Topic 2

Question 1

Philip Head & Sons Ltd. v Showfronts Ltd., (1970) 1 Lloyd’s Rep. 140

Answer 1

Principle: For Rule 1 of Section 18 to apply, the contract must be unconditional. An unconditional contract means that the passing of property is not subject to a condition.

Fact: The plaintiff sold carpet to the defendants which they were required to lay. The carpet was delivered to the defendant’s premises but was stolen before it could be laid and the plaintiffs sued the defendant contending that the property in the carpet had passed to the defendants under section 18 Rule 5(1) of the Act. But the defendants denied liability contending, (1) that the contract was not one for sale of goods or a contract to which the sale of goods applied but one work and labour and supply of materials and that the property had not passed and, (2) that the goods had not been unconditionally appropriated to the contract in a deliverable state.
Held:
The contract was one to which the Sale of Goods Act applies, but that the carpet had not been unconditionally appropriated to the contract since it was not in a deliverable state, apparently because it was a heavy bundle and difficult to move. Therefore, the property in the carpet had not passed to the defendants.

Question 2

Underwood Ltd. v Burgh Castle Brick and Cement Syndicate, (1921) All ER 515

Answer 2

Principle: Rule 1 of Section 18 only applies to sale of specific goods in “deliverable state”. Goods are in a deliverable state when they are in such a state that the buyer is bound to take delivery of them. The goods are not in a deliverable state if the seller has agreed to do something to them before the buyer is to take delivery under the contract.

Fact: The plaintiffs’ sellers agreed to sell a condensing machine to the defendants. The machine weighed 30 tons and was bolted to and embedded in a cement floor. Under the terms of the contract, the plaintiffs were to dismantle the machine, a task which cost them £100 and took about 2 weeks. While the engine was being loaded on a railway truck, it was damaged. The plaintiffs would only be entitled to sue for the price if property had already passed before the time of the damage.
Held:
The machine was not in a deliverable state; consequently, the property had not passed when the contract was made. Atkin, L.J., states that because of the risk and expenses involved in dismantling and moving the engine, the proper inference to be drawn was that property was not to pass until the engine was safely placed on rail in London.

Question 3

Fayose v Alalade

Answer 3

Principle: Rule one of Sec 18 of SOGA

Fact: A, a buyer, contracted B for the purchase of a car to be shipped from abroad. The car was shipped whereby A paid all the custom charges. The car was registered in the name of a third party upon which A brought an action against B for conversion.

Held: Property had passed to A although the purchase price has not been paid, thus, B is liable.

Question 4

Talabi v Mandilas

Answer 4

Similar fact with Fayose supra… In this circumstance, the price of the car that was purchased increased. The court held that the increment is immaterial and in line with Rule 1 of Sec 18 of SOGA, property had passed to the buyer.

Question 5

Nanka Bruce v Commonwealth Trust Ltd, (1926) AC 77

Answer 5

Principle: Rule 3 provides thus; “where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test, or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until the act or thing is done, and the buyer has notice that it has been done.” This rule applies only where the acts are to be done by the SELLER.

Fact: The plaintiff sold cocoa to the defendant at an agreed price per 60- 1b weight, it being arranged that the defendant would resell the goods to a third party, and that the cocoa would then be weighed by the third party, on their receipt, with a view to ascertaining the total amount due to the plaintiff from the defendant. The plaintiff attempted to have his contract with the defendant set aside on the ground that property had not passed to the defendant or, therefore, to the third party until the weighing took place.
Held:
The transaction between the plaintiff and the defendant had been a completed sale. On appeal to the privy Council, the judgement of the lower courts were affirmed, for the Board held that, weighing, (by a third party, and even if it was by the buyer) did not make the contract conditional, and that the property passed to the buyer before this price was ascertained. In other words, the weighing did not make the contract conditional, and the ownership of the goods passed to the buyer before the third party, (sub-buyer) weighed them, even though the exact price to be paid by the buyer could not be ascertained until the weighing was done by the third party.

Question 6

Kirkham v Attenborough

Answer 6

The good, subject matter of the contract of sale was delivered to the buyer on “sale or return”. The buyer pledged the goods. The court held that property had passed as the buyer had done an act which adopted the transaction in line with Rule 4 of Section 18.

