SACKEY v.

FATTAL [1959] GLR 169-189

IN THE HIGH COURT, ACCRA

10TH APRIL, 1959

OLLENNU J.

Sale of goods—Agency—Ghana agent of Japanese manufacturer—Liability of agent

for breach of contract—Rights of buyer, and quantum of damages, where goods below
sample.

HEADNOTES

Florence Naa Ajeley Sackey sued Fuad Fattal for breach of contract; she claimed
£G8,121 18s 0d. damages. Her case was as follows:

She had agreed to buy, and Fattal (trading as Ghana and Overseas Commercial
Syndicate), who was acting as agent for Maurice Sherbance of Japan, agreed to sell
(a) 20 bales (998 pieces) of Spun Rayon, costing £G1,646 14s. 0d.; and (b) 40 bales
(1,978 pieces) of Spun Rayon, costing £G3,313 3s. 0d. The parties had agreed that,
as a condition of the contract, the rayon cloth must be of a quality equal to the samples
submitted by Fattal to Sackey. On the delivery of the goods, Sackey found most of
them were inferior to the sample sent to, and approved by, Fattal's principals in Japan.
Sackey had already met the bank charges and, to avoid the heavy expense of
reshipping the rayon, she sold the goods of inferior grade.

The Statement of Defence denied these allegations, and set up the following case:

Fuad was a partner in the firm known as the Ghana and Overseas Commercial
Syndicate (now defunct). That firm was agent for the Reuben Import and Export
Corporation, of Japan (subsequently known as Messrs Maurice Sherbance). About 2
years prior to this action, Sackey had approached Fattal's firm, and had placed through
it an order for 40 bales of cloth of the same kind as a sample from the Japanese
Corporation. The order was placed, and in due course the goods arrived.

After Sackey had taken delivery of the goods, she reported that 26 bales were not
according to sample, and she asked Fattal's firm for advice. The firm advised her to
do one of three things:

(1) to send back the 26 bales in question to the Japanese Corporation, or

(2) to agree to have the bales sold at a public auction under the supervision of Fattal's
firm, the Japanese Corporation to be asked to pay whatever difference might be found
due to Sackey, or

(3) to agree to accept such compensation as might be fixed between her and the
Japanese Corporation.

Sackey informed Fattal's firm that she would take up the matter herself direct with the
Japanese Corporation through her Bankers. After conveying that decision Sackey did
not at any time report anything about the transaction to Fuad's firm, which her Writ of
Summons took by surprise. When Sackey placed the said order for goods, Fattal's
firm acted as a mere agent. It was not liable to Sackey, for there was no privity of
contract between Sackey and either Fattal himself or his firm.

Suit No. 507/9157 (Accra).

Held:

(1) that even assuming the continued existence of the general custom of merchants
that when an agent contracts on behalf of a foreign principal he undertakes the liability
of principal, it is in each case a question of fact what the parties intended;

(2) that if a customer writes to the foreign manufacturers of goods forming the subject
matter of a breached contract, this does not constitute an election by the customer to
treat the manufacturers as principals;

(3) that where a contract is breached by the delivery of goods below sample-quality,
the quantum of damages is the difference in market price fetched by the goods
delivered and the prevailing market price for goods of the sample-quality.

CASES REFERRED TO

(1) Miller, Gibb & Co. v. Smith & Tyrer Ltd. ([1917] 2 K.B. 141);

(2) J. S. Holt & Moseley (London) Ltd. v. Cunningham & Partners ((1949) 83 LI.L. Rep.
141);

(3) Esso Petroleum Co. Ltd. & anor v. Southport Corporation ((1955) 3 All E.R. 864);

(4) Owoade v. United Africa Co. Ltd. (13 W.A.C.A. 204);

(5) Wakefield v. Duckworth & Co. ([1915] 1 K.B. 218);

(6) Montgomerie & Ors. v. United Kingdom Mutual Steamship Association, Ltd.
([1891] 1 Q.B. 370);

(7) Dramburg & anor. v. Pollitzer ((1873) 28 L.T.R. (N.S.) 470);

(8) Peterson v. Ayre (138 E.R. (C.P.) 1235).

COUNSEL

Akufo-Addo for plaintiff (Sackey).

Wuaku for defendant (Fattal).

NATURE OF PROCEEDINGS

(His lordship referred to the pleadings, and proceeded:)

The most important witnesses in the case, so far as the nature of the transactions
between the plaintiff and the defendant are concerned, are the plaintiff, her third
witness (Mr. Sydney Brown), and the defendant. It is necessary to set out the relevant
parts of the evidence given by each of those three witnesses on that issue.

JUDGMENT OF OLLENNU J.

(His lordship examined the evidence of those witnesses, and proceeded—)

Upon the evidence of the defendant, it appears to me that another most important
question calls for determination as an issue preliminary to that of the relationship
established between plaintiff and defendant as a result of the transaction between
them. That preliminary question is: What was the nature of the relationship between
the defendant and Messrs. Maurice Sherbance of Japan?

For the proper determination of this question it is necessary to consider some of the
documentary evidence, together with the oral evidence. Attached to Exhibit "C" (Order
No. 8) is a document dated January 7, 1956. The first three entries on that document
are as follows:—

"Shipment Samples

Your Order No. 8

Contract No. T 1090"

A similar document in the bundle of papers tendered is dated the 30th January,
1956. These documents indicate that, for every order placed, there was a contract
entered into between the suppliers in Japan and someone in this country. Exhibit "M,"
which the defendant said was sent to his firm by their principals in Japan, is the
contract No. T 1090 supporting Order No. 8. The parties to that contract are shown
as "Messrs. The Gold Coast and Overseas Commercial Syndicate... Purchaser, and
Messrs. Maurice Sherbance, Osaka... Sellers."

Again, the oral evidence of the defendant and of Mr. Brown disclosed that the nature
of the agency which the defendant's firm held in the Gold Coast (as it then was) for
Messrs. Maurice Sherbance was one which made them the sole dealers or distributors
in this country for goods supplied by Messrs. Maurice Sherbance of Japan. They were
not agents in the sense of being a firm in the Gold Coast acting for and on behalf of
Messrs. Maurice Sherbance. Nor were they a conduit pipe through whom Gold Coast
traders could become customers of Messrs. Maurice Sherbance.

This interpretation is corroborated by the clear picture of the situation given by Exhibit
"E2". This was a letter dated the 12th April, 1956, which Messrs. Maurice Sherbance
(then known as Reuben Import and Export Corporation) wrote to the defendant's firm
on the subject of "Claim on Order No. 12." one of the orders relevant to this suit. That
letter reads: -

"Claim on Order No. 12.

We thank you for your letter of April 5. Although we are quite unhappy about the
situation in respect of this order, we have nothing to add to our previous letters. We
are anxious to settle this claim, but you have never approached us with any concrete
suggestion as to what may be able to satisfy your client. On our own accord, end of
last year we made an offer, but you never discussed it with us. We are now negotiating
with the mill and will make you an offer of settlement some time next week.

In the meantime, please try to find out what compensation would satisfy your buyer . .
. We are always ready to settle any claim promptly to safeguard interest of our agents
and their buyers . . ." (The underlinings are mine.) That letter makes it abundantly
clear that one privity of contract existed between Reuben Import Corporation, as
vendors, and the defendant's firm, as purchasers; and that another privity of contract
existed between the defendants' firm, as vendors, and the persons who placed orders
with the defendant's firm.

Before going back to the nature of the transaction between the plaintiff and the
defendant, I would refer to the evidence of another witness to show how customers in
the Gold Coast who dealt with the defendant understood their relationship with the
suppliers in Japan. I refer to the evidence of Mr. Kalendarian. Under cross-
examination this witness said:

"We placed order with the defendant's Company, but the defendant's Company later
put us in touch with the suppliers in Japan, so we also wrote to them."

When re-examined on this point he stated:

"We asked for the name of the suppliers, and we were told, as we wanted to be in
direct touch with them. We did not do this in order to deprive the defendant of his
commission from his suppliers. All we wanted was to know who the suppliers were
and contact them."

