Commercial Flashcards
(37 cards)
Kursell v. Timber Operators & Contractors
Contract between parties was for sale of all merchantable timber growing on a certain date in Latvia. ‘Merchantable timber’ was defined as ‘all trunks & branches of trees, but not seedlings & young trees of less than 6 inches in diameter at a height of 4 feet from the ground’ buyers were to have 15 yrs to cut timber. Later, Latvian government passed law nationalising forest sellers argued that property in timber had passed on to buyers and that consequences of nationalisation decree fell on buyers
o CoA held: timber which was the subject of contract of sale was not ‘specific goods,’ since the trees answering the contract measurements could not be IDed until the time came to cut them, which could be at any time w/in 15 year period –> timber was still property of sellers and contract was frustrated
Helby v. Matthews
Helby v. Matthews established that the owner of goods which are let out under a hire-purchase agreement cannot lose his title under s.9 of Factors Act 1889 (or equivalent = s.25(1) of SGA 1979)
o H contracted to hire a piano to Brewster for 3 years at a rental of 52p a month. Contract included following provisions:
o 1) Owner agrees that hirer may terminate hiring by delivering instrument to owner
o 2) If hirer shall punctually pay the full sum at date of signing, and by 36 monthly instalments of 10s 6d in advance, the instrument will become the property of hirer
o 3) Unless the full sum is paid, the piano continues to be sole property of owner
o W/o authority from H, Brewster pledged the piano to Matthews (pawnbroker) as security for a loan –> although B was not owner of piano, pledge would have been effective under the Factors Act 1889 if the contract had been one of conditional side
o HoL held: was not conditional sale; H entitled to claim piano from pawnbroker –> terms of contract did not bind B to buy, but left him free to do so or not
CF Forthright Finance v. Carlyle Finance
Forthright Finance v. Carlyle Finance
Forthright delivered a car to Carlyle under a contract, described as hire-purchase, on terms that C would pay 36 monthly instalments and that it would then be deemed to have exercised an option to purchase the car unless it elected not to take title
o Since C was contractually bound to pay all 36 instalments + was virtually inconceivable that C would elect not to receive title, CoA held: transaction was a conditional sale agreement
CF Helby v. Matthews
Robinson v. Graves
In early cases, what differentiated sales of goods, from contract for work and materials seemed to be the relative importance of the 2 elements – labour or materials
In Robinson v. Graves, q was determined by the ‘substance’ of transaction
o Person went to artist to have portrait painted –> CoA had to decide whether this was contract for sale of goods or contract for work & materials held: painting of portrait is usually held to be an undertaking by artist to exercise such skill as he is possessed of in order to produce for reward a thing which ultimately has to be accepted by the client
The Aliakmon
Leigh & Sillavan (plaintiffs) agreed to buy steel coils from Kinsho-Mataishi Corpn, to be shipped from Korea to UK. Contract’s terms said: at relevant time, goods were at buyer’s risk, but property did not pass to them yet until payment of price; steel was damaged whilst stowed on the defendant’s (Aliakmon Shipping) vessel, due to neg. for which D were responsible
o HoL held: since goods were not buyer’s property at time when damage was caused, their only claim was for economic loss, in respect of which D owed them no DoC
o NB: Carriage of Goods by Sea Act 1992 would now give buyers the right to sue carriers in contract on facts of Aliakmon, but it remains an authoritative ruling in tort
Heads v. Tattersall
May be seen as illustration of concept of risk
o H bought from T, an auctioneer, a horse described in catalogue as having been hunted w/ Bicester and Duke of Grafton’s hounds; info was incorrect. Sale contract contained condition that ‘horses not answering the description must be returned before 5 pm on Wednesday evening next; otherwise, purchaser shall be obliged to keep the lot w/ all faults’
o H took horse away and during the time that it was in his custody, it was accidentally injured when it took fright and ran; he returned horse in its damaged state before 5 pm, on grounds it had not corresponded w/ its description
o Ct of Exchequer held: he was entitled to do so, could have his money back; as a time for returning the horse was fixed by contract, an accident occurring w/in the time from a cause beyond P’s control ought not to deprive him of his right, provided he can return the horse in some shape or other
Demby Hamilton & Co v. Barden
Example of s.20(2), SGA 1979.