Lopez J defined “an act which adopts the transaction” as “an act which is inconsistent with his being other than a purchaser”.

Question 7

Poole v Smith’s car sales

Answer 7

In August 1962 Poole supplied a second-hand car to Smiths on a sale or return basis. However, Smiths never sold the car and despite many requests only returned it, (in poor condition) in October. Held: the property had passed to Smiths under s 18, r 4. Obiter had the property not passed Smiths would have been liable for the deterioration of the car as bailees

Question 8

Re ferrier

Answer 8

Principle: A party will not be liable for failure to deliver a good purchase upon a circumstance beyond his control. Eg, The enforcement of judgement debt or theft, provided there is no negligence.

Fact: The buyer was unable to return the goods due to a seizure by customs officers for weeks. Rule 4 of section 18 is not applicable.

Question 9

Carlos Federspiel and Co. S.A. Charles Twigg and Co. Ltd., (1957) 1 Lloyd’s Rep. 24

Answer 9

Principle: Pearson J said: “For the purpose of passing of property a mere setting apart or selection by the seller of the goods which he expects to use in the performance of the contract is not enough … usually, but not necessarily, the appropriation act is the last act to be performed by the seller.”
Unconditional appropriation means that the seller must have the intention to irrevocably attach the goods to the contract of sale, holding out that those goods and not others are the subject of the sale.

Fact: A Costa Rican company bought from Y, an English company, 85bicycles, which were manufactured to X’s orders, and to be shipped by Y. X paid the price in advance. The bicycles were made and packed in containers with X’s name and address on them, and were registered for shipment in a named ship, but they had not been sent to the port for shipment. Before the goods could be shipped, Y went into liquidation. X claimed the bicycles from the liquidator arguing that there has been an unconditional appropriation and the property therefore passed to him under Rule 5(1).
Held:
From the surrounding circumstances, it was the intention of the parties that no property in the goods should pass until there is shipment; therefore, property had not passed to the buyers. The court was, therefore, saying that although there had been ample acts of preparation by the sellers towards consummating the contract, it was clear that one could not hold that the goods had been unconditionally appropriated to the contract. It is possible that even at the stage the sellers left the goods one could not say that the goods had been irrevocably committed to the contract. Merely marking the goods with the name of the buyer is not conclusive because there is still room for change of offer to another buyer.

Question 10

Healey v Howlett & Sons, (1917) 1 KB 337

Answer 10

Principle: For s. 18 Rule 5(1) to apply, the goods must be unconditionally appropriated to the contract and earmarked for the buyer. For a good to be said to have been unconditionally appropriated, it must have been specifically identified.

Fact: The plaintiff, a fish exporter carrying on business in Ireland, dispatched 190 boxes of mackerel by rail and ship to his customers in England and instructed the railway officials to earmark twenty boxes for the defendant and the remaining boxes to two other consignees. The train was delayed before the defendant’s boxes were earmarked, and by the time this was done, (i.e., when they reached) the fish had deteriorated.
Held:
The defendant was not liable because the property in the fish had not passed to the defendant before the boxes were earmarked and they were therefore still at the seller’s risk when they deteriorated. In other words, as the twenty boxes had not been earmarked before the fish deteriorated, property in them remained with the seller who must bear the loss.

Question 11

Pignatoro v Gilroy & Sons, (1919) 1 B 459

Answer 11

Principle 1: An unconditional appropriation will not pass unless the other party assents. As stated by Rule 5(1), the assent may be implied. Where assent is given only after unconditional appropriation has been made, the property passes not upon appropriation but when the other party’s assent is subsequently given.

Principle 2: In line with the first proviso provision in Sec 20 of SOGA, a party who has defaulted in the execution of the delivery of goods, subject matter of a contract of sale bares the risk of any loss which would not have occured but for the default.

Fact: X sold bags of rice to Y from a specified parcel at a particular place, and informed him that they were ready for collection, i.e., he sent Y a note of appropriation. Y did nothing for a month during which the bags were stolen.
Held:
Y’s assent was implied from his failure to reply for a whole month. In other words, Y had by his silence assented to the appropriation by X. Accordingly, property and risk had passed to him.

