Sale of Goods II

Question 1

s27 SGA

Answer 1

“It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale.”

Question 2

Warranty

Answer 2

a minor term of contract, “collateral to the main object of it” (see Chanter v Hopkins (1838) 4 M&W 399, 404 (Lord Abinger)) for breach of which the innocent party has standard contractual remedies such as damages and remains bound to perform under the contract

Question 3

Condition.

Answer 3

A term that goes to the root of the contract, a breach of which gives the innocent party a power to terminate the contract as well as damages for any loss

Question 4

Breach of a condition

Answer 4

Breach of a condition = repudiation = gives power to the innocent party to terminate = if power is exercised, both parties absolved from future performance of their obligations under the contract. The breaching party liable for the breach.

Question 5

Termination v Recission

Answer 5

Johnson v Agnew [1980] AC 367 (HL) at 393 per Lord Wilberforce:
“it is important to dissipate a fertile source of confusion and to make clear that although [the innocent party, e.g. B] is sometimes referred to [e.g. in cases where S’s repudiation of the contract is accepted by B] as ‘rescinding’ the contract, this so-called ‘rescission’ is quite different from rescission ab initio, such as may arise for example in cases of mistake, fraud or lack of consent. In those cases, the contract is treated in law as never having come into existence…
In the case of an accepted repudiatory breach the contract has come into existence but has been put an end to or discharged.”

Question 6

s 11(3) SGA:

Answer 6

Whether a stipulation in a contract of sale is a condition (…) or a warranty (…) depends in each case on the construction of the contract, and a stipulation may be a condition, though called a warranty in the contract.

Question 7

Sellers LJ in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (Hongkong Fir) [1962]:

Answer 7

“The formula for deciding whether a stipulation is a condition or a warranty is well recognised; the difficulty is in its application. It is put in a practical way by Bowen LJ in Bentsen v Taylor, Sons & Co (2) [1893] 2 QB 274, 281:
‘There is no way of deciding that question except by looking at the contract in the light of the surrounding circumstances, and then making up one’s mind whether the intention of the parties, as gathered from the instrument itself, will best be carried out by treating the promise as a warranty sounding only in damages, or as a condition precedent by the failure to perform which the other party is relieved of his liability.’”

Question 8

Diplock LJ in Honkong Fir

Answer 8

66 “The test whether an event has [the effect of discharging one party from further performance] or not has been stated [thus]…: does the occurrence of the event deprive the party who has further undertakings still to perform of substantially the whole benefit which was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?”

Question 9

Implied terms that are warranties

Answer 9

That goods are free from a security or encumbrance

That B will enjoy quiet possession of the goods (s12(5A))

Question 10

Implied terms that are conditions

Answer 10

That S has the right to sell goods (s12(5A))
That goods will correspond with the description if sold by description 13(1A))
That goods will be of satisfactory quality (s14(6))
That goods will be fit for purpose where a particular purpose was made known to S (s14(6))
That goods will correspond with the sample where sale is by sample (s 15(3))

Question 11

s15A

Answer 11

A breach of a condition may be treated as a breach of a warranty where breach is so slight that it would be unreasonable for B to reject the goods:
BUT contract may show contrary intention (s15(2))

Question 12

s30(2A)

Answer 12

B does not have a right to reject where excess or shortfall in delivery so small that rejection would be unreasonable

Question 13

What are intermediate terms?

Answer 13

Diplock LJ in Hongkkong Fir
Where an event occurs that neither the parties nor prliamnt have expressly stated whther this will discharge performance, it is for court to decide
“There are, however, many contractual undertaking of a more complex character which cannot be categorised as being ‘conditions’ or ‘warranties’ in the late nineteenth-century meaning adopted in the Sale of Goods Act 1893…Of such undertakings all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract obtain as the consideration for performing those undertakings?”

Question 14

Can intermediate terms apply in SOG?

Answer 14

The Hansa Nord
Term that “shipment to be made in good condition”, part of cargo found damaged on arrial. B seeks to reject and claim return of price, argues that concept of intermediate terms could not apply to SOG (see s11(3))
See eg per Lord Denning MR at 60: the division between conditions and warranties under the Act “was not exhaustive. It left out of account the vast majority of stipulations which were neither ‘conditions’ nor ‘warranties’ strictly so called: but were intermediate stipulations, the effect of which depended on the breach.” – the duty to ship in good condition is such a term and (at 61) the breach here “did not go to the root of the contract”.

Question 15

s12(1)

Answer 15

implied term that S as right to sell goods
Rowland v Divall (1923)
Sale of stolen car, 6 months later recovered by owner. B sued S to recover purchase price as a total failure of consideration. S argued B nonethless had some use of the car
Court says he did get a car delivered to him, but the seller had no right to sell it so he did not get what he paid for, a car to which he would have title

Question 16

Restriction or exclusion of liability?

Answer 16

Liability for breach of the obligations arising from s12 of the SGA 1979 cannot be excluded or restricted by reference to any contract term: s6(1)(a) UCTA.

Question 17

s13

Answer 17

Term that goods correspond with description

Question 18

Arcos v EA Ronaasen (1933)

Answer 18

Agreement to sell staves of wood for making barrels, half an inch thich as S knew. Staves were 9/16 of an inch, B claimed to reject
Should such a small discrepancy entitle b to reject?
HL said yes, its a term in the con, annd G ought to match description
B not bound to accept goods merely bc they were merchantable

Question 19

Does s13 apply to specific goods? (i.e. goods you have identified

Answer 19

McKendrick says you should not ebable to reject specific goods for non-confomirty with specification
But The Diana Prosperity disagrees (1976)

Question 20

Reardon Smith Line v Hansen-Tangen (The Diana Prosperity) (1976)

Answer 20

Vessel to be chartered on completion but first to be built at Osaka with the yard or hull number 354, but eventually built at Oshima 004 - the physical attributes of the vessel corresponded with those required
Charterers sought to reject the vessel, arguing that the vessel tendered did not correspond with the contractual description in that it was Oshima 004 and not Osaka 354
Lord Wilberforce: ”the fatal defect in [charterers’] argument consists in their use of the words ‘identity’ or ‘identification’ to bridge two meanings. It is one thing to say that of given words that their purpose is to state (identify) an essential part of the description of the goods. It is another to say that they provide one party with a specific indication (identification) of the goods so that he can find them and if he wishes sub-dispose of them. [Charterers] wish to say of words which ‘identify’ the goods in the second sense, that they describe them in the first…I can only read the words in the second sense…”
“Even if a strict and technical view must be taken as regards the description of unascertained future goods (eg commodities) as to which each detail of the description is assumed to be vital, it may be, and in my opinion is, right to treat other contracts of sale of goods in a similar manner to other contracts generally so as to ask whether a particular item in a description constitutes a substantial ingredient of the ‘identity’ of the thing sold, and only if it does to treat it as a condition.”
Need to distinguish describing a thing such as to identify, and descriptions where each detail is vital

Question 21

s14(2)

Answer 21

Term that goods are of satisfactory quality
Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.
So where it’s a private sale, s14(2) may not apply

Note 14(2A) whether satisfactory quality: would a reasonable person regard the goods as of satisfactory quality, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.

Note too s14(2B) – quality includes state and condition as well as other aspects such as fitness for all the purposes for which goods of the kind in question are commonly supplied.

Note also 14(2C) – quality is not unsatisfactory where defect specifically drawn to B’s attention or where B examined and the examination ought to have revealed a defect

Question 22

Business Applciaiton Specialists v Nationwide (1988)

Answer 22

• second-hand Mercedes sold for £5,000 with 37,000miles on the clock: after 500 miles broke down because of burnt-out valves and badly worn valve seals (unusual defect).
  Was this a breach of a condition?
  No, car was reaonably fit for purpose acquired and was of merchantable quality. Have to expect second-hand cars to develop defects

Question 23

Jewson v Boyhan (2003)

Answer 23

Purchase of 12 electric boilers for flats - Standard Assessment Procedure (SAP) ratings of flats were so low that there was substantial risk flats would not be sold – appeal from the decision that J Ltd was in breach of terms implied by s14(2) and (3) SGA
Clarke LJ at [69]: “There may be exceptions, but in general a particular purpose which is not one of the ordinary uses for which goods of the relevant type are generally supplied seems to me to be irrelevant. The question in most cases will be whether the goods are intrinsically satisfactory and fit for all purposes for which goods of the kind in question are supplied. In my opinion these boilers satisfied that criterion.”
Sedley LJ, at [77]-[78]: “the court’s principal concern is to look at their intrinsic quality, using the tests indicated in subsection (2A)(2B) and (2C) [of which especially 2B(a)-(d)] may well require regard to be had to extrinsic factors. These will typically have to do with the predictable use of the goods. But the issue is still their quality (…) So, for example, the safety and durability of a soft toy would ordinarily need to be judged in relation to how a toddler may handle it — not in relation to the possibility of its being given to the dog. If it gets into a toddler’s mouth and causes harm, it may well have been sold in breach of section 14(2). If the dog chokes on it, the claim must probably be brought under section 14(3) or fail — unless, say, the toy was bought in a pet shop, for that might well be a relevant circumstance within section 14(2A)”

Question 24

s14(3)

Answer 24

Term that goods reasonably fit for a particular purpose made known to S

Question 25

Jewson v Boyhan Clarke LJ, at paragraph [15], cited in BSS Group Plc v Makers (UK) Limited [2011] EWCA Civ 809 [6] (Rimer LJ)

Answer 25

1. Has the buyer, expressly or by implication, made known to the vendor the purpose for which the goods were being bought?
2. if so, were the goods reasonably fit for that purpose;
3. if they were not reasonably fit for that purpose, has the vendor shown
   a. that the buyer did not rely upon its skill and judgment, or
   b. if it did, that it was unreasonable for him to do so.

Question 26

*Ashington Piggeries Ltd v Christopher Hill Ltd [1972]

Answer 26

Sale of herring-meal for the purpose of feeding it to mink - It was toxic and killed large numbers of mink- herring-meal used commonly as both animal feed and fertilizer – S of the meal knew it was for feeding animals but did not know it was for feeding mink – B does not pay – S sues for price – B counterclaims: meal not fit for purpose
Was the meal not fit for purpose?
Lord Diplock: “The key to both subsections [14(1),(2) SGA 1893] is reliance – the reasonable reliance of the buyer upon the seller’s ability to make or which are reasonably fit for the buyer’s purpose coupled with the seller’s acceptance of responsibility to do so. The seller has a choice whether to accept that responsibility. To enable him to exercise it he must be supplied by the buyer with sufficient information to acquaint him with what he is being relied upon to do and to enable him to appreciate what exercise of skill or judgment is called for in order to make or select goods which will be fit for the purpose for which the buyer requires them.”
“It was there laid down [in Cammell Laird case [1934] AC 402] that if the defect in the goods which rendered them unfit for their purpose was due to a characteristic which it lay within the sphere of expertise of the seller to detect and avoid, the responsibility for their unfitness lay with the seller. The ratio decidendi leads ineluctably to the corollary that if the defect was due to a characteristic which it lay within the sphere of the expertise of the buyer to detect and avoid, the seller was not contractually responsible for it”.

Question 27

Jewson Ltd v Boyhan

Answer 27

Regarding 14(3): Judge found not fit for purpose (See Clarke LJ at [50] citing Foskett J) BUT CA disagreed 
Clarke LJ: At [60]: “I do not think that it could properly be held on the facts that Mr Kelly relied upon the skill and judgment of Jewsons save as to the intrinsic qualities of the boilers. He did not rely upon them in relation to the question whether the boilers were suitable for installation in flats with the particular characteristics of these flats”

Question 28

s15

Answer 28

Term that the goods will correspond with the sample
Applies where the contract is expressly or impliedly a contract of sale by sample
The term is that bulk will correspond with the sample in quality and free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination of the sample.

