Page, J.:— I have taken time to consider this case because it involves an inquiry into the legal position of indent merchants who import goods into India, and, therefore, is of considerable importance to the mercantile community. In the course of my judgment I shall refer to the foreign seller (who may or may not be the manufacturer of the goods) as the supplier, the person who imports the goods as the merchant, and the person upon whose indent or order the goods are imported as the dealer. Now, the rights and obligations of the parties to an indent transaction depend upon the contract into which they have entered; but for many years past doubts have been felt as to whether the legal relationship of the merchant to the dealer under an indent is that of an agent or a principal. The uncertainty as to the legal position of indent traders has been created mainly because persons engaged in the indent trade evince a strange disregard for the significance of the language that they use in framing their contracts. For instance, they appear to treat “limit and fixed price”; “client and customer”; “commission and profit”; “buy on my account” and “sell to me”, as synonymous terms with a levity bewildering to any one who attaches importance to the meaning of words. The traders, however, are not alone to blame for the looseness of the language in which they couch their agreements. The tenderness with which the Courts have been wont to treat commercial usages and phraseology to some extent may have conduced to the belief that is prevalent among commercial men that, so long as the course of business is established and the usages of a trade are well understood, the rights and obligations of the persons who carry on the trade will be regulated by its established practice and usage, irrespective of the form of the contract into which they have entered. I am glad that the tide is now turning, and that the present tendency of the Courts is to hold the parties to a mercantile contract more strictly to the terms in which they have purported to express the agreement that has been concluded between them.

Lord Birkenhead, L.C, observed in a recent case—

“The Learned Judge ……… has in effect declared that a custom may be given effect to in commercial matters which is entirely inconsistent with the plain words of an agreement into which commercial men, certainly acquainted with so well known a custom, have nevertheless thought proper to enter. Much evidence would be necessary to convince me of the existence of such a custom, and, if it were forthcoming, I should nevertheless hold the custom to he had on grounds which seem to me to be both notorious and elementary.”

Affreteurs Renis v. Leopold Walford, see also Miller Gibb & Co. v. Smith and Tyrer, Palgrave Brown & Son, Ltd. v. Owners of S.S Turid.

No doubt, where ambiguous terms or phrases are found in a mercantile contract evidence of usage is admissible to explain the meaning of the expressions in the particular trade or locality, and where a contract is silent in respect of some incidental term or condition which according to the course of business established in a particular trade it is customary to find included in such a contract, evidence of the custom is admissible to prove that such term or condition formed part of the contract, unless the incorporation of the term or condition in the contract will have the effect “of introducing something repugnant to or inconsistent with the tenor of the written agreement” (per Lord Campbell, C.J in Humfrey v. Dale. But where the parties to a contract have expressed the agreement at which they have arrived in a written document the terms of which are capable of a reasonable interpretation according to the natural meaning of the words that are used, a trade usage which, if it regulated the rights and obligations of the parties, would alter fundamentally the nature and character of the contract as expressed in the written agreement, can neither determine nor affect the rights and obligations of the parties engaged in the transaction; and as it is inconsistent with the terms of the written agreement evidence of such an usage is inadmissible both under the provisions of the Indian Evidence Act and the principles of the Common Law. Willes, J. thus enunciated the rule:

“It is also an elementary proposition that a custom of trade may control the mode of performance of a contract, but cannot change its intrinsic character. It may regulate as extrinsic what is done in the market, where the contract does not provide otherwise. It cannot overrule what is agreed upon between file parties, whether intrinsic or extrinsic. The agent may perform the business he is engaged for according to the usages of the market in matters of detail, although the principal be unaware of such a usage; because every authority to do a tiling, not specifying the way, implies authority to do it in a reasonable way which the usual way prima facie is. But no usage unknown to the principal can justify a broker in converting himself into a principal seller”.

Mollett v. Robinson

I would add that, in my opinion, such an usage will not bind the principal or become admissible in evidence merely because the principal is aware of it. Indeed, the more fully the principal was aware, of the usage the less likely is it that he would have contracted in terms inconsistent with the usage, unless he was minded to preclude the usage from regulating the rights of the parties to the contract. I am of opinion that the principal would not be bound by such an usage, whether he knew of it or not, unless it is proved or admitted that the principal consented to the agent performing the contract in the manner sanctioned by the usage.

This statement of the law may come as a surprise to business men, but if as a result of this suit persons engaged in the indent trade are induced so to alter the terms of their contracts that they are made to conform to the meaning that the parties intend to express, the time and labour that has been expended upon the trial will not have been wasted.

The plaintiffs in the suit are merchants, and they claim to recover damages from the defendant, who is a dealer, for failing to take delivery of goods sold to him by the plaintiffs; in the alternative, the plaintiffs as agents claim an indemnity from the defendant as their principal. The plaintiffs' claim is based upon four contracts, the terms and conditions of which are set out in a common form of printed indent or order, each indent (Nos. 74, 75, 78 and 88) being completed by the dealer, who wrote below the printed matter the particular details of the order. A large number of indent forms is use among persons concerned in the indent trade at Calcutta were adduced in evidence, but they were substantially the same as the forms used for the purpose of the transactions in suit. Indent No. 74 was to the following effect:—

“Indent No. 74 Messrs Holmes Wilson & Co. Ltd., 22nd October 1919.”

