SEC DEVELOPMENT CO LTD v. HIGHLINK LTD

C.L. No.15/1986

Headnote

Contract - Letter of Credit.

Contract for the supply of goods providing for shipment before fixed date and for payment by way of direct irrevocable Letter of Credit with time of the essence:-

1.         Terms as to time and direct opening of the Letter of Credit introduced an implied condition into contract, amounting to a condition precedent, that the opening of the irrevocable Letter of Credit be effected so as to allow shipment of the whole contract quality of goods on or before the apointed time. Trans Trust S.P.R.L. v. Danubian Trading Co. Ltd.(1952)1 Lloyds List L.R. 348 and Plasticmoda Societa Per Azioni v. Davidsons (Manchester)Ltd. (1952)1 Lloyd's Rep. 527 applied.

2.        An "opening" of a Letter of Credit takes place when it comes into the hands of the beneficiary and is available to him, subject to its terms, for his own benefit.

C.L. No. 15 of 1986

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Commercial List

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BETWEEN

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JUDGMENT

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1. The plaintiff sues for damages for breach of contract and the defendant counterclaims against the plaintiff for commission and/or damages arising out of the same contract.

2. The plaintiff is a company managed by P.W. 1 Tony Tong Sai-chi, having its principal business as that of importing goods into China. It has a subsidiary SEC Computer Ltd. which engages also in the same sort of business. The defendant is a company managed by D.W.1 Davey Li Chun-man and it too engages in the import/export business principally in electronic parts and machinery. The plaintiff and the defendant had not previously done business together but at the end of February, 1985 P.W.1 and D.W.1 were introduced and P.W. 1 told D.W.1 that he wanted to be supplied with a quantity of combined water cooler and fan heaters. It is the plaintiffs case that it had a contract with a purchaser in China for the supply of these items and that that contract had to be performed before the 1st of April 1985 at which date their import into China would be prohibited. This contract was not produced.

3. In any event, P.W. 1 and D.W. l had discussions about the items and then on the 8th of March 1985, the parties concluded an agreement as is evidenced in the documents marked 'D1’ and 'D2'. D1 is a purchase order of SEC Computer Co. Ltd. agreeing to buy 15,000 fan heaters from the defendant at US$23.50 per set (total US$352,500) subject to various conditions therein set out. Payment was to be by way of 10% deposit, which was in fact paid, and the balance by cashiers order on delivery. Delivery was to be in Hong Kong and the contract provided for delivery as to 4,800 sets by the 18th of March, 4,800 sets by the 22nd of March and 5,400 sets by the 26th of March 1985. By way of printed condition on the back of the purchase order (P. 6), time was expressed to be of the essence.

4. D2 is a proforma invoice of the defendant, dated the 8th of April 1985, confirming the sale and its basic terms. It is addressed to the plaintiff and not to SEC Computer Ltd. It has a SEC Computer chop on it however and it is quite clear on all the evidence that the contract was concluded with the conglomerate "SEC" and nothing in the end turns on whether this contract was with SEC Computer Co. Ltd. or SEC Development Co. Ltd.

5. There is no real contest that thereafter this contract was cancelled and a fresh contract entered into between the parties. That new contract was of the 11th of March 1985 and is evidenced by the proforma D12 which sets out its terms. That contract provided for a reduction in quantity to 10,000 Bets at the same unit price and varied the delivery provisions to provide for delivery in Hong Kong of 4,000 sets on or before the 22nd of March 1985 and 6,000 sets on or before the 24th of March 1985. There is a dispute as to how this new contract came about but, save for any issues of credit, nothing turns on that contract either because it is clear that it was, as the earlier contract, cancelled (D18) and yet another contract negotiated and concluded on the 14th of March 1985.

6. There is no dispute that on the 14th of March 1985 D.W.1 visited P.W. 1 and in the presence of P. W.2 Ho Ting-kong, the Sales Manager of the plaintiff company, told P.W. 1 that the goods which he was selling to the plaintiff were from a supplier in Taiwan but that as his bank required full margin, he had insufficient funds to open a letter of credit to fund the purchase. He asked the plaintiff to open the letter of credit in his stead and after discussion the plaintiff agreed to do this. Yet another contract was then concluded between SEC Development Ltd. and Highlink Ltd. on the 14th of March 1985 and that contract is contained in the plaintiff's purchase order (D15) which provides for the supply of 10,000 fan heaters to the plaintiff by the defendant at the reduced unit price of US$22.50 per set. Payment was to be by "direct open L/C in US$220,000 to J.I.C. Enterprises Taiwan Ltd., US$0.50 will be paid per set after delivery". J.I.C. Enterprises Taiwan Ltd. was the defendant's supplier. Under the new contract 4,000 sets were to be delivered before the 18th of March 1985 and 6,000 sets on or before the 20th of March 1985. There is no contest that these dates are to be read as the last shipment dates in Taiwan.

