450
Contract—Rectification—Sale of goods by description—Mutual mistake as to nature of goods induced by innocent misrepresentation by sellers—Commodity A believed identical with commodity B—Concluded oral agreements for commodity B—Written contracts in like terms.The plaintiffs, London merchants, were asked by their Egyptian house for " Moroccan horsebeans described here as feveroles." Their representative did not know what feveroles were, and asked the defendants' representative, who after making inquiries, told him that feveroles were just horsebeans and that his firm could procure them. After negotiations on that basis, written contracts were concluded (1) between North African suppliers and the defendants, (2) between the defendants and the plaintiffs, and (3) between the plaintiffs and Egyptian buyers, for the sale and purchase of "horsebeans," payment to be in London by confirmed irrevocable letters of credit against shipping documents. When the horsebeans, shipped from Tunis, were received by the Egyptian buyers, the latter found that the commodity supplied was not feveroles, but another type of bean ; but as they had paid for the goods, they accepted them and claimed damages.
The resulting disputes between the plaintiffs and the defendants were referred to arbitration, and awards made in favour of the defendants. The plaintiffs then started proceedings in the High Court, claiming, inter alia, rectification of the contracts by the addition of the word '' feveroles '' after the word '' horsebeans,'' intending if successful to claim damages on the contracts as rectified.
Pilcher J. found that both parties had made an oral agreement by which they intended to deal in " horsebeans of the feverole " type," but that owing to a mutual mistake innocently induced by the sellers' representative, all the written contracts were for horse-beans ; and he allowed the rectification asked for by the plaintiffs. On appeal by the defendants : —
Held, that, as the concluded oral agreement between the parties was for horsebeans, and the written contracts were in the same terms, the remedy of rectification, available only where there was clear proof that a written agreement did not correspond with the contract into which the parties entered, as expressed by their outward acts, was not available to make new contracts for feveroles between the parties.
Per Denning L.J. : Though both parties were under a fundamental mistake as to the nature of the subject-matter, the contract was not a nullity, for where parties to a contract were to all outward appearances in full and certain agreement, neither of them
451could set tip his own mistake, or the mistake of both of them, to make it a nullity ab initio.
Dictum of Simonds J. in Crane v. Hegeman-Harris Co. Inc. [1939] 1 All E.R. 662, 664, that a continuing common intention might be sufficient ground for obtaining rectification doubted by Denning L.J.
Decision of Pilcher J. [1953] 1 Lloyd's Rep. 84 reversed.
APPEAL from Pilcher J.
The plaintiffs, Frederick E. Eose (London) Ld., and the defendants, William H. Pirn Jnr. & Co. Ld., carried on business as merchants and middlemen in the City of London. The plaintiffs had an associated company in Egypt—Eose (Middle East)— and the defendants an extensive connexion with North African suppliers and shippers of local products.
On October 26, 1950; Eose (Middle East) cabled to their London house: "Have inquiry Egypt up to five hundred tons " Moroccan horsebeans described here feveroles. Please offer " c.i.f. Port Said. ..." The plaintiffs' market representative,-Hampson, did not know what the French term " feveroles " meant, and telephoned to the defendants' representative, Brooks, whom he had known for some 25 years. According to the plaintiffs' evidence, Hampson read the whole cable to Brooks, and asked him what " feveroles " were. Brooks said he did not know, but would find out, and shortly after he told Hampson that feveroles meant horsebeans and that these could be obtained from Algeria, Tunisia, or Morocco.
On October 31, the plaintiffs cabled to their Egyptian house a firm offer to supply "horsebeans," stating in the cable: "Understand horsebeans exact translation feveroles." There followed various offers and counter-offers between the parties, and on November 2, 1950, three contracts were signed, as follows: (1) sale by an Algerian company to the defendants of 500 tons Tunisian horsebeans, fair average quality; (2) sale by the defendants to the plaintiffs of the like quantity and quality of Tunisian horsebeans; and (3) sale by the plaintiffs to a firm in Port Said of the same quantity of Tunisian, horsebeans. On November 7, 1950, three similar contracts for a further 200 tons of Algerian horsebeans were concluded, the buyers in this case being, an Egyptian firm in Alexandria.
