ARCOS, LIMITED
v.
E. A. RONAASEN AND SON.
Lord
Buck-
master.
Lord
Blanes-
burgh.
Lord
Warring-
ton of
Clyffe.
Lord
Atkin.
Lord
Macmillan.
Lord Buckmaster.
MY LORDS,
The Appellants are an English company, and are the instru-
ments of the Russian Government for the sale of their goods in this
country. By two contracts, dated 13th November, 1929, they
agreed to sell to the respondents a quantity of redwood and white-
wood staves c.i.f. the River Thames. The staves were to be
shipped during the summer of 1930, and were to be of the following
dimensions : under one contract as to 90 standards they were to be of
1/2 in. thickness, 28 ins. in length, and 2 ins. to 5 ins. in breadth; and
as to 10 standards, 1/2 in. thickness, 17 ins. in length, and 21/2 ins.
to 5 ins. in breadth; and under the other, 135/180 standards were
to be 1/2 in. by 28 ins. by 2 ins. to 5 ins.; 15/20, 1/2 in. by 17 ins. by
2 1/2 ins. to 5 ins.; 27, 1/2 in. by 28 ins. by 2 ins. to 5 ins.; 3, 1/2 in. by
17 ins. by 21/2 ins. to 5 ins. Each contract was in the same terms and
provided that any dispute that should arise should be forthwith
referred to the decision of a third party to be mutually agreed upon,
or, in default, to two arbitrators.
The goods were shipped from Archangel on or about 9th Octo-
ber, 1930. The buyers rejected the documents when tendered, on
the ground that the shipment was not a shipment during the
summer of 1930 in accordance with the terms of the contracts.
This matter was referred to arbitration, and the Arbitrator,
by his award dated 18th February, 1931, awarded that the
Respondents were not entitled so to reject the goods. Since October,
1930, the goods which had been landed have lain exposed to the
weather on the open wharf.
On 10th April, 1931, the Respondents demanded a further
arbitration with regard to the quality and cutting of the staves.
This was referred to two arbitrators, according to the contract,
and they, having failed to agree, on 3rd July, 1931, appointed Mr.
Vigers as umpire, who heard the evidence, inspected the goods, and
made his award on 24th August, 1931. It is as to the meaning of
the Award upon the true facts there found that this Appeal is
concerned.
The real dispute was as to whether the goods satisfied the
description as to measurement contained in the contracts, and upon
this the arbitrator found as follows :-
” (2) The goods tendered by the Sellers to the Buyers as
“ aforesaid and invoiced as 28 in. staves (hereinafter referred
“ to as ‘ the said 28 in. staves’) were redwood and whitewood
” staves bundled and were in length not less than 28 ins. and
“ not more than 28 1/8 ins.
” (3) The said 28 in. staves are of the following thick-
” nesses :
” None are less than 1/2 in.
” 4.3 per cent, are 1/2 in.
” 85.3 per cent, are more than 1/2 in. and not more
than 9/16 in.
18073 A
2 [2]
” 9.4 per cent, are more than 9/16 in. and not more than
” 5/8″.
” 1.0 per cent -are more than 5/8 in. and not more than
” 3/4 in.
” None are over 3/4 in.
” (4) All the said 28 in. staves were 2 ins. to 5 ins. in
” width.
” (5) The goods tendered by the Sellers to the Buyers as
” aforesaid and invoiced as 17 in. staves (hereinafter referred
” to as ‘ the said 17 in. staves ‘) were redwood and whitewood
” staves bundled and were in length not less than 17 ins. and
” not more than 17 1/8 ins.
” (6) The said 17 in. staves are of the following thick-
” nesses :—
” None are less than 1/2 in.
” 6.4 per cent, are 1/2 in.
” 75 3 per cent, are more than 1/2 in. and not more than
” 9/16 in.
” 18.3 per cent, are more than 9/16 in. and not more than
” 5/8 in.
” None are over 5/8 in.
” (7) With the exception of 2.159 standards 2 ins. in
” width all the said 17 in. staves were 21/2 ins. to 5 ins. in width.
” The tender of 2.159 standards of 17 in. staves 2 ins. in width
” was within the provisions of the contracts referred to in para-
” graph 5 (ii) of this award and constituted a good tender.