7. It is the defendant's case that D.W. l made it clear to P.W. 1 & 2 that he, D.W. 1, was stepping out of the contractual arrangements with the plaintiff and that there was to be a "direct deal" between the plaintiff and J.I.C. Enterprises Taiwan Ltd. (hereafter called "J.I.C. ") for the supply and purchase of the fan heaters with the defendant acting as agent for J.I.C. The way D.W. 1 put it was that he would be a "middleman". The plaintiff denies that D.W. 1 said anything about being a "middleman" or there being a "direct deal".

8. I am by no means confident that these words were used by D.W. 1. But even if they were, much more would be required from him to make it clear that he was seeking to so totally change his role in the arrangements that had hitherto existed between the parties. There would also need to be some evidence, which there is not, that the plaintiffs acknowledged and accepted the change in the role of the defendant and was prepared to contract with J.I.C. direct. Any statements (if they were made) by D.W. 1 related to henceforward being a "middleman" or the deal being "a direct deal" are far too vague. The fact of the matter is that the defendant signed the contract (D15) in its own name as previously and on no reasonable construction of that document could it be said to have been signed by Highlink Ltd. as an agent. The contract still provides that Highlink is to pay 10% damages for late delivery as previously; a burden it would hardly undertake if it were an agent. The contract (D15), on its face, reflects that which was the new arrangement between the parties, namely a reduction in unit price by US$1 per set reflecting the re-negotiated terms embracing a shifting of the letter of credit expenses to the plaintiff, adjusting the shipping arrangements, with payment to the defendant's supplier direct and the balance to the defendant as its profit.

9. On the facts the contract (D15) is one made between the plaintiff and the defendant, both as principals. The evidence in the case which purports to contradict the clear written terms of the contract is in any event inadmissible and that being so I cannot but find the contract otherwise than that which on its face it appears to be, viz., one between the plaintiff and the defendant as principals for the supply of the quantity of fan heaters referred to on the conditions therein set out.

10. After the fresh contract (D15) was entered into, D.W. 1 gave P.W. 1 particulars regarding J.I.C. and his own unprocessed letter of credit application (P16) as a draft. On that same day, the 14th, the plaintiff applied for an irrevocable letter of credit from its own bank, the Hong Kong Industrial & Commercial Bank, in favour of J.I.C. as beneficiary for US$220,000 covering 10,000 sets of heaters and providing for shipment in Taiwan as to 4,000 sets on or before the 18th of March and 6,000 sets on or before the 20th of March in terms of the contract which had been concluded between the plaintiff and the defendant. The correspondent bank was the Hua Nan Commercial Bank in Taipei.

11. It is important to note that the letter of credit was an irrevocable one and that the dates provided as the last shipment dates were dates caused to be written into that letter of credit by the plaintiff itself. It was the plaintiff which procured payment under the letter of credit to be conditioned upon shipment on or before predetermined dates. There was no requirement in the contract (D15) that payment on the letter of credit be so conditioned.

12. A letter of credit was processed through the plaintiff's bank and the application given a number on the 16th March 1985. D.W. 1 then telexed that number to J.I.C. (D19) after he had got it from the plaintiff.

13. It appears however that the Hong Kong Industrial & Commercial Bank did not contact the Hua Nan Bank in Taipei until the 18th of March when it sent a telex setting out the terms and conditions of the letter of credit which it had issued. There is a chop on that telex (D22) which reads "incoming cable"; it is dated the 19th of March and has a reference No. 42629 on it. Precisely what that chop means is not at all clear but in any event it carries a date after the last shipment day referred to in the letter of credit. There was then further delay and a copy of that telex with covering letter was not sent to J.I.C. by the Hua Nan Bank until the 20th of March, 1985 (D21).

