Topic 6 – Remedies for Breach of a Contract of Sale of Goods Flashcards
1
Q
What are the two types of remedies available to an unpaid seller?
A
Real remedies (against the goods) and personal remedies (against the buyer).
2
Q
What statutory provision defines an ‘unpaid seller’?
A
Section 38, Sale of Goods Act 1979 (SGA 1979).
3
Q
What is the difference between liquidated damages and penalties?
A
Liquidated damages are predetermined amounts estimating actual loss, while penalties punish breach and are unenforceable.
4
Q
Which case shifted the test for penalties from compensating for loss to protecting legitimate interests?
A
Makdessi v Cavendish Square Holdings BV; ParkingEye Ltd v Beavis [2015] UKSC 67. The SC established a new test: a clause is only a penalty if it imposes a detriment disproportionate to any legitimate interest in enforcing the contract. The old test: valid liquidated damages would be a genuine pre-estimate of loss at the time of contract formation, Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79, per Lord Dunedin.
5
Q
What is the burden of proof for challenging a liquidated damages clause?
A
The defendant (the one contesting the clause) must prove the clause is an overestimation of loss.
6
Q
What is a seller’s lien?
A
The right to retain possession of goods until payment is made, s.41 SGA 1979.
7
Q
Under what condition is a seller’s lien lost?
A
If the seller loses possession of the goods (s.43 SGA 1979).
8
Q
What is stoppage in transit?
A
The seller’s right to reclaim goods in transit if the buyer becomes insolvent, s.44 SGA 1979.
9
Q
When does the right to stoppage in transit end?
A
When the buyer takes delivery of the goods, s.45 SGA 1979.
10
Q
Under what provision does the unpaid seller have the right to resale?
A
Section 48, SGA 1979.
11
Q
What is a retention of title (ROT) clause?
A
A contract term allowing the seller to retain ownership until full payment is received.
12
Q
Which statutory provision allows for ROT clauses?
A
Section 19, SGA 1979. Reservation of right of disposal.
13
Q
What happens if goods subject to an ROT clause are transformed?
A
The ROT clause may be ineffective, Re Peachdart Ltd (1984).
14
Q
Can a seller enforce an ROT clause after a buyer enters administration?
A
Not without court permission under the Corporate Insolvency and Governance Act 2020 (CIGA 2020).
15
Q
What is a key case supporting ROT clauses in commercial contracts?
A
Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976].
16
Q
What are the main remedies for a non-consumer buyer?
A
Rejection, damages, and specific performance.
17
Q
Under what provision is specific performance available?
A
S.52 SGA 1979
18
Q
Why was specific performance denied in Cohen v Roche [1927]?
A
The goods (Hepplewhite chairs) were not unique.
19
Q
What case allowed specific performance for a Ferrari gearbox?
A
Gregor Fisken Ltd v Carl [2020].
20
Q
What is the key requirement for rejecting goods under s.35A SGA?
A
The buyer must communicate a clear intention to reject, Lee v York Coach and Marine [1977] RTR 35.
21
Q
What statute governs consumer remedies for sales of goods contracts?
A
The Consumer Rights Act 2015.
22
Q
What is the short-term right to reject under CRA 2015?
A
Consumers can reject faulty goods within 30 days (s.22 CRA 2015).
23
Q
What are the options after the short-term rejection period?
A
Repair or replacement, s.23 CRA 2015; price reduction or final rejection, s.24 CRA.
24
Q
What must the seller do when repairing/replacing faulty goods?
A
Complete the repair within a reasonable time and at no cost, s.23(2).
25
Under what circumstances can a consumer terminate the contract for non-delivery?
If the seller fails to deliver within 30 days (s.28 CRA 2015).
26
What is the measure of damages for non-delivery?
The difference between contract price and market price (s.50 SGA 1979).
27
In which case was the principle that the measure of damages for non-delivery is the difference between the contract price and the market price reaffirmed?
Williams Bros v. Agius Ltd [1914] AC 510
28
What is the primary measure of damages for defective goods?
Difference in value between defective and conforming goods (s.53(3) SGA 1979).
29
What case awarded damages for personal injury due to defective goods?
Godley v Perry [1960]. Loss of eyesight due to defective toy catapult.
30
What is the key principle in Hadley v Baxendale (1854)?
Damages are limited to losses arising naturally from the breach.
31
What provision defines acceptance of goods?
Section 35, SGA 1979.
32
What actions indicate acceptance under s.35?
Using the goods or failing to reject within a reasonable time or doing 'any act in relation to them which is inconsistent with the ownership of the seller'.
33
What case held that rejecting defective goods must be timely?
Clegg v Olle Andersson [2003].
34
Can a buyer reject part of a defective delivery?
Yes, under s.35A, SGA 1979.
35
Does continued use always invalidate rejection?
Not necessarily, as seen in Alan King v Black Horse Ltd (2024).
36
What case supports the rule that wrongful rejection is a fundamental breach?
