Couturier v Hastie [1856] UKHL J3 (26 June 1856)

Merchants sold a cargo of corn through agents, but unknown to both parties, the cargo had already been sold at Tunis due to heating damage before the sale contract was made. The House of Lords held the contract void as there was no existing subject matter at the time of sale.

Facts

The Plaintiffs were merchants at Smyrna who shipped a cargo of 1180 quarters of Indian corn from Salonica to England in January 1848. The Defendants were corn factors in London who were employed to sell the cargo on commission. On 15th May 1848, the Defendants sold the cargo to A.B. Callander under a bought note specifying corn ‘of fair average quality when shipped’ with bill of lading dated 22nd February.

Unknown to either party at the time of sale, during the homeward voyage the cargo had become so heated that the vessel was obliged to put into Tunis, where on 22nd April 1848, after proper survey, the cargo was unloaded and sold. When Callander discovered this, he repudiated the contract on 23rd May, claiming the cargo did not exist at the date of the contract.

Issues

The central legal issue was whether a contract for the sale of goods could be valid when, unknown to both parties, the subject matter of the contract had ceased to exist at the time the contract was made.

Judgment

The House of Lords affirmed the judgment of the Court of Exchequer Chamber. The Lord Chancellor delivered the principal judgment, with all attending Judges unanimously agreeing that the judgment of the Exchequer Chamber was correct.

The Lord Chancellor held that the question turned upon the construction of the contract. In the absence of evidence of mercantile usage providing a different interpretation, looking at the contract itself alone, the parties contemplated that there was an existing something to be sold and bought. The insurance benefit was intended to attach to losses and damage occurring before or after the sale date, but only assuming that something passed by the contract.

The judgment confirmed that since the contract plainly imports that there was something which was to be sold at the time of the contract, and no such thing existed, the contract was void.

Legal Principles

The case established the fundamental principle that a contract for the sale of specific goods is void where, unknown to both parties, the goods have perished or ceased to exist before the contract was made. This reflects the requirement that there must be an existing subject matter for a valid contract of sale.

Implications

This case became a foundational authority on the doctrine of res extincta (non-existence of subject matter) in contract law. It was later codified in section 6 of the Sale of Goods Act 1893 (now section 6 of the Sale of Goods Act 1979), which provides that where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract is made, the contract is void.

The decision significantly influenced the development of the doctrine of common mistake in English contract law, establishing that where both parties are mistaken as to the existence of the subject matter, no contract comes into existence.

Verdict: Judgment for the Defendants in Error, with costs. The judgment of the Court of Exchequer Chamber was affirmed, holding that no valid contract existed as the subject matter (the cargo of corn) had ceased to exist at the time of the purported sale.

Source: Couturier v Hastie [1856] UKHL J3 (26 June 1856)