Commercial Sales Flashcards
Passing of property in after-acquired and unascertained goods
A seller sells goods, which at time of contract doesn’t own or owns and are unascertainable e.g. part of bulk, buyer pays in advance but seller refuses to deliver or becomes insolvent – who owns the goods?
Becomes owner in equity - Holroyd v Marshall
Does this survive SoG Act?
Holroyd v. Marshall (1862), 10 H.L.C. 191
Facts – seller (assignor) assigning property/goods for security of loan and goods he might subsequently acquire, assignor became insolvent was assignee entitled to after acquired goods?
Held – yes, provided that goods were clearly identifiable
Re Wait [1927] 1 Ch. 606 (COA)
Facts – W bought 1000 tonnes of wheat to be loaded on a ship, W sold 500 tonnes to sub-purchasers, wheat was shipped, W received bill of lading, subsequently pledged with bank of security for loan, some purchasers paid whilst ship still at sea, before ship was unloaded, W became insolvent, was sub purchasers entitled to wheat or was wheat owned by trustee in bankruptcy, sub –purchasers wanted specific performance, s52 Act says in any action to deliver ascertained goods courts can make action performed specifically, but goods not ascertained because 500/1000, second argument it to rely on Holyroad v Marshall in equity
Held – Rule does not survive enactment of sale of goods act, not because ‘common law’ excludes equity, but because regime for passing of property in s16-19 impliedly excluded possibility of Holroyd v Marshall, trustee in bankruptcy gets all (dissent s16-19 aren’t inconsistent with equity)
Re Goldcorp Exchange Ltd. [1994] 2 All E.R. 806 (privy council)
Facts – G was insolvent, dealers in gold bullion, maintained stock, bought and sold it to investors, most who bought didn’t take delivery, when became insolvent, was too little gold to settle those who had bought gold, did buyers have proprietary interest or were they confined to claim for damages
Held – applied Re Wait – purchaser had no equitable to claim in gold, s16-19 is complete set
s2 Sale of Goods Act 1979
S2 Sale of Goods Act 1979 - Contract of sale.
(1) A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.
(2) There may be a contract of sale between one part owner and another.
(3) A contract of sale may be absolute or conditional.
(4) Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale.
(5) Where under a contract of sale the transfer of the property in the goods is to take place at a future time or subject to some condition later to be fulfilled the contract is called an agreement to sell.
(6) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.
Ss. 61(1) Sale of Goods Act 1979
sale” includes a bargain and sale as well as a sale and delivery
Colley v. Overseas Exporters [1921]
Facts – sellers sold a quantity of leather belting, to buyers FOB Liverpool, property in goods passes when loaded on ship, sellers dispatched goods to docks and named ship in Liverpool, ship was withdrawn from service before goods were loaded, buyers then nominated 4 other ships in succession, all failed to take cargo on board, goods never loaded, did they have claim for price?
Held – MJ McArdy? – no, s49(1) of Act – only if property in goods has passed to buyer, in this case hadn’t
Held - seller argued there is distinction between bargain and sale and sale and delivery, this is a bargain and sale so should be liable- McArdy rejected this because distinction was only relevant in old pleading system removed by Judiciar Act 1875
The Res Cogitans [2016] UKSC 23
Facts – ROT , contract to supply oil to ship, the ship was in port in Russia, chain of contracts for supply of bunkers (oil) , all contracts had ROT clauses, also contained provision for buyers to entitled to use and consume oil before paying, sellers became insolvent, ship owner when sued for price of oil refused to pay because refused to pay and no property has passed s49 , even though has consumed oil
Held – ship owners were liable for price, because this wasn’t a contract for sale of goods, was a contract of its own kind so not covered by s49(1) of 1979 didn’t apply,
s61(1) Sale of Goods Act 1979
S. 61(1) - “goods” includes all personal chattels (other than things in action (personal property only asserted by bringing action not by taking possession e.g. debt) and money , and in Scotland all corporeal moveables except money; and in particular “goods” includes emblements , industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale (even if fixed to land can be subject to contract of sale of goods if to be severed before delivery – don’t have to abide by formalities for contracts for sale land) ; and includes an undivided share in goods (contract to sell show is contract to sell goods)
Moss v. Hancock [1899] 2 Q.B. 111
Held – antique bank note could count as goods if being sold as a collectable
Hamilton v. Papakura District Council [2000] 1 N.Z.L.R. 26
Facts – H was grower of hydroponic vegetables, needed very pure supply of water, public water supply was pure enough, but supply became polluted, wasn’t harmful to humans but effected his vegetables, sued D council alleging breach of obligation to supply goods of satisfactory quality
Held – water could be goods for SOG act, claim failed for other reasons
St Albans City and DC v. International Computers Ltd. [1996]
Facts – supplied faulty computer software
Held – software itself is not goods, needs to be on physical item
Exchange
Exchange or barter does not fall within SOG because SOG needs to be for money consideration called price- no contract for sale of goods if no money
Flynn v. Mackin [1974] I.R. 101
Facts – 2 D’s, agreed that D2 motor dealer, D2 would supply D1 with new car in return for money and delivery of D1 used car (part exchange), understood that D2 would acquire new car from 3rd party, parties didn’t ascertain price of new car or attribute any value to old car, very informal as close friends, D2 obtained new car and telephoned D1 to say he had it, D1 agreed to take delivery same day, when D2 was driving it hand over he was involved in serious accident, P was seriously hurt, P sued D1 & D2 for damage in negligence, (unclear why D1 was sued, maybe for vicarious liability).