Question 12

Aluminium Industrie Vaassen BV v Romalpa Aluminium, [1976] 1 WLR 676

Answer 12

Principle: Retention of title clause is a stipulation in a contract of sale that the right of ownership of the goods shall not pass to the buyer until the buyer has paid the seller in full or has discharged all liabilities owing to the seller. It is also known as a Romalpa clause.

Fact: The plaintiffs (AIV) sold foil to Romalpa on terms that until all debts owed by Romalpa to AIV were met: (i) the property in the foil would not be transferred to Romalpa; and (ii) the foil would be stored in such a way that it was clearly the property of AIV. There was a further (implied) term that Romalpa were entitled to sell the foil to sub-buyers. Before full payment was made Romalpa went into receivership. AIV claimed the foil which they had supplied (worth £50,000) and the proceeds from sub-sales (£35,000) by Romalpa. Romalpa conceded that they held the foil as bailees. Held:
the property in the remaining unsold foil had not passed to Romalpa and so AIV were entitled to recover that foil. On the issue of the proceeds from sub-sales, as Romalpa Held: the foil as bailees they owed AIV a fiduciary duty, and so AIV were entitled to trace the proceeds of the sale of their property. The defendant’s contention that after resale the relationship between the parties was no more than that of debtor and creditor was rejected.

Question 13

Sterns Ltd v Vickers Ltd, (1923) 1 KB 78

Answer 13

Principle: S. 20(1) of the Sale of Goods Act: Unless otherwise agreed, thegoodsremain at the seller’s risk until the property in themistransferred to the buyer, but when the property in themistransferred to the buyer thegoodsare at the buyer’s risk whether delivery has been made or not.

The defendants sold to the plaintiffs 120,000 gallons of spirit, being part of a larger quantity of spirit contained in a tank belonging to a storage company. The defendants obtained a delivery warranty from the third party whereby the spirit sold was made deliverable to the plaintiff’s order and handed it to plaintiffs. However, the plaintiffs left the spirit in the tank for the time being, before they took delivery, the quantity of the spirit in the tank deteriorated. The ownership of the spirit bought had not passed to the plaintiffs because it had not been separated from the larger quantity in the tank and appropriated to the contract. The issue was whether the risk in an unascertained part of a bulk passed to the buyers. Held: The property in the goods had not passed to the buyers because the goods were unascertained and so not appropriated to the contract. However, in the circumstances “ that is:, (i) that the sellers had done all that they could on their part;, (ii) that the buyers had the right to demand delivery at any time; and, (iii) if they had taken delivery earlier they would have got what the sellers had promised them “ the risk had passed to the buyers.

Question 14

Demby Hamilton v Barden, (1949) 1 All ER 435

Answer 14

Principle: If the delivery of the goods has been delayed through the fault of the buyer or seller, the risk of the goods would be borne by the party in fault as regards to any loss which might not have occurred but for such fault.

Fact: Demby Hamilton sold 30 tons of apple juice to be collected by February 1946. By November 1946 much of the apple juice remained uncollected by the buyer, and this had become putrid. Held:
As the delay in the delivery of the goods was through the fault of the buyer, the apple juice was at his risk.

Question 15

Bishopgate Finance Corporation v Transport Broker Ltd., (1940) 1 All ER 37 CA

Answer 15

Principle: A third party who buys goods in good faith and without notice of lack of title on the part of the seller, acquires a valid title to it. Hence, Lord Justice Denning (as he then was) said:
“In the development of our law two principles have striven for
mastery. The first is the protection of property. No one can give a better title than he himself possesses. The second is the protection of commercial transactions. The person who takes in good faith and for value without notice should get a good title. The first principle .has held sway for a long time, but it has been
modified by common law itself and by statute so as to meet the needs of our own times.”

Fact: The hirer of a motor car under a hire-purchase agreement drove it to Maidstone, a place reputed for sale of motor vehicles, and sold it to the defendants who took it bona fide and were unaware of any defect or want of title on the part of the hirer. The plaintiffs sued the defendant for the return of the car.
Held:
A good title passed to the defendants.