This evidence shows that the person with whom the witness had contractual
relationship was the defendant, and it was only for purposes of his own convenience,
not for the purpose of breaking his contractual relationship with the defendant, that the
witness wrote to the suppliers in Japan.

I now turn to the nature of the transaction between the plaintiff and the defendant as
deducible from the evidence of Brown, the defendant and the plaintiff. There is no
room for doubt upon the whole evidence that the parties were ad idem on one thing,
namely, that the defendant's firm was the sole agent in the Gold Coast for goods
supplied by Messrs.Maurice Sherbance; in other words, the defendant's firm was
"holder of a monopoly in the Gold Coast to import goods from Messrs. Maurice
Sherbance." To put it in another form, the defendant's firm was the sole Gold Coast
distributor of goods supplied by Messrs. Maurice Sherbance. In that capacity the
defendant contracted with the plaintiff to import for her the goods of the quality of
samples provided by the plaintiff. I am satisfied that it is in his capacity as an "agent"
(as defined) that the plaintiff has sued the defendant.

Counsel for the defendant submitted that the plaintiff's claim should be dismissed on
the following grounds of law:
(1) the defendant was sued as an agent of a foreign principal, but the old presumption
that an agent of a foreign principal is personally liable unless he could prove that he
had the authority of his said principal, is no longer good law;

(2) the plaintiff, having sued the defendant in his capacity as an agent, has sought to
prove the case against him in a personal capacity; and that is a thing which she is not
permitted by law to do;

(3) the defendant's principals having been disclosed, the only persons liable in law to
be sued on the contract with the defendant are his principals;

(4) an agent has neither rights nor liabilities, and therefore in law he cannot sue or be
sued, and

(5) even if the defendant could be liable on the contract, the plaintiff has elected to
make direct contact with the defendant's principals, and she cannot therefore in law
be admitted to sue the agent.

In support of his first point, Counsel referred the Court to Halsbury, 3rd Edition, Volume
1, page 218 paragraph 496, and to Powell on The Law of Agency, (1952) pp. 207-
8. He cited the case of Miller, Gibb & Co. v. Smith & Tyrer Ltd. ([1917] 2 K.B. 141),
where the English Court of Appeal expressed doubt whether the presumption still
existed. Counsel referred also to the case of J. S. Holt & Moseley (London), Ltd. v.
Cunningham & Partners ((1949) 83 LI. L. Rep. 141), where Pritchard J. said:

"The so-called presumption or trade usage to this effect cannot, I think, be regarded
as existing as part of the law governing commercial contracts."

But the answer to Counsel's first submission is contained, firstly, in the last sentence
to note 4, on page 208, of Powell. It says, "but the inference still depends on the facts
of the case." Secondly, Pritchard J. answered the question in the sentence which
immediately followed the passage quoted above, when he said:

"the true view seems to be merely this - that when a question is raised as to the legal
position of an agent contracting for a foreign principal, it is in each case a question of
fact what the parties intended. The intention of the parties can only be ascertained
from the facts as proved in evidence, and the nationality and whereabouts of the
principal is no more and no less than one of the facts to which such weight will be
given as in any particular case the Court thinks proper."

Applying that principle, I say that upon the evidence in this case it appears clear to me
that it was not the intention of the parties that an illiterate woman (however shrewd a
businesswoman she may be) should part with such large sums of money as the
plaintiff did, and, in the event of the goods supplied not conforming to sample, that she
should look for her remedy to someone in a far-off country who, for all she knows, may
be an imaginary person. I believe it was the intention of the parties that the plaintiff
should look to no person other than the defendant (as the sole dealer, in the Gold
Coast, in goods of the foreign firm) for satisfactory performance of the contract.