Held – Appeal at Supreme Court: by P and D2, dismissed appeal because not contract for SOG but rather barter and therefore property could only pass on delivery and as no delivery D1 had no interest in car at time of accident. Went on to say that even if was SOG no property would have passed anyway because agreement of sale on future goods and no appropriation of car to the contract at that time
Bailment and transfers for value
Bailment is a transaction which may or may not be contractual, which merely involves a transfer of possession from Bailor to Bailee on understanding that the same goods will be returned to bailor on end of bailment
Contract of this kind there is no SOG because no intention for Bailee to become owner, merely has possessory interest
South Australian Insurance Co. v. Randell (1869) (PC)
Facts – trading in grain, farmers who grew crops, supplied in bulk to grain elevator, mixed with grain of other farmers on basis that if owner of elevator was able to resell grain, farmers would receive price subject to commission, if not farmers were entitled to return of same quantity and quality of grain deposited, but not exact same ones, what kind of contract is this
Held – not contract for SOG but rather transfer for value, so SOG Act does not apply and rules about passing of property don’t apply
Chapman Bros. v. Cerco Bros. & Co. Ltd. (1933)
Facts – Farmers delivered bags of wheat to a company carrying on business as millers and merchants, wheat was delivered in unidentified bags identical to other farmers, transaction required the company to buy and pay for the wheat on request by the farmer or failing such a request, on a specified date, to return an equal quantity of wheat of the same type; but there was no obligation to return the identical bags.
Held – transaction was necessarily one of sale as the property passed to the company on delivery, Property must pass even if not at once, That is the nature of transaction and this transaction seems inconsistent with the possibility of a bailment.
Geddling v. Marsh [1920]
Facts – There is problem about containers within which goods are contained, if the container is returnable, used to be common that certain types of bottles were returnable to retailer for nominal sum, in these circumstances are the bottle treated as part of good for SOG, bought fizzy drink in returnable bottle, bottle exploded injuring purchaser, did terms about quality apply to bottle
Held – it did apply, was construed as sale of both bottle and contents even though bottle was returnable
Clay v. Yates (1856) (Exch)
Facts – contract to print a treaties , buyer supplied manuscript to printer, was contract for SOG or WaM
Held – was WaM, test was to compare value of labour and materials, labour was more significant
Lee v. Griffin (1861) (Exch)
Facts – contract to make a pair of false teeth,
Held – test was to say that If purpose of transaction was to produce a new thing and supply that is a SOG
Young & Marten v. McManus Childs, Ltd. [1969] (HL)
Facts – contract to roof a building, required the roofing company to use tiles of certain type, they roofed building using specified type, unfortunately they used defective batch¸ had to remove and replace, who had to bare cost
Held – duty to supply particular type impliedly meant had to be good tiles, so SOG Act s14(1)/ (3 now) applies
Phillip Head & Sons, Ltd. v. Showfronts, Ltd. [1970] (QBD)
Facts – contract to supply carpet to building and fit it, some of carpet was supplied and some was fitted, but some supplied but not yet fitted was stolen , who is liable to pay, Supplier argued that all carpet supplied to premise belonged to building owner, because property had passed, owner of building said not yet fitted had not passed
Held – was SOG because dominant feature was supply not fitting, SOG applied, – 2 tests compare relative value of two components , other Lee v Giffiths
Hire Purchase and related transactions
A contract whereby hire goods under a contract which grants an option to buy goods at end of hiring period, hirer is expected to pay monthly instalments to owner of goods
problem if the hiree sells the good they don’t own yet -
according to s25 SoGA - where someone has agreed to buy goods from the seller and is in possession and they transfer it to a 3rd party acting in good faith its as if they are agent of hirer with consent
means hirer will lose their security
Lee v. Butler [1893] (CA)
Facts – L was in passion of furniture under hire purchase with P, before last payment L sold it to D who was acting in good faith
Held – a conditional sale agreement (contract for sale of goods, subject to retention of title in goods until price is paid) did fall within s25, had bought or agreed to buy
Helby v. Matthews [1895] (HL)
Facts – owner of a piano let it on hire, hirer agreed to pay rent and if pay all instalments he would get the piano, but he could also terminate the hiring by returning the piano to the owner