14. Thereafter there were various exchanges between the parties and J.I.C. resulting in agreement that the letter of credit would be amended. That was done on the 20th of March 1985 and on the 21st of March 1985 the plaintiff sent a telex (D24) direct to J.I.C. confirming the amendment and that the new terms were that the last shipping date was to be the 23rd of March 1935 for the whole 10,000 sets.

15. As at the 20th of March 1985 there then existed a contract between the plaintiff and the defendant for the supply of 10,000 sets of fan heaters at a price of US$225,000 upon the terms set out in D15 providing, as varied, for shipment in Taiwan on or before the 23rd March 1985 and that payment was to be by way of a direct (irrevocable) letter of credit in favour of J.I.C. for US$220,000 with the balance of the adjusted contract price of US$5,000 (at 50¢ per unit) to be paid direct to Highlink Ltd. upon delivery. Time was of the essence.

16. It is this contract and no other which determines the rights and liabilities of the parties in this case and I shall shortly turn to whether or not this contract had in it a condition precedent to the performance of it by the defendant that the plaintiff open the letter of credit referred to.

17. On the 22nd of March 1985, the plaintiff's bank cabled the amendment to the correspondent bank, i.e. the Hua Nan Bank in Taipei (D32). There is no evidence as to what happened in the 2 days between the application to amend the letter of credit and the plaintiff's bank telexing the Taiwan bank in regard to that amendment. It seems however that there was the same delay as with the earlier letter of credit. The cable from the Hong Kong Industrial & Commercial Bank Ltd. to the Hua Nan Bank in Taipei (D32) is dated the 22nd of March 1985 and is effectively a notification from the Hong Kong bank to the Taiwan bank that the amendment had been effected. It says "first lot covering 4,000 sets of goods must now be effected not later than the 23rd of March 1985 instead of originally stated". That cable, as previously, is similarly chopped "incoming cable" by the Hua Nan Bank and that is dated the 23rd of March 1985. Once again as previously, the Hue Nan Bank, again 2 days later, this time on the 25th of March 1985, sent a letter to J.I.C. (D31) enclosing the cable from the Hong Kong Bank and advising as follows:

"We enclose herewith the following documents and/or authorized cable marked (x)----------- (x) cable notification of amendment dated the 22nd of March 1985 our cable No. 4584 all other terms and conditions remain unchanged------. This letter must be presented with all drafts drawn in accordance with the above mentioned cable and all amounts negotiated should be endorsed on the reverse hereof. "

18. It is clear therefore that J.I.C. did not have the letter of the 25th of March 1985 from the Hua Nan Commercial Bank Ltd. (D31) prior to the last shipment date of the 23rd of March. The plaintiff argues that the number-which corresponds on the chop on the telex (D32) and is referred to in the letter (D31) - indicates that the correspondent bank telexed the contents of the telex from the Hong Kong Industrial & Commercial Bank Ltd. of the 22nd of March 1985 to J.I.C. on the 23rd of March 1985 even though it did not formally send a copy of it to it until the 25th of March and that therefore, J.I.C. could have and should have shipped pursuant to the contract but did not despite knowing by the telex D26 that if shipment was not effected by the 23rd of March 1985, the goods would not be accepted.

19. The relationship between the parties is governed by the contract between them evidenced in the purchase order (D15) of the 14th March 1985 as amended by the later agreement of the 20th of March 1985 as to the last shipment date. That contract provided for payment by "direct open L/C in US$220,000 to J.I.C. Enterprises Taiwan Ltd." and for the balance of purchase price to be paid to the defendant direct after delivery. The 10,000 sets agreed to be sold by the defendant to the plaintiff were to be shipped in Taiwan on or before the 23rd of March 1985 and in that regard time was of the essence.

20. The provisions in the contract as to time and the direct opening of a letter of credit introduce into the contract a necessarily implied condition, amounting to a condition precedent, that the opening of the letter of credit (which was irrevocable), be effected in such a manner as to allow shipment of the whole of the contract quantity on or before the 23rd of March 1983 in Taiwan. The plaintiff required shipment on or before that date and introduced that term (albeit already agreed with the defendant in the contract) into the conditions attaching to the letter of credit. In order for J.I.C. to get payment on the letter of credit, it had to ship on or before the 23rd of March 1985. If the letter of credit was irrevocable and subject to terms relating to shipment as it was, it follows like night does day that the letter of credit necessarily had to be opened in sufficient time to enable its conditions to be complied with. If it were otherwise, the whole contract would be of a quite different nature to that which the parties in this case clearly intended.