” (12) It was admitted by the Buyers that some excess in
” thickness is permissible and I find that staves of thickness
” not exceeding 5/8 in. are fit for the purpose of making cement
” barrels whether as sides or headings.
” (13) The said 17 in. and 28 in. staves are now swollen
” and in bad condition by reason of wetting since shipment. J
” cannot say with accuracy from their present size what was
” their thickness when shipped but I find that their thickness
” was closer to 1/2 in. when shipped than it is now and I am
” satisfied that the staves when shipped were commercially
” within and merchantable under the contract specification.”
and upon these findings he held that the Respondents were not
entitled to reject the goods. The Award was in the form of a
special case which came before Wright J. on 15th December, 1931,
who referred it back to the arbitrator to say what was the evidence
upon which he based his statement as to the admission by the buyers
that some excess in thickness was permitted. To which the Arbitra-
tor replied that that was his clear impression, but that his Award
was not based on that admission, and that the buyers had in fart
received the very goods that the contract had provided. Wright J.
in his judgment decided “in favour of the buyers, upon the ground
that the difference in the sizes was not of such a trivial character
as would justify its being disregarded by the Court, that the find-
ing as to measurement shows that the goods were not those con-
tracted to be sold and that it was those goods and not their com-
mercial equivalent that the buyers were entitled to demand. The
Court of Appeal have confirmed this view.
It is not necessary to examine again the actual difference
between the goods shipped and those defined in the specification;
nor is it possible to fix the exact extent to which the exposure of
the staves, for which the Respondents were responsible, has altered
their size. For the real question is whether the statement of the
Arbitrator that the staves, when shipped, were commercially within
[3] 3
and merchantable under the contract shows that the Arbitrator has
found that according to its proper construction the contract has been
satisfied. The very wording of the phrase leads strongly to the
conclusion that it does not bear that interpretation.
The fact that the goods were merchantable under the contract
is no test proper to be applied in determining whether the goods
satisfied the contract description, and I think the phrase ” com-
” mercially ” itself shows that while the goods did not in fact
answer the description, they could, as a matter of commerce be so
dealt with, but the rights of the buyers under the contract are not
so limited.
If the article they have purchased is not in fact the article that
has been delivered, they are entitled to reject it, even though it is
the commercial equivalent of that which they have bought.
But for the decision in the case of Vigers and Sanderson, 1901,
1 K.B. 108, there could, I think, be little doubt about this matter.
The learned Judge there held that the buyer was entitled to reject
the goods, but he made a statement that the clause entitling the
rejection does not operate ” so as to force the buyer to take the
” goods which are neither within nor about the specification, nor
” commercially within its meaning.” That decision must be read
in relation to the words of the contract then considered, which pro-
vided that the goods were to be ” about ” the specification stated,
and no such word as ” about ” occurs in the present contract.
There is no room in this contract for any elasticity, and I agree
with the judgment of Lord J. Scrutton in the case of Green v. Arcos,
in 39 Lloyds List Reports, p. 229, at p. 231, that the phrase used
by Bigham J. was only intended to cover cases in which the dif-
ference was so small that the law would not regard it.
The only part of this case that, in my opinion, presents any
difficulty is the fact that some change of size took place owing to
the exposure for which the Respondents were responsible, but I agree
with the interpretation of the Court of Appeal upon the finding in
this respect, namely, that though the staves were nearer to 1/2 in.
when they were delivered, yet they did not then satisfy the specifica-
tion, except by regarding the matter as one in which the commer-
cial equivalent can be accepted for the actual description.
I can find no flaw in the reasoning of Wright J. and the Court
of Appeal, and their unanimous opinion renders further discussion
of the matter unnecessary.
48073 A 2
IN THE MATTER OF THE ARBITRATION ACT, 1889 and
IN THE MATTER OF, AN ARBITRATION
between
ARCOS, LTD. (Sellers)
Lord
Buck-
master.
Lord
Blanes-
burgh.
Lord
Warring-
ton of
Clyffe.
Lord
Atkin.
Lord
Macmillan.
v
E. A. RONAASEN AND SON (Buyers).
Lord Warrington of Clyffe.
MY LORDS,
The question in this Appeal from a unanimous Judgment of
Scrutton, Greer and Slesser, L.J.J., affirming a Judgment of
Wright, J., in favour of the buyers is whether on a sale of goods
by description the implied condition that the goods shall correspond
with the description (Sale of Goods Act, 1893, Section 13) has been
performed by the seller so as to disentitle the buyer to reject the
goods.