Each contract was on form 62 of the London Corn Trade Association, and included an arbitration clause; and attached to each was a slip containing provisions as to payment, and providing'that the certificate of cargo superintendents at shipment
452 was to be final as to weight, quality, condition, and admixture. Payment was to be made by net cash against shipping documents by confirmed irrevocable letters of credit to be opened by buyers with a London bank.
In pursuance of these contracts, 500 tons of horsebeans were shipped at Tunis for dispatch to Egypt in December, 1950. The certificate of the cargo superintendents at Tunis at first described them as " feves de Tunisie," whereupon the plaintiffs told the bank not to honour the credit, as they could not accept " feves " as equivalent to horsebeans. The cargo superintendents, therefore, with the approval of both plaintiffs and defendants, altered the certificate so as to describe the goods as horsebeans—which they in fact were—and the bank paid the price in exchange for the shipping documents.
When the Egyptian buyer took delivery of the goods he at once made a complaint that the goods were not " feveroles " but " feves "; but as he had already paid for them by means of the irrevocable credit, he accepted them and claimed damages.
As a result of the misunderstanding as to what " feveroles " were, disputes arose between the plaintiffs and defendants, and were referred to arbitration. The award of the arbitrators on the contracts of both November 2 and November 7 were in favour of the defendant sellers. Appeals were entered by the plaintiffs, but stood adjourned pending the present proceedings in the High Court. Meanwhile proceedings were taken in the courts of Egypt by the buyers of the 200 tons. After an incursion into the Chancery Court, the plaintiffs began the action against the defendants in the commercial list.
By their statement of claim the plaintiffs claimed rectification of both contracts by the addition of the word " feveroles " after the words " Tunisian horsebeans " and " Algerian horsebeans " respectively, and also damages for breach of the alleged oral warranty by Brooks, the defendants' representative, namely, that he had warranted that goods described as Algerian/Tunisian/ Moroccan horsebeans were goods commonly known in Egypt as " feveroles " which could be resold in fulfilment of a requirement for " feveroles," and that in consideration of such warranties the plaintiffs had accepted the defendants' offers.
Before Pilcher J. the plaintiffs abandoned their claim to damages for breach, of warranty, the reason given being that the defendants had pleaded section 4 of the Sale of Goods Act, 1893, as a defence to the claim.
During the trial and the hearing of the appeal, it was
453evident that there was much uncertainty as to the meaning of " feveroles "; it appeared that there were various types of bean grown in various North African countries; a special type, denoting horsebeans of medium size, were known as " feveroles," a larger type was called "feves," and a small size "fevettes." The
medium size were more valuable than the large ones; but the English word " horsebeans " appeared to cover all varieties.
Pilcher J. concluded that, at the time of the conversations with Hampson, the defendants' representative, Brooks, honestly "believed that " North African horsebeans described in Egypt as " ' feveroles ' " were in fact the same commodity as " North " African horsebeans, fair average quality," and that he had innocently misled the plaintiffs, with the result that the defendants had bought horsebeans which were not feveroles, and had passed this commodity on to the plaintiffs, who in their turn sold it to their Egyptian buyers. He said that though all the written contracts described the commodity as horsebeans, that was solely because of the mutual mistake originating with Brooks, which had been accepted by the plaintiffs. He found that both parties made an oral agreement in which they intended to deal in "horsebeans of the feverole type," and he gave judgment for the plaintiffs, on January 23, 1953, holding that they were entitled to have the two forms of contract rectified by the addition of the word " feveroles " after the word " horsebeans."
The defendants appealed.
