Maiden Electronics Works Ltd. V. Attorney-general Of The Federation (1974)
LawGlobal-Hub Lead Judgment Report
The defendants, an electronics and telecommunications Company, by letter dated 29th February, 1968, written as a follow-up to an earlier letter dated 22nd February, 1968, (Ex. 31) submitted to the Deputy Director, Department of Posts and Telecommunications, Ministry of Communications, Lagos, quotations in respect of multi-channel radio-telephone links which the Ministry proposed to install between Lagos and Calabar and between Ogoja and Calabar, and also in respect of a proposed low-power SSB point-to-point simplex radio telephone over the same paths. The contents of the letter (Ex. 8) read:
“We have the pleasure to refer to our enquiries of last month and submit as per attached QUOTATIONS Schedules our quotations in respect of the proposed multi-channel radio-telephone links between Lagos and Calabar or between Ogoja and Calabar and also in respect of the proposed low-power SSB point-to-point simplex radio-telephone over the same paths.
We wish to say that we have devoted much thought and consideration to your technical requirements both as related to costs and quality of equipment and we are satisfied that our selection of the various types of equipment is highly competitive, we therefore have no doubt that you will find each item of the Equipment and Systems offered very satisfactory.
We have endeavoured to quote for alternative SYSTEMS, in the hope that you will not fail to find one that will meet your specific requirements and specification.
We have also described each of the major equipment in some detail, on the attached schedule, under various headings.
Comprehensive technical performance specifications of each equipment offered are readily available in the descriptive leaflets contained in this folder.
We shall be quite happy to supply further information on any aspect of these quotations in anticipation that you will be disposed to grant us the opportunity to be of service to your Department.
We must explain that the c.i.f. prices quoted include only sea freight and insurance but do not include customs duty.
(Sgd.) S.B. Obassa.”
Attached to the above letter are the quotations for each of the three systems referred to therein.As quotation in respect of the Ogoja-Calabar system (referred to as System 3) is not relevant to these proceedings, we shall say no more about this particular system. The cost of the items of equipment quoted as System 1 was 28,520:0:0d while the cost of System 2 which is quoted as an alternative to System 1 is 26,908:0:Od. In addition, the cost of the installation of either of these two Systems together with System 3, less transportation, was quoted as 1,350:0:Od. Incidentally, the above quotation for System 1 was also attached to the earlier letter dated 22nd February, 1968, which the defendants had also written to the Deputy Director.The Deputy Director replied by letter dated 30th May, 1968 (Ex. 1) to the earlier letter of 22nd February, 1968, as follows:
HF Radio communication Equipment
In reply to your letter reference SB/CA.34-144 of 22nd February,
1968, I wish to inform you that you are requested to supply the under mentioned HF radio communication equipment with ancillaries within 6 to 8 weeks delivery period. The equipment are to be installed by you with in two weeks of delivery.”
After listing all the items of equipment offered earlier by the defendants in his letter (Ex. 31) as System 1 and System 3 respectively, the letter ended as follows:
“2. The Controller of Stores will issue and forward to you Local Purchase Order for the above-mentioned items.
- Please treat as urgent and keep me informed of the position.
(Sgd.) I.O.A. Lasode
Deputy Director (Planning).”
A copy of this letter was then forwarded to the Controller of Stores, P. & T. Headquarters, Lagos, with the following endorsements:
Please issue L.P.O. to the Telecommunications Manager, Maiden Electronics, Lagos.
On 4th June, 1968, the Local Purchase Order (Ex. 6), which was later attached to the Payment Voucher No. 26 of December, 1968 (also admitted in evidence as Ex. 6), was duly prepared in favour of the defendants. Attached to this L.P.O. is a list containing all the equipment listed under Systems 1 and 3. Incidentally the cost of the items of equipment used in System 3 (the Calabar-Ogoja link) which has been satisfactorily installed and commissioned, and for which payment has been made, is 840:0:Od. The present proceedings, therefore, do not concern System 3.
On the receipt of the Local Purchase Order (no. NR/89168-9 of 4th June 1968, in respect of Order No. 381018) the defendants placed an order for the equipment.
Meanwhile, the Assistant Director (Planning) wrote to the defendants about the equipment on 4th September, 1968. The letter (Ex. 16) reads:
Ogoja H.F. Terminals
The receipt of your letter ref. SB/CA.341238 informing us of the cost of airfreighting Radio Equipment for the above terminals is hereby acknowledged and the amount of ‘C31, 450 involved noted.
We wish to remind you that according to your letter ref. SB/CA.34-144 of February 22nd, 1968 a delivery time for the equipment of 6/8 weeks was quoted. In our letter to you ref. P.020/ of May 30, 1968 instructing you to supply the equipment, it was our hope that you will adhere strictly to the delivery period which you had quoted earlier and the equipment would have been delivered at the end of July 1968 at the latest. We are now in the first week of September, 1968.
You may like to know that the government of the South-Eastern State is getting extremely anxious about the delay in installing the Calabar-Ogoja-Lagos-H.F. Links and I am sure you will appreciate the anxiety of that government and ensure that further delay in delivering the equipment is avoided at all cost.
(Sgd.) P.S. Sahni
Asst. Director (Planning)”
Later, Mr. Sahni (the Asst. Director, Planning) wrote again to the defendants on 30th November, 1968. The contents of this letter (Ex. 19) are as follows:
“Lagos-Calabar H.F. Link
This is to confirm that payment will be made as agreed in my letter No. P.020 of May 30, 1968 when we take delivery of the equipment for the above link, which I presume, have arrived from the United Kingdom. This matter was discussed with Mr. Ghobadia and Mr. Lasode. The equipment are as listed in the Radio Communications Ltd. Packing Note No. CP/10444 of 20th November, 1968.
I may add it here that payment for the installation and commissioning will be made on satisfactory completion of the contract.
(Sgd.) P.S. Sahni
Asst. Director, Planning.”
Pursuant to the above letter, the defendants, on 2nd December, 1968, wrote to the Deputy Director (Planning), Posts and Telecommunications, about payment for the equipment. The letter (Ex. 32) reads:
“Lagos-Calabar H.F. Link
Further to your letters reference No. P.020 of May 30th, 1968 and No. 020 No1.III/421 of 30th November, 1968, we will be grateful if you will make payment for the above equipment, on our delivery and acceptance by you, to the United Bank of Africa, Oba Akran Avenue, Ikeja.
We will be very grateful if you will confirm your compliance with this instruction in writing.
Thanking you very much for your co-operation in this matter.
(Sgd.) Anofi S. Guobadia
To this letter the Ministry replied in a letter dated 3rd December, 1968 (Ex. 33) as follows:
Lagos-Calabar H.F. Link
Your letter No. AGICA 31-1212 of 2nd December, 1968.
I have to refer to your above letter and to advice you that your request to have the payment made to your bank, the United Bank for Africa, Oba Akran Avenue, Ikeja will be complied with any time this is to be made in connection with the delivery and acceptance of the above equipment.
(Sgd.) S.O. Olusemo
for Contracting Officer Deputy Director.”
The equipment duly arrived in Nigeria in December, 1968. The list of equipment which arrived, as shown in Invoices Nos. M0056 and M0057 of 10th December, 1968 (Ex. 6) did not include the “Racal HF Double Diversity Receiving Terminal” selected in System 1. Instead the “Racal Single ended Receiving Terminal” offered earlier as an alternative under System 2 was substituted. Nevertheless, the equipment, on arrival, were, as shown in the Invoices referred to above, collected in a P.&T. lorry and “Received in good condition” by an official of the Ministry of Communication. We wish to point out, at this juncture, that the list in Packing Note No. CP/10444 (see Ex. 9)referred to in the letter (Ex. 19) from Mr. Sahni to the defendants includes only the “Single Receiving Terminal” and not the “Double Diversity Receiving Terminal” ordered in System 1.
On the receipt of the equipment listed in the Invoices, the Ministry, on 20th December, 1968, prepared a Payment Voucher (Ex. 6) for 26,900. The detailed description of the articles for which payment is being made by virtue of the Payment Voucher reads:
“To payment of Telecommunications Equipment supplied to the Posts and Telecommunications Department by Maiden Electronics Works Ltd., Lagos vide Invoice Nos. M0056 and 0057 of 10th December, 1968 attached.”
The Payment Voucher was checked, passed, and the amount shown therein paid on the same day 20th December, 1968. On being paid, the defendants issued the receipt (Ex. 7) dated 20th December, 1968, the contents of which read:
“Received from Director, P.&T. Lagos the sum of Twenty six thousand nine hundred pounds,shillings and pence being payment of the cost of Radio telephone equipment supplied in respect of Lagos/Calabar/Lagos and Calabar/Ogoja radio links vide P.V. No. 261 of 20/12/68 26,900:
Maiden Electronics Works Ltd.”
Before the arrival of the equipment, a meeting was held on 18th October, 1968, in the office of the Assistant Director (Planning) to consider among other things:
“(1) Installation of the Transmitting, Receiving and R.T.T. terminals at Falomo and Osborne Road Stations including the interconnections between Falomo, Osborne Road and Lagos ‘A’ Exchange.”
Paragraph 3 of the minutes of this meeting (Ex. 10) at which four representatives of the Posts and Telecommunications Department and one Mr. Obassa who represented the defendants were present reads:
“Mr. Obassa was next asked by Mr. Ekanem to submit the Block Schematic diagram of the installation for study and consideration. He produced his file copy. This was studied in the light of the amendments which Mr. Obassa pointed out and was found workable. He promised to submit the latest version, which Mr. Ekanem will reproduce and circulate to the sections represented at the meeting.”
Mr. Ejiofor suggested that Maiden Electronics should agree to allow P.&T. personnel to take part in the installations at both Lagos and Calabar which Mr. Obassa readily agreed to.”
As we have said earlier, four representatives of the Posts and Telecommunications Department were present at this meeting of 18th October, 1968. Among those present was Richard Ekanem who holds a Master of Science degree in Electrical Engineering of London University and was at the material time in the planning section of the department. When he gave evidence as the 3rd D/W. in this case in 1970, he was the Acting Territorial Controller of the department in the South-Eastern State.
As a follow-up to the decision taken at the meeting referred to above, the Asst. Director (Planning) wrote to the defendants on 21st October, 1968. The letter (also admitted as Ex. 10) reads:
“Calabar-Lagos H.F. Public Telephone Link
I attach herewith copy of minutes of the meeting held with you in my office on October 18, 1968 annexed to which is the ‘Action Sheet’ in which are summarised the actions to be taken by the persons named therein in respect of the installation of the above link.
I shall be grateful if you will submit earliest, as requested, to our Mr. R.E. Ekanem the Block Schematic Diagram of the Installation and the list of one-year stock of recommended spares for the system.
I wish to inform you that arrangements are already in hand to attach to your installation team P. & T. personnel to take part in the installations at both Lagos and Calabar.