Question 29

Limits of restricting or excluding liability for breach of obligations

Answer 29

Note s 55(1) SGA
Liability for breach of the obligations arising from ss13, 14 or 15 SGA cannot be excluded or restricted by reference to a contract term unless the contract term is reasonable: s6(1A)(a) Unfair Contract Terms Act (note also s 3 UCTA)
Test of “reasonableness”: see s 11 UCTA and Schedule 2 to UCTA , setting out guidelines, e.g.
the strength of the bargaining positions of the parties relative to each other; were goods produced to the special order of the customer?

Question 30

S’s duties as to delivery: ss 27-28, 61

Answer 30

s 27: It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale.
s 28: S must be ready and willing to give possession to B in exchange for the price
Delivery – s 61(1) – “voluntary transfer of possession from one person to another”

Question 31

Buyer’s duties and possibility of rejection

Answer 31

s 27: It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale.
In some circumstances B does not have to discharge B’s duty to accept = B has the power to reject the goods

Question 32

Effect of termination by B (impact on the duty to pay)

Answer 32

By exercising the power to terminate B may escape a losing contract

Question 33

(i) if the contractual duty to pay has not yet arisen…

Answer 33

… it can no longer be imposed on B:

Arcos Ltd v EA Ronaasen and Son [1933] Lord Atkin: “the conditions of the contract must be strictly performed. If a condition is not performed then the buyer has a right to reject… No doubt, in business, men often find it unnecessary or inexpedient to insist on their strict legal rights. In a normal marker if they get something substantially like the specified goods they may taken them with or without grumbling and a claim for an allowance. But in a falling market I find that buyers are often as eager to insist on their legal rights as courts of law are ready to maintain them.”

Question 34

(ii) if the price was due and has been paid…

Answer 34

… this does not mean that it has been unconditionally earned by S. So, if the goods can be rejected, B can reclaim the price

see eg Rowland v Divall [1923] 2 KB 500 (CA) at 505 per Scrutton LJ: “Section 12 says in express terms that there shall be: ‘An implied condition on the part of the seller that…he has a right to sell the goods.’ It being now a condition, wherever that condition is broken the contract can be rescinded, and with the rescission the buyer can demand a return of the purchase money, unless he has, with knowledge of the facts, held on to the bargain so as to waive the condition.”

Question 35

Note that price (or instalment of price) can be earned unconditionally by S:

Answer 35

See Stocznia Gdanska SA v Latvian Shipping Co [1988] 1 WLR 574 (HL): 2nd instalment of price to be paid on notice of keel-laying = ‘unconditionally earned’: see eg per Lord Goff at 588: “is the contract in question simply a contract for the sale of a ship? Or is it rather a contract under which the design and construction of the vessel formed party of the yard’s contractual duties, as well as the duty to transfer the finished object to the buyers?”
See also Workman Clark & Co v Lloyd Brazileno [1908] 1 KB 968: 1st instalment to be paid on keel-laying = earned even though property had not yet passed to B

Question 36

2 different questions

Answer 36

Does B have a power to terminate? May arise where S has breached a condition (in the sense used in s 11) eg Arcos Ltd/ Rowland

Has S ‘s right to price accrued?

1. The acts/events required under the contract for S to earn the price can be seen as conditions on S’s right to the price: if S performed the acts/events occurred – S’s right to price accrues
2. Price can be payable even if it has not been earned (as where the contract stipulates for payment in advance of delivery)

Question 37

Dies v British and International Mining [1939] 1 KB 724:

Answer 37

contract for sale of rifles and ammunition – S terminates after B fails to keep up with payment of instalments – express provision that S can retain certain sums in event of breach – S must return other pre-paid sums to B: Stable J at 743:
“the general rule is that the law confers on the purchaser the right to recover his money, and that to enable the seller to keep it he must be able to point to some language in the contract from which the inference to be drawn is that the parties intended and agreed that he should.”

