PASSING OF PROPERTY IN THE GOODS
•Passing of the property in the goods
•Passing of the property: why is it important?
•In a nutshell, it signifies the moment when the seller cease to be, and the buyer becomes the owner of the goods
•The buyer bargains for the ‘property in goods’ and not in their ‘possession’
•Agreement to Sell
•The Contract is executory
•Any remedy against the seller is in damages for breach
•The risk of loss is on the seller
•If the seller becomes insolvent, the buyer has no rights to the goods
•Where the buyer becomes insolvent the seller can claim the goods back
•The buyer cannot insist on in rem rights against third parties (Sillavan v Aliakmon 1986)
•Sale agreements
•There is a conveyance in addition to the contract
•The buyer has in rem rights
•The buyer is left with all the responsibility for the goods, including risk of lost
•The doctrine of frustration is inapplicable; s 7 of SGA
•Where the seller becomes insolvent the buyer can claim the goods
•Risk
•General Rule: Any damage to goods ought to fall on the person who is the owner of it (Head v Tattersall 1871)
•The rule can be waived by an agreement (applies only ‘unless otherwise agreed) S 20 SGA-Leigh Sillavan v Aliakmon 1986)
•The agreement does not have to be express, and can be inferred (Head v Tattersall 1871)
•Exceptions to the general rule (Risk)
•(A) s 20(2): Two accumulative conditions:
•(1)the seller or buyer fails to deliver/take delivery of the goods at the proper time through his fault resulting in loss
•(2) that loss might not have occurred but for such fault (Demby Hamilton [1949]
•The goods are at the risk of the party at fault
•Cont.
•(B) where the seller is the bailee of the goods, he is under a duty to use such care as a reasonably prudent owner would take of his own property *Wiehe v Dennis Bros (1913)
•(C) The risk may pass despite that the property hasn’t; the parties may by agreement place the risk on the buyer. See unascertained goods (Sterns Ltd v Vickers where the buyer assumed the risk of loss or damage in respect of their share of the bulk spirit [1923]).
•*s 20 (A) resolves partly this conundrum
•Cont. Consumer Sales
•*none of the exceptions will apply in consumer sales 20(4)… Risk is passed when goods are delivered to the consumer
•Ss 6 and 7; destruction of specific goods.
•Section 6: 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.
•Couturier v Hastie (1856) + McRae (1950); if the seller warrants to sell goods, despite that they had never existed, the seller is liable to pay damages for breach of this term
•Note that s 6 did not apply because the Section envisages the existence of specific goods.
•Cont.
•Any role to Hedley Byrne [1964]?
•Emptio spei [purchase of hope] (the buyer may take the risk)
•The meaning of perish
•The court gives a broad meaning to the term ‘perish’
•A scenario ‘partial loss’ is sufficient to fall under the ambit of s 6; “A contract for a parcel of 700 bags is something different from a contract of 591 bags (Barrow v Phillip [1929]) Wright J argued that it would be unjust to compel someone to take delivery, something he had not contracted to take.
•Deterioration in quality less than total destruction can still qualify as ‘perished’ within the statutory meaning (See Asfar v Blundell [1896])
•Section 7: Specific goods which subsequently perish
•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
•Sec. 7 applies where the risk passes to the buyer, covering cases which are an exception to s18
•Cont. Se. 7
•Where Sec.7 Applies the contract is avoided and therefore, the seller is not obliged to deliver, and the buyer is not obliged to pay for the price of the goods
•Restitutionary right of the buyer is observed
•Common features between s.6 and s. 7
•s.6 and s.7 are rules of presumed intention, which could be excluded by a contrary extension (contentious as it runs in the dace of the language of both sections)
•If the matter falls outside the scope of s.6 and s. 7 the rights of the parties will be governed by common law rules relating to Common mistake and frustration.
•Perishing of unascertained goods
•(1) Generic goods
•To dissolve the contract the event relied on must be something which both parties had in their mind when they entered into the contract (the availability of ordinary facilities for dispatching the timber from Finland (BlackBurn [1918])
•“the warp and woof of industrial and commercial aggravation”, such commonplace events as a breakdown of machinery or the inadequacies of a railway are far removed from the legal doctrine of frustration (Intertradex [1977])
•Cont.
•(2) goods which are to be appropriated from a specific bulk or source
•In Howell v Coupland (1876) the court of appeal said that ‘there should be a condition implied that before the time of performance of the contract the potatoes should be, or should have been in existence, and should still be existing when the time came for the performance’.
•Cont.
•Often the court will imply that if there is a shortfall the seller is bound to let the buyer have the smaller amount which has been produced (HR &S Sainsbury v Street [1972]
•Relevant to (1) and (2): Parties can agree on terms which serve to discharge the parties liabilities in the likelihood of an event; ‘force majeure’
•Passing of the property: why is it important?