With reference to the joint inspection of Falomo and Osborne Road Stations and the aerial forms proposed, it has been arranged that this be carried out on Wednesday October 23, 1968 at 9.00 a.m. Would you therefore please call at this office on the day in question at the specified for the inspection.
(Sgd.) P.S. Sahni
Asst. Director (P).”
Apparently there was some delay in carrying out the installation as a result of which Mr. Sahni wrote a letter dated 14th January, 1969 (Ex. 17) complaining about the delay and requesting the defendants that if they had “any difficulties or limitations in commissioning the equipment before the 30th January, it should be brought to our notice without any delay.” When the delay in completion continued in spite of further complaint in writing, the Deputy Director (Planning) then wrote a strongly worded letter dated 8th April, 1969 (Ex. 21) to the defendants. The letter reads:
“Commissioning of Lagos-Calabar H.P. Links.
I wish to inform you of our utter disappointment is not receiving a reply to our letter P.020 Nol. IV/493 of 15th March, 1969 despite the urgency attached to it.
- Up to date, there has been no improvement at all to the Lagos/ Calabar link and further delay to the completion of commissioning on your pan is causing P. & T. and the Government of South Eastern State serious concern and great embarrassment. I request therefore that you should submit immediately to this office the up to date position in respect of the link and your proposals for bringing the commissioning of the system to a successful operating condition would make it possiblefor us to commence the necessary tests.
- You will recall that on Thursday, 3rd April, 1969 a meeting was held in my office with Mr. Ejiofor during which I expressed our serious concern about the deplorable situation of the link and urged that immediate action be taken to bring the link to an acceptable standard. At this meeting Mr. Ejiofor promised that he would discuss the issue with you and submit to this office on Saturday, 5th April, 1969 a letter which would provide a fully reply to our letter of 15th March and contain proposals if any which would cause the improvement to the link to meet our technical and operational requirements. I am still anxiously waiting for your early response.
(Sgd.) I.O.A. Lasode
Deputy Director (Planning).”
On 30th April, 1969, the defendants wrote to Mr. Lasode (Ex. 23) informing him that they had reported the unsatisfactory performance of certain items in the equipment to their suppliers in the United Kingdom and that they had promised to replace the unsatisfactory unit with another unit as soon as possible. When nothing happened, the Deputy Director (Planning) wrote another letter (Ex. 24) to the defendants on 28th July, 1969, directing them to complete the installation and commissioning of the link not later than 15th August, 1969. In their reply of 11th August, 1969 (Ex. 25) the defendants stated, inter alia, as follows:
“We hope to be able to hand over the installation to you on the 15th instant as instructed. We would like to mention that the Calabar-Ogoja Link has long been completed and handed over on trial to the Territorial Controller Calabar.”
When the installation was still not completed by 15th August, 1969, as requested, the Deputy Director (planning) wrote to the defendants on 16th August, 1969, instructing them to discontinue work on the installation. The letter (Ex. 30) reads:
Lagos-Calabar and Calabar-Ogoja H.F. Radio Links
Notice of dismissal from Projects”
Further to my letter P.020 Nol.lV/44 of the 28th July, 1969, informing you that the installation and commissioning of the Lagos-Calabar and Calabar-Ogoja radio links must be completed not later than 15th August, 1969, you are hereby informed that since as of today’s date 16th August, 1969, work on the above radio links have not been satisfactorily completed as requested, you and your agents are to discontinue forthwith any further work on these radio links.
- An inventory of all equipment, materials and parts thereof forming part of these radio links is to be taken and all such equipment in Lagos, Calabar and Ogoja handed over to the P. & T. Territorial Controllers in Lagos and Calabar. All other outstanding items still in your possession should also be handed over. Subsequently you and your agents should vacate all P. & T. premises.
(Sgd.) LO.A. Lasode
Deputy Director (Planning)”
In view of the above letter it is needless to say that the sum of 1,350 which the defendants quoted as cost of installation in their letter of 29th February, 1968 (Ex. 8) was not paid. Instead, the Attorney-General of the Federation, on behalf of the Posts and Telecommunications Department, (hereinafter referred to as the Ministry), instituted proceedings against the defendants in the Lagos High Court wherein he claimed in his amended statement of claim as follows:
“(i) Declaration that the defendant is in breach by reason of his failure to perform vital stipulations of the contract and the Ministry of Communications is discharged from performing the contract;
(ii) Refund of the sum of 26,900 paid to the defendant for a consideration which has totally failed;
(iii) 10,000 general damages for breach of contract;
(iv) Alternatively, 10,000 damages for breach of warranty ex post facto.”
Paragraphs 3 to 13 of the plaintiff’s statement of claim read:
“3. The defendant contracted to supply and install radio communications equipment for the Ministry of Communications linking Lagos with Calabar and Calabar with Ogoja at a total cost of 29,870.
- By virtue of quotation dated 29th February, 1968 the defendant promised to deliver the equipment in Lagos within 6 to 8 weeks of the date of the confirmed order.
- In the quotation referred to in paragraph 4, the defendant submitted among other things specifications for three alternative systems from which the Ministry of Communications selected a system which the defendant quoted as 4 voice Frequency Channels using Double Diversity Reception, to ensure high quality service capable of optimum integration into the existing public telephone/telegraph systems on Lagos-Calabar-Lagos and single SB Receiver Transmitter for Ogoja-Calabar-Ogoja links.
- By a letter dated 30th May, 1968, the Ministry of Communications confirmed the order and requested the defendant to supply the equipment within 6 to 8 weeks and to install it within 2 weeks of delivery.
- The Ministry of Communications paid out the sum of 26,900 to the defendant to supply the equipment.
- The defendant supplied and installed the equipment minus the double diversity combiners comprised in System 1 which System was selected for order for the plaintiff for Lagos-Calabar-Ogoja link to ensure high quality service but instead the defendant ordered Receiver Type RA 117 A without authority from the Ministry of Communications.
- The Ministry of Communications wrote several letters to the defendant directing their attention to the delivery period and expressing dissatisfaction over the way the project has been handled but the defendant after several promises and excuses failed to deliver the installation.
- At a meeting convened on 23rd January, 1969, to discuss matters concerning transmission performances of the link, the defendant disclosed that the equipment installed cannot give the performances quoted and that part of the equipment i.e. double diversity receiving terminal would be very complicated, unreliable and that diversity combiner, being a very sophisticated device, is extremely expensive.
- In spite of repeated demands, the defendant failed to deliver the installation for commissioning on 15th day of August, 1969 as agreed.
Thereafter the Ministry of Communications by letter dated 22nd day of August, 1969 stopped the defendant from doing further work.
- The plaintiff will contend at the trial that the contract has been discharged for total failure to perform the contract by the defendant.
- The Ministry of Communications has suffered financial loss known to the defendant as a result of the defendant’s default to perform the contract as promised.”
In their statement of defence, the defendants denied the averments in paragraphs 6 to 13 of the statement of claim and averred further that as a result of further negotiations with the Ministry, the plaintiff verbally cancelled their letter of the 30th May, 1968 and verbally ordered the items of equipment in System 2 described in the defendants quotation of 20th February, 1968, and which include 4 Voice Frequency Channels using single receiving terminal, all of which were stated to cost 26,908. They then averred further in paragraphs 11 to 18 of their statement of defence as follows:
“11. The defendant denies paragraph 7 of the amended statement of claim and say that the sum of 26,900 which was paid on or about the 10th December, 1968 was the cost of the equipment comprised in System 2 ordered by the ministry of Communications and which had been supplied by the defendant.
- The defendant avers that it supplied and installed System 2 which was ordered by, delivered to, and accepted by the Ministry of Communications and that double diversity combiners are not included in System 2 aforesaid. The defendant further avers that Receiver Type RA 117 A formed pan of the equipment comprised in System 2 aforesaid. Save as aforesaid, the defendants deny the allegations contained in para.8 of the amended statement of claim.
- With further reference to paragraph 9 of the amended statement of claim the defendant says that the representatives of the said Ministry waived the delivery period or agreed with the defendant to extensions thereof.
- Save that a meeting was convened on the 23rd January, 1969, the defendant denies any other allegation contained in paragraph 10 of the amended statement of claim.
- The defendant says that at no time was there any agreement as to the standard of high quality or of performance required by the said Ministry.
- With further reference to paragraph 12 of the amended statement of claim, the defendant says that it duly delivered and installed on the premises provided by the said Ministry the several equipment ordered by the Ministry to wit System 2.
- With further reference to paragraphs 11 and 12 of the amended statement of claim, the defendant says that on the 15th August, 1969 the equipment comprised in System 2 had been installed on the premises of the Ministry of Communications and were in good working order to the knowledge of the representatives of the said Ministry.
- The defendant will rely at the trial on estoppel by conduct and on every other legal and/or equitable defences.”
At the hearing, the plaintiffs called four witnesses. The first is Adelakun (1st Pl./W) who, at the material time, was the Controller of Stores at the Ministry. He admitted receiving the original of the invoice (Ex. 6) for the equipment, and sending it to the Deputy Director, Planning, so that the equipment could be checked with the invoice and payment arranged. Later a copy of the payment voucher (Ex. 4) for the amount shown on the invoice, which had been prepared by the Deputy Director, was sent to him. He later took delivery of all the equipment and took them into his stores after checking the number of cases supplied. He did not check the contents. He then informed Mr. Lasode the Deputy Director, Planning, that he had received the equipment and Mr. Lasode instructed him that the equipment should be delivered to him at Falomo. Following these instructions, he delivered the equipment to Richard Ekanem, the Senior Engineer (Planning) and a specialist in telecommunication who, as we pointed out earlier, was in the Ministry at the material time.
The next witness is Richard Ekanem (2nd PW). He stated that although the defendants offered him the equipment in System 1 for the Lagos-Calabar-Lagos Link and also those in System 2 as an alternative they only accepted those in System 1 and wrote the defendants to this effect. They also chose System 3 for the Ogoja-Calabar link. The total cost of System 1 is 28,520 C.I.F. Lagos while that of System 3 is 840 C.l.F. Lagos. When he took delivery of the goods on arrival he noted that, in respect of three items of the equipment supplied, the description, word for word, was not those contained in the system quoted for System 1 and also that the double diversity combiner unit was not among the equipment supplied. After stating that he raised verbal queries about these misdescriptions and omissions, he described what later transpired as follows:
“I was told then that not all the equipment had arrived. The voucher for 26,900 was for the goods, which had actually arrived and had been delivered. I told the defendants of the disparity between what were quoted and what were supplied. I was told by the defendants that the three items were alternatives to the ones in the proposal at no sacrifice to the scheme. They told me that these items would do exactly the same job. The statement by the defendants were, to my mind, tenable.”