T. G. Roche for the defendants. No one was agreed as to what exactly "feveroles" are; but Pilcher J. allowed the contract to be rectified so as to read " horsebeans (feveroles)." The question is whether, where parties to a contract think that commodities A and B are the same when in fact they are not, the court can rectify a contract for the sale of A to read as a contract for the sale of B. In certain circumstances such a " fundamental " mistake," as Pilcher J. described it, might be ground for saying that there was no contract; but it is not open to the judge, by allowing rectification, to make another contract for the parties. Here the offer was for horsebeans, and that exact offer was accepted, under a mutual mistake, for the parties did not know that feveroles had any separate existence from horsebeans. They thought that they were contracting for horsebeans which had the quality of being capable of being sold in Egypt as feveroles. In Bell v. Lever Brothers Ld. it was held that if the mistake was
454 as to the nature and substance of the thing sold there was no 1953 consent and no contract, but that if it was as to the quality of the subject matter there was no remedy, unless there was a collateral warranty : see per Lord Blanesburgh, per Lord Atkin, citing Kennedy v. Panama, New Zealand and Australian Royal Mail Co.,, where the mistake was induced by the innocent misrepresentation of the directors, and per Lord Thankerton on mutual error.
[DENNING L.J. Kennedy's case was decided before equity was joined with law. The rule now is that one can have rescission for material misrepresentation; but it does not affect this argument, for rectification is never a remedy for innocent mistake.]
Here there was an innocent mistake as to the quality of the commodity. Two remedies were available: (1) rescission—and if the parties had discovered the mistake in time the buyers could have rescinded. But the Egyptians kept the goods so that rescission was not possible; or (2) damages for breach of collateral warranty; but that plea was abandoned by the plaintiffs. The authorities do not show that rectification is a remedy here. If the court were to decide that Pilcher J. was right, it would be making new law in the case of innocent misrepresentation, and it would mean that for more than a century the legal profession has been under a misapprehension as to the remedies for such misrepresentation. It has always been thought that the only remedy is to strike swiftly and rescind while the contract is still executory ; but if the present decision is right, one can wait five-and-a-half years and then apply to rectify and later-get damages on the contract as rectified.
Where rectification is sought, the duty of the court is to rectify written instruments to bring them into 'accord with a prior oral contract, and the inquiry to which the court directs its mind is: did the parties at the time when they signed the written agreement intend to carry out the prior oral agreement, or had they changed their minds ? Pilcher J. referred with approval to Simonds J. in Crane v. Hegeman-Harris Co. Inc., citing Clauson J. in Shipley Urban District Council v. Bradford Corporation.Clauson J. held that an agreement in writing could be rectified where there was a prior oral contract, made by a public authority, which was void unless it was in writing. The question there was whether
455that was possible in law when there could not have been any prior agreement. But that point cannot arise here, for there was here a concluded prior oral agreement, and the question is what that agreement was. Either there was a contract for horsebeans or no contract at all: see per Lord Cozens-Hardy M.B. in Lovell & Christmas Ld. v. Wall on the essence of rectification, and per Fletcher-Moulton L.J. on the point that the law does not make new contracts for the parties. Thus, unless a mistake is proved, there is nothing to rectify. See also Craddock Brothers v. Hunt, per Warrington L.J., on " the real antecedent con-" tract "; and United States of America v. Motor Trucks Ld.,per Lord Birkenhead L.C., on rectification owing to common mistake where the written contract does not express the true bargain.
[DENNING L.J. There was no prior contract to supply feveroles if they are different from horsebeans.]
The parties negotiated and came to a verbal agreement on the basis that the two things were the same. They did not come to two agreements. If the two things are in fact different, they cannot rectify.
Kenneth Diplock Q.G., Eustace Roskill Q.C., A. J. Bateson and J. H. A. Scarlett for the plaintiffs. The case was pleaded on construction of the contract and rectification.
[DENNING L.J. Why did the plaintiffs abandon their claim for breach of collateral warranty?]
Because the warranty contradicted the express terms of the written contract, and where there is a contract for the sale of goods by description and there has been a parole warranty that those goods will comply with another description, which varies, modifies or contradicts the written contract, parole evidence as to the negotiations between the parties is not admissible if the oral agreement has been embodied in the written document: see Smith v. Jeffryes, which is closely analogous to this case. There was there a common intention to deal in Regent's Ware potatoes and an oral agreement to supply them, but the written contract omitted the word " Regent's " and, on appeal, the court refused to admit parole evidence of the common intention.
The important element was common intention, as it is here; and, short of fraud, it mattered not how that intention was
456 induced. The court in Lovell & Christmas Ld. v. Wall mentioned the same difficulty as to the inadmissibility of parole evidence in those circumstances.