“1. I (we) the undersigned, request you to purchase yourselves or through your agent on my (our) account and risk the whole or any part of the undermentioned goods on the terms and conditions stated below:—

“2. I (we) authorise you, your agents, or whoever you or they may appoint, to draw on me (us) for invoice amount calculated on the terms of this Indent, and I (we) agree with you, and as a separate agreement with your agents, to accept such Draft or Drafts on presentation and to pay the same at maturity. No interest to be allowed on part payment made against such Draft or Drafts

“3. Should I (we) fail to accept on presentation or to pay at maturity such bill or hills, I (wa) hereby authorise you to dispose of the documents or goods either by private sale or public auction on my (our) account and risk without notice and I (we) hereby bind myself (ourselves) to make good any loss or deficiency that may arise from such sale together with all expenses and usual brokerage and interest, waiving all claim to any advantage thereon. I (we) agree to pay yon a commission of 5 per cent. on proceeds of such goods resold together with 12 per cent. interest, on the draft amount from date of maturity till realisation thereof.

“4. Should I (we) fail to pay any D/A draft on due date, you are hereby authorised to have all subsequent drafts on route or otherwise, altered to or drawn on D.P terms, whether the relative indents have been accepted on D/A terms or not, and I (we) agree to accept such and to retire same on or before the due date.

“5. We agree to pay interest at 12 per cent. per annum on any Draft or acceptance from date of maturity, which has become overdue, till date of payment.

“6. If any dispute arise with regard to this order, two European Merchants, one to be appointed by each party, shall survey the goods, and their decision shall be final, or in case of their disagreement, that of an Umpire to be appointed by them, and I (we) hereby agree to abide by it. Expenses of survey to be borne by the losing party. I (we) agree to deposit Rs. 32 as Survey fees.

“7. In case of dispute arising with reference to any shipment where more than one, the remaining shipment-shipments shall be taken delivery of without reference thereto or prejudice thereby. Each delivery shall stand as a separate contract and he dealt with as such.

“8. When goods are ordered from special manufacturers or manufacturers' agent, I (we) agree to take all risks connected with outturn, quality, delivery and every other respect shipment of such goods not being subject to arbitration in accordance with clause 6.

“9. In the event of the goods arriving before the Bill or Bills become due I (we) agree to pay the said Bill or Bills against same on arrival.

“10. If this indent is referred back and subsequently confirmed by me (us) it is understood that the time for shipment extended by the time taken for obtaining my (own) confirmation unless otherwise distinctly, stated.

“11. In the event of fire, strikes among workmen, or the failure of your supplier through bankruptcy or any other reason, you or you agents are to have the option of cancelling this order or buying elsewhere.

“12. In the event of the goods being shipped or arriving before or after the time hereinafter stipulated, or other deviations from the terms of this indent whatsoever, I (we) agree to waive all claims to compensation or damages in consequence thereof. “Arrival” shall mean the arrival of the goods at Saugor.

“13. Any deviation from time limit not exceeding 21 days is not to be considered a breach of contract; all goods which have been delivered to time at port of shipment shall be accepted as actually shipped within the limit of time stipulated.

“14. In the event of the execution of this indent, or the shipment or arrival of the goods being delayed through Force Majeure strikes of workmen, failure of machinery, detention of vessel or cargo, or other causes I (we) agree that you may exceed the stipulation hereinafter mentioned and may execute and ship this indent as soon thereafter as possible, and I (we) agree to accept and pay for the goods without objection there to, as though the conditions have been complied with. Further, you are at liberty to cancel this indent at your option, at any time without notice to me (ns).

“15. Should any goods be shipped late, no action for damages or loss of profit shall be taken against you or your agents, but I (we) have the option of accepting the goods without any allowance.

“16. Packing, breakage, leakage, damage and shortage are at my (our) expense.

“17. Goods to be insured F.P.A unless otherwise noted. I (we) hereby agree to bear any loss which may arise in consequence of goods insured F.P.A arriving salt water damaged.

“18. In the event of war you are at liberty to pay for my (our) account any extra premium necessary to cover that risk or extra freight even if it the terms are C.I.F but it shall be optional for you to so insure.

“19. It is agreed that the delivery to consignors of a clean Bill of Lading shall end your risk whether the terms are F.O.B or U.I.F

“20. It shall be optional with you or your said agent to execute the whole or any part of this order.

Total 50 tons at S. 103-00 per Ton Freight basis C.I.F

$ 24.64 per ton. Shipment as early as possible.

Bata Kristo De & Co.”

The additions in writing on Indent No. 75 were:—

Total 50 tons at $ 103-8100 per ton C.I.F—Freight basis 824-04 per ton Shipment as soon as possible.

Bata Kristo De & Co.”

With respect to these two indents the plaintiffs sent to the defendant a placement report to the following effect:—

“Holmes Wilson & Co. Ltd.

Calcutta, 15th Nov. 1919.

Messrs Bata Kristo De & Co.

Dear Sir,

Indent 74

At foot we beg to hand you particulars of your abovenoted indent.

Yours truly,

Holmes Wilson & Co. Ltd.

“Mild Steel Plates.

Placed.

Shipment as soon as mill and shipping conditions permit.”

The details added in writing on Indent No. 78 were:—

Total 100 tons at $ 103.00 per ton C.I.F Freight basis $ 24.64 per ton Shipment first quarter 1920.

