KUNJILAL MONOHAR DAS Vs. DURGA PRASAD DEBIPROSAD

JUDGEMENT

(1.) This is a special case for the opinion of the Court upon the rights of buyers and sellers under a contract that was made on the 5th November last year. That was a contract for the sale of 50 tons new crop up-country small grain linseed and by the terms of the contract it is perfectly clear, that the method by which the contract was to be carried out was, by Laving the goods put on rail at the up-country station and transmitted in that manner to the Kidderpore Docks. It appears that the harvesting of this linseed begins in the month of March and that the dispatch of it would, in ordinary circumstances, be commenced in the month of April. Now, at the time the contract was made the position as regards the affreightment of such goods by rail was that all the railway wagons for the purpose were under the control of Government and that, without a certificate from the proper officer of Government, it was impossible to get the goods sent by rail and it was well known to the parties at the time when they entered into the contract that that was the position. As regards getting the certificate from the proper officer of the Government at the time this contract was made, I collect that it was known to the parties that such a certificate was, at that time, not being granted for the purpose of ordinary commercial contracts such as this. Now, under these circumstances, the question arises whether the contract has become void by reason of the impossibility or illegality of its performance, and, it is to be observed, that, although at the time the contract was made it would have been impossible to do what the contract contemplated, nevertheless, the contract was a forward contact to be performed in the future, and the finding of fact upon the special case before me is that, when the contract was entered into, it was assumed that the Armistice having been arranged in Europe, Government would, by the time linseed deliverable under the said contract would have to be dispatched, give up the control, that all the restrictions would be removed and the Railway Company would accept linseed for dispatch from up-country to the Kidderpore Docks. It is not clear whether the control by Government was under statutory authority or how otherwise, but it must, I think, be taken by me as in the nature of an Act of State which gives rise to a duty upon the subject as well as an Act which rendered the performance of the contract impossible. The statement in the special case, "that it was assumed that Government would give up the control" is taken by me as intending to say that it was a pre-supposition of both parties to the contract, a common postulate between the buyer,, and seller at the time the contract was made. Now, under these circumstances, the question presented by this contract is somewhat interesting and I think novel. There can be no doubt that the rules applicable to an obligation created by a contract are distinct from those applicable to an obligation which the law itself imposes upon the subject. So far as obligations imposed by the law are concerned, the Act of God, for example, is regarded as a complete answer. " The law does not itself impose an obligation which is to be carried into effect when an impossibility comes in, but so far as obligations created by a contract are concerned, the rule is very different. Prima facie, when the party has not qualified his obligation, he must be taken to have weighed and accepted the risk of his not being able to carry out the contract. This is quite clear as regards impossibility of performance which is relative to the ability or circumstances of the party himself. It is also a general rule as regards an impossibility which is absolute, such as an impossibility created by a breakdown on a railway system, but while this is the general rule, it is a rule which is not of universal application, for example, from the nature of the contract itself, the qualification may be clearly implied. A contract of marriage, a contract of partnership, a contract of service are all contracts with regard to which it is clear that, if one of the parties dies, or becomes so ill as to be unable to perform his part of the contract, the contract is at an end and there is no claim for damages for breach of contract. Another class of exception is to be seen in cases of bailment or of the lending of particular chattel such cases have been reviewed in the leading case of Taylor v. Caldwell (1863) 3 B. & S. 826 : 32 L.J.Q.B. 164 : 8 L.T. (N.S.) 366 : 11 W.R. 726 : 129 R.R. 573 and the principle which was there laid down by Mr. Justice Blackburn in this manner:-- " This rule is only applicable when a contract is positive and absolute and not subject to any conditions either express or implied, and there are authorities, which, as we think, establish the principle that, where, from the nature of the contract, it appears that the parties must from the beginning have known that it could not be fulfilled, unless, when the time for the fulfilment of the contract arrives, some particular specified thing continued to exist, so that, when entering into the contract, they must have contemplated such continuing of existence as the foundation of what was to be done ; there, in the absence of any express or implied warranty that the thing shall exist, the contract, is not to be construed as a positive contract but as subject to an implied condition that the party shall be excused, in ease, before breach, performance becomes impossible from the perishing of the thing without the default of the contractor." The well-known series of cases known as The Coronation Cases show that where contracts have been made upon the footing that a particular event is going to take place, the principles of Taylor v. Caldwell (1863) 3 B. & S. 826 : 32 L.J.Q.B. 164 : 8 L.T. (N.S.) 366 : 11 W.R. 726 : 129 R.R. 573 , will apply. The contract will be impliedly conditional upon that event or state of things being present at the time when performance is due. The principle of Taylor v. Caldwell (1863) 3 B. & S. 826 : 32 L.J.Q.B. 164 : 8 L.T. (N.S.) 366 : 11 W.R. 726 : 129 R.R. 573 is not merely a principle to be found in that branch of law which concerns particular things "de certo corpore" but is a general principle applicable to contracts where parties contract upon a common postulate: the contract will be impliedly conditional upon that common assumption holding good and will not be enforced by the Court so as to throw upon one of the parties a risk which neither of the parties intended that he should bear, Now, the present case is, I think, an inverted example of a case within that principle . It is not the case of people assuming a continence of a state of circumstances at the time the contract was made. It is quite clear that, if the circumstances had accident as the same, the contract would have been futile and commercially insensible. The parties were contracting not on the continuance but on a change in the circumstances, and the question is whether it is right to apply the principle of an implied condition to that state of affairs. It is to be observed that this is a forward contract and, as I read the statement of facts by which I am bound in the special case, the assumption of both parties at the time in spite of the existing state of affairs was that the normal state of affairs would have returned by the time of the performance of the agreement. It is not generally easy to suppose that there can be any assumption with regard to a change of circumstances but when a state of things that exists is abnormal and temporary and looks as if it was coming to an end there is no impossibility in the change of circumstances being regarded by both parties as being absolutely certain and being, as this case states, the assumption upon which the contract was made. If this were a matter which was being decided as regards the facts before me, it is evident that the fact that it was regarded as certain that the normal state of circumstances would be resumed, would be a double edged consideration. If there was so little risk, it may well be that the seller was content to take it; but I have not got to consider this case from the point of view of the correct inferences to be drawn upon contested fact?. 1 have got to consider this case upon the facts as given to me. When I find it stated that this was the common assumption of both parties, I take that to mean that if I throw the risk upon either one of these parties, it would be throwing upon him something which the other party himself did not intend that ha should bear.

(2.) Now, with regard to this matter of an implied condition; the nearest case has been cited to ma and that is Anglo-Russian Merchant Traders and John Bait & Co., In re (1917) 2 K.B. 679 : 86 L.J.K.B. 1360 : 116 L.T. 805 : 61 S.J. 591. That was a contract for the shipment of aluminum to Vladivostock, and, so far as I am concerned with that case, it was regarded as a contract for shipment from England. The contract was made in August 1915 and the shipment was to be in December; that is to say, there was no question of the war coming to an end or of the parties being sure that in a few months time the normal state of things would have been resumed. The contract was made with no express condition as to the performance of it and the question was whether, as it was impossible to ship aluminium from England owing to Ordinances which had been made in congestion with the war, the seller s obligation was to be regarded as absolute or not. That case was decided upon the principle s of law which were laid down in "The Moorcock" (3), that, if an implied condition is absolutely necessary to give that effect to the transaction which the parties must have intended at all events, this condition is to be implied. The principle is bath positive and negative. Where it is necessary for that purpose, an implication will be made; and no further implication will be made than is necessary to give such efficacy to the transaction as must have been intended at all events. Applying those two principle s of that case, the conclusion of the Court of Appeal was that the contract really was that the seller would use his best endeavors, would do everything reasonable to obtain permission to effect shipment, and that if he did that, and did not succeed, he was not liable for damages. Now, in this case the only difference of fact is that the parties were not contemplating the getting of priority certificates under existing conditions. They were contemplating such a change of circumstances as would make this unnecessary. Bat the principle seems to be the same. In order to give business efficacy to this contract and to give it the minimum that the parties must have intended, I think the parties are to be regarded as contracting upon the footing of a common assumption, contracting without the intention that either of them should bear the risk which, in the events that have happened, has ultimately come about. It may be said that, in order to give business efficacy to the, transaction, it is not necessary upon these facts to imply a condition. This has often been argued in such cases for the reason that, although the seller cannot deliver the goods, he can always do one or other of two things. He can always either deliver the goods or pay damages. That argument seems to me to be fallacious. When you are considering the intention of the parties when they were making this contract, I think it is of importance to remember that the intention of the parties is that the contract shall be fulfilled. Contracts are not based upon the assumption of a breach being made. Commercial men know that contracts are often broken but the intention of the parties is not that a contract shall be broken and damages shall be paid. The intention of the parties is that it shall be carried into effect. I do not put this forward as a first principle. In the well-known case of Sanders v. Maclean (1883) 11 Q.B.D. 327 : 52 L.J.Q.B. 481 : 49 L.T. 462 : 31 W.R. 698 : 5 Asp. M.C. 160 certain observations of Lord Justice Bowen may be taken by way of contrast. The learned Judge there says that, the contract of merchants, it is never superfluous to remark, is not based upon the supposition of possible frauds. The object of mercantile gentlemen is to prevent the risk of insolvency, not of fraud, and any one who attempts to explain fully the law of merchants will soon find himself lost, if he begins by assuming that merchants conduct their business on the basis of attempting to insure themselves against fraudulent dealings; on the contrary, credit, not distrust, is the basis of commercial dealings." This is not true of the possibility of breach of contract. The contract of merchants is based upon the possibility of breach of contract, upon the possibility of damages having to be paid particularly in the case of goods for which there is in the full sense of the word a market". The principle which I have been alluding to is not a principle which is in the least analogous to that of Lord Justice Bowen. The principle simply is this, that when you are having regard to the intention of parties at the time of entering into the contract, the lawyer is apt to make a mistake if he assumes that the intention of the contracting parties is to bring about a state of circumstances such that the legal remedy of damages will require to be resorted to, lawyers assuming that it will pervert the intention of commercial men in cases of this sort. That being so, and applying the principle that this contract was not a contract made indifferently for the sale of goods or for the payment of damage?, but a contract for the delivery of goods, it seems to me that performance is impossible, that the contract having been made upon the assumption that the normal state of things would have come into existence by March or April of this year, the intention of the contract would be perverted, if T was to hold that the sellers are to insure the buyers against this obscene of the control of Government going on. For these reasons, I answer the questions which have been put to me in this way: First:-- Did, in the circumstances hereinbefore mentioned, such a contract become void and were the sellers excused from the performance thereof ? My answer i.e., yep, the contract became void before breach. Secondly:-- Are the buyers entitled to recover any compensation from the sellers? I answer that, no, either in respect of goods which were lying ready at the up- country station which the Railway Company refused to accept for dispatch or in respect of goods which were not so delivered. I answer "no" to both parts of the second question because the performance having became impossible, no tender could have had any effect upon the Railway Company.

(3.) It is important in this case to add that this decision proceeds entirely upon the facts as given to me by agreement, not only the facts as regards the contract and the position of Railway tram s but also the facts stated as regards the assumptions and intentions of the parties. When the latter class of facts is not the same, it is very probable that different considerations altogether will prevail