Examiners’ reports 2017

Examiners’ reports 2017

LA2017 Commercial law – Zone B

Introduction
This document sets out the Chief Examiner’s report for the examination paper in
Commercial law Zone B and begins some general observations on the examination
scripts as a whole before considering each examination question in turn.
Many candidates answered the questions well. However, across a number of scripts,
two common difficulties were exhibited. One was a very fundamental one: an inability
to recognise that certain areas of law were involved in resolving the hypothetical
problem. For example, in relation to Question 6, many candidates failed to recognise
that this problem concerned the rules on the passing of property, addressing this
instead as a question concerned with the obligations of the seller under ss.12–15 of
the Sale of Goods Act 1979.
A second difficulty was presented by those candidates who did not carefully consider
the facts given in a problem question or contention set out in an essay question. As
a result, their answers often comprised a general discussion of a particular area of
law without any attempt to apply this law towards the resolution of the problem or an
analysis of the essay question. An answer that offers little more than an exposition of
potentially relevant law will invariably be rewarded with a relatively low mark because
the candidate is demonstrating only knowledge of the law and not the ability to utilise
that knowledge.
It is extremely important that candidates apply the law to the issues presented in a
problem. Candidates should consider the principles developed within the relevant
cases and the reasons behind these particular principles. These must then be applied
to the problem to resolve it. In many cases, answers to problem questions amounted
to little more than an outline of some relevant case law, dutifully recorded in the
answer booklet. The reason for this is probably two-fold: first, it is often hard for
intermediate candidates to discern the relevant from the irrelevant and caution
encourages a complete list of cases to ensure that none is omitted; secondly, it is
tempting to produce a lengthy answer in the hope that the examiner will be impressed
by the breadth of knowledge acquired by the candidate. A successful answer
identifies the issues and applies the relevant law to them. Such an answer displays
not only knowledge but also understanding of the subject being examined. The
recitation and discussion of cases which are irrelevant to the question serve to
highlight a candidate’s uncertainty as to which issues are involved in the question. In
other instances, some answers appeared chaotic, as if the candidate had hurried into
an issue without full consideration of the question as a whole. Candidates who
prepare a careful plan of their answer before writing it in full will find that the time
spent in making such a plan is repaid by the clarity of the final answer. Among other
things, it allows candidates to see the interaction of issues before they have
committed themselves to one course or another. It should also prevent candidates
from omitting points they had intended to discuss.

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Many candidates struggled to answer essay questions thoroughly. Their attempts
were often, and unfortunately, confined to the recitation of everything they knew about
a particular subject. In so doing, such candidates often presented a great deal of
material; this presentation was marred by an apparent inability to discern the relevant
from the irrelevant and a lack of analysis as to the underlying nature of the question.
In attempting to answer essay questions, candidates needed to consider the exact
nature of the question asked. At times, this can be very broad, allowing candidates
to draw upon particular areas covered in this course. The information drawn up,
needs to be employed as support for the arguments made in attempting to answer
the question. Candidates should resist the temptation to write everything they know
about a particular area of law and focus on what is relevant to answering the question
set. Candidates must consider whether or not they are addressing their answer to the
question asked. A part of this answer will, necessarily, involve legal analysis. In other
instances, candidates were unable to answer the question asked in an essay
question. They chose, instead, to adapt the question to a topic that they did know
something about. Such an attempt is not, however, an answer to the question asked.
It also leaves the examiners with the impression that the students are unable to
answer four questions from the examination paper.
Finally, many candidates suffered from an inability to budget their time. In these
instances two or three good answers would be followed by a weak (and in some
cases non-existent) effort to answer the balance of the paper.
It goes without saying that it is difficult to succeed where all of a candidate’s efforts
are concentrated on two or three answers when the examination paper requires four
questions to be answered. A number of candidates did not appear to have sufficient
knowledge of commercial law to attempt four questions. Lastly, the examiners in
commercial law wish to emphasise the importance of writing the answers clearly. It is
difficult, and sometimes impossible, to assess the illegible.

