LEE WAH ELECTRONICS LTD v. INTER-CONTINENTAL AMALGAMATED AGENCIS LTD

1983, No. 12193

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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1. The plaintiff is a manufacturer of radio cassette players among other things. According to its letter head the defendant carries on business as "manufacturers, importers, exporters, buying agents and confirmers". The dispute in this case arises out of a contract for the supply by the plaintiff to the defendant of 2,000 radio cassette players. In substance the plaintiff claims US$21,681 for the supply of 300 radio cassette players delivered to the defendant and some $47,000 in respect of the loss of profit on 1,700 sets, of which it says the defendant did not take delivery. The defendant in substance says that the contract was an FOB contract and that the plaintiff did not comply with the terms of a letter of credit and, furthermore, that it repudiated the contract by refusing to deliver the 1,700 sets.

2. Now the facts of this case are as follows. By a contract evidenced by Order Confirmation No. 83/082 dated 14th March 1983, the plaintiff agreed to supply the defendant 2,000 model CTR-191 radio cassette players. Only the following details of the Confirmation need be mentioned :-

3. Both parties knew the cassette players were intended for a German buyer, Sethi Overseas GmbH (Sethi). Indeed representatives of the two parties and of Sethi had a meeting in the defendant's office before the delivery dates specified were agreed. The confirmation is addressed to the defendant at its address in Des Voeux Road West, though below this appears "c/o Sethi Overseas GmbH". That is the only reference to Sethi. The confirmation is recorded as "read and accepted by the buyer" and then appears the stamp of the defendant together with an authenticating signature.

4. From this and the limited evidence led at the hearing it is clear that the buyer was the defendant, at any rate so far as the contract evidenced by the Confirmation is concerned.

5. The defendant opened letter of credit No. 116027 (P6 of the Agreed Bundle) with the Banque Nationale de Paris (BNP) on 16 April 1982. Its material contents are as follows:

       We hereby issue in your favour this documentary credit which is available by payment against presentation of the following documents and draft at sight drawn on application bearing the clause: drawn under documentary credit No. 116027 of BNP Hong Kong.

 

6. In not opening the letter of credit earlier, nor for the full contract amount, the defendant was in breach of the terms of the contract. Whether the plaintiff was thereby entitled to repudiate is of no consequence because it chose not to do so. Mr. LEUNG Wai-lam, the plaintiff's Marketing Manager, testified that the defendant requested the plaintiff to manufacture only 500 sets first, explaining that as this was its first transaction with the Sethi, it had no confidence and would like to carry on the business bit by bit. Mr. Leung said his company could have refused but it decided to meet the defendant's request. Some time before 30 April 1983, the expiry date of the letter of credit and the latest date of shipment of the 500 sets, at the request of the plaintiff the defendant got BNP to extend the expiry date of the letter of credit to 20 May 1983. The clear implication of this was that the 500 sets had to be delivered in time to get the documents cleared before 20 May 1983.

7. On 1 June 1980 about 3.40 p.m. the defendant received a telex message from the plaintiff in the following terms:

"Top Urgent

 

Please telex confirmation your acceptance of following discrepancies when negotiation of documents: -

 

Please confirm master air waybill will be given to us for presentation. 

Please come to our office and bring SMP shipment sample.

Please confirm above discrepancies otherwise can't deliver goods today".

8. The defendant replied promptly that same afternoon by telex in the following terms:

"We confirm acceptance of following discrepancies

 

Please send your letter of guarantee about response of quality of the caption model along with one set of sample, charge will be after receive the same."