21. If the letter of credit had been intended to have been opened at any time either before or after delivery for the purpose of effecting payment under the contract, the whole point of an irrevocable letter of credit with an express condition as to last shipment date would be lost. The parties' conduct, both plaintiff and defendant, clearly evidence that shipment was dependent upon the opening of the letter of credit. Why else the provision for a last shipment date? Additionally there are abundant telexes confirming that the one was dependent upon the other and indeed, in the plaintiff's own application for a letter of credit (D17), it expressly conditions payment on the letter of credit on a last shipment date not later than the 23rd of March 1985.

22. In Trans Trust S.P.R.L. v Danubian Trading Co. Ltd. (1952)1 Lloyds List L.R. 348 Denning L.J. said at page 355:-

"This is another case concerned with the modern practice whereby the buyer agrees to provide a banker's confirmed credit in favour of the seller. This credit is an irrevocable promise by a banker to pay money to the seller in return for the shipping documents. One reason for this practice is because the seller wishes to be assured in advance not only that the buyer is in earnest, but also that he, the seller, will in fact get his money when he delivers the goods. Another reason is because the seller often has expenses to pay in connection with the goods and he wishes to use the credit so as to pay those expenses. He may, for instance, be himself a merchant, who is buying the goods from the growers or the manufacturers, and has to pay for them before he can get deliveries; and his own bank will only grant him facilities for that purpose if he has the backing of a letter of credit. The ability of the seller to carry out the transaction is, therefore, dependent on the buyer providing a letter of credit: and for this reason the seller stipulates that the credit should be provided at a specified time well in advance of the time for delivery of the goods.

 

What is the legal position of such a stipulation? Sometimes it is a condition precedent to the formation of a contract, that is, it is a condition which must be fulfilled before any contract is concluded at all. In those cases, the stipulation "subject to the opening of a letter of credit" is rather like a stipulation "subject to contract". If no credit is provided, there is no contract between the parties. In other cases, a contract is concluded and the stipulation for a credit is a condition which is an essential term of the contract. In those cases, the provision of the credit is a condition precedent, not to the formation of a contract, but to the obligation of the seller to deliver the goods. If the buyer fails to provide the credit, the seller can treat himself as discharged from any further performance of the contract and can sue the buyer for damages for not providing the credit. "

23. In this case there is a condition precedent to Highlink Ltd. performing its part under the contract to supply the goods and that is that the plaintiff provide the credit particularized before the named shipment date. An essential term in the arrangement between the plaintiff and the defendant was that the credit would be available to J.I.C. on or before the 23rd of March 1985 and it was not. It does not matter that the credit was to be opened in favour of the defendant's supplier and not the defendant itself.

24. In Plasticmoda Societa Per Azioni v Davidsons (Manchester) Ltd. (1952)1 Lloyd's Rep. 527 Denning LJ. said at page 538:

"This is yet another case about confirmed credits. It is settled by the case of Pavia & Co. S.P.A. v Thurmann-Nielsen ((1952)1 ALL E.R. 492) that, then nothing is said, the buyer must establish the credit at the beginning of the shipment period. There was, in this case, no shipment period, but only a shipment date, a specified date for shipment, originally March 9th, 1950, varied subsequently to March 15th, 1950. The letter of credit ought, no doubt, to have been established a reasonable time before that date. That was a condition precedent to the obligation of the seller to ship the goods, and that condition precedent was not fulfilled. A letter of credit was established for 30 tons but not for the contractual quantity of 100 tons. If nothing else appeared in the case, the buyer could not claim for damages, because they have never established a letter of credit in accordance with the contract; but the evidence shows that the seller, by his conduct, led the buyer to believe that he would not insist on the credit being established until the seller had told the buyer that the goods were ready. "

25. The plaintiff therefore, as a condition precedent to the defendant's obligation to supply the goods under the contract, must have opened a letter of credit in favour of J.I.C. within a reasonable time of the 23rd of March 1985 to enable shipment of the goods by that date.

26. It is then necessary to determine the point in time at which a letter of credit is "opened". That could be at any time after the issuing bank agrees to issue the credit up to the date of physical receipt of the letter of credit by the beneficiary.