Comments on specific questions

Question 1
‘When there is conflict, commercial law rightly emphasises adherence to
established commercial practices over rigid doctrines.’
Discuss.
General remarks
The purpose of this question is to allow candidates to construct a wide range of
answers, referring to almost any aspect of the law that they have studied. It is also
an opportunity to demonstrate an understanding of material beyond the bounds of
the syllabus. However, with this freedom in terms of content comes the requirement
that students must use the material they offer up to address the question, not
merely to describe a range of potentially relevant material. In general, answers to
this question scored relatively low marks because they tended to reprise the
description of law used in another question without providing any explanation as to
its relevance to this question.
 

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Law cases, reports and other references the examiners would expect you to
use
Candidates could have legitimately referred to almost any area of the syllabus
providing they were able to explain how it served to prove or disprove the
contention raised by this question. However, cases and commentary that explicitly
consider the over-arching function of commercial law would be particularly useful
here.
Common errors
There was a failure to engage with the contention and instead to describe, without
any analysis, a particular area of law.
A good answer to this question would…
have a clear and purposeful structure, feature an increasingly prominent critical
narrative drawing on (instead of describing) an ever wider range of evidence but
evidence that is used sparingly and effectively, showing an increasing degree of
discernment and command. An answer in this range would be very much
addressed to the question. A very good answer would draw on evidence from
beyond the syllabus, including recently decided cases and extensive extra-judicial
writing on this topic. Credit would be given for drawing on less obvious (but
credible) examples, which support a candidate’s argument.
The very best answers would demonstrate real command of the material and the
ability to pinpoint a range of examples and bring them together into a compelling
critical account, which demonstrates a strong ability to structure and craft a
response in a short period of time.
Poor answers to this question…
tended to use general terms with few or no references to law, or describe the
general purpose or history of commercial law or refer to a particular area of law
making no effort to relate it to the question, let alone offer an analysis of the
contention itself.
Student extract
Commercial law is certainly an odd creature of sorts. It has been said that it is
neither posited in contract or sales law. Its ambiguous, superfluous nature
only took shape given the codification efforts of several piece of legislation to
hack out a plan, albeit a legal route or map or GPS, for merchants (in the
past) and now, commercial parties.
Given its rather outlandish nature it is like all other forms of law in the UK, a
mix between statutory reforms and common law cases. Although it was
initially a backdrop that operated for business partners alone, it is clear that
with the advent of the UTCCR 1999 and now Consumer Rights Act 2015, it is
taking on a new form to cater to non-commercial parties. This in all honesty
seems rather comical, if not humorously bizarre because the very same
‘commercial law’ should only cater for commercial parties, should not
consumers have a separate realm of law that does not intrude on the sanctity
of commercial transactions and business processes?
Comments on extract
This is an example of a fairly weak but very typical example of an answer to this
question. These are the two opening paragraphs of this candidate’s answer.
The first thing to note is that there is no proper introduction. An essay of any quality
must begin with a clear introduction setting out what the essay is concerned with
and an outline of the thesis that it will seek to advance. In other words, what point it

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will try to make. In addition, an effective introduction will also set out how the
argument will be structured.
Each point then requires an effective introduction, here, the opening sentence of the
second paragraph tells the reader very little about what is going to be argued, just
offers a very subjective observation. This observation, as with many others in this
answer, is expressed using language that is neither, clear, accurate not wholly
appropriate for an essay. It is important to be measured and avoid hyperbole, it is
also not necessary to repeat a point several times using different words.
There is a lack of solid evidence for the contentions made here. For each
contention, some sort of evidence must be offered. It is necessary to explain the
law, citing relevant authority, before continuing to offer some analysis. It is very
difficult to piece together an argument simply by presenting examples of
commercial law as evidence, there must be some analysis explaining what exactly
that evidence means, does it suggest that the contention is correct, or not, and why
this is the case. What we see here are three examples of commercial legal
rules/problems with little detail about the law. This is also essential with a little said
about them to make it clear how or why they relate to this question and the point
that is being made.
What can be seen here is an absence of a clear explanation of the law and no
analysis, nothing to indicate how it relates to the question and the answer is very
much weaker as a result.
Question 2
‘The remedies available to the seller of goods under the Sale of Goods Act
1979 offer very little comfort at all.’
Discuss.
General remarks
This question required candidates to consider the real and personal remedies
available to a seller of goods under the SGA. Few candidates chose to answer this
question.
Law cases, reports and other references the examiners would expect you to
use
Primarily, this question required students to offer an analysis of SGA, ss.38–50 and
related case law.
Common errors
A small number of candidates addressed this purely as a question concerned with
retention of title clauses.
A good answer to this question would…
distinguish between real and personal remedies and work methodically through the
statutory provisions, making reference to the case law, considering the individual
and collective strength of the remedies as a remedial scheme and clearly relating
this analysis to the question posed.
Poor answers to this question…
did little more than reproduce sections of the SGA, offering little or no case law and
with little or no effort to relate the statutory provisions to the question posed.
 

