownership. Now comes an astonishing sequence of events. There was Mr. Baas in Rotterdam who was an importer of feeding products (including citrus pulp pellets). On 29th May 1971, if not before, he inspected the cargo in the lighters. On 1st June 1971, the lighter-owners applied ex parte to the Rotterdam County Court, Commercial Court I expect, asking it to authorise a sale of the goods. They applied by their lawyer, a Mr. Driessen. The sellers were not told of this application. But the buyers were. They were represented by the same lawyer as the lighter owner, Mr. Driessen. On the same day this Court granted the application and authorised the sale. It appointed agents to make the sale. The agents approached Mr. Baas. They did not approach any other possible bidders. They sold the whole cargo to Mr. Baas (out of H both No. 2 and No. 1 holds) for a sum equivalent to £32,720. The expenses of sale were deducted, leaving the net proceeds at £29,903.These were paid into a Dutch bank "to the order of whom it may concern". On the self-same day, Nr. Baas sold the whole cargo to the buyers (i.e. the original buyers under the two contracts) at the same price and upon the same terms as he had himself bought them from the agents of the Court. The Board of Appeal found: "As a fair inference", that the buyers and Fir. Baas intended from the beginning "that he (Baas) should acquire the cargo for their (the buyers') benefit, or on their behalf". Having bought the whole cargo from Mr. Baas, the buyers transported it in the same way as they would have done if it had never suffered any damage. They took the lighters by canal to their plant at Veghel, a journey of some sixty miles. The buyers then used the entire cargo to manufacture cattle food at their processing plant at Veghel. They used it in the self-same way as they would sound goods except that they used "smaller percentages in their compound feeds than would be normal with sound goods". This difference in manufacture did not cause them any loss. At any rate, there is no finding that it did. And it was surely for them to prove it.
The upshot of it all was, therefore, that the buyers took the whole cargo and used all of it for their business just as if they had never rejected it save for the smaller percentages. So the ubiquitous Mr. Baas had helped them greatly. They paid only £32,720 for it instead of the contract price of £100,000. The Board of Appeal of the Trade felt it necessary to make this comment: "We wish to record that we are not satisfied that we have been presented with a full account of how the goods were disposed of in Rotterdam after rejection by the buyers. The witnesses produced by the buyers gave contradictory evidence on this question, as well as on other less vital issues".
That is a devastating comment. The buyers must have known the truth. But they did not tell it to the Board of Appeal. At any rate not the whole truth.
Nevertheless, despite that devastating comment, the Board of Appeal made their award in favour of the buyers. They ordered the sellers to repay to the buyers the £100,000 with interest, and directed the proceeds of sale (£29,903) to be repaid to the sellers. So the buyers have got the entire cargo and used it for their cattle food, but instead of paying £100,000 for it, they have only paid them £30,000. The Judge has upheld this award. The sellers appeal to this Court. They recognise that they may have to pay something by way of damages for the damaged goods, but they deny that the buyers had any right to reject the whole cargo.
The Board of Appeal found a breach of the express clause "Shipped in good condition". They said that: "…. On the balance of probability, not all the goods in hold No. 1 were shipped in good condition as required by the contract, nor on balance of probability were they reasonably fit to be carried on the contemplated voyage". The Board of Appeal also found a breach of the implied condition as to merchantability contained in section 14(2) of the Sale of Goods Act 1893. They said:
"The goods in hold I were 'merchantable' on arrival in Rotterdam in a commercial sense, though at a lower price than would be paid for sound goods: we find and hold, however, that they were not 'of merchantable quality' within the meaning of the phrase when used in the Saleof Goods Act 1893".
The Board of Appeal did not find a breach of the implied condition of fitness contained in section 14(1) of the Act. They found all the elements about reliance and so forth, but they did not find that the goods were unfit. They could hardly have found them unfit, seeing that they were in fact used for that purpose.
"SHIPPED IN GOOD CONDITION" The Judge held that, in contracts for the sale of goods, a stipulation must either be a 'condition' or a 'warranty' and that there could be no tertium quid. Accepting that distinction, he held that this stipulation "shipped in good condition" was a "condition" and not a "warranty": so that, for any breach of it by the seller, the buyer was entitled to treat the contract as repudiated.
