Sale of Goods: the Passing of Property & Risk Primary Sources

Question 1

Sale of Goods Act 1979, s.17

Answer 1

*First apply this:
Property in specific/ascertained goods passes when intended to pass:
(1) What the contract intends
(2) To ascertain intention, regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case

Question 2

Sale of Goods Act 1979, s.18

Answer 2

Where the parties fail to make clear their intentions as to when property in the goods will be transferred to the buyer, consider the rules in section 18 that ascertain the intention of the parties as to the time at which the property in the goods is to pass to the buyer (unless a different intention appears).

Question 3

Sale of Goods Act 1979, s.18 Rule 1

Answer 3

Where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed

Question 4

Sale of Goods Act 1979, s.18 Rule 2

Answer 4

Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until the thing is done and the buyer has notice that it has been done.

Question 5

Sale of Goods Act 1979, s.18 Rule 3

Answer 5

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.

Question 6

Sale of Goods Act 1979, s.18 Rule 4

Answer 6

When goods are delivered to the buyer on approval or on sale or return or other similar terms the property in the goods passes to the buyer:—

(a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of that time, and, if no time has been fixed, on the expiration of a reasonable time.

Question 7

Sale of Goods Act 1979, s.18 Rule 5(1)

Answer 7

(1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods then passes to the buyer; and the assent may be express or implied, and may be given either before or after the appropriation is made.

Question 8

Sale of Goods Act 1979, s.18 Rule 5(2)

Answer 8

(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is to be taken to have unconditionally appropriated the goods to the contract.

Question 9

Sale of Goods Act 1979, s.18 Rule 5(3)

Answer 9

(3) Where there is a contract for the sale of a specified quantity of unascertained goods in a deliverable state forming part of a bulk which is identified either in the contract or by subsequent agreement between the parties and the bulk is reduced to (or to less than) that quantity, then, if the buyer under that contract is the only buyer to whom goods are then due out of the bulk—
(a) the remaining goods are to be taken as appropriated to that contract at the time when the bulk is so reduced; and
(b) the property in those goods then passes to that buyer.

For ascertainment by exhaustion the following conditions must be transferred for property to transfer to the buyer:

• The goods must be in a deliverable state
• The sale must be of a specified quality of unascertained goods that form part of a bulk
• The bulk referred to must have been identified by the contract or alternatively by subsequent agreement between the parties
• The bulk must have been reduced to the amount of, or less than, the goods due to the buyer; and
• The buyer is the only buyer remaining who is entitled to the goods from the bulk.

Question 10

Sale of Goods Act 1979, s.18 Rule 5(4)

Answer 10

(4) Paragraph (3) above applies also (with the necessary modifications) where a bulk is reduced to (or to less than) the aggregate of the quantities due to a single buyer under separate contracts relating to that bulk and he is the only buyer to whom goods are then due out of that bulk.

Question 11

Sale of Goods Act 1979, s.19

Answer 11

(1) The seller may, by contract terms or appropriation, reserve the right of disposal of the goods under certain conditions (if specified or subsequently appropriated to the contract goods). Property does not pass until condition satisfied.
(2) Where goods are shipped, and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is prima facie to be taken to reserve the right of disposal.
(3) Buyer bound to return BoL if does not honour BoE; wrongful retention of BoL means that property does not pass to buyer

Question 12

Companies Act 2006, s.859A

Answer 12

Charges must be registered

Question 13

Companies Act 2006, s.859H

Answer 13

Unregistered charges are void

Question 14

Sale of Goods Act 1979, s.49(1)

Answer 14

Unless otherwise agree, the seller may only sue the buyer for the price once property in the goods has passed

Question 15

Sale of Goods Act 1979, s.20

Answer 15

Unless the parties have agreed otherwise, risk is borne by the owner of the goods (risk of theft/loss/damage etc. not risk of non-payment): s.20(1)

Where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the party at fault as regards any loss which might not have occurred but for such fault: s.20(2)

Nothing in s.20 will affect the duties or liabilities or either seller or buyer who acts as a bailee or cushier of the goods of the other party s.20(3)

N.B. Delivery to a third party carried is prima facie delivery to the non-consumer buyer and risk will pass to them: s.32(1)-(3)

Question 16

Sale of Goods Act 1979, s.16

Answer 16

In the case of a contract for the sale of unascertained goods, no property in them can be transferred to the buyer unless and until the goods are ascertained, this is the case even if the parties agree otherwise

In PQ, where goods are initially unascertained, apply this section, then section 17(1) which explains that once the goods become ascertained property will pass to the buyer when the parties to the contract intend it to pass, then (only if it the goods are ascertained AND it is not possible to determine whether parties intended ownership to pass) apply section 18 Rule 5

Cf section 20A

Question 17

Sale of Goods Act 1979, s.20A

Answer 17

Section 16 is subject to section 20A, which is concerned with undivided shares in goods forming part of a bulk. It permits a buyer who has purchased a specified quantity of unascertained goods from an identified bulk to become co-owner of the bulk (together with other co-owners) provided that he has paid for some or all of the goods. In other words, such a buyer may obtain a share in the ownership of the bulk.

The following conditions must be met:

• The contract must be for the sale of a specified quantity of unascertained goods, this must be expressed in units of quantity and not fractions or percentages
• The goods (or some of them) must form part of ab bulk which is identified either in the contract or by subsequent agreement between the parties and
• The buyer must have paid the price for some or all of the goods which are the subject of the contract and which form part of the bulk

Provided the above conditions have been satisfied then, unless the parties agree otherwise, s.20A(2) explains that:

• Property in an undivided share in the bulk is transferred to the buyer and
• The buyer becomes an owner in common of the bulk

The undivided share of a buyer in a bulk at any time shall be ‘such share as the quantity of goods paid for and due to the buyer out of the bulk bears to the quantity of goods in the bulk at that time’: s.20A(3)

N.B. to calculate the extent of the buyer’s co-ownership at any time, you should divide the quantity of the goods paid for by the buyer and due to him by the quantity of goods in the bulk; applying this to Re Wait, the sub-purchaser would have become 50% co-owner of the goods, with the remaining 50% belonging to Wait’s trustee in bankruptcy; reduce proportionally if aggregate of undivided shares of buyers exceeds the whole bulk at that time: s.20A(4)

Question 18

Re Wait [1927] 1 Ch 606

Answer 18

Case: W purchased 1,000 tons of wheat that was then loaded on a ship for delivery. The following day, he sold 500 tons of the bulk to a sub-purchaser (X) who paid W for the goods. By the date the ship docked, W had been declared bankrupt and his trustee in bankruptcy claimed the entire consignment of 1,000 tons.

