Tullis Russell & Co Ltd V. Eadie Industries Ltd
| Jurisdiction | Scotland |
| Judge | Lord Macfadyen |
| Date | 31 August 2001 |
| Docket Number | CA93/14 |
| Court | Court of Session |
| Published date | 31 August 2001 |
| OUTER HOUSE, COURT OF SESSION | |
| CA93/14/99
| OPINION OF LORD MACFADYEN in the cause TULLIS RUSSELL & COMPANY LIMITED, Pursuers; against EADIE INDUSTRIES LIMITED, Defenders: ________________ |
Pursuers: Kinroy; Dundas & Wilson, C.S.
Defenders: Sandison; Tods Murray, W.S.
31 August 2001
Introduction
[1]In this action the pursuers, who are paper manufacturers, aver that they purchased certain equipment for their paper mill in Markinch, Fife, from the defenders, that certain parts of that machinery supplied by the defenders were of defective quality, and that the defenders were in that respect in breach of contract. On that basis they seek various remedies.
[2]As the parties' pleadings developed, it became clear that, while the primary position of each party was that there had been a contract between them for the supply of the equipment, they were in dispute as to the terms on which they had contracted. In particular, there was an issue as to whether the contract incorporated the pursuers' Standard Terms and Conditions of Purchase ("the pursuers' Conditions") or the defenders' Terms and Conditions of Sale and Installation ("the defenders' Conditions"). The pursuers sought to have that issue resolved in their favour by declarator in terms of branch (i) of each of their first and third conclusions. Those conclusions, read together and somewhat paraphrased, are for declarator that the parties' contract was made in terms of the defenders' Quotation and Specification, Phases One and Two (references E3370-1 and E3370-2), and the pursuers' Purchase Order No. 3109210 dated 29 March 1996.
[3]At a preliminary hearing on 24 January 2000 I pronounced an interlocutor allowing a preliminary proof before answer on the issue of the constitution and terms of the contract.
The Documentation
[4]The issue between the parties falls to be determined partly by reference to various documents and partly by reference to the evidence of a considerable number of witnesses bearing on the negotiations between the parties, their contracting procedures and the circumstances in which the documents were created and transmitted between the parties. It is convenient, before examining the evidence of the witnesses, to set out the terms of the material documents. The order in which they were generated appears at first sight to be illogical, but I shall leave consideration of that problem until I come to discuss the evidence of the relevant witnesses.
[5]Although it appears not to have been the starting point of the negotiations between the parties, the first document which requires to be considered for present purposes is the defenders' Quotation E3370. That document was dated 27 November 1995, ran in name of MagnaVac Air Systems ("MagnaVac"), a trading division of the defenders, and was addressed to the pursuers. It was sent to the pursuers under cover of a letter of the same date from the defenders' Sales Manager, Mr Ostapjuk to Mr Hacket of the pursuers. The quotation and the covering letter together form No. 7/3 of process. The quotation bears to be in respect of a "Jagenburg Vari Winder [and] Trim Handling System". It contains a number of sections concluding with one headed "7.0 Commercial Conditions" which contains inter alia the following provisions:
| "Terms of Payment | ||
| 25% | Deposit payable with order. | |
| 70% | Payable upon availability/delivery of goods. | |
| 5% | Payable on completion of commissioning or 60 days from date of delivery invoice, whichever is the earlier. | |
| Validity | ||
| ... The receipt by Sellers of an order does not conclude a Contract to sell unless and until confirmed by Sellers in writing. | ||
| ... | ||
| Terms and Conditions of Sale | ||
| Any contract arising out of this quotation will be subject to Eadie Industries Limited Standard Terms and Conditions of Sale, of (sic) copy of which is enclosed." |
[6]The Eadie Industries Limited Standard Terms and Conditions of Sale ("the defenders' Conditions"), which bore to be enclosed with quotation E3370, form No. 7/1 of process. Clause 1 defines "Seller" as the defenders trading as Fibre Flow Techniques or MagnaVac Air Systems. Clause 2 provides inter alia as follows:
| "BASIS OF THE SALE | ||
| 2.1 | The Seller shall sell and the Buyer shall purchase the Goods in accordance with any written quotation of the Seller which is accepted by the Buyer, or any written order of the Buyer which is accepted by the Seller, subject in either case to these Conditions. | |
| 2.2 | Unless other terms and conditions are expressly accepted by the Seller by means of a specific written amendment hereto signed by a director of the Seller the Contract will be on these Conditions to the exclusion of any other terms and conditions (except those implied in favour of a Seller which are not inconsistent with these Conditions) whether or not the same are endorsed upon, delivered with or referred to in any purchase order or other document delivered or sent by the Buyer to the Seller or which the Buyer purports to apply under any purchase order, confirmation of order or similar document." |
Clause 3 provides inter alia as follows:
| "GENERAL | |
| These Conditions shall be deemed to be incorporated in the Contract and in the case of any inconsistency with any order, letter or form of Contract sent by the Buyer to the Seller or any other communication between the Buyer and Seller whatever may be their respective dates, the provisions of these Conditions shall prevail unless otherwise agreed by the Seller in writing. ..." |
Clause 4 provides inter alia as follows:
| "QUOTATIONS | ||
| 4.1 | Any quotation is given by the Seller on the basis that no Contract will come into existence until the Seller despatches an order acknowledgement to the Buyer." |
Clause 5 provides inter alia as follows:
| "ORDERS | ||
| 5.1 | No order submitted by the Buyer shall be deemed to be accepted by the Seller unless and until the Seller despatches an order acknowledgement or it is otherwise confirmed in writing by a director of the Seller." |
Clause 18 provides inter alia as follows:
| "GENERAL | ||
| 18.5 | The formation, interpretation and operation of the Contract will be subject to English law ..." |
[7]The next documents that require to be considered are dated 8 March 1996. They comprise a letter from Mr Ostapjuk to Mr Rintoul of the pursuers and three further quotations (E3370-1, E3370-2 and E3370-3). The letter and the first two quotations form No. 7/4 of process (only an incomplete copy of the third quotation being available - No. 6/3 of process). The letter of 8 March 1996 is in inter alia the following terms:
| "Dear Jim, COATING PLANT WASTE BALING SYSTEM | |||
| Following our meeting on Tuesday 5 March 1996, we have now re-examined our costings for the Vari winder trim project and reorganised our quote and prices to prioritise the project as the following. | |||
| Phase 1 | : | Bale Press and modifications to existing edge trim system | |
| Phase 2 | : | Provision of a waste shredder and trim conveying system | |
| Phase 3 | : | Upgrade of the Vari winder trim system to accept 450mm of trim | |
| ..." |
On the file copy of that latter, a line has been drawn in manuscript between the passage dealing with Phase 2 and the passage dealing with Phase 3 and, in the left hand margin, the lines dealing with Phase 1 and Phase 2 have been bracketed and the annotation "Order 3109210" appears. Those quotations are in a somewhat different style from the original quotation E3370, and bear to have been written by Mr M. L. Slater rather than Mr Ostapjuk. The Phase 1 quotation (E3370-1) bears to have been in respect of "Powell 800/1100 Automatic Bale Press [and] Vari Winder Trim System Modifications", and the price stated was £103,150.00. The Phase 2 quotation (E3370-2) bears to have been in respect of "Powell PS 40 Heavy Duty Shredder-Hogger [and] Magnavac Waste Extraction System", and the price stated was £49,050.00. The Phase 3 quotation (E3370-3) bears to have been in respect of "Vari Winder Upgrade [and] Magnavac Waste Extraction System". Each of quotations E3370-1 and E3370-2 ends with a section headed "Price and Delivery Schedule". Each of those schedules provides inter alia as follows:
| "Terms:- | 30% With Order | |
| 60% On Delivery | ||
| 10% 30 Days From Delivery | ||
| Our Standard Terms and Conditions Apply as per our previous ref E3370". |
[8]An excerpt from the defenders' Works Order Log Book (No. 7/22 of process; a copy of the relevant part is No. 7/8 of process) contains the following entry:
| Wo. No. | DAY | CLIENT | GOODS | Code | Eng | VALUE |
| 20319 | TULLIS RUSSELL Part Del. 1/7/96 | BALER/SHREDDER AND TRIM SYSTEM | £152,200 |
There are additional notations in the three right hand columns, but their content is not material for present purposes. The "day" column is blank, but the last preceding entry in that column, three lines earlier, is "21/3", and three lines later the next date entry is "25/3". I shall return in due course to examine the evidence about the circumstances in which that entry was made.
[9]The next document is the defenders' file copy of what bears to be their order acknowledgement (No. 7/5 of process). The circumstances in which it came to be generated will require to be discussed in more detail later, and for the present I confine myself to recording its terms. It was on MagnaVac letterhead, bore to be dated 21 March 1996, carried the contract number 20319 and was addressed to the pursuers. It referred to the pursuers' order number 3109210, and gave the order date as 20 March 1996. It then referred to the goods ordered as:
| "1 | Powell 800/1100 Auto Baler and Trim System Mods to our quote E3370 and E3370/1 |
| £103,150.00 | |
| 1 | Powell PS 40 Hogger and Trim System as our quote E3370 and E3370/2 |
| £ 49,050.00 | |
| TOTAL | £152,200.00" |
It then set out the terms of payment as follows:
| "25% | Deposit payable with order | |
| 70% | Payable on availability/delivery of goods | |
| 5% | Payable on... |
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