In Nov 1945, Barden, wine merchant, agreed to buy from DH 30 tons of apple juice, to be collected at the rate of one truckload per week by 3rd parties to whom the juice had been sub-sold; sellers crushed apples sufficient to fulfil this contract and put juice into barrels; if juice had been collected punctually, delivered would have finished in Feb 1946, but only 2 truckloads were collected after December 1945, and eventually on November 1946, sellers informed buyer that remaining juice had become putrid and had been thrown away
• Held: loss lay on buyer, b/c delay in taking delivery was his fault
Wiehe v. Dennis Bros
Example of s.20(3), SGA 1979.
W contracted to buy a Shetland pony called ‘Tiny’ from DB, intended to be presented w/ a car and harness to Princess of the Netherlands. While pony was in sellers’ custody, charitable ball was held, in the course of which an unauthorised person took pony out of its stall & the pony was mishandled and injured
• Sellers were held liable on basis that they had failed to show that they had taken proper care of the horse as bailees pending delivery
Sterns v. Vickers
Basic law that property cannot pass in unascertained goods = s.16
o BUT parties may place risk of loss on buyer EVEN BEFORE contract goods have been identified as such
Admiralty sold to V 200,000 gallons of white spirit which was stored by the London and Thames Haven Oil Wharves Co. 2 weeks later, V contracted to sell 120,000 gallons of this to Sterns. S resold spirit which they had bought, to Lazarus.V obtained from storage company a warrant acknowledging that 120,000 gallons of spirit were being held on S’ behalf; warrant was indorsed by S to L. L made his own arrangements w/ storage company for further storage and paid them rent later, when L took spirit, he found it had been mixed w/ other spirit
CoA held: even though property in the spirit had not passed to buyers, they had assumed the risk of loss/damage in respect of their share of the bulk spirit from the time when they accepted the storage company’s warrant
o JULIA case: Lord Norman said best view of Sterns v. Vickers is that buyer had immediate practical interest in the goods (title had passed already)
o BUT there is now the s.20A amendment
Re Wait
W contracted to buy from Balfour, Williamson & Co 1000 tons of wheat which was to arrive at Avonmouth from the US on the Challenger; following day, he agreed to sell 500 tons of this wheat to Humphries & Bobbett, who paid him price in advance; few days before Challenger arrived, Wait went bankrupt; by time this action was brought, some of wheat had been disposed to other buyers, but 530 tons remained which was still in law the property of Wait + in his possession; nothing had been done to ID the 500 tons which was to be used to fulfil H&B’s contract
o CoA held: H&B had no claim to any of wheat, but could only prove in Wait’s bankruptcy for return of the price
o Atkins J rejected argument that buyers might be able to assert a claim of proprietary nature to their share of the wheat based on principles of equity independently of Act. A seller/purchaser may create any equity he wants, BUT the mere sale/agreement to sell, or acts in pursuance of such a contract mentioned in the Code will only produce the legal effects which the Code states
Re London Wine Co (Shippers) Ltd
Company had executed debenture giving floating charge to its bank secured over all assets; the bank, acting under a power conferred by the charge instrument, had appointed a receiver. Certain customers of the company claimed they had bought wine which was in the possession of the company and that it was their property, either at law or in equity. Bank contended that, since no wine had been appropriated to answer any of the contracts in q, all wine remained property of company and was subject to the charge
o Company had acquired stocks of wine which were held in various warehouses, some of it in bond, some duty paid. These customers had each contracted to buy wine of a particular description from the company, and after paying price, had received a ‘Certificate of Title’ which described buyer as ‘sole and beneficial owner’ of the wine in q. Company charged buyer for storage & insurance until he chose to take delivery of wine/sold to someone else.