Question 38

Method and time of rejection

Answer 38

1. How must B do it?
   • Unequivocal notice of rejection: Graanhandel T Vink BV v European Grain and Shipping Ltd [1989] 2 Lloyd’s Rep 531
   • B’s notice of rejection is ineffective if inconsistent with his contemporaneous conduct: Chapman v Morton (1843) 11 M & W 534; Tradax Export SA v European Grain & Shipping Ltd [1983] 2 Lloyd’s Rep 100, 107 (Bingham LJ)
2. Must B return goods to S as part of rejection?
   • s36: Unless otherwise agreed, where goods are delivered to B, and he refuses to accept them, having the right to do so, he is not bound to return them to S, but it is sufficient if he intimates to S that he refuses to accept them.
3. When must B do it?
   • Within reasonable time: see s35(4)

Question 39

Loss of the right to reject and deemed acceptance: s 35

Answer 39

• B intimates to S that he has accepted them,
• goods have been delivered to B and he does any act in relation to them which is inconsistent with the ownership of the seller
• Where goods delivered to B but B has not previously examined them, he is not deemed to have accepted them until he has had a reasonable opportunity of examining them - s 35(2)
• after the lapse of a reasonable time he retains the goods without intimating to S that he has rejected them

Question 40

Reasonable time:

Answer 40

s35(5) The questions that are material in determining …whether a reasonable time has elapsed include whether B has had a reasonable opportunity of examining the goods

Question 41

*Clegg v Andersson [2003]

Answer 41

The yacht as delivered was not of satisfactory quality because of the overweight keel (even though cost of remedial work comparatively small (Purchase price = £ 236,000; Cost of remedial work = £1680)
(a) did B intimate to S that B had accepted the yacht? No, why?
(b) did B do anything in relation to the yacht that was inconsistent with S’s ownership? No, why?
(c) had a reasonable time elapsed from 12 August 2000 till 6 March 2001 in which B retained the yacht without intimating rejection?
- No: see [64]: as a result of ss 35(5) and (6), “time taken to ascertain what would be required to effect modification or repair is to be taken into account in resolving the question of fact which arises under s 35(4). In light of the undisputed fact that [B] did not receive the information he had sought in August and September 2000 until 15 February 2001 I consider that the three weeks which elapsed thereafter until the letter of rejection dated 6 March 2001 did not exceed a reasonable time for the purposes of s 35(4).”
See too Lady Hale at [75]: “if [B] is seeking information which [S] has agreed to supply which will enable [B] to make a properly informed choice between acceptance, rejection or cure, and if cure in what way, he cannot have lost his right to reject”
As a result, B entitled to “return of the price and other acquisition costs they incurred” and “compensation for consequential losses”.

Question 42

Acceptance

Answer 42

s35(6) The buyer is not by virtue of this section deemed to have accepted the goods merely because –

(a) he asks for, or agrees to, their repair by or under an agreement with [S], or
(b) the goods are delivered to another under a sub-sale or other disposition.