On the second point, Counsel cited the case of Esso Petroleum Co. Ltd. and anor. v.
Southport Corporation ((1955) 3 All E.R. 864 at pp. 870-1,) and Owoade v. United
Africa Company Ltd. (13 W.A.C.A. 204). My interpretation of "agent," as indicated
above, disposes of this point. In any event, I am of the opinion that the nature of the
Statement of Defence necessitated the evidence led, and that the evidence was not
inconsistent with the capacity in which the defendant was sued. The defendant
appreciated the special capacity in which he was sued (as pleaded in paragraph 1 of
the Statement of Claim), hence his denial of that paragraph in paragraphs 1 and 2 of
his Statement of Defence, his allegation (in paragraph 5) of advice to the plaintiff, and
his averment (in paragraph 9) that his firm acted as a `mere agent.'

On the third point, Counsel cited two cases, (1) Wakefield v. Duckworth Co. ([1915] 1
K.B. 218), and (2) Montgomerie & ors. v. United Kingdom Mutual Steamship
Association Ltd. ([1891] Q.B. 370 at p.371). With respect, neither case supports the
general principle stated by counsel that an agent is not liable on a contract. In
Wakefield v. Duckworth, a Solicitor contracted prima facie on behalf of his client for
photographs to be supplied for use in the conduct of his client's case. There were no
circumstances about the order which could have made the photographer doubt the
Solicitor's authority to act for the client. And in Montgomerie v. United Kingdom Mutual
Steamship Association Ltd. the action was based upon an Insurance Policy which
contained the following conditions:-

"In accordance with the articles of association and the rules of the class, this policy,
and the other policies of the association and class, are granted on this condition; and
it is hereby specifically agreed that the association under all their policies of insurance
of the said class shall be liable in the whole only to the extent of so much of the said
funds as the said association is able to recover from the members of the said class."

The action was instituted by a partner in a firm which owned the ship which was the
subject matter of the policy, but he was not the firm described on the policy as "a
member." It was held that the action was not maintainable, as the terms of the policy
expressly excluded liability on the part of the defendants, to any person other than the
firm therein described as "a member."

It is not necessary to say more on the fourth point made by Counsel, except that, as
already pointed out, an agent may have rights or liabilities, based upon the facts and
circumstances of each case.

Counsel's final submission was that, by her act in writing to the defendant's principals
to complain about the goods, the plaintiff elected to treat the principals as the persons
liable on the contract, and therefore the defendant's personal liability, if any,
ceased. But this also is shown, by the book to which he referred in support, to be a
question of fact depending on each case. In Dramburg and anor. v. Pollitzer ((1873)
28 L.T.R. N.S. 470), it was held that an order placed with, and accepted by, an agent
of foreign manufacturers formed a contract between the customer and the agent. It
was further held that a letter written by the customer to the foreign manufacturers, after
a breach of that contract had been committed, did not constitute an election by the
customer to treat the manufacturers as principals. In my opinion, that case is very
similar to the present one in many respects.

I am satisfied that the plaintiff placed three orders with the defendant, and that the
defendant failed to discharge according to sample-quality the first and third orders, for
20 bales and 40 bales respectively. Thereby he committed a breach of his contract
with the plaintiff, and he is liable in damages to the plaintiff for that breach.

In such a case the quantum of damages is the difference between the market price
fetched by the poor quality goods and the market price for the good sample-quality,
prevailing at the time (Peterson v. Ayre (138 E.R. (C.P.) 1235)). No effort was made
by the defence to challenge the evidence led by the plaintiff as to the market prices of
the sample-quality goods prevailing at the time, and the price at which the plaintiff
actually sold the goods.

I accept the evidence of the plaintiff and her witnesses, that, out of the first
consignment of 20 bales (each containing 50 pieces), 16 were not of sample-quality,
and that she sold those at 30/- a piece, when the prevailing market price was 65/-. I
accept also that the only price she could obtain for the second consignment of 40 bales
(of 50 pieces each), none of which was of sample quality, was 32/- a piece, as against
the prevailing market price of £5 for sample-quality goods.

There will be judgment for the plaintiff for £G8,121 14/- damages, with costs fixed at
175 guineas inclusive.

DECISION

(The defendant Fattal appealed to the Court of Appeal, the report of whose
proceedings is immediately subjoined.)