Carli and Others v Bashanfer and Other (Civil Case No. 926 of 1957) [1959] EACA 69 (19 May 1959)

Key Facts

Transaction Type

Issues

• The court examined whether the buyer was entitled to reject cement shipped under a sale by description contract. The plaintiffs agreed to supply 'Dalmatian Portland Cement B.S.S./12/1947 of Yugoslavian origin. Two Lions brand' but shipped 'Salona Towers' brand instead. The court held that since this was a sale by description and the goods did not match the agreed description, the first defendants were entitled to refuse acceptance of delivery.
• The court considered whether the first defendants had any insurable interest in the cement after rejecting it. Under the Marine Insurance Act, 1906, section 6(1) requires the assured to be interested in the subject-matter at the time of loss. Since the defendants rejected the goods, they ceased to have any interest in the cement, and there was nothing for them to assign. The court held that the plaintiffs had no insurable interest at the time of the loss.
• The court examined the validity of the insurance policy assignment from the first defendants to the plaintiffs after the loss occurred. Under section 51 of the Marine Insurance Act, 1906, any assignment made after the assured has parted with interest is inoperative unless expressly agreed to assign. The court found that the assignment was made after the loss and after the defendants had already disclaimed interest in the policy, making it ineffective. The court held that the plaintiffs could not recover under the insurance policy.

Holdings

• There is no implication that by custom or otherwise in contracts of this description the seller is deemed to be a party to the insurance policy from the outset. The subsequent assignment of the policy after loss was of no effect because the buyer had no insurable interest at the time of loss.
• The first defendants had not agreed to a change of brand or description of the cement, and the plaintiffs failed to tender cement according to the agreed description. Since this was a sale by description, the first defendants were entitled to refuse to accept delivery.
• When the first defendants rejected the goods they ceased to have any interest in the cement, and there was nothing for them to assign. Accordingly, the plaintiffs had no insurable interest in the cement at the time of the loss.

Remedies

Legal Principles

• Under Section 6(1) of the Marine Insurance Act 1906, the assured must be interested in the subject-matter at the time of loss. When the first defendants rejected the goods, they ceased to have any interest in the cement, and there was nothing for them to assign. Section 51 provides that where the assured has lost interest in the subject-matter and has not agreed to assign the policy, any subsequent assignment is inoperative.
• There is no implication that by custom or otherwise in contracts of this description the seller is deemed to be a party to the insurance policy from the outset. The court rejected the argument of implied or equitable assignment of the policy arising from the nature of the transaction.
• The court held that the first defendants never agreed to any change in the brand or description of the cement. The plaintiffs failed to tender cement according to the agreed description (Two Lions brand), and since this was a sale by description, the first defendants were entitled to refuse to accept delivery.

Precedent Name

Key Disputed Contract Clauses

• The contract was a c. & f. contract with payment by irrevocable letter of credit. The letter of credit specified the cement description as 'Dalmatian Portland Cement B.S.S./12/1947 of Yugoslavian origin. Two Lions brand'. The plaintiffs argued that a letter dated March 4, 1957 to Eastern Bank Ltd. constituted agreement to substitute this description with 'Standard Portland Dalmatian Cement', but the court found no evidence of such agreement.
• The contract specified 'Dalmatian Portland Cement B.S.S./12/1947 of Yugoslavian origin. Two Lions brand' as the description of goods to be delivered. The plaintiffs delivered 'Salona Towers' brand cement instead. The first defendants refused to accept the goods as not in accordance with the agreed description. The court held that since this was a sale by description, the defendants were entitled to refuse acceptance of delivery when the goods did not match the agreed description.

Cited Statute

• Sale of Goods Ordinance
• English Marine Insurance Act, 1906
• Interpretation and General Clauses Ordinance, s. 41
• Aden Maritime Insurance Ordinance (1958)

Judge Name

Passage Text

• A COCKBURN, C.J., in his judgment in North of England Oil Cake Company v. Archangel Insurance Co. says: 'We are agreed on one point, which entitles the defendants to judgment, viz. that, the policy not having been assigned until after the interest of the assignors had ceased, an effective assignment was impossible. If there had been a stipulation in the contract of sale that the policy should be assigned for the benefit of the plaintiffs, the vendees, it might have been otherwise; but not only is there no express stipulation to that effect, but the implication from the nature of the contract is the other way.'
• These sections make it clear that unless the buyer in this case had an insurable interest in the goods at the time of the loss he had nothing to assign (since it cannot be disputed that he had not prior thereto agreed to assign the policy) and that the policy became inoperative on the cessation of his insurable interest.
• (i) the first defendants had not agreed to a change of brand or in the description of the cement and accordingly the plaintiffs had failed to tender to the first defendants cement according to the agreed description; since this was a sale by description the first defendants were entitled to refuse to accept delivery; (ii) when the first defendants rejected the goods they ceased to have any interest in the cement, and there was nothing for them to assign; accordingly the plaintiffs had no insurable interest in the cement at the time of the loss; (iii) there is no implication that by custom or otherwise in contracts of this description the seller is deemed to be a party to the insurance policy from the outset.