[DENNING L.J. So the plaintiffs abandoned the collateral warranty plea on the analogy of Smith v. Jeffryes ?]
Yes, and many other decisions since that. While it is appreciated that rectification is a discretionary remedy, it is submitted that the plaintiffs here had no other remedy.
[MORRIS L.J. Is it submitted that in Smith v. Jeffryes ls the contract might have been rectified today by inserting the word " Regent's " on the jury's finding that that was the parties' intention?]
Yes; those are the circumstances in which rectification is the remedy, and the only remedy. This case turns on a question of fact: was there a common intention to sell horsebeans which would comply in Egypt with the description '' feveroles '' ? Pilcher J. has found that there was that common intention: see Crane v. Hegeman-Harris Co. Inc., which correctly laid down the law as to the remedy of rectification; and Simonds J.'s judgment, cited by Pilcher J., was confirmed in the Court of Appeal.
[SINGLETON L.J. But if it is shown that the market clerks made a mistake, are the plaintiffs entitled to rectification as of right, when both parties know that there is a string of contracts and that other parties up and down the line will be affected ? See Lord Hardwicke L.C. in Henkle v. Royal Exchange Assurance Co. as to whether the court ought to interpose and relieve by rectifying " under the circumstances and nature of the trade."]
In the absence of estoppel, the string of contracts should not affect the case. This case does not turn on a misrepresentation. It is a question of common mistake or common intention and, once the common intention is established, that is sufficient for rectification. Unless the judge's finding that there was a common intention to make an oral agreement to deal in horsebeans of the feverole type can be upset, the right to rectification follows. It must be remembered that these transactions arose from an attempt to meet an inquiry by a buyer, i.e., to find a commodity which a potential buyer in Egypt had defined. If there is evidence on which Pilcher J. could find as he did, the plaintiffs are entitled to rectification.
457Roche, in reply. When Simonds J. in Crane v. Hegeman- Harris Co. Inc. referred to intention and said that it was sufficient to find a common continuing intention, he meant intention expressed in oral agreement, i.e., the objective intention. If he meant more than that " agreement means intention " as expressed," the court ought not, in view of the clear expressions of opinion to the contrary in the other decisions cited, WILLIAM H. to follow him.
[DENNING L.J. The question could not be: did you intend to sell it as feveroles? but only, did you agree to sell it as feveroles?]
Yes. Whether the mistake was as to nature or quality, a rectification which has the effect of making a new contract is not possible. As to the exercise of the court's discretion in allowing that remedy, see Caird v. Moss. -
Cur. adv. vult.
SINGLETON L.J. stated the facts and continued:—Apart from any question of law, one sees at once the difficulty caused by the uncertainty as to the meaning of "feveroles." The first cable of October 26, 1950, mentioned " horsebeans described in Egypt " as feveroles," and that cable led to discussions between Hampson and Brooks. I cannot say that it is clear from the evidence that the word " feveroles " has the same meaning everywhere, though it seems fairly clear that they are a type of horsebean.
[His Lordship then referred to the conclusions of Pilcher J. and continued: ] Innocent misrepresentation may give rise to a right of rejection; that right was not exercised in this case. And it might have been possible to establish a breach of a collateral warranty. Neither of these questions arises. The sole question is as to whether the plaintiffs are entitled to rectification of the contracts. This depends not on intention but on proof that the written contract is not the contract into which the parties entered, and the terms of the contract into which they had entered must be clearly proved.
In Crane v. Hegeman-Harris Co. Inc. Simonds J. said: " I would rather, I think, say that the court can only act if it " is satisfied beyond all reasonable doubt that the instrument " does not represent their common intention, and is further " satisfied as to what their common intention was. For let it be '' clear that it is not sufficient to show that the written instrument
458 " does not represent their common intention unless positively
" also one can stow what their common intention was. It is in
" the light of those principles that I must examine the facts of
" this somewhat complicated case." When that case was before the Court of Appeal Sir Wilfred Greene M.E. spoke of the " high " degree of conviction which unquestionably is to be insisted
" Upon in rectification cases."
