- Sabru Motors v Rajab Enterprises
- This piece examines the remedy of a buyer where there has been breach of a sale of goods contract arising from the failure of a seller to deliver due to an increase in the price of the goods. The case of Sabru Motors v Rajab Enterprises (2002), considered this issue. Sabru Motors (Sabru) was a distributor for the Anambra Motor Manufacturing Company Limited (ANAMCO) who entered into a contract for the sale of two Mercedes Benz trucks to the Rajab Enterprises (Rajab) at the cost of N846,259.20 each. In 1992, Rajab paid a total sum of N1,692,519.40 for the two trucks but Sabru failed to deliver the vehicles.
- Rajab therefore commenced litigation claiming the sum of N1,692,519.40 (plus interest) being the money paid for the two trucks plus an additional sum of N4,307,000.00 which they would have to pay to buy the two trucks in the open market. Sabru admitted that Rajab paid the sum of N1,692,519.40 for trucks and the money was remitted to the manufacturer ANAMCO. In 1993, Sabru informed Rajab that ANAMCO had reviewed the prices of the trucks upwards to N1,500,000 each (against the earlier price of N846,259.20) and asked Rajab to pay the additional amount. A few months later, Sabru collected the two trucks from ANAMCO but rather than deliver them to Rajab, it sold the trucks to Leventis Motors because Rajab refused to pay the additional amount.
- The trial court held that that failure to deliver the trucks was wrongful. It gave judgment in favour of Rajab and awarded the sum of N1,692,519.40 (plus 5% interest) being the price paid for the two trucks plus the sum of N300,000 as damages against Sabru. However, Rajab considered the award of damages inadequate and appealed to the Court of Appeal which held that the trial court ought to have awarded Rajab the sum N1,307,480.60 as damages being the difference between the contract price of the two trucks and their open market value or current price of N3,000,000.00 at the time when Sabru failed to deliver the trucks. Sabru challenged the judgment at the Supreme Court which dismissed the appeal.
- The Supreme Court considered the provisions of sections 51 of the Sale of Goods Act which states that; (1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer; the buyer may maintain an action against the seller for damages for non-delivery; (2) The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events from the seller’s breach of contract; (3) Where there is an available market for the goods in question the measure of the damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time when they ought to have been delivered or (if no time was fixed) at the time of refusal to deliver. His lordship Iguh JSC then said,
“Where therefore the seller wrongfully fails to deliver the goods, the subject matter of a contract of sale, the buyer may among other things maintain an action for damages against the seller for non-delivery under section 51(1) of the Sale of Goods Act. But by section 51(3) of the Act, where there is an available market for the goods in question the measure of damages for non-delivery or repudiation by the seller is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time when they ought to have been delivered or if no time was fixed then at the time of the refusal to deliver.”
- Commentary
This case is instructive especially at this time when prices of goods are constantly changing. A seller may fail to deliver because an increase in the price of raw materials has resulted in an increase in the cost of the goods and the delivery of the goods will result in loss of profit to a seller. A seller who fails or refuses to deliver goods due to changes in the price of the goods will incur damages unless there is a price variation clause inserted into the contract to protect the seller against changes in price.