Decision: The Court of Appeal held that W’s trustee in bankruptcy was entitled to succeed and that X was entitled to nothing (may prove for return of price as usual debtor) even though he had already paid W for his 500 tons of wheat. As X’s 500 tons were not specific or ascertained (i.e. separated from the 1,000 tons bulk and identified as the goods to be used in the performance of the contract), property did not pass to him. There was no appropriation or identification of, or any such obligation to delivery, a particular 500 tons, as to effect an equitable assignment giving the sub-purchasers a beneficial interest therein or a lien in respect thereof.

Rule:

1. Goods are ascertained when they are identified as the goods to be used in the performance of the contract
2. An agreement for the sale of goods does not import any agreement to transfer property other than in accordance with the terms of the SGA, which are ‘complete and exclusive statements of the legal relationships both in law and equity’

cf SGA s.20A

Question 19

Re London Wine Co (Shippers) Ltd [1986] PCC 121

Answer 19

Case: Customers order and pay for wine and receive certificate of title; when receiver appointed with charge of company assets, customers claim that wine in possession of company is now owned by them, i.e. property has passed from S to B
Categories of customer:
1. Customer buys entire LWC stock of a certain wine
2. Several buyers exhaust LWC stock of a certain wine
3. LWC holding quantity of certain wine to buyer’s order

Decision: Property had not massed as no ascertainment of the goods, LWC was free to supply any bottles of wine corresponding to contract description; despite references to ‘beneficial interest’ in company documentation, LWC was not holding goods on trust for customers; in third case no estoppel due to warehousemen representations, who are not party to proceedings, but may claim damages against warehousemen

Distinct from Wait & James v Midland Bank, ascertainment by exhaustion as there was no way of obtaining more wheat, so the 850 stock were the only that could be available to fulfil the contract

Rule: No property can pass in unascertained goods

Cf Re Stapylton Feltcher Ltd

Question 20

Re Goldcorp Exchange [1995] 1 AC 74 (PC)

Answer 20

Case:

1. Company sold unascertained bullion to claimants for future delivery; each customer received an invoice or certificate verifying his ownership; the company’s employees also told customers that the company would maintain a separate and sufficient stock of each type of bullion to meet their demands (they failed to do so)
2. Second respondent, having initially purchased specific gold maple coins from the company, agreed to buy a further 1,000 maples on a non-allocated basis and to store all the coins with the company; company subsequently acquired substantial quantity of maple coins but not expressly for him
3. Third respondent represented a category of claimants who had bought bullion from W (business later taken over by company); there was sufficient ascertainment and appropriation of bullion by W to transfer title to each of them, and thereafter they had a shared interest in the pooled bullion stored separately on their behalf

Decision:
1/2. Since the non-allocated claimants and the second respondent had contract to purchase unascertained generic goods, no property in any bullion passed to them in law or in equity immediately upon the making of the purchases by virtue of the contracts (see rule); it was not estopped from denying their title as no fixed/identified bulk in existence which could be created by deemed appropriation; since no separate and sufficient stock of bullion there was nothing which any proprietary interest could be related; that despite the company’s failure to fulfil its contractual obligations, since it was not required by any express or implied contractual term to set aside all the bullion which it had purchased for the fulfilment of unallocated sale contracts, it had not acted wrongfully in acquiring, maintaining and using its own stock of bullion; no quistclose trust as not express/implied agreement to trace money or that company fiduciary for purchase moneys or provision preventing company from spending purchase moneys
3. The bullion belonging to W claimants which was held by the company comprised bullion equal to the lowest balance thereof held by the company at any time; that in all the circumstances it would be inequitable to impose a lien in favour of those claimants on all the company’s assets at the date of receivership to enable them to recover the value of their bullion unlawful misappropriated by the company; remedies available as given by judge

Rule: A purchaser cannot acquire title until it was known to what goods that title related and collateral promises made by a seller do not constitute a declaration of trust in favour of a buyer

Quote: ‘As Lord Blackburn wrote in his treatise on The Effect of the Contract of Sale (1845) … a principal inspiration of the Sale of Goods Act 1893: “The first of [the rules] that the parties must be agreed as to the specific goods on which the contract is to attach before there can be a bargain and sale, is one that is founded on the very nature of things.”’ per Lord Mustill

Question 21

Re Stapylton Feltcher Ltd [1994] 1 WLR 1181

Answer 21

Case:
ESV and SFL were wine merchants who held stocks of wine for customers
1. When a customer purchased wine from ESV it was physically removed from the company’s trading stock and placed in the company’s reserve; it was then stored by type and master index which showed the names of customers and the number of wine allocated; the individual cases of wine were not however marked wit ha particular customer’s name
2. Some wines were also ordered for customers ‘en primeur’ directly from the producers and stored for them in bonded warehouses; individually allocated to customers and details in master index
3. By contrast, SFL made no attempt to allocate the wines either to specific customers or as between the company and its customers generally; a number of customers had ordered and paid for en primeur wine and were waiting for the French producers to dispatch their orders

Decision:
1. For goods forming part of a bulk, ascertainment for the purposes of s.16 SGA did not occur until those goods were separated from the bulk, usually immediately prior to delivery; however, the segregation of the stock from the company’s trading assets on purchase identified goods to be handed over for the performance of the contract, making the purchasers tenants in common of the entire stock in the proportion that his goods bore to the total in store for the time being; wines stored in a warehouse that had not been marked or by inventory were not ascertained
2/3. En primeur wines which had been ordered and paid for in full but had not left France at the time of the receivers’ appointment remained part of the generic stock of the vineyards, albeit subject to a contract for its sale to ESV or SFL, and no proprietary interest passed at all in law or equity

cf Re London Wine Co (Shippers) Ltd

Question 22

The Elafi [1982] 1 All ER 208

Answer 22

Case: Buyers purchased, under 4 identical contract, a total of 6,000 metric tons of copra being shipped for the Philippines to Sweden; consignment was part of a cargo of 22,000 tons of copra, the balance of 16,000 tons being off-loaded at Hamburg and Rotterdam; after the vessel sailed from the Philippines it was discovered more copra had been loaded onto that for which BoL had been issued; no additional BoL issued for the quantity but a parcel of 500 tons of it was sold to an intermediary who resold it to the buyers; during the buyers’ consignment in Sweden 825 tons were damaged by water as a result of the shipowner’s negligence; the buyers accepted the total consignment, including the damaged copra, and then claimed from the shipowners in respect of the damage.