I accept without hesitation the finding of Pilcher J. that both Hampson and Brooks were under a mistaken view as to what" feveroles " or beans described in Egypt as " feveroles " were, and that that mistake came about as the result of what Brooks said. Still, it is necessary to ascertain what the contract was. The offer clearly was Tunisian horsebeans. It was so treated by the plaintiffs in their cable to Eose (Middle East), who accepted it the same day. On acceptance by the plaintiffs a slip was made out in the defendants' office, and that formed the groundwork of the contract. The oral contract between the plaintiffs and the defendants was in fact for 500 tons of Tunisian horsebeans, and the written contract was in the same terms. In those circumstances, a claim to rectify the written contract by adding the word " feveroles " cannot succeed. The written contract is in the same terms as the oral contract. Whatever remedies the plaintiffs might have, or might have had, rectification is not one of them.
Mr. Roche, on behalf of the defendant sellers, submitted that either there was a contract for horsebeans, or there was no contract at all. That seems to me to be right. I cannot accept the submission of Mr. Diplock that, because of the conversation some days before November 2 to the effect that " feveroles " meant " horsebeans," the oral contract was a contract for the sale of " feveroles." We know that the defendants passed on to the plaintiffs an offer for the sale of horsebeans. If it had been sought to introduce the word " feveroles " into the contract, it is almost certain that inquiries would have been made in North Africa, and some information might have been forthcoming as to the varieties of horsebeans, in which event Hampson and Brooks might not have agreed on terms, or they might have agreed on terms other than those at which they arrived.
The same considerations apply to the second contract as to the first. I do not regard this as a case in which rectification can be granted. I am in favour of allowing the appeal.
459DENNING L.J. stated the facts and continued:—It is quite plain that neither the Egyptian buyer nor the plaintiffs could claim damages under the written contracts, because those contracts were contracts for horsebeans, and the goods delivered were in fact horsebeans; and that has been so found by arbitrators in London. In those circumstances the plaintiffs seek in this action to have their contract with the defendants rectified so as to make it refer to " feveroles " instead of horsebeans. If they get the contract rectified they will claim damages for failure to deliver " feveroles." Their object in so doing is, of course, to cover themselves against a claim by their Egyptian buyers. We were told that the courts in Egypt have, on a similar parcel of 200 tons, already held the plaintiffs liable for not supplying "'feveroles." Hence the desire of the plaintiffs to be able to claim over against the defendants.
The facts which I have stated raise nice questions on the law of mistake. It is quite clear on the evidence that the parties to the second and third contracts (though not to the first) were under a common mistake. The defendants, the plaintiffs, and the Port Said firm of buyers all thought that " feveroles " meant horsebeans, and that horsebeans meant " feveroles." They thought that if they got horsebeans they would get the " feveroles " which they wanted. It was under the influence of that mistake that they entered into those contracts for horse-beans. The defendants were, of course, the cause of all the trouble. Thinking that " feveroles " just meant horsebeans, they asked their Algerian supplier to supply horsebeans, and he did so. They ought to have asked him to supply " feveroles," and then there would have been no trouble. The Algerian supplier no doubt knew the difference between horsebeans (" feves ") and "feveroles." If he had been asked for "feveroles," he would have quoted for "feveroles" and supplied " feveroles "; but being asked only for horsebeans, he supplied horsebeans.
What is the effect in law of this common mistake on the contract between the plaintiffs and defendants? Mr. Roche quoted Bell v. Lever Brothers Ld.,, and suggested that the contract was a nullity and void from the beginning, though he shuddered at the thought of the consequences of so holding. I am clearly of opinion that the contract was not a nullity. It is true that both parties were under a mistake, and that the mistake was of a fundamental character with regard to the subject-matter.