Question 43

JH Ritchie Ltd v Lloyd Ltd [2007] UKHL 9, [2007] All ER 353

Answer 43

Sale of combination seed drill and power harrow
26 Apr: B begins seeding and notices vibration from harrow’s drive chain
28 Apr: vibration still present – B stops using and telephones S
S discovers problem (missing two bottom bearings) – orders new parts – after some weeks, harrow ready for collection by B - B asks S what the problem was – S refuses to answer – B decides to reject – S refuse to return price (c £14,000) – claims B has duty under s 27 to accept the harrow, which is now as good as new
Lord Hope: “…is [B] bound in every case to accept and pay for the goods simply because they are said by [S] following their repair, to be conform to the contract?… The problem is not capable of being solved satisfactorily by a pre-ordained code.
In the absence of express agreement, the answer to it must depend on what terms, if any, are to be implied into the contract at this stage, bearing in mind that [S] was in breach at the time of delivery and that [B] retains the right to resile because the goods were not in conformity with the contract.”
[15]: “There may be cases, for example, where the nature of the defect and exactly what needs to be done to correct it, and at what expense to [S], are immediately obvious to both parties. It may then be said that a [B], who, having been equipped with all that knowledge, allows the [S] to incur the expense of repair is under an implied obligation to accept and pay for the goods once the repair has been carried out. His right to resile will be lost when the repair has been completed.”
[19]: therefore S was “under an implied obligation to provide [B] with the information that [B] asked for”

Question 44

Power to reject the goods - consequences of rejection:

Answer 44

B may be discharged from the duty to pay the price unless price (or part of it) unconditionally earned by S
B may normally hold S liable for non-delivery (see Millar’s Machinery Co Ltd v David Way & Son (1934) 40 Com Cas 204) unless S can tender a new lot of goods within the period permitted under the contract (see Borrowman Philips & Co v Free & Hollis (1878) 4 QBD 500; EE Brian Smith (1928) Ltd v Wheatsheaf Mills Ltd [1939] 2 KB 302)
If property had passed to B, B’s rejection revests the property in S and restores to him the immediate right to possession => B does not have a right to retain the goods if S refuses to return the price: J L Lyons & Co Ltd v May & Baker Ltd [1923] 1 KB 685

Question 45

Action for damages

Answer 45

(a) Damages for non-delivery: s51 SGA:

(b) Remedy for breach of warranty: s53 SGA:

Question 46

Specific Performance:

Answer 46

s52 SGA
(1) In any action for breach of contract to deliver specific or ascertained goods the court may, if it thinks fit, on the plaintiff’s application, by its judgment or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages.

Question 47

Specific performance examples

Answer 47

Example: Behnke v Bede Shipping Co Ltd [1927] 1 KB 649: a ship = “specific” within the Act, in respect of which an order for specific performance was made (see Wright J at 661)
“[it] was of peculiar and practically unique value to [B]”;
damages would not be adequate

Re Wait [1927] 1 Ch 606 (CA): a court is very unlikely to order specific performance of a contract to provide unascertained goods
Applies whether or not property passed: Re Wait at 617 (Lord Hanworth MR)
Nb. where property passed: B may also use s 3 of Torts (Interference With Goods) Act 1977 to ask for order of delivery up (also at court’s discretion but courts will probably more readily protect an owner than B asking for section 52 SGA remedy to whom property did not pass)

Wide discretion of court. Nb court very likely to refuse specific performance where (see Cohen v Roche [1927] 1 KB 196, 180-181 (McCardie J)):
the goods are “ordinary articles of commerce and of no special value or interest”
“no grounds exist for any special order for delivery”

Question 48

Proprietary remedies of an unpaid S:

Answer 48

s 39(1) …even if property in the goods passed to B, the unpaid S of goods, as such, has by implication of law:

a) a lien on the goods or right to retain them until price is paid - ss39(1)(a) and 41-43, 47.
b) if B is insolvent, right of stopping the goods in transit, ss 39(1)(b) and 44-47.
c) a right of re-sale under, ss 39(1)(c) and s 48.

Question 49

Personal remedies

Answer 49

a) Power to terminate the contract
b) Action for damages:
1. s 50: if B wrongfully fails to accept and pay for goods; general common law principles
2. s 37: Buyer’s liability for not taking delivery of goods
c) Action for the price: s 49.

Question 50

Unpaid S’s lien

Answer 50

Form of security right – S can retain possession until price paid where:
(a) goods sold without any stipulation as to credit
(b) goods sold on credit but the term of credit has expired
(c) B becomes insolvent
Lien is based on retention of possession, not merely S having possession

Question 51

Loss of unpaid S’s lien – key examples: Unpaid S loses lien where: i.

