Late shipment leads to revocation of contract

The First Hall of the Civil Courts agreed to rescind a contract after the consignment of goods was not delivered and reduced in another consignment. This was decided by Mr Justice Lawrence Mintoff on 17 September 2018 in Dr Carlo Bisazza as special mandatory of Brymorex Spolka ZOO v Steel Eagle Commerce Limited.

In their application the Polish company explained that it had entered into a supply  agreement with the defendant company.

In the agreement there were stipulated dates when the merchandise had to be delivered. The plaintiff company had paid over €50,000 and it is asking to be refunded.

Steel Eagle replied by saying that the plaintiff company should prove why the agreement should be rescinded and receive the money.

Mr Justice Mintoff analysed the evidence produced before the court. The chairman of the plaintiff company presented his affidavit, wherein explained that the two companies started working together in 2013.

In April 2015 the plaintiff company had made an order worth USD27,100, however the merchandise never arrived. In May 2015 another order was made and the defendant company issued another invoice for USD15,244. Again the goods did not arrive to their destination.

The defendant company did refund part of the first order, however, there is still a balance of €50,000 in the plaintiff’s company’s favour. In August 2017, the plaintiff company received a consignment, however, it was not complete.

A representative of the defendant company did present an affidavit too and presented a document showing that the company received from the Polish company the €50,000 and admitted that the products were not received, since the container was not released. In the same document, the defendant company agreed to rescind the agreement and refund the company in three instalments.

The senior sales manager of the defendant company accepted that the company had financial problems and in fact he was not receiving his salary. He told the court that the company has similar problems with other companies.

The Court pointed out that the defendant company argued that the container was sent but it arrived late. The Court quoted Article 1347 of the Civil Code which states:

“1347. A sale is complete between the parties, and, as regards the seller, the property of the thing is transferred to the buyer, as soon as the thing and the price have been agreed upon, although the thing has not yet been delivered nor the price paid; and from that moment the thing itself remains at the risk and for the benefit of the buyer.”

According to Article 1378, a person who sells goods, has two obligations, the first being to hand over the object and secondly to guarantee it. In fact, Article 1385 states:

“1385. If the seller fails to make delivery at the time agreed upon, the buyer may elect either to demand the dissolution of the contract or to demand that he be placed in possession of the thing sold, provided the delay has been caused solely by the seller.”

The Court quoted from a judgment Malta International Airport plc -v- Safety and Security Management Limited decided on 16 December 2015. In the judgement the court held Article 1385 gives the plaintiff a right to rescind the contract of sale, since the consignment was not done.

The court then moved to order the defendant company to pay the plaintiff company the claim and rescinded the contract between the two.