Sale of goods: B2B

Question 1

Five key elements of a contract of sale

Answer 1

1. Two parties: a buyer and a seller
2. A contract
3. Transfer of property
4. Goods
5. The price

Question 2

Esso Petroleum Ltd v Commissioners of Customs & Excise

Answer 2

1. Petrol stations advertised a ‘free’ gift of a commemorative coin marking the 1970 World Cup to anyone buying four gallons of fuel
2. It was held by the House of Lords that, although the transaction was not a gift, inasmuch as the station was contractually bound to supply the coin to anyone buying four gallons of fuel, it was not a sale of goods either
3. The transaction was characterised as one in which the station promised to supply a coin in consideration of a customer buying the petrol
4. It was therefore a collateral contract existing alongside the contract for the sale of the fuel

Question 3

May & Butcher v The King

Answer 3

1. The House of Lords held that an agreement for the sale of goods at a price to be later fixed by the parties was not, in the circumstances of the case, a concluded contract

Question 4

Courtney & Fairbairn Ltd v Tolaini Bros (Hotels) Ltd

Answer 4

1. The Court of Appeal refused recognition of a contract at a price “to be agreed”

Question 5

Howell v Coupland

Answer 5

1. A sale of 200 tonnes of potatoes to be grown on a particular piece of land was held to be a sale of specific goods, despite the fact that they were not yet in existence

Question 6

Re Wait

Answer 6

1. Held that a sale of 5,000 tonnes out of a cargo of 10,000 tonnes of wheat on a particular ship was not a sale of specific goods within the meaning of the Act

Question 7

H R & S Sainsbury v Street

Answer 7

1. A sale of 275 tonnes of barley to be grown on a particular farm was not a sale of specific goods

Question 8

Unascertained goods

Answer 8

Those goods which are not identified and agreed upon at the time the contract of sale is made. They cover three possibilities
1. Goods to be manufactured or grown by the seller
2. Purely generic goods
3. An unidentified portion of a specified bulk or whole

Question 9

Barrow, Lane & Ballard Ltd v Phillip Phillips & Co Ltd

Answer 9

1. Wright J regarded 700 bags of nuts as an indivisible parcel of goods and held that the contract was avoided by section 6 even though only 109 bags had disappeared by the time the contract was made

Question 10

Asfar & Co v Blundell

Answer 10

1. For the goods to have perished, the goods need to be significantly altered so that, for commercial purposes, they can no longer be said to be the same goods that were subject to the contract

Question 11

Oldfield Asphalts Ltd v Grovedale Coolstores (1994) Ltd

Answer 11

1. The goods need to be so damaged that they are deemed to be different from those the parties had contracted for

Question 12

Beale v Taylor

Answer 12

1. A car advertised as a specific model/year but was found to be different was ruled as non-compliant with the description
2. Mr Taylor had placed an advertisement for a car in newspapers, describing the car as “Herald, convertible, white, 1961”
3. After examining the car, Mr Beale decided to buy it
4. In fact, the car was an amalgamation of a 1961 Herald and another of a different year, which had been welded together and was in a very dangerous condition
5. The Court of Appeal held that the words “1961 Herald” formed part of the description, which had not been complied with

Question 13

Frost v Aylesbury Dairy

Answer 13

1. Aylesbury Dairy unknowingly sold milk with typhoid germs
2. It was held liable for failing to ensure satisfactory quality, despite the defect’s hidden nature

Question 14

Ginzberg v Barrow Haematite Steel Co

Answer 14

While section 17 only applies to specific goods, it is well settled that as a matter of general contract law, the principle expressed in section 17(2) also applies to unascertained goods

Question 15

Healy v Howlett & Sons

Answer 15

1. The defendant ordered 20 boxes of mackerel from the plaintiff, a fish exporter carrying on business in Ireland
2. The plaintiff dispatched 190 boxes and instructed the railway officials to earmark 20 of the boxes for the defendant and the remaining boxes for two other consignees
3. The train was delayed before the defendant’s boxes were earmarked, and by the time this was done, the fish had deteriorated
4. It was held that the property in the fish had not passed to the defendant before the boxes were earmarked and that they were, therefore, still at the seller’s risk when they deteriorated
5. Because it was not possible to say which of the boxes belonged to the buyer until the earmarking had been done, no identified or ascertained goods had yet been appropriated to the contracts of each individual buyer

