a ship, rarely does; probably does not, it is submitted, apply to a contract c.i.f. or 'ex-ship'; and finds its proper sphere of activity in a class of case where

'the seller's obligation to send the goods arises not on the sale itself but only incidentally to it, as part of a simultaneous mandate given by the buyer to his seller1.'

For these and other mercies we are indebted to the Act of Union with Scotland.

(3) Effect of action by the Executive.

We now come to consider the effect upon contracts for the sale of goods of prohibitions of export or import and similar official action of an emergency nature. Many of the cases turn upon the construction of particular clauses and it is not easy to extract any general principles, nor is it always possible to draw the line (as we have seen in Chapter V) between supervening illegality and impossibility of performance. In that chapter we found it necessary to the thread of our argument to consider several of these cases, so that the remarks which follow are supplementary and somewhat fragmentary.

The lawful requisition by the Government of specific goods which are the subject of a contract of sale but not yet delivered, will excuse the seller from further performance of the contract2. Whether we regard it as a case of impossibility arising from the cessation of a state of affairs postulated as the foundation of the contract or in the narrower light of impossibility arising from a lawful act of the State1 the conclusion arrived at is the

same.

Whether the case would be different if the act of the State purporting to requisition goods which are specifically the

1 Per Hamilton, L.J. [1913] 3 K. R. at 763.

2 Shipton, Anderson & Co. and Harrison Bros. & Co.'s Arbitration [1915] 3 K. B. 676.

3 See Chapter V.

4 Bailey v. De Crespigny (1869) L. R. 4 Q. B. 180. For a case of the requisition before completion of a ship sold while under construction, see Dale Steamship Co. v. Northern Steamship Co. (1918) 62 S. J. 328 (C. A.).

subject of a contract of sale was ultra vires is not clear. In the case of Russian Bank for Foreign Trade v. Excess Insurance Co.1 Bailhache J. held upon a policy of marine insurance that voluntary compliance with an ultra vires order of the Admiralty purporting to requisition a ship outside the British Isles and the waters adjacent thereto did not amount to a 'restraint of princes'; 'as disobedience to an ultra vires order is not illegal, obedience to such an order, unless compelled by force, or threats of force, is a voluntary act and not a restraint of princes.' This judgment was affirmed by the Court of Appeal on another ground, and Scrutton L.J. inclined to doubt this view. It may have to be considered in the case of voluntary compliance with an unlawful requisitioning of goods.

Where the sale is one of goods which are not specific or where the prohibition of export or import is only partial, more difficult questions are apt to arise.

In Ford & Sons (Oldham), Ltd. v. Henry Leetham & Sons, Ltd.2, the seller had power to cancel the contract for the sale of flour not specific in case of prohibition of export... preventing shipment or delivery of wheat to this country.' Later, export was prohibited from twenty-one countries, but remained permissible in the case of three countries which were the principal sources of supply to this country. The price of wheat rose considerably as the result of the prohibition, and the seller made a short delivery, and claimed to cancel the contract. Bailhache J. held that the fact of one or more substantial sources of supply being closed by prohibition of export enabled him to exercise his right of cancellation.

Many prohibitions of exportation or importation imposed during the war have merely been prohibitions in form and have in substance been the means of regulating exportation or importation by a system of licences or permits. Failure to obtain the necessary licence or permit has frequently given rise to disputes, as it may happen that a seller on a rising market will not display as much zeal in his attempts to obtain 1 [1918] 2 K. B. 123; [1919] 1 K. B. 39 (C. A.).

MCN.

2 (1915) 31 T. L. R. 522.

II

a licence from the appropriate Government department as his buyer considers is due from him.

In Anglo-Russian Merchant Traders and John Batt & Co.'s Arbitration1 there was an agreement to sell and deliver abroad aluminium made at a time when to the knowledge of both parties aluminium could only be exported from the United Kingdom under licence from the British Government. The sellers duly applied for an export licence but their application was refused. Upon the assumption that both parties contemplated shipment from this country, were the sellers liable to pay damages for breach of the contract which was in terms absolute and contained no such expression as 'subject to permit being obtained'? The umpire and Bailhache J. held that the sellers, having entered into a positive contract to ship aluminium and not having stipulated for the event of being unable to obtain a permit, were liable in damages; they had 'assumed the obligation and risk of obtaining a permit equally with the obligation and risk of obtaining the goods or freight room.' There is a great deal to be said for this view of the obligations of one who enters into a positive contract with his eyes open, but the Court of Appeal unanimously (Viscount Reading C.J., Lord Cozens-Hardy M.R. and Scrutton L.J.) took an entirely different line and applied The Moorcock2; to give 'business efficacy' to the contract it was necessary in their opinion to imply an obligation that the sellers should use their best endeavours to obtain a permit; they had done so and failed, and therefore there was no breach of contract. It is not easy to define the limits of The Moorcock doctrine, but clearly unless it is applied with care, it may injure the interests of business, 'the essential basis of all trade' being 'the right to rely upon contracts.'

1 [1917] 2 K. B. 679 (C. A.).

2 (1889) 14 P. D. 64.

APPENDIX TO CHAPTER VII

INSURANCE ON ENEMY GOODS

Statement by Sir EDWARD BEAUCHAMP, Bart., M.P., Chairman of Lloyd's, at the International Conference on Maritime Law at Copenhagen, on 16th May, 1913.

British Underwriters have naturally paid great attention to the question of the payment of claims on Enemy Goods insured with them, and the Committee of Lloyd's have obtained from their legal advisers an opinion, of which I will read the material parts:

1. 'Upon the declaration of war between Great Britain and a Foreign Power all contracts pending between British Subjects and subjects of the Foreign Power become unenforceable so long as the war lasts.

2. 'Consequently a British Underwriter is under no enforceable liability to a subject of the Foreign Power in respect of a loss occurring during the war under a Policy effected in time of peace; and, in respect of a loss which had occurred, before the declaration of war, under such a Policy, he can claim to have legal proceedings against him for its recovery suspended until the restoration of peace.

3. 'But a British Underwriter is not forbidden by law to pay the subject of the Foreign Power in time of war for a loss which has occurred either during or before the war, if he thinks fit to do so; nor does he commit any legal offence or render himself liable to any legal penalty by so doing. In the case of a loss sustained by a subject of the Foreign Power before declaration of war, it rests entirely with the British Underwriter to decide for himself whether he will claim suspension of legal proceedings until restoration of peace; and if he does not expressly claim this suspension in answer to an action brought against him, the Courts will proceed with the trial of the action during and notwithstanding the war.'

I am advised that the origin of the law as enunciated is to be found in the strict decisions given in the English Courts during the Napoleonic Wars, and, although these questions have not been directly brought forward in recent years, it is already evident that the tendency of the British Courts is against the strict enforcement of the rules laid down at a time when the conditions of international commerce, including marine insurance, were on a very different footing from those existing at the present time.

As Chairman of Lloyd's, I desire to make the following

statements:

First, I am advised that the records contain no case in which the British Underwriters have resisted a claim on a Marine Policy for a loss by perils of the sea on any of the grounds referred to in the opinion which I have already read.

Secondly, my attention has been drawn to a recent article in the Foreign Press in which it is stated that the English Underwriters are not only not bound by law to pay compensation to the subjects of Enemy State (sic) for losses which arise during the war, even when the Policy was concluded before the commencement of war, but that the payment is actually illegal. This statement is an inaccurate reproduction of the answer of the British Maritime Committee to the questionnaire, and is misleading. It is contrary to the opinion I have already read, which states unequivocally that 'a British Underwriter is not forbidden to pay the subject of a1 Foreign Power in time of war for a loss which has occurred either during or before the war'; and, moreover, it entirely disregards the fact indicated in the answer to the questionnaire that the Crown has an inherent right to permit business with an alien enemy. It has been pointed out in the interesting answer to the questionnaire prepared for the Dutch Association by Mr Loder that 'laws are made in vain if they contravene the ideas of good faith and the sentiment of whatever is honest and of good report.' The position which the English Underwriters have assumed,

1 This is an error and should be 'the,' meaning, as a glance at paragraph I above shows, 'the enemy Power.'