460The goods contracted for—horsebeans—were essentially different from what they were believed to be—"feveroles." Nevertheless, the parties to all outward appearances were agreed. They had agreed with quite sufficient certainty on a contract for the sale of goods by description, namely, horsebeans. Once they had done that, nothing in their minds could make the contract a nullity from the beginning, though it might, to be sure, be a ground in some circumstances for setting the contract aside in equity. In Ryder v. Woodley, where a buyer contracted to buy a commodity described " St. Gilles Marais wheat," believing that it was wheat when it was not, the contract was held to be binding on him and not a nullity. In Harrison & Jones Ld. v. Bunten & Lancaster Ld., where parties contracted for the supply of " Calcutta kapok ' Sree ' brand," both believing it to be pure kapok containing no cotton, whereas it in fact contained 10 to 12 per cent, of cotton, Pilcher J. held that their mistake, although fundamental, did not make the contract a nullity. In McRae v. Commonwealth Disposals Commission, where. sellers contracted to sell a stranded oil tanker, described as lying at a specified point off Samarai, believing that there was a tanker at such a place when there was in fact no such tanker there, nor anywhere in the locality, the High Court of Australia held that the mistake, although fundamental, did not make the contract a nullity, and that the buyers were entitled to damages. The court showed convincingly that Couturier v. Hastie was a case of construction only. It was not a case where the contract was void for mistake. The other old cases at common law can likewise be explained. At the present day, since the fusion of law and equity, the position appears to be that when the parties to a contract are to all outward appearances in full and certain agreement, neither of them can set up his own mistake, or the mistake of both of them, so as to make the contract a nullity from the beginning. Even a common mistake as to the subject-matter does not make it a nullity. Once the contract is outwardly complete, the contract is good unless and until it is set aside for failure of some condition on which the existence of the contract depends, or for fraud, or on some equitable ground: see Solle v. Butcher. Could this contract, then, have been set aside? I think it could, if the parties had acted in time. This contract
461was made ' under a common mistake as to the meaning of " feveroles " and " horsebeans." This mistake was induced by the innocent misrepresentation of the defendants made to the buyers and passed on to the sub-buyers. As soon as the buyers and sub-buyers discovered the mistake, they could, I think, have
rejected the goods and asked for their money back. The fact that the contract was executed would not be a bar to rescission. But once the buyers and sub-buyers, accepted the goods, and treated themselves as the owners of them, they could no longer claim rescission: see Leaf v. International Galleries.
The buyers now, after accepting the goods, seek to rectify the contract. Instead of it being a contract for " horsebeans " simpliciter, they seek to make it a contract for " horsebeans " described in Egypt as feveroles " or, in short, a contract for "feveroles." The judge has granted their request. He has found that there was " a mutual and fundamental mistake " and that the defendants and the plaintiffs, through their respective market clerks, "intended to deal in horsebeans of the feverole " type "; and he has held that, because that was their intention —;their " continuing common intention "—the court could rectify their contract to give effect to it. In this I think he was wrong. Rectification is concerned with contracts and documents, not with intentions. In order to get rectification it is necessary to show that the parties were in complete agreement on the terms of their contract, but by an error wrote them down wrongly; and in this regard, in order to ascertain the terms of their contract, you do not look into the inner minds of the parties—into their intentions—any more than you do in the formation of any other contract. You look at their outward acts, that is, at what they said or wrote to one another in coming to their agreement, and then compare it with the document which they have signed. If you can predicate with certainty what their contract was, and that it is, by a common mistake, wrongly expressed in the document, then you rectify the document; but nothing less will suffice. It is not necessary that all the formalities of the contract should have been executed so as to make it enforceable at law (see Shipley Urban District Council v. Bradford Corporation ); but, formalities apart, there must have been a concluded contract. There is a passage in Crane v. Hegeman-Harris Co. Inc. which suggests that a continuing common intention alone
462 will suffice; but I am clearly of opinion that a continuing common intention is not sufficient unless it has found expression in outward agreement. There could be no certainty at all in business transactions if a party who had entered into a firm contract could afterwards turn round and claim to have it rectified on the
ground that the parties intended something different. He is allowed to prove, if he can, that they agreed something different: see Lovell & Christmas v. Wall, per Lord Cozens-Hardy M.R., and Per Buckley L.J., but not that they intended something different.