9. After receiving the defendant's reply Mr. Leung asked the defendant to prepare the documents, since in his view the defendants were the shippers, and also to send someone to take delivery. On 2 June 1983 Hill and Delmain Cargo Handlers came and collected the 300 sets. This is clear from their reception check - list (P20 Agreed Bundle). The air waybill issued by KRM Freight Express (P14 Agreed Bundle) is dated 2 June 1983. Its material contents are as follows :

10. Mr. Leung says he sent a messenger to the defendant's office about 5 or 6 June and obtained the air waybill. The shipping particulars in the air waybill had not been filled in by him and he assumed that the defendant had done this. On 7 June he presented to the plaintiff's bank a demand draft under the letter of credit with supporting documents.

11. On 10 June he discovered that the goods had been consigned "to order" contrary to the requirements of the letter of credit. As a result he sent by telex the following message to the defendant: -

"Received KRM's air waybill No. 00127 for submission of 300 pieces CTR-191 to your customer Sethi Overseas GmbH under our order confirmation No. 83/082. Please note your Shipping Department have instructed the forwarder to consign goods "to order" instead of consigned to bank as required in your letter of credit No. 116027 in favour of us. We are not responsible for this discrepancy and officially notify your goodselves to take immediate action."

12. No reply to this was received nor was responsibility for the failure to consign the goods to the bank denied by the defendant until 5 July, almost a month later.

13. Meanwhile on 18 June 1983 BNP informed the plaintiff's bank that they had found 1the following discrepancies in the document: -

14. On 20 June 1983 BNP wrote to the plaintiff's bank in the following terms:

"Further to our advice of June 18, 1983, we advise having received a letter from credit openers reading as follows -

 

15. The plaintiff's bank informed the plaintiff of these communications on 23 June 1983. On 1 July 1983 BNP wrote to the plaintiff's bank again referring to the letter sent on 20 June 1983. The plaintiff's bank in turn passed this on to their client on 4 July 1983. On 5 July 1983 the plaintiff sent a telex message to the defendant pointing out that they had received advice from their bank that the submission of 300 pieces of CTR-191 under the letter of credit had not been honoured by the defendant's party due to the following discrepancies:

The plaintiff went on to point out that the defendant had, by its telex of 1 June, accepted the discrepancies with the exception of (d), and that accordingly the defendant should accept those discrepancies as confirmed. They added that the discrepancies were caused by the defendant's Shipping Department as the instructions were prepared by the defendant's side. Moreover the plaintiff said the discrepancy at (d) was only a minor clerical mistake which should not cause the defendant to stop payment. The plaintiff concluded by stating that if payment was not received by 11 July they would have to take legal action to settle the matter. The defendant replied the same afternoon in the following terms:

"As per our directions we agreed to accept points (a) to (d) but on (e) it is your entire fault as you should follow L/C instruction. However we agreed to this except provided that you hold yourself responsible to compensate fully should we not be able to recover the money. Had you agreed we could have got the money by now and delay on your side by not accepting any responsibility further would only benefit the buyer for the delay in remittances and we cannot be hold responsible." (sic)

16. To this the plaintiff replied that if payment was not received it would have to settle the matter by legal action. The defendant responded by suggesting again that the plaintiff advise its bank to release the documents to the plaintiff's bank or to the final buyer for collection as the defendants were an agency of the client and would be better placed to effect collection. That was on 6 July. On 8 July they followed this with a further telex communication suggesting an amicable settlement and that if the plaintiff would release the documents for collection as suggested by the defendant they could get paid within two weeks. The plaintiff responded the same day by insisting on immediate payment in default of which legal action would ensue. On the 2nd September 1983 the plaintiff's solicitors gave notice to the defendant that unless the sum of US$21,681 was paid to the plaintiff within 7 days legal action would ensue. The defendant's solicitors replied on 10 September 1983 claiming that the fault was the plaintiff's in not meeting the requirements of the letter of credit, in particular in not consigning the goods to the Bank of Credit and Commerce. They added that nonetheless their clients were prepared to do everything possible to assist the plaintiff in recovering the money from the ultimate buyer in Germany, provided the plaintiff bore the cost of such collection, and so these proceedings ensued.