Question 16

Re London Wine Co (Shippers) Ltd

Answer 16

1. A company sold wine to customers, while retaining possession of the wine
2. The customers paid for the wine, as well as for subsequent storage charges, and the seller gave the buyers “certificates of title”, but there was no actual earmarking or physical segregation of the wine sold to the different customers
3. The wine company became insolvent, and it was claimed that all the wine still belonged to the company
4. Although the sellers may quite genuinely have intended in their own minds to tie in the sales with a particular stock of wine of that description, they were under no legal obligation to do so
5. That particular stock of wine belonged to them, not the buyers; the sellers could have disposed of it elsewhere and bought further stocks to satisfy the buyers without any breach of contract

Question 17

Pignataro v Gilroy

Answer 17

1. The defendants sold 140 bags of rice to the plaintiff
2. The goods were unascertained by description, and the particular bags required to satisfy the contract were not then ascertained
3. The plaintiff was told that 125 bags would be delivered at Chambers’ Wharf, and that the remaining 15 bags would be delivered to the defendants’ place of business
4. The plaintiff sent a cheque to meet the price of the goods, and asked for a delivery order as arranged
5. On the following day, the defendants wrote to the plaintiff enclosing a delivery order for only 125 bags from Chambers’ Wharf, and stating that the 15 bags were ready for delivery
6. However, the defendants failed to send the 15 bags, which had been stolen sometime shortly before the agreed date of delivery
7. On the issue of whether the property of 15 bags of rice became the property of the buyer, the court, relying on “risk being passed with the property”, found for the plaintiff upon the grounds that the subject-matter of the sale had involved unascertained goods and there was no evidence of appropriation by either party with the assent of the other, and that, consequently, the property had not passed to the plaintiff at the time of the loss
8. Hence, the seller bore the risk

Question 18

Hayman v McLintock

Answer 18

1. P bought 250 sacks of flour from S
2. The sacks formed an undifferentiated part of a larger quantity of sacks in an independent store
3. P paid for the 250 sacks and obtained a delivery order for them
4. P took delivery of 29 sacks but the remaining 221 sacks were still in the store when S became bankrupt
5. The trustee in the bankruptcy successfully claimed the 221 sacks, founding on section 16

Question 19

Stern v Vickers

Answer 19

1. The seller agreed to sell 120,000 gallons of spirit out of a 200,000-gallon lot to the buyer
2. The seller sent a delivery warrant to the buyer
3. The buyer delayed collection for several months, by which time the spirit had deteriorated
4. The court held that the parties must have intended the risk to pass when the delivery warrant was sent to the buyer, who had to bear the loss, and pay the price of the Spirit, even though the ownership of the Spirit had not passed to the buyer because the seller had not set aside the 120,000 gallons

Question 20

Demby Hamilton v Barden

Answer 20

1. A buyer bought 30 tons of apple juice, and took delivery of 20.5 tons
2. He failed to give instructions for the delivery of the rest, which went putrid
3. The court held that the buyer was at fault and therefore had to bear the loss

Question 21

Demby Hamilton & Co Ltd v Barden

Answer 21

1. A batch of apple juice spoiled while in the carrier’s possession
2. As risk had passed to the buyer upon delivery to the carrier, the buyer bore the loss

Question 22

Head v Tattersall

Answer 22

1. The buyer could reject a horse that was not as described
2. Since risk only passes when goods are accepted, risk remained with the seller until the buyer accepted the goods as satisfactory

Question 23

Couturier v Hastie

Answer 23

1. If the goods never existed they cannot be said to have existed
2. The contract is void at common law
3. This case involved the sale of a cargo of corn
4. The goods had already been sold by the ship’s master at the time of the sale to the claimant buyer
5. Thus, at the time of the contract, the goods did not exist
6. The contract was accordingly void

Question 24

Monkland v Jack Barclay Ltd

Answer 24

1. The seller was not relieved of his duty to deliver simply because the particular Bentley model he intended to sell was unavailable, as other options were available to fulfil the contract