•In a nutshell, it signifies the moment when the seller cease to be, and the buyer becomes the owner of the goods
•The buyer bargains for the ‘property in goods’ and not in their ‘possession’
•Agreement to Sell
•The Contract is executory
•Any remedy against the seller is in damages for breach
•The risk of loss is on the seller
•If the seller becomes insolvent, the buyer has no rights to the goods
•Where the buyer becomes insolvent the seller can claim the goods back
•The buyer cannot insist on in rem rights against third parties (Sillavan v Aliakmon 1986)
•Sale agreements
•There is a conveyance in addition to the contract
•The buyer has in rem rights
•The buyer is left with all the responsibility for the goods, including risk of lost
•The doctrine of frustration is inapplicable; s 7 of SGA
•Where the seller becomes insolvent the buyer can claim the goods
•Risk
•General Rule: Any damage to goods ought to fall on the person who is the owner of it (Head v Tattersall 1871)
•The rule can be waived by an agreement (applies only ‘unless otherwise agreed) S 20 SGA-Leigh Sillavan v Aliakmon 1986)
•The agreement does not have to be express, and can be inferred (Head v Tattersall 1871)
•Exceptions to the general rule (Risk)
•(A) s 20(2): Two accumulative conditions:
•(1)the seller or buyer fails to deliver/take delivery of the goods at the proper time through his fault resulting in loss
•(2) that loss might not have occurred but for such fault (Demby Hamilton [1949]
•The goods are at the risk of the party at fault
•Cont.
•(B) where the seller is the bailee of the goods, he is under a duty to use such care as a reasonably prudent owner would take of his own property *Wiehe v Dennis Bros (1913)
•(C) The risk may pass despite that the property hasn’t; the parties may by agreement place the risk on the buyer. See unascertained goods (Sterns Ltd v Vickers where the buyer assumed the risk of loss or damage in respect of their share of the bulk spirit [1923]).
•*s 20 (A) resolves partly this conundrum
•Cont. Consumer Sales
•*none of the exceptions will apply in consumer sales 20(4)… Risk is passed when goods are delivered to the consumer
•Ss 6 and 7; destruction of specific goods.
•Section 6: 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.
•Couturier v Hastie (1856) + McRae (1950); if the seller warrants to sell goods, despite that they had never existed, the seller is liable to pay damages for breach of this term
•Note that s 6 did not apply because the Section envisages the existence of specific goods.
•Cont.
•Any role to Hedley Byrne [1964]?
•Emptio spei [purchase of hope] (the buyer may take the risk)
•The meaning of perish
•The court gives a broad meaning to the term ‘perish’
•A scenario ‘partial loss’ is sufficient to fall under the ambit of s 6; “A contract for a parcel of 700 bags is something different from a contract of 591 bags (Barrow v Phillip [1929]) Wright J argued that it would be unjust to compel someone to take delivery, something he had not contracted to take.
•Deterioration in quality less than total destruction can still qualify as ‘perished’ within the statutory meaning (See Asfar v Blundell [1896])
•Section 7: Specific goods which subsequently perish
•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
•Sec. 7 applies where the risk passes to the buyer, covering cases which are an exception to s18
•Cont. Se. 7
•Where Sec.7 Applies the contract is avoided and therefore, the seller is not obliged to deliver, and the buyer is not obliged to pay for the price of the goods
•Restitutionary right of the buyer is observed
•Common features between s.6 and s. 7
•s.6 and s.7 are rules of presumed intention, which could be excluded by a contrary extension (contentious as it runs in the dace of the language of both sections)
•If the matter falls outside the scope of s.6 and s. 7 the rights of the parties will be governed by common law rules relating to Common mistake and frustration.
•Perishing of unascertained goods
•(1) Generic goods
•To dissolve the contract the event relied on must be something which both parties had in their mind when they entered into the contract (the availability of ordinary facilities for dispatching the timber from Finland (BlackBurn [1918])
•“the warp and woof of industrial and commercial aggravation”, such commonplace events as a breakdown of machinery or the inadequacies of a railway are far removed from the legal doctrine of frustration (Intertradex [1977])
•Cont.
•(2) goods which are to be appropriated from a specific bulk or source
•In Howell v Coupland (1876) the court of appeal said that ‘there should be a condition implied that before the time of performance of the contract the potatoes should be, or should have been in existence, and should still be existing when the time came for the performance’.
•Cont.
•Often the court will imply that if there is a shortfall the seller is bound to let the buyer have the smaller amount which has been produced (HR &S Sainsbury v Street [1972]
•Relevant to (1) and (2): Parties can agree on terms which serve to discharge the parties liabilities in the likelihood of an event; ‘force majeure’
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