The present case is a good illustration of the distinction. The parties no doubt intended that the goods should satisfy the inquiry of the Egyptian buyers, namely, " horsebeans described " in Egypt as feveroles." They assumed that they would do so, but they made no contract to that effect. Their agreement, as outwardly expressed, both orally and in writing, was for " horsebeans." That is all that the defendants ever committed themselves to supply, and all they should be bound to. There was, no doubt, an erroneous assumption underlying the contract —an assumption for which it might have been set aside on the ground of misrepresentation or mistake—but that is very different from an erroneous expression of the contract, such as to give rise to rectification.
The matter can best be tested by asking what would have been the position if the contract between the defendants and the plaintiffs had been for "feveroles." Surely, then, the defendants on their side would have stipulated with their Algerian suppliers for the delivery of "feveroles," and the plaintiffs on their side would have agreed with their sub-buyers to deliver " feveroles." It would not be fair to rectify one of the contracts without rectifying all three, which is obviously impossible.
There is one other matter I must mention. In the statement of claim the plaintiffs originally claimed damages for breach of a collateral warranty—a warranty that the horsebeans would be a compliance with a demand for " feveroles "—but that claim was formally abandoned at the trial. I do not myself quite see why it was abandoned. Section 4 of the Sale of Goods Act, 1893, was no bar to it. Nor was such a warranty in any way in contradiction of the written contract. (Smith v. Jeffryes was not an action on a collateral warranty.) The only difficulty in such a claim might be whether there was a contractual warranty or
463merely an innocent misrepresentation. I should myself have thought that it had a better chance of success than the claim for rectification. It was put forward by the plaintiffs very forcibly in their letter of March 12, 1951, but its abandonment at the trial makes it impossible for us to consider it. We have only to consider the question of rectification; and on that I think that the plaintiffs fail. I agree that the appeal should be allowed and judgment entered for the defendants.
MORRIS L.J. Both plaintiffs and defendants are merchants engaged in the grain trade and dealing on the Baltic Exchange, and there can be no doubt that the plaintiffs, as buyers, would appreciate that the defendants did business for forward shipment. The plaintiffs would appreciate that the defendants bought and sold simultaneously and would buy from a shipper in order to sell to the plaintiffs. The defendants knew that the plaintiffs were buying in order to resell. These circumstances do not, however, govern the determination of the issue of rectification now raised between the parties.
It seems to me clear beyond doubt that both parties proceeded on the basis that " feveroles " and " horsebeans " were the same. The plaintiffs' representative expressed the matter succinctly when he said: "I had agreed to buy because feveroles were " horsebeans and horsebeans were feveroles." In that belief the parties came to agreement, and the formal written contracts were prepared and signed. The parties had throughout a clear common intention and purpose of buying and selling horsebeans, and their written agreements faithfully embodied and exactly recorded what they had agreed. In these circumstances it seems to me that no claim for rectification can succeed.
Both parties thought that the result of what they clearly understood and clearly expressed would be that the plaintiffs as buyers would be able to satisfy the inquiry which, as the defendants knew, had been received. In that they were mistaken as a result of the advice honestly given by the defendants' market clerk. But the fact that they were under a mistaken impression as to what their agreement would achieve does not disturb the clarity and the fixity of the agreement which they in fact made. The defendants intended to offer horsebeans and the plaintiffs intended to accept horsebeans: the written agreements correctly reflected and incorporated what they had agreed.
The judge said that " both the plaintiffs and the defendants " made an oral agreement in which they intended to deal in
464 " horsebeans of the feverole type." With respect, that was not quite the position. There was no question of contracting in reference to a " type " of horsebeans. There was a joint understanding that they should contract in reference to " horsebeans " simpliciter which they thought were the same as "feveroles."
If, as now appears to be the case, they were wrong, it appears probable that they would not have acted as they did had they been enlightened. But this does not enable one party to convert the contract into something different from what it was.On the assumption that " feveroles " are different from " horsebeans," it cannot be said that the parties agreed on the sale of a commodity of the separate existence of which they had no knowledge. The defendants were selling "horsebeans," and in order to sell they would have to acquire "horsebeans." If "feveroles" are different, then the defendants, and equally the plaintiffs, never even gave their minds at all to the question of a sale of some products which are different from "horsebeans."Appeal allowed.Leave to appeal to the House of Lords refused.Solicitors: Richards, Butler & Co.; Thomas Cooper & Co.M. M. H.