Hamilton sheriff rules metal goods contract dispute resolved by email correspondence

Sheriff Court
Sheriff Court

Two companies which were at odds over whether a dispute over a contract between them for the sale of metal products had been resolved have had the issue resolved in favour of the original seller.

The pursuer, Donald McCarthy Trading Pte Ltd, contracted with Ireland Alloys Ltd for the sale of metal turnings and other devices. The dispute originally arose as a result of defective products listed in the invoice.

The case was heard in Hamilton Sheriff Court by Sheriff Daniel Kelly.

Excessive amounts of Bismuth

In June 2019 the pursuers, a company registered in Singapore, entered into a contract for the supply of goods by them to the defenders, who were registered in Hamilton, for the amount of 712,764.75 US Dollars. The pursuers averred that the contract stipulated that 60% of the purchase price was to be paid prior to shipping, with the remainder paid within 30 days of the goods’ arrival at the designated UK port.

Following the expiration of the 30-day period, the defenders contended that some of the goods did not conform to the specifications of the contract. They disputed that there was any implied term requiring them to analyse the materials and pay the remaining 40% in 30 days. At the raising of the action, the outstanding balance was $85,939.40, the defenders having paid some but not all of the 40% outstanding.

In addition to this contract, the pursuers had also sold the defenders metal turnings listed in a different invoice for the sum of $58,187.50 in April 2019. During email correspondence between solicitors acting for the pursuers and Stuart Douglas, a director of the defenders, Mr Douglas confirmed that he intended to pay the remainder of the balance for the June 2019 invoice and return the turnings. He asked for confirmation that this would settle matters between the parties, which the pursuers answered in the affirmative.

Following the pursuers’ final email, Mr Douglas informed them that the defenders would pay the balance for all the materials in the June 2019 invoice except for some Waspaloy products which had been found to contain excessive amounts of Bismuth alloys, contrary to the terms of the purchase contract.

It was submitted for the pursuers that the email correspondence prior to Mr Douglas’ final email amounted to a contract to settle the dispute. By the time of the pursuers’ final email, the only outstanding matter was the confirmation that settlement would resolve matters, with both invoices having been adequately addressed.

The defenders submitted that there had been no consensus in relation to the essential elements of a settlement agreement. The final email sent by Mr Douglas constituted a rejection of the terms offered by the previous email from the pursuers’ solicitors. Therefore, there was no contract and the action was irrelevant.

Well settled approach

In his decision, Sheriff Kelly began by laying out the proper approach to the questions of law, saying: “The proper approach in law to questions of this kind is well settled and has been expressed as being that both parties must have manifested an intention to be immediately bound to all of the legally essential elements of the bargain. In assessing this, the court adopts an objective approach, based upon what an informed reasonable person would have understood by the words and conduct of the parties or their agents.”

Applying this approach to the facts of the case, he said of the pursuers’ final email: “The pursuers’ solicitor in the email timed at 15.56 requested that the sum of US $285,105.90 be remitted direct to the pursuers by 5 pm that day. It was contended by the defenders that this meant that no agreement had been reached as to the date of payment and that the date was being dictated by the pursuers rather than agreed.”

He continued: “However, the defenders themselves at 14.52 had already intimated that payment would be arranged once confirmation had been given of the pursuers’ position regarding the 907 turnings. That confirmation had been provided at 15.10 that day. There had, therefore, been agreement upon a point at which the amount would be payable.”

Analysing Mr Douglas’ final email, he said: “An informed reasonable person reading the previous emails would have understood that an agreement between the parties had already been concluded prior to the 16.44 email having been sent. This subsequent email from the defenders’ director contradicted the earlier agreement.”

He continued: “Having previously confirmed that he would be paying the full price of US $285,105.90, he then said, in what he himself termed ‘our revised offer’, that they intended to offer a lower amount. This was a unilateral proposed alteration and not one which was taken up by the pursuers.”

Sheriff Kelly concluded: “An informed reasonable person would have understood that the parties had already entered into a contract for payment of US $285,105.90 as the balance for the goods supplied on invoice number 2702DT, which was payable after 15.10 on 29 August 2019. Accordingly, this subsequent email from the defenders’ director timed at 16.44 that date neither formed part of that earlier contract nor detracted from it.”

For these reasons, decree was granted in favour of the pursuer for the sum of US $85,939.40. A counterclaim by the defenders that was no longer insisted upon was dismissed.

© Scottish Legal News Ltd 2021

Other judgments by Sheriff Kelly