Nan Fung Textiles 2nd Mill Ltd v. Textured Yarn Sales Ltd

HCA000402/1977

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: Mr. Commissioner Liu, Q.C. in Court.

Date of Judgment: 25th July, 1978.

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JUDGMENT

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1. This is an action by the plaintiff company for damages for alleged wrongful non-acceptance by the defendant of, firstly, 24,366.5 yards and, secondly, 309,501 yards of denim.

2. At the commencement of the hearing, the defendant applied for and obtained leave to discontinue with its counterclaim, and the only outstanding matter for consideration is the plaintiff's said claim against the defendant.

3. By a contract in writing, Ex. P1, dated the 9th January, 1976, the plaintiff agreed to sell and the defendant agreed to buy 600,000 yards of denim at the price of $6.05 per yard for delivery from February through June 1976 and to be paid for by cash cheque maturing 45 days after delivery ex-mill.

4. The first disagreement between the plaintiff and the defendant in this action is the alleged inclusion or exclusion of the terms on the back of the contract. It is common ground that this controversy is no longer material. The point was initially raised in anticipation of matters for adjudication in the counterclaim which has since been discontinued with leave. Lest I should be taken as being incomplete, I will also discuss the evidence on this issue and have my findings thereon recorded accordingly.

5. From Ex. P1, it can be seen that across the back of the written contract there is a faint line drawn diagonally from top to bottom, and according to the sub-manager of the plaintiff company, Mr. Fan, P.W.1, Mr. Mak, the clerk working under his supervision, reported to him a certain conversation between Mr. Mak himself and Mr. Fong, the Managing Director of the defendant, as regards an amendment to the payment term on the face of the contract. The original payment term of the contract of sale, Ex. P1, was by confirmed irrevocable letter of credit to reach the seller one month ahead of each delivery. That original provision was deleted by a typewriter, and the new term "By cash cheque which will be made 45 days after delivery" was inserted, also with the aid of a typewriter. This proposed alteration was reported by Mr. Mak to Mr. Fan. According to Mr. Fan, Mr. Fong had also mentioned such proposed amendment to him, and thereupon he, Mr. Fan, requested Mr. Fong to chop and initial the proposed alteration. With this request, according to Mr. Fan, Mr. Fong agreed. Mr. Fan further testified that he did not notice the line on the back of the contract, and to all intents and purposes he took the terms on the back of the contract as being applicable.

6. On this matter, Mr. Mak, P.W.3, the clerk, gave evidence that he reported the alteration of the payment term to Mr. Fan. He said that he could not remember if Mr. Fong had told him about the deletion of the terms and conditions on the back of Ex. P1, but that if he had been told by Mr. Fong he would have reported it to Mr. Fan. Mr. Mak further explained that he was not responsible for the contract terms nor their alteration.

7. In this regard, it is not entirely without interest to note that in none of the similar sales contracts by the plaintiff to May Fung, Ex. P4(1)-(3), were the terms on the back deleted. The same situation prevailed in respect to another sale contract to a company by the name of C. Itoh & Co. (H.K.) Ltd., Ex. P6. In Ex. D1, the defendant's sale contract to Textile Alliance Ltd., which is hereinafter called T.A.L., the back terms were deliberately deleted by a conspicuous across from top to bottom and chopped in no less than five places by what appears to be a chop of T.A.L. But, of course, what seems to be practice of T.A.L. is not necessarily a practice of the defendant's, its subsidiary. In the defendant's other contracts of sale to May Fung, D2(1), D3(1), D4(1), the conditions on the back were all left undeleted. Lastly, regard must be paid also to the terms in letters set out at pages 5, 16, 21 and 30 in the agreed bundle, Ex. P2. They all make reference to the terms on the back of the contract, and in none of the defendant's replies was an objection to such a reference voiced.

8. Mr. Fong, D.W.1, gave evidence on the deletion on the back terms of Ex. P1, and he told the court that he categorically informed Mr. Mak of the proposed deletion. He explained that the faint line on the back was not chopped or initialled like the amendment to the payment term on the face of the contract because the back terms were printed and he did not consider it necessary to have the deletion formally authenticated. He denied that he ever told Mr. Fan about any amendment. By implication, he also denied the allegation in the evidence of Mr. Fan that he was explicitly told to initial and chop the alteration. I have no hesitation in accepting the evidence of Mr. Fan and Mr. Mak. I prefer their evidence to that of Mr. Fong's. This is not a matter of any materiality, but I find that the diagonal line on the back of the contract did not have the effect of deletion and that the terms and conditions on the back of Ex. P1 were operative.

9. On behalf of the defendant, it has been alleged that the goods delivered by the plaintiff to the defendant under Ex. P1 were not in accordance with description or sample. The Managing Director of the defendant, Mr. Fong, claimed that the sample material attached to Ex. P1 offered a criterion for colour and construction quality although he conceded that he knew not what the quality of the attached material sample was. The sales manager of the defendant, Mr. Chan, D.W.2, told the court that the description in the contract, Ex. P1, gave no specifications for quality, but he maintained that the denim ordered by the defendant from the plaintiff ought to be of Grade A top quality firstly by reason of the huge quantity ordered and secondly because in the contract, Ex. P1, it was expressly stipulated that 90 per cent of the goods to be delivered were to be of about 90 yards in length. For these two reasons, Mr. Chan was of the view that the ordered denim should be of top quality.

10. Mr. Fan told the court that the material sample attached to Ex. P1 was merely for the colour, and his evidence is somewhat borne out by the written provision on the face of the contract, which reads as follows:

11. It was conceded on behalf of the defendant during the course of the proceedings that all the criticisms levelled at quality were relative to "quantum of damages" on account of Mr. Fan's earlier statement to the court that it was the same kind of goods as that delivered under the contract, Ex. P1, which were subsequently disposed of to other buyers. Therefore, it was argued that the lower sale price to the other buyers was in fact brought about by the inferior quality and did not reflect any fall in the market and that such lower sale price to the other buyers could thus be no yardstick for measure of damages.

12. Mr. Fan agreed that the denim supplied by the plaintiff to the defendant was, though dyed by Indigo dye, not processed with Indigo dye of 100 per cent purity. That, Mr. Fan maintained, was in compliance with the contractual requirement. It is of interest to note that there was no complaint on dye from the defendant throughout until its preparation for these proceedings. There was also no complaint of short length by the defendant until about February, 1977. I will come back to the question of quality. So far as the dye is concerned, the denim supplied by the plaintiff to the defendant under the contract, Ex. P1, was dyed, according to Mr. Fan and I so find, as stipulated.

13. I mentioned that there was no complaint of short length until February, 1977. Mr. Fan emphasized that there was no difference between lengths of 60 to 90 yards and that lengths as short as 30 to 40 yards would make no difference in price and were acceptable, particularly as denim was then in great demand, but he explained that lengths of less than 30 yards would cause inconvenience and were unacceptable as well as less valuable. Mr. Fan maintained that quality of the denim supplied by the plaintiff to the defendant was, as in the matter of dye, acceptable and as stipulated under the contract. Mr. Fan stated the same goods were delivered to and accepted by other companies presumably under similar contracts and that it was quite impossible to manufacture denim all of 90 yards.

14. Mr. Fong and Mr. Chan of the defendant would have the court believe that only lengths between 60 to 90 yards were contracted for and lengths between 30 and 60 yards were unacceptable though they were being tolerated to a proportion of 10 per cent under the terms of Ex. P1.

15. The contract term was: "Length about 90 yards per piece with 10% tolerance in short length of 30 yards minimum." In effect, Mr. Fan contrued "length about 90 yards." as between 30 upwards to 90 yards, and Mr. Fong took it to mean 60 to 90 yards. Further, whilst Mr. Fan interpreted "short length of 30 yards minimum." as any length of 30 yards or under, Mr. Fong was of the view that it meant lengths between 30 to 60 yards. Again, on this aspect I accept the evidence of Mr. Fan to the effect that in practice denim from 30 yards upwards to 90 yards were acceptable and that it was only when the length was 30 yards or below that it would make a difference in price and would become unacceptable. In effect, Mr. Fan maintained that there was no difference in price for denim of lengths of 30 yards upwards to 90 yards. I also accept the evidence of Mr. Fan that the denim delivered to the defendant by the plaintiff were of good quality, lengthwise and in other respects, as contracted for and that the occasional rejects of defective goods were accepted but not charged for by the plaintiff. In fact, on the 12th March, 1976, 20,001 yards were delivered, on the 24th March, 1976, 22,605 yards were delivered, and on the 13th April, 1976 21,845.5 yards were delivered. That makes a total of 64,451.5 yards, of which 23,952.5 yards were returned to and accepted by the plaintiff under complaint of the defendant. And, therefore, a total quantity of 40,499 yards was delivered by the plaintiff under the said contract and paid for by the defendant. Of the total contract quantity of 600,000 yards, 559,501 yards thus remained outstanding.

16. P.W.1, Mr. Fan, told the court that the defendant first sought delivery under the contract, Ex. P1, in early March. Mr. Mak, P.W.3, testified that Mr. Fong complained of small quantity in deliveries once or twice and that Mr. Chan Ying of the defendant also made similar complaints. Mr. Mak said in evidence that those complaints were not made in May or June although he could not remember when those complaints were made by the defendant but that he reported the complaints to Mr. Fan who immediately instructed the plaintiff's factory to effect further deliveries to the Cheong Shun Garment Factory, the recipient of the contract goods nominated by the defendant, Mr. Mak told the court that thereafter he urged Mr. Fong of the defendant on not more than five occasions to take delivery. Mr. Fan further told the court that denim was then in great demand and that although the price of Indigo dye from the supplier increased five fold, the increase was not quite significant by reason of the fact that dye cost represented only 15 per cent of manufacturing cost of denim. Mr. Fan stressed that the plaintiff company, producing as much as 1.2 million yards per month, was at all times in a position to effect delivery to the defendant under the contract if only the defendant would request for and take delivery of it. Mr. Fan further testified that having given instructions to the factory to effect more delivery to the defendant, it came to his knowledge that delivery was rejected by the defendant's nominated Cheong Shun Garment Factory and that thereupon he contacted Mr. Fong of the defendant several times and requested the defendant to take delivery by making arrangements for delivery to be accepted by the defendant's other factories. According to Mr. Fan, Mr. Fong of the defendant told him, and I quote:

"For the time being the goods cannot be delivered to some other places."

17. On this aspect of the case, Mr. Fong said this in evidence: He spoke to Mr. Fan after the second delivery on the 24th March, and he warned Mr. Fan that if the quantity required was not delivered before May then the contract, Ex. P1, would be cancelled. Mr. Fong told the court that in April he urged Mr. Mak of the plaintiff once or twice for further delivery and that he also rang up Mr. Fan for the same purpose once in April. In May he contacted Mr. Mak, and he told Mr. Mak in no uncertain terms that the defendant would no longer accept any further deliveries. Mr. Fong admitted that he did not contact Mr. Fan for that purpose in May. He stated that denim was in great demand until the second half of June. Although Mr. Fan of the plaintiff could not remember if he was told after the 12th July that the defendant would no longer accept any further delivery, Mr. Fong of the defendant laid to rest any uncertainty for the month of May as he, Mr. Fong, claimed to have only contacted Mr. Mak and not Mr. Fan in May. The evidence on the alleged notification of cancellation is not altogether satisfactory. It was not specifically put to Mr. Mak. Even if cancellation had been communicated to the plaintiff, the turn of events and the facts found in this case show that the defendant had no legal justification for cancellation but was purely making excuses.

18. Mr. Chan of the defendant testified that Mr. Fong told him that the contract was cancelled in May. Mr. Chan further told the court that the denim boom ended in June, that after the receipt of the letter dated 12th July, 1976 at page 5 of Ex. P2, he telephoned Mr. Mak that the buyer would not accept any more goods as the goods had been overdue and that he conveyed to Mr. Mak that the defendant could not take the balance quantity. Mr. Mak was also not asked specifically as regards such alleged cancellation.