Held – HoL, s25 does not apply to contracts of higher purchase, because s25 says “bought or agreed to buy goods obtains”, a higher purchaser has not, higher purchaser has no legal requirement to buy it, only has an option to buy it
s25(2) Sale of Good Act
(a) the buyer under a conditional sale agreement is to be taken not to be a person who has bought or agreed to buy goods
(b) “conditional sale agreement” means an agreement for the sale of goods which is a consumer credit agreement within the meaning of the Consumer Credit Act 1974 under which the purchase price or part of it is payable by instalments, and the property in the goods is to remain in the seller (notwithstanding that the buyer is to be in possession of the goods) until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfille
S. 62(3), (4) Bills of Sale Act
Transactions falling Bill of Sale Act are taken outside of scope of SOG Act
Snook v. West Riding Investments, Ltd
Held – if faced with this kind of transaction, have to look at substance of transaction not just form, if was trying to create charge over goods it would fall within Bill of Sales Act and be void if not registered
Sale of Goods Act 1979 S 8
(1) The price in a contract of sale may be fixed by the contract, or may be left to be fixed in a manner agreed by the contract, or may be determined by the course of dealing between the parties.
(2) Where the price is not determined as mentioned in sub-section (1) above the buyer must pay a reasonable price.
(3) What is a reasonable price is a question of fact dependent on the circumstances of each particular case.
Sale of Goods Act 1979 Ss. 2(1) 9
(1) Where there is an agreement to sell goods on the terms that the price is to be fixed by the valuation of a third party, and he cannot or does not make the valuation, the agreement is avoided; but if the goods or any part of them have been delivered to and appropriated by the buyer he must pay a reasonable price for them.
(2) Where the third party is prevented from making the valuation by the fault of the seller or buyer, the party not at fault may maintain an action for damages against the party at fault.
May and Butcher v. The King [1934] (HL)
Facts – buyer contracted to buy from crown a quantity of tentage (raw surplus tents), contract said price was to be determined as deliveries proceed, before delivery a dispute broke out between parties, crown claimed contract was void because contract hadn’t been made and until price agreed they are still negotiating/
Held – HoL agreed was just negotiation, no contract yet so S8(2) doesn’t apply as no contract, only applies where is contract but no agreed price
–> Cases have to acknowledge authority of May & Butcher v King as not overruled and HoL, so have to find a way around,
Getting round May and Butcher v The King
–> Cases have to acknowledge authority of May & Butcher v King as not overruled and HoL, so have to find a way around,
if there has been some delivery, if price has been agreed in respect to some of the goods you can use the price as evidence of what price would be agreed for future deliveries
May & Butcher rule only applies if the contract is wholly executory at the time when the dispute breaks out, if no deliveries can’t apply way around
Foley v. Classique Coaches [1934] (CA)
Facts – buyer agreed to buy petrol for use in fleet of coaches at prices to be agreed between us, seller agreed part of arrangement to convey land to buyer, consideration for land was contract to buy petrol, after some petrol was delivered and paid for, parties fell out, buyer claimed promise to buy petrol was void
Held – can use price paid for delivered petrol to work out price for future deliveries
Hillas & Co. Ltd. v. Arcos Ltd. (1932)
Facts – contract to supply timber in particular season at price fixed in contract, A sold timber on behalf of Soviet Govt., contract gave option to buy timber in following season at price to be agreed
Held – can use price agreed at 1st season as evidence of what price would be agreed in 2nd season, so contract was not void
British Bank for Foreign Trade v. Novimex Ltd. [1949] (CA)
Facts – contract for sale of Norwegian oil skins, were paid for deliveries
Held - can use price paid for delivered skin as evidence price for future deliveries
Mamidoil-Jetoil Greek Petroleum Co SA v. Okta Crude Oil Refinery AD [2001] EWCA Civ 406; [2001]
Facts – not SoG case, contract for use of port facilities in Greece, long standing arrangement between parties, D imported oil using C port, D had paid for use of facility, D bought another facility capable of handling imports, wanted to transfer business to own facility, purported to terminate without notice, C claimed can’t do, no agreement about what was to be paid for facilities, payments had been made
Held – CoA rejected that lack of agreement about price made any agreement void
Key dicta - Rix: cant agree to agree on essential terms, however when familar to industry and acting like contract court will imply price
Ss. 2 Sale of Goods Act 1979
(1)A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.