o BUT there was no procedure of IDing or segregating wine sold to customer. Ct considered 3 typical cases:
(1) Those where customer had bought company’s total stock of a particular wine at date of purchase
(2) Those where two or more customers had bought quantities of a particular wine which, taken together, exhausted whole of company’s stock of that wine
(3) Those where purchase did not exhaust particular stock, but there had been acknowledgement that appropriate quantity of particular wine was being held to customer’s order
o Chancery Division held: in none of these instances had the property, or any other legal/equitable interest of a proprietary nature, passed to buyer; bank’s security interest therefore prevailed, and buyers were simply unsecured creditors for the return of money which they had paid
Wait & James v. Midland Bank
Sometimes, ascertainment may take place w/o the act of either party, ‘by exhaustion’; decided in CL and confirmed by statute = s.18, r5(3)
W&J owned a consignment of wheat which had arrived on a boat and was placed in a warehouse of the Bristol Dock Authority; they had entered into contracts to sell various quantities of this wheat to a no. of buyers, including contracts respectively for 250, 750 and 250 quarters to Redlers. R had taken away 400 quarters out of total 1250 quarters due to them, and had pledged the remaining 850 quarters to the Midland Bank; all other buyers then took delivery of their wheat, so that 850 quarters remained in warehouse; both W&J, who had not been paid, and the Bank, claimed to be entitled to this wheat
o Ct held: wheat to satisfy R’s contract had been ascertained by exhaustion, and that the bank’s claim prevailed
Re Blyth Shipbuilding & Dry Docks Co
S.17(2): : for the purpose of ascertaining the intention of the parties, regard is to be had to the terms of the contract, the conduct of the parties and the circumstances of the case
- Parties are free to express an intention which is the opposite of that which would normally be inferred, and the court will give effect to such an intention
Here, parties to a contract to build and deliver a ship, which was to be paid for by instalments, had agreed that on payment of the first instalment of the price, property in the vessel should pass to the buyers
o Buyers thus became owners of the uncompleted vessel, even though in ordinary case, no property would pass until ship was finished
However, parties’ expressed intention sometimes has to be overridden b/c of reasons of practicality or by weightier rules of law.
o In Re Blyth Shipbuilding, court declined to give effect to a further provision in the contract that ‘all materials appropriated’ for building the vessel should also become the property of the buyers: this would have made them owners of all the unworked material that did not end up built into the ship – a result which parties could not have intended
Re Anchor Line (Henderson Bros):
S.17 allows court to give effect to the implied, as well as express, intention of parties
Where there was a contract to sell a crane for a deferred purchase price, court inferred intention that property in crane should remain w/ seller, from fact that there was an express clause placing the risk on the buyer
o Ct reasoned that since this clause would have been unnecessary if the property had passed when contract was made, parties must have intended the opposite
Tarling v. Baxter
Where there is an unconditional contract for the sale of specific goods which are in a deliverable state, r.1 of s.18 states the property in the goods passes to the buyer when the contract is made; it is immaterial whether the time of payment/time of delivery are postponed
On 4 January, the parties agreed on the sale & purchase of a stack of hay, standing on land belonging to the seller’s brother. Payment was to be made in a month’s time, and no hay was to be cut/taken away until price had been paid; but before price was due, hay was destroyed in a fire
Underwood v. Burgh Castle Brick & Cement Syndicate
o Deliverable state: s.61(5) provides that goods are in a deliverable state when they are in such a state that the buyer would under the contract be bound to take delivery of them
Underwood agreed to sell to Syndicate a large engine which was a trade fixture on their leasehold premises as part of contract, sellers were to detach engine from land & load on railway truck. Engine damaged during loading process; buyers refused to accept it they were held entitled to do so since the engine was still the seller’s property at the time when it was damaged
o Ct discussed nature of fixtures: Rowlatt J said the fixture was not personal property but was part of a freehold; however, fixtures can be converted into personal property after sellers detach it and dismantle it from the realty
o There still remained something to be done to engine before it could have been sold to buyer; therefore was still seller’s property
Philip Head & Sons v. Showfronts
o Deliverable state: s.61(5) provides that goods are in a deliverable state when they are in such a state that the buyer would under the contract be bound to take delivery of them
Showfronts contracted w/ Heads to supply & lay fitted carpeting for no. of rooms in office block carpet for largest room had to be made from several lengths stitched together; was very unwieldy and took up to 6 men to lift it. After being assembled, it was left on the premises and was later stolen
• Ct held: it was not in a ‘deliverable state’ until it had been satisfactorily laid, and so it was the sellers’ property and at their risk when it was stolen -> look at physical state of the carpeting
Turley v. Bates
- 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/thing to the goods for the purpose of ascertaining the price, r3, s.18 lays down a presumption that the property in the goods will not pass until the act/thing has been done, and the buyer has notice it has been done
T contracted to sell Bates a heap of fireclay lying on T’s land at the price of 2s (10p) per ton, to be carted away by Bates and weighed at his own expense. B had taken away about 270 tons of clay and paid for it. Action was brought for the price of the remaining clay. B argued that property in heap had not passed to him, so that he was liable for damages only
o Ct held: property had passed and B was liable for the price, b/c the bargain was for the WHOLE heap
Nanka-Bruce v. Commonwealth Trust
- The following case underlines the fact that the presumption laid down by r3, s.18 applies only in the case where the act is to be performed by the seller
Nanka-Bruce (planter & shipper of cocoa) entered into arrangement w/ Laing, under which L was to receive cocoa from NB at price of 59 s per load of 60 lbs. L would resell cocoa to other merchants, and when other merchants took delivery by a transfer of the consignment notes, the goods would be weighed at their premises. After, amount payable to L made w/ appellant would be ascertained.