Those decisions by the Judge are so important that they deserve careful consideration.
1. THE GENERAL LAM APART FROM THE SALE OF GOODS For the last 300 or 400 years the Courts have had to grapple with this problem: In what circumstances can a party, who is in breach himself of a stipulation of the contract, call upon the other side to perform his part? or sue him for non-performance? At one time the solution was thought to depend on the nature of the stipulation itself, and not on the extent of the breach or its consequences. Under the old forms of pleading, a plaintiff had to aver and prove that he had performed all conditions precedent or that he was ready and willing to perform them. The question, therefore, was whether the stipulation (which he had broken) was a condition precedent or not: or, in the terminology of the 18th century, whether it was an independent covenant (the breach of which did not debar him from suing the other side), or a dependent covenant (the breach of which did debar the plaintiff because the performance by the other was dependent on the plaintiff performing his). This distinction was well stated by Sarjeant Williams in his notes to Pordage v. Cole (1669) 1 Williams Saund. at page 320:
"Where there are several covenants, promises or agreements, which independent of each other, one party may...
To continue reading
Request your trial
- Alan Thomas Bohlsen v DraftWorldwide Sdn Bhd
-
Process Components Ltd v Kason Kek-Gardner Ltd
...that effect. He continued: "It remains true, as Lord Roskill has pointed out in Cehave NV v Bremer Handelsgesellshaft mbH (The Hansa Nord) [1976] QB 44, that courts should not be too ready to interpret contractual clauses as conditions … But I do not doubt that, in suitable cases, the court......
-
Kuwait Rocks Company v AMN Bulkcarriers Inc. (The Astra) [QBD (Comm)]
...friend, Lord Roskill. It remains true, as Lord Roskill has pointed out in Cehave NV v Bremer Handelsgesellschaft mbH (The Hansa Nord)ELR[1976] QB 44, that the courts should not be too ready to interpret contractual clauses as conditions. And I have myself commended, and continue to commend,......
-
Toepfer v Lenersan-Poortman N.v
... ... from other contracts in this respect: Cehave N.V. v. Bremer w.b.H. (The Hansa Nord) (1976) I ... ...
-
RE-EXAMINING THE RELATIONSHIP BETWEEN MUTUAL PROMISES IN CONTRACT LAW.
...Breach of Contract (n 9) 14-16 [1-20]; Carter and Hodgekiss (n 3) 36-42; Cehave NV v Bremer Handelsgesellschan mbH (The Hansa Nord) [1976] 1 QB 44, 57-60 (Lord Denning MR) ('The Hansa (25) Sale of Goods Act 1893, 56 & 57 Vict, c 71, s 11(1)(b). (26) MD Chalmers, The Sale of Goods Act, 1......
-
Conditions, Warranties, and Repudiatory Breach
...(1983), 46 P & CR 187 (CA) (not of the essence). 53 See Section B, above in this chapter; and Sale of Goods Act , above note 20. 54 [1975] 3 All ER 739 (CA) [ Cehave ]. THE L AW OF CONTR ACTS 726 to such agreements. The particular term at issue was, in Lord Denning’s view, one that could be......
-
MANN V PATERSON CONSTRUCTIONS PTY LTD: THE INTERSECTION OF DEBT, DAMAGES AND QUANTUM MERUIT.
...George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 1 QB 284, 304 (Oliver LJ); Cehave NV v Bremer Handelsgesellschaft mbH [1976] 1 QB 44, 71 (Roskill LJ). See also Daniel Friedmann, 'The Performance Interest in Contract Damages' (1995) 111 (October) Law Quarterly Review 628; Ro......
-
Hire purchase and consumer protection adjudication in caricom courts
...based its decision on the old common law case of Drages v. 180 Reardon-Smith v. Hansen-Tansen [1976] 1 W.L.R. 989. 181 Cehave v. Bremer [1976] Q.B. 44. 182 [1976] 2 Q.B. 44, 71. See also the preface to Addison, Treaties on Contract (London: 1847) where he wrote: "The law of contracts may ju......