Fercometal SARL v Mediterranean Shipping Co SA [1989].
37
What case limited seller liability for consequential losses?
Lambert v Lewis [1982]. Buyer continued to use the defective towing coupling.
38
What case ruled on damages where resale was contemplated?
R & H Hall Ltd v WH Pim, Junr, & Co. Ltd (1928); exception to the general rule in Williams Bros v Agius Ltd (1914). Sale of grain Pim to Hall to Williams to Suzuki.
39
What case clarified liability for defective axles in forklifts?
GKN Centrax Gears Ltd v Matbro Ltd [1976].
40
What case introduced the assumption of responsibility test for damages?
Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008].
41
What is an "intermediate term" in contract law?
A term that is neither a condition nor a warranty.
42
Can a seller claim price if risk passes but not property?
Yes, as in PST Energy 7 Shipping LLC v OW Bunker Malta Ltd [2016]. The buyer could use the goods before property passed. The contract stated that risk passed on delivery.
43
What case questioned the enforceability of ROT clauses?
Tatung v Galex Telesure [1989].
44
Can an exclusion clause limit rejection rights in consumer contracts?
No. Any term restricting or excluding a right re liability for satisfactory quality, fit for purpose, or matching their description. is not binding, s.31(2) CRA. These rights include the right to reject under ss.19(3) and 20.
45
What is the impact of the Corporate Insolvency and Governance Act (CIGA) 2020 on ROT clauses?
The clause cannot be enforced without court permission.
46
How does the seller’s right of lien under the SGA 1979 interact with the buyer’s right to reject goods, and what limitations exist on its enforcement?
The seller’s lien (s.41, SGA 1979) allows the seller to retain possession of goods until payment is made. However, this right is limited in several ways:
Loss of possession – If the seller parts with the goods voluntarily, the lien is lost (s.43).
Credit agreements – If the goods are sold on credit and the credit period has not expired, the lien does not arise.
Insolvency carve-outs – If the buyer becomes insolvent before taking delivery, the seller may regain possession through stoppage in transit (s.44).
Conflict with rejection rights – If a buyer has the right to reject defective goods, the seller cannot enforce a lien because ownership may not have passed to the buyer.
In Valpy v Gibson (1847), the court held that once the buyer’s assignee (Brown) had taken possession, the right of stoppage in transit ceased.
If a buyer has already accepted the goods (s.35), the seller’s remedies shift to personal remedies, such as an action for the price (s.49).
Thus, while a lien is a powerful remedy for unpaid sellers, it is weakened when ownership has passed, the buyer rejects the goods, or possession is lost.
47
Under what circumstances will the court grant specific performance in a sale of goods contract, and how has case law shaped this remedy?
Specific performance is a discretionary remedy available under s.52, SGA 1979, primarily for specific or ascertained goods. However, courts are reluctant to grant it unless damages are inadequate.
1. Ordinary goods: Courts deny specific performance where goods are commercially available.
In Cohen v Roche [1927], specific performance was refused for Hepplewhite chairs because they were ordinary goods.
2. Unique goods: Where goods have special value or rarity, specific performance may be granted.
In Gregor Fisken Ltd v Carl [2020], the court compelled delivery of a unique Ferrari gearbox.
3. Unascertained goods: Courts are even more reluctant to order specific performance for unascertained goods.
In Sky Petroleum v VIP Petroleum [1974], an injunction preventing non-supply of petrol was effectively an order for specific performance due to an oil shortage.
4. Risk of insolvency: Courts may grant specific performance if damages would be ineffective due to financial instability.
In Gravelor Shipping Ltd v GTLK Asia M5 Ltd [2023], the court relied on Chitty on Contracts, stating that specific performance prevents the defendant from evading liability by insolvency.
Thus, specific performance is rarely granted for fungible goods but may be ordered where goods are unique or damages are insufficient.
48
How have courts distinguished between valid ROT clauses and security interests, and what impact does the CIGA 2020 have on their enforcement?
Retention of Title (ROT) clauses allow sellers to retain ownership until full payment, as permitted under s.19, SGA 1979. However, courts distinguish between a valid ROT clause and a security interest, which requires registration.
1. Retention of specific goods: If goods are identifiable and unused, the ROT clause is generally valid.
In Clough Mill Ltd v Martin [1984], the ROT clause was upheld because the yarn remained identifiable and unpaid.
2. Loss of identity = loss of ROT: If goods are transformed into a new product, the ROT clause may fail.
In Re Peachdart Ltd [1984], the seller could not claim handbags made from unpaid leather.
3. Proceeds of resale complications: If an ROT clause entitles the seller to sub-sale proceeds, it may be reclassified as a security interest, requiring registration.
In Tatung v Galex Telesure (1989), the court treated the seller’s claim over proceeds as a charge, rendering it unenforceable due to lack of registration.