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Question 3
Idris owns a restaurant. He appoints Michelle as restaurant manager to run it.
Idris expressly prohibits Michelle from placing orders for goods with anyone
other than his regular suppliers. Idris has informed his regular suppliers of
Michelle’s appointment. Michelle is also aware that Idris has a cash flow
problem due to several account customers being slow payers. Idris has
decided to refuse to accept any further bookings from such account
customers until their accounts are cleared.
Shortly after Michelle was appointed, the restaurant runs out of takeaway
menus. Idris’s usual printer cannot supply the menus for two weeks and so
Michelle contacts Quickprint Ltd, a new company. Tawny, a representative of
Quickprint, visits the restaurant and Michelle agrees to purchase menus to
the value of £200 on Idris’s behalf.
Tawny, who also works as a representative for a company which provides an
app which customers can use to order takeaway food, persuades Michelle to
purchase a subscription to the app at a cost of £8,000 per year. Tawny is
concerned Michelle does not have authority to enter into the agreement as
restaurant managers normally seek authority from the owner for such a large
amount of money but Michelle assures her she has the authority. The
payment for the first year is now due.
Colin is an account customer. He makes an account booking for 100 people
which Michelle gladly accepts. It subsequently transpires that there is a large
amount of money outstanding on Colin’s account.
When Idris discovers what Michelle has been doing they have an argument
and Michelle resigns. The next day Michelle goes to Morton & Son Ltd, Idris’s
regular supplier of wine, and purchases two dozen bottles of wine on credit to
Idris’s account. Michelle has a party at which all of the wine is consumed.
Advise Idris.
General remarks
This question was one of the most frequently attempted on this examination. The
majority of candidates identified that this question was concerned with the law of
agency and primarily concerned with the authority (or lack of) of the would-be
agent. The overall standard of answers however, was not high. Candidates failed to
show an appreciation of both problem question technique and a detailed grasp of
the law and its application.
In terms of technique, there was a general tendency to begin with a general
descriptive preamble of the law of agency, which did little or nothing to address the
question. Such broad introductions that make no substantive reference to the
question should be avoided. Further, many candidates proceeded to give a lengthy
account of relevant law but then failed to apply it to the question. It must be borne in
mind that a problem question is primarily an exercise testing a candidate’s ability to
select and apply the law. A candidate who has a confident grasp of the law will be
able to focus on the relevant and exclude the irrelevant. Lengthy, broad accounts of
the law demonstrate neither skill nor a description of the law, however detailed and
well-referenced will only ever garner a mark below the 2:1 level. The focus must be
on the application of the law so as to provide reasoned advice.
 

