S. L. Jones & Co. v. Bond

LENNON, J.

The defendant in this action appeals from a judgment awarding damages to the plaintiff for an alleged breach of contract. The conceded facts of the case which constitute the basis of plaintiff’s cause of action are these: On January 27, 1920, plaintiff and defendant signed an instrument, partly printed and partly typewritten, which provided for the delivery by the defendant to the plaintiff of 1,000 long tons of steel bars of a specified size at $3.90 per 100 pounds, f. o. b. Vancouver. Shipments were to be made in February, March, and April, subject to “Hunt’s inspection, buyer’s account.” On the face of this instrument, under the printed heading “Terms,” the parties inserted the words “To be arranged.” Thereafter the parties arranged for a letter of credit, which was issued by the Bank of California on February 11, 1920. This letter of credit authorized the defendant to draw on the bank at sight for and on account of the plaintiff “for any sum or sums not exceeding in all $92,000.00 U. S. currency covering 1,000 long tons steel bars (Order No. 83) to be shipped by Port Moody Steel Works, Ltd., Port Moody, B. C., on or before April 30, 1920.”

No steel was ever delivered, and it is for this failure to deliver that damages were sought and recovered. Defendant contends that the instrument of January 27, 1920, is insufficient in and of itself to constitute either a formal contract between the parties or a memorandum, under the statute of frauds, for the reason that it affirmatively appears from the phrase “Terms. To be arranged” in said instrument contained, that the terms of credit or payment were not agreed upon, but were to be the subject of future negotiations between the parties.

It is to be noted that defendant does not claim that there was no contract whatever between the parties. The defendant, however, denies that any contract was established as of January 27, 1920, but claims that the terms of payment were agreed upon and settled by subsequent arrangements between the parties and that a binding contract thereupon, came into existence. One of the terms of this contract, so the defendant argues, was that payment should be made only

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for steel shipped by the Port Moody Steel Works. With this fact as a basis the defendant contends for the conclusion that inasmuch as the Port Moody Steel Works never commenced operations and produced no steel, delivery by defendant under the contract was excused.