4. CIGA 2020 restrictions:
Under the Corporate Insolvency and Governance Act 2020, sellers cannot enforce an ROT clause without court permission if the buyer enters a moratorium.
This limits sellers’ ability to reclaim goods during insolvency, making contractual clarity crucial.
ROT clauses remain an essential commercial tool, but their enforceability depends on how they are structured and whether goods retain their identity.
49
What are the limitations on a buyer’s right to reject goods, and how do courts determine whether rejection is valid under the SGA 1979?
A buyer has the right to reject non-conforming goods, but this right is subject to statutory and common law limits:
1. Affirmation & waiver: If the buyer expressly accepts the goods (s.35(1)(a), SGA), the right to reject is lost.
Jones v Gallagher [2004] held that continuing to use goods after requesting repairs can indicate affirmation.
2. Reasonable time requirement: A buyer must reject within a reasonable time (s.35(4), SGA).
In Clegg v Olle Andersson [2003], rejection eight months after delivery was allowed because the buyer acted promptly after obtaining expert advice.
3. Conduct inconsistent with rejection: If the buyer uses or modifies the goods in a way that indicates ownership, rejection is barred.
In Armaghdown Motors v Gray [1963], registering a car in the buyer’s name was inconsistent with rejection.
4. Partial rejection (s.35A, SGA 1979): Buyers can reject part of a delivery, but must do so clearly and promptly.
5. Impact of CRA 2015: Consumers have a 30-day absolute right to reject under s.22 CRA 2015, but after this, rejection rights are restricted to repair/replacement.
Thus, rejection remains a powerful remedy, but must be exercised promptly and clearly.
50
How do damages for non-delivery (s.50, SGA 1979) differ from damages for breach of warranty (s.53, SGA 1979), and how have courts applied these principles?
If the seller fails to deliver, the buyer is entitled to the difference between contract price and market price, s.50(3), SGA; Williams Bros v Agius (1914).
If goods are defective but accepted, the measure is the difference in value, s.53(3), SGA.
Remoteness & the Achilleas Principle:
In Transfield Shipping v Mercator Shipping (The Achilleas) [2008], the court limited liability to foreseeable losses assumed by the breaching party.
While s.50 focuses on market price differentials, s.53 accounts for actual losses, subject to remoteness principles.
51
What are the three principal avenues of redress available to an innocent party in the event of a breach of contract?
The three avenues are: (1) self-help, (2) judicial decision, and (3) arbitration.
52
What are the advantages of self-help remedies under English law?
They offer speed, avoid legal costs, and bypass procedural and substantive obstacles to judicial relief.
53
Name at least five self-help remedies available to an innocent party.
Forfeiting deposits, set-off, liens, stopping goods in transit, rescission, resale, enforcing security, repossessing goods, withholding performance, and contract termination.
54
How do damages differ from specific performance as judicial remedies?
Damages are substitutionary (monetary equivalent of performance), while specific performance is primary and compels literal performance of obligations.
55
What was the traditional stance of common law courts on specific performance?
They did not grant it; remedies were limited to debt, damages, and delivery of possession.
56
How do equitable remedies differ from legal ones in terms of entitlement and discretion?
Legal remedies are given as of right; equitable remedies are discretionary and subject to principles like clean hands and balance of hardship.
57
What is the main difference between a prohibitory and a mandatory injunction?
A prohibitory injunction restrains future breaches; a mandatory injunction compels the reversal of an existing breach.
58
When is a party entitled to sue for a debt rather than claim damages?
When they have fully performed under the contract and the other party is obliged to pay a fixed sum.
59
Under what condition can a party claim the full contract price for partial performance?
Only if performance is substantial or the other party voluntarily accepts the benefit of the partial performance.
60
What are negotiating damages and when might they be awarded?
Negotiating damages are assessed based on what the claimant could hypothetically have charged to release the defendant from obligations. They are awarded mainly in property or IP misuse cases, or when damages substitute for an equitable remedy.
61
What was the significance of A-G v Blake in the context of awarding gains from a breach?
It allowed for the disgorgement of profits (royalties from a book) in an exceptional case involving a former spy, but this remedy is rarely granted and typically applies only in fiduciary or quasi-fiduciary contexts.
62
In which two scenarios did One Step (Support) Ltd v Morris-Garner confirm negotiating damages may be awarded?
(1) Where the defendant wrongfully uses the claimant's property, and (2) where damages are awarded in lieu of an equitable remedy like specific performance or an injunction.
63
What issue does the Panatown case illustrate regarding loss and third-party benefit?
That where a third party suffers the loss but only the original promisee can sue, recovery is problematic unless the promisee is seen as suing on behalf of the third party or can show personal loss.
64
What was the approach of the dissenting Lords in Panatown?
They supported a broader recovery based on the promisee’s own loss from not receiving the expected performance, rather than relying solely on third-party rights.
65
How did Ruxley Electronics Ltd v Forsyth affect the measure of damages where there’s no market loss?
It endorsed awarding damages for loss of amenity rather than cost of reinstatement when the defect was not serious enough to warrant full repair and the economic waste would be disproportionate.
66
What are the two main categories of pecuniary loss in contract law?
(1) Normal loss—direct loss like difference in market and contract price;
(2) Consequential loss—indirect losses like hiring substitutes or lost profits beyond the subject matter of the contract.
67
What is the rule in Hadley v Baxendale concerning remoteness of damage?
The breaching party is liable only for losses that (a) arise naturally or (b) were within the parties' contemplation at the time of contracting.
68
What is the "assumption of responsibility" approach to remoteness and how does it differ from Hadley?
It focuses on whether the defendant objectively accepted liability for the loss, not just whether it was foreseeable. It sets a higher bar than Hadley.
69
What are the two cardinal rules for measuring damages in contract?
1) Damages should reflect the expectation interest;
(2) The innocent party must mitigate their loss by taking reasonable steps to reduce it.
70
When does the duty to mitigate arise, and what does it require?
It arises immediately after breach and requires the claimant to avoid unreasonable losses and take positive steps to limit damage, though failure to mitigate affects only the amount recoverable, not the right to claim.
71
What are liquidated damages, and how do courts treat them under English law?
Liquidated damages are pre-agreed sums payable on breach. Courts will enforce them unless they are found to be penalty clauses—i.e., extravagant or unconscionable compared to the innocent party’s legitimate interest.
72
What did the Supreme Court decide in Cavendish Square Holding BV v Makdessi and ParkingEye v Beavis?
It reaffirmed the penalty rule but narrowed its scope. A clause is penal if it imposes a disproportionate detriment relative to the legitimate interest the innocent party seeks to protect.
73
What two factors determine whether a clause is penal according to the Supreme Court?
(1) Whether the clause is exorbitant or unconscionable, and (2) whether the innocent party had a legitimate interest in performance that justified the stipulated consequence.
74
What is the legal effect of termination for breach of contract?
It discharges both parties from further primary obligations, converting them into rights to claim damages. Termination is prospective, not retroactive—it doesn't erase accrued rights.
75
What are the four grounds that entitle the innocent party to terminate a contract?
(a) Repudiation by the other party,
(b) Breach of a condition,
(c) Breach that frustrates the commercial purpose, or
(d) A contractual termination clause.
76
How does the law distinguish between a condition and a warranty?
A condition is a major term—its breach allows termination; a warranty is a minor term—its breach only gives rise to damages.
77
What are innominate terms, and how do courts treat their breach?
Innominate terms are neither conditions nor warranties. Whether their breach allows termination depends on the seriousness of the consequences, especially if it deprives the innocent party of the contract’s main benefit.
78
How do courts assess whether breach of an innominate term justifies termination?
They use a fact-sensitive, multi-factorial test—whether the breach substantially deprives the innocent party of the benefit of the contract.
79
What is anticipatory breach, and how can the innocent party respond?
It occurs when a party, before performance is due, signals they won’t perform. The innocent party may accept the repudiation and terminate immediately or affirm the contract and wait.
80
Can the innocent party delay their response to anticipatory breach?
Yes, they are not required to make an immediate election. They may delay to allow the other party to reconsider, without being deemed to have affirmed the contract.
81
What risk does the innocent party assume by affirming the contract after an anticipatory breach?
If they affirm, the contract continues for both parties' benefit, meaning the guilty party may later rely on frustration or another supervening event to escape liability.
82
How does the innocent party’s ability to affirm change once the time for performance has arrived?
After the due date, affirmation becomes more restricted—especially if performance now requires the guilty party’s cooperation, which may not be forthcoming.
83
In what scenario can an innocent party continue to perform and claim payment without the other party’s cooperation?
When the innocent party’s entitlement does not depend on the guilty party’s cooperation and performance would not be commercially wasteful or pointless.
84
What does English law say about the innocent party’s ability to insist on performance that is economically wasteful?
It disapproves of such waste; the innocent party cannot insist on continuing if it results in no real benefit to the guilty party.
85
How does the law view a buyer who rejects defective goods but still wants a replacement?
The buyer may reject the initial performance but keep the contract open and ask for cure (repair or replacement) within a reasonable time.
86
What is Lord Ackner’s key statement in The Simona regarding the innocent party’s options after repudiation?
The innocent party must either affirm or terminate; there is no middle ground to keep the contract alive while withholding performance unless explicitly allowed.
87
Is the innocent party obliged to perform immediately after a repudiatory breach?
No, not immediately. The innocent party is allowed time to decide whether to affirm or terminate and is not required to perform in that interim period.
88
Identify four situations where the innocent party may lawfully withhold performance.
1) Contractual right to suspend;
(2) Agreement or waiver by the other party;
(3) Dependency on prior performance;
(4) Obstruction or lack of cooperation by the other party.
89
Can a contract be terminated without breach?
