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Schiller and ors. Vs. Sooltan Chand and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata
Decided On
Judge
Reported in(1879)ILR4Cal252
AppellantSchiller and ors.
RespondentSooltan Chand and ors.
Cases ReferredFreeth v. Burr
Excerpt:
contract - right to rescind--time of the essence of the contract--reciprocity of obligation--contract act (ix of 1872), sections 39, 51 and 55. - .....was of the essence of the contract, because the defendants had a right to insist upon immediate payment on delivery. but, as i have said, they did not insist upon this. from the 1st of the 8th of may deliveries were being made, and only one payment was made, namely, on the 5th may, of rs. 1,000, and it is not asserted that payment strictly on delivery was ever demanded. as to the earlier deliveries, therefore, the defendants could not, in my opinion, now assert that time was of the essence of the contract, and that payment not having been made strictly on delivery, the plaintiffs had broken their contract, and so absolved the defendants from any further performance of it. if the plaintiffs had ever said they would not pay the balance due for deliveries already made, or that they would.....
Judgment:

Richard Garth, C.J.

1. The defendants have appealed, and the amount of damages not being disputed, we have only to consider whether the defendants were justified in cancelling the contract. The defendants rely on the provisions of Sections 39 and 51 of the Indian Contract Act of 1872. Under Section 39 they say that the plaintiffs not having paid for the goods on delivery, they have refused to perform the contract in its entirety: and that the defendants had, therefore, a right to cancel it. This is not my view of the proper construction of Section 39.

2. That section, as I understand it, only means to enact what was the law in England, and the law here, before the Act was passed,--viz., that where a party to a contract refuses altogether to perform, or is disabled from performing, his part of it, the other side has a right to rescind it.

3. This rule will be found explained in the notes to Cutler v. Powell (2 Smith's L.C., 1, at p. 12, 7th ed.). The case of Freeth v. Burr (L.R., 9 C.P., 208) is one which is very opposite to the present, and which illustrates the principle of Section 39 very clearly. The defendants there had contracted to sell to the plaintiffs 250 tons of pig iron, half to be delivered in two, and the remainder in four weeks; payment to be made fourteen days after delivery of each parcel. The payment for the first parcel was not made for six months, and the defendants did not deliver the second parcel, which was deliverable under the contract at the time when the first parcel was to be paid for. The plaintiff's then claimed to set off as against the price of the first parcel the loss which they had sustained by non-delivery of the second parcel. The defendants then refused to deliver the second parcel at all, upon which the plaintiffs bought in other iron against them, and sued them for damages for the non-delivery. The Court hold that the defendants were not justified in refusing to complete the contract. The plaintiffs had not refused to pay for the iron. They had only neglected to pay it in proper time, and had tried to set off their losses against the price of the first parcel. And so in the present case the plaintiffs never refused to pay for the linseed delivered: they only made a claim for excess refraction and empty bags; and expressed their willingness to pay when these claims had been adjusted.

4. Before I leave the subject of Section 39, I ought perhaps to refer to the illustrations in that section, which have been relied upon by the appellant in support of his argument.

5. Without going into the very serious question (which I think it is unnecessary to do on the present occasion), as to how far the illustrations, which are now so constantly used, have the effect of controlling or explaining the language of the sections to which they relate, it is sufficient for my present purpose to say that one of the illustrations to Section 39 instances the case of a singer engaged to perform at a theatre several nights, who wilfully absented herself on one night only. This is said to be such a refusal to perform her contract in its entirety that the manager of the theatre was justified in putting an end to the contract.

6. It has been urged upon us by the appellants' counsel that the default of the singer was only a partial refusal to perform her contract; and that the plaintiffs in this case were equally guilty of a partial refusal to perform theirs.

7. That illustration is perhaps not a happy one; because it may lead, as I think it has led in this instance, to misapprehension. But the difference between that case and this is clear enough. The singer, by wilfully absenting herself, though on one night only, did in fact refuse altogether to perform an integral and essential part of her contract. By doing so, she put it out of her power to perform her contract in its entirety. But here the plaintiffs have never refused to perform any part of their contract. They were willing to pay the sum due as soon as their cross claims were adjusted; and their default consisted in not paying for the linseed on delivery.

8. But then it is argued by the appellants that Section 51 applies, because the promises to deliver linseed and to pay for it on delivery were reciprocal promises. But in my opinion that section is not applicable here at all. The section says,--that where a contract consists of reciprocal promises to be simultaneously performed, no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise.'

9. Now, applying that section to the present case the reciprocal obligations were the delivery of the seed and payment of the money on the occasion of each delivery.

10. The defendants were bound to deliver, the plaintiffs to pay for, the linseed. If the plaintiffs had been unwilling or unable to pay, the defendants would have been justified in refusing to deliver; but the defendants did deliver the seed; the neglect to pay in this instance was after delivery, when the reciprocity of obligation had ceased; and there is clearly no evidence here that the plaintiffs were unwilling or unable to pay for the deliveries which the defendants refused to make. The neglect to pay for past deliveries was, under the circumstances, no reason for refusing to make all further deliveries.

11. Then Mr. Bonnerjee argues that (under Section 55) instant payment was so essential that the failure of the plaintiffs to pay for the past deliveries at the moment of delivery justified the defendants in cancelling the contract.

12. This argument is not only quite inconsistent with the conduct of the parties in this particular case, but contrary to the known course of dealing in all mercantile contracts of the kind. It involves the supposition that instant payment of the price on each delivery was of the essence of the contract, and that, unless the plaintiffs paid their money down at once upon each delivery, the defendants were at liberty to cancel the contract. Now it must be borne in mind that the defendants made several deliveries in this case without asking for money at all; and that when money was paid by the plaintiffs it was paid in a lump sum on account.

13. There is nothing, as it seems to me, in this contention, and on the whole I think the appeal should be dismissed with costs.

Markby, J.

14. I also think that the appeal must be dismissed with costs. I agree that the question before us must be determined in accordance with the Contract Act. I also agree with the learned Judge of the Court below that Section 39, whatever it may mean, is not applicable to a mercantile contract of this description. I think that Section 51 would apply if the defendants, when they came to make delivery, had insisted upon the contract being strictly performed and payment being made on delivery; but this they did not do. With regard to Section 55, in one sense it might be said that time was of the essence of the contract, because the defendants had a right to insist upon immediate payment on delivery. But, as I have said, they did not insist upon this. From the 1st of the 8th of May deliveries were being made, and only one payment was made, namely, on the 5th May, of Rs. 1,000, and it is not asserted that payment strictly on delivery was ever demanded. As to the earlier deliveries, therefore, the defendants could not, in my opinion, now assert that time was of the essence of the contract, and that payment not having been made strictly on delivery, the plaintiffs had broken their contract, and so absolved the defendants from any further performance of it. If the plaintiffs had ever said they would not pay the balance due for deliveries already made, or that they would not pay on delivery for future deliveries, the case would have been different. But they never said that. There was a dispute as to the balance due on past deliveries, but there was no doubt that, on this dispute being settled, the balance would have been paid; and there was also no doubt that future deliveries would have been paid for, if demanded, according to the contract.

15. Under these circumstances, the defendants cannot say that the failure to pay on delivery strictly in accordance with the contract justified them in refusing to go on with it.


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