Answer 51

B lawfully obtains possession of the goods for a period, even if S regains possession (s43(1))

See Valpy v Gibson (1847) 4 CB 837: S (Gibson) sent cloth to port requesting them to be shipped as directed by B – B’s agent obtains possession of goods but sends them back to S ordering them to be repacked - B went insolvent while S was in possession of goods and unpaid – Wilde CJ held S had no lien as: “The goods being sold on credit, and the complete property and possession having vested in [B], they became his absolutely, without any lien or right of [S] attaching to them”.

But note right of stoppage in transit

Question 52

Loss of unpaid S’s lien – key examples: Unpaid S loses lien where: ii.

Answer 52

B sells goods to a third party and S assented to it (s47)
See DF Mount Ltd v Jay & Jay [1960]: dispute over peaches in a warehouse – Jay & Jay (S) entered into a contract of sale with Merrick (B) – S made out delivery orders in favour of B (addressed to the warehouseman) – B sells to Mount (a sub-purchaser) - B did not pay the price. Salmon J refers to the meaning of assent in Mordaunt Bros v British Oil and Cake Mills [1910] 2 KB 502 (Pickford J): “assent …[must be] given in such circumstances as show that the unpaid S intends that the sub-contract shall be carried out irrespective of the terms of the original contract”… “[unpaid S must be shown to] renounce his rights”
Assent = S knows B cannot pay unless B resells
No assent = S had no reason to doubt B’s ability to pay and was told about the sub-sale after the fact (as in Mordaunt)

Question 53

Loss of unpaid S’s lien – key examples: Unpaid S loses lien where: iii.

Answer 53

S delivers the goods to a carrier for transmission to B and does not reserve the right of disposal

Question 54

Right of stoppage in transit

Answer 54

Unpaid seller’s lien is lost, under s 43(1)(a), if S delivers the goods to a carrier for transmission to B but goods are still in transit S can exercise the “right of stoppage” and so regain possession by:

• taking actual possession
• giving notice to the carrier (or other bailee) who is in possession

Note s 47 is again relevant in determining the effect of eg a sub-sale made by B

Question 55

Right of re-sale:

Answer 55

S may resell goods, in which property passed to B
This will not be a tort against B, nor a breach of contract with B, and will be valid to pass good title to the purchaser from S if:
- Goods are of a perishable nature (s 48(3))
- S gives notice to B that s/he intends to sell the goods and B fails to pay within a reasonable time (s 48(3))
- S expressly reserves the right of resale in case B should not pay and B fails to pay, ie. defaults (s 48(4))
There is a “rescission” of the contract in the sense that title revests in S, but S’s contractual right to sue for damages remains

Question 56

S’s action for the price: s49

Answer 56

s 49(1) Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods

1) Payment of price must be due -
2) B wrongfully refuses or neglects to pay
3) S’s action for price arises where property passed to B

Note: the action may arise even if property did not pass to B:

(a) Where price is payable on a day certain irrespective of delivery (s49(2)), or
(b) Under certain circumstances where risk passed to B and B’s duty to pay depends on (as to time or amount) the happening of an event which can no longer occur as a result of an accident to the goods for which B assumed the risk.

Note that fact that S unable to deliver is not an obstacle to the action for price - B liable to pay the price even if S were no longer able to deliver: see Auld LJ in Habton Farms v Nimmo [2004] QB 1 (CA) [123].

Question 57

The difference between the action for the price and damages:

Answer 57

Auld LJ in Habton Farms v Nimmo [2004] QB 1 (CA): [122]: “[the entitlement to the price] is quite different from the remedy of damages for breach of a contractual obligation…All that S has to do is prove that the price is contractually due. He does not have to prove any actual loss, for example, that the subject matter of the contract has a lower market value than the sale price or no market value at all. Similarly, there is no room for questions of remoteness or, generally, of mitigation of damages”.