Yes. For instance, on expiry of a fixed term, by mutual agreement, or where a contract of indefinite duration is terminated on reasonable notice.
90
What causes the loss of the right to terminate a contract for breach?
If the innocent party affirms the contract—expressly or impliedly—after knowing of the breach, the right to terminate is lost, and only damages are available.
91
What is the effect of affirmation on a breached condition in a contract?
Once affirmed, the condition is treated as a warranty, meaning the only remedy is damages—not termination.
92
Can a claimant claim full restitution if they have received partial performance?
No. Restitution for failure of consideration is only available where no part of the performance has been received.
93
What’s the purpose of awarding damages for breach of contract?
To place the claimant in the position they would have been in had the contract been properly performed—protecting their expectation interest.
94
When can nominal damages be awarded in contract cases?
When the claimant proves breach but has suffered no measurable loss.
95
What must be proved to recover consequential losses?
That the expenditure or further loss occurred as a direct consequence of the breach, beyond the loss of the subject matter's value.
96
What standard of proof is applied to past events versus future losses?
Past events are judged on the balance of probabilities;
Future events are valued as a lost chance, with discounts for uncertainty.
97
How is “loss of a chance” treated in contract law?
It’s compensable only if the chance is real and significant, not speculative.
98
What principle prevents the recovery of certain losses due to intervening acts?
The rule of remoteness—if an intervening act breaks the causal link or was not foreseeable, the loss is too remote to be recoverable.
99
What is the main policy concern behind limiting damages via the duty to mitigate?
To avoid unreasonable compensation and ensure that claimants take reasonable steps to reduce avoidable loss. But one of the adverse effects of this desirable rule is that it gives every incentive to the defendant to delay the assessment of damages in the hope that the claimant will meanwhile obtain a substitute contract that reduces or extinguishes his loss.
100
Why is the penalty rule seen as a limitation on freedom of contract?
Because it allows courts to override agreed terms if they are disproportionate, even though the parties had voluntarily contracted for them.
101
What does “rejection” mean under the Sale of Goods Act 1979?
It means the buyer refuses to accept goods under the contract. It concerns the goods themselves—not necessarily the termination of the contract. Unlike the Consumer Rights Act 2015, it does not automatically include ending the whole agreement
102
When is a buyer entitled to reject goods?
When (i) The contract expressly allows it;
(ii) Usage or prior dealings imply it;
(iii) There is a breach of condition or fundamental breach by the seller.
103
Does rejecting goods always mean terminating the contract?
No. The right to reject goods does not automatically include the right to terminate the contract. However, if the buyer does terminate, that will include a right to reject the goods.
104
What limitation does s.15A Sale of Goods Act 1979 place on rejection?
If a breach of a term (e.g., those implied by ss.13–15, which are prima facie conditions) is slight and it would be unreasonable to reject, the buyer is limited to claiming damages—the breach is treated as a breach of warranty, not condition.
105
What are the consumer's “short-term” and “final” rights to reject under the Consumer Rights Act 2015?
Short-term: Must be exercised within 30 days; leads to a refund.
Final right: Arises after failed repair or replacement; must be used within six months and may be subject to a deduction for use.
106
Can a buyer choose not to reject despite a breach of condition?
Yes. The buyer may treat the breach as a warranty instead, keep the contract alive, and claim damages.
107
When must a buyer reject goods to preserve the right?
Within a reasonable time, considering both parties’ interests. Rejection may occur before, during, or after delivery but before acceptance.
108
How must the buyer communicate rejection?
By an unequivocal notice. It doesn’t need to be in writing or return the goods—but the goods must be available for the seller to collect.
109
What if the buyer's notice of rejection is unclear or inconsistent with their conduct?
It will be ineffective. If the buyer has already accepted the goods or acts inconsistently (e.g., resells them), they lose the right to reject.
110
What happens if a buyer wrongfully rejects goods?
It may amount to a repudiation. The seller can either accept it and sue for damages, or affirm the contract and hold the buyer to it.
111
Does wrongful rejection of an instalment always repudiate the whole contract?
Not necessarily—it depends on the facts and how serious the breach.
112
Does rejection of goods automatically end the contract?
No. Rejection of goods nullifies the delivery, but does not necessarily discharge the contract unless the buyer elects to terminate.
113
What happens to the goods once they are lawfully rejected?
Property and risk revert to the seller. Rejection restores the seller’s obligations and exposure, including the risk of loss.
114
Can the seller correct a defective tender?
Yes, if time remains. English law recognizes a “right to cure” by making a fresh tender—though this is not fully codified in statute.
115
When does the seller lose the right to cure?
When:
(i) Time to perform has expired;
(ii) The contract doesn't permit partial deliveries and some goods were accepted;
(iii) The seller’s actions amount to repudiation (e.g., repeated or serious defective tenders).
116
What are the three statutory categories of deemed acceptance under s 35(1) and (4) of the Sale of Goods Act 1979?
The buyer intimates acceptance to the seller.