When cross-examined about the equipment which the defendants supplied he replied as follows:
“It is true that System 2 was an alternative to System 1. System 1, the double diversity system, the difference between it and System 2 is that System 2 has not got the double diversity combiner in it.That is the main difference. System 2 uses the single receiving terminal. The sum quoted for System 2 is 26,908 against 28,520 for System 1. I admit that the only difference is that System 2 does not consist of a double diversity combiner unit. The equipment were inspected by me at our stores in Apapa and not at Falomo.”
When questioned further about the three different items supplied by the defendants and the double diversity combiner, he replied:
“I had discussed the matter with the defendants and they had assured me that the three items did the same work as the one quoted and would be no cost to the installation. Mr. Lasode may have told me that he had discussed the matter with the defendants and that I was to accept them. The defendants told me that the ones quoted for would have taken more delivery time and that the ones substituted would do exactly the same job. Mr. Lasode told me exactly the same thing.
In my discussions with Mr. Lasode I also said that the double diversity combiner was not supplied. Mr. Obasa had told me that all the equipment had not arrived. It is true to say that all that remained to be supplied with the double diversity combiner units.”
He then described what happened after they had taken delivery of the equipment as follows:
“During my assignment the workshop was called out to inspect the equipment. After this I was never called out again. I only checked the equipment and left them in the store. I knew that the equipment were later sent to Osborne Road and Calabar for installation. I admit that the equipment were handed over to the defendants for installation at Osborne Road and Calabar. I know that the Government paid 26,900 for the equipment I checked.”
Another witness called by the plaintiff is Prithan Singh Sahni (4th Pl./W.) He holds a Bachelor of Science degree in telecommunication engineering and is a member of the Professional Institute of Chartered Engineers. At the material time, he was the Assistant Director, Telecommunications, in the Ministry. This witness stated that the items of equipment supplied and installed by the defendants were not working and that as a result the Ministry “did not obtain the objective of the contract and it resulted in a loss.” He also stated that this loss included the loss of the equipment, that they claimed 26,900 for the equipment, and that they also suffered a loss of 10,000 that they claimed as general damages.
Another important witness who testified for the plaintiffs was Hilmo Ceremovic (5th Pl/W.). He is a Yugoslav and holds a degree from the University of Zagreb. At the material time, he was the Chief Engineer, Planning in the Ministry. He did not come into the picture until December, 1968, after the equipment had been delivered and received by Ekanem (3rd Pl./W.) from whom he took over the Branch during that month. His responsibility, according to him, was to follow up the project and after final installation, to accept the system. As a result of what Ekanem told him about the difference between the items of equipment ordered and those supplied, and also after showing him (Ceremovic) the block diagram of the equipment to be supplied, he (Ceremovic) looked through the file relating to the matter. On perusal, he too discovered that the equipment supplied did not include the entire item required for the double diversity reception. He later raised the matter with a Mr. Chelter who is a representative of the overseas supplier of the equipment. He narrated the outcome of their discussion as follows:
“When I raised the question of the diversity reception Mr. Chelter explained that it would not be advisable to use diversity combiner, which is a very sophisticated and unreliable device. He said the device was also very expensive. I expressed my opinion that if they were not going to supply the equipment the price should be reduced accordingly.”
This witness also confirmed that although the equipment had been installed since April, 1969, the defendants had been trying to connect the system into the Posts & Telecommunications network but that this had not been successful. As a result, the link had not been commissioned by 15th August, 1969, when they instructed the Territorial Controllers at Lagos and Calabar to take the equipment into the custody and to prevent the defendants from entering the premises where the items of equipment were installed. When questioned about the connection to the main network the witness replied:
“I said this morning that the defendants were to connect their installation to our network. That was what we agreed upon. I denied that what was agreed upon was for the Post and Telecommunication staff to connect the installation to our network. In fact the defendants were trying always to connect it successfully but they did not succeed. It is true that some Post-Telecommunications staff were assigned to the defendants to help them but I say without responsibility to do the actual connection.”
To further question about the equipment supplied by the defendants, the witness replied:
“The equipment themselves were sound physically when we received them. We did not test them but as far as we could see they were sound. We accept and check the equipment. They were not damaged and we returned them to the defendants for installation. Upon acceptance of the equipment we paid for them. I signed Exhibit 4 saying that the equipment had been duly delivered and that payment should be made.”
Incidentally, Exhibit 4 is a copy of the payment voucher (Ex. 6) for ‘C326,900 on which this witness certified as follows:
“I certify that the above account is correct, and was incurred under the authority quoted, and that the services have been duly performed and that the rate/price charged is according to regulation/contract”.
Hilmo Ceremovic then concluded his testimony by corroborating the evidence of Ekanem (3rd Pl./W.) as follows:
“We are ready and willing to take over the installation if everything required to be done had been done by the defendants. What the defendants supplied was system 2 plus one receiver. In other words it was system 1 without the double diversity combiner. In System 2 there would be only one receiver. Defendants supplied all equipment listed for System 2. They supplied all equipment for system 1 except (1) the double diversity combiner, (20 pre-selection unit and (3) adaptor.”
In their defence, the defendants called on Anofi Guobadia, their Managing Director (1st D/W), who stated that the Ministry was informed at the outset after they had carried out a survey of the sites made available to them at Osborne Road, Lagos, and a Calabar, that the System they had recommended to them as double diversity System could not be installed at either of the two sites, that they asked them to accept System 2, and that Mr. Lasode, the Deputy Director, Planning, agreed. As a result of the agreement reached, they placed an order for System 2 in England. When the items of equipment arrived they were delivered to and accepted by the Ministry and paid for. Later, the defendants installed the equipment on the premises of the Ministry both at Lagos and at Calabar. Guobadia denied that the defendants agreed to commission the system. The 1st D1W then stated that after the installation had been completed, they tested it on the frequency given to them by the Ministry and found that this was not free from interference, including noise. When they used their own demonstration frequency, which had been allocated to them by the Ministry for other jobs, the reception was all right. By this they were able to prove that the equipment was working but that the fault was in the frequency allocated for the link. The witness said the defendants had finished the installation and were ready to hand over the system to the Ministry on 15th August, 1969, as requested, but that no one showed up to take over from them. They phoned to Ceremovic and he would not come. As a result they left and later they wrote the letter (Ex. 35) to the Deputy Director, Planning, on 19th August, 1969. In the letter the defendants admitted that one of the two main points outstanding is the operating frequencies.” They also pointed out “that the frequencies allocated for the services are unusable because of the high level of interference on each of them and that the frequencies now being tried out were selected by them as a last resort, even though they are incapable of the required bandwidth for the service.”
,When questioned about the equipment supplied by the defendants, the 1st DIW replied:
“It is true that the Ministry delivered back to use the equipment for Installation. The Ministry received and agreed with what we supplied.” With respect to the cost of installation the witness testified fun her as follows:
“The 26,900 that was paid to use did not include installation cost. In fact we have not been paid for installation. The installation cost was quoted ‘C31,350 for by us.”
The testimony of Goubadia-(1st DIW) was corroborated substantial by Simon Obassa (2nd DIW), the Telecommunications Manager of the defendants who was the defendants representative at the various meetings which the defendants had with the officials of the Ministry. He was also the person who inspected the sites both at Lagos and at Calabar on which the items of equipment were to be installed, and who, as a result, recommended that the double diversity combiner in System 1 would be unsuitable. Before joining the defendants, he had worked in the Posts and Telecommunications Department for 38 years and had been in charge of radio installation all over Nigeria and the Cameroons.
Another witness called by the defendants is Dennis Ejiofoh, an electrical engineer with the defendants’ Company, which he joined on 1st February 1969. Before then he was with the Ministry of Communications where he worked in the operational services branch in the Chief Engineer’s Office. While in the Ministry he was involved in the Lagos-Calabar link at the initial stages and was one of the officials present at the meeting of 18th October, 1968 when the two alternative systems were discussed and at which Obassa explained System 2 as shown in the schematic diagram (Ex. 11). When asked whether the system installed by the defendants was ready by 15th August, 1969, he replied:
“With regard to the frequency which we were using for our experiment which can only accommodate two-voice frequency channels the system was ready. With regard to the frequencies allocated the system was not ready and can never be ready unless the Ministry of Communications clears those frequencies of interference, noise, and traffic. The Ministry of Communications was responsible for allocation of frequencies. To my knowledge frequencies were allocated to my company. The quality of those frequencies was very bad. The best of them all could only accommodate one voice frequency channel as against the 4 frequencies channels required for the system. No equipment can work at all if no frequency is allocated.”
In a reserved judgement, the learned trial judge found as follows:
“I have considered very carefully the evidence on both sides and I have reached the decision that the Ministry at no time altered their order for a double diversity system as quoted by the defendants in the letter Ex.1. I do not believe the evidence adduced on behalf of the defendants that the Ministry’s Mr. Lasode or anybody else, agreed that the defendants should supply equipment other than as quoted in System 1. It seems to me that the defendants, despite the agreement they had reached with the Ministry, made up their minds to carry out the contract in defiance of what was agreed. . . .”
I have considered the evidence adduced by the defendants that the Ministry did not make available land of a sufficient size for the double diversity system. I do not believe this and I accept the evidence of the plaintiff’s witness to the effect that the land that was made available was sufficient for a double diversity system. . . . I do not believe that the land at Osborne Road or at Calabar which the Ministry made available was not suitable for the double diversity system or that the Ministry agreed to a change to System No.2.
The learned trial judge then considered the installation of System 2 and observed as follows:
“Even though the defendants went ahead and purported to install what they called System 2 that System never worked.. . The defendants did not make any installation that worked by the 15th August, 1969 or at any other time. Instead they made a number of lame excuses some of which I outlined above. The stories of the defendants that they installed System 2 properly or that they had the permission of the Ministry to alter the scheme to System No.2 or that the System which they purported to install was capable of a good reception or that the System worked and received Calabar clearly or that failure in commissioning the radio link was due to failure to allocate adequate frequency to them are all false and were altogether made up. It seems to me that the defendants were completely ignorant of the technicalities of the work they undertook to supply and install. The defendants I am satisfied were not capable of installing either the equipment in System 1 or 2.”
Thereafter the learned trial judge dealt with the law as applicable to the parties as follows:
“The defendants in their quotations put across a clear and unambiguous offer of the three types of equipment they held themselves out of being capable of delivering and installing. The letter Ex. 8 to my mind is not by an stretch of the imagination an invitation to treat. The evidence does not support the contention that there was a meeting of the minds of the parties on the supply and installation of System 2.”