Question 16

Eastern Distributers v Goldring, (1957) 2 QB 600

Answer 16

Principle: If the owner acts in such a way or shows that the seller has the authority from him to make the sale, then the owner cannot later turn around and claim that the seller had no authority or consent from him to make the sale. The conduct can arise either by misrepresentation or neglect. If such is the case, title passes to the purchaser.

Fact: Murphy owned a Bedford van. He wanted to raise some money. So Coker, a car dealer, suggested that Murphy sold the van to the plaintiff hire-purchase company and repaid the money raised in instalments. In the event, Murphy signed blank, (HP) proposal forms and a memo of agreement, and they pretended that Coker was selling the van to Murphy. The hire-purchase company bought the van and let it to Murphy, who then sold it to the defendant “ who bought it in good faith. When Murphy defaulted, the hire-purchase company traced the van and sued the defendant for conversion. By the nemo dat rule the plaintiffs had no title to assert because they bought the van from a non-owner, (Coker).
Held:
Murphy was estopped by his conduct from denying the plaintiffs’ title. Therefore when Murphy sold the van “again”, (to the defendant) he did not have title, it being vested in the plaintiff. Consequently, judgment was entered for the plaintiff hire-purchase company.

Question 17

Oppenheimer v Attenborough & Son, (1908) 1 KB 221

Answer 17

Principle: A pledge by a mercantile agent must be in the ordinary course of his business as an agent, i.e. “as if he were carrying out a transaction which he was authorised by his master to carry out” -Lord Alverstone CJ

Fact: A diamond broker was entrusted with diamonds by the plaintiff dealer under the pretence of showing them to customers. The broker pledged them to the defendant pawnbroker instead. The plaintiff claimed that title could not have passed to the pawnbrokers under s 2 of the Factors Act because:, (i) it was a custom of the trade that diamond brokers had no authority to pledge goods; and, (ii) the pawnbroker thought that he was dealing with the owner of the diamonds, not an agent, therefore the pledge was not in the “ordinary course of business” as required by s 2. Held:
on point, (i), authority conferred by s 2 was a general authority and not limited by a trade custom. On point, (ii) Buckley LJ said that “ordinary course of business” meant:” within business hours, at a proper place of business and in other respects in the ordinary way in which a mercantile agent would act” so as not to put the pledgee on notice. Thus, it was irrelevant whether the broker dealt as owner or agent and title could pass to the pawnbroker under s 2.

Question 18

Lee v Bayes

Answer 18

Jervis J held that a market overt signifies “open, public and legally constituted market”.

Question 19

Reid v Metropolitan Police Commissioner, (1973) 2 All ER 97

Answer 19

Principle: for the exception of market over to be established, the sale must have occurred between sunrise and sunset.

Fact: The sale of stolen goods took place in a market overt in the morning when the sun had not risen and it was still only half light.

Held:
The Court of Appeal quashed the decision of the lower court, holding that the buyer had not received a valid title.

Question 20

Pacific Motor Auction Property Ltd. v Motor Credit, (Hire Finance) Ltd., (1965) 2 WLR 881

Answer 20

Principle: The words “continue in possession” in s. 8 of the Factors Act were intended to refer to the community of physical possession regardless of any private transaction between the seller and purchaser which might alter the legal title under which the possession was held”. Accordingly, unless there is an actual transfer of physical possession, the seller is to be treated as continuing in possession, and as able to pass a good title under section.