19. Suffice it for me to say that I accept the evidence of Mr. Fan who impressed me as a witness and that in so far as the evidence of Mr. Fong of the defendant conflicts with the evidence of Mr. Fan of the plaintiff, I reject the evidence of Mr. Fong as I do with the evidence of Mr. Chan of the defendant. I find that although the plaintiff had agreed to deliver approximately 120,000 yards per month, none of the parties insisted on strict performance in delivery. Denim was in great demand, and the defendants was a first-time customer of the plaintiff's. Obviously preservation of good business relationship between the parties was then something to be treasured by the defendant. It was conceded by Mr. Fong that the provision in the contract, Ex. P1, for delivery February through June, 1976 was deliberately so worded in order to leave more room for manoeuvre. Small deliveries, I find, were made by the plaintiff to the defendant, but the defendant made no real issue on strict performance in delivery except that the defendant did urge the plaintiff to deliver more quantities from time to time, but upon the plaintiff's further delivery to the defendant's nominated Cheong Shun Garment Factory, it was refused without any good cause. I also find that thereupon Mr. Fan contacted Mr. Fong of the defendant and pressed the defendant to accept denim ordered under the said contract with a suggestion that perhaps deliveries under the contract could be made to other factories than Cheong Shun but that Mr. Fong intimated that that could not be done for the time being.

20. That position continued until some time before the 18th October, when the plaintiff was accusing the defendant of breach of contract for its failure to take delivery. The parties negotiated, and certain terms were proposed by the defendant and accepted by the plaintiff. That culminated in the letter dated the 18th October, 1976, a document at page 12 in Ex. P2 which reads as follows:

"Dear Sirs,

21. What had been agreed as evidenced by the letter dated the 18th October, 1976 was: First, the defendant was to take 150,000 yards at $5.80 per yard, and the defendant was to export 100,000 yards at $6.10 per yard F.O.B. with quota which has been explained by Mr. Fan, whose evidence thereon I also accept, to be equivalent to $5.80 per yard. Lastly, the balance quantity, at that time thought to be 296,000 yards but in fact it should be 309,501 yards, was to be "settled by your (the defendant's) giving instructions to us (the plaintiff) on or before 30th October 1976." After this letter, the defendant duly exported 100,000 yards and ultimately took delivery of the 150,000 yards locally except for 24,366.5 yards.

22. In fact, an earlier letter dated 12th July, 1976 at page 5 of Ex. P2 was sent after the defendant had failed to take delivery under the contract, Ex. P1. This letter was in standard form for use by the plaintiff in any case of non-acceptance. In that standardized letter, the plaintiff requested the defendant to take delivery in ten days, and according to Mr. Fong of the defendant, he contacted Mr. Mak of the plaintiff by telephone and again repeated that he would not accept any more. Mr. Chan of the defendant said that after this letter he left it to Mr. Fong to go about having the problem solved. Some days before the 18th October. 1976, the parties came to terms which were reduced into writing in the letter dated 18th October, 1976 at page 12 of Ex. P2.

