S. 53 (4). Interest and special damages. S. 54. Right to recover interest, (1) at common law; (2) by statute. reason of the defective workmanship. The ship afterwards becomes strained, and has to be repaired. B. may recover the cost thereof from A., such subsequent damage not being covered by the abatement in price. Mondel v. Steel (1841), 8 M. & W. 858 (t). (5.) Nothing in this section shall prejudice or affect the buyer's right of rejection in Scotland as declared by this Act. See on this, ss. 11 (2) and 35. 54. Nothing in this Act shall affect the right of the buyer or the seller to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover money paid where the consideration for the payment of it has failed. Interest. At common law, the creditor, as a general rule, is not entitled to interest. "It is now established as a general principle, that interest is allowed by law only upon mercantile securities, or in those cases where there has been an express promise to pay interest, or where such promise is to be implied from the usage of trade, or other circumstances" (u). There is no implied promise to pay interest on a sale of goods simpliciter, and it makes no difference that the sale is on credit, or that a particular date is fixed for payment (x). But a contract to pay interest on the price will be implied when the goods are to be paid for by bill, which is not given, and from the date when the bill would have matured (y). By statute the creditor may, in certain circumstances, and at the discretion of the jury, recover interest by way of damages for the wrongful detention of the money (z). 3 & 4 Will. 4, c. 42, s. 28, enacts, "that upon all debts or sums certain, payable at a certain time or otherwise, the jury on (t) And see Street v. Blay (1831), 2 B. & Ad. 456; Allen v. Cameron (1833), 1 C. & M. 832; Davis v. Hedges (1871), L. R. 6 Q. B. 687. (u) Higgins v. Sargent (1823), 2 B. & C. 348, per Abbott, C.J. (x) Gordon v. Swan (1810), 2 Camp. 429; 12 East, 419; Calton v. Bragg (1812), 15 East, 223. (y) Marshall v. Poole (1810), 13 East, 98; Farr v. Ward (1837), 3 M. & W. 25. (z) See Webster v. British Empire Assurance Co. (1880), 15 Ch. D. 169, and the dictum of Thesiger, L.J. (at p. 178), that the statute is merely declaratory of the common law. the trial of any issue, or on any inquisition of damages, may, if they shall think fit, allow interest to the creditor, at a rate not exceeding the current rate of interest, from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time, or, if payable otherwise, then from the time when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand, until the term of payment: Provided that interest shall be payable in all cases in which it is now payable by law" (a). Special damages. These words embody the second branch of the rule in Hadley v. Baxendale, quoted supra, under s. 51, ante, p. 278. Special damages are such as, under ordinary circumstances, would not be the natural and ordinary consequences of the breach of contract. They arise from special circumstances connected with the particular contract, and may be recovered if they are "such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it." The judgment in Hadley v. Baxendale proceeds as follows:"Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract which they would reasonably contemplate would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated." The above extract was stated by Lord Esher, M.R., in Hammond v. Bussey (b), "as rather a valuable exemplification of the rule an illustration of the circumstances under which the second branch of the rule would apply—than as part of the rule itself." The special circumstances must not only be communicated to the party sought to be charged, but he must have assented to be responsible for the consequences flowing from them (c). But knowledge of the special circumstances would, in ordinary cases, amount to such an assent as, when the real situation of the parties is disclosed to the party to be charged, there may be "a (a) For cases decided under the statute, see Duncombe v. Brighton Club Co. (1875), L. R. 10 Q. B. 371; 44 L. J. Q. B. 216; Geake v. Ross (1875), 44 L. J. C. P. 315; and, generally, on the question of interest, Mayne on Damages (ed. 1894), Chap. IV. (b) (1887), 20 Q. B. D. at p. 88. S. 54. Right to recover special damages. S. 54. Goods ordered purpose. fair inference of fact that [special] damages were intended to be recouped if they were suffered "(e). The principles of law relating to special damages are in no way peculiar to contracts of sale, and therefore fall outside the scope of this treatise. Some leading cases illustrative of contracts of sale, together with their salient points, are included in the note, infra (ƒ); and for fuller information on the subject the reader is referred to Mayne on Damages (ed. 1894), by the Author and Judge Lumley Smith. It may, however, be useful to mention here certain special rules under this head relating to contracts of sale. Upon the non-delivery by the seller of an article which was to for particular his knowledge ordered for a particular purpose, the buyer may, where there is no market for similar articles, recover the value of the profits which he would have made by the application of the article to such purpose (g); or, if the seller was aware of no particular purpose, the amount of the loss, not exceeding the value of the profits which the buyer would have gained by the application of the article to any purpose to which it was, to the knowledge of the seller, capable of being ordinarily applied (h). When the purpose for which the goods were bought is the fulfilling by the buyer of a sub-contract of sale, the damages, where there is no market, include, in addition to loss of profit, a reasonable indemnity against the buyer's liability to the subbuyer (i). But the buyer cannot recover, as such, any particular (e) Per Bowen, L.J., in Grebert Borgnis v. Nugent (1885), 15 Q. B. D. at p. 93. (f) Fletcher v. Tayleur (1855), 17 C. B. 21; 25 L. J. C. P. 65 (sale of a ship-late delivery-special damage recovered: loss of freights); Portman v. Middleton (1858), 4 C. B. N. S. 322; 27 L. J. C. P. 231 (sale of a fire-box-late delivery-special damage not known to seller and not recoverable-Illustration, ante, p. 279); Smeed v. Ford (1859), 1 E. & E. 602; 28 L. J. Q. B. 178 (sale of a threshing machine-late delivery-special damage recovered: injury to crops); Cory v. Thames Ironworks Co. (1868), L. R. 3 Q. B. 181 (sale of a derrick-late delivery -special purpose not communicated to seller-Illustration, post, p. 295); Hydraulic Engineering Co. v. McHaffie (1878), 4 Q. B. D. 670 (sale of an essential part of a machine-late delivery-special damage recovered: expenditure incurred on machine, and loss of profits on sub-contract); Hammond v. Bussey (1887), 20 Q. B. D. 79 (sale of steam coal-breach of warranty-special damage recovered: costs of action reasonably defended by buyer-Illustration, post, p. 294). (g) Fletcher v. Tayleur (1855), 17 C. B. 21; per Cairns, L.C., in Ex parte Trent and Humber Co. (1868), 4 Ch. Ap. at p. 117; Hydraulic Engineering Co. v. McHaffie (1879), 4 Q. B. D. 670. (h) Cory v. Thames Ironworks Co. (1868), L. R. 3 Q. B. 181; De Mattos v. G. E. Steamship Co. (1884), Cab. & Ell. 489. (i) Grebert Borgnis v. Nugent (1885), 15 Q. B. D. 85. The knowledge of the seller may be by parol: Sawdon v. Andrews (1874), 30 L. T. N. S. 23. damages or penalties provided for by the second contract, unless the seller was aware of the specific provision (k); but the amount of such damages or penalties is relevant to prove what is such a reasonable indemnity aforesaid (k). Knowledge by the seller of a general intention in the buyer to resell is sufficient knowledge so as to entitle the buyer to recover the amount of his profits under a particular contract (k). Thol v. Henderson (1), on this point, seems to be overruled. When the purpose for which the goods were ordered is the fulfilment of a sub-contract of sale, and the goods do not answer the contract, the damages include the damages and costs of an action against the buyer, which the latter has reasonably defended (m); and the fact that the inferiority of the goods could not be detected except by use after delivery to the sub-buyer is relevant to prove that the defence was reasonable (m). Consideration ... S. 54. consideration. has failed. When one party to a contract Failure of has paid money under the contract to the other party, and the consideration for which it was paid wholly fails, he may recover the money so paid, on the ground of failure of consideration, in an action for money had and received (n). This principle is applicable to every class of contract, and presents no peculiarity in relation to contracts of sale. The earliest case on the subject relating to a contract of sale was decided about a century ago, and the law has remained settled since that date (o). The buyer, who has paid the whole or part of the price in advance, may maintain an action for money had and received, when there has been a breach of some condition to be fulfilled by the seller, and the buyer has elected, under ss. 11-15, ante, to reject the goods and repudiate the contract. For example, the buyer may recover the price paid to a seller who has impliedly warranted his title to the goods sold under s. 12 (1), when the goods prove to be stolen goods, which the buyer is compelled to restore to the true owner (p). Or again, when there is a breach by the seller of the condition implied under s. 13, and the goods delivered differ in substance from (k) Per Brett, M.R., in Grebert Borgnis v. Nugent, supra. (1) (1881), 8 Q. B. D. 457. (m) Hammond v. Bussey, supra ; secus, when the inferiority can be detected before: Wagstaff v. Shorthorn Dairy Co. (1884), Cab. & Ell. 324. (n) Chitty on Contracts, pp. 8792; Bullen & Leake, Precs. of Pleading (3rd ed.) p. 48, where all the cases are collected. (0) Giles v. Edwards (1797), 7 T. R. 181. (p) Eichholz v. Banister (1864), 17 C. B. N. S. 708. S. 54. those which the buyer has contracted to accept and pay The consideration must have wholly failed; but in some cases, when the contract is severable, an action will lie when a part of the consideration has wholly failed, e.g., when a quantity of goods have been ordered at a certain rate of payment, and only a portion has been delivered, the buyer may recover a proportionate part of the price paid (s). The action for money had and received lies when money has been paid by reason of a mistake of fact, e.g., when an excess of price was paid on the sale of a bar of silver sold by weight, owing to an error of the assayer (t). For fuller information on the subject of failure of consideration, the reader must be referred to the text-writers mentioned in the note, infra (u). ILLUSTRATIONS [of special damages]. 1. B. buys of A. a quantity of "steam coal" for the purpose, known to A., of reselling it, under the same description, for use in steamships. B. resells it to C. as coal of a similar description. The coal was not reasonably fit for use as "steam coal" on steamships, but this fact could only be detected by use. C., in an action on his warranty against B., recovers damages and costs. B. may recover from A. such damages and costs, if B. acted reasonably in defending C.'s action, as damages and costs would, under the circumstances above stated, be reasonably contemplated by the parties as the probable result of A.'s breach. Hammond v. Bussey (1887), 20 Q. B. D. 79. 2. B. buys of A. a cow which A. warrants to be free from foot-andmouth disease. A. knows B. to be a farmer, and that the cow would probably be placed with a herd. B. places the cow, who was infected with the disease in question, with other cows, to whom she communicates the disease, and in consequence she and several of them die. The value of the cow sold is 8l., and of the other cows 421. B. may recover from A. (in addition to the 87.) the 421., as special damages, as the death of the other cows was the probable result of A.'s breach. Smith v. Green (1875), 1 C. P. D. 92. 3. B. buys of A. a quantity of sheep skins for the purpose of fulfilling a sub-contract with C., of which he informs A. A. fails to deliver, and, there being no market for similar goods, B. cannot buy elsewhere, and loses a profit of 341., and also has to pay C. 287. damages. B. can recover the 341. from A., and also the 281., the (2) Per Cur. in Chapman v. Speller (1850), 14 Q. B. 621; 19 L. J. Q. B. 241; Gompertz v. Bartlett (1853), 2 E. & B. 849; 23 L. J. Q. B. 65. (r) Lamert v. Heath (1846), 15 M. & W. 486. (s) Devaux v. Conolly (1849), 8 C. B. 640; cf. Harnor v. Groves (1855), 15 C. B. 667; 24 L. J. C. P. 53; Benj. p. 398. (t) Cox v. Prentice (1815), 3 M. & S. 344. (u) Benj. p. 396; Chitty on Contracts, pp. 87-93; Bullen & Leake (3rd ed.), p. 48. |