The buyer performs an act inconsistent with the seller’s ownership after delivery.
The buyer retains the goods for a reasonable time without intimating rejection.
117
Does intimation of acceptance always constitute legal acceptance under the Act?
No. Under s 35(2), the buyer must have had a reasonable opportunity to examine the goods before intimation counts as deemed acceptance.
118
Can a buyer reject goods after using them for a period of time?
Possibly, but if the buyer uses the goods after a reasonable opportunity to inspect—or after knowing about the defect—that use may be deemed acceptance under s 35(1)(b) or the common law doctrines of affirmation or estoppel.
119
How does retention of goods lead to deemed acceptance under s 35(4)?
If the buyer retains the goods beyond a reasonable time without notifying rejection, acceptance is deemed. What is “reasonable” depends on the type of goods, inspection difficulty, and buyer-seller communications.
120
Can requesting or agreeing to repairs amount to acceptance?
No. Section 35(6)(a) specifically excludes requests or agreements to repair as constituting acceptance by themselves.
121
Does delivery to a sub-buyer bar rejection of non-conforming goods?
No, not automatically. Section 35(6)(b) clarifies that delivery under a sub-sale or disposition does not itself constitute acceptance, but common law rules (e.g., inability to restore) may still apply.
122
What is the significance of the Consumer Rights Act 2015 in relation to acceptance?
It provides consumer buyers a clear 30-day short-term right to reject faulty goods, overriding the more complex SGA regime for those contracts.
123
Can acceptance be revoked under UK law once deemed under s 35?
Generally, no. Once acceptance is deemed, it is final. Unlike the U.S. UCC, the SGA does not allow revocation of acceptance except in limited consumer contexts under the CRA 2015.
124
Can a buyer reject goods if they cannot return them to the seller?
No. Under both s 35 and common law, inability to restore the goods in appropriate time and condition bars rejection—even if the goods were defective.
125
Is acceptance affected if the buyer was unaware of the breach when affirming the contract?
Yes. Affirmation requires knowledge of the breach. But if the buyer had a reasonable opportunity to inspect, the law equates that with knowledge, which may preclude rejection.
126
What happens if the buyer accepts part of a delivery affected by breach?
Under s 35A(1), the buyer does not lose the right to reject other goods affected by breach, provided they haven’t been accepted. This supports partial rejection.
127
What is the relevance of “reasonable time” in determining acceptance?
“Reasonable time” governs when retention of goods becomes deemed acceptance under s 35(4). Factors include:
Complexity of goods,
Time needed for inspection or repairs,
Seller's conduct after complaint.
128
Can the buyer reject if the goods are short in quantity but the shortfall is minor?
Usually not. Under s 30(2A), rejection for slight shortfall or excess is barred if it would be unreasonable, unless contract/custom tolerates variation.
129
What legal consequences follow acceptance under s 11(4)?
Once the goods are accepted, any breach of condition becomes a breach of warranty—so the buyer can’t reject the goods or terminate the contract unless an express term permits it.
130
How does common law interact with statutory acceptance rules?
Per s 62(2), common law principles (e.g., affirmation, estoppel, inability to restore) continue to apply where not inconsistent with the statute. Thus, a buyer may still be barred from rejecting even outside s 35’s scope.
131
What is the primary complexity in the buyer’s remedies under the Sale of Goods Act 1979?
The multiplicity of remedies and the need for the buyer to sometimes elect between them.
132
What is the effect of rescission in strict legal sense?
It treats the contract as void ab initio and requires restitution of benefits received.
133
Under what circumstances is rescission barred?
When restitution is impossible or impracticable.
134
What is the buyer entitled to do if goods do not conform to contract?
Reject the goods, even if that doesn't amount to rescission or termination.
135
Can the buyer suspend payment if the seller fails to perform?
Yes, irrespective of whether the seller’s obligation is a condition or warranty.
136
What happens when the buyer terminates for breach or repudiation?
The buyer may claim restitution or damages, depending on what has been paid or lost.
137
What is the legal effect of acceptance of goods on buyer's remedies?
Acceptance converts breach of condition to breach of warranty, limiting remedy to damages.
138
When will courts order specific performance of a sales contract?
Where damages are inadequate, such as for unique or specially manufactured goods.
139
What tort remedies are available for non-delivery?
Conversion and damages for detention if buyer had the right to possession.
140
What legal principle allows damages for negligent misrepresentation?
The special relationship test from Hedley Byrne v Heller.
141
What is a collateral contract in sales law?
A separate agreement, often arising from a promissory statement, breach of which gives rise to damages.
142
When is anticipatory breach actionable by the buyer?
When the seller repudiates before the due date; the buyer can accept it and sue immediately.
143
What is the effect of the buyer choosing to wait until after anticipatory breach?
The buyer must still mitigate after the due date or lose damages for unnecessary loss
144
What are the buyer’s remedies for non-delivery?
Termination, damages, or specific performance depending on severity and timing of breach.
145
How are damages measured where goods are not delivered and a market exists?
By the difference between the contract price and market price at due delivery date.
146
What are special damages under Hadley v Baxendale?
Losses arising from special circumstances within the reasonable contemplation of both parties.
147
What is an 'available market' under s.51(3) SGA?
A market with reasonably accessible, fungible goods, governed by supply and demand.
148
Does actual substitute purchase affect damages under s.51(3)?
No, damages are calculated as if buyer bought on due date, regardless of actual conduct.
149
What happens if there is no available market?
Damages are assessed by reference to value lost for the buyer’s intended use.
150
Can a resale contract displace the market-price rule?
Yes, but only if the seller knew or should have known that the same goods were earmarked for resale.
151
What rule applies to damages for delayed delivery in resale situations?
Difference in value between due and actual delivery dates.
152
What damages apply when goods are for use and not resale?
Lost profit and cost of temporary substitutes, not loss in capital value.
153
How does the law prevent double recovery of capital and income loss?
Courts avoid overlap and allow only one head of damages unless logically separated.
154
What was the main issue in Cullinane v British Rema?
Court improperly refused to split buyer’s claim between loss of capital and income.
155
When is repair or replacement under CRA 2015 unavailable?
If repair or replacement is impossible or disproportionate to each other.
156
What is the consumer’s short-term right to reject under CRA?
The right to reject where goods breach ss. 9, 10, 11, 13, 14, or 16 CRA 2015 that must be exercised within 30 days of delivery or possession.
157
What is the final right to reject under CRA 2015?
It applies when one repair or replacement fails, or where it's impossible or delayed.
The consumer may be refunded subject to a deduction for use of goods.
158
What is the role of court discretion under CRA 2015 remedies?
Courts may override the consumer’s chosen remedy if another is deemed more appropriate.
159
Can the buyer sue for breach of warranty after acceptance?
Yes, but only for damages reflecting the difference in value of the goods.
160
When can consequential loss be claimed after acceptance?
If the losss was within reasonable contemplation of the seller and not exacerbated by buyer's conduct.
161
What was at issue in Parsons v Uttley Ingham?
Whether illness in pigs due to mouldy nuts was too remote; Court said no.
162
How did the court define foreseeability in Parsons?
As a serious possibility of injury from a defective hopper—not the precise outcome.
163
Why is the market-price rule controversial?
It ignores actual buyer conduct and assumes instant cover on the due date.
164
What does the U.S. UCC provide for buyer cover?
Damages based on actual reasonable cover, not abstract market price.
165
Can the buyer recover price after defective title?
Yes, as a total failure of consideration—even after using the goods.
166
When is restitution available for defective goods?
If buyer rejects and has paid, they may recover price under restitution principles.
167
How does acceptance affect CRA remedies?
Acceptance limits options to repair, replacement, or price reduction; rejection must be timely.
168
How do courts measure warranty damages under s.53(3) SGA?
By the difference in value between warranted condition and actual state on due date.
169
What test governs recovery of consequential loss?
Hadley v Baxendale: (i) "not unlikely" and not just tort foreseeability, i.e. reasonable contemplation of loss at contract formation, The Heron II (1969); (ii) The second limb now incorporates assumption of responsibility alongside reasonable contemplation, The Achilleas (2008).
170
What must a buyer show to displace the market rule with sub-sale losses?
That the seller knew or should have known the buyer had committed to resell identical goods, since there would be no available market.
171
What is the policy behind the market-price rule?
To ensure certainty and avoid speculative or inflated claims.
172
Can repair or replacement under CRA be refused based on price reduction?
No, disproportionality is only assessed between repair and replacement, not against rejection or price reduction.
173
Can a consumer claim both price reduction and final rejection?
No, only one remedy may be chosen, not both.
174
What role does mitigation play in breach of contract cases?
Buyer must take reasonable steps to reduce loss, though this is limited under s.51(3) SGA.
175
What if buyer delays in covering after anticipatory breach?
Courts may still use due-date price, unless early action was clearly reasonable.
176
What are the default remedies under common law for non-conforming goods?
Rejection, damages, specific performance, and rescission, unless modified by statute.
177
Why was Hall v Pim criticized?
It was misread to suggest seller need only foresee resale—not resale of same goods.
178
How does CRA balance trader obligations with consumer rights?
It allows proportionate and timely remedies but introduces judicial discretion and structured hierarchy.
179
What is the purpose of the CRA’s remedy hierarchy?
To reflect consumer behavior while balancing trader obligations and legal clarity.
180
On what legal basis can a buyer rescind a contract of sale?
A buyer may rescind a contract where the seller has made a misrepresentation—whether fraudulent, negligent, or innocent—entitling the buyer to treat the contract as void from the beginning.
181
What is the principal legal ground for termination of a contract of sale by the buyer?