Bata Kristo De & Co.”

With respect to this Indent the plaintiffs' placement report was:—

“Holmes Wilson & Co. Ltd.

Calcutta, 26th Nov. 1919.

Messrs Bata Kristo De & Co.

Order No. 78 D/28/- 10/19.

Dear Sir,

At foot we beg to hand you particulars of your abovenoted indent.

Yours truly

Holmes Wilson & Co. Ltd.

Indent 78 100 Tons Mild Steel Plates at $ 103-00 per ton C.I.F Works have accepted 1/1× plates at $ 100 per ton C.I.F 3/16″ plates at $ 106.00 per ton C.I.F Freight basis S. 24.64 per ton. Shipment as soon as they possibly can.”

The details added on Indent No. 88 in writing were:—

From Messrs Carnegie & Steel Co.

60 Tons steel joists 5″×3″×9.75 lbs. per ft. in length of 30/40 ft. rising by 1 foot.

20 Tons steel joists 7″×3.66″×15 lbs. per ft. in length of 30/40 ft. rising by 1 foot.

20 Tons steel joists 8×4×18 lbs. per ft. in length of 30/40 ft. rising by 1 foot.

Total 100 tons at $ 95.00 per ton C.I.F Freight basis $ 22.40 per ton shipment as soon as possible.

Bata Kristo De & Co.”

and the placement report in respect of No. 88 was:—

“Holmes Wilson & Co. Ltd.

Calcutta, 11th December 1919.

Messrs Bata Kristo De & Co.

Order No. 88

Dear Sir,

At foot we beg to I and you particulars of your abovenoted indent.

Yours truly,

Holmes Wilson & Co. Ltd.

Indent 88 Steel joists —Accepted at limit. each 5×3×30/40 ft. rising by a foot, 8 lengths each 7×3.66×30/40 ft. rising by a foot and 7 lengths each 8×4×30/40 ft. rising by a foot. Freight basis $ 24.64 per ton. Any variation on your account. Extra freight to be charged by Steamship company for long lengths to be charged to you”.

It was common ground at the trial that the parties entered into an agreement in respect of each of these four indents, and I am satisfied—indeed, the defendant in the course of his evidence admitted—that each indent was an offer on the part of the defendant which the plaintiffs accepted by sending the corresponding placement report. In so far as the placement reports varied the terms of the indents, no doubt, they were in the nature of counter offers, but upon the evidence I find as a fact that in respect of each transaction a contract was concluded between the parties upon the terms and conditions set out in the indent and the placement report.

The first issue to be determined is whether upon a true construction of these contracts the plaintiffs agreed to purchase the goods in suit from the suppliers upon the terms and conditions of the indents as agents for and on account of the defendants, or whether under, the terms of the contracts the plaintiffs were entitled as principals to purchase the goods from the suppliers on any terms that they might arrange, and then to resell the goods to the defendant upon the terms and conditions of the indents. In other words, in effecting the contracts by which the defendant purchased the goods were the plaintiffs to be regarded vis-à-vis the defendant as agents or principals? Learned counsel for the plaintiffs during the course of the trial was disposed to argue upon the authority of certain passages in the judgment of Blackburn, J. in Ireland v. Livingston that in respect of these sales the relationship of the plaintiffs to the defendant was that both of agent and principal, but, in my opinion, these passages do not support the proposition for which they were cited. In Robinson v. Mollett Blackburn, J. in expressing an opinion contrary to that of Brett, J. and other learned Judges appeared to think that an agent might purchase goods for his principal without himself being the vendor or creating privity of contract between his principal and a third person. But the view that found favour with Blackburn, J. as I understand Robinson v. Mollett, was not accepted by the House of Lords, and I am clearly of opinion that under the contracts of sale by which the defendant purchased the goods in suit the plaintiffs inevitably must have been either principals or the agents of the defendant, and in the eye of the law cannot be regarded as filling at the same time both capacities. It may be that the agreement between the plaintiffs as merchants and the defendant as a dealer for whom they were acting at the outset was one of principal and agent, and that so long as the contract remained executory the relationship of principal and agent subsisted between them: Moreover, if an agent employed to effect a purchase on behalf of his principal from a third person upon certain terms either sells his own goods to his principal or as agent buys from a third person upon other terms, the principal thereby is not bound, and in either event is at liberty to repudiate the act of his agent in effecting the contract. But if the agents sells his own goods, and the principal assents to the mode in which the agent has carried, out his mandate, in my opinion, after the purchase has been effected the relationship of the parties quoad the contract of sale ceases to be that of principal and agent, and ripens into that of vendor and purchaser; though it may be necessary to refer to some other agreement, for instance, the agreement of agency, in order to ascertain the terms and conditions of the contract of sale. If the law were to be otherwise the result would be that in so far as the agent was acting as a vendor he would be under no obligation to account to the other party to the contract in respect of any profit that he might have made through buying or selling the goods in question to that other party. On the other hand, in so far as he was acting as the agent of a principal, he would be liable to account to his principal in respect of any profit in excess of the agreed commission payable by his principal (if any) that he might have made out of the transaction. In my opinion, where goods are purchased through A by B A inevitably must either have sold the goods to B on his own account as a principal, or as agent for B have created privity of contract between B and a third, person Feise v. Wray, Ireland v. Livingston, Robinson v. Mollelt, Cassaboglou v. Gibb, Ex. parte Miles, Blaekbnrn on sale, 3rd Ed. 52.