o 160 bags of cocoa were dispatched by NB under a consignment note made in favour of L -> L then sold goods to respondents and handed them the consignment note -> respondents took delivery and, against a large debt due to them from L, credited him w/ the price at which they purchased the goods -> L’s conduct was definitely dishonest, but conduct of respondents was quite honest
o Lower courts found that L had purchased the cocoa from appellant, but NB attacked this finding, alleging that the weighing up of the goods must be treated as having been a condition precedent to an operative sale
PC held: the provision as to the weight of the goods being tested was not a condition precedent to a sale; the testing was merely to see whether the goods fitted the weights as represented, but this testing was not suspensive of the contract of sale or a condition precedent to it
Castle v. Playford
If the buyer is to do the weighing & goods are destroyed before weighing has been done, how is the price to be reckoned? The following case – which turned on the fact that RISK, not property, had passed to the buyer – gives a clue
C agreed to sell to P a cargo of ice, to be shipped to the UK and paid for on arrival at the rate of £1 per ton ‘weighed on board during delivery’ under the contract, the risk lay w/ the buyer ship & cargo were lost at sea.
Ct ruled: buyer was liable to pay the price which had to be estimated
National Coal Board v. Gamble
Concerned w/ sale of unascertained goods – coal was loaded onto a lorry pursuant to a bulk contract and taken to a weighbridge on the seller’s premises, where lorry was found to be nearly 4 tons overladen. Driver said he would take his chance on the overloading, took the weighbridge ticket and left premises; he was later stopped by police & his firm convicted of permitting lorry to be overweight
o Divisional Ct held: Coal Board, as seller, had rightly been convicted of aiding & abetting the driver in the commission of the offence, since until the goods had been weighed and the weighbridge ticket handed to the driver, the property in the coal remained w/ the seller, whose employee (the weighbridge man) could have insisted that the excess be unloaded
Kirkham v. Attenborough
An example of an act ‘adopting the transaction’ under r.4, s.18 is where the buyer sells/pledges the goods
K, a manufacturing jeweller, delivered to Winter a quantity of jewellery on sale or return -> W pledged some of jewellery to Attenborough -> in this action, K claimed that the goods pledged were still his property, but was unsuccessful
Elphick v. Barnes
For the buyer to ‘adopt’ a transaction under r4(a), s.18, there must be some act of election on his part (by words or conduct); not sufficient for seller simply to show that buyer is unable to return the goods
Horse which was delivered on 8 days’ trial died from illness on 3rd day
Ct held: there was no sale at the time of the horse’s death, which happened w/o the fault of either party, and therefore the action for goods sold & delivered must fail
Weiner v. Gill
Rule 4, s.18 only lays down a presumption; it is open to the parties to make any other arrangement as regards the passing of the property – e.g. that it shall not pass to the buyer until the price has been paid
W, a jeweller, delivered a diamond brooch and other articles to another jeweller, Huhn, on the terms: ‘On approbation. On sale only for cash or return… Goods had on approbation or on sale or return remain the property of Weiner until such goods are settled for or charged.’ H delivered to Longman who said that he had a customer for them, but in fact he pawned them w/ Gill
CoA held: on the contract there appeared a different intention as to when the property shall pass from that laid down in r4 of s.18; terms of the contract showed a clear intention that no property in the goods shall vest in H until he has paid for them or been charged by P for them.
The property in the goods never passed to H, and consequently Gill had no answer to W’s claim