The facts and the law applicable to them have been or are about
to be so thoroughly stated and discussed by other noble and learned
Lords, whose opinions I have had the advantage of reading, that
I propose to state quite shortly my reason for agreeing with their
conclusion and that of the four learned Judges by whom the case
was decided in the Courts below.
The contracts (there were two in identical terms) were for the
sale by the Appellants as sellers to the Respondents as buyers of a
quantity of Russian redwood and whitewood staves of certain
specified dimensions in length breadth and thickness. As to
length and breadth certain limits of variation were permitted by
the contract and are specified in the description, but as to thick-
ness this is to be in every case 1/2-inch without any qualification.
The goods were duly shipped and tendered but they were re-
jected by the buyers on the only ground material to this Appeal,
viz., that they or a large number of them exceeded the contractual
thickness and that the statutory condition was therefore not
fulfilled.
Pursuant to the contracts the matter was referred to a com-
mercial arbitrator who made his award in the form of a special
case.
Under the contracts the staves were to be of a definite thickness
of 1/2-inch, neither more nor less, and with no qualification such as
” about ” or ” substantially ” or ” commercially ” whatever may be
the precise meaning of this last word. The sellers therefore were
bound to tender 1/2-inch staves.
The actual results of the inspection of the staves given by the
Arbitrator disclosed extensive variations in thickness always on the
side of excess. The staves had, however, been exposed to weather
since landing and were swollen and in bad condition.
Under these circumstances the Arbitrator stated ” I cannot say
” with accuracy from their recent size what was their thickness
” when shipped but I find that their thickness was closer to 1/2-inch
” when shipped than it is now.” That is in my opinion a finding
that staves now exceeding 1/2-inch were at shipment also in excess of
that measure though not to the same extent. He then adds ” I am
2 [5]
” satisfied that the staves when shipped were commercially within
” and merchantable under the contract specification,” and he made
an award in favour of the sellers.
In my opinion by acting as he did he has added to the
description in the contract a qualification to which the contracting
parties have not agreed, and which he was not entitled to add, and
that the Courts below were justified in setting aside his award.
It is not suggested that this is a case in which the deviations
from the contractual thickness were so slight as to be negligible.
In such a case a simple finding that they answered the description
would be proper without the addition of such a qualification as
above mentioned.
I agree that the Appeal fails and should be dismissed with costs.
Lord
Buck-
master.
burgh.
[6]
ARCOS, LIMITED
v.
E. A: RONAASEN AND SON.
Lord Atkin.
MY LORDS,
The question between the parties arises on an award stated in
the form of a special case by an umpire appointed under a sub-
mission contained in two contracts for the sale of timber. The
contracts were in the White Sea 1928 C.I.F. form and were between
the appellants Arcos, Limited, sellers, and the respondents, E. A.
Ronaasen and Son, buyers. It is unnecessary to set them out at
length. The substance was that the sellers agreed to sell to the
buyers ” the wood goods hereinafter specified ” subject to a varia-
tion of 20 per cent, in sellers’ option on any item, to be shipped
from Archangel ” during the summer 1930.” The first contract
specified ” Redwood and whitewood staves bundled
90 standards 1/2 in. by 28 ins. by 2 ins. to 5 ins.
10 standards 1/2 in. by 17 ins. by 2-1/2 ins. to 5 ins.
Messrs. Arcos, Limited, promise to do their best to induce the
shippers not to cut any 2 ins. in the 1/2 in. by 17 ins. headings, but
should a few 2 ins. width fall buyers agree to take same at a reduc-
tion in price of 40s. per standard.” There were further conditions
on the back of the contract which it is unnecessary at present to
consider. The second contract was in identical terms save as to
quantities of standards and provided for 135/180 and 27 standards
of 28 ins. length, and 15/20 and 3 standards of 17 ins. length. The
staves were required by the buyers for making cement barrels and
this was made known to the sellers in circumstances that implied a
condition that they should be fit for that purpose. The goods in
question were shipped under the contracts in October. When the
shipping documents were tendered the buyers refused them on the
ground that there had not been a summer shipment. There was an
arbitration to determine this dispute, and the umpire held that the
shipment was a summer shipment. The buyers thereupon examined
the goods which had been landed and claimed to reject them on the
ground that they were not of contract description. This dispute
went to arbitration and the umpire made his award in the form of
a special case in which, after stating the facts, he awarded subject
to the opinion of the Court that the buyers were not entitled to
reject. On the hearing of the special case Wright J., and on
appeal the Court of Appeal, differed from the umpire and held that
the buyers were entitled to reject. The simple question is whether
the goods when shipped complied with the implied condition (Sale
of Goods Act 1893, Section 13) that they should correspond with the
description. When the umpire inspected them on July 9, 1931.
