TMI Blog1956 (7) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... rom whom purchases were made entered in their account books the names of the assessees as the pur- chasers of the goods and the names of the persons for whom the goods were bought were not disclosed to those sellers. The Sales Tax Officer and the Revising Authority took the view that there was no privity of contract between the various business houses at Kanpur from which the goods were purchased and the assessees' customers who were the persons who ultimately received goods through the assessees. It was, there- fore, inferred by the taxing authorities that two sales had taken place. The first was the sale to the assessees by the firms from whom the goods were purchased and the second was the sale effected by the assessees to their customers to whom they were supplied. The second transaction having been considered to be a sale effected by the assessees, they were held to be dealers within the meaning of the Sales Tax Act and required to pay sales tax on the amount received from their customers which was regarded as their turnover. The assessees contended that the business of purchasing goods for their customers and thereafter supplying these goods to them was their ordinary busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase for him a quantity of a certain kind of opium. No such opium could then be obtained at Hong Kong but, instead of informing the plaintiff of this fact, the defendant by mistake informed him that he could procure it, and he purchased and shipped to the plaintiff the opium which he erroneously supposed to be such as was ordered, but (1) (1883) 11 Q.B.D. 797. which was really of an inferior description. The plaintiff claimed damages, and the question arose as to what was the relationship between the parties. If the relationship was that of a principal and agent the liability and measure of damages would be different from that which it would if the relationship was that of vendor and purchaser. The Court held that the relationship between the plaintiff and the defendant was not that of a vendor and purchaser but of principal and agent, and that therefore the true measure of damages which the plaintiff was entitled to recover was not the difference between the value of the opium ordered and shipped but the loss actually sustained in consequence of the opium not being of the description ordered. Fry, L.J., observed at page 806 of the report: "It is said, however, that there mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, though that was a case of stoppage in transitu.' Then in Ireland v. Livingston(3), Cleasby, B., says that there was there 'not a mere contract between vendor and purchaser, although after the goods were shipped a relation like that of vendor and vendee might arise.' No doubt in that case Lord Blackburn uses stronger language, and says that 'the legal effect of the transaction' 'is a contract of sale passing the property from the one to the other, and consequently the commission merchant is a vendor and has the right of one as to stoppage in transitu;' but by the legal effect of the transaction he means the legal effect of an analogous contract to that of a contract of purchase and sale. It is important also to observe that Lord Chelmsford in that case puts the matter so as to exclude the existence of any contract of purchase and sale. He says, 'I would preface what I have to say by stating my opinion that the question is to be regarded as one between principal and agent, though the plaintiffs might in some respects be looked upon as vendors to the defendants, so as to give them a right of stoppage in transitu'. Therefore in such a case as the present there is in fact no contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had carried through the transaction as pakka adatias of the defendant the rise or fall of the market was a matter of no concern to them, except so far as it might enhance the risk of recovering complete indemnity from their employer. Their right was to their commission and to an indemnity against loss as incidents of their employment. The mere fact that as to the greater part of the linseed there was no delivery, but an adjustment of claims cannot alone vitiate the transactions." This case was cited to show that the status of a commission agent had received judicial recognition and that the second transaction in the present case should be regarded as the discharge by the assessees of their duty as commission agents. In Bhagwan Das Narottam Das v. Kanji Deoji(1), a case decided by a Bench of the Bombay High Court, the legal position of a pakka adatia was again considered. It was held that the pakka adatia has no authority to pledge the credit of an up-country constituent to the Bombay merchant and that no contractual privity is established between the up-country constituent and the Bombay merchant. Yet the transaction between the pakka adatia and his constituent was not regarded a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a sale by the cloth dealers in Kanpur to the assessees and the assessees thus acquired the property in the goods so purchased. By the second trans- action it is this property in the goods which they possessed that was transferred by the assessees to their customers and sale is nothing but the transfer of the property in the goods for a price. The fact that the assessees did not make a profit is not relevant. Sales may be and sometimes are effected at a loss, and if in the present case the assessees charged a commission at a fixed rate the transaction did not differ from a sale. Our attention was invited to Feise v. Wray(2), one of the cases referred to in the judgment of Fry, L.J., in Cassaboglou v. Gibb(3). (1) (1865) 34 L.J.C.P. 191 at p. 194. (3) (1883) 11 Q.B.D. 797. (2) 3 East, 93; 102 E.R. 532. In that case a certain trader in London ordered a Hamburg mer- chant to procure and ship for him a quantity of beeswax. This was procured and shipped on the account and risk of the London merchant on board a general ship for the port of London. The bill of lading was filled up to the order of the London trader. The persons from whom the Hamburg merchant had 'purchased the wax were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alings between principal and principal and not between an agent and principal. Section 4 of the Sale of Goods Act defines "a contract of sale of goods" as "a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price", and if in pursuance of this contract the property in the goods is transferred to the buyer by the seller there is a sale. The customer's identity was not disclosed to the persons from whom the assessees purchased the goods and there was clearly no privity of contract between the vendors and those customers. The assessees were in law the purchasers of the goods; they were liable for the price of the goods the property in which passed to them. When subsequently the assessees supplied those goods to their customer the property in the goods passed to that customer, and the question is whether it passed in pursuance of a contract of sale bet- ween the assessees and their customers, or otherwise. A commission agent when he agrees to work for his principal as the latter's agent and to obtain for his principal the goods which the latter wants, undertakes a duty which he has to discharge by purchasing the goods required and supp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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