23. According to Mr. Fan of the plaintiff, this letter of the 18th October was handed to Mr. Fong on the 19th October, 1976 in Sandy's Cafe, and Mr. Fong did not sign the letter immediately but took it back for consideration. In fact, on the 21st October, 1976 Mr. Fan met Mr. Fong together with one Mr. Chan of the plaintiff in Sandy's. Mr. Fong arrived with a letter dated the 20th October, the original of Ex. P3(1). Mr. Fong was desirous of having that letter signed. Mr. Fan flatly refused to consider and declined to sign it. Thereupon, in the presence of Mr. Fan, Mr. Fong signed the letter dated the 18th October which is at page 12 of Ex. P2. At one stage, Mr. Fong of the defendant, as a last straw, if I may so describe it, sought to make capital of the fact that the defendant's counter letter was taken away by Mr. Fan of the plaintiff in Sandy's. He seemed to attach some significance to the fact that Mr. Fan agreed to retain the original of Ex. P3(1). Mr. Fong of the defendant told the court that he had no knowledge whether the original had been sent back to the defendant. Mr. Chan of the defendant also claimed that he was unaware whether the original of Ex. P3(1) was returned to the defendant by the plaintiff. But according to Mr. Fan, the original of Ex. P3(1) was sent back to the defendant one or two days later after a copy had been taken, which is Ex. P3(1). I accept his evidence. One has only to look at the defendant's reply to the plaintiff's subsequent letter dated the 15th November which urged the defendant to comply with the terms in the letter dated the 18th October to see the defendant's manipulation. In that reply of the defendant dated the 23rd November, 1976 at page 18 of Ex. P2, the defendant boldly sought to rely on its own letter dated the 20th October, 1976 which was known to have been rejected and left unsigned.

24. Mr. Fan told the court that this letter dated the 18th October, 1976 was drafted by solicitors, and he testified that the provision for the balance quantity was to ensure that the defendants would give instructions for delivery by the 30th October. In the early part of the same letter, it could be seen that in relation to the 100,000 yards for export it was expressly stated in similar terms that the defendant was to give instructions to the plaintiff to deliver that quantity. If one turns to Additional Condition 16 on the back of the contract, one would notice the use of the same terminology for giving instructions for delivery or loading. At page 16 of Ex. P2, in a letter written by the plaintiff to the defendant dated the 15th November, 1976, it was charged that the defendant failed to give instructions for delivery, and the defendant's reply dated 23rd November, 1976 at p.18 of Ex. P2 made no issue of the use of this terminology. After all, Mr. Chan of the defendant in his evidence agreed that the allegation of failure to give instructions for delivery of the balance quantity in the letter dated the 18th October, 1976 was true.

25. When Mr. Fong of the defendant came to give evidence, he was, to say the least, evasive in his attempt to leave delivery completely out of the provision for the balance quantity in the letter dated the 18th October, 1976. He told the court that when he received the letter of the 18th October, he did not study the contents very closely before signing it. That is inconsistent with Mr. Fan's evidence and his own subsequent concession that he took the letter back for consideration. Mr. Fong sought also to maintain that the balance quantity was to be rescinded or set aside for the time being pending fresh negotiation and discussion. On both of these allegations of Mr. Fong's I do not accept his evidence. Mr. Fong went on to say that he would wait until the market turned better to reopen negotiation and that the defendant was not required to "give instructions before the 30th October about taking delivery" and "the defendant company would give instructions to the plaintiff before the 30th October about negotiations for the balance quantity." Despite his devious attempt to dissociate this provision for the balance quantity from delivery and his attempt to introduce an interim rescission or suspension of the defendant's contractual obligation for the balance quantity, Mr. Fong gave quite similar evidence as that given by Mr. Fan of the plaintiff on the parties' mutual understanding as to the balance quantity at the time of the signing of the letter dated the 18th October. Mr. Fan agreed in evidence that he had told Mr. Fong of the defendant that the plaintiff had a quarter of a million yards in stock which Mr. Fong subsequently agreed to dispose of but that Mr. Fong was not prepared to take all of the outstanding 309,501 yards. According to Mr. Fan, on the 21st October, 1976 when the letter at page 12 of Ex. P2 was signed, Mr. Fong wanted to omit the balance quantity and intimated that he would consider it "if he could make further arrangement." Mr. Fan further agreed that the question of the price in their attempted device to resolve their differences had to wait for further negotiation and that Mr. Fong did not agree to $5.80, the price he insisted on. I have not lost sight of the fact that at one time Mr. Fan of the plaintiff seemed to suggest that Mr. Fong agreed to accept the balance quantity leaving open only the date for taking delivery. Subsequently, Mr. Fan, summed up his evidence more accurately as follows:

"At that time we agreed that if he was willing to take all delivery by December we would sell it to him at a price of 5.80, but he did not agree to the price and we added, if so, the price might change; might be a bit higher, for example, 5.90 or 6.00. How much the price would be depended on further negotiation."

This was precisely the fluid situation in respect to the balance quantity at the time when they signed the letter dated the 18th October, 1976: As for this balance quantity, the price depended on further negotiation, and the defendant was quite undecided as to when, if at all, it would accept it. Mr. Fan concluded by saying that since Mr. Fong of the defendant was bound by contract, he was obliged to accept the rest in any event. It is clear and I so find that by the letter of the 18th October the plaintiff only agreed not to enforce its seller's right for breach by reason of defendant's non-acceptance until the 30th October, 1978. Further time was given to the defendant to make a concrete proposal for remedying its breach by the 30th October, and in the meantime the plaintiff, as it were, agreed to hold its horses. The provision for the balance quantity in the letter dated the 18th October, 1976 standing alone or as explained evidenced no concluded new contract. In no way did the negotiation for the balance quantity reach the point of a concluded enforceable agreement. Much depended on further negotiation as to price, and much hinged on whether the defendant was able to find buyers or make alternative arrangements.

26. In general, I find Mr. Fong of the defendant evasive and unimpressive. I hardly need to repeat that in so far as his evidence conflicts with that of Mr. Fan and Mr. Mak, I accept the evidence of Mr. Fan and Mr. Mak.

27. Mr. Chan displayed loyalty to his superior, and I do not propose to place much reliance on his evidence in so far as it differs from that of Mr. Fan's and Mr. Mak's.

28. I have said that the 100,000 yards were duly exported, and it forms no part of the dispute between the plaintiff and the defendant in this action. Of 150,000 yards agreed to be accepted locally, there was some initial delay, but we are now only concerned with the outstanding 24,366.5 yards. The defendant admitted not having taken delivery of this quantity but vaguely suggested that these 24,366.5 yards might have been as defective as the earlier deliveries. I do not accept the evidence of alleged defects by the defendant, and it is plainly unjustified for the defendant to assume that the quantity to be delivered would be defective.

29. So far as the market price is concerned Mr. Fan said the market price rose slightly until August when it began to fall. In September/October, the market price was $5.20. In November, there was a slight fluctuation. In December, it was $5.00. The January price was better. In February, the market price was $4.60. Mr. Fan also relied on Ex. P4(1) to (3), the three September contracts of sale to May Fung at 5.20 per yard. These contracts have been criticized by the defendant as contracts limited to sales of 30 to 60 yards. I have said that I accept the oral evidence of Mr. Fan on the market price and as to the price for denim from 30 yards upwards. Mr. Fan also referred to P6, a contract of sale to C. Itoh & Co. (H.K.) Ltd. on 20th January, 1977 for $5.30 and another contract, P7, dated the 8th February, 1977 for $4.00. I rely heavily on the oral evidence as to price and market price given by Mr. Fan. Mr. Fan also testified that "30 to 60 yards" lengths were within the same price range as that for lengths of 30 yards upwards, and I also accept that testimony. Furthermore, in the letter, p.16 of Ex. P2, dated the 15th November, 1976, the plaintiff clearly told the defendant that they sold some quantities at $5.20 losing 85 cents, and in its reply dated the 23rd November, 1976, page 18 of Ex. P2, the defendant did not see fit to challenge the market price so quoted.

30. The defendant's evidence is that in August 1976, as can be seen in Ex. D2(1), a Contract of Sale dated the 10th August 1976, the price was $5.80, in another contract D3(1) dated 5th November 1976 the price was $5.70, and in D4(1) dated 20th November 1976 the price was $5.80. The defendant informed the Court through Mr. Fong that the market price on the second half of June 1976 was $6 something, August 1976 - $5.80, September, November 1976 - $5.80, December - $5.60 to $5.70. As for January, Mr. Fong was a little imprecise, and for February, Mr. Fong put it at $5.00. Mr. Chan also told the Court that the market price from June 1976 to February 1977 was around $5.70 to $5.80, that it could from time to time be $5.60 and that a 10 cents' difference was of no significance.

