#5255 - Seller's Remedies - Commercial Law

• Real remedies

  • Exercisable against the goods, so using the goods as a form of security to protect his position

    • Resale

    • Lien Stoppage in Transit

  • As a general rule when both property and possession has passed the seller has no more right over the goods and has to resort to personal remedies

• Personal remedies

  • Action for price s.49 – effect is to affirm the contract

  • Action for damages for non-acceptance s.50 – based on the fact that the sale has not taken place

  • Special damages under s.54 – can be used in either situation

  • Scenarios

    • Property has passed and B has accepted the goods – action for price

    • Property has not passed and B refuses to accept the goods – action for damages

    • Property has passed and B refuses to accept the goods – Either

1. Action for price is more favourable than an action for damages

2. But where property has not passed S is in a dilemma

   1. HE can argue that property has passed to B

      1. Disclaim all responsibility and sue on price

   2. But he runs the risk that the court may decide that property had not passed

      1. And S’s remedy is for non-acceptance

      2. Thus, the seller would have been responsible for mitigating damage by attