. 814 KING'S BENCH DIVISION.

[1917]

1917 C. S H A E P E & CO., L I M I T E D v. NOSAWA & CO.

May 17.
[1915 C. 3510.]
Sale of. Goods—O.i.f. Contract—Non-delivery-—Time for measuring
Damages—Arrival of Shipping Documents—Arrival of Goods—
" Time or times when they ought to he delivered "—Sale of Goods
Act, 1893 (56 & 57 Vict. c. 71), s. 51, sub-s. 3.

By s. 51, sub-s. 1, of the Sale of Goods Act, 1893, where the seller
wrongfully neglects or refuses to deliver the goods to the buyer,
the buyer may maintain an action against the seller for damages
for non-delivery. By sub-s. 3, where there is an available market
for the goods in question the measuro of damages is prima facie to
be ascertained by the difference between the contract price and the
market or current price at the time or times when they ought to
have been delivered.
Merchants in Japan sold goods to be shipped in June at a price
including cost, freight, and insurance to London. Shipping docu-
ments, including the bill of lading and policy of insurance, relating
to the last possible shipment in Juno would, if sent forward with
reasonable dispatch, have reached London on July 2 1 ; the goods
themselves would have arrived on August 30. The goods were not
shipped. In an action by the buyers for non-delivery :—
Held, that the delivery intended by the contract was a construc-
tive delivery by tender of the shipping documents as soon as
possible after shipment, and that there was a breach of contract;
on July 21.
Held, also, that the damages were to be measured by the difference
between the contract price and the market price on July 21, as
that date, and not August 30, was the time when the goods ought to
have been delivered within the meaning of s. 51, sub-s. 3, of the Act.
Meld, further, it being impossible to buy similar goods coming
forward on a June shipment but possible to buy such goods on the
spot, that a merchant in the circumstances acting reasonably would
have bought goods on the spot, and that the price of such goods
should be regarded in measuring the damages.

TRIAL of action before Atkin J . without a jury.

The plaintiffs were seed merchants, of Sleaford in Lincolnshire.
The defendants were merchants carrying on business in J a p a n and
having an office in London.
I n April, 1914, the parties entered into two contracts for the sale
by t h e defendants to t h e plaintiffs of two parcels of Japanese peas
upon a sample sent to this country. One contract was for 50 tons
2 K. B. KING'S BENCH DIVISION. 815

at 10s. 6d. a cwt. c.i.f. London May shipment; the second was for 1917
100 tons on the same sample at 10Z. 15s. a ton c.i.f. London June c gHABPB
Co
shipment. I n respect of the first contract a portion of the goods * -
was shipped by the Agapenor, which left Japan on May 24 and NOSAWA
arrived on July 21. I n the meantime a bulk sample had been sent
with the shipping documents and arrived in this country some time
before June 16. On comparison of the bulk sample with the contract
sample the plaintiffs rejected the goods on the ground that they were
not equal to sample. A further shipment consisting of the rest of
the 50 tons under the first contract and 6J tons under the second
contract was sent by the Phemius, which left Japan on June 9 and
arrived on August 4. I n the case of this shipment also a shipping
sample was sent forward with the shipping documents and arrived
on June 30; and this shipment, like the former, was rejected by the
plaintiffs. The parties negotiated with a view to both shipments
being accepted with an allowance in the price, and, as the result of
an arbitration, the plaintiffs accepted the shipments with an allow-
ance of Is. per ton in the one case and Is. 2d. per ton in the other.
Neither of the shipments was in fact equal to sample.
As to the balance, 93f tons, of the second contract, on June 16
the plaintiffs had cabled to the defendants that they refused to
accept the goods as the shipping sample was inferior in every respect.
The defendants replied that the quality was equal to sample and
that they would cancel the balance. The plaintiffs answered that
the quality was not equal to sample, that they refused point blank,
and would claim damages. On June 17 they wrote requiring the
defendants to send the goods in accordance with the terms of the
purchase. On June 18 the defendants, confirming their telegram
of June 16, wrote to say that they would cancel the contract. The
plaintiffs received this letter on July 6. They replied to it on
July 29, asking if they were to understand that the defendants had
not shipped the balance of the goods equal to sample and requesting
them to cable at once, otherwise they would have to buy against
them. The defendants did not answer this letter.
If the goods had been shipped on the last possible day for a June
shipment and the shipping documents had been forwarded as they
had been in the case of the shipments by the Agapenor and the
Phemius, the documents would have arrived in London on or about
816 KING'S BENCH DIVISION. [1917]

1917 July 21, and the goods themselves would have arrived on or about
C. SHAKPE August 30. Neither the documents nor the goods were ever sent.
& Co
- On December 23, 1915, the plaintiffs issued the writ in this action
NOSAWA claiming damages for non-delivery of the 93f tons. The question
was as to the measure'of damages. The defendants paid into Court
a sum equal to 12L per ton, alleging that to be the value of similar
goods procurable in London on July 21. The value of similar goods
on August 30 was 171. 10s. per ton. The plaintiffs claimed damages
on that basis.

T. Hollis Walker, K.C., and Goodman, for the plaintiffs. A cost,

freight, and insurance contract is a contract for the sale of goods,
and not merely for the sale of the shipping documents : Karberg
& Co. v. Blythe, Green, Jourdain & Co. (1) The defendants have
refused to deliver. By s. 51, sub-s. 3, of the Sale of Goods Act,
1893 (2), the measure of damages is the difference between the con-
tract price and the market price of the goods at the time when they
ought to have been delivered. The time when goods shipped
towards the end of June ought to have been delivered was at the
end of August. Assuming that there was an anticipatory breach by
the defendants on June 16 when they insisted that they would
cancel the contract, or on July 21 when the shipping documents did
. not arrive, the plaintiffs then were entitled, but not bound, to rescind
the contract. They had a right to wait till the time came for per-
formance, i.e., till the end of August, and then measure their
damages : Michael v. Hart & Co. (3)
There was no market for these goods on July 21. They were of a
special quality not procurable. The defendants, who have broken
(1) [1916] 1 K. B. 495. breach of contract.
(2) Sale of Goods Act, 1893 " (3.) Where there is an avail-
(56 & 57 Vict. c. 71), s. 5 1 : able market for the goods in ques-
"(1.) Where the seller wrongfully tion the measure of damages is
neglects or refuses to deliver the prima facie to be ascertained by
goods to the buyer, the buyer may the difference between the contract
maintain an action against the price and the market or current
seller for damages for non-delivery, price of the goods at the time or
" (2.) The measure of damages times when they ought to have
is the estimated loss directly and been delivered, or, if no time was
naturally resulting, in the ordinary fixed, then at the time of the
course of events, from the seller's refusal to deliver.'"
(3) [1902] 1 K. B. 482.
2 K. B. KINO'S BENCH DIVISION. 817

their contract, cannot insist that the plaintiffs shall go into the 1917
market and buy goods which they did not order and do not want. c. SHABPB
& Go
Roche, K.C., and Whately, for the defendants. The duty of a -
seller who sells goods on cost, freight, and insurance terms is to ship NOSAWA
the goods according to the contract and to send forward as soon
as he can an invoice, a bill of lading, and a policy of insurance :
Ireland v. Livingston (1), per Blackburn J . ; Biddell Brothers v.
E. Clemens Horst Co. (2), per Hamilton J. As a general rule the
goods are sold and delivered and the property in them has passed
when they are shipped : Sale of Goods Act, 1893, s. 32 ; s. 18, r. 5.
But the seller is bound to give the buyer as soon as possible the means
of dealing with the goods or their value, and so he must send forward
the bill of lading and policy of insurance : Sanders v. Maclean. (3)
If he does this he is generally entitled to payment in return for the
documents : Biddell Brothers v. E. Clemens Horst Co. (4), per
Kennedy L.J., affirmed in the House of Lords. (5) If he fails to do
this he commits a breach of his contract. The delivery contem-
plated by such a contract is a constructive delivery by tender of
the documents, and the time for measuring the damages is the time
when the documents would have been tendered if the contract had
been performed ; that is, in this case, on July 21. On that day the
plaintiffs would have had complete control over the goods, which
might have been sold and resold many times before August 30.
Unless it was a term in the contract that the plaintiffs should be in
possession of the goods on August 30, the defendants are not to be
affected by the market price on that date. I t was no part of their
contract to be liable for fluctuations in the market throughout the
month of August.
The difference in quality between the goods sold and those
procurable in the market at the end of July did not amount to a
difference in kind.
T. Hollis Walker in reply.