27. The evidence in the case is unhelpful. The defendant says that it takes 3 days to open a letter of credit. Why that should so is by no means clear and it seems to me that much must depend on the efficiency or otherwise of th bank or banks involved and the applicant's relationship with those banks and the charges he is prepared to incur related to the opening of the credit.

28. Be all that as it may, I have concluded that a letter of credit is opened when it comes into the hands of the beneficiary, and is available to him, subject to its terms, for his own benefit. The verb "to open" as defeined in The Shorter Oxford Dictionary, as applicable, means:- to render accessible to; reveal, disclose, declare, make known; to disclose or divulge; to render available for settlement, use, intercourse.

29. At first it may appear that a letter of credit is available for the use of the beneficiary when it comes into the hands of the correspondent bank - in this case, the Hua Nan Bank which, after all, was J.I.C. 's own bank - on the basis that that bank is the beneficiary's agent. Such is not the law however, but rather a correspondent bank which undertakes no engagement (as here) is the agent of the issuing bank (Benjamin Sale of Goods 2nd Edition para. 2214.) A letter of credit in the hands of a correspondent bank is not therefore in the hands of the beneficiary on any principle of agency and accepting, as I do, that to "open" means to render available for settlement or use, it follows that a letter of credit is not "opened" until the beneficiary has it and is able to use it subject to its conditions.

30. In this case, the documentary evidence establishes that the Hua Nan Bank sent the letter of credit to J.I.C. on the 25th of March 1985 i.e. 2 days after the last shipment date. The evidence does not establish that the cable referred to in that letter (D31) was sent to J.I.C. on the 23rd of March but even if I was prepared to take a benevolent view of that evidence in favour of the plaintiff, the letter of the 25th, in accordance with its very terms, needs to be produced and is itself an integral part of the documentary credit arrangement. It therefore also needs to be in the beneficiary's hands.

31. A seller could not be expected to procure the packaging, transportation and shipment of 10,000 fan heaters, all on the same day even if he had reason to anticipate that he may be called upon to do so. Shipment had failed once before because the letter of credit had not arrived in time and with that background it would be far to onerous to expect J.I.C. to have been ready to ship instantly and chance receipt of the full proper documents at a later time.

32. It is clear that the plaintiff did not fulfill a condition precedent to the contract between the parties but that is not the end of it because the plaintiff in that event contends, as I understand its case, that it is nonetheless still not liable in that the history of the dealings between the parties establishes that the defendant never was in a position to supply under the contract and, as a consequence, the plaintiff is excused from its failure to issue the letter of credit in time.

33. There was a great deal of evidence and argument on it on this aspect and in that regard the evidence is at variance on a number of issues. I will however state simply that where credit is involved I prefer the evidence of D.W. l.

34. I accept that after signing the first contract on the 8th of March 1985, D.W. 1 took steps to procure a letter of credit in favour of J.I.C. for part shipment of the order (which I accept is a commercially sensible course to keep capital outlay down by covering future shipments by amendments consequent on earlier shipments). D.W. 1 flew to Taiwan on the 9th of March to check production at J.I.C.'s factory and thereafter he says that on the 10th of March (a Sunday) P.W. l contacted him and told him for the first time about the impending restriction on import into China after the 1st of April 1985 for these goods and stressed the urgency of delivery even of a reduced quantity. After discussion, it was agreed to reduce the quantity and that led to the second contract (D12) with the amended local delivery dates. P.W. 1 claims that there was no such telephone conversation at all but rather that D.W. l called to see him in the office on the 11th of March 1985 and told him that he could neither fill the order as to quantity nor shipment date. P. W.2 had claimed in chief that he witnessed this event. In cross-examination, he seemed to indicate that this was rather something that P.W. 1 had told him. In any event, D.W. 1's account of these events makes more sense. The telexes support him in that there is nothing to indicate that he could not supply the 15,000 sets he had already ordered from J.I.C.

35. There were other issues: e.g. whether D.W. 1 claimed on the 14th March 1985 that he would guarantee delivery of the goods if the plaintiff opened the letter of credit. None of these matters have any real bearing on the case. One such other example is that P.W. 1 claimed that in late March, about the time of the amendment, D.W. 1 telephoned him and offered to ship a less quantity than that agreed. He suggested a quantity of "less than 5,000". D.W. 1 denies having made this suggestion and in that regard, I believe him.

36. In April 1985 D.W. 1 attended the plaintiff's office with a person named Mike Liang from J.I.C. At that meeting, Liang is said to have apologized for not delivering the goods. P. W.2 asked for compensation and Liang said that he was prepared to pay the charges that had been incurred by the plaintiff for opening the letter of credit. D.W. 1 would have no part of this and, in his evidence on this matter, he agreed that Liang offered to pay the letter of credit charges but claims that it was clear to him that Liang was doing this as he wanted to do business with the plaintiff in future. In other words, Liang was trying to smooth troubled waters. I can see no basis for concluding, as is suggested, that the actions of Liang whatever they come to amount to an admission against the defendant that the goods could not in fact be supplied on time.

37. It is pleaded by the plaintiff that it was an implied term of the agreement of the 14th March 1985 that the defendant would supply under the contract whether the letter of credit was opened in time for the scheduled deliveries or not and that such was a necessarily implied term in order to give "business efficacy" to the contract. It is claimed that the defendant knew that J.I.C. would only accept payment for the goods by way of letter of credit; this the plaintiff also knew. It is claimed that the defendant knew that the application for the opening of the letter of credit could not be made before the 14th of March; so too the plaintiff. It is claimed that the defendant knew that J.I.C. would have to be notified the letter of credit had to be opened before it was shipped; the plaintiff also must have known this. It is said that the defendant knew there would be delay in opening the letter of credit and notifying J.I.C. that it was opened; this also the plaintiff knew. It is claimed that the defendant knew there would be shipping delays; this the plaintiff also knew.

38. The argument, as I understand it, is that the parties were agreeing, on the plaintiffs case, to an impossibility in requiring the plaintiff to open a letter of credit in favour of J.I.C. by the 18th of March to enable shipment by the due date to be effected. In Liverpool City Council v. Irwin (1976)2 All ER 39 Lord Wilberforce said at p. 44 in relation to an alleged condition said to be necessary to give business eficacity to the contract:-

"In my opinion, such obligation should be read into the contract as the nature of the contract itself implicitly requires, no more, no less; a case in other words of necessity. "

39. I find nothing in the facts of this case which serve to point to me that it was impossible for the plaintiff to open a letter of credit in sufficient time. There is no question of a further implied term in this contract.

40. The bones of this case appear to me to be that in pursuit of delivery of goods prior to a known deadline for sale in China, the plaintiff insisted on shipment by a particular date and expressely, and of its own volition, undertook payment by irrevocable letter of credit, of the supplier and conditioned that payment on shipment on or before the nominated date. There can be really no other sensible conclusion but that the plaintiff believed that it all could be done and gambled on it being done. The plaintiff took: a business risk and, in the event, the timings were too short. It may even be that no fault lies at the front door of the plaintiff; it rather seems that there were banking delays and in those delays valuable time was lost and the documents were not presented on either occasion in sufficient time to oblige the shipper to ship.

41. That seems to me to be the end of the matter as there is no obligation on the defendant to supply the goods under the contract because a condition precedent to his responsibility in that regard had not been fulfilled. There will therefore be judgment for the defendant on the plaintiffs claim.

42. The defendants counterclaim is framed in the alternative. Principally and primarily it says that the plaintiff is liable to it for commission (quantified at US$0.50 per set) on the contract entered into by the defendant on behalf of J.I.C. Enterprises Taiwan Ltd. with the plaintiff. I have already indicated the contract which exists is a contract between the plaintiff and the defendant: J.I.C. is not a party to any of the contracts with the plaintiff and so the defendants claim for commission as an agent must fail.

43. The defendant says in the alternative that if the contract between the plaintiff and the defendant is one of principal to principal then as a consequence of the plaintiff's failure to fulfill a condition precedent to that contract the defendant is entitled to the damage suffered by him as a result. Clearly, the defendant is entitled to those damages. The defendant is entitled to such damage as is its natural and direct loss resulting from the plaintiff's breach which is simply quantified at US$0.50 per set i.e. the balance of the purchase price that was to have been paid to the defendant by the plaintiff after delivery of the goods to the plaintiff pursuant to the contract. The defendant is therefore entitled to judgment on its counterclaim in the sum of US$5,000.

44. The plaintiff is to pay defendant's costs of the action and counterclaim.