Termination arises from a breach of contract, such as a breach of condition or an anticipatory repudiation, rather than from a misrepresentation.
182
What is the key remedial difference between rescission and termination in terms of buyer’s options?
Rescission leads to restitution, requiring both parties to return benefits received. Termination allows the buyer to claim damages, particularly for loss of bargain or consequential losses, without being confined to restitution.
183
Does rescission require proof of a contractual breach?
No. Rescission is not dependent on breach but on misrepresentation inducing the contract, whereas termination is based on breach of a contractual obligation.
184
What are the four core duties of the buyer under a contract of sale?
The buyer must: (1) remain ready and willing to perform, (2) take delivery of the goods, (3) accept the goods (i.e., not reject conforming goods), and (4) pay for the goods.
185
Is payment by itself sufficient to discharge the buyer’s duty?
No. Payment does not absolve the buyer of the obligation to take delivery. These duties are cumulative.
186
What distinguishes rescission from termination in a contract for the sale of goods?
Rescission operates retroactively and nullifies the contract from the beginning, while termination is prospective but still divests title in a sale of goods contract.
187
What are “real remedies” of the seller, and what do they assume?
Real remedies (lien, stoppage in transit, resale) are directed at the goods and usually assume the contract is ongoing.
188
What is the legal difference between taking delivery and accepting goods?
Taking delivery waives objections to the manner of tender but does not imply acceptance of the goods’ conformity with the contract.
189
Under what circumstances can a buyer lawfully refuse to take delivery?
A buyer may refuse delivery if the goods are non-conforming, or if delivery is not made at the correct time, place, or in the manner specified in the contract.
190
What is the effect of section 27 of the Sale of Goods Act 1979 on the buyer’s duties?
Section 27 imposes the duty to accept and pay for the goods, although "accept" primarily means not to reject without lawful reason.
191
When must payment be made and in what form?
Payment must be made at the time and place specified in the contract and is presumed to be in legal tender unless otherwise agreed.
192
What does section 28 of the Sale of Goods Act provide regarding delivery and payment?
Delivery and payment are concurrent conditions—each party must be ready and willing to perform in exchange for the other's performance.
193
When can the seller sue for the price under section 49(1)?
(1) When property has passed to the buyer and the buyer refuses or neglects to pay as agreed.
(2) Where the price is payable at a certain time irrespective of delivery even though the property has not passed and the goods have not been appropriated to the contract, and the buyer wrongfully neglects or refuses to pay the price.
194
What is the significance of section 49(2)?
It allows the seller to sue for the price even if property hasn’t passed, as long as the price is due on a day certain and the buyer refuses to pay.
195
What legal debate surrounds the interpretation of section 49?
The Court of Appeal sees it as exhaustive, but the Supreme Court in PST Energy suggests it is not, allowing claims outside s.49 in exceptional cases.
196
What is the rule in Colley v Overseas Exporters?
The seller cannot sue for the price where the buyer’s failure to act (e.g., nominating a ship) prevented the passing of property.
197
What is the legal consequence of a buyer's fraud or misrepresentation?
The seller may rescind the contract ab initio, reclaim the goods, and assert rights even in the buyer’s bankruptcy.
198
What are the seller’s options when faced with anticipatory breach by the buyer?
The seller can either accept the breach and sue for damages or affirm the contract and wait for the due date to enforce performance.
199
What controversial assumption was made in Braithwaite v Foreign Hardwood?
That a buyer who repudiates cannot later rely on the seller’s inability to perform, even if such inability existed at the time.
200
What is the preferred view regarding after-acquired grounds for termination?
A party can rely on facts discovered later that would have justified termination at the time of repudiation.
201
Under section 50, how are damages for non-acceptance calculated where there is a market?
The measure is the difference between the contract price and the market price at the time when the goods ought to have been accepted or at the time of refusal to accept.
202
What happens if there is no available market?
Damages are based on the value of the goods or the actual resale price, and special damages under s.54 may also be claimed. S.54 does not apply to consumer contracts.
203
What is the “lost volume seller” argument?
The seller claims loss of a second sale he could have made in addition to the one lost, particularly where supply exceeds demand. Since buyer did not accept goods, seller used goods to fulfill a sale he would have fulfilled from his stock.
204
Under what conditions can the seller claim lien over goods?
When he is in possession, the goods were sold without credit or the credit has expired, or the buyer is insolvent.
205
When may the seller exercise stoppage in transit?
Only if the buyer becomes insolvent while the goods are in the hands of a carrier or bailee and have not yet been delivered.
206
What rights does resale confer under section 48(2)?
The second buyer gets a good title even if the resale breaches the seller’s duties to the original buyer, regardless of notice or good faith.
207
What is the effect of resale under section 48(4)?
Resale terminates the original contract prospectively, and the seller may still claim damages from the original buyer.
208
How does a retention of title clause work?
It allows the seller to retain ownership until payment, but possession and title do not always align, and recovery depends on additional rights to rescind or repossess.