A T K I N J . The question is whether the damages are to be measured

by the price of peas in July, when the documents would have arrived
(1) (1872) L. R. 5 H . L. 395, (3) (1883) 11 Q. B. D. 327.
406. (4) [1911] 1 K. B. 934.
(2) [1911] 1 K. B. 214, 220 (5) [1912] A. C. 18.
V O L . II. 1917. 3X 2
818 KING'S BENCH DIVISION. [1917]

1917 in the ordinary course, or the price in August, when the goods would
c. SHAHPE have arrived on a June shipment, assuming that the voyage took
&
^- two months. The answer depends upon the true meaning of a c.i.f.
NOSAWA
& contract of this kind. I t is reasonably plain that such a contract
Co. .
is performed by the vendor taking reasonable steps to deliver as
soon as possible after shipment the shipping documents, including
the bill of lading and policy of insurance, and the buyer paying the
price against the documents unless there is some other stipulation
as to payment in the contract. But performance by the seller is
• by delivery of the documents which represent the goods, i.e. the bill
of lading, which is a constructive delivery. The delivery intended
by the contract is a constructive delivery. The bill of lading is, in
the words of Bowen L.J. (1), a great master of the common law, " a
key which in the hands of a rightful owner is intended to unlock the
door of the warehouse, floating or fixed, in which the goods may
chance to be," and is therefore a constructive delivery of the goods
to the buyer, who from the time he receives the documents has
control of the goods and can deal with them relying on their receipt,
or, by virtue of the insurance, their value, so that there can be no
doubt in his mind that he has the control of existing goods or their
value. The position is one which has been expounded finally by the
judgment of Kennedy L.J. in Biddell Brothers v. E. Clemens Horst
Co. (2) That was a dissenting judgment, but, in view of the com-
ments made upon it in the House of Lords (3), it must be treated as
authoritative. One passage I ought to read : " Secondly, if there
is a duty on the vendor to tender the bill of lading, there must, it
seems to me, be a corresponding duty on the part of the purchaser
to pay when such tender is made. Very relevant on this point is the
language of Brett M.K. in his judgment in Sanders v. Maclean (4),
which applies to this class of contract the same principle as was
expounded by Bowen L.J. in The Moorcock. (5) He said ' The
stipulations which are inferred in mercantile contracts are always
that the party will do what is mercantilely reasonable ' ; and, if it
be the duty implied in the c.i.f. contract, as held by Brett M.B. in

(1) Sanders v. Maclean, 11 (3) E. Clemens Horst Co. v.

Q. B. D. 327, 341. Biddell Brothers [1912] A. C. 18,22.
(2) [1911] 1 K. B. 934, 958. (4) 11 Q. B. D. 327, 337.
(5) (1889) 14 P. D. 64.
 2 K. B. KING'S BENCH DIVISION. . 819

that case, that the vendor shall make every reasonable exertion to 1917
send forward and tender the bill of lading as soon as possible after c. SHARPE
& 0,
he has destined the cargo to the particular vendee, it is, I venture ^
NoBAWA
to think, ' mercantilely reasonable' that the purchaser should be
cc Co.
held bound to make the agreed payment when delivery of the goods —
is constructively tendered to him by the tender of the bill of lading,
either drawn originally in his favour or indorsed to him, and accom-
panied in case of loss by the policy of insurance. For thereunder,
as the bill of lading with its accompanying documents comes forward
by mail, the purchaser obtains the privilege and absolute power of
profitably dealing with the goods days or weeks, or, perhaps, in the
case of shipments from a distant port, months, before the arrival of
the -goods themselves. This is, indeed, the essential and peculiar
advantage which the buyer of imported goods intends to gain under
the c.i.f. contract according to the construction which I put upon it."
The right view of that passage is that the Lord Justice intended
to adopt the judgment of Brett M.E. in Sanders v. Maclean (1) that
' it is the duty of the vendor to make every reasonable effort to send
forward and tender the bill of lading as soon as possible after he has
destined the cargo to the particular vendee. He assumes that if
there is a mail the vendor will transmit the documents so that they
will arrive before the ship. That is clearly the right view. The
contract is performed in fact, and the date of its performance is the
date when the documents would come forward, the vendor making
every reasonable effort to forward them. In this case, on the evi-
dence, such a period would be twenty to twenty-one days after the
ship sailed. Not only from the course of business in this case, but
from ordinary commercial usage, it would be reasonable for the
vendor to send the documents by the mail by the Trans-Siberian
Kailway as soon as the goods had been shipped. They would have
arrived on July 21—that is, twenty or twenty-one days after the
latest possible June shipment. They did not arrive on July 21, and
there was consequently a breach of the contract on that date.
What, then, is the remedy of the buyer ? His remedies are specified
in s. 51 of the Sale of Goods Act, 1893. His right is to place himself
as nearly as possible in that position in which he would have been if
the contract had been fulfilled.
(1) 11 Q. B. D. 327.
3 E 2 2
820 • KING'S BENCH DIVISION. [1917]