Ss. 5 Sale of Goods Act 1979
1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured or acquired by him after the making of the contract of sale, in this Act called future goods.
(2) There may be a contract for the sale of goods the acquisition of which by the seller depends on a contingency which may or may not happen.
(3) Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods.
Ss.6 Sale of Goods Act 1979
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.
Couturier v. Hastie (1856) (HL)
Facts – contract for sale of cargo of grain, unknown to either party the master of ship had put into an intermediate port and sold cargo because it was overheating and would catch fire, would expect claim to be against seller for damages for non-delivery but claim was actually against buyer for price because seller argued was under contract all he had to do was transfer shipping documents to buyer not cargo and therefore could fulfil obligations under contract
Held – rejected, actually had to deliver cargo, authority on construction of contract
Key point – many interpreted that the contract was void and therefore for that reason they could not get the price, many believed that its authority that if there is contract for specific goods and at time of contract they don’t exist anymore the contract is void – reflected in s6 SoG Act
McRae v. Commonwealth Disposals Commission (1951), 84 C.L.R. 377 (HC Aust)
Facts – M was salvage expert in Melbourne, D was Govt Org selling raw surplus material, advertised for sale of wreck of tanker stranded off reef, M bought and paid for wreck, fitted out salvage expedition to salvage it, when he got there, there was no tanker, he had bought something that didn’t exist, M brought action for breach of contract, 3 claims, (1) for return of price – claim, D agreed to return price because of s6 SOG Act was specific goods and contract is void, (2) damages for breach of contract for cost of expedition (reliance damages), D rejected because no contract because s6 made contract void so can’t claim for breach of non-existent contract,
Held – upheld (2nd) claim as contract is not just contract for sale of contract but also implied promise by D that contract/ tanker exists, can claim damages for breach of this (free standing)promise, so s6 is no barrier as it is a contract for sale of specific goods but also other obligations (if only for SoG would be void),
Key point - s6 only applies where there is contract for SoG and nothing else
Re Shipton Anderson & Co. and Harris & Co. [1915] 3 K.B. 676 (KBD)
Facts –parties made contract shortly after WW1, for sale of specific parcel of wheat in Liverpool, terms of sale in cash where payment in 7 days for transfer order, before delivery wheat was requisitioned by government, buyers sued for damages for non-delivery
Held – accepted that property had not passed to buyers under contract, property was intended to pass on payment or on making of contract under s18(1) SoG Act, here accepted that no property had passed, requisition excused the seller from performance of contract, couldn’t sue for damages
H.R. & S. Sainsbury v. Street [1972] (QBD)
Facts – seller was farmer, entered into contract with buyers to sell 275 tonnes of barley to be grown on sellers farm, made at beginning of season for delivery upon harvest, in year was failure of barley crop, only produced 140 tonnes, seller alleged that failure frustrated contract, he sold crop that had to a 3rd party for a price which was higher than contract price, buyers claimed damages for non-delivery of crop
Held – contract was not subject to implied term that the seller was relieved from delivery if through no fault there was a shortage, seller was still obliged to offer what he had to buyer, rejected frustration, but buyers didn’t have to accept offering, c
Asfar v. Blundell [1896] (CA)
Facts – not SoG case, action on policy of marine insurance, policy was in respect of cargo of dates which had been loaded on ship, ship had sunk in shallow water in Thames, dates had been covered in sewage, cargo was salvaged and turned into alcohol, owners of cargo claimed against insurers that there had been a total loss of cargo
Held – was total loss of cargo, notwithstanding salvaged and sold for smaller a-mount, D argument that was salvaged was not commercial , if deteriorated to extent that is in inferior commercial category they have perished, don’t have to be completely physically destroyed
Good case
Horn v. Minister of Food [1948] (KBD)
Facts – on this issue directly, contract for sale a clamp of potatoes, specific clamp of potatoes, (s8 case), when clamp was opened to deliver, they had gone rotten, had they perished for s8
Held – they hadn’t perished as still existed, were just inferior
Bad decision
Barrow, Lane & Ballard v. Phillip Phillips & Co. [1929] (KBD)
Facts – partial perishing, sellers had contracted to sell specific parcel of nuts in bags, about 700, buyers gave sellers a bill of exchange in respect of price, when came to deliver nuts some of bags had been stolen before making of contract no one was aware, more was stolen before delivery, seller sued for price on bill of exchange
Held – partial perishing was void under s6
Problems – doesn’t explain to what extent does partial perishing constitute perishing, what degree of perishing is necessary, influenced by fact not wanting to hold buyers liable
Ss. 7 Sale of Goods Act 1979
Goods perishing before sale but after agreement to sell.
