Johnson Bekederemo V. Colgate-palmolive (Nig.) Ltd (1976)

LawGlobal-Hub Lead Judgment Report

SOWEMIMO, JSC 

The question which arises for consideration in this appeal is whether a breach of a condition of a contract of sale constitutes a repudiation of the contract.   The facts in the case are not in dispute. The plaintiff entered into an agreement with the defendant company under which the latter agreed to supply the former with goods. Their transactions were to be governed by certain conditions contained in the agreement tendered in the case as Exhibit A1. The terms of the contract relevant to this case are: –

“1. The Company hereby agrees to sell to the distributor and the distributor hereby agrees to buy the company’s goods for sale throughout Midwest State, starting from ……………………………….

2. All purchases of the company’s goods by the distributor shall strictly be for cash payments. Provided that the company will grant up to thirty days credit after delivery of the goods by the company to the distributors within which the distributor shall effect payment in full for all goods delivered.

3. Whilst this agreement remains in force, the company shall pay to the distributor a rate of commission of 10% on the invoice price of all goods bought by him.

4. This agreement is to be operative for a trial period of four months and if successfully executed by the distributor to the satisfaction of the company, then this agreement shall continue in full force and effect provided always that in case the company is not satisfied with the performances of the distributor, then the company shall be entitled to terminate this agreement during the said trial period of four months by giving 14 days notice to the distributor.

10. Without prejudice to any of the provisions herein-contained, the company may terminate this agreement by giving three months notice in writing to the Distributor and on the expiration of such three months, this agreement shall be wholly determined.”

As indicated on Ex. K, which the plaintiff admitted with some corrections as correct, the defendant company supplied goods on nine (9) specific occasions running from 15/1/72 to 24/6/72. The total value of the goods supplied is £16,333.2.8d. The plaintiff made a total part payment for the goods on seven (7) occasions from 15/3/72 to 18/8/72 and the total payment is 7,000. It is however not disputed that the plaintiff was indebted to the defendant company for £5,337.15.3d. In spite of this indebtedness the plaintiff insists that he was entitled to be supplied with goods and that failure to do so was a breach of Ex. A1 which we have referred to above.    The learned trial judge examined the legal implications involved in the peculiar position of defaulting plaintiff and his claim and held thus: –

“It is clear that the obligation of the company to deliver goods to the plaintiff and the plaintiff’s undertaking to pay cash immediately or within thirty days are concurrent and correlative promises; both obligations are conditions of contract. It is only when they are properly observed and each party wants the agreement to terminate that clause 10 which stipulates the termination of the agreement after a three months’ notice can operate.  

But where there is a breach which has affected the very basis of the agreement the condition as to notice does not form any matter for consideration in determining the liability of the injured party. It has to be remembered also that if a party is entitled to put an end to a contract by reason of a breach of an essential promise and he does not exercise his right to do so on becoming aware of the breach he loses that right and cannot afterwards exercise the right without giving reasonable notice of his intention to do so. See Halkett v. Earl of Dudley (1907) 1 Ch. 590 at page 600.

But the fact, however, that the company condoned the breach after the first delivery did not prevent them from terminating the agreement when further breaches occurred as it was laid down in Jackson v. Rotax Motors & Cycle Co., (1910) 2 K. B. 937 and Ponoutsos v. Raymond Hardley Corporation of New York (1917) 2 K. B. 473 at pages 478 – 479 that the fact that the innocent party has over-looked one breach of an essential promise does not prevent him from terminating the contract if a second breach of an essential promise is committed.    It follows that in my opinion the plaintiff must fail in his claim because he sues upon the special contract (Exhibit A) and he has not performed the contract in accordance with its terms.

The plaintiff could not insist on delivery of goods to him when he showed no ability to pay for them. The defendant company has expressed its willingness to continue with the contract but this can only depend on a reciprocal assurance by the plaintiff to pay for the goods which is really the stratum of the agreement. The plaintiff’s claim is therefore refused and it is accordingly dismissed with N50.50 costs in favour of the company.”    

On appeal before us Dr. Ijewere, learned cousel for appellant, contended that time for payment for goods supplied was not a condition for future supplies and therefore Clause 2 of Ex. A. was not breached. He referred to Section 11 (2) of the Sale of Goods Law Cap 115 in Volume 5 of the Laws of Western Region of Nigeria, which is the applicable law, and submitted that time not being of the essence of Ex. A1, a breach of Clause 2 of that contract is not a breach of a condition. That section reads:-

“11 (1)Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale, but whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract.”

With respect it is quite clear that appellant and defendant/respondent company definitely made time for payment a condition of the contract in Clause 2 of Ex. A1. As a matter of fact appellant did not raise this as an issue at the trial. Learned counsel for the respondent pointed out that on the agreement and in evidence both parties intended to be bound by Clause 2, and on that basis the appellant cannot now complain. Some reference was made to Section 31(2) of the same law but it does not seem that it is applicable to this case because that section deals with contract for instalmental delivery of goods.    

We are quite satisfied that the learned trial judge was justified in refusing the appellant’s claim on the ground that he had committed a breach of an essential condition of the contract, which had the effect of putting the contract itself at an end.  The appeal fails and is hereby dismissed. The appellant will pay to the respondent the cost of this appeal which we assess at 116 Naira.

Other Citation: (1976) LCN/2298(SC)