1917 In this case there is first the question could the buyers have gone
n
C. SHARPE i *° the market at the time when the contract ought to have been
& Co. performed and have bought goods c.i.f. June shipment. If so, the
NOSAWA difference of price would be the measure of damages. I am not satis-
' fled that they could in fact have bought 93 tons of Japanese peas
c.i.f. June shipment, although there was some evidence that they
could have bought smaller parcels. The damages are to be assessed
on the basis of reasonable conduct on the part of the purchaser. In
the circumstances of this case the reasonable thing for a merchant
to do who could not buy goods coming forward would be to go into
the market and buy goods on the spot. In that way h e would put him-
self as nearly as may be in the same position as if the contract had
been fulfilled, and would have got control of an equivalent amount
of goods. I t is true he may incur further expense by reason of
having to take up goods at once, the cost of warehousing, insuring,
&c, but that would be a part of his damages. I t has been suggested
that he might and ought to wait until the goods would have arrived.
That, in my view, puts him into a different position. If the con-
tract had been performed he would have had control of the goods
at the time when the documents would have arrived. If he awaits
the arrival of the goods, inasmuch as that may not happen for
weeks or months, he is in the meantime subjecting the vendor to
the risk of fluctuations in.the market not contemplated by the
parties and not reasonable. The reasonable course was for the
plaintiffs to go into the market and buy goods. There is no doubt
that they could have bought Japanese peas on the spot in July.
They would have bought ex wharf and would have had to pay more
in respect of landing charges, but they would have got a month's
credit. In the normal course the goods would have arrived towards
the end of August. The plaintiffs could have warehoused the sub-
stituted goods for fourteen days free of charge. The cost of ware-
housing till the end of August, so as to put themselves in the same
position as if the goods had. arrived in the ordinary course, would
be a small matter.
It was said that the plaintiffs could not have bought these goods ;
that the contract was for Japanese peas of a very special quality, of
better than fair average quality. I cannot accept, that view.
They were of more than fair average quality, but they were Japanese
2 K. B. KING'S BENCH DIVISION. 821

peas, and the difference between them and those which the plaintiffs 1917
could have bought on the spot was not so great as to amount to a c. SHAKPE
& Co
difference of kind or character. It is hardly possible to match a -
particular sample precisely, but that is a matter which can be NOSAWA
adjusted when assessing damages. As far as I can see, in July the
plaintiffs could not have bought goods of this particular quality ; but
they were entitled to buy, and should have bought, goods as near in
quality as possible to the goods the defendants contracted to sell.
The only other question is as to " the time or times when they "
—i.e. the goods—" ought to have been delivered " within the
meaning of s. 51 of the Sale of Goods Act, 1893. Those words mean
the time or times when they ought to be delivered according to the
mode of delivery contemplated by the contract. If the contract
provides for delivery of goods by means of documents, or by hand-
ing over the key of a warehouse, the date for that event is " the time
. . . . when they ought to have been delivered." In this case the
date on which the documents ought to have arrived, that is to say
July 21, is the important date in considering when the plaintiffs
ought to have bought in the market. No doubt the plaintiffs ought
to have a reasonable time in which to consider their position. The
time cannot be indefinitely extended on the assumption that the
plaintiffs could waive the term that the shipment should be in
June. The matter has to be considered as between vendor and
vendee on a contract to be performed strictly as to time. In these
circumstances I fix the time for ascertaining the market or current
price as somewhere about the last week in July. It is not neces-
sary to fix the price very definitely, because the defendants have
paid into Court the equivalent of 121. a ton, and that is a sufficient
allowance for all extra considerations. If August is the proper time
to fix the market price, the price then was 171.10s. But in my view
the end of July is the proper time, and the defendants have paid a
sufficient sum into Court. In the result the defendants are entitled
to judgment, but the plaintiffs get the costs of the action up to the
date of payment into Court by the defendants.

Judgment for defendants.

Solicitors for plaintiffs : Fraser & Christian.
Solicitors for defendants : Enever & Aarons.
W. H. G.