SECTIONS 17/18/19 - When Property Passes Flashcards
When does risk pass?
With property, even if delivery hasn’t been made to buyer
Which section denotes that risk passes with property?
s 20(1) UNLESS OTHERWISE AGREED
What happens if delivery of goods is delayed due to fault of one party?
That party bears the risk, provided loss would not have occured except due to their fault
Which section states that party at fault retains risk
s 20 (2)
What is the paramount principle of s17?
That property passes when the parties intend
Which part of s17 states property passes when parties intend?
s17 (1)
What is s17 (2)
Guidance on what courts will take into consideration as intention
Which case states courts will take into account implied as well as express intention?
RE ANCHOR LINE 1937
RE ANCHOR LINE 1937
(Crane); stipulation that the buyer was to have “entire charge of and responsibility” for a crane was taken to indicate that the buyer, who took possession of the goods, did so as a bailee and that property in the goods was still vested in the seller
What is the principle of s18?
No property is transferred to the buyer unless the goods are ascertained; prevails over the stated intention of the parties
What is s18?
The statutory presumptions of s17
How many rules are there in s18
5, but rule 5 is a selection of subrules
RULE 1 s18
Sale of specific goods, unconditional contracts
What does rule 1 mean?
Property will pass at the time of contract, even if delivery is delayed
What does unconditional mean in rule 1
the preferred view that a contract is unconditional where there is nothing that prevents property from passing
WHy has the idea of unconditional in rule 1 been the subject of debate?
Stoljar S.J. ‘Contractual Concept of Condition’ (1953)
note that contracts with a Retention of title/Romalpa clause are conditional contracts in that the passing of property is conditional on payment of the purchase price
What did Stoljar write in 1953, stating contracts with a Rompula clause are not unconditional, but depend on payment of purchase price?
Contractual Concept of Condition 1953
Cases for Rule 1
Kursell v Timber Operators
Joseph Reid pty ltd v Schultz
CASE FACTS
Kursell v Timber Operators
Timber, property not passed to the buyer pursuant to rule 1 as the timber was not specific goods. goods were identified after the contract was made
‘TIMBER’ not specific enough
CASE FACTS
Joseph Reid ltd v Schultz
contract for all the malleable timber on a plot of land. the timber was already cut and awaited collection; held to be specific goods as there was no identifying to be done after the contract was made
Difference between Joseph Reid ltd v Schultz and Kursell v Timber Operators
The specific nature, timber in Kursell was not a specific good, too general, whereas in Joseph Reid the exact timber was identified
Rule 2
sale of specific goods to be put into a deliverable state
Under rule 2 what has to happen?
Goods must be in a deliverable state and notice given to the buyer of this
Cases for Rule 2
Underwood v Burgh Castle
Philip Head v Show Fronts Ltd
Henry F Moss Ltd v Bohm
CASE FACTS
Underwood v Burgh Castle
property couldn’t pass at the time the contract was made as it was in an undeliverable state
CASE FACTS
Phillip Head v Show Fronts Ltd
Carpet case; property hadn’t passed contract was for the carpet to be delivered and laid not just for the carpet to be delivered
CASE FACTS
Henry F Moss Ltd v Bohm
Same as Underwood, but seller failed to notify buyer of goods being detached - cannot place risk in goods without notifying buyer
RULE 3
Property does not pass until seller has fulfilled their obligations and the buyer is given notice of this
What are the usual obligations under Rule3
Weigh, measure, test etc.Non exhaustive list
Case for Rule 3
Nanka Bruce v Commonwealth Trust
CASE FACTS
Nanka Bruce v Commonwealth Trust
Cocoa: ownership hadn’t passed as the buyer didn’t fulfil their side of deal, didn’t weigh the cocoa
Applies even if only for the purpose of ascertaining the price
RULE 4
Goods delivered to buyer on approval or sale and return or other similar terms
Under Rule 3, what happens if it is the buyer who is obliged to carry out the weighing etc?