Decision:

1. S.16 SGA is to be interpreted broadly where there were parallel contracts between the parties encompassing the whole of a consignment of unascertained goods passing from a seller to a buyer of from different sellers to the buyer the goods where ‘ascertained’, enabling property to pass to the buyer; the goods were ascertained by a process of exhaustion (without necessity of goods to be physically allocated between separate contracts or for buyer to nominate which particular goods came from which particular source) after prior deliveries to others completed at Hamburg
2. On the issue of appropriation, rule 5 (1) in section 18 of the 1893 Act did not make appropriation of the goods to the contract a precondition of the passing of property in the goods but merely created a presumption to that effect which was rebuttable if ‘a different intention appears’; since the parties had a different intention that property would pass on transfer of shipping documents during the voyage in accordance with usual practice relating to cif contracts, the intermediary intended that on completion of discharge at Hamburg the property in whatever surplus copra remained on board should then pass to the buyers; it followed that the buyers had title to the copra at the time it was damaged and were entitled to sue the shipowners in tort

Rule: This case was brought into statutory footing by Rules 5(3) and 5(4) that were a buyer agrees to buy goods out of a specified bulk they may be appropriated by exhaustion.

Question 23

Phillip Head & Sons Ltd v Showfronts Ltd [1970] 1 Lloyd’s Rep 140

Answer 23

Case: S agrees to supply carpets for premises refurbished by P; one carpet intended for room (very large so several sections provided to be stitched together); carpet delivered and assembled by S and left on premises with work to be completed; carpet stolen

Decision: S should bear the risk as the goods are not in a deliverable state; there was a condition for the seller so not unconditionally appropriated to the contract

Rule: Deliverable state where they are in such a state the buyer would under the contract be bound to take delivery of them… ‘Things remain to be done’ (per Lord Blackburn in Seath & Co v Moore); test of common sense

Quote: ‘I think one is entitled to apply everyday common sense to the matter; a householder, for example, purchasing carpeting under a contract providing that it should be delivered and laid in his house would be very surprised to be told that carpeting, which was in bales which he could hardly move deposited by his contractor in his garage, was then in a deliverable state and his property.’ per Mocatta J

Question 24

Carlos Federspiel & Co SA v Charles Twig & Co Ltd [1957] 1 Lloyd’s Rep 240

Answer 24

Concerned with unconditional appropriation: Rule 5

Case: CF agrees to buy bicycles from CT and pays the price; goods to be loaded on ship in Liverpool; CT manufactures the goods, which are then packed into crates with name of buyer; arrangements made to have goods sent to Liverpool; CT in receivership

Decision: Goods not appropriated to the contract; this was a contract for sale of unascertained goods by description – for the sale of future goods probably still to be manufactured; there must have been a common intention that these goods will be used, in this case the seller could have changed his mind (actual or constructive delivery, see: Aldridge v Johnson)

Rule: For goods to be unconditionally appropriated to the contract, they must be irrevocably earmarked as THE goods to be used to satisfy the contracts. Once those goods have been irrevocably appropriated to the contract then those goods, and no others, become the property of the buyer.
[Then discuss Rule 5(1), that either the buyer or seller may unconditionally appropriate goods but this must be with the other’s assent, express or implied, either before or after appropriation is made.]
Applying these principles:
• Firstly, intention was that the ownership should pass on shipment as emphasis is throughout on shipment as the decisive act to be done by the seller in performance of the contract
• Secondly, it is impossible to find in this correspondence an agreement to change of ownership before the time of shipment
• Thirdly, there is no actual or constructive delivery, no suggestion of the seller becoming bailee for the buyer
• Fourthly, there is no suggestion of the goods being at the buyer’s risk at any time before shipment
• Fifthly, the last two acts to be performed by the seller, namely, sending the goods to Liverpool and having the goods shipped on board, where no performed
Therefore, prima facie inference from the contract is that property was not to pass at any time before shipment – and this is not displaced by subsequent correspondence by the parties

Quotes:

1. “To constitute an appropriation of the goods to the contract, the parties must have had, or be reasonably supposed to have had, an intention to attach the contract irrevocably to the goods, so that those goods and no others are the subject of the sale and become the property of the buyer.” per Pearson J
2. ‘Firstly, the intention was that the ownership should pass on shipment because the emphasis is throughout on shipment as the decisive act to be done by the seller in performance of the contract. Secondly, it is impossible to find in … correspondence [between the parties] an agreement to a change of ownership before the time of shipment. Thirdly, there is no actual or constructive delivery; no suggestion of the seller becoming a bailee for the buyer … Fourthly, there is no suggestion of the goods being at the buyer’s risk at any time before shipment … Fifthly, the last two acts to be performed by the seller, namely, sending the goods to Liverpool and having the goods shipped on board, were not performed. Therefore … the prima facie inference which one would have drawn from the contract … is in my view not displaced by the subsequent correspondence between the parties. It follows, therefore, that there was no appropriation of these goods … ’

Question 25

Sterns Vickers Ltd [1923] 1 KB 78

Answer 25

Case: V owned 200,000 galloons of spirit and sold to S 120,000 gallons of white spirit, being part of a larger quantity then lying in a certain tank belonging to a storage company, and handed to S a delivery warrant, whereby the company undertook to delivery that quantity of the spirit to S; subsequently to S’s acceptance of that warrant and before the quantity purchased had been severed from the bulk, the spirit in the tank became deteriorated in quality

Held: Whether the property in the undivided portion of the larger bulk had passed or not, upon the acceptance of the delivery warrant the risk (in undivided share) passed to the buyers, and the loss must be borne by them

Scrutton LJ: At the material time there had been no severance of the quantity purchased for the large bulk; would not be an insurable interest without segregation (Inglis v Stock); where power of selection remains with the seller, property has not passed (Gillet v Hill)

N.B. Distinguished from Re Wait

Question 26

The Aliakmon [1986] AC 785 (HL)

Answer 26

Case: L&S agreed to buy a quantity of steel coins from K to be shipped to Korea, contract on C&F terms, meaning that at the relevant time the goods where at the buyer’s risk; but the property had not passed to them as, under the contract, this was not to take place until payment of the price ‘ steel damaged on vessel

Decision: Since the goods were not the buyer’s property at the time when the damage was caused, their only claim was for economic loss, in respect of which the defendants owed them no duty of care

