Jamal v Moolla Dawood, Sons & Company
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1916 |
| Date | 1916 |
| Court | Privy Council |
Contract - Sale of Shares - Breach by Buyer - Measure of Damages - Rise in Value after Breach -
Under a contract for the sale of shares in a company the measure of damages upon a breach by the buyer is the difference between the contract price and the market price at the date of the breach, with an obligation on the part of the seller to mitigate the damages by getting the best price he can upon that date. If the seller retains the shares after the breach he cannot recover from the buyer any further loss if the market falls, nor is he liable to have the damages reduced if the market rises.
Sect. 73 of the
APPEAL from a judgment and decree of the Chief Court of Lower Burma (July 24, 1913) affirming the judgment of Ormond J. of that Court.
By six contracts made between April and August, 1911, the respondents bought and the appellant sold, at various prices, 23,500 shares in the British Burma Petroleum Company, Limited, to be delivered and paid for on or before December 30, 1911. The contracts contained a clause providing that in default of payment the seller should have the option to resell the shares. The shares were tendered on December 30, 1911, but the respondents declined to take delivery or pay for them. At the market price for sales upon that day, namely 4s. 3d. a share, the 23,500 shares would have realized Rs.109,218 less than their price under the contracts. The appellant gave the respondents written notice of his intention to sell the shares against them. No sale, however, was made until February 28, 1912; all the shares were sold at various times between that date and August, 1912. By these sales the appellant realized more than if he had sold upon December 30, 1911, namely, a sum only Rs.79,862 less than the price under the contracts.
The facts are more fully stated in the judgment of their Lordships.
In March, 1912, the appellant sued the respondents in the Chief Court for damages for breach of contract, claiming Rs.109,218. The respondents contended that the appellant was only entitled to recover Rs.79,862.
The suit was tried by Ormond J., who gave judgment for the appellant for Rs.79,862 only on the ground that the appellant having elected to exercise the right of resale given under the contracts was bound to give the respondents the benefit of the prices obtained. The Chief Court in its appellate jurisdiction (Hartnoll, acting Chief Judge, and Young J.), while differing from the above view of Ormond J., affirmed his decision upon the ground that the respondents were entitled to the benefit of the prices actually obtained in mitigation of damages.
Oct. 22. Sir Erle Richards, K.C., and F. J. Coltman, for the appellant. The case is governed by s. 73 of the Indian Contract Act (IX. of 1872), which, however, is merely declaratory of the English common law as to damages for breach of contract. The measure of damages is the difference in the market price of the shares at the date of the breach under the contract; the respondents are not entitled to the benefit of the higher prices obtained when the sales actually took place. Any increase or decrease in the price after the breach was a matter which only concerned the appellant. The decisions relied on by the Chief Court, such as Brace v. CalderF1, were cases with regard to contracts of a continuing character and are distinguishable. Pott v. FlatherF2, which was referred to, is in...
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Table of Cases
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Table of cases
...1 EGLR 146 (CA) ............................................................................. 312 Jamal v Moolla Dawood, Sons & Co, [1916] 1 AC 175, 85 LJ PC 29, 60 Sol Jo 139 (PC) .........................................25, 26, 459, 460, 462, 463 James Estate v Gillis, 2011 BCSC 826 ...........