31. The evidence given on behalf of the defendant stressed that denim of over 60 yards in length would give minimum wastage and that lengths of 30 to 60 yards would fetch a much lower price. I find Mr. Fan of the plaintiff a conservative witness who impressed me as a man of integrity. He abide by the truth from beginning to end in all the matters whether to the advantage or disadvantage of the plaintiff. I accept his evidence as to the price of denim of various lengths and the fluctuating market price.

32. After all, the defendant through Mr. Fong and Mr. Chan seemed to accept the reality that much would depend on the selling power of a seller particularly in a buyer's market. Mr. Chan further conceded that it was difficult to sell a quarter of a million yards in one lot, and he was driven to agree that supply was then bigger than demand. He further agreed that he found difficulty in disposing of the 150,000 yards locally and that the defendant lost several thousand dollars in exporting the 100,000 yards.

33. On the facts found, the defendant was in breach by not taking delivery and was conscious of it. I share the insinuation made by counsel for the plaintiff, Mr. Woo, that the defendant made no real effort to counterclaim for loss of profits by reason of its awareness of its own breach.

34. The case of the plaintiff was based on breach of either the original contract or the alleged new agreement embodied in the letter dated the 18th October 1976 at page 12 in Ex. P2. So far as the quarter of a million yards are concerned, an agreement had been reached and was recorded in the letter dated the 18th October, but as to the balance quantity, as I have found, there was no concluded agreement whatsoever. From beginning to end, the plaintiff's case has not been founded on the allegation that the delivery date under the original contract for the 309,501 yards was agreed to be extended by mutual consent at the same price. The plaintiff case was and is that the defendant was in breach of the original contract and that a new agreement was arrived at. The discussion which resulted in the letter dated the 18th October 1976 was on a completely different offer, different in price as well as in delivery time. The evidence, I accept, does not support any alleged discussion or agreement for extending or waiving the delivery date under the original contract at the contract price of $6.05. In any event, this point has not been raised on the pleading despite the last effort made by counsel for the plaintiff, but even if it were so pleaded, such allegation has not, in my view, been substantiated. The alleged new agreement was pitched at a different level, and no concluded contract was made for the balance quantity in October.

35. In the result, for the 24,366.5 yards I find that the defendant was in breach. In October, 1976, the defendant agreed to take delivery of it at $5.80 by November, and I find the market price in November as $5.20 and not $5.00 as suggested by Mr. Woo. It is true that in December, according to Mr. Fan, the price went down to $5.00, but in November, Mr. Fan said, the price fluctuated - it might be more or it might be less. I find, as a fact, $5.20 to be the market price in November, being the time of the defendant's breach of its agreement to take the 150,000 yards under the letter dated the 18th October 1976. Therefore, the loss to the plaintiff was the difference of 60 cents: $5.80 - $5.20 - i.e. a total sum of $14,619.90. To that extent, judgment must be given to the plaintiff against the defendant.

36. As for the claim on the 309,501 yards, I find that there was no concluded contract by the letter dated the 18th October 1976 or at all. The defendants were in breach of the original contract for not taking the contract quantity by the end of June, at which time the market price was on the rise. Thus, there was no monetary loss suffered by the plaintiff as a result of the breach by defendant under the original contract, and I would award $1.00 damages to the plaintiff on that score.

37. On quite a number of matters, I have found against the defendant. In fact, insofar as the witnesses of the defendant's are concerned, I disbelieve their evidence. I have taken into consideration all the matters, the legal and factual issues, the conduct of the parties and the extent of success in the claims or allegations. I have come to the conclusion that a fair order of costs in the present circumstances should be each party to pay its own costs. I would also award interest on the judgment debt in favour of the plaintiff from the 1st December 1976 until payment.

Representation:

Mr. K.H. Woo instructed by Messrs. P.K.H. Wong for Plaintiff.

Mr. William Lane instructed by Deacons for Defendant.