The Buyer's Duties and the Seller's Remedies Flashcards
What are the two categories that the buyer’s duties fall under?
The buyers duties fall into two broad categories:
1) To accept the goods
2) To pay for the goods
What is the buyer’s duty to accept the goods?
⁃ Section 27: the corollary of the seller’s duty to deliver is the buyer’s duty to accept the goods and pay for them
⁃ Section 35 governs what amounts to “acceptance” of the goods by the buyer. “Acceptance” occurs when the buyer:
⁃ 35(1)(a) intimates to the seller that he has accepted them, or
⁃ (b) when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller.
⁃ (4) The buyer is also deemed to have accepted the goods when after the lapse of a reasonable time he retains them without intimating to the seller that he has rejected them.
⁃ However by virtue of section 35(2) when goods are delivered to a buyer who has not previously examined them the buyer is not deemed to have accepted the goods until he has had a reasonable period for examining them to ascertain that they are in conformity with the contract or, if it is a contract for sale by sample, in accordance with the sample. See also the consumer protection in section 35(3), which provides that the buyer cannot lose this right to inspect the goods “by agreement, waiver or otherwise.”[ So if you are a consumer, it doesn’t matter if you expressly waive your right to inspect the goods, this wouldn’t be given any effect due to s 35(3).
There is still a practice of sellers having buyers sign delivery notes when they take possession of the goods (e.g. by physical delivery by a courier). These delivery goods would provide in there terms that the goods were accepted as being in good condition. In a consumer contract regardless of what the buyer signs, they still have this right to inspect the goods and will not be deemed by signing a delivery note to have accepted the goods until such time as they have inspected the goods.]
⁃ Section 35(6): the buyer is not deemed to have accepted the goods merely because he asks for or agrees to their repair by or under an arrangement with the seller.
J&H Ritchie v Lloyd [2007]
the buyers bought farming equipment from the sellers. They used the equipment and the next day noticed vibrations, implying the goods may have been faulty. The buyers got in touch with the seller’s and the equipment was taken to the seller’s premises in order to inspect it and if repair was possible it would be carried out. No express agreement was made at this stage as to what the consequences would be once the defect had been identified. The seller’s discovered that significant parts of the equipment were missing. The seller’s repaired the equipment and told the buyer’s it had been repaired. The buyer asked what the problem was and the seller refused to tell them. The buyer was then told informally by someone who was involved in repairing the equipment that significant parts had been missing and the buyer was concerned that because he had used the equipment without these parts there may have been some other damage to the equipment. The buyer wasn’t going to be using the equipment until the following spring so it wouldn’t be until that period of time had elapsed that he’d know whether there was a problem or whether it had been rectified by repairs. On the basis that he’d asked what the problem was and hadn’t been formally told, and his concerns that there may be further issues, he rejected the equipment. The buyer’s told the sellers that they were rejecting the equipment because the seller’s had refused to provide information regarding the nature of the defect. The court considered s 35(6) - the buyer’s aren’t deemed to have accepted the goods if they allow a repair to take place, but what happens to the right of rejection? The court said that it was important to consider that at the time the goods were taken back for repair the seller’s were in breach of contract and at that time the buyer retained the right to reject the goods. So taking these factors into account the court held that a term had to be implied into the agreement by which the buyers sent the goods back for repair that the seller’s were under an obligation to provide the buyer’s with the information that they had asked for. Since the seller’s had refused to do so they had deprived the buyer’s of the information that they needed in order to make a properly informed choice about whether to keep or reject the goods, as such the buyers were entitled to reject the equipment.
The buyer is obliged to take delivery of the goods within a reasonable time although failure to do so will not usually justify rescission unless the failure of refusal amounts to a repudiation of the contract. Where goods are perishable it is assumed that time is of the essence.
What is the buyer’s duty to pay for the goods?
S 28 confirms that payment and delivery are concurrent obligations (unless otherwise agreed). So when the goods are delivered (either physically delivered or available for collection) payment is due to take place unless the contract provides otherwise.
S 10 - time isn’t of the essence as regards time of payment “unless a different intention appears from the terms of the contract”.
What are the seller’s remedies for breach by the buyer?
⁃ 1) Those which enable the seller, if he wishes, to disengage from the transaction
⁃ Section 50 allows the seller to claim damages for wrongful non-acceptance. The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events from the buyer’s breach. Where there is an available market in the goods the measure of damages is prima facie the difference between the contract price and the market price at the time the goods ought to have been accepted.
⁃ Section 37: if the buyer does not take delivery of the goods within a reasonable time after being requested by the seller to take delivery he is liable to the seller for any loss occasioned by his refusal to take delivery and also for a reasonable charge for the care and custody of the goods.
⁃ 2) Those which assume continuance of the contract.
⁃ If the goods are delivered and the buyer doesn’t pay the seller can raise an action for the price under s 49. (This remedy is also available when payment is due to be made on a certain date, irrespective of whether delivery has taken place or property in the goods has passed.)
Section 49: entitles the seller to raise an action for the price
What are the additional remedies of the seller when he has not been paid by the buyer?
The unpaid seller has additional remedies which can be taken against the goods themselves:
1) Lien (s 41)
⁃ If property in the goods has passed to the buyer but the seller remains in possession of the goods he is entitled to be in possession of the goods until they buyer has paid.
⁃ NB the right of lien can be lost (s 43): look this up.
2) Stoppage in transit when the buyer is insolvent (s 44)
⁃ If the buyer becomes insolvent, even if the seller has parted with possession of the goods, he is able to stop them in transit and resume possession of them and retain it until he is paid.
3) Right of resale and right of withholding delivery (s 48)
⁃ This right is available where the goods are perishable or where the buyer gives notice to the buyer that he intends to resell and the buyer doesn’t pay for them within a reasonable period, then the seller is entitled to resell the goods.