17. Only two other matters of fact need to be mentioned. On 29th September 1983 the defendant's solicitors wrote to Sethi claiming US$ 24,354.00 as payment for "the consignment of 61 cartons of car radio cassettes which was consigned to you under Airway Bill No. KRM00127" adding that "we understand that you have received the consignment but no payment has been made". I do not see this letter as necessarily being some sort of admission by the defendant that Sethi was indebted to it and that by inference that the defendant was indebted to the plaintiff. The defendant could quite simply have been trying to find an easy solution to the problem.

18. As to the other matter, the defendant suggested that its role was only that of a commission agent and that the plaintiff had direct dealings with Sethi. In support, the defendant produced the original of a letter sent by the plaintiff to Sethi to accompany the original order confirmation and a colour gift box of a CTR-191 set in English, and to ask for a German translation if required. I remain wholly unconvinced that there were direct dealings between the plaintiff and Sethi of a sort that indicate the defendant was merely a commission agent. I do not accept the defendant's suggestion. All the evidence points to the contrary.

19. Both parties seem for the most part to have taken a somewhat nonchalant attitude to the contract, between them varying it, indulging in and accepting delays, and partial and late delivery. This attitude persisted at the hearing of the action. No evidence was provided by the plaintiff on the fate of the 300 sets actually shipped, nor in respect of certain aspects of the quantum and mitigation of damages e.g. whether its manufacturing capacity visa exhausted and whether it was in fact too busy to cope with the defendant's order as suggested by its inability to produce even 500 sets within the original contract period. For its part the defendant, not to be outdone, and notwithstanding its counterclaim, reciprocated by not calling any evidence at all.

20. To proceed to the legal implication of the facts I have outlined, the original contract was that evidenced by the order confirmation. This was varied to provide for the initial supply of only 500 sets, by implication, in time for payment to be made before expiry of the letter of credit i.e. April 1983. The time of delivery was further extended to the extended date of expiry of the letter of credit i.e. 20th May 1983. Both parties accepted the validity of these mutually agreed variations and neither sought to question their binding effect. The latter, in any event, would have flowed from the advantages secured by the plaintiff in not being able or desirous of manufacturing all the 2,000 sets immediately, and by the defendant in being able to proceed bit by bit as it was concerned to do. The foregoing variation left the original contract subsisting, but obviously with variations in the delivery dates and in the date of the opening and amount of the letter of credit originally provided for.

21. But return to the variation agreed in relation to the initial supply of 500 sets, the plaintiff was in breach in failing to deliver on or before 20th May 1983. When, therefore, the defendant received the plaintiff's telex of 1st June 1983 seeking, for the purpose of negotiating documents, acceptance of specified discrepancies, in particular late and partial shipment, it could have refused. However it expressly confirmed acceptance. Again neither party has at any stage questioned the binding nature of that acceptance. Acceptance of the discrepancies for the purpose of negotiating documents by necessary implication required the defendant to instructed BNP to accept the documents concerned notwithstanding the specified discrepancies. This the defendant failed to do.

22. The defendant justifies its omission by saying that it did not accept the packing list discrepancy, nor more particularly the consignment "to order" instead of to the Bank of Credit & Commerce, inferring that it was not responsible for these discrepancies.

23. It is necessary therefore to ascertain who was responsible for the two discrepancies. It is reasonably clear from the specification of the unit price in the order confirmation e.g. "@US$73.00 FOB Hong Kong" that the contract must be regarded as an FOB contract. The plaintiff as seller would therefore ordinarily have had to place the goods on board and to bear the expense of doing so. (Benjamin's Sale of Goods, 2nd Ed. p. 1781-82)

24. However Mr. Leung concluded from the amendment to the letter of credit expressly requiring the defendant to be shown as shipper, that the defendant had itself decided to undertake or arrange for shipment though he conceded that the plaintiff would have to bear the expense of getting the goods on board. It is my finding that Mr. Leung did ask the defendant to prepare the documents and to send someone to collect the the goods; that the defendant arranged for this to be done; furthermore that Hill & Delmain Cargo Handlers and KRM Freight Express in taking delivery and consigning the goods acted as agents for the defendant which itself or through such agents consigned the goods to Sethi; that therefore it was the defendant itself or through its agents that wrongly consigned the goods "to order". It is also my finding that the parties agreed to such delivery being taken by the defendant. I do not accept that it was not open to the buyer to take delivery and move the goods from the seller's premises and to obtain the air waybill simply because this was an FOB contract.

25. If authority is required for what would seem implicit in a contract even an FOB contract, this may be found in the judgment in Marine Spinning Co. v. Sutcliffe & Co. (1918) 87 L. J. K. B. 382, cited at p. 1784 of the 2nd Ed. of Benjamin's Sale of Goods, from which it is implicit that a buyer and seller may mutually agree to delivery in some manner other that provided for in the contract. Alternatively, as suggested by the editors of that Edition, by collecting the goods from the plaintiff the defendant can be said to have "waived" the seller's duty to deliver.

26. As to the discrepancy in the packing list, the latter in my finding was prepared by the defendant on its own printed form. But the details it incorporates of necessity must have come from the plaintiff. Additionally this is the implication of the plaintiff's contention in its telex of 5 July 83 to the defendant i. e. that the packing list discrepancies "are only minor clerical mistake which should not cause you to stop payment" (sic). As to the packing list discrepancies themselves, these are specified by BNP in their letter of 18 July 1983 in the following terms:

The order confirmation clearly provides for l% spare parts, by implication free since the total amount specified i.e. US$146,000.00 is represented wholly by the unit price (US$73.00) of 2,000 sets. The letter of credit does not expressly refer to the 1% spare parts but it does in specifying the goods covered state "other details as per order confirmation No. 83/082 It is therefore surprising that the bank picked on this point as a discrepancy and that the defendant did not accept this "discrepancy" if so it was.

27. As to the other aspect of the packing list, the air waybill records the gross weight as 633 kgs. The packing list refers to 61 cartons each of a gross weight of 9.21 kgs. That produces an aggregate gross weight of 632.997 kgs, a discrepancy of 0.003 kgs which I find difficult to believe would be regarded as of any significance. Although, therefore, the de minimis principle does not apply to documents tendered under letters of credit (Sopromo v. Marine & Animal Products Corp. [1966] 1 II.L.R 367 at 390), I cannot accept such a microscopic difference as being in fact a discrepancy in the particular context. Rounding off must surely come in at some point.

28. In the context of discrepancies in the documents, Miss Remedios submitted first, that there was a duty on the plaintiff as the seller under a bankers commercial credit to tender proper documents and that the plaintiff could not evade this by delegation to the defendant; and second that the contract provided only for payment under the letter of credit and that having effectively provided this means of payment, the defendant was discharged from liability to pay, even if the plaintiff was not able to recover the purchase price under the letter of credit.

29. It is convenient to begin with the second of these submissions. In support Miss Remedios cited Soproma v. Marine & Animal By-Products Corp. [1966] 1 L1.L.R 367. That case related to a contract for sale of fishmeal and provided for payment against a letter of credit confirmed, irrevocable with a specified bank. It was contended on behalf of the buyers that the shipping documents had to be tendered to the bank and that such tender of documents was the only manner in which the sellers could obtain payment. McNair J. observed (at PP.385, 386) that:

"Such a conclusion, as it seems to me, is of mutual advantage to both parties... Although in the classic statements as to the duties of the respective parties, such as is to be found in Ireland & Ors v. Livingston [1872] L.R. 5 H.L. 395 and Biddell v. E. Clemens Horst Co. [1911] 1 KB 214, reference is made to the duty of the sellers to tender to the buyers the shipping documents in exchange for payment by the buyers, in a case like the present, in which by the express terms of the contract payment is to be made against letters of credit, as it seems to me, the general principle in those cases must be controlled by the express words of the contract. Under this form of contract as it seems to me, the buyer performs his obligation as to payment if he provides for the sellers a reliable and solvent paymaster from whom h e can obtain payment - if necessary by suit - although it may well be that if the banker fails to pay by reason of his insolvency, the buyer would be liable; but in such a case, as at present advised, I think the basis of the liability must in principle be his failure to provide a proper letter of credit which involves (inter alia) that the obligee under the letter of credit is financially solvent. (This point as to the buyer's liability was not fully argued before me and I prefer to express no concluded opinion upon it as I under-stand it may arise for decision in other cases pending in this court). It seems to me to be quite inconsistent with the express terms of a contract such as this to held that the sellers have an alternative right to obtain payment from the buyers by presenting the documents direct to the buyers. Assuming that a letter of credit has been opened by the buyer for the opening of which the buyer would normally be required to provide the bank with either cash or some form of authority, could the seller at his option disregard the contractual letter of credit and present the documents direct to the buyer? It seems to me the answer must plainly be in the negative."

30. However the view that the opening of letters of credit might as a general rule operate as payment was dismissed by the Court of Appeal in W.J. Alan & Co. v. El Nasr Export & Import [1972] 1 Lloyd's Rep. 313. Denning M.R. and Stephenson L.J. held, albeit obiter, that in the ordinary way an irrevocable letter of credit operated as a conditional payment. Of particular relevance are the following passages from Lord Denning's judgment at pages 321 and 322: -

and at page 323: -

                "Conclusion As To Payment

        As a result of this analysis, I am of the opinion that in the ordinary way, when the contract of sale stipulates for payment to be made by confirmed irrevocable letter of credit, then, when the letter of credit is issued and accepted by the seller, it operates as conditional payment of the price. It does not operate as absolute payment."

31. The foregoing obiter dicta was adopted by Ackner J. in Maran Road v. Austin Taylor [1975] 1 Lloyd's Rep. 156. The plaintiff's counsel in that case submitted on the strength of W. J. Alan & Co. v. El Nasr Export & Import, that a letter of credit is not to be regarded as an absolute payment but only as a conditional payment of the purchase price of goods which, when and only when honoured, discharges the buyer's debt to the sellers. Ackner J. expressly accepted the submissions as correct, recognizing at the same time that, the ordinary position or presumption could be displaced, but went on to find that there was nothing in the particular transaction which could properly have that effect.

32. In Man Ltd. v. Nigerian Sweets[1977] 2 Lloyd's Rep. 50, Ackner J. again followed the Alan v. Nasr dicta, stating at page 56 that : -

"It follows from the finding that the letters of credit were given only as conditional payment, that if they were not honoured, the respondent's debt has not been discharged. This is because the buyers promised to pay by letter of credit, not to provide by letter of credit the source of payment which did not pay. See W.J. Alan & Co. v. L. Nasr Export, [1972]1 Lloyd's Rep. 313 per Lord Justice Stephenson at p. 323. The seller's remedy in such circumstances is to claim from the buyers either the price agreed in the contract of sale or damages for breach of their contractual promise to pay by letter of credit.

33. The Editors of the 2nd Edition of Benjamin's Sale of Goods sum up the position in the following terms -

"As it is agreed in the contract of sale that payment should be made by the furnishing of a documentary credit, the seller has to claim payment from the banker in the first instance and only on the banker's default from the buyer". (paragraph 2176)

34. Turning to the facts of the present action, I find nothing to suggest that the letter of credit was to operate as absolute payment.

35. I also note that unlike the Soproma case, no specific bank was nominated to provide the letter of credit in this case; also that in all the cases mentioned above, the letters of credit were irrevocable. In this case, the order confirmation does not contain any such requirement. I accordingly reject Miss Remedios second submission and find that the letter of credit was only conditional payment, that the letter not having been honoured the defendant's debt has not been discharged.

36. Proceeding them to Miss Remedios' first submission (i.e. that the plaintiff had a duty which could not be delegated, to tender proper documents), she relied upon paragraphs 1788 and 1791 of the 2nd Edition of Benjamin's Sale of Goods. My reading of those paragraphs is that such tender is suggested only as a general or prima facie duty. I do not see anything in those paragraphs to preclude the plaintiff from relying upon the failure of the defendant to provide it with an air waybill properly consigning the goods, the defendant having undertaken to effect shipment. Furthermore in my view the plaintiff did discharge its duty to seek payment under the letter of credit and duly presented the necessary documents, which were deficient only because of the actions of the defendant and its agents. It follows that I find no merit in this first submission too.

37. I consider therefore that having performed its side of the contract as varied in regard to the 300 sets, the plaintiff is entitled to damages. Prima facie these should correspond to the agreed purchase price. But the defendant says the plaintiff did not mitigate its loss, specifically that it did not release its documents so that the defendant could collect from Sethi, and, if I understood it rightly, that the plaintiff did not dispose of the 300 sets in a seller's market at a profit. It would seem from paragraph 1942 of the 2nd Ed. of Benjamin's Sale of Goods, that an air waybill is probably not a document of title. Yet both parties treated and regard it as such, perhaps not without reason, particularly as the goods were consigned "to order".

38. The plaintiff's contention is that it was unreasonable to expect it to release its documents which would have deprived it of its guarantee or assurance of payment. Rather, it contends, the defendant should have instructed BNP to accept the discrepancies.

39. Now while there is a duty upon claimants for damages to mitigate, in the sense that they will be deprived of such damages as they could by reasonable steps have avoided, they are not for example "under any obligation to do anything otherwise than in the ordinary course of business' Dunkirk Colliery Co. v. Lever [1878] 9 Ch. D 20 at p. 25. Applying the test used by James L. J. at p. 25, I find that the plaintiff acted as reasonable men of business" would have done under all the circumstances of the case, in not releasing the documents to the defendant or its agents. Not only would that have deprived the plaintiff of the security the documents provided, but the plaintiff was also required to responsible for all costs of collection. Further-more the question of the plaintiff releasing its documents would not have arisen had the defendant discharged its implicit obligation to instruct BNP to accept the specified discrepancies the defendant had agreed to accept. And in the latter context the defendant had agreed to accept "other discrepancies caused by our side, if any". (In this regard the erroneous consignment "to order" in my finding was caused by defendant or its agent). Even BNP wrote to the defendant on 18 June 1983 seeking authority to accept the discrepancies, all of which were listed in BNP's letter.

40. The onus of proof in regard to mitigation of damages lies upon the defendant, which must show that the plaintiff did not take reasonable steps to mitigate its loss; that onus the defendant has totally failed to discharge.

41. It follows that in respect of the 300 sets the plaintiff is entitled to judgment for the purchase price claimed together with interest for being denied that sum from the time it should have been paid. As to the defendant's counterclaim in relation to these 300 sets, the amount claimed has already been reduced by 1%, representing the 1% commission due from the defendant. As well be seen, no evidence was led to establish that another 1% commission was to be paid by Sethi.

42. To proceed then to the 200 sets not delivered, the defendant's acceptance of the discrepancies related only to negotiation of the related documents. It did not purport to accept short and delayed delivery in satisfaction of the plaintiff's obligation to supply 500 sets, quite apart from whether such an agreement would have been binding. The defendant's counterclaim in relation to the 200 sets must therefore succeed to the extent of its actual loss. As I have said, there is no evidence that the defendant would have received 1% commission from Sethi. But Mr. Leung, the plaintiff's Marketing Manager conceded that the plaintiff had agreed to pay 1% commission. Therefore the defendant should have its 1% commission on the purchase price of the 200 sets, together with interest from the agreed time of delivery i.e. 20 May 1983.

