Emperor Gold Mining Company Ltd v Fiji Industries Ltd [2000] FijiLawRp 13; [2000] 1 FLR 311 (1 December 2000)

[2000] 1 FLR 311

IN THE COURT OF APPEAL OF FIJI

EMPEROR GOLD MINING COMPANY LIMITED

v

FIJI INDUSTRIES LIMITED

Court of Appeal Appellate Jurisdiction
Casey, Ward and Byrne, JJ
1 December, 2000
ABU0001/99

Contract - whether contract was of supply only with no obligation to purchase quicklime - whether contract frustrated due to withdrawal of joint venture - whether contract discharged - business efficacy rules

The High Court awarded judgment for damages plus interest in favour of the respondent for the respondent's breach of a contract to purchase quicklime. It held that a letter and local purchase order together constituted an agreement for sale and purchase and rejected the appellant's submissions that it was a contract for supply only. The appellant appealed on the grounds of the certainty of contract, uncertainty of terms and frustration due to the withdrawal of a joint venture partner Ranger. The court found that the parties intended to assume commercial risks of unexpected events affecting performance of the contract, and arising out of its own business activities and relationships.

Held - (1) Written contract consisted of letter and purchase order by mutual reference to each other and was intended to be red together as a single document setting out the terms between the parties.

(2) The court must consider the terms of the contract in light of the surrounding circumstances known to the parties at the time it was made.

(3) The test of an implied condition is whether parties, assuming them to be reasonable business-people, would necessarily have agreed to such a condition as appropriate to put into their contract if the point had been raised with them at the time it was made. In other words, is the term so obvious it goes without saying. Here, there was no implied condition that Ranger withdrawal from the joint venture would end contract, or lead to frustration.

(4) The use of 'estimate' is common in commercial contracts and the parties understood boundaries for the expression.

(5) Ranger's withdrawal from the joint venture was not something that made the continued obligation to purchase the stated quantity something radically different from the obligation undertaken in the contract, thus appeal on the grounds of frustration fails.

Judgment of the High Court upheld and appeal dismissed with costs.

Cases referred to in judgment
Appr Codelfa Construction Pty Limited v State Railway Authority of NSW [1982] 149 CLR 337
Appr Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
Foll Pioneer Shipping Ltd v BT.P Tioxide Ltd [1982] AC 742
Foll Hirji Mulji v Cheong Yue SS Co