After observing that the defendants represented the quality of the equipment and installation they were to give in such superlative terms, the learned trial judge pointed out again that the items of equipment were not installed in time and were not shown to be capable of being used as a telephone line and that their delivery was made outside the stipulated delivery item. The trial judge thereupon found as follows:
“Even though this was so the Ministry patiently awaited the installation. By their patience they more or less extended the completion time from about August 1968 to August 1969. This is the case where time is a condition and essence of the performance of a contract and upon a lapse in the stipulated time, the buyer continues to press for delivery in a contract for the sale of goods (see Richards v. Oppenheim (1950) 1 K.B.D. 16). When the time originally fixed, being of the essence of the contract the Ministry pressed the defendants to complete it and gave the defendants the final completion time as 15th August, 1969 the Ministry was entitled to cancel the contract when on that date the defendants were unable to complete it. I am satisfied upon the evidence that despite the assurance of the defendants in Exhibit 25 that they would hand over the installation on 15th August, 1969 the defendants did not do so.”
The learned trial judge then found that, because of the failure of the defendants to perform their stipulation to deliver the items of equipment in question within 6 to 8 weeks and to install them within two weeks as a radio communication link, the Ministry’s obligation under the contract was discharged. After stating that the plaintiffs were, therefore, entitled to a repayment of the 26,900 which they had paid to the defendants under the contract, the judge observed that as the plaintiffs gave no evidence of any damages suffered by them as a result of the breach, he was unable to award substantial damages against the defendants. He thereupon gave judgement as follows:
“On a full consideration of all the facts I have decided to award a sum of 27,300 in favour of the plaintiffs against the defendants whereof 26,900 is the sum paid by the Ministry to the defendants for a consideration which has wholly failed and 400 is general damages. Accordingly I enter judgement in favour of the plaintiffs against the defendants for 27,300 with costs assessed at 105.”
From the above, it is clear that the damages awarded were for breach of contract and NOT for breach of warranty.
In the appeal now before us against this judgement, the four grounds of appeal which were argued by the learned counsel for the defendants read:
“(1) The learned trial judge erred in law in failing to make a finding on the question whether the contract between the parties is:
(i) (a) a contract for the sale of goods, and (b) a separate contract for the installation of the equipment; or (ii) a single contract for work and labour.
(2) The learned trial judge erred in law and on the facts in failing to observe that the contract between the parties consisted of (i) the contract for the sale of goods and (ii) a separate contract for the installation of the equipment.
(3) The learned trial judge erred in law and on the facts in failing to take account of the fact that (i) all the goods delivered by the defendants to the plaintiffs were checked by the plaintiffs and accepted by them, and (ii) the equipment for the Calabar/Ogoja link was in fact installed and there was no complaint about it in this action.
(4) The learned trial judge misdirected himself in law and on the facts in holding . . . that the defendants for reasons that they failed to perform their stipulations to deliver the equipment in question within 6 to 8 weeks and to install them within two weeks as a radio communication link, the Ministry’s obligation under the contract is discharged and they are entitled to a repayment of the sum of 26,900 paid to the defendants under the contract.
Particulars of misdirection
(i) The contract between parties was for the supply of goods which were in fact supplied, delivered to and accepted by the plaintiffs who thereupon paid the purchase price for them.
(ii) In the alternative to (i) the goods supplied were (except for the absence of the double diversity combiners) substantially what the defendants delivered to the plaintiffs and which the said plaintiffs checked, accepted and for which they paid the sum of 26,900.
(iii) The sum of 26,900 being paid for the supply of goods (including the equipment in respect of the Calabar/Ogoja link) which the Plaintiffs have accepted and retained and not rejected and returned to the defendants, it is inequitable and unconscionable for the said plaintiffs to have a refund of the said sum as ordered by the court.
(iv) The learned trial judge found that ‘this is a case where time is a condition and essence of a contract and upon a lapse in the stipulated time the buyer continues to press for delivery in a contract for the sale of goods.’ Accordingly failure to deliver within the originally stipulated time cannot amount to a breach.
Briefly stated, the argument of the learned counsel for the defendants/appellants is this. The only conclusion, which can be discerned from the documents admitted as Exhibits 8, 10, 19, 32 and 33, is that the contract for the supply of the equipment enumerated in Systems 1 and 3 is separate and distinct from that for the installation of those equipment. Admittedly, what the defendants/appellants eventually supplied were the items of equipment in Systems 2 and 3, but once the plaintiffs/respondents have accepted the equipment, and paid for them, the plaintiffs/respondents are estopped from complaining that there has been a breach of contract for the sale of the items of equipment, particularly as one of their representatives said that the items were checked before they were accepted and found to be in good condition. The learned trial judge was therefore in error in ordering the repayment of the sum of 26,900 which is the amount paid by the plaintiffs/respondents for the equipment which also includes the sum of 840 which is the cost of the equipment in respect of the Ogoja-Calabar link in respect of which there has been no complaint since its completion.
With respect to the separate contract for the installation, since what the plaintiffs/respondents supplied to the defendants/appellants for installation as the Lagos-Calabar-Lagos link were what the defendants/appellants installed, the plaintiffs/respondents cannot now complain if the system does not work as efficiently as expected. Moreover, since the plaintiffs/respondents agreed to the variation of time of completion of the contract, time ceased to be an essence of the contract and the damages of 400 awarded for the breach should not have been awarded.
For the plaintiffs/respondents, learned counsel replied to the defendants/ appellants’ arguments as follows. The contract is one and indivisible. Under it, the defendants/appellants were to supply the items of equipment listed as Systems 1 and 3 and install them. What the defendants/appellants delivered to the plaintiffs/respondents and received by them were only part of the items of equipment contracted for and since the rest were not delivered there was a total failure of consideration for the supply of the equipment listed in System 1. Furthermore, since the installation could not be made to work there was also a failure on the defendants/appellants part to perform the installation part of the contract and the plaintiffs/respondents were therefore entitled to rescind the contract. With respect to the argument that time was no longer an essence of the contract, learned counsel contended that the plaintiffs/respondents were entitled to expect that the contract would be performed within a reasonable time.
A close perusal of the letter dated 29th February, 1968, (Ex. 8) showed that, in it, the defendants/appellants made three separate and distinct offers. Firstly, they offered to provide the equipment for the Lagos-Calabar-Lagos link under System 1 which would have “4 Voice Frequency Channels Using Double Diversity Reception.” It is a “high quality service” and all the equipment to be supplied under the System would cost 28,520. They also offered for the same link, in the alternative, another set of equipment under System 2 which would also have “4 Voice Frequency Channels Using Single Receiving Terminal” instead of the Double Diversity Reception; all the equipment to be supplied under this second System would cost 26,908. Secondly, they offered another set of equipment for the Ogoja-Calabar-Ogoja link under System 3 which would have a “looW Single Sideband Radiotelephone simplex; the equipment to be supplied for this System would cost 840. Thirdly, the defendants/appellants offered to install either Systems 1 and 3 or Systems 2 and 3, depending on which offer was accepted, for 1,350.
In their reply of 30th May, 1968 (Ex. 1) the plaintiffs/respondents accepted the quotations made in respect of Systems 1 and 3 and requested them to supply “the equipment with ancillaries within 6 to 8 weeks.” They also accepted the defendants/appellants’ offer to install the equipment because they stated in the letter “the equipment are to be installed by you within two weeks of delivery.”
At this juncture, it would be seen that the offer to supply the equipment and that to install them were made separately and accepted as such. To our mind, the two contracts are clearly severable. Before the equipment arrived, the plaintiffs/respondents indicated in a letter dated 30th November 1968, (Ex. 19) that payment for all the equipment would be made after they had taken delivery of them. To this letter, the defendants/appellants replied on 2nd December, 1968 (Ex. 32) requesting the plaintiffs/respondents to pay the amount of the cost of the equipment into their bank account at the United Bank for Africa at Ikeja after they had been delivered and accepted. On 3rd December, 1968, the plaintiffs/respondents replied (see letter Ex. 33) and promised to comply with the defendants/appellants instructions as to payment. Early in December, 1968, the items of equipment arrived as shown in the Invoice (Ex. 6). They were duly delivered to the plaintiffs/respondents in the plaintiffs/respondent’s lorry, checked by them, found to be in good condition, and accepted. At this point the plaintiffs/ respondents, because of the price shown on the invoice, knew or ought to have known that what were delivered to them were not all the items of equipment ordered for System 1, but were those ordered for System 2. As a matter of fact, Ekanem (3rd P./W) did say, in the course of his testimony, that when he went to their Stores at Apapa to check whether the items of equipment supplied were correct, he discovered that the descriptions of three items “word for word were not those contained in the system quoted for System 1 and also that the double diversity combiner unit was not among the equipment supplied.” Instead of rejecting all or some of the equipment, even at that stage, as not being in accordance with the contract, the plaintiffs/respondents nevertheless, kept them, paid for them and certified in the payment voucher (Ex. 6) that “the services have been duly performed and that the price charged is according to contract.” All these steps taken by the plaintiffs/respondents made it abundantly clear that the contract for the supply of the equipment was understood by them to be separate and distinct from that for installation and that they acted on the basis of that understanding. Their letter dated 16th August, 1969 (Ex. 30) in which they gave the defendants/appellants “notice of dismissal from projects” also lends considerable weight to this view. We will again refer to paragraph 2 of that letter which reads:
“2. An inventory of all equipment, materials and parts thereof forming part of these radio links is to be taken and all such equipment in Lagos, Calabar and Ogoja handed over to the P. & T. Territorial Controllers in Lagos and Calabar.All other outstanding items still in your possession should also be handed over.”
In view of the various actions taken by them,it cannot be gainsaid that the plaintiffs/respondents had accepted the items of equipment and appropriated them to the contract.
What then is the law applicable in such circumstances To our mind, there is provision for this type of situation in the Sale of Goods Act, 1893, which is a statute of general application in force in England on the 1st of January, 1900, and which is therefore in force in Nigeria. (See Khalil v. Mastronikolis (1949) 12 WACA 462 and Ekun v. Younan & Ors. (1961) All N.L.R. 245 at pages 254-255). The Act has been applied in Lagos State (see Khiami v. McCaul & Co. Ltd. 1956) L.L.R. 32). For our purpose, the relevant sections of the Act are sections 14(2), 17(1) and (2), 34 and 35 and they are reproduced hereunder:
“14(2) Where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality; provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.
17(1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.
(2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case.
- Where goods are delivered to the buyer, which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.
- The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them”.
In the case in hand, the plaintiffs/respondents after examining the items of equipment, accepted them, paid for them, and kept them in their Stores at Apapa as far back as December, 1968. They were later issued to the defendants/appellants for the purpose of carrying out the installation. When they felt there was undue delay about the completion of the installation they took back the equipment in August, 1969. By their conduct, they must be deemed, bearing in mind the above provisions of the Sale of Goods Act, to have accepted the items of equipment in a deliverable state and appropriated them to the contract. It is a question of construction of the contract, in each case as to what state the property would pass; it is, however, a question of fact, in each case, whether that stage has been reached. In view of the letters exchanged by the parties before and after the equipment arrived in Nigeria and the subsequent conduct of the parties, it is our view that the property in all the equipment, accepted and paid for by the plaintiffs/ respondents, passed to them on delivery and acceptance by them in December, 1968. In these circumstances, we do not see how the plaintiffs/ respondents can now claim the refund of the sum of 26,900, which they paid for the equipment on the ground that the consideration for the payment has wholly failed. They are certainly estopped by their conduct from making such a claim and the learned trial judge was in error in conceding and granting it.