some nine months after landing and exposure to rain, he found the
actual measurements to be as follows :—
28 in. staves.
4.3 per cent. were 1/2 in.
85.3 per cent. between 1/2 in. and 9/16 in.
9.4 per cent. between 9/16 in. and 5/8 in.
1 per cent. between 5/8 in. and 3/4 in.
None over 3/4 in.
17 in. staves.
6.4 per cent. were 1/2 in.
75.3 per cent. between 1/2 in. and 9/16 in.
18.3 per cent. between 9/16 in. and 5/8 in.
[7] 2
He found that they were all fit for use in the manufacture of cement
barrels. He was unable with accuracy to say what was their thick-
ness when shipped, but ” their thickness was closer to 1/2 in. than it
” is now and I am satisfied that the staves when shipped were com-
” mercially within and merchantable under the contract specifiea-
” tion,”
The decisions of the learned Judge and of the Court of Appeal
appear to me to have been unquestionably right. On the facts as
stated by the umpire as of the time of inspection only about 5 per
cent, of the goods corresponded with the description : and the
umpire finds it impossible to say what proportion conformed at the
time of shipment. It was contended that in all commercial
contracts the question was whether there was a ” substantial ” com-
pliance with the contract: there always must be some margin : and
it is for the tribunal of fact to determine whether the margin is
exceeded or not. I cannot agree. If the written contract specifies
conditions of weight, measurement and the like, those conditions
must be complied with. A ton does not mean about a ton, or a yard
about a yard. Still less when you descend to minute measurements
does 1/2 in. mean about 1/2 in. If the seller wants a margin he must
and in my experience does stipulate for it. Of course by recognised
trade usage particular figures may be given a different meaning, as
in a baker’s dozen; or there may be even incorporated a definite
margin more or less : but there is no evidence or finding of such a
usage in the present case. No doubt there may be microscopic
deviations which business men and therefore lawyers will ignore.
And in this respect it is necessary to remember that description and
quantity are not necessarily the same: and that the legal rights in
respect of them are regulated by different sections of the code
description by Section 13, quantity by Section 30. It will be found
that most of the cases that admit any deviation from the contract
are cases where there has been an excess or deficiency in quantity
which the Court has considered negligible. But apart from this
consideration the right view is that the conditions of the contract
must be strictly performed. If a condition is not performed the
buyer has a right to reject. I do not myself think that there is any
difference between business men and lawyers on this matter. No
doubt in business men often find it unnecessary or inexpedient to
insist on their strict legal rights. In a normal market if they get
something substantially like the specified goods they may take them
with or without grumbling and a claim for an allowance. But in a
falling market I find that buyers are often as eager to insist on their
legal rights as courts of law are ready to maintain them. No doubt
at all times sellers are prepared to take a liberal view as to the
rigidity of their own obligations, and possibly buyers who in turn
are sellers may also dislike too much precision. But buyers are not
as far as my experience goes inclined to think that the rights defined
in the code are in excess of business needs. It may be desirable to
add that the result in this case is in no way affected by the umpire’s
finding that the goods were fit for the particular purpose for which
they were required. The implied condition under Section 14 (1),
unless of course the contract provides otherwise, is additional to
the condition under Section 13. A man may require goods for a
particular purpose and make it known to the seller so as to secure
the implied condition of fitness for that purpose : but there is no
reason why he should not abandon that purpose if he pleases, and
apply the goods to any purpose for which the description makes
them suitable. If they do not correspond with the description there
seems no business or legal reason why he should not reject them if
he finds it convenient so to do.
Agreeing as I do with the reasoning of the judgments below, I
find it unnecessary to say more than that I agree that the appeal
should be dismissed with costs.
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