I proceed, therefore, to consider the question whether under the terms of the contracts in suit the plaintiffs were bound to purchase the goods from a third person as agents for the defendant, or whether they were entitled to sell their own goods to the defendant upon the terms and conditions contained in the indent. I am clearly of opinion that under the four indents in suit the relationship of principal and agent was created between the defendant and the plaintiffs; and unless the defendant assented to some other mode of performance, that it was the duty of the plaintiffs under the indents to create privity of contract between the defendant and the foreign supplier for the purchase of the goods upon the terms and conditions of the indents. Under these indents the order given to the merchants by the dealer is “to purchase ourself or through your agents on my account and risk”. Both in common parlance, and as interpreted by Courts of law, these words denote an agreement for agency, and are wholly inconsistent with the nation that the person to whom they are addressed is there invited or entitled to sell his own goods to the person who has given him an order in this form. It is unnecessary to elaborate this matter for, as Willes, J. pointed out in Mollett v. Robinson:—

“Here the authority of the brokers was to buy as brokers for their principal, not to sell to him. If the sale had been consummated in the course insisted upon by the brokers, the principal would have obtained goods and paid for them; that is, would have bought them. Of whom? Of his own brokers, and no one else. That ought not to be, without the knowledge and consent of the principal. It is an axiom of the law of principal and agent that a broker employed to sell cannot himself become the buyer, nor can a broker employed to buy become himself the seller, without distinct notice to the principal, so that the latter may object if he think proper. A different rule would give the broker an interest against his duty, to pass off a bad bargain or inferior goods”.

Learned counsel for the plaintiffs further strenuously urged that because the goods were to be bought by the dealer at a stated price C.T.F, and no commission was payable by the dealer, the contract was one of sale, and could not be one of agency. I am unable to appreciate the force of that contention. There is no magic in the term C.I.F, the meaning of which is free from ambiguity and well understood, and merely indicates compendiously the sum that the dealer will have to pay for the actual cost of the goods, insurance, and freight. And a contract of sale C.I.F, in which no provision is made for paying commission is equivalent to a contract of sale C.I.F.C.C.I.F, and C.I.F.C indicating that the dealer is willing to pay the sum stated but no more for the actual cost, insurance, freight, and commission, whether payable to the merchant or by the merchant in order to obtain the goods. It was further contended that the conditions of sale set out in the indents were inapplicable to a contract of agency. Construed as a whole, however, the terms and conditions of the indents do not appear to be incompatible with agency. Indeed, some of the clauses of the indent (for instance, clause 3) would be superfluous and unnecessary if the contract was one of sale between principals. Again, it is common ground that it is customary in the indent trade to use the printed form of indent in suit in transactions in which the parties intend that the merchant shall act as the agent of the dealer, and whether the goods are to be purchased F.O.B, or C.I.F, (see clause 19). Further, the printed form of invoice used by the plaintiffs, in these and similar contracts in which it is stated that the goods are “consigned unto order for account and risk of” the defendant also tends to show that the printed form of indent is applicable to a transaction in which the merchant is the agent of the dealer. Learned counsel for the defendant relied upon certain admissions by Mr. Holmes in a written statement in answer to a claim by the defendant in another suit, No. 1835 of 1923, relating to other indents. I do not think it necessary to refer to the pleadings in that suit, both because the facts in that suit may well be different from those in the present suit, and may have to be investigated hereafter, and also because it may be urged with plausibility that in that suit the present defendant framed his claim upon the footing that the plaintiffs had contracted to sell the goods to him otherwise than as agents. But in the course of certain arbitration proceedings in respect of the contracts in suit it is clear that the plaintiffs insisted that under the contracts their position was that of agents and not of principals. It is, of course, to be remembered that during the arbitration proceedings and thereafter the plaintiffs have been acting under, legal advice, and in accordance with the opinion as to their legal position which commended itself to their legal advisers; but the fact remains that until the present suit was launched the plaintiffs adopted the view that under the indents the relationship of principal and agent was created between the defendant and themselves. In my opinion, it is idle to contend that under the terms of the contracts in suit the plaintiffs did not become the agents of the defendant to purchase goods from the suppliers for and on account of the defendant upon the terms and conditions of the indent. It is conceded by the plaintiffs, if they were under an obligation in the circumstances obtaining in this case as agents for the defendant, to effect contracts between the defendant and the suppliers for the purchase of the goods in suit upon the terms and conditions of the indents, that they have not performed their part of the contracts, and that the claim in the suit for damages or for an indemnity must fail.

Learned counsel for the defendant further contended that in these transactions the plaintiffs throughout were acting as agents for the defendant, and that privity of contract was established between the suppliers and the defendant. But I refrain from discussing the interesting question of law that was mooted at the trial as to whether, if the plaintiffs purchased the goods from the suppliers as agents for the defendant without disclosing the name of their principal, privity of contract thereby was created between the defendant and the United States Steel Products Co., of America who supplied the goods; because upon the oral and documentary evidence that has been adduced I am satisfied (1) that the plaintiffs did not purchase the goods in suit from the United States Steel Products Co., as the agents of the defendant but as principals on their own account, and, therefore, that privity of contract was not created between the United States Steel Products Co. and the defendant under the contracts whereby the plaintiffs purchased the goods from the suppliers (2) that the terms of the contracts of sale between the United States Steel Products Co. and the plaintiffs differed in material respects from the terms and conditions of the indents, and that the plaintiffs were not authorised under the indents to enter into any such contracts as agents for the defendant.