43. As to the remaining 1,500 sets, the plaintiff says the defendant wrongfully failed and refused to call for delivery and that by its refusal to pay for the 300 sets and its failure to open a further letter of credit to cover the purchase price of the remaining sets, the defendant evinced an intention no longer to be bound and thus repudiated the contract.

44. The defendant, on the other hand, says that by its failure to comply with the terms of the letter of credit and refusing to deliver the balance of the 1,500 sets, the plaintiff evinced an intention to repudiate.

45. Now it is known from Mr. Leung that the defendant's wish to carry on the business bit by bit did not meet with any objection from the plaintiff. On the contrary the plaintiff agreed to an initial delivery of only 500 sets, though, of course, it did not come to agree any other phasing of performance. Even this quantity, reduced by one half from the original 1,000 to be delivered in April, could not be completed by the 30th April and the expiry of the letter of credit was extended to 20 May. In the event by 30 May the plaintiff was only able to complete 300 of the 500 sets. Thereafter no mention was made on either side about delivery of the 200 sets, nor until legal action ensued, about delivery of the remaining 1,500 sets. Having become embroiled in the dispute over payment for the 300 sets, it seems that neither side wished to proceed with the contract at any rate while that problem remained unresolved. The defendant could have called for delivery of the overdue 200 sets or have opened a letter of credit to cover payment of the remaining 1,500 sets. Likewise the plaintiff could have notified the defendant of completion of the 200 sets or called for a new letter of credit. The defendant led no evidence at all much less any evidence that the plaintiff refused to deliver the balance of 1,700 sets. In these circumstances I am not satisfied that either side evinced any clear intention to repudiate the contract, though I doubt very much whether either side particularly wished to continue with it. The first clear intention to repudiate emerged in the plaintiff's writ issued on 3 October 1983. It is not without significance that the plaintiff's solicitors' letter of 2 September 1983 claimed and threatened legal action only in respect of the sum of US$21,681.00 for the 300 sets. And in their reply of 10 September 1983, the defendant's solicitors too, only concerned themselves with that claim. In these circumstances I do not think I could regard the defendant as having by its conduct repudiated the contract while the action then pending was the supply by the plaintiff of the 200 overdue sets, which the defendant had not waived.

46. I find therefore that the contract, in respect of the 1,500 sets in question, was repudiated by the plaintiff in issuing a writ for breach of the entire contract. It follows that the defendant must succeed in its counterclaim in respect also of the 1,500 sets, but for reasons already explained, only as regards 1% of the pruchase price of these sets.

47. If I am wrong and the defendant's failure to call for delivery and to open a letter of credit constitutes repudiation, then the plaintiff would be entitled to damages, if it sustained any loss in respect of the 1,500 sets. But all it did in this regard was establish its cost of production and that at a point in time earlier that it could have manufactured the sets. It made no effort to show that it had spare capacity to manufacture the sets or indeed that it actually suffered any loss at all. It is not without significance that in May it manufactured 1930 CTR-191 sets, of which presumably 300 went to the defendant; the remaining 1,630 sets may well have been for another market with different radio wavebands requiring different circuits. In these circumstances the plaintiff would in my view have to do more to establish a probability that it sustained a loss of some US$47,000, the sum to which Mr. Wong for the plaintiff reduced the plaintiff's relevant claim in his closing submission.

48. For the foregoing reasons there will on the claim be judgment for the plaintiff in the sum of US$21,681.00 with interest from 10 June 1983, and on the counterclaim, for the defendant in the sum of US$1,241 with interest from 3 October 1983. Since the latter sum was not the subject of evidence or argument, there will be liberty to apply. Interest in respect of both sums will be at the rate of 1% above prime. I make an order nisi for costs to the plaintiff on the claim and to the defendant or the counterclaim.