The claim relating to the installation is on a different footing. The learned trial judge, on the evidence, which he accepted, found as a fact that the equipment did not work although the defendants/appellants assured the plaintiffs/respondents that they would work. He also found to be false both their “stories” and their explanation that the equipment did not work because the plaintiffs/respondents failed to allocate adequate frequencies to them. In the face of these findings of fact, it is immaterial whether the plaintiffs/respondents agreed to the installation of the equipment in System 2 in place of those in System 1 or not. The point is, the installation never worked and the completed period, which should have taken two weeks, had to be extended on a number of occasions until the 15th August, 1969, when the plaintiffs/respondents, with complete justification if we may say so, took over the installation and discharged the defendants/respondents.
By their delay or inability in completing the installation and making it work on the 15th August, 1969, defendants/appellants, in our view, have committed a breach of the separate contract for the installation of the Lagos-Calabar-Lagos link. Where, as a condition of its performance, time is of the essence of a contract for the sale of goods or for work to be done, and on the lapse of the stipulated time, the buyer continues to press for delivery or the employer continues to press for the completion of the work, thus waiving his right to cancel the contract, either the buyer or the employer as the case may be, has the right to give notice fixing a reasonable time for delivery of the goods or for the completion of the work thus making time again the essence of the contract; in that case, if the contract is not fulfilled by the new time stipulated, such buyer or employer will then have the right to cancel it. (See Richards v. Oppenheim 1950) 1 K.B. 616 (C.A.). The plaintiffs/respondents are, therefore, entitled to a declaration that the defendants/appellants are in breach of this particular contract (the satisfactory installation of the Lagos-Calabar-Lagos link O, by reason of their failure to make the system work and that the Ministry was therefore discharged from performing the contract.
The plaintiffs/respondents claimed the sum of 10,000 as general damages for this breach. The learned trial judge awarded them 400. We have had cause to comment before on the confusion that can arise by the use of the term “special” and “general” damages in cases of breach of contract (see Khawam v. Chanrai & Co. (1965) 1 All N.L.R. 182; and Akinfosile v. Mobil Oil Nigeria Ltd. SC/724/1966 delivered on 28th November, 1969). The rule governing the award of damages in contract has been clearly stated on Hadley v. Baxendale (1854) 9 Exch. 341 and it is this. Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either as arising naturally, i.e. according to the usual cause of things, from such breach of contract itself, or such as may reasonably be supported to have been in the contemplation of the parties, at the time they made the contract, as the probable result of the breach of it. The rule has been referred to with approval in Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. (1949) 2 K.B. 528; East Ham Corporation v. Bernard Sunley & Sons Ltd. (1966) A.C. 406 at pages 450’97451; and Koufos v. Czarnikow Ltd. (1967) 3 W.L.R. 1491. Again in Agbaje v. National Motors (Nigeria) Ltd., SC/20/68 delivered on 13th March, 1970, this court observed as follows:
“It is undesirable to refer in contract to general or special damages as normally the only damages, other than those arising naturally, flow from consequences specifically provided for by the parties which would not otherwise naturally arise from a breach of the contract.”
With this principle in mind, we will now proceed to consider what is the measure of damages suffered by the plaintiffs/respondents in the case in hand. We refer, in this connection, to what the learned editors of Hudson’s Building and Engineering Contracts, 10th Edition (1970) say at page 585, about defective or incomplete work. It reads:
“In these cases where, in a breach of contract, the work has been left incomplete, whether by abandonment, termination, or otherwise, or containing defects, the direct measure of damage will be the difference between the reasonable cost to the employer of repairing the defects or completing the work, together with any sums paid by or due from him under the contract and a sum which would have been payable by him under the contract if it had been properly carried out. (Where the former does not exceed the latter only, nominal damages would be recoverable, and where the sum due under the contract have been paid in full, as where a contractor has completed and defects or omissions are discovered at some time after final payment, the direct measure is, of course, the reasonable cost of repair simpliciter). Such damages are clearly recoverable within the first branch of the rule in Hadley v. Baxendale as likely to arise in the usual course of things from the breach.”
Nowhere in the judgment in the present case did the learned trial judge advert to the above principle of assessment, with which we agree, or employ any of the methods of assessment. All he said was that the plaintiffs/respondents gave no evidence of the damages suffered by the Ministry as a result of the breach and then went on to award them the sum of 400. Nevertheless, it is our view that all the plaintiffs/respondents are entitled to by way of damages cannot be more than the expenses, which they would have had to incur in employing another contractor to complete the installation. The contract for the installation of the two links is 1,350 and although this amount has not been paid to the defendants/appellants, we do not think, having regard to all the circumstances, including the undue delay, that we should disturb the award of the sum of 400 made to the plaintiffs/respondents by the learned trial judge.
Having said this much, we think that this appeal must succeed, but only in part. With respect to the judgment for a declaration that the defendants/appellants were in breach by reason of there failure to perform vital stipulations in the contract, the appeal fails and it is dismissed. So also is the appeal against the award of the sum of 400 as damages for the breach of the contract for the installation of the Lagos-Calabar-Lagos link. The appeal against the award of the sum of 26,900 as damages for the contract for the supply of the equipment, for the reasons, which we have given earlier, succeeds and it is allowed. This particular award is therefore set aside.
We accordingly order that the claim for the refund of the sum of 26,900 be and is hereby dismissed and this shall be the judgment of the Court. The defendants/appellants are awarded costs of this appeal assessed at N143.00.
IBEKWE, J.S.C. dissented:- I regret that I have to differ from the majority judgment on the central issue of this appeal. In my judgment, the question which falls for determination is two fold:
“(1) Did the defendants comply with the terms of the written contract which they entered into with the plaintiff
(2) Was it necessary for the learned trial judge to determine whether the contract entered into between the parties in this case, is a contract for the sale of goods or for work and Labour And what effect would such distinction have on the liability of the Defendants
The Claim in this action is for:
(i) Declaration that the defendant is in breach by reason of his failure to perform vital stipulations of the contract and the Ministry of Communications is discharged from performing the contract;
(ii) Refund of the sum of 26,900 paid to the Defendant for a consideration, which has wholly failed;
(iii) 10,000 general damages for breach of contract;
(iv) Alternatively 10,000 damages for breach of warranty ex post fact.”
The plaintiff, the Attorney General of the Federation, is suing as the person authorised by law to institute and defend proceedings on behalf of the Government of the Federation of Nigeria. The defendants, a Telecommunication Engineering Company, are dealers in telephone and electrical appliances. For the purpose of clarity, I prefer to refer to the plaintiff in this case as the Ministry.
The facts in this case are straightforward. Through the Territorial Controller of Posts and Telecommunications stationed in the South Eastern State, the Federal Ministry of Communications approached the defendants, in the hope that they would be able to submit proposals for the installation of a high frequency radio link between Lagos and Calabar on the one hand, and Calabar and Ogoja on the other hand. The purpose was to establish Public Telephone systems between Lagos and Calabar and Calabar and Ogoja, respectively.
In response to this enquiry, the defendants wrote letter Ex. 8 dated 29th February 1968, in which they offered three alternative systems to the Ministry. The letter reads thus:
QUOTATIONS FOR H.F. SSB 7 ISB RADIO TELEPHONE TERMINALS
We have pleasure to refer to your requires of last month and submit as per attached QUOTATIONS Schedules our questions in respect of the proposed Multi-channel radio-telephone Links between Lagos and Calabar or between Ogoja and Calabar also in respect of the proposed Low-power SSB Point-to-point complex radio-telephone over the same paths.
We wish to say that we have devoted much thought and consideration to your technical requirements both as related to cost and quality of equipment and we are satisfied that our selection of the various types of equipment is highly competitive, we therefore have no doubt that you will find each item of the Equipment and Systems offered very satisfactory.
We have endeavoured to quote for alternative SYSTEMS, in the hope that you will not fail to find one that will meet your specific requirements and specification.
We have also described each of the major equipment in some detail, on the attached schedule, under various headings.
Comprehensive technical performance specifications of each equipment offered are readily available in the descriptive leaflets contained in this folder.
We shall be quite happy to supply further information on any aspect of these quotations in anticipation that you will be disposed to grant us the opportunity to be of service to your Department.
We must explain that the c.i.f. prices quoted include only Sea freight and Insurance but do not include Custom Duty.
(Sqd.) S.B. Obassa,
MAIDEN ELECTRONICS WORKS LTD.
Onigbongbo Mile 9 Ikorodu Road,
118 Broad Street,
P.O. Box 1732,
4 VOICE FREQUENCY CHANNELS USING DOUBLE DIVERSITY RECEPTION. HIGH QUALITY SERVICE
Item Qty. Description rice fob Price cif
EACH ALL ALL
1.2 Racal ISB Transmitting
1.2 Racal ISB Transmitting
TA127 IKW Transmitter
with MA141 Distortion
Indicator/Monitor MA152 SWR
Indicator & Trip. MA202
12 Kc/s ISB Modulator
4 CRYSTALS to specific
Frequencies; housed in
floor standing steel cabinet
and generally as in Technical
Publication 340-2 TA99
Voltage Reg. 4325.00 9090.0.0
- 2 Racal HF Double Diversity
- 2 Receiving Terminal
Comprising: 2 RA 17L
Terminal Receivers 2
MA 197B Preselection and
RACAL 6 CH Crystal Oscillators
4 Crystals to specific Frequencies
2 RA98 ISB Adaptors
Combiners all housed in
floor standing steel
cabinet and generally as in
2 TA99 Single Phase 4142.00 8700.0.0
Item Qty. Description
Price fob Price cif
EACH ALL ALL
- 2 Racal MA 108 Wideband
with connectors 500.0.0 1050.0.0
Radio Telephone Terminal
& VFf signal Channelling
2 Units Comprising:
4 RTU Radio Terminal Units
Racal Call/Signal Unit
Voice Frequencies DisplacerlRestorer
2 Multiplexer Units
2 Demultiplexer Units
Recal Taching Panel
Transmit 4600.0.0 29870.0.0 9680.0.0
Cost of Installation of System
1 and 3 or System 2 and 3, less transportation
N.B. Aerial Masts assories have not been quoted for as you may decide to utilise bigar Masts mentioned in my other details. However, we can quote for this year and assories is approximately 5200.0.0.