The course taken by the plaintiffs on receipt of the defendant's indents was to communicate with the Calcutta office of the United States Steel Products Co. and endeavour to arrange with them for the goods to be sold to the plaintiffs at a price lower than that set out in the defendant's indents. The plaintiffs fist order to carry out indents Nos. 74 and 75 bought from the United States Steel Products Co. C.I.F Calcutta 48 tons of 3/16″ mild steel plates at 97.60 per ton and 52 tons of ¼″ mild steel plates at 92 per ton; to fulfil indent No. 78 the plaintiffs bought from the United States Steel Products Co. C.I.F Calcutta 48 tons of ¼″ mild plates at 94 per ton and 52 tons of 3/16″ mild steel plates at 99.60 per ton, and against indent No. 88, 103 tons of steel joists at 90 per ton. These goods were all bought subject inter alia to the suppliers' printed conditions of sale which were different front the terms and conditions of the defendant's indents and were less favourable to the purchaser. After the suppliers had agreed to sell the goods to the plaintiffs the plaintiffs sent the placement reports' to the defendants. I find that the contracts under which the plaintiffs bought from the United States Steel Products Co. were concluded between the suppliers and the plaintiffs as principals, and that the suppliers gave credit solely to the plaintiffs, and regarded the plaintiffs alone as the purchasers of the goods. Under the contracts the goods were shipped by the suppliers, and the bills of lading were made out to the orders of the shippers, and were endorsed “notify Holmes Wilson Calcutta”. The invoices for the goods were sent to the plaintiffs, and drafts were drawn by the suppliers upon the plaintiffs who met them upon the arrival of the goods in Calcutta. The plaintiffs did not communicate to the defendant the terms upon which the goods had been purchased from the suppliers, and they, sent their own invoices to the defendant in which the goods were charged at the indent prices. Nevertheless learned counsel for the defendant contended that the effect of the evidence was that the plaintiffs in purchasing the goods from the United Steel Products Co. must be held to have acted as the agents of the defendant. In this connection the defendant placed much reliance upon the terms of the plaintiffs' invoices and the placement reports. The invoices, however, were on a printed form which was used indifferently for all indent business, and whether the plaintiffs were acting as agents or as principals. I do not think in the circumstances that much importance should be attached to the printed form of invoice that was used. [See per Blackburn, J. in Armstrong v. Strokes]. As regards the placement reports learned counsel for the defendant urged, that if the plaintiffs had purchased the goods from the United States Steel Products Co. as principals it was unnecessary that any reference should have been made in the placement reports to the acceptance of the orders by the Works. I am not prepared to accept that contention, for it appears to me that it was natural and reasonable that the plaintiffs should have informed the defendant that the United States Steel Products Co. from whom the defendant desired that the goods should be obtained had agreed to supply the goods. In respect of the placement report for indent No. 78 in which it is stated “works have accepted ¼″ plates at 100, ″ plates at 106 per ton Cl.F”, it is enough that I accept Mr. Holmes' explanation that these were the terms upon which the plaintiffs were prepared to supply the goods to the defendant, and that in due course the plaintiffs charged the defendant for the goods at the prices set out in this placement report. I do not think that it is either necessary or desirable that I should burden my judgment by discussing further in detail the evidence upon this matter. It is enough that I should hold that the effect of the transactions in fact and in law was that the plaintiffs purchased the goods in suit from the suppliers upon their own account as principals, and resold them to the defendant.

The plaintiffs sought to justify their action upon three grounds (1) that upon a true construction of the indents they became principals and not agents vis-à-vis the defendant; (2) that according to the established usage of the indent trade in Calcutta known to the defendant a merchant who under an indent agrees to purchase goods from abroad for and on account of a dealer “C.I.F no commission” is entitled to purchase the goods from the supplier as a principal on any terms that he may arrange and to resell the goods to the dealer upon the terms of the indent, the difference between the price at which the merchant buys from the supplier and the price at which he sells to the dealer being his remuneration for obtaining the goods for the dealer; (3) that the defendant well understood and assented to the mode in which the plaintiffs proposed to execute the indents, and cannot now be heard to deny that the plaintiffs had the authority of the defendant for the mode in which they carried out his mandate.