Where there is an agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided.
Ss.11 Sale of Goods Act 1979
When condition to be treated as warranty.
(2)Where a contract of sale is subject to a condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated.
Ss. 28 Sale of Goods Act 1979
Payment and delivery are concurrent conditions.
Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price and the buyer must be ready and willing to pay the price in exchange for possession of the goods.
s61(1) Sale of Goods Act 1979
“specific goods” means goods identified and agreed on at the time a contract of sale is made
S20(1) SoG Act
risk passes with property, unless agreed goods is at sellers risk until property is passed to buyer even if delivery has not occurred
Sale of Goods Act 1979 s16
Goods must be ascertained.
Where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods are ascertained.
Sale of Goods Act 1979 s19
Reservation of right of disposal.
(1)Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled; and in such a case, notwithstanding the delivery of the goods …the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.
Re Wait [1927] 1 Ch. 606 (CA)
W bought 1000 tonnes of wheat to be loaded on a ship, W sold 500 tonnes to sub-purchasers, wheat was shipped, but goods not ascertained because 500/1000,
Held – goods were not identified so property could not pass
Varley v. Whipp [1900] 1 Q.B. 513
Facts – S contracted to seller to B a reaping machine, described at almost new, at time B had not seen machine, was specific goods, when delivered B discovered was not almost, was old and worn
Held – from judgement seems to suggest this is specific good
Sale of Goods Act 1979 s17
Property passes when intended to pass.
(1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.
(2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.
Dennant v. Skinner and Collom [1948]
Facts – contract for sale of car by auction, P was a car dealer who conducted auctions, sold car and several others to buyer who called himself George Albert King (pseudonym), after auction GAK wanted to pay by cheque, seller allowed him to take possession of cars upon signing certificate that says that ownership doesn’t pass until cheque has been cleared, cheque wasn’t honoured, car bought by S who bought it from C who bought it from GAK, who has better title
Held – the term that D had tried to include was ineffective because property had already passed to GAK under voidable contract, property had passed under S18 (1)
Key point: must introduce term before property has passed
R.V. Ward, Ltd. v. Bignall [1967] (CA)
Facts – contract to buy 2 cars, for £850, paid deposit of £25, leaving car in possession of P on condition of paying balance, refused to pay balance on grounds of misrep of one of the cars, offered to buy the other car for £500, P rejected, required him to pay whole balance and if not sell elsewhere and sue for loss, P resold 1 car and brought action for D claiming balance of purchase price, recovering balance of price
Held – s49 (1) can only sue for price if property has passed to buyer, trial judge held for P, but didn’t make finding of fact as to whether property had passed although assumed not,
Held - CoA upheld D argument alleging price should not have been awarded, property had passed to D under s18(1) but effect of buyers exercising right of resale s48(3) (rescission) had effect of property revesting in them, therefore although entitled to damages of non-acceptance of goods, not entitled to price
Lacis v. Cashmarts [1969] (QBD)
Facts – criminal case, buying good in cash and carry shop
Held – divisional court said that in this kind of sale, property only passes on the payment of price, common intention of parties in transactions of this kind, w
Sale of Goods Act 1979 s18 r1
Rules for ascertaining intention.
Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.
Rule 1.—Where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed