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The second point in relation to technique concerns statements of law. Many
answers to this question failed to make clear statements of the relevant legal
principles (talking in general terms about ‘authority’, for example) and, for the most
part, candidates failed to define those principles with reference to the case law. As
a result, there was a limited base from which to properly analyse the problem at
hand. While lengthy description should be avoided, clear, properly referenced
statements of relevant principle are an essential prerequisite for an effective
analysis of the problem and are fundamental in showing a candidate’s
understanding.
In terms of legal understanding, most candidates demonstrated only a superficial
comprehension of the relevant legal rules, with very few showing an understanding
of more complex and recent decisions, especially those relevant to the second part
of the question.
Law cases, reports and other references the examiners would expect you to
use
Candidates should consider the cases that define the various forms of authority:
Montgomerie, Ireland v Livingstone (actual express authority), Hely-Hutchinson v
Brayhead, Waugh v Clifford (actual implied authority) Rama Corp, Freeman
Lockyer (apparent authority) as well as cases that consider the requirements of
apparent authority such as Bank of Kuwait v Hamoud, The Ocean Frost, First
Energy v Hungarian International Bank, CRJ Services v Lanstar and, on reliance,
Criterion Properties v Stratford and Hopkins v TL Dallas. Complete answers would
also consider the termination of agency, especially apparent authority (SEB Trygg
v Manches).
Common errors
While most responses to this question appreciated that it was concerned with
agency and particularly authority, common errors included the following.
In relation to the purchase of menus, dealing with this as a matter of actual implied
usual or actual implied incidental authority. This overlooked the fact that where an
agent is expressly prohibited from a particular act, they cannot have actual implied
authority for that same act. Actual implied authority after all still requires actual
authority, which is absent where the agent has been expressly prohibited. The issue
here therefore was whether the agent had apparent authority.
In relation to the subscription to the app, most candidates failed to consider the
position of self-authorising agent and the difficulty posed by the decisions in The
Ocean Frost and First Energy.
In relation to the account customer, most candidates simply failed to offer any legal
basis for their advice.
In relation to the wine purchase, most candidates failed to see that the issue raised
here was termination of agency and, since the agents actual authority had clearly
been terminated, to consider how an apparent authority if it existed would be
terminated.
Many candidates wrongly considered and applied Watteau v Fenwick. This is a very
particular decision thought largely to be on its own facts and lacking a clear ratio. As
such, unless the facts of the present were materially the same, (not the case here) it
need not be considered.
While not an error as such, many answers considered at length whether Idris would
be able to ratify the transactions, in the context of the problem this is unlikely to be
helpful in the majority of cases.

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A good answer to this question would…

focus on addressing the question, go directly to consider the issues individually and
in order. Make clear, accurate, properly referenced statements of law and apply
them in detail to the facts.
Poor answers to this question…
generally offered vague discussion about authority or agency but in descriptive and
general terms with little effort to distinguish the different forms of agency or
reference relevant case law.
Student extract
The question in the present scenario is concerned with the agency
relationship established between Idris and Michelle, in which Idris is the
principal and Michelle is an agent for Idris upon appoint as restaurant
manager to run restaurant owned by Idris.
The first issue is whether Michelle was in breach of agency owed to Idris, her
principal. The relevant law of agency is that an agent will be in breach of the
contract of agency owed to the principal if the agent has exceeded the
express or implied actual authority conferred by the principal. In the instant
scenario it is obvious that Michelle has been in breach of her obligations as
agent to Idris, on the fact that Michelle has exceeded her authority given by
Idris by not placing orders with anyone other than his regular suppliers, here
the present case is that transaction entered into between Michelle on behalf
of Idris and Tawny, who is not a regular supplier, has been in breach of the
express authority given by Idris. So I will advise that the transaction between
Michelle and Tawny is not binding on Idris.
Comments on extract
This is an example of a fairly weak but not atypical answer to this question.
Turning first to the introduction, while it is brief, as an introduction to a problem
question usually should be, and while in an examination a perfectly crafted
introduction is not expected, this introduction lacks precision. An introductory
paragraph is an opportunity to identify the main issue/s raised by the question and
from that, identify the legal issues that will be addressed. In doing so, you identify
for yourself and the reader the structure that the answer will take.
The introduction here fails to properly identify what the issue is, i.e. whether Idris
will be bound to the transactions. It is reasonable to assume that as he has
expressly prohibited Michelle from working with anyone but his usual suppliers he is
keen to escape liability for them. The legal issue therefore, is whether Michelle had
authority for the transactions she entered into, and, if she exceeded that authority,
whether Idris may still be bound. It may be useful here to set out the types of
authority to be considered, if it is sufficiently clear at the outset such that later
discussion will not be needed. A general discussion of agency (which despite being
mentioned does not feature in this answer) is not needed, or at least not at length. A
good answer may simply state the fundamental of agency and continue to consider
the question at hand.
This answer usefully states the issue that will be considered first. This is something
that is easily overlooked, ‘signposting’ greatly improves structure and clarity.
However, the issue is not fully or accurately stated here.
This answer then moves immediately to make a statement of law that is again very
general. Because the opening sentence was not well constructed it is not clear how
this is relevant. Further, no authority is offered for this contention.

