KEY REVISION POINTS

Question 1

Overview of drafting commercial contracts

Answer 1

Drafting Commercial Contracts
Nature and regulation of commercial transactions
Content of the contract, i.e. terms, conditions, warranties and innominate terms
Terms – set out the rights, liabilities and obligations of the parties and must be incorporated expressly (or implied) into the contract.
- Incorporation by signature, by notice or by custom or course of dealing.

Question 2

What are implied terms

Answer 2

Implied Terms: by the courts, by statute (e.g. SOGA 1979) or by trade and custom
Implied by the Courts:
In law: if it is a necessary incident of the type of contract and implied as a matter of policy.
In fact: Implied to fill gaps in the contract to give effect to the parties objective intention.
Relationship between contractual interpretation and implication of terms?

Question 3

Key things to know about SOGA

Answer 3

Sale of Goods Act 1979

Definitions, including goods, property and price and different types of goods (existing/future and specific/unascertained) as classified to determine the applicabliluty and effect of the Act.

Duties of the parties: Delivery, Acceptance and Payment (ss 27-37)

Question 4

Key things to know about SOGA and passing of property

Answer 4

Property in specific or ascertained goods (s.17)
→ Parties intention, i.e. terms of the contract e.g. IncotermsProperty in unascertained goods (s.16)
→ Irrespective of parties intention, property cannot pass until the goods become ascertained
Subject to s.20A, or;
Statutory Presumptions under s.18(5)
Risk (s.20): Unless otherwise agreed risk passes with property (N.b. effect will be given to applicable Incoterm)

Question 5

Things to know about SOGA and physics duties relating to s13

Answer 5

SOGA: Physical duties relating to the goods
s.13 – Implied term that the goods will correspond with the contractual description
N.b. also relates to shipment terms, e.g. time of shipment.
s.14(2) & (3) – Implied term that the goods will be of satisfactory quality and fit for purpose
N.b. Importance of case law in demonstrating knowledge and understanding
Remedies

Question 6

Things to know about payment under LoC

Answer 6

Payment under letters of credit

The opening of the letter of credit and the distinct undertakings to make payment by the issuing and confirming (advising) banks on a complying presentation of documents and subject to the rules of the UCP 600 where applicable

Question 7

Payment against documents is held to what principles

Answer 7

Payment against documents is made subject to the principles of:

Strict compliance (Equitable Trust v Dawson)
Common law mirror image approach (importance of case law) v Functional standard of verification of UCP 600 (N.b. importance of International Standard Business Practice). 

Need for new approach in common law recognised in Kredietbank NV v. Midland Bank Plc.

Question 8

Key things to know about UCP 600

Answer 8

A complying presentation under the UCP 600:

Article 2 - defines a complying presentation

Articles 14 and 18 UCP 600 determine the standard of conformity for the information provided in the bills of lading and commercial invoice (Articles 14(e) and 18(c) apply to the description of the goods)

Autonomy of the Credit
Articles 4 and 5 UCP 600
A credit by its nature is a separate contract from the sale on which it is based and a bank deals with documents and not goods to which it relates (Hamzeh Malas & Sons v British Imex Industries Ltd)

Banks are not concerned with matters external to the letter of credit, subject to the fraud exception (The American Accord).
N.b. Article 34 UCP 600: Disclaimer
But
The seller/beneficiary of the payment must be party/privy to the fraud at date of presentation.
The bank must be aware of the fraud at that date (subject to Article 34 UCP 600)
Actual fraud must be proven
Buyer will have to seek an injunction to prevent payment under the documentary credit.

Question 9

Overview of commercial agency

Answer 9

Commercial Agency
Nature of the relationship and how authority arises for the agent to act on behalf of the Principal:
Actual authority -> Scope determined by looking to the contract.
Implied actual authority -> Incidental, usual, customary and implied from conduct of the parties.
Apparent Authority – authority arises on the basis of estoppel
Authority by operation of law
Ratification

Question 10

What duties of the agent

Answer 10

Duties of the agent
Duty of care and skill in contract and tort
Fiduciary duties arising from their the relationship of trust and confidence

Commercial Agents (Council Directive) Regulations 1993, which apply to Commercial agents