Lloyd's Maritime and Commercial Law Quarterly
REJECTION OF GOODS, RESTITUTION FOR SERVICES AND INCONTROVERTIBLE BENEFIT
The Manila
The Manila
1 involved two interesting issues. The first was whether a c.i.f. buyer who had taken up documents for goods shipped late was thereafter entitled to reject the goods, although the documents disclosed the possibility of late shipment. This question involved a detailed consideration of the almost notorious Panchaud Freres S.A. v. Ets. General Grain.2 The second issue was whether a c.i.f. buyer, who had rejected goods, was entitled to recover from the seller the extra freight which he had voluntarily paid to the shipowner, and to do so not as damages for breach of contract but on principles of restitution.
The case involved two contracts, on the GAFTA 100 form, each for the sale of 500 tonnes of copra cake from the Philippines c.i.f. Rotterdam/Hamburg in December 1983/January 1984. The buyers paid 98% of the purchase price against the shipping documents when presented in Hamburg sometime in February or March, 1984. These documents included bills of lading, dated 31 January 1984, and a survey report which was not contractually required but which showed that loading of the cargo, comprising 4,000 tonnes in all, had not been completed until 11 February, 11 days after the expiry of the contractual period for shipment. Because of the insolvency of the shipowners, the ship remained in the Philippines after the completion of loading until it was agreed among the various cargo interests, including the buyers, that additional freight should be paid so as to enable the ship to proceed to Rotterdam, where she duly arrived on 8 July 1984. Two days later, the buyers sought to rescind the contract by reason of the incorrectly dated bills of lading. The sellers claimed the balance of the purchase price. The GAFTA Board of Appeal found in favour of the buyers on two points. First, they allowed the buyers to recover the purchase price from the sellers, holding that the details in the survey report were not sufficient to cast doubt on the bills of lading. Secondly, they held that the sellers were liable to compensate the buyers in respect of the additional freight payment. The sellers appealed on both points.
Right of rejection
On the first point, although Hirst, J., upheld the decision of the Board of Appeal in favour of the buyers on the ground that its finding of fact (that the survey report was insufficient to cast doubt on the bills of lading) was not impeachable, he nonetheless undertook a review of the cases on waiver, election and estoppel. The main problem in this area of the law is that, while the general principle remains that a buyer who gives a bad reason for rejection may subsequently rely on a good reason providing that it existed at the time of the original rejection, this rule is not an
1. Procter & Gamble Philippine Manufacturing Corp. v. Peter Cremer GmbH & Co. (The Manila) [1988] 3 All E.R. 843.
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