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A better answer would have noted that Michelle has actual express authority but
that it is explicitly limited before going on to state where there is an express
limitation on an agent’s actual express authority, their authority cannot be extended
by reference to their actual implied authority. Clarity as this point would avoid the
later discussion of ‘usual authority’, which is not possible and not well placed at this
point in the answer.
Having established that there is a want of actual authority, a pre-requisite for
considering apparent authority, there is then a clear and logical progression to the
discussion of apparent authority. Instead, this candidate rapidly reaches a brief
conclusion on the basis of almost no reasoning or evidence.
A better answer would have discounted actual authority then gone on to explain
apparent authority, noting it is a form of estoppel that might be pleaded by the third
party, the effect being the same as if the principal had given authority. This would
show an appreciation of the nuance of the concept and that it can only be argued by
a third party.
Having failed to consider this, the candidate has provided themselves with no
opportunity to demonstrate their knowledge of this topic. A better answer would
have identified that Freeman Lockyer sets out the requirements for apparent
authority offering some degree of detail on these. The answer would then proceed
to apply the law, considering whether the requirements are fulfilled on the facts.
Here, there appears to be little or no evidence of a representation (unless merely
presenting Michelle as restaurant manager would amount to one) and so it seems
unlikely a claim based on apparent authority would be successful.
Overall, this answer should cite more authority, provide a more substantive
introduction, ensure a better structure by focusing on the question and define key
concepts to provide a clear structure for the application of the law to the facts.
Question 4
‘Retention of title clauses which seek to assert the seller’s rights over
manufactured goods and proceeds of sale very often fail.’
Discuss.
General remarks
This question invited candidates to analyse the limitations on retention of title
clauses, particularly considering why claims that extend to manufactured goods, or
the proceeds of sale generally fail.
Law cases, reports and other references the examiners would expect you to
use
When setting out the general principles, reference to the Romalpa decision is
essential.
In respect of claims to manufactured goods cases such as Clough Mill v Martin, Re
Andrabell, Re Peachdart, Borden v Scottish Timber Products, Modelboard v
Outerbox, Re Hendy Lennox could all have been usefully discussed.
Cases such as Re CKE Engineering, Indian Oil v Greenstone Shipping, involving
the mixing and comingling of goods may also have been considered.
In respect of claims to the proceeds of sale, further consideration of Romalpa,
Clough Mill would be expected. Discussion Pfeiffer v Arbuthnot and Compaq v
Abercorn and Tatung v Galex Telesure are indispensable.
 

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Common errors
There were few common errors with this question. The main shortcoming was a
lack of detail, lack of structure and lack of focus on the two issues specifically raised
by the question.
A good answer to this question would…
begin by clearly defining what is meant by a retention of clause, offering an
explanation of the general principles and the importance of identifiability. A good
answer would then go on to consider the case law in respect of manufacturing
processes and claims to sale proceeds, illustrating how and why such claims have
invariably failed, considering both the legal and policy aspects of those decisions.
Poor answers to this question…
did little more than offer a generalised commentary on the nature of retention of title
clauses or why they are used, with little understanding of the issues raised by the
questions and little or no authority for the basic points made.
Question 5
Mo runs a business supplying office equipment. His business is not a limited
company. Mo entered into two contracts with Pulp Products Ltd (PPL), a
stationery and office equipment wholesaler:
a) A contract for ‘1,000 packs, 500 sheets per pack, plain A4 size printer
paper, 80g per m2 weight, recycled paper content to be no less than
50%’. The total cost of the paper was £2,500.
PPL delivered 995 packs of plain A4 size printer paper, 500 sheets
per pack, all 80g per m2 weight, 560 of the packs supplied state they
are made from ‘100% new pulp’ i.e. have no recycled content. On
many of the packs of paper, the packaging used is dirty and torn. It
is now a week after delivery, all the paper remains in Mo’s
warehouse. Mo wishes to reject the entire delivery.
b) A contract for a colour photocopier, which Mo has bought from PPL
for £7,000 in order to offer a copying service to his customers. Mo
has also occasionally used the copier for his own personal use. In
the first week after delivery, the paper feed mechanism broke twice
and caused serious overheating. It was repaired by PPL. The
machine broke again three weeks later. Mo told PPL he would like
them to seek advice from the manufacturer before they repaired it
again. Eight weeks later, the manufacturers told PPL they must fit a
redesigned part in order for the machine to work properly and avoid
overheating and that a lasting repair may result in slower
performance. Mo has now waited a further six weeks before
deciding to reject the goods.
PPL claim he is not entitled to reject the goods under either contract.
Advise Mo.
General remarks
This question was attempted by a substantial number of candidates. Almost all
correctly identified this question was concerned with the implied terms of the Sale of
Goods Act 1979 (SGA). The majority of candidates, however, failed to provide a
thorough analysis of the implied terms in the context of the question, or to fully
consider the available remedies.
 

