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A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer
for a money consideration, called the price (section 2(1) SGA 1979).
Look for:
• Express – from contract
⇒ Late payment - S.27 – It is the duty of the seller to deliver and of the buyer to accept and pay
⇒ Time of essence – Hartley v Hymans – if agreed in commercial contract then time if of essence.
S.10(2) If time of essence buyer can reject goods if delivered late. S.29(3)If no time specified for
delivery, must be within a reasonable time
⇒ S.13 Sale by description? Implied term goods correspond to description
⇒ S.14(2) Implied term that goods are of satisfactory quality (taking into account description of goods,
price and other relevant circumstances)
⇒ S.14(3) Implied term that goods are reasonably fit for their purpose
⇒ S.28 Unless agreed otherwise, delivery and payment are concurrent conditions, i.e. the buyer
must pay when goods are delivered.
Explain how the term has been breached and by how much – relate to the facts.
Look for:
• Anticipatory repudiatory breach
2. o Where the buyer refuses to pay/accept the goods before the deadline for payment.
o The Seller has two options:
Accept the breach now – sue immediately
Affirm the contract and wait until deadline – risky!
3. Lay out:
s.50(2) Measured according to the estimated loss resulting from B’s breach directly and naturally flowing
from breach
s.50(3) If ready market for goods, is difference between contract price and market value of goods at time
of acceptance(measure)
s.51(2) Measured according to the estimated loss resulting from S’s breach directly and naturally flowing
from breach
s.51(3) If ready market for goods, is difference between contract price and market value of goods at time
of delivery (measure)
Defences:
4. • S.35(4) Deemed acceptance of goods if B intimates acceptance or acts in a way inconsistent with
ownership by S – IE – where the Buyer tries to reject goods after having them for several days. Cannot be
done as they have impliedly accepted the goods in their conduct.
Breach of contract?
Or
2.
Trigger for ROT?
• Non-payment
• Insolvency of buyer
Remedies (essential)
• S49 – action for the price – non payment
o S.49(1) – ownership has passed to the buyer
o S.49(2) – ownership still with seller
3.
• NB – often no point trying to sue for damages because the company is in financial difficulty. So go onto
discuss the ROT clause.
2
1. Section 17(1) SGA says that property passes when the parties intend it to pass.
2. Section 19(1) allows the seller to reserve title to the goods until certain conditions are fulfilled and property
does not pas until the conditions are fulfilled.
3. Pull apart the clause into following (see below for details)
• Essentials
i. Reserving title
ii. Rights of entry, seizure and resale
• Bluff value
i. Tracing into the proceeds of sale
ii. Claiming ownership of mixed goods
iii. Tracing into mixed / manufactured goods
NB – if one of the following has taken place then ownership has passed to the buyer:
• Full payment
• Resale to a 3rd party (s.25)
• Mixing
RETENTION OF TITLE:
See attached ROT clause from I-tut handout.
Introduction A clause in a contract for the sale of goods by which a seller seeks to retain ownership of the
goods, despite delivery to the buyer, usually against payment in full.
The seller should make it clear that he will remain the owner of the goods, and
that (legal) ownership will not pass to the buyer until one of the two events
described takes place.
Cannot reserve equitable title, creates a charge which must be registered. See Re Bond
Worth.
A right of entry onto B’s premises for purposes of seizure of goods and subsequent re-sale
Avoids trespass
3
Optional but useful iii. Separate storage
If they remain identifiable, a retention of tile clause is more likely to be effective. Unused
identifiable yarn in Clough Mill v Martin was subject to an effective retention of title clause
Only useful if the goods can remain identifiable. Ie no good for a tonne of sand.
Passing of the risk protects the seller from accidental loss of, or damage to, the
goods.
v. Insurance
As B has the risk, can include an obligation on him to insure the goods and, if necessary,
hold the insurance proceeds on trust for S in separate bank account.
Reserve title until B pays S for all goods supplies under sale of goods contract. If a regular
long-term contract paid by instalments, B will probably always owe S a sum of money
A clause allowing the seller to separate and remove detachable goods is likely to
be upheld by the court. If the goods supplied to the buyer are readily
detachable without damage to the buyer’s products, the seller’s goods can
be recovered..
(worth putting in This was successfully done in Romalpa yet only as the court could find a fiduciary
because still a term of relationship. The general approach of the courts is to find a charge yet bluff value? Hasn’t
contract if agreed. worked since Romalpa. Buyer will want to buy for himself NOT on behalf of the Seller.
Enforceable against
parties who stupid
enough to agree.
Except some third
parties eg liquidator
s.395)
Are generally treated as charges yet are still included for bluff value. Creates an interest that
cannot be registered. Seller is unable to create a charge on mixture of different materials.
Clough Mill – retention of title into fabric, from yarn, was unsuccessful
Yet:
Hendy Lennox – could retain title to diesel engines incorporates. They were easily
identifiable and removable. Were recoverable as detachable.
Buyer re-sells the Generally clauses are drafted so that title passes to buyer when he sells it (see 6.1.2).
goods S25 implies that title passes but always put in express clause.
Allows Seller to retain title until the Buyer pays the seller in full
ROT clause will work without it but all monies clause makes it much more probable that all goods at
the buyer’s premises will belong to the seller. Easier for seller to work out what belongs to him.
Mixed goods clause May occasionally be effective and have BLUFF value.
6
May help seller in negotiations if buyer does not comply
Right to enter and Legally effective and ESSENTIAL
seize
8. Seek interest under the Late Payment of Commercial Debts (Interest) Act 1998.
Consumer Credit
Why If Seller can find 3rd party to provide money to seller to pay in full it will avoid lots of problems. Money can
pass direct from 3rd pty to seller.
Regulates consumer credit industry by ensuring that providers of credit are licensed
Controls individual agreements