WJ Alan v El Nasr - 1972

WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189

Contract law – Sale of goods – Offer and acceptance

Facts

In 1967, a coffee selling business based in Kenya agreed to sell 500 tons of coffee to an Egyptian company based in Tanzania. The contract was based on the terms given by the London Coffee Trade Federation and therefore was governed by English law. The contract stated the price for the coffee in Kenyan shillings and the payment method would be by way of an irrevocable letter of credit. The buyers gave their payment with Pound Sterling as the currency and the sellers took part-payment for the shipment from this. Whilst the goods were in transit, the Pound Sterling became devalued and the sellers claimed for an additional sum to allow for this. The judge at first instance held that the buyers were liable to pay the additional sum. The buyers appealed this decision.

Issue

It was important for the court to consider whether the payment for the goods given by the letter of credit in Pound Sterling could satisfy the value of the goods in the agreement. If not, the buyer would have to pay the remainder of the balance left outstanding as a result of their chosen currency being devalued.

Held

The court allowed the buyers appeal. The court held that the currency stated in the contract between the parties was Kenyan shillings. However, the fact that the sellers had accepted the part-payment by way of Pound Sterling had waived their right to be paid in the currency listed in the contract. On this basis, the buyers had discharged their whole contractual obligation by handing the sellers the letter of credit and were not required to pay the difference between the devalued Pound Sterling and the Kenyan shilling.