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Law cases, reports and other references the examiners would expect you to use
Candidates attempting this question should have made reference to ss.13, 14(2)
and 14(3) of the SGA and a range of case law on the implied terms.
In relation to s.13, Ashington Piggeries and Harlingdon Leinster are especially
important as they provide guidance on the meaning of the implied term.
In relation to s.14(2), Stevenson v Rogers and a range of case law elaborating on
the meaning of the criteria in s.14(2C) should be used. Particularly in relation to
fitness for all common purposes (Aswan v Lupdine) and freedom from minor defects
(Rogers v Parish, Bernstein v Pamson Motors and Millars v Turpie). N.B. there are
many others. In relation to s.14(3), Manchester Liners v Rea, Slater v Finning and
Griffiths v Peter Conway, Kendall v Lillico and Jewson v Boyhan.
In relation to s.35(4), Clegg v Anderson and Jones v Gallagher.
Common errors
There was a tendency to describe in broad terms the implied terms but make little
effort to apply the law to the facts and conflating s.14(2) and s.14(3). Also
insufficient reference to the case law on the SGA implied terms.
Poor understanding of s.13 and especially the meaning of ‘description’ in s.13.
Misunderstanding the s.14(2) requirement that a sale must be in the course of
business, applying this to the buyer instead of the seller, many citing R&B Customs
Brokers. Section 14(2) is quite clear that it applies where the seller sells in the
course of business. R&B Customs Brokers concerned instances when a business
could ‘deal as a consumer’ under now repealed sections of the UCTA. It is no
longer good law and not material here in any case (see below).
Failing to consider remedies or focusing on damages rather than rejection. Where
rejection was considered, analysis/application of s.35 was invariably weak with little
apparent understanding of the statute or the relevant case law. There was repeated
reference to Bernstein v Pamson Motors which was overruled by the CA in Clegg,
which is now the authority on what amounts to a reasonable time for purposes of
s.35(4).
Consideration of the UCTA (both in its pre-2015 and post-2015 form) as
determining the available remedies, despite the question making no reference to
exclusion clauses.
A good answer to this question would…
consider the status of the buyer and identify that, while a private buyer may fall
within the ambit of the CRA, this is clearly an SGA problem. Identify the most useful
implied term for each part of the question and work methodically through each part
of that term. Consider that s.13 could be relevant but show an appreciation that it is
often of limited use, noting how narrow the concept of ‘description’ has been held to
be. Focus on s.14, dealing separately with s.14(2) and s.14(3), showing an
appreciation that these are discrete terms. Again, working methodically through the
provisions: consider if there has there been a sale in the course of business, state
the overall standard, use the case law and factual analysis to determine what is the
relevant standard in relation to the particular goods.
Having clearly established a breach of the implied term, identify repudiation of the
contract and rejection of the goods as the most desirable remedy. Set out that this
follows from a breach of the implied conditions and consider whether the right could
have been lost as a result of acceptance (noting the effect of s.11). Consider
whether any of the triggers for acceptance in s.35 have occurred, focusing on
s.35(4), and consider whether a reasonable time has elapsed, refer to the CA
decisions in Clegg and Gallagher particularly.