Fact: The plaintiffs, a hire-purchase finance company, become owner of a number of cars, in the possession of, and displayed for sale by, a firm, (a car dealer) called “Motordom” under a “floor plan agreement” in which the plaintiffs in return advanced a substantial percentage of each car’s value. These cars were, however, retained by Motordom and sold by it in the same way as it sold other cars which it had received in the course of business and which it had not transferred to the plaintiffs. When the vehicles covered by the plan were sold, Motordom accounted to the plaintiffs for the proceeds of the sale. Motordom ran into financial difficulties and when the plaintiffs learnt about this, they revoked Motordom’s authority to sell cars covered by the plan, but Motordom purported to sell some 29 cars for £16,510 to the defendants; this sum represented the amount of money Motordom owed the defendants. The defendants made out a cheque to cover this amount and handed over to Motordom’s manager, who immediately endorsed it in favour of the defendants and handed it back to the defendant’s accountant to cover the debt owed the defendant by Motordom. The High Court of Australia found that the defendants acted in good faith throughout but that they could not rely on Motordom’s ostensible authority as a mercantile agent. Further, the Australian Court held that the equivalent provision in the New South Wales Act to Section 8 of the Factors Act had no application because the character of Motordom’s possession had changed: Motordom had sold as hirer and not as a seller in possession and, therefore, the defendants were not protected. On appeal to the Privy Council, Held:
The defendant obtained good title to the cars under the New South Wales law. The Privy Council held that, the words continues¦.in possession in the section were intended to refer to the community of physical possession regardless of any private transaction between the seller and purchaser which might alter the legal title under which the possession was held”. Accordingly, unless there is an actual transfer of physical possession, the seller is to be treated as continuing in possession, and as able to pass a good title under section. The view previously held would require that the section be read as “continues in possession as seller”, but there was no justification for implying such a qualification.

Question 21

Car & Universal Credit v Caldwell, [1964] 2 WLR 600

Answer 21

Principle: The general rule is that an intention to rescind must be communicated to the other party, within a reasonable time. However, where that party, by absconding, deliberately makes it impossible to communicate an intention to rescind, the law will allow the innocent party to use other methods

Fact: A rogue called Norris purchased Caldwell’s Jaguar car with a cheque which was later dishonoured. As soon as he discovered the fraud Caldwell notified the police and the Automobile Association. Of course he was unable to locate Norris to communicate to him an intention to rescind the contract. At a later time, Norris sold the car to a car dealer called Motobella, and the car eventually came into the hands of the C & U Ltd. Caldwell claimed title to the car. Held:
A contract induced by fraud brings the rogue only a voidable title; if the contract is rescinded before the rogue resells the goods the title will re-vest in the original owner. The general rule is that an intention to rescind must be communicated to the other party, (in this case Norris) within a reasonable time. However, where that party, by absconding, deliberately makes it impossible to communicate an intention to rescind, the law will allow the innocent party to use other methods. In the circumstances of this case, Caldwell’s notice of the fraud to the police and AA effectively rescinded the contract and Norris therefore had no title to pass to Motobella; Caldwell could recover his car..

Question 22

Mbanugo & Others v UAC of Nigeria Ltd., (1961) LLR 162

Answer 22

A bailiff in execution of writ of fieri-facias seized and sold by public auction a Bedford Tipper Lorry in possession of a judgement debtor. The sale was advertised but no one came forward to claim the lorry before it was sold to the plaintiffs who now sued the defendants on the latter seizing the lorry, because they let it on hire-purchase to the judgement debtor.
Held:
Lambo, J. held that, under Section 16 of the Sheriff and Civil Process Act, the purchasers had secured a clear title in respect of the lorry as against the former owner.

Question 23

Cahn v Pocketts Bristol Channel Steam Packets Co. Ltd., (1899) 1 QB 643

Answer 23

X, a seller of copper transmitted a bill of exchange for the price together with the bill of lading to the buyer, Y, for Y to accept. Y did not signify his acceptance of the bill of exchange but indorsed the bill of lading to the plaintiffs in accordance with a contract for resale of the copper already made. The plaintiffs took the bill of lading in good faith and for value. The seller purported to stop the goods in transitu. The plaintiff brought this action against the carriers for failing to deliver the goods on production of the bill of lading.
Held:
The plaintiff was entitled to succeed. By reason of Section 19(3), the property had not passed to Y, because he had not satisfied the conditions about acceptance buy Y was treated as someone who had “agreed to buy” the goods, and since the plaintiffs had taken the transfer of the bill of lading in good faith and without knowledge of the original seller’s right, they obtained a good title to the copper under Section 9 of the Factors of Act, (and Section 25(2) of the Sale of Goods Acts). The court also held that, buy virtue of the proviso to Section 47, the original owner’s right of stoppage in transit which arose because the buyer was insolvent and the goods were still in the course of transit, was defeated. In other words, whereas Section 19(3) gave protection did not extend to the right of a subsequent purchaser from the buyer who obtained the bill of lading in good faith and for value. In such a situation, the sub-buyer for value and without notice is completely protected under Section 25(2) or Section 47.