B. E. O. O. Industries (Nigeria) Ltd V. Mrs. S. B. Maduakoh & Anor (1975)

LawGlobal-Hub Lead Judgment Report

IDIGBE, J.S.C. 

When this case came up for trial in the lower court (i.e. the High Court of Lagos) there were stored away in a store 10,242 special satchels, designed for use by the Census  Board during the last census exercise in the country in 1973; they had been manufactured by the respondents at the request of the appellants but had not been collected and paid for by them in accordance with the terms of a contract concluded between the parties during the month of May, 1973.

The evidence which the learned trial Judge accepted in the lower court was that pursuant to negotiations between the appellants and the respondents, the latter at the request of the former agreed to manufacture a total of 150,000 special satchels. It happened in this way: In May, 1973 the 1st appellant who, together with the 2nd appellant, was trading under the style of “Plumstead Commercial and Company” approached the Managing Director of the respondents, B.E.O.O. Industries Ltd., a trading company incorporated in Nigeria, and they discussed about the manufacture of special census satchels; these satchels were required by the National Census Board which in turn had asked he appellants to make available for its use, at an agreed fee, a total of 150,000 of the said satchels.

The negotiations culminated in an agreement between the parties as evidenced by exchange of letters and, in particular, the first appellant’s letter of 15th May, 1973 (Exhibit E). There was a statement given in evidence (although not appearing in the pleadings) that the satchels were to bear and did bear the coat-of-arms of the Federal Government of Nigeria. At first it was agreed that a total of 150,000 satchels were to be manufactured for the appellants at a coat price of N1.30 per satchel. Subsequent to the agreement and after some of these satchels had been manufactured by the respondents, they (respondents) were obliged to complain to the appellant about the rise in the price of raw materials used in the production of these satchels.

Consequent upon this complaint, it was agreed verbally, according to the respondents, that the unit cost of each satchel should be increased by 50k (i.e. from N1.30 to N1.80). It should be mentioned here, at once, that the learned trial Judge did not accept this evidence of oral variation of the terms of the contract culminating in the increase of the unit price of each satchel.

However, in pursuance of the contract the respondents manufactured 150,000 special census satchels but the appellants took delivery of, and paid for, only 139,758 of them inspite of persistent and pressing demands of the respondents that they (the appellants) should collect and pay for the balance (10,242 special census satchels). Following the appellants’ refusal to collect and pay for the balance of the said satchels the respondents were compelled to initiate the present proceedings and claimed by their writ of summons as follows:-

“N100,000.00 being special and general damages for breach of contract of manufacture of 150,000 units of census satchels”
and in the final paragraph of their statement of claim, the respondents claimed:-

“….special and general damages of N100,000.00 and interest at the rate of 10% per annum.

PARTICULARS OF DAMAGE

(1) Balance due on contract sum  N88,314.60

(2) Cost of storage of 10,242
satchels and general damages   N11,685.40
Total=      N100,000.00

Apart from a document Exhibit M. (Certificate of Incorporation, under the Registration of Business Names Act, of the trading concern known as Plumstead Commercial & Company) which was put in evidence by the appellants during the cross-examination of one of the witnesses for the respondents, the appellants relied on their pleadings and did not call any witness in support of their case. It was clear from the Statement of Defence of the appellants that they were not disputing the existence of the contract; they however, denied (a) that there was any oral variation of the same culminating in an increased unit price of 50k for each manufactured satchel and (b) that the respondents produced 150,000 special satchels “of good quality.” According to the appellants, “the respondents delivered only 139.758 satchels of good quality which was 10,242 short of the number bargained for”, and they (respondents) “were duly paid what was due for the amount so delivered which was N181,685.04”. Appellants further averred in their defence that “in consequence of the failure of the plaintiffs to supply the satchels” they were obliged to make alternative arrangement for the supply of the remaining 10,242 satchels. It should, however, be mentioned that the 2nd appellant denied that he was a member of trading partner of Plumstead Commercial & Company which is a business of which the first appellant claimed to be the sole proprietress; and it was in their effort to establish this aspect of their defence that Exhibit M was put in evidence by the appellants. At the trial, however, three witnesses one of whom (a Mr. Butler Ogiale) was the managing director of the respondents/company testified in support of the case for the respondents; and in the concluding stages of his evidence, Mr. Ogiala told the court that because the appellants refused to collect the remaining 10,242 satchels (the balance of their order) the respondents/company were compelled to hire a warehouse in which to store the same. As is evident from their claim, part of it is in respect of the cost of hire of the said store.

The learned trial Judge having reviewed the evidence before him made the following observations:

“…………… I am of the opinion that the refusal by the defendants to take delivery of 10,242 satchels was a wrongful act which constituted a breach of their contract with the plaintiffs. And by section 50(1) of the Sale of Goods Law Cap 115, the plaintiffs are entitled to maintain an action against the defendants for non-acceptance of these satchels. The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of event, from the defendants’ breach of contract………….. In a situation such as in this case where damages is claimed for non-acceptance of satchels for which there is no available market, the measure of damages is not only loss of profit, but includes the loss of the cost of the satchels that cannot be disposed of by the plaintiffs…”
The learned trial judge after considering the several submissions on the issue of damages which were made before him continued his observations: