Saffron v Societe Miniere Cafrika

Société Minière Cafrika (the plaintiff) sued Abraham Gilbert Saffron (the defendant) in the Supreme Court of New South Wales for the price of chrome ore sold and delivered. The action was heard as a commercial cause, and the parties narrowed their dispute to two core issues: whether the plaintiff was entitled to payment only if it came from a specific letter of credit, and if so, whether the unavailability of that credit excused the defendant's non-payment. The trial judge found in favour of the plaintiff on both issues, leading to an appeal to the High Court.

The High Court was required to determine whether the contractual stipulation for payment by letter of credit meant that it was the exclusive source of payment, thereby releasing the buyer from direct liability if payment failed through the credit. The Court also considered whether the parties' conduct and the specific terms of the contract indicated an intention to treat the letter of credit as absolute payment or merely as a primary, but not exclusive, method of payment. Furthermore, the Court addressed whether the defendant's actions, which led to the letter of credit being unusable, excused him from his obligation to pay for the goods.

The Court reasoned that the stipulation for payment by letter of credit did not go beyond establishing it as the primary, but not exclusive, source of payment. It held that to allow the defendant to argue on appeal that no sale or delivery had occurred would undermine the efficiency of the commercial causes procedure, as this issue was not litigated at trial. The Court found that the defendant's conduct, including his role in the preparation of the bill of lading, was responsible for the letter of credit failing as a means of payment. This, coupled with the defendant's acceptance of the delivered goods, meant he remained liable for the price.

Accordingly, the High Court dismissed the appeal with costs, affirming the decision of the Supreme Court of New South Wales.