Rule: The buyer has only rights in personam against the seller: the seller can exercise proprietary rights in relation to the goods (e.g. sue a third party in tort if the goods are wrongly detained, stolen or damage), but the buyer cannot

Question 27

Howell v Coupland (1876) 1 QBD 258

Answer 27

Frustration at common law [discuss if section 7 fails]:

Case: S only able to supply 80 tons of potatoes from a particular field, rather than agreed 200 tons, due to disease

Decision: S not liable for damages for 120 tons not delivered; there was an implied condition that the potatoes should be in existence at the time of performance but they were destroyed by causes over which the defendants had no control

Quote: “It was not an absolute contract of delivery under all circumstances, but a contract to deliver so many potatoes, of a particular kind, grown on a specific place, if deliverable from that place” per Lord Coleridge CJ

Rule: For quasi-specific goods, frustration of the contract is a much stronger possibility if the agreed source perishes

N.B. Not a case of common law frustration as only excused for 120 tons not delivered; legal basis is unsure on this case but considered the right decision

See also: HR & S Sainsbury Ltd v Street

Question 28

Barrow Lane & Ballard Ltd v Phillip Phillips & Co Ltd [1929] 1 KB 574

Answer 28

Concerned with s.7 perishing goods

Case: Contract for specific goods - 700 bags of ground nuts; 109 bags stolen before contract made; P sued B for the price of all 700 bags

Decision: Section 6 applied - contract goods (parcel of 700 bags) had ‘perished’ prior to contract; contract for sale of 591 bags is different that contract for sale of 700

Rule: perished does not appear to be limited to situations where there is total destruction of the goods (not entirely clear but courts are happy to hold goods as perished without total destruction)

Question 29

Sale of Goods Act 1979, s.2

Answer 29

Defines a contract for the sale of goods:

• Seller transfers or agrees to transfer property…
• … in goods…
• …for money consideration (the price)
• May be between one part owner and another
• May be absolute or conditional

Question 30

Sale of Goods Act 1979, s.6

Answer 30

Where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract is made, the contract is void

Question 31

Sale of Goods Act 1979, s.7

Answer 31

Where there is an agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided

Question 32

Sale of Goods Act 1979, s.12

Answer 32

Implied terms about title:

• That seller has a right to sell the goods (in the case of agreement to sell, that seller will have such a right at the time when the property is to pass): s.12(1) - condition (s.12(5A)
• Unless is appears in the contract or inferred from its circumstances an intention that the seller should transfer only such title as he or a third party has (s.12(3)), there is also an implied term that the goods are free and will remain free until the time when the property is to pass and that the buyer will enjoy quiet possession: s.12(2) - warranty (s.12(5A))
• All charges or encumbrances known to the seller and not known to the buyer have been disclosed: s.12(4) - warranty (s.12(5A))

Question 33

Sale of Goods Act 1979, s.13

Answer 33

Sale by description:

• Implied term (condition: s.13(1A)) that goods will correspond with the description: s.13(1)
• If sale by sample it is not sufficient that the bulk of the goods corresponds with the sample if do not also correspond with description: s.13(2)

Question 34

Sale of Goods Act 1979, s.14

Answer 34

Implied terms about quality or fitness:

• Except provided in ss.14-15, there are no implied terms about quality/fitness: s.14(1)
• Implied term that of satisfactory quality: s.14(2) (condition)
• SQ is standard that a reasonable person would regard as satisfactory, taking account of any description, the price and other relevant circumstances: s.14(2A)
• S.14(2B) lists appropriate aspects of quality to consider
• S.14(2C) lists exclusions, including what would have been apparent on a reasonable examination (if has examined or by sample)
• Fitness for particular purpose: s.14(3) (condition)

Question 35

Sale of Goods Act 1979, s.15

Answer 35

Sale by sample:

• A contract of sale is a contract for sale by sample where there is an express or implied term to that effect in the contract: s.15(1)
• Implied terms that will correspond with the sample in quality, be free from defect etc.

Question 36

Sale of Goods Act 1979, s.20B

Answer 36

To overcome the issues with s.20A requiring all co-owners to be joined in order to transfer any part of the bulk, s.20B(1) states that ‘a person who has become an owner in common of a bulk by virtue of s.20A shall be deemed to have consented to any delivery of goods out of the bulk to any other owner in common of the bulk, being goods which are due to him under his contract’ i.e. a co-owner will not need the consent of the other co-owners in order to deal with his own share of the goods

Question 37

Sale of Goods Act 1979, s.61

Answer 37

Definitions:
- ‘Property’ refers to ownership of the goods: ‘the general property in goods, and not merely a special property’: s.61(1)
- ‘Goods’ includes ‘all personal chattels other than things in action and money … and in particular “goods” includes emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale and includes an undivided share in goods’: s.61(1)
[Undivided share means can buy e.g. half star erin horse or specific lump of grain; see also s.2(2)]
- ‘Specific goods’ are ‘goods identified and agreed on at the time a contract of sale is made and includes an undivided share, specified as a fraction or percentage, of goods identified and agreed on as aforesaid’: s.61(1)
- ‘Future goods’ are ‘goods to be manufactured or acquired by the seller after the making of the contract of sale’: s.61(1)
- ‘Goods are in a deliverable state within the meaning of this Act when they are in such a state that the buyer would under the contract be bound to take delivery of them.’: s.61(5) [see Rule 1, 2 and 5]

Question 38

Sale of Goods Act 1979, s.62

Answer 38

• The rules in bankruptcy relating to contracts of sale apply to those contracts, notwithstanding anything in this Act
• The rules of the common law, including the law merchant, except in so far as they are inconsistent with the provisions of legislation and in particular the rules relating to the law of principal and agent and the effect of fraud, misrepresentation, duress or coercion, mistake, or other invalidating cause, apply to contracts for the sale of goods

Question 39

Sale of Goods Act 1979, s.15A

Answer 39

Modification of remedies for breach of condition:

• The buyer has right to rejects goods by reason of a breach on the part of the seller of a term implied by ss. 13-15 unless the breach is so slight that it would be unreasonable to reject them (therefore breach of warranty not condition): s.15A(1)
• This section applies unless a contrary intention appears, or is to be implied from, the contract: s.15A(2)

Question 40

Fern Computer Consultancy Ltd v Intergraph Cadworx & Analysis Solutions Inc [2014] EWHC 2908, [2015] 1 Lloyds Rep 1

Answer 40

Rule: Software is not goods, however when supplied on CD, it likely is (downloading from interest is merely licence to use the software of which someone else has the copyright to)

