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WJ Alan Ltd v El Nasr Export and Import Co (1972) CA
This case concerns a contract dispute over currency of payment for coffee sales. Understanding the key points is crucial for grasping the concepts of waiver and variation in contract law.
I. Core Facts:
A. Waiver (Lord Denning MR):
This case concerns a contract dispute over currency of payment for coffee sales. Understanding the key points is crucial for grasping the concepts of waiver and variation in contract law.
I. Core Facts:
- Contract: Two contracts for 250 tons of coffee each, priced in Kenyan shillings (KES). Payment stipulated as "confirmed irrevocable letter of credit."
- Dispute: The buyer provided a letter of credit in British pounds sterling (£), not KES. After two shipments invoiced and paid in £, the seller invoiced the third shipment also in £. Sterling then devalued against the KES. The seller sued for the difference.
A. Waiver (Lord Denning MR):
- The sellers, by accepting payment in £ for the first two shipments, waived their right to payment in KES.
- This is a classic example of waiver, based on the principles established in Hughes v Metropolitan Railway Company and Central London Property Trust Ltd v High Trees House Ltd.
- Denning MR clarifies that waiver, while sometimes temporary, can become irreversible if withdrawing it would cause injustice to the other party (buyer). In this instance, it was considered irreversible.
- Key takeaway: Acceptance of a different payment method than initially contracted can constitute waiver of the original contractual right. The action of the promisee (seller) acting on the belief induced by the other party (buyer) is sufficient, even without demonstrable detriment.
- Megaw LJ viewed the shift from KES to £ as a variation of the original contract. Both parties benefitted/risked from this change at the time. This mutual benefit constitutes consideration for the variation.
- Alternatively, even without variation, Megaw LJ concludes the buyers would still succeed based on the seller's waiver.
- Key takeaway: A change in a contractual term can be a binding variation if both parties provide consideration (a mutual benefit or detriment).
- Stephenson LJ agreed that either variation with consideration or waiver explained the outcome.
- He acknowledged the detriment suffered by the sellers (loss due to devaluation) in supporting the waiver argument.
- Waiver: The voluntary relinquishment of a known right. It can be express or implied (through actions). It can be temporary or permanent depending on the circumstances and the potential for injustice to the other party.
- Variation of Contract: A change to the terms of a contract, requiring consideration from both parties to be binding.
- Consideration: Something of value exchanged by both parties to a contract, creating a legally enforceable agreement.
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