(Sgd.) S.B. Obasa,
- VOICE FREQUENCY CHANNELS USING
SINGLE RECEIVING TERMINAL
Item Qty. Description Price fob Price cif
EACH ALL ALL
Racal ISB Transmitting
1&2 2 Same equipment, items
1&2 of System 1 4325.0.0 8650.0.0 9090.0.0
Racal Single ended
32 1 RA 17L Receiver
1 MS 197B Preselection
& Protection Unit
1 RACAL 6 Ch. Crystal
1 RA98 ISB Adapter
1 RA98 ISB Adaptor
1 4 CRYSTALS cut to
all housed in floor
standing steel cabinet
and generally as in
1 RA99 Single Phase
3375.0.0 6750.0.0 7088.0.0
42 1 Racal MA 108F Wide band
Generally as in
500.0.0 1000.0.0 1050.0.0
RADIO TELEPHONE TERMINAL & V.F.T. CHANNELING UNITS.
All items of equipment as in SYSTEM 1.
4600.0.0 9200.0.0 9680.0.0
LOW SINGLE SIDEBAND RADIOTELEPHONE, SIMPLEX
Item Qty. Description Price fob Price cif
EACH ALL ALL
1 2 Racal TRA355 12 Watt
with Hand Micro
Telephone and either 230V.
A.C. OR ALTERNATIVELY
12 Volts D.C. Supply
Units 400.0.0 800.0.0 840.0.0
Aerial Array Using 2″
Galvanised Iron Pipes
for Masts. 270.0.0
SYSTEM 1 & 2 6/8 Weeks
SYSTEM 3 4/5 Weeks
From date of receipt of confirmed order.
TERMS OF PAYMENT:
Strictly by Divisible, Confirmed and Irrevocable Letter of Credit drawn at
sight in favour of Racal Communications
Limited on any London Bank.
(Sgd.) S.B. Obassa,
By its letter dated 30th May, 1971 the Ministry accepted System 1 for the Lagos Calabar Link and also reproduced, word for word, the quotations and description relating to this system as set out in the defendants’ letter of offer.
The Ministry’s letter Ex. 1 speaks for itself. It reads as follows:
HF Radio-communication Equipment In reply to you letter reference SB/CA.34-144 of 22nd February 1968, I wish to inform you that you are requested to supply the under mentioned HF Radio communication equipment with ancillaries with-in 6 to 8 weeks delivery period. The equipments are to be installed by you within two weeks of delivery.
Item Qty. 1 2 Description
Racal ISB Transmitting Terminal Comprising
TA127 IKW Transmitter with MA141 Distortion Indicator/Monitor
MA 152 SWR Indicator and Trip
MA202 15B Modulator
4 Crystals to specific frequencies TA99
Single phase voltage Regulator Racal HF
Double Diversity Receiving terminal
MA 197B Pre-selection and protection units
Racal 6 channel Crystal Oscillators
Crystals to specific frequencies
RA98 ISB Adaptors
RS5172 Diversity Combines
RA99 Single phase Voltage Regulator
Racal MAI08F Wide band matching transformer with connectors.
Radiotelephone terminal and VFT SignaV Channelling units comprising:
RTUSC Radio terminal units
Racal Call. Signal Unit Voice Frequency
2 Multiplexer units
2 demultiplexer units
5 2 Racal Patching Panel transmit
Racal Patching Panel receive
Racal TRA355, 125 Watt p.c.p. HF transmitter/ Receiver with hand micro-telephone,
- The Controller of Stores will issue and forward to your local Purchase Order for the above-mentioned items.
- Please treat as urgent and keep me informed of the position.
(Sgd.) LO.A. Lasode,
Deputy Director (Planning).
This appeal is important in some aspects, and I therefore, think it desirable to set out the relevant portions of the Statements of Claim and of Defence filed by the parties.
In their Amended Statement of Claim the plaintiff averred as follows:
“2. The Defendant whose Registered Office is situated at 118 Yakubu Gowon Street, is an Electronics and Telecommunications Engineering Company.
- The Defendant contracted to supply and install radio communications equipment for the Ministry of Communications linking Lagos with Calabar and Calabar with Ogoja at a total cost of 29,870.
- By virtue of quotation dated 29th February, 1968 the Defendant promised to deliver the equipment in Lagos within 6 to 8 weeks of the date of the confirmed order.
- In the quotation referred to in paragraph 4, the Defendant submitted amongst other things from which the Ministry of Communications selected a system which the Defendant quoted as 4 Voice Frequency Channels using double Diversity Reception, to ensure high quality service capable of optimum integration into the existing public telephone/telegraph systems on Lagos-Calabar-Lagos and single SB Receiver Transmitter for Ogoja-Calabar-Ogoja Links.
- By a letter dated 30th May, 1968 the Ministry of Communications confirmed the order and requested the Defendant to supply the equipment within 6 to 8 weeks and to install it within 2 weeks of delivery.
- The Ministry of Communications paid the sum of 26,900 to the Defendant to supply the equipment.
- The defendant supplied and installed the equipment minus the double diversity combiners comprised in System 1 which system was selected for order for the Plaintiff for Lagos-Calabar-Lagos Link to ensure high quality service but instead the defendant ordered Receiver Type RA117 without authority from the Ministry of Communications.”
In their reply the Defendants averred thus:
“3. The Defendant admits paragraphs 2, 4 and 5 of the Amended
Statement of Claim.
- The defendant denies paragraph 6 of the Amended Statement of Claim and say that the letter of 30th May, 1968 from the Ministry of Communications only requested the Defendant to supply and install the equipment therein specified.
- With further reference to paragraph 6 of the Amended Statement of Claim, the Defendant avers that on receipt of the letter of the 30th May, 1968 from the Ministry of Communications, the Defendant did not agree to deliver and install the equipment therein specified and they entered into further negotiations with the representatives of the said Ministry.
- As a result of the further negotiation aforesaid, the representatives of the said Ministry in or about July 1968 verbally cancelled their letter of the 30th May, 1968 and verbally ordered an alternative system described in the defendant’s quotation of 29th Feb. 1968 as 4 Voice Frequency Channels using single receiving terminal (hereinafter referred to as “System 2″ .)
- The Defendant avers that it supplied and installed system 2 which was ordered by, delivered to and accepted by the Ministry of Communications and that double diversity combiners are not included in System 2 aforesaid. The Defendant further avers that Receiver Type RA 117 A formed part of the equipment comprised in System 2 aforesaid. Save as aforesaid, the Defendant denies the allegations contained in paragraph 8 of the Amended Statement of Claim.
- The Defendant says that at no time was there an agreement as to the standard of high quality or of performance required by the said Ministry.”
As could be seen therefore from the pleadings, the defence put forward by the defendants rests on two arms:
(1) That there was an oral variation of the contract, and that under the alleged verbal contract, they, the defendants, have had to supply System Two, which was agreed upon.
(2) That there was no guarantee given as to the quality and performance of the equipment required by the Ministry.
The case in the Court below was therefore fought on those two main issues which, as, would be seen later on, were never raised on appeal.
Put in a nut-shell, the Ministry’s case is that the defendants have failed to supply System One as was agreed upon between the parties; and that what they have installed is not fit for the purpose for which it was required. They therefore, contend that the defendants are in breach of the contract in as much as they have failed to perform their own part of the bargain. The defendants, on their part, allege that there has been a subsequent oral variation of the original contract; and that, in keeping with that verbal agreement; they have supplied System Two, which was agreed upon between the parties. It is, however, not part of their case that they have satisfactorily installed the equipment in question.
I must say that there is something sinister in the way the defendants unilaterally decided to vary the contract entered into with the Ministry. For instance, they failed to supply the Ministry with the RA 17L Receiver which was ordered, and which according to the defendants “is the basic equipment”, and constitutes “a revolutionary advance in the field of electronics.” Strangely enough, the defendants somehow, chose to deliver to the Ministry a certain RA17 Receiver, which it never bargained for, and which, they, the defendants, believe to be inferior to the RA 17L Receiver.
In other words, the plaintiff’s complaint is that the defendants have supplied, and have attempted to install, a radio-telephone link which did not have the double diversity combiner unit and three other component parts. The following portion of the evidence of Richard E. Ekanem P.W.3, who received the equipment on behalf of the Ministry is relevant:
“I noted that in respect of 3 items the description; word for word, were not those contained in the system quoted for system 1 and also that the double combiner unit was not among the equipment supplied. The first item I.S.B. Modulator the pack No. was to be MA202 but the one that arrived was Pack 175. According to the proposal, we were to get receiver Type RA17L but the one that arrived was RA117. The third one was to be TRU-SC Radio Terminal Unit, as quoted but what arrived was “GAALT-Radio Terminal Unit.”….
Continuing his evidence Mr. Ekanem said:
“After I had conducted my checks and noted the three items which was wrong and the absence of the combiner unit, I raised verbal queries. I was told then that not all the equipments had arrived.”
On the face of it, the defendants’ letter of offer and the plaintiffs’ letter of acceptance, each contains the particular goods which, according to Mr. Ekanem’s testimony, the defendants have failed to supply.
After giving very careful consideration to the evidence led on both sides, the learned trial judge, quite rightly in my view, rejected the defendants’ contention that there had been an oral variation of the contract at some subsequent date. Indeed, this aspect of the defence was not canvassed before us, and I therefore, do not intend to go beyond endorsing the decision reached by the learned trial judge who heard the witnesses.
Finally, the learned trial judge recorded the following finding:
“I am satisfied upon the evidence that despite the assurances of the defendants..: that they would hand over the installation on the 15th August, 1969, the defendants did not do so. It is my view that they were incapable of doing so because the equipment they supplied could not be properly installed by them and, in any case, was not suitable for the kind of reception forwhich, known to the Defendants, it was intended….In my view the Plaintiff has established his claim.”
Judgment was, therefore, entered in favour of the plaintiff as follows:
“On a full consideration of all the facts I have decided to award a sum of 27,300 in favour of the plaintiff against the defendants whereof 26,900 is the sum paid by the Ministry to the Defendants for a consideration which has wholly failed and 400 as general damages.”
It is from this decision of the trial judge that the defendants have appealed to this Court.
Chief F.R.A. Williams, Learned Counsel for the appellants, sought and obtained leave to argue the following grounds of appeal in place of the original grounds filed by the defendants:
“1. The learned trial judge erred in law in failing to observe that as he made no order for the Amendment of the Claim on the Writ of Summons, the claim set out in paragraph 15 of the Statement of Claim should have been ignored insofar as it is inconsistent with the former claim on the Summons issued on 19.11.69.
- The learned trial judge erred in law in failing to make a finding on the question whether the contract between the parties is
(i) A contract for the sale of goods and (b) a separate contract for the installation of the equipment
(ii) A single contract for work and labour.
- The learned trial judge erred in law and on the facts in failing to observe that the contract between the parties consisted of (i) a contract for the sale of goods and (ii) a separate contract for the installation of the equipment.
- The learned trial judge erred in law and on the facts in failing to take account of the fact that
(i) All the goods delivered by the defendants to the plaintiffs were checked by plaintiffs and accepted by them;
(ii) The equipment for the Calabar/Ogoja link was in fact installed and there was no complaint about it in this action.
- The learned trial judge misdirected himself in law and on the facts in holding-
“…..that the Defendants for reason that they failed to perform their stipulations to deliver the equipment in question within 6 to 8 weeks and to install them within two weeks as a radio communication link, the Ministry’s obligation under the contract is discharged and they are entitled to a repayment of the sum of 26,900 paid to the Defendants under the contract.”
Particulars of Misdirection
(i) The contract between the parties was for the supply of goods which were in fact supplied, delivered to and accepted by the Plaintiffs who thereupon paid the purchase price for them.
(ii) In the alternative to (i) the goods supplied were (except for the absence of double diversity combiners) substantially what the defendants delivered t the plaintiffs and which the said plaintiffs check, accepted and for which they paid the sum of 26,900.
(iii) The sum of 26,900 being paid for the supply of goods (including the equipment in respect of the Calabar/Ogoja Link) which the Plaintiffs have accepted and retained and not rejected and returned to the defendants, it is inequitable and unconscionable for the said Plaintiffs to have a refund of the said sum as ordered by the Court.
(iv) The learned trial judge found that “this is a case where time is a condition and essence of a contract and upon a lapse in the stipulated time the buyer continues to press for delivery in a contract for the sale of goods.” Accordingly failure to deliver within the originally stipulated time cannot amount to a breach.
(v) For reasons stated in (i), (ii), (iii) and (iv) above the learned trial judge ought not to have granted the declaration claimed by the Plaintiffs or order the refund of the sum of 26,900.
- The learned trial judge erred in law in failing to observe that since the plaintiffs’ claim was based on a contract to install a Double Diversity System when the Equipment in fact provided for the performance of the contract was not one which operates such a System the plaintiff was not entitled to damages for breach of contract as the minds of the parties were not ad idem and accordingly there was no contract for which damages ought to have been awarded.
- The learned trial judge erred in law in giving judgment in favour of the plaintiffs when the facts found by him cannot support any of the reliefs claimed by the plaintiffs in this action.
- The learned trial judge erred in law in granting the declaration claimed when
(i) The said claim was improperly introduced into the Amended Statement of Claim;
(ii) The Plaintiff has in fact already performed its obligations in regard to the contract for the supply of the Equipment by payment for the goods; and
(iii) the defendants having duly performed their obligations in respect of the Calabar/Ogoja Link it was wrong and inequitable to grant a declaration which has the effect of discharging the Plaintiff from the obligations in this regard.
- Judgment is against the weight of evidence.”
But before us, learned counsel for the appellants argued only grounds 2, 3 4 and 5 of the new grounds of appeal. In the course of his argument, Chief Williams made important submissions which could be summarised as follows:
(1) That the first question, which is substantial, is whether the contract is for work and labour, or for the sale of goods It is the contention of learned counsel that it is important to draw the distinction, and that such distinction if drawn, would make all the difference. To buttress his argument, Chief Williams relied heavily on the fact that in the contract, there is a separate charge for installation, and a separate charge for the cost of the equipment;
(2) That there is ample evidence to show that at the time of delivery, the goods received by the Ministry were in good condition;
(3) That whatever may be the difference between what was ordered and what was supplied, what was delivered was indeed received and paid for by the Ministry in such a manner as to constitute an acceptance under the Sale of Goods Act, 1893. In the view of learned counsel, therefore, once the Ministry had taken delivery of the equipment, it became their property.
It was, therefore, urged upon us to set aside the decision of the learned trial judge, and to enter judgment for the defendants.
Replying, Dr. F.O. Awogu, Principal State Counsel in the Federal Ministry of Justice, raised a number of cogent points, which could be summed up as follows:
(1) That the defendants offered Systems One and Two in the alternative, but that the Ministry preferred and accepted System One, on the ground that System 1 uses Double Diversity Reception; while System 2 uses Single Receiving Terminal. It is the contention of the learned Principal State Counsel that there is a world of difference between the two systems, and that the failure by the defendants to supply System One, constitutes a serious breach of contract.
(2) With sagacity, Dr. Awogu contends that as the defendants have chosen to rest their case in the Court below on an alleged oral variation of the contract, which story the learned trial judge has rejected, their case has no leg upon which to stand.
(3) Dealing with the point made by Chief Williams that there has been acceptance on the pan of the Ministry, in that they received and kept the equipment delivered, Dr. Awogu claims that the submission is not open to the defendants because, on the pleadings, their case was that there had been a subsequent oral agreement under which they delivered the equipment which is different from what was originally ordered by the Ministry. In the view of Dr. Awogu, the defendants are bound by their pleadings and by the case, which they set up at the trial, namely, that there was a fresh oral contract, which varied the original contract.
I shall now endeavour to examine the points canvassed before us, in the light of the contract entered into between the parties and the evidence adduced at the trial.
In my opinion, there is nothing complex in so far as the facts of this case are concerned; what seems difficult is the law applicable to the facts. I shall begin by repeating what I have said earlier on in this judgment, that I agree with the learned trial judge that the defendants have failed to prove that there has been an oral variation of the contract as was alleged by them. The terms of the written contract as evidence by their letter of offer Ex. 8, and the Ministry: letter of acceptance Ex.1 therefore, bind them. Precisely, the intention of the parties, as gathered from the said documents, is that the defendants shall “shall and install” the equipment described under System One. It seems to me that this finding has dealt a knockout blow on the defendant’s case, which is that they supplied System 2 as was orally agreed between the parties.
Now, it is not in dispute that the defendants failed to supply the “double combiner units” which is the very thing required by the Ministry; furthermore, the defendants, without the consent of the Ministry, delivered three other items of equipment which do not bear the description of the ones they had agreed to supply. These facts are borne out by the uncontradicted testimony of Richard E. Ekanem P.W.3. The true picture, therefore, is as follows:
(a) The defendants did not deliver any equipment with “Double Diversity Reception”, as was agreed upon.
(b) In place of MA202, the defendants supplied Pac 175.
(c) In place of “RTU-SC Radio Terminal Unit,” the defendants supplied “GAALT-Radio Terminal Unit.”
(d) In place of Receiver Type “RA17L,” the defendants supplied “RA17.” With particular reference to the latter (namely RA17) I think that the defendants’ case is further weakened by the fact that they themselves acknowledge that the RA l7L type which the Ministry ordered, and which, they, the defendants, failed to supply, is indeed the basic equipment. In the words of the defendants, in the part of Ex. 8 entitled Summary of Schemes para 6(1):
“The basic equipment offered, RA17L is the latest version of RACAL RA17 receiver which represents a revolutionary advance in electronic equipment design. This receiver has been made famous by its outstanding performance and continuous reliability in service.”
In the circumstances, I doubt, without reaching a conclusion, whether having failed to supply this particular instrument which the parties regarded as the basic equipment, the defendants could still be heard to say that they have performed their own side of the contract.
I am, therefore, not surprised, that the learned trial judge found as he did, that the equipment supplied by the defendants “could not be properly installed by them” .. and that the equipment was not “suitable for the kind of reception for which, known to the defendants, it was intended.”
I now come to consider the law, which, I think, is applicable to the facts of this case. In my view, ground 2 of the new grounds of appeal argued by Chief Williams raises and important question of law which calls for a deeper consideration. But before going into it, I propose to deal first with the contention of Chief Williams, under ground 4, that the learned trial judge erred in law and on the facts in failing to take account of the fact that all the goods delivered by the defendants to the Ministry were checked and accepted by them.
I think that this submission tends to make a mountain out of a molehill. I take the view that the Ministry was in duty bound to receive from the defendants the various units of the equipment as they arrived, more especially as the equipment was to be installed on the Ministry’s premises. Once the units had been assembled, the work of installation would then begin; and that was exactly what happened in the present case. It is on record that when indeed, the Ministry’s representative, Richard Ekanem P. W.3, detected the difference between some of the goods ordered and the ones delivered, he quite promptly raised a query; there and then, he lodged a protest with the defendants. It was, therefore, not the case that the Ministry had received the goods in complete silence, which might have implied consent on their part.
As I have said, it was the duty of the Ministry to co-operate with the defendants in their effort to “assemble and install” the diverse units of equipment. Had the Ministry done otherwise, it would have laid itself open to the accusation that it was making it impossible for the defendants to fulfill their obligations under the contract. It is plain commonsense that, in doing work of that kind, the defendants would normally have to rely on the active assistance and co-operation of the Ministry.
I now revert to ground 2 under which Chief Williams strenuously argued that the learned trial judge erred in law in failing to make a finding as to whether the contract between the parties is
(i) (a) A contract for the sale of goods and
(b) A separate contract for the installation of the equipment; or
(ii) A single contract for work and labour.
Suffice it to say that it is trite law that what really matters is the intention of the parties; and that, as far as possible, such intention, as gathered from the agreement reached between the parties, should be given effect.
In the case before us, the intention of the parties is clear, simple direct. It is that the defendants shall supply and install the equipment described under System One, for the sole purpose of providing a radiotelephone link between Lagos and Calabar. But, without the Ministry’s consent, the defendants proceeded unilaterally to vary some of the goods ordered, with the result that, when ultimately, all the component parts were assembled and installed, the equipment failed to function satisfactorily.
I wish to draw attention to the fact that throughout the transaction, the defendants held themselves out to the Ministry as persons:
(i) Who were in a position to supply the kind of equipment which would serve the Ministry’s purpose; and
(ii) Who possess the requisite skill for installing such equipment satisfactorily.
In the long run, it turned out that the equipment did not, and could not,serve the purpose for which the Ministry needed it. After repeated warnings, the Ministry had no other alternative than to rescind the contract and sue the defendants for its breach.
It seems to me, that the defendants have openly acted in breach of their contract “to supply and install” the equipment agreed upon between the parties. Accordingly, I think that they were properly held to be liable to the plaintiff.
The rule is that when a skilled person “is employed, there is on his part an implied warranty that he is of skill reasonably competent to the task he undertakes-spondes peritiam artis” (Harmer v. Cornelius, 5 C.B.N.S. 246).
He would be expected to demonstrate that degree of skill and knowledge, which would reasonably be expected from one acting in the particular employment and circumstances.
Delivering the judgment of the Court in Jenkins v. Betham 139 English Reports, 384, at p. 392, Jervis C.J. said:
“The cause of action is, that the defendants, by holding themselves out as valuers and surveyors of ecclesiastical property, represented themselves as understanding the subject, and qualified to act in the business in which they professed to act, and thus induced the plaintiff to retain and employ them; whereas they were ignorant of the subject and the plaintiff by reason of their ignorance sustained a loss. Their ignorance of the subject, “and incompetency to act in the business, were in part shown by their failure upon the valuation which subsequently too place: but that was not the whole cause of action. The cause of action was their undertaking that they were competent and the breach of that undertaking, followed by a loss sustained by the plaintiff/n the defendants in consideration of the plaintiff’s retainer, had entered into a written engagement that they were qualified to act, and understood the subject, there is no rule of law which would have protected them from liability for a loss caused by a breach of that engagement.”
Now, having regard to the facts of the present case, and the particular circumstances surrounding it, I doubt whether it is necessary to determine the issue as to whether the contract between the Ministry and the defendants is in substance a contract for the sale of goods, or for work and labour. It seems to me that where there is a valid contract, and the intention of the parties is also clear, then, subject to the weight of evidence, that intention should be given effect, even if the transaction itself seems to defy academic classification.
I am of the view that, in the present case, there is an implied warranty on the part of the defendants that the equipment, which they undertook to supply and instal, would serve the purpose for which the Ministry required it. On this point, I draw considerable support from the case of Sanuels v. Davis (1943), K.B. P. 526. The issue in that case is akin to the one, which we are called upon to determine with respect to the appeal now before us.
The plaintiff was a dentist who agreed with the defendant to make a set of false teeth for the defendant’s wife. The teeth were made and delivered, but the defendant refused to pay for them on the ground that they were so unsatisfactory that his wife could not use them. There was controversy as to whether the contract was for the sale of goods or for work and materials,
but the Court of Appeal held that, in the circumstances of the case, the question was irrelevant. Delivering the judgment of the Court Scott L.J. said at p. 527:
“This appeal is important in some aspects, but we are quite clear what the position is in this court in view of the findings, on sufficient evidence, by the county court judge that there was a breach of the implied condition that the denture should be reasonably fit for the purpose for which it was supplied, whether the contract was for the sale of goods, as the judge thought, or for services rendered.”
In my view, it is a matter of legal indifference whether the contract was one for the sale of goods or one of service to do work and supply materials. In either case, the contract must necessarily, by reason of the relationship between the parties, and the purpose for which the contract was entered into, import a term that, given reasonable co-operation by the patient, the dentist would achieve reasonable success in this work…”
In his own judgment, du Parcq L.J. has this to say at page 529.
“In Lee v. Griffin, the court was not directing its attention to the question whether there were any incidents in the case of a contract for the sale of a denture which were different from those in the case of a contract for the work and labour expended on the making of a denture. I have no doubt that, if the question had arisen for decision, whether it made any difference whether the contract was described as one of sale or one of work and labour, the answer for the present purpose would have been: “None whatever.”
In Francis v. Cockrel, which was cited in G.H. Myers v. Brent Cross Service Co., Kelly C.B. said: “I do not “hesitate to say that I am clearly of “opinion, as a general proposition of “law, that when one man engages with “another to supply him with a particular “article or thing, to be applied to a “certain use and purpose, in consideration “of a pecuniary payment, he enters into “an implied contract that the article “or thing shall be reasonably fit/or “the purpose for which it is to be used “and to which it is to be applied.”
I, too, think that, in the present case, there is an implied warranty or condition that the equipment to be supplied and installed by the defendants would be reasonably fit for the purpose for which it was required by the Ministry, regardless of the fact as to whether the transaction is regarded as a contract for the sale of goods, or for labour and supply of materials. Indeed, I agree with their Lordships’ thinking that, in such circumstances, it makes no difference which it was.
Assuming for the sake of argument, that it is a contract for the sale of goods, it is my view that the transaction falls within S.14 of the Sale of Goods Act 1893, which, for easy reference, is set out here as follows:
Sale of Goods Act S.14.
“Subject to the provisions of this Act and of any statute in that behalf,there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:
“(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose, provided that in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose:
(2) Where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality; provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.”
By the strict wording of the statute, section 14(1) is to come into play where the buyer makes his purpose known to the seller, so as to “show that he relies on the seller’s skill or judgment.” The question whether, on a sale of goods, the buyer made known to the seller the purpose for which the goods were required so as to show that he relied on the seller’s skill or judgment is one of fact and each case will have to be considered on its own facts as disclosed by the evidence and the particular circumstances surrounding it.
On the evidence before the Court in this case, it is not in doubt that the Ministry made known to the defendants the particular purpose for which the equipment was required i.e. to provide a radiotelephone link between Lagos and Calabar. It is also not in dispute that the Ministry relied on the skill of the defendants for the installation of the equipment. In the circumstances, it strikes me that by virtue of S.14(i) of the Sale of Goods Act, “there is an implied condition” that the equipment shall be reasonably fit for the purpose for which it was required.
The learned trial judge found that the equipment is not suitable for the purpose for which the Ministry required it; and as there is ample evidence to support his finding, I see no reason to disagree with his decision that the defendants are in breach of their contract.
If, on the other hand, the view is taken that the transaction is a contract for labour and materials supplied. I should still think that, on the facts and the circumstances of this case, the defendants could not in any way escape liability for breaking the contract, which they entered into with the Ministry. Again, it seems to me that there is an implied condition or warranty on their part that the equipment to be supplied and installed by them (as contractors) shall be of good quality and shall be reasonable fit for the purpose for which it is intended.
The House of Lords has recently discussed the extent and nature of the terms, which may be implied in contracts for work and materials See Young and Marten, Ltd. v. McManus Childs. Ltd., (1968) 3 W.L.R. 630, in which their Lordships made it clear that, as far as implied warranties or conditions go, the so-called distinction between a contract for the sale of goods and a contract for work and materials, is a distinction without a difference. The facts of that case are as follows:
“Some time before 1958 the respondents decided to build a number of houses for sale. The contracted with Saunders. Saunders then subcontracted with the appellants for the roofing. There was a discussion about the type of tiles to be used and Saunders for “prestige” reasons decided to have a rather expensive type, Somerset 13, made by Browne of Bridgwater. The houses were completed and sold in 1958. But very soon these tiles began to give trouble. It is agreed that the defects in these tiles could not have been detected by any reasonable examination before they were fixed on the roofs. And it is agreed that generally these tiles are of good quality and that there must have been some fault in the manufacture of this batch. Various attempts were made to put matters right but they were unavailing, and ultimately the owners of a number of the houses decided to reroof them and successfully sued the respondents for the cost. The respondents brought in the appellants as liable to them on an implied warranty.”
Delivering the judgment of the Court Lord Reid stated at p. 632-633:
“This is a contract for the supply of work and materials and this case raises a general question as to the nature and extent of the warranties which the law implies in such a contract. As regards the contractor’s inability for the work done there is no dispute in this case: admittedly it must be done with all proper skill and care. The question at issue relates to his liability in respect of material supplies by him under the contract.”
Moreover, many contracts for work and materials closely resemble contracts of sale: where the employer contracts for the supply and installation of a machine or other article, the supply of the machine may be the main element and the work of installation be a comparatively small matter. If the employer had bought the article and installed it himself, he would have had a warranty under section 14 (2), and it would be strange that the fact that the seller also agreed to install it should make all the difference.”
Lord Upjohn put it succinctly as follows in his judgment at p. 638-640:
“If a man sells an article, he thereby warrants that it is merchantable.”
Curiously enough, however, there was no equal body of decision at common law in the nineteenth century to support, in express terms, a similar implied warranty in the case of contracts for work and materials.
But that a man who supplies his labour or his labour and materials is subject to the same basic obligation cannot be doubted. In Duncan v. Blundell in 1820 Bayley J. in his usual direct language said of a case where the defendant had undertaken to supply and fit a stove:
“Where a person is employed in a work of skill, the employer buys both his labour and his judgment; he ought not to undertake the work if it cannot succeed, and he should know whether it will or not. Of course, it is otherwise if the party employing him choose to supersede the workman’s judgment by using his own. . . . ”
“So I cannot see any logical distinction between the obligations which ought in general to be implied with regard to quality and fitness between a sale of goods and a contract for work and materials. Indeed, for may part I think, as a matter of commonsense and justice, one who contracts to do work and supply materials ought to be under at least as high, if not higher, a degree of obligation with regard to the goods he supplies and the work that he does than a seller who may be a mere middleman or wholesaler. Greer L.J. took this view in the Court of Appeal in Cammell Laid & Co., Ltd., v.Manganese Bronze and Brass Co. Ltd. . .
My Lords, I think the true view is that stated by du Parcq J. in G.H. Myers & Co. v. Brent Cross Service Co.
“. . . . the true view is that a person contracting to work and supply materials warrants that the materials which he uses will be of good quality and reasonably fit for the purpose for which he is using them, unless the circumstances of the contract are such as to exclude any such warranty.”
“That statement I have no doubt involves two warranties though, as in this case, it very frequently happens that for any relevant purpose there is no difference between the two.”
And at p. 643-644, Lord Wilberforce in his judgment declared as follows:
“Since the Sale of Goods Act, 1893, it has been fully accepted by the courts that suitable warranties, adapted to the nature of the contract, ought to be implied in contracts where there are mixed elements of supply of goods and work to be done. I do not think it is necessary to enumerate those cases, some of which are inadequately reported, but confine myself to one illustration. In Sanuels v.Davis the Court of Appeal had to consider a contract for a denture-the same contract which before the Sale of Goods Act, 1893, had been the subject of the leading case of Lee v. Griffin. The court found an implied condition of reasonable fitness for the purpose without finding it necessary to decide the precise nature of the contract. “In my view” said Scott L.J., “it is a matter of legal indifference whether the contract was one for the sale of goods or one of service to do work and supply materials,” and du Parcq J. agreed..”
“In the present case, the contract was in the composite form “supply and fix” so that it was not strictly a contract of sale. It was indeed contended by the respondents that the appellants are bound by an admission in the pleadings that the contract was one of sale. I regard this point as of no importance since neither analysis nor authority supports the suggestion that, other circumstances apart, the conditions or warranties to be implied should be any different from those which would have arisen had this contract beenfor sale simpliciter.”
I am in complete agreement with their Lord-ships’ exposition of the law. I too, take the view that, as far as implied condition or warranty as to fitness or quality is concerned, there does not seem to be any practical difference between a contract for the sale of goods and a contract for work and labour.
It is true, as was contended by Chief Williams, that in the present case, the learned trial judge did not consider whether the contract was for the sale of goods or for work and labour. But on the authorities I cited, and in view of the reasons I have given, it is clear that, in the present case, it makes no difference, which it was. If I err, I err in good company.
Furthermore, I consider that it would be unconscionable to saddle the Ministry with the equipment, which is not what it ordered; and which, in any case, is not fit for the purpose for which it is required.
In my view, therefore, there is every reason why the warranty as to quality and fitness should apply and no reason why it should not.
On the whole, I am satisfied that in the present case, the learned trial judge has not erred in law; nor has he misdirected himself on the facts. Accordingly, I take the view, that his judgment ought not to be disturbed, and that the appeal should be dismissed.
Other Citation: (1974) LCN/1965(SC)