Quote: ‘ … where software is supplied on CDs there is a real prospect of success in arguing that that is the supply of goods. Where that supply is accompanied by a physical dongle and documentation then the argument is even stronger. While there is an argument that what is really being supplied is software, which is not goods, that argument is not so strong as to make the contrary argument unsustainable.’ per Mann J

Question 41

GJ Dawson (Clapham) Ltd v H&G Dutfield [1936] 2 All ER 232

Answer 41

Rule: Part-money, part-exchange is sufficient to bring within definition of money and the ambit of the Act

Question 42

Rowland v Divall [1932] 2 KB 500

Answer 42

Explaining s.12(1) SGA right to sell the goods

Case: B buys a car from S and then sells on to a third party; B refunds purchase price to third party when police confiscate car as it had been stolen

Decision: B able to recover full purchase price from S on the basis that there had been a total failure of consideration; the seller was not legally able to pass on title

Question 43

Arcos Ltd v Ronassen & Son [1933] AC 470

Answer 43

Explaining s.13(1) SGA correspondence with description

Case: Contract required wood to be ½ inch thick, but was actually 9/16 inch thick

Decision: Buyer entitled to reject goods: they did not correspond with contract description (despite being trivial)

N.B. the potential effect of s 15A where breach is slight - likely that this case would be decided differently today due to 15A; where the breach is slight the buyer will usually not have a right to reject the goods and terminate the contract

Question 44

Aswan Engineering v Lupidine Ltd [1987] 1 WLR 1

Answer 44

Case: S supplies water proofing compound in plastic pails to B in Kuwait; Pails collapse when they are in Kuwait due heat; Entire consignment of compound is lost as pails had been damaged

1. Example of s.14(2) SGA implied term of satisfactory quality (where sold in course of business)

Decision: No breach of term implied by s 14(2) as pails were suitable for purposes for which they were usually bought

2. Example of s.14(3) SGA fitness for purpose

Decision: No reliance on S in selecting pails therefore s 14(3) not applicable to claim

Rule: for s.14(2) to apply, the buyer must place some reliance on the seller in selecting the particular goods

Question 45

Bristol Tramways v Fiat Motors [1910] 2 KB 831

Answer 45

Example of s.14(3) fitness for purpose

Case: B buys tram cars from S ‘for the conveyance of passengers in motor omnibuses in and near Bristol, a heavy traffic in a hilly district’; Tram cars were not suitable for task (hilly district in Bristol, although may have be suitable for another area such as London) and further work required by S

Decision: S liable to B for breach of the equivalent term implied by SOGA 1893

Question 46

What SGA terms can be excluded?

Answer 46

Terms implied by s.13 (description), s.14 (quality and fitness for purpose) and s.15 (sale by sample) can be excluded, but only where reasonable to do so: UCTA 1977, s.6(1A)

N.B. On the question of reasonableness see s 11 and Sch 2: especially s11(2), and Sch 2 para 1(e)

Question 47

Sale of Goods Act 1979, s.27

Answer 47

It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale.

(Delivery may be actual, symbolic or constructive)

Question 48

Sale of Goods Act 1979, s.28

Answer 48

Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price and the buyer must be ready and willing to pay the price in exchange for possession of the goods.

Question 49

McKendrick (ed), Goode on Commercial Law, page 367

Answer 49

Quote: “Refusal to take delivery may (and usually does) signify rejection, but just as the taking of delivery is not synonymous with an acceptance, so the refusal to take delivery does not inevitably signify rejection.”

Question 50

Sale of Goods Act 1979, s.21(1)

Answer 50

Nemo dat quod non habet (cannot give a better title than you have yourself)

N.B. exceptions ss.21-24

Question 51

McKendrick (ed), Goode on Commercial Law (2010), page 229

Answer 51

‘Section 16 of the Sale of Goods Act tells us that “where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods are ascertained”, that is, identified by some act of appropriation subsequent to the contract.’

Question 52

Ewan McKendrick (ed), Goode on Commercial Law (2010), page 231

Answer 52

Ascertained goods: ‘If I agree to buy 100 kilos of potatoes, then, unless otherwise stipulated, the seller is free to supply them from any existing or future source. I as the buyer have no right to insist that any particular source of supply shall be used. How the seller performs is none of my business as long as he does perform.’

Quasi-specific goods: ‘ … the buyer agrees to purchase 100 kilos of potatoes forming part of a consignment of 500 kilos then on board a named vessel or in a designated warehouse. The goods in this case are not wholly unascertained, for while the particular 100 kilos out of the 500 cannot be identified until set aside and appropriated to the contract, it can be said that the seller is neither entitled not obliged to supply 100 kilos from any other source.’

Question 53

Dennant v Skinner and Collom [1948] 2 KB 164

Answer 53

Case: D’s car sold at an auction to K; D receives uncleared cheque; K signs document indicating that ownership would not pass to K until D received payment in relation to the cheque; K sells car to S who then sells to C; D brings proceedings for recovery of the car

Decision: Property passed to K when hammer fell on the basis of a straightforward application of s 18 r 1; no evidence of a contrary intention

Question 54

Healy v Howlett & Sons [1917] 1 KB 337

Answer 54

Concerned with unconditional appropriation: Rule 5

Case: S agrees to sell 20 boxes of fish to B; S dispatches 190 boxes of fish by rail with instructions to railway company to distribute the boxes amongst a number of S’s customer including B; Train is late with result that fish deteriorates; Railway company sets aside 20 boxes for B, but B rejects fish

Decision: Goods were not appropriated until 20 boxes set aside for B; deterioration occurred when S still bore risk

Question 55

Ewan McKendrick (ed), Goode on Commercial Law (2010), page 256

Answer 55

The term deliverable state has different meanings depending on the significance to the rule:
- For the purpose of Rule 5, goods are not in a deliverable state unless they are in fact in such condition that the buyer would not be entitled to reject them when tendered or they are accepted by the buyer as being in a deliverable state

Question 56

Ewan McKendrick (ed), Goode on Commercial Law (2010), page 265

Answer 56

Quote: ‘Goods are at a party’s risk if he has to bear the loss resulting from their damage or destruction. The impact of this will depend on whether the party in question is the seller or buyer.’

Question 57

Demby Hamilton v Barden [1949] 1 All ER 345

Answer 57

Concerned with s.20(2) fault of delay

Case: DH sells apple juice to B; Juice is not collected punctually as agreed; Juice is no longer suitable for consumption and DH disposes of it

Decision: Risk was on B as collection was B’s responsibility

Question 58

Wiehe v Dennis Bros Bros (1913) 29 TLR 250

Answer 58

Concerned with s.20

Case: W agrees to buy a Shetland pony, car and harness from DB; W intended to present pony to Dutch princess; Delivery due to take place after one month; Pony is injured in period before delivery to W

Decision: DB liable in bailment for failing to take proper care of the pony

See s 20(3): nothing in s 20 affects bailee obligations that S may have to B, or B to S

Question 59

Intertradex v Lesieur Tourteaux [1977] 2 Lloyd’s Rep 146

Answer 59

Frustration at common law (mention where section 7 fails):

Case: S had in mind that they where going to get the goods from a particular source, only source where S could get the goods from; problem in the factory where S’s supplier performed a process on the goods

Decision: the contract between S and B was not frustrated, that although in the contemplation of S that they were going to get the goods from this source and it was the only source, this was not within the contemplation of B

cf Re Badische Co

Question 60

Re Badische Co [1921] 2 Ch 331

Answer 60

Frustration at common law (mention where section 7 fails):

Case: selling and buying of chemicals that both parties knew where to come from Germany, at the start of the first world war it became illegal to trade with the enemy

Decision: the contract was frustrated; difficulties with this case (doubtful authority)

N.B. Treital: big difference between trading with the enemy and problems sourcing goods because trade has failed

Question 61

Couturier v Hastie (1856) 5 HL Cas 673

Answer 61

Mistake at common law [discuss if section 6 fails]:

Case: By the time of agreement the goods are not there to be sold/bought – could not claim the price from the buyer; Corn shipped in February 1848; Contract for sale of corn agreed in May; Unbeknown to relevant parties, corn overheated and had been sold by ship’s captain in April

Question raised: did the buyer buy the corn as such or an interest in a maritime adventure? The correct construction of the contract was that it was for the sale of the corn per se

Decision: Corn not delivered, so seller cannot claim price

Rule: Trietel views this as authority for the rule that a contract for the sale of non-existence goods in void for common mistake cf HCA in McRae v Commonwealth Disposals

Question 62

McRae v Commonwealth Disposals Commission (1950) 84 CLR 377

Answer 62

Case Oil tanker contracted to be sold did not exist

Decision: In Couturier the contract was not ‘void’ but never existed; in this case there was an implied term that the tanker di not exist

Rule: If the question had arisen in Couturier v Hastle whether contracts void for mistake if non-existence of goods, believed it would not be void but would have been an implied condition

Question 63

Atiyah (1957) 73 LQR 340–349:

Answer 63

Where specific goods either never existed or had perished when contract was made, there are several possible outcomes based on the construction of the parties’ agreement

• Neither party has liability is most likely outcome in practice: void for mistake (or implied term re existence of the goods)
• S liable to B: S has promised the goods do exist
• B is liable to S: B bore risk of the goods having perished prior to the contract

Question 64

Not goods for purpose of Act (S&W)

Answer 64

o	Animals in the wild state
o	Electricity and other forms of energy
o	Human remains
o	Tissue and organs and bodily products
o	IP
o	Computer software
o	Material in digitised form (distinct from stored on disk per St Albans District Council v International Computers Ltd, 1996)
o	Information

Question 65

Moss v Hancock [1899] 2 QB 111

Answer 65

Rule: Although money is expressly excluded from SGA, a coin may be sold as a collector’s item

Question 66

Capable of being goods (S&W):

Answer 66

o Ships, aircraft and vehicles
o Domestic animals
o Wild animals which have been reduced to captivity or are dead
o Water, oil and gases (even compressed air)

Question 67

Morgan v Russell & Sons [1909] 1 KB 357

Answer 67

Decision: Persons obtaining licence to occupy and remove slag/cinders tipped on land ruled to have been sold an interest in land as the cinders/slag had become part of the soil itself; not a safe of goods as no contract of definite quantity of mineral nor a heap of earth which was a separate thing; it was a contract to give free access to certain tips to remove

Question 68

Underwood Ltd v Burgh Castle Brick & Cement Syndicate [1922] 1 KB 343

Answer 68

Case: Large engine affixed to leasehold

Decision:

1. Seller did not sell personal property but a part of the realty which the sellers had a right to detach and convert into personal property
2. The buyer did not have property in the engine and it was still part of the freehold with the sellers to later deliver (not in a deliverable state); buyers intention was to buy a loose chattel when the process of dismantling and detaching had taken place

Rule: To determine whether something is in a deliverable state, the test is whether something remained to be done by the sellers

Question 69

Kursell v Timber Operators & Contractors Ltd [1927] 1 KB 298

Answer 69

Case: Contract for sale of all merchantable timer (trunks and branches of trees but not seedlings and young trees

Question 70

Helby v Matthews [1895] AC 471, HL

Answer 70

Rule: Hire purchase is distinct from Sale of Goods

cf Forthright Finance Ltd v Carlyle Finance Ltd (1997) where the hirer of a car had to pay all the instalments for 36 months and then had ‘an option to take title’ which was considered conditional sale agreement as it was inconceivable that they would not elect to take title so was a conditional sale agreement ‘both in substance and in form’

Question 71

Note

Answer 71

see page 12 of reading notes for revision (mind map?)

page 13 has rules with prima race application

Question 72

Head v Tattersall (1871) LR 7 Exch 7

Answer 72

Case: H bought a horse from T – described incorrectly as having been hunted with certain hounds; Sale of contract contained a condition ‘horses not answering the description must be returned by 5 o’clock on the Wednesday evening next; otherwise the purchaser shall be obliged to keep the lot with all faults’; H took horse away and was damaged while in his custody; Returned horse in damaged state before deadline on the ground that it did not match description

Decision: He was entitled to have the whole of his money back as he had not done anything which he was not entitled to do under the contract by taking the horse away; an accident occurring within that time out of the buyer’s control ought not to deprive him of right to return

Rule: Generally, damage from the depreciation of a chattel ought to fall on the person who is the owner of it (this case exception, ownership subject to right of rescission)

Question 73

Wiehe v Dennis Bros (1913) 29 TLR 250

Answer 73

Case: W contracted to buy a pony called ‘Tiny’ from D, intended to be presented along with a car and harness to Princess Juliana; Pony and car to be delivered to Rotterdam in a month’s time; While the pony was in the seller’s custody, a charitable ball was held in Olympia, in the course of which an unauthorised person took the pony out of its stall and led it among the dancers, but it was mishandled and suffered injuries