As regards the first ground of justification for the reasons that I have stated I am of opinion that under the terms of the indents the plaintiffs were bound to purchase the goods from the suppliers as agents for the defendant, and not as principals. In connection, with the second ground many authorities were cited by the parties, but I am relieved from discussing these delusions in detail because admittedly the two cases upon which the plaintiffs mainly relied were Mollett v. Robinson and Paul Beier v. Chotalal. In my opinion, even if the usage pleaded were to be proved the effect of the incorporation of such an usage into the written agreement that had been concluded between the plaintiffs and the defendant would be to “change its intrinsic character”. Evidence of the usage, therefore, is inadmissible for the purpose of varying the terms of the written agreement; and it is equally inadmissible whether the defendant was aware of it or was ignorant of its existence. Why should it be presumed, merely because the parties were aware of a trade usage, that they intended that their rights and obligations should be controlled by the usage, when they had concluded a contract the terms of which are fundamentally inconsistent with the usage that it is sought to incorporate in the contract. Commonsense and, in my opinion, the Common Law alike are opposed to any such presumption. Lord Halsbury L.C in May and Hart v. Angeli observed:—

“I have no doubt, and I do not think it is susceptible of doubt, that when there is only the relation of broker and customer the broker cannot satisfy the terms of his employment by selling his own goods to the customer who is employing him as broker; and apart from the special circumstances of the case ‘Robinson v. Mollett’ establishes no more. The special circumstances of that case had relation, so far as the contention in it was concerned, to the peculiarities of a particular business, and which was supposed to take the case out of the ordinary rule. But no one doubted, as I think no one can doubt, the ordinary rule to be what I have stated.”

It may be, of course, that the defendant assented to the plaintiffs performing the contracts of agency in the manner sanctioned by the usage, but no case has been cited to me, except possibly Paul Beier v. Chotalal, in which an usage such, as the one pleaded in this case has been held to be binding upon a party to a contract the nature of which differs fundamentally from that of the usage, merely because the party was aware of the usage at the time when he entered into the contract. If such a case was brought to my notice I should refuse to follow it unless it was an authority binding upon me; for hold that the admissibility of such an usage cannot be squared either with the Common Law principle expression facit cessare taciturn, or with the provisions of the Indian Evidence Act.

In Mollett v. Robinson, the party whom it was sought to bind by the usage was not aware of its existence, and the decision in that case is not an authority for the proposition that the party would have been bound by the usage then under consideration if he had been aware of it. The true view, in my opinion, is that expressed by Willes, J. in Mollett v. Robinson, that an agent who has agreed to purchase goods on behalf of his principal would not be entitled to sell his own goods to his principal “without the knowledge and consent of the principal”. Lord Lyndhnrst stated the rule in the same way.

“Where an agent employed to sell becomes himself the purchaser, he must show that this was with the knowledge and consent his employer.”

Charter v. Trevelyan. I must now endeavour to ascertain and explain what really was decided in Paul Beier v. Chotalal. The printed form of the indent in that case commenced with the words—

“ hereby request and authorise you to order, and, if possible, buy and send the undermentioned goods on account and risk and bind to pay for the same at the prices and conditions specified below,”

and then additional printed terms and conditions are set out. After the printed matter there was added in writing inter alia—

“12 cases each containing 16 pieces of 25/30 yds. at 1s. 1d. per yard nett free godown including duty; 60 days 6 per cent. interest after due date”.

The question that arose in that case was whether the merchants were bound to account to the dealer for the difference between the price paid to the supplier and the price mentioned in the indent. As I apprehend the judgment of Jenkins, C.J the Court was of opinion that under the terms of the indent the contract between the merchants and the dealer was one of sale and not of agency. If that were so cadit quaestio, and the correctness of the decision cannot be questioned. But Jenkins, C.J in the course of his judgment, observed:—

“In the view, however, that I take of the case it is not necessary nor is it desirable that we should decide whether on the acceptance of the indent the relations of the parties became crystallized into those of vendors and purchasers pure and simple; for, apart from that, I hold that on the terms of the indent viewed in the light of the custom of trade in Bombay the plaintiff are under no obligation to account”.

The learned Judge thus described the custom of trade then under consideration.

“Taking the whole of the evidence into consideration the conclusion to which I come is that, according to the custom of trade in Bombay, when a merchant requests or authorizes a firm to order and to buy and send goods to him from Europe at a fixed price nett, free godown including duty, or free Bombay Harbour, and no rate of remuneration is specifically, mentioned, the firm is not bound to account for the price at which the goods were sold to the firm by the manufacturer.”

The reason why Jenkins, C.J refrained from determining whether under the indent the relation ship of the merchant to the dealer was that of an agent or a principal appears to be that in the opinion of the learned Chief Justice, provided the custom was established, it was a matter of indifference whether the merchants were principals or agents vis-à-vis the dealer. But in considering the rights and obligations of the parties was it permissible to treat the relationship between them created under the indent as and irrelevant matter that could be ignored? Jenkins, C.J accepted the view, as I read the judgment, “that direct relations were not established between the indent or and the maker”; that the suppliers sold the goods to the merchants as principals, and that under the indent the merchants did not become the agents of the dealer. His Lordship observed—

“There is no express term that accounts shall he rendered; it can only be claimed that the obligation exists by implying or importing into the contract an incident of the relations between a principal and his agent. Moreover the argument assumes that the contract between the parties was that of agency.”

Under these circumstances I should have thought that it was of vital importance to determine the relationship of the parties under the written contract into which they had entered. If the Court had come to the conclusion that under the terms of the indent the merchants had agreed to buy the goods from the suppliers as agents for the dealers and on his account and risk, the usage upon which the merchants relied in that case, (based as it necessarily must have been upon the supposition that the merchants were entitled to make a profit by buying from the suppliers at a lower rate than that fixed by the indent, and then delivering the goods at the indent price to the dealer), was inconsistent with the contract of agency. If it had come to that conclusion, in my opinion, the Court ought to have held that evidence of the custom was inadmissible with because it sanctioned a situation in which the agents interest conflicted with their duty, and also because, if incorporated in the contract, the usage unite change the intrinsic character of the written contract that had been concluded between the merchants and the dealer. Notwithstanding the great respect that I entertain for the opinion of Sir Lawrence Jenkins I confess that, in my judgment the case of Paul Beier v. Chotalal, far from dissolving the doubts as to their legal position that have been perplexing indent traders, tended to foster an erroneous belief that the rights and obligations of persons concerned, in the indent trade are to be determined by the usage and course of business established in that trade, and that where the terms of the indent conflict with the usage of the trade the contract is to be deemed subordinate to the usage and pro tanto its terms are to be disregarded. It is clear from the evidence that this fallacious view of their legal position permeated the minds of Mr. Holmes and the other merchants who were called as witnesses to prove the alleged custom in the present case, and that it determines the course that they follow in transacting business. These witnesses did not pretend that any usage exists in the indent trade that an agent employed to buy on his principal's account is entitled to buy goods on his own account and then to resell them to his principal. The position that they took up, as I understand their evidence, was that the course of business in the indent trade was established and well understood by all persons concerned in the trade, and that the rights and obligations of persons who imported goods from abroad upon indents were determined by the course of business and the usages of the trade: and in so far as the terms of an indent were inconsistent with the rights and obligations created or sanctioned by the usages of the trade the usage was to prevail and the terms of the indent were to be treated as of no account. Now, from the evidence adduced in this case I find the course of business that I am about to describe well established in the indent trade in Calcutta. When goods are ordered from abroad by a dealer under an indent at a price and rate of commission therein stated it is the duty of the merchant as agent for the dealer to buy the goods from the supplier upon the terms and conditions of the indent at the lowest price obtainable not exceeding the price set out in the indent. The dealer receives the supplier's invoice, and the supplier draws upon the dealer for the price of the goods. In such a transaction the merchant acts throughout as the agent of the dealer, and is entitled to commission from the dealer at the indent rate. Owing to the unwillingness of foreign suppliers, however, to enter into direct relations for the supply of goods with bazar dealers this course of business in which the merchant acts merely as a middleman in the transaction usually is not resorted to, and one or other of the following alternative methods of supply is followed. The merchant agrees as agent for the dealer to buy the goods from the supplier on the indent terms F.O.B or C.I.F, the price being stated in the indent but no commission being payable by the dealer. In that case according to the usage of the trade the parties are understood to agree that the merchant shall be entitled to obtain remuneration by making an arrangement with the foreign supplier for the payment to the merchant of a return commission; but the amount of this return commission does not concern the dealer, the rate of the commission being fixed by agreement between the merchant and the supplier, and being paid by means of credit slips either at the time when the goods are supplied, or at a periodical adjustment of accounts, as may be arranged. Under the alternative method of supply, in which no commission is payable by the dealer the dealer orders the goods to be imported by the merchant at a fixed price C.I.F or F.O.B, and according to the usage of the trade the parties are understood to agree that the merchant may buy the goods on his own account from the foreign supplier without disclosing the dealer's name or acting as his agent, and then resell them at the indent price to the dealer upon the terms of the indent. Under this method the merchant obtains his remuneration by retaining the difference between the price at which he buys from the supplier and the indent price of the goods.

It appears from the evidence that under indents where no commission is payable by the dealer it is the customary course of business that one or other of these two methods of supply should be adopted, and Mr. Holmes stated that about 50 per cent. of such indents are carried out by the one method, and 50 percent, by the other. The defendant stated that he was fully aware of the usage by which a merchant obtains his remuneration by way of return commission, but that he never had heard of an usage by which the merchant obtained his remuneration by what I may call the difference in price method. Bearing in mind what I have already stated with respect to the indifference with which indent traders regard the wording of their contracts it is not a matter of surprise that the customary form of indent, commencing with the words:—

“We/I, the undersigned request you to purchase yourself or through your agents on my/our account and risk?”

is used by indent traders whichever method of supply they may employ and whether according to the course of business the merchant is acting as a principal or as the agent of a dealer. Mr. Miles, one of the merchants who gave evidence in connection with the alleged usage, stated that—

“In the case of a C.I.F pries where there is no commission charged it is understood that the merchant's remuneration is provided for in the price”.

Q.—The language is “we request you to purchase through your agents upon our account; but because it is a C.I.F price, therefore, those words have to be deleted”. You have to go straight against those words? Yes, it seems so.

Q—When you put down “C.I.F price” the words “purchase on our account” become inconsistent with your view of the C.I.F price? Yes.

Q—The moment the C.I.F price is put down you are under no obligation on his account at all? No.

Q.—Is there a custom in Calcutta to change the language? It is an understood thing when you sell at a C.I.F price that you have to deliver the goods at that price.

Q.—By what is understood you nullify what is expressed in the document? It seems like it.

Again.

To the Court,

Q.—You agree with the view, in substance, that the form is an agency form? That first clause applies more to an agency.

Q—And, therefore, if it is an agency form it is not an apt form to express a sale between principals?,

Perhaps not.

Mr. Petit; another merchant, stated—

Q.—The custom is that in a C.I.F contract you are the principal? Yes.

Q.—Once the rate quoted is C.I.F so much, whatever the other terms may be, you cannot be an agent? I do not consider that you can be an agent in that case.

Q.—Under the custom if it is not written expressly that you are to act as an agent, but if there are other terms from which one can make out that you are merely an agent, do you say from the fact that it is C.I.F that those terms are overridden by the Calcutta custom? Yes.

Again, Mr. Petit stated—

You see the custom of the trade is that by a C.I.F contract you become a principal, and supposing there is no definite agreement to the contrary I should construe it in that sense, and I believe that is the general understanding, in the mercantile community of Calcutta.

Q.—What clauses are overridden by the term C.I.F? You said some terms would be overridden by the C.I.P terms? All the terms in our form.

Q.—In the form all the clauses are given the go by to because it is C.T.F? Yes.

The witness was then asked to endeavour to amend, the wording of his indent form to make it conform to the usage.

To the Court.

Q.—May I suggest one thing? “Sell to me the following goods”?—“We request you to sell to me the following goods.” It would be probably an improvement.

Q.—But that would meet the case? I think a better way would be to say “We request you to buy in Europe and we agree to purchase from you the goods on their arrival”.

Q.—Your amendment is quite inconsistent with the printed form? It is, I admit.

In my opinion, the usage proved in this case that where goods are ordered by a dealer at a fixed price “C.I.F, commission nil” the merchant is entitled to make and retain a profit by buying from the supplier at one price and selling to the dealer at the indent price is fundamentally inconsistent with the terms of the contract into which the plaintiffs and the defendant have entered, and is inadmissible in evidence, whether the defendant was aware of it or not.

The question that remains to be determined is in connection with the third ground upon which the plaintiffs sought to justify the mode in which they performed the indents. It is one of fact, namely, whether the defendant consented to the plaintiffs performing the contracts in suit in the manner sanctioned by the said usage; for I hold that the plaintiffs in executing the indents in suit have followed the well established course of business in the indent trade in Calcutta.

[His Lordship then proceeded to consider the evidence on this question and continued as follows:—]

I am, of course, aware of the cases that lay down that where it is alleged that the principal has consented to an agent selling to him his own goods in fulfilment of a contract under which the agent has agreed to purchase goods on behalf of the principal, the consent of the principal must clearly be proved. But, to my mind, the evidence in this case leads irresistibly to the conclusion—and I find without doubt or hesitation—that the defendant consented to the plaintiffs executing the indents by the difference in price method, and must be taken to have authorised the acts of the plaintiffs in carrying out the indents by purchasing the goods, from the supplier and reselling them to the defendant. I find that the goods required to fulfil each of the indents in suit arrived in Calcutta, and I find also that the goods were shipped in due time, and that the plaintiffs at all material times were ready and willing to deliver the goods to the defendant as agreed between them. The plaintiffs, however, after accepting and paying for a portion of the goods delivered under Indent No. 75 have refused to accept; or pay for the balance of the goods. In my opinion, the defence to the plaintiffs' claim upon which the defendant relied at the trial was ingenious, but not genuine; I believe that the defendant refused to take delivery of the balance of the goods; that he had ordered not because he did not approve of the manner in which the plaintiffs had executed the indents, but because the rate of exchange had gone against him, and if he had taken delivery of the goods at the indent price the transaction would have resulted in a heavy loss.

At the end of 1919; the rate of exchange with the United States stood at Rs. 240 to a $ 100.00: at the end of 1920 it had risen to Rs. 100 to a $ 100.00; and in July 1920 the rate was Rs. 440 to a $ 100.00 In these adverse circumstances the defendant endeavoured to obtain the cancellation of the indents, and Mr. Holmes was approached by the defendant for the purpose of effecting the cancellation of the indents or the resale in the United States of the goods that the defendant had ordered.

The plaintiffs appear to have made strenuous efforts to minimise, even if they could not obviate, the loss that the defendant must suffer if he was forced to take delivery; but at the same time, by their letters of the 1st and 4th November 1920 the plaintiffs made it clear to the defendant that they would only consent to cancel the indents if the suppliers were willing to forego their rights under the contracts that they had made with the plaintiffs. When the suppliers remained obdurate, and insisted upon the transactions being completed, the defendant, as appears from his letter of the 9th February, 1921, decided to refuse to take further delivery upon the ground of late shipment; and in the arbitration proceedings that followed pleaded, inter alia late shipment as a defence to the plaintiffs' claim. The arbitration, however, was abortive; and at the hearing of the suit the defendant abandoned the plea of late shipment, which obviously would, have militated against the defence upon which he was advised to rely, at the trial, namely, that the plaintiffs were his agents in the transaction, and had committed various breaches of duty as agents, and in particular had made secret profits out of the indent transactions. An examination of the plaintiffs' books, however, supported Mr. Holmes' assurance that the plaintiffs had received no remuneration from the suppliers by way of return commission or otherwise, and that the only profit that they could make out of the transaction would be the difference between the indent price and the price at which they, purchased the goods from the suppliers. As I have found that the defendant consented to the plaintiffs executing the indents by the difference in price method, in my opinion, there is no defence to the plaintiffs claim.

The plaintiffs are entitled to recover the damages that they have suffered by reason of the failure of the defendant to accept delivery and pay for the balance of the goods order under the indents, and upon that basis a decree will be passed in favour of the plaintiffs.

Attorneys for the plaintiff Co: Morgan & Co.

Attorneys for the defendant: H.N Dutt & Co.

B.M.S