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Poor answers to this question…

offer no legal analysis/basis, simply stating that given the price, defects, etc. some
remedy should be available. Or, broadly note that the implied terms are relevant
and perhaps describe them, often reproducing them from the statute book. State
that the term has been breached (or not) with little, if any, reasoning. Make no
consideration of remedies or state in non-legal terms that the goods could be
rejected while offering legal basis for this.
Question 6
Interiors Ltd is selling paint online and in a single small shop. Over the
course of the year, Interiors Ltd has experienced a substantial fall in sales
and have now entered insolvent liquidation. The liquidator, Adrian, has now
become aware of the following transactions:
a) Ari and Bob each ordered four five-litre cans of ‘Mayan Gold’ paint
from the Interiors Ltd website. Interior Ltd’s acknowledgement of
their orders noted that the goods were ‘in stock in our shop ready to
collect’. They both paid in full for their paint at the time they placed
their orders.
b) Commercial Finishing Ltd ordered an ‘XL Trade Pack’ of white paint.
The liquidator has established that when Commercial Finishing Ltd
placed his order, they only had a single XL Trade Pack of white
paint in stock. Commercial Finishing has not paid for the paint.
c) Interiors Ltd offered a service whereby customers could add glitter
to paint to give it a sparkling appearance. Dreepto selected a five-
litre can of paint and left it with Interiors Ltd to add the glitter and
mix it. The glitter was added and the paint mixed but Interiors Ltd
did not contact Dreepto to tell him this had been done and remains
in the possession of Interiors Ltd.
d) Ed ordered 10 cans of ‘Deep Burr’ varnish. At the time, Interiors Ltd
had 25 cans of Deep Burr varnish in stock. After Ed placed his order
they sold and delivered 20 cans to another buyer. Ed’s is the only
outstanding order for Deep Burr varnish, however, the varnish does
not bear Ed’s details.
The buyers are now demanding delivery of the goods.
Advise Adrian.
General remarks
This question primarily concerned the passing of property with aspects of risk. In
each case, candidates were expected to determine whether property has passed to
the buyer of the goods, showing an understanding of SGA, ss.16–18, 20, 20A and
20B.
This question was not widely attempted and most answers were of a reasonable
standard, although a good number simply described the relevant law making no
attempt to apply it
Law cases, reports and other references the examiners would expect you to use
A competent answer to this question would have included consideration of SGA
ss.16, 17, 18, 20A and 61 and the case law that elaborates the meaning of the
words used in those sections, such as Underwood v Burgh Castle Cement Brick &
Cement Syndicate on the meaning of ‘deliverable state’ and Carlos Federspiel v

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Twigg on the meaning of ‘unconditional appropriation’. In respect of the first part of
the question, consideration of quasi-specific goods and the case law related to them
(e.g. Re Wait) were important.
Common errors
The most common error was a failure to apply the law to the question in order to
solve the problem, instead candidates often simply gave a brief description of the
statutory provisions. Other common errors included assuming payment was always
relevant to the passing of property (when s.18 applies it is not), identifying the
wrong rule to solve the problem and relying on s.17 despite the question making no
suggestion that the parties had expressed any intention.
In respect of the first part, a number of candidates also overlooked s.20A when
addressing the first part of the question.
In respect of the second part, many candidates failed to identify that the goods were
specific and dealt with this incorrectly as a s.17 or s.18, r.5 issue.
In respect of the third part, many candidates failed to note that for property to pass
under s.18, r.2, notice must be given to the buyer, which here it was not.
In respect of the fourth part, many candidates addressed this as a simple case on
unconditional appropriation, when in fact there was an instance of ascertainment by
exhaustion (s.18, r.5(3)).
A good answer to this question would…
work methodically through each part of the problem in sequence, accurately and
succinctly determining the type of goods concerned (i.e. specific, unascertained,
etc.) using this to determine the applicable rule on the passing of property, noting
the effect of s.16 and the absence of intention under s.17. A good answer would
also make use of relevant case law to show a deeper understanding of the statutory
provisions.
Poor answers to this question…
tended to say little about the problem little itself, instead broadly describing the
statute and drawing conclusion about the parties ‘must have intended’, addressing
this as a s.17 question, when in fact the question is intentionally silent on the
parties’ intentions.
Question 7
The report of the Crowther Committee on Consumer Credit stated in 1971
that, ‘Statutory protection for the bona fide purchaser has developed in a
piecemeal and haphazard fashion; and some of the relevant provisions have
been so drafted and interpreted as to make their application depend not on
principles of equity or justice but on fine technicalities.’
Discuss.
General remarks
Very few candidates attempted this question. In essence, what was required was an
explanation of the nemo dat principle and an analysis of the exceptions to it, with
potentially some discussion of the justification for the existence of those exceptions.
This question required candidates to look at the overall scheme of the exceptions
and consider whether they could be regarded as a coherent whole, or, as the
Crowther Committee suggested, a highly technical, complex and not wholly
coherent set of provisions.
 