Decision: The sellers where liable on the basis that they had failed to show that they had taken proper care of it as bailees pending delivery

Question 74

Blackburn Bobbin Co Ltd v TW Allen & Sons Ltd (1918) 2 KB 467 (CA)

Answer 74

Case: A contracted to sell to B 70 ‘standards’ (165 cubic feet) of Finland birch timber; no sailings from Finish ports over period so no timber could be imported and was impossible to obtain Finish timber from any source

Decision: A not excused from contractual obligations

Rule: Seller takes responsibility of ensuring contract description available for delivery and accepts all risks incidental to seeing that they are supplied

cf Howell v Coupland

Question 75

Intertradex SA v Lesieur-Tourteaux SARL [1977] 2 Lloyd’s Rep 146, [1978] 2 Lloyd’s Rep 509 (CA)

Answer 75

Case: Suppliers unable to meet their commitments to Seller due to a mechanical breakdown

Decision: Not excused from performance; this is a basic risk assumed by the Seller (Donaldson J)

Rule: Seller not excused from performance even if sourcing problem is due to sub-contractor

N.B. Construct contract to manage such situations, e.g. force majeure clause (Mockland v Jack Barclay Ltd)

cf Howell v Coupland

Question 76

HR & S Sainsbury Ltd v Street [1972] 1 WLR 834

Answer 76

Case: Seller of barley crop contents that implied term in contract that he should harvest crop and failure to farm it prevented I’m from an obligation to deliver the crop

Decision: There cannot be an implied term that failure to produce the entire tonnage will avoid the entire contract

Question 77

HM Customs and Excise v Everwine [2003] All ER D 97

Answer 77

Case: Wine belonging to E held at F’s bonded warehouse, whenever E sold wine to another wine trader he faxed ‘release notes’ to F specifying the goods that had been sold

Decision: Property had passed to the buyer where the goods specified were the whole of the stock of the stock description held on that day by F (sufficient appropriation within s.18, r.5); but there was no appropriation and no physical property passed where F held a great quantity the stock and no physical separation had taken place

Question 78

Wait & James v Midland Bank (1926) 31 Com Cas 172

Answer 78

Decision: Ascertainment by exhaustion

Question 79

Turley v Bates (1863) 2 H & C 200

Answer 79

Case: T to sell B a heap of fireclay at price of 2s per ton, to be carted away by B and weighed at own expense; B taken away 270 tons and paid for it (some clay remained)

Decision: Property had passed; all that was left to be done was cart away

See section 18 Rule 3

Question 80

Nanka-Bruce v Commonwealth Trust [1926] AC 77 (PC)

Answer 80

Case: Seller sold cocoa to buyer on credit; Buyer sold cocoa to sub-purchaser without weighing; Buyer absconded; had property passed to sub-purchaser?

Decision: Yes

Rule: Weighing up is not a condition precedent of sale when buyer to pay price per load to be measured

Question 81

Castle v Playford (1872) LR 7 Exch 98

Answer 81

Rule: Where weighing to happen on arrival of shipment and risk has passed to buyer, buyer liable to pay price but must be estimated price

Question 82

Kirkham v Attenborough [1897] 1 QB 201

Answer 82

Case: Seller claimed jewellery sold to buyer were still his property after buyer had pledged to sub-purchaser

Decision: Property had passed to buyer

Rule: Property passes on ‘adoption’ by the buyer

N.B. Must be adoption; not sufficient to just show that unable to return goods (Elphick v Barnes)

cf Weiner v Gill where agreed that property shall not pass until payment; different intention means r.4 does not apply

Question 83

Poole v Smith’s Car Sales (Balham) Ltd [1962] 1 WLR 744

Answer 83

Case: P delivered car to S with authority to sell it, provided that he received £325 with S able to retain any sum received in excess of that figure; P telephoned several times asking for the return of the car and wrote a letter stating that if it was not returned it would be deemed to have been stolen by S; when returned P refused to take it back; it had been driven £1,600 a badly damaged by S’s employees

Decision: P could claim the price as property had passed; this is a contract of sale and return

Question 84

Atari Corpn (UK) Ltd v Electronics Boutique Stores (UK) Ltd [1998] QB 539

Answer 84

Case: Contract for sale of computer games, not selling well so buyer places those unsold in warehouse and notifies seller of return

Decision: The notice was effective, the fact that the actual quantity and identity of goods were not noted was irrelevant

Question 85

Wait v Baker (1848) 2 Exch 1

Answer 85

Rule: Property does not pass until there is a bargain with respect to a specific article, and everything is done which, according to the intention of the parties to the bargain, was necessary to transfer the property in it

Question 86

Langton v Higgins (1859) 4 H & N 402

Answer 86

Case: C sold peppermint oil to L; L sent C necessary bottles and they were filled with oil; C then sold them to H and absconded

Decision: L could sue H as property in the oil has passed to L when the bottles where filled (not when the oil was made)

Question 87

Mucklow v Mangles (1808) 1 Taunt 318

Answer 87

Case: R contracted to build a barge for P; the whole of the agreed price was paid as the work progressed; P’s name painted on the stern; ship seized by M who was executing a judgment against R

Decision: Property had not passed to P as R was under a contract to finish the barge, which is different from a contract of sale; painting name made no difference where the subject of the contract is still to be made

N.B. not enough facts are known about this case

Question 88

Pignataro v Gilroy [1919] 1 KB 459

Answer 88

Case: Buyer notified of ascertainment of bags of rice; did not reply to reminders; bags stolen

Decision: Property has passed to buyer and risk of loss lay with them; Buyer could not reject place as had already inspected rice there; could not have rejected quality unless inferior to what he had inspected

Rule: Assent (required for rule 5) may be implied/inferred

Question 89

Wardar’s (Import & Export) Co Ltd v W Norwood & Sons Ltd [1968] 2 QB 663 (CA)

Answer 89

Case: W agreed to buy from N 600 cartons of frozen ox kidneys out of a consignment of 1,500; driver employed by firm of carriers on W’s behalf forgot to term on the refrigerating machine; Kidneys unfit for consumption

Decision: The loss fell on the buyers, since property and risk had passed the the driver arrived and the deterioration had occurred after that time (no evidence that it had happened before, other 900 sold with no complaint)

This would considered unconditional appropriation for purposes of r.5

Question 90

McDougall v Aeromarine of Emsworth Ltd [1958] 1 WLR 1126

Answer 90

Case: A contracted to build M a cruiser yacht for use in yachting season; payment made in 5 instalments; clause in contract that property in vessel passed after payment of the first instalment; yacht had defects rending it unseaworthy when launched; A offered to finish on varied terms which M not prepared to accept

Decision: Buyer was justified in rejected the yacht and that, although property had passed according to the contract it had passed only defeasibly, and had been revert in A when M rightly exercised his right to reject

Rule: Breach of condition entitles recision (property revests in seller)

Question 91

Niblett v Confectioners’ Material [1921] 3 KB 387

Answer 91

Decision: The tinned milk with labels which infringed the Nestle trade mark were held not to be of merchantable quality

Rule: ‘Quality’ (s.61(1)) refers to state or condition

Question 92

Geddling v Marsh (1920) 1 KB 668

Answer 92

Decision: Could sue for damages to her person when bottle exploded when it burst, despite being returnable container, breach of contract

Rule: S.14(2) implied term of satisfactory quality to be interpreted broadly to include the contained in which the goods where supplied

Question 93

Cordova Land Co Ltd v Victor Bros Inc [1966] 1 WLR 793

Answer 93

Rule: Relevant time to test quality (s.14(2)) is the time of delivery

Question 94

Mash & Murrell v Joseph I Emanuel [1961] 1 All ER 485

Answer 94

Rule: Where contemplated by the parties that the goods were to undergo a journey, they would not be regarded as being of mercantile quality unless, at the time they were delivered, they were in a fit state to endure a normal journey of that kind in a merchantable state when they arrived

Question 95

Bartlett v Sidney Marcus ltd [1965] 1 WLR 1013

Answer 95

Rule: Buyer cannot complain of defect drawn to their attention

Question 96

Britvic Soft Drinks Ltd v Messer UK Ltd [2002] EWCA Civ 548

Answer 96

Concerning satisfactory quality: s.14(2)

Case: Carbon dioxide supplier for use in sparkling drinks had been contaminated with carcinogenic

Decision: Although the gas did not infringe the relevant British Standard and would not pose threat to health in quantities used in the drinks, it was held not to be of satisfactory quality because it was commercially necessary for the buyer to recall all the drinks from sale for fear of adverse publicity

Question 97

Jewson Ltd v Kelly [2003] EWCA Civ 1030

Answer 97

Concerning satisfactory quality: s.14(2)

Case: K bought 13 electric boilers when converting former school building into flats; they worked well but gave flats ‘low home energy ratings’ under government assessment procedure which may put off potential buyers

Decision: Held to be of satisfactory quality

Question 98

Bramhill v Edwards [2004] 2 Lloyd’s Rep 653

Answer 98

Concerning satisfactory quality: s.14(2)

Case: B bought motor home from E (imported from US); turned out to be two inches wider than the legal limit in this country; evidence that similar over-width motor homes used in the UK and authorities were turning a blind eye

Decision: No breach of s.14(2)

Question 99

Balmoral Group Ltd v Borealis [2006] EWHC 1900

Answer 99

Concerning satisfactory quality: s.14(2)

Case: Polythene supplied for manufacture of oil tanks but many of the tanks became brittle and fractured

Decision: A manufacturer who switched to a new type of polyethylene could be expected to review its processing operations so that the tanks which it produced where of acceptable standard

Rule: The test of satisfactory quality did not require that where a material had a very wide range of possible uses the ‘fit for purpose’ test should mean ‘fit for every conceivable purpose’

N.B. Cases above where decided under the former law, which in effect required the buyer to prove that the circumstances were such as to show that he relied on the seller’s skill and judgment. Section 14(3) now reverses the position, leaving it to the seller to show that the buyer did not rely on his skill and judgment, or that it was unreasonable for him to do so. However, it is likely that the same result would now be reached in each case under the revised wording

Question 100

Cammell Laird & Co Ltd v Manganese Bronze & Brass Co Ltd [1934] AC 402

Answer 100

Concerning fitness for purpose: s.14(3)

Case: C agreed to build two ships for U, and had contracted with M to have propellers made for these ships to designs which specified the general dimensions of the propellers but not the thickness and shaping of the blades; M was left as specialists to determine; first suppliers provided where defective

Decision: The defects lay in those areas of the design where C had relied on M’s specialist skill and judgment

Rule: Where there is reliance on seller’s specialist skill and judgment, the seller is responsible for goods not being fit for purpose

N.B. Cases above where decided under the former law, which in effect required the buyer to prove that the circumstances were such as to show that he relied on the seller’s skill and judgment. Section 14(3) now reverses the position, leaving it to the seller to show that the buyer did not rely on his skill and judgment, or that it was unreasonable for him to do so. However, it is likely that the same result would now be reached in each case under the revised wording

Question 101

Teheran-Europe Co Ltd v ST Belton (Tractors) Ltd [1968] 2 QB 545

Answer 101

Concerning fitness for purpose: s.14(3)

Case: B contracted to sell mobile air compressors to be sold in Iran

Decision: Sellers where aware that to be resold in Iran, however the buyers knew all about the particular conditions for sale and relied on their own skill and judgment to see if suitable for Iran

N.B. Cases above where decided under the former law, which in effect required the buyer to prove that the circumstances were such as to show that he relied on the seller’s skill and judgment. Section 14(3) now reverses the position, leaving it to the seller to show that the buyer did not rely on his skill and judgment, or that it was unreasonable for him to do so. However, it is likely that the same result would now be reached in each case under the revised wording

Question 102

Henry Kendall & Sons v William Lillico & Sons Ltd (Hardwick Garm Farm v SAPPA) [1969] 2 AC 31

Answer 102

Concerning fitness for purpose: s.14(3)

Case: H’s pheasants killed by eating goods supplied by S; obviously a good cause of action; but how far can that loss be handed to the various merchants up the line of supply?

Decision: Where supplier knew of purpose, then liable

Question 103

Ashington Piggeries Ltd v Christopher Hill Ltd [1972] 1 A.C. 441

Answer 103

Concerning fitness for purpose: s.14(3)

Case: Toxin in animal seed that effect animals to varied degrees, particularly harmful to mink

Decision: Although only the buyers had any expertise relating to mink, it was held that both the sellers and their Norwegian suppliers were in breach of s.14(3), because they had been relied on to supply goods which were reasonably fit for feeding to animals generally (not limited specifically to mink)

Question 104

Aswan Engineering v Lupdine [1987] 1 All ER 135

Answer 104

Rule: The wider the purpose (s.14(3)) the great the dilution of the seller’s responsibility