If the goods are destroyed before they can be weighed then there will be an ESTIMATED price fixed, as the risk did lie with the buyer
What is meant by sale and return in Rule 4
The sale or return contract is not in itself a sale. this is an options to whether you will purchase or not. you have agreed possession of the property for the agreed period. terms are set out in the agreement however, the default clause is that the property therein passes to the buyer. The risk prima facie remains with the owner during the period of bailment as per McGREGOR v HAWTHORNE
Cases for Rule 4
Kirkham v Attenborough
Weiner v Gill
Genn v Winkel
CASE FACTS
Kirkham v Attenborough
Selling goods on would be an act adopting the transaction
CASE FACTS
Weiner v Gill
Buyers agreed that property wasn’t passed until payment was made. So the seller could get the goods back again.
CASE FACTS
Genn v Winkel
Buyer deemed to have adopted the transaction when he couldn’t return the goods.
However handing the goods to other people doesn’t necessarily mean that one is adopting the transaction
Which case in Rule 4 is for issues in relation to notice concerning failure to identify quantity and identity of rejected goods
Atari Corp (UK) Ltd v Electronic boutique stores
CASE FACTS Atari Corp (UK) Ltd v Electronic boutique stores
Notice was enough, it didn’t require the goods to be returned, because as soon as notice was given there was an immediate effect
Property did not pass
What do the sub-rules in Rule 5 deal with?
Unascertained goods
What is meant by unascertained goods?
Goods that are not specifically identified at the time of sale
Rule 5 can only apply if there is what?
Unconditional appropriation -> when unascertained goods become ascertained by attaching them to the contract
What is meant by unconditional appropriation?
This is some act which identifies the goods as the contract goods and irrevocably commits the parties to those goods thus depriving that party of the right to change his mind and substitute other goods of the contract description.
What can be said to be an act that commits the parties to those goods?
Placing them in the care of a third party carrier
Anything where the seller no longer has control of the goods -> being packaged/labelled internally DOESN’T COUNT as they still have control (sub rule 2)
Rule 5 (1)
When the goods described, being in a deliverable state are unconditionally appropriated to the contract then property passes to the buyer (normally by assent)
Rule 5 (2)
Deliverance of goods to the carrier constitutes to unconditional appropriation. seller has fulfilled his/her part.
Case on importance of unconditional appropriation
Healey v Howlett & Sons ltd
CASE FACTS
Healey v Howlett & Sons Ltd
Railway company screwed up delivery; however, seller bore the risk as we have to bear in mind that property cannot pass in unascertained goods.
The goods were unascertained because they had not been separated from the other goods on the train -> were not identified as the specific contract goods, was not UNCONDITIONAL
Rule 5(3) and (4)
exhaustion / shrinkage’ in respect of unascertained goods in a deliverable state which form part of a bulk
When do 5(3),(4) apply?
ONLY applies when there is only one buyer left of the bulk and all that remains is what he has contracted to buy or what remains is less than he has contracted to buy
What happens to the exhausted bulk?
It is automatically appropriated as goods of the contract, and property passes to the buyer
Cases for exhaustion Rule 5(3/4)
The Elafi
Re Wait 1926
Re Stapylton Fletcher Ltd
CASE FACTS
The Elafi
Process of removal by the other owners, meant that the remaining goods were ascertained automatically. ascertained by exhaustion
CASE FACTS
Re Wait 1926
wheat bulk- two orders. If there wasn’t enough they would have to share remaining bulk according to their respective ratios.
CASE FACTS
Re Stapylton Fletcher Ltd
Owners become owners in common of the resulting bulk. Goods were ascertained when segregated from the rest and placed in the warehouse.
What does s19 state?
When the presumptions raised under s18 do not apply
When doe s s19 apply?
Applies to specific goods and goods which have been subsequently appropriated to a contract where the seller has RESERVED A RIGHT OF DISPOSAL of the goods until certain conditions are fulfilled
Under s19, when does property pass?
ONly once the conditions have been met