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 Examiners’ reports 2017

Law cases, reports and other references the examiners would expect you to
use
There is a very wide (and invariably critical) literature on the exceptions as a whole
and in addition, a great deal is written about a number of prominent decisions (e.g.
Shogun Finance v Hudson and other cases concerning mistaken identity), any
reference to this commentary would have been a useful addition to an answer.
Any answer of quality required a consideration of SGA, ss.21, 23, 24 and 25 and/or
the equivalent provisions in the FA as well as ss.1 and 2 in addition to the case law
that elaborates on the meaning of the words used in the statute.
Common errors
The most common error was a failure to fully engage with the question, taking it as
an invitation to simply replicate the statute book or to describe the overall scheme,
often with reference only to the statutory provisions but offering no analysis of it, i.e.
little or no discussion of whether the scheme was accurately described by the
Crowther Committee or not.
A good answer to this question would…
identify the basic legal rule as codified in s.21 SGA and note the structure of the
overall scheme – a range of provisions spread across the SGA and FA and
common law.
A good answer would offer some comment on this structure, noting a scheme with a
number of duplicate provisions and not found in a single statute, is itself not
conducive to the understanding of ordinary commercial people.
A good answer would then continue to offer an exposition of the entire scheme of
exceptions, outlining the content of each exception and proceeding to indicate
whether or not that particular exception served to prove or disprove the contention.
In the time available in the examination, detailed analysis of each provision is a
challenge and therefore a good answer may simply outline and briefly critique some
provisions and give a more detailed consideration of others.
There are many valid points that could be made in relation to the provisions, these
might include comment on the clarity of the language they contain, the minor
differences between the provisions in the FA and SGA, the different effect that each
provision has and the individual complexity of each. Further, a good answer would
inform the analysis with consideration of a range of case law, considering whether it
serves to clarify or add coherence to the scheme, or not.
Poor answers to this question…
tended simply to describe the scheme, or provide a precis of the statutory
provisions with little or no consideration of the related case law or attempt to relate
this material to the question.
Question 8
Donaldson LJ said in Intraco Ltd v Notis Shipping Corporation of Liberia, The
Bhoja Trade (1981) that documentary credits were the ‘lifeblood of
international commerce’, and warned that, ‘thrombosis will occur if, unless
fraud is involved, courts intervene and thereby disturb the mercantile practice
of treating rights there under as being equivalent to cash in hand.’
Discuss.
General remarks
This was another popular question on this paper. On the whole, most answers were
competent and showed a good degree of knowledge of documentary credits.

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However, as with other essays questions on this paper, many candidates limited
themselves by failing to properly relate their discussion to the question.
Law cases, reports and other references the examiners would expect you to
use
A competent answer to this question would make good use of case law with
particular consideration of: key provisions of the UCP600; Banco Santander v
Bayfern; Montrod v Grundkotter; Standard Chartered v Pakistan National Shipping;
Lloyds v Canadian Imperial Bank of Canada and case law relating to the strict
compliance rule and autonomy principle.
Common errors
The most common error on this question was to see it as an opportunity to describe
documentary credits as a whole or to focus on strict compliance to the exclusion of
other issues.
A good answer to this question would…
show solid knowledge of the nature and function of a documentary credit both in
commercial and legal terms and a working knowledge of at least some of the
provisions of the UCP600, particularly those that define the nature of a
documentary credit and the obligations of the parties to them. A good answer would
also demonstrate solid knowledge of the rule of strict compliance and the fraud
exception, which are vital to a good answer to this question.
A good answer would also demonstrate a good knowledge of a range of relevant
case law to effectively illustrate the standard of compliance required and the
limitations on the fraud exception.
Poor answers to this question…
tended to offer a generalised account of documentary credit, often losing focus and
discussing related aspects of international trade, focusing on the process of the
opening of a credit and the relationships created, omitting discussion of the more
relevant principles identified above. Poor answers made little, if any, reference to
the question and were more or less wholly descriptive.

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