IN THE SUPREME COURT OF HONG KONG
Action No. 1341 of 1968
|Arthur A. Seidman & Co. (a firm)
|National Textile Ltd.
Coram: Briggs, J. in Court.
Date of Judgment: 6th April, 1971.
1. This case arises out of a contract made in Hong Kong on 8th December 1966 between the Plaintiff and the Defendant. The Plaintiff is a partnership based in New York and at the material time was one of the largest of importers of cloth into the U.S. The Defendant Company at the material time were weavers. They operated in Singapore and were a wholly owned subsidiary company of the Winner Company who are a Hong Kong based Company, and a company with whom the Plaintiff had had previous dealings. By the contract in question the Defendant agreed to weave 450,000 yards of grey cotton hopsacking at 19 1/2 cents U.S. per yard F.O.B. Hopsacking is a low grade quality material. The intention of the Plaintiff was to re-sell it to customers in America who would bleach it, dye or print it when it would sell as furnishing material etc. The Defendant was responsible for packing the goods and experting them to Charleston in the U.S. This they did. The Plaintiff made certain sales to customers one of whom rejected the goods. He claims damages alleging that the goods were of inferior quality. And that he was only able to dispose of them at a loss. The Defendant denies this.
2. In 1964 the Plaintiff had purchased 200,000 yards of hopsacking from Winners. It was woven in Hong Kong and the Plaintiff was satisfied with the goods he received.
3. In 1966 the Plaintiff purchased some Osnaburg, a different type of cloth from Winners. This was woven in Singapore by the present Defendant. It was a sale by sample. The Plaintiff was not satisfied with the quality he received. It was not up to sample. Indeed that sale has been the subject matter of another action, an action in which the Plaintiff was successful. I mention this because Mr. Seidman a partner in the Plaintiff firm frequently referred to it in his evidence. The contract for Osnaburg does not concern us in these proceedings.
4. The Plaintiff's agent in Hong Kong is a firm called Universal. In December 1966 despite the fact that the Plaintiff had become aware of the unsatisfactory condition of the Osnaburg, he agreed to purchase hopsacking from the Defendant and the contract which is the subject matter of this case was entered into on December 8th. It was negotiated by Universal and the Defendant. The Plaintiff informed Universal that the quality of the hopsacking must be equal to that which had been made for him by the Winner Company in Hong Kong in 1964.
5. Mr. Seidman, representing the Plaintiff, came to Hong Kong on December 22nd 1966 and he signed the contract on December 31st. At that time he was vociferously complaining of the quality of the Osnaburg cloth which he had already received from the Defendant. His evidence was that he wanted the hopsacking to be of the same quality as the hopsacking which he had received previously from Winner's and which had been woven in Hong Kong in 1964.
6. There appeared to have been a luncheon party on Christmas Eve in Hong Kong. Mr. Seidman, Mr. Chow, Mr. Chuk and Mr. Luk were all there and they gave their recollections of what occurred in evidence. Mr. Seidman represented the Plaintiff, Mr. Chuk represented Universal, Mr. Chow was the Managing Director of the Winner Company and a director of the Defendant, and Mr. Luk represented the Defendant also. A great deal of time was wasted on this part of the case.
7. The luncheon was in 1966 and it is not surprising that the recollection of those taking part varied. However there was a sharp conflict between the evidence of the witnesses on each side.
8. In any event the contract had already been made on December 7th or 8th. Whether the negotiations were conducted between Mr. Chuk of Universal for the Plaintiff and Mr. Luk or Mr. Chow for the Defendant is in dispute. I will accept Mr. Chuk's version of what occurred. He said he passed on to the other side that the hopsacking must be of quality similar to that previously supplied in 1964.
9. I have heard the evidence and I am satisfied that the representatives of the Defendant must have been aware that the Plaintiff wanted hopsacking which was of that quality previously woven in Hong Kong and sold to him by Winner. And undertook to deliver goods of that quality.
10. But here we run up against a difficulty. There has been shown to me no piece of cloth made in Hong Kong of the quality in question. This was not a sale by sample. There was no sample. It was a sale by description. There is no mention in the written contract of any guaranteed quality: nor does the written contract contain any express warranty as to the quality of the goods to be supplied. Mr. Zimmern for the Plaintiff said that Section 16(a) and (b) of the Sale of Goods Ordinance are not relied upon. There was he says this understanding between the parties as to the quality of the cloth to be supplied. I shall refer to this point later in this judgment.
11. Messrs. Winners ran off a length of about 100 yards of hopsacking in Hong Kong in order to arrive at a costing for the contract. This evidence was not challenged. This was shown to Mr. Seidman at the end of December 1966 when he was in Hong Kong but it is not suggested that that length was to be considered a sample of the cloth which was to be produced under the contract. What the plaintiff wanted was cloth similar to that produced in 1964. But that cloth was to be woven by the Defendant and not by the Winner Company; in Singapore and not in Hong Kong.
12. Mr. Seidman in his evidence said that he told Mr. Chow, that he would not sign the contract until he had seen a 100-yard length of the cloth to be sold which must be woven in Singapore. However, he did sign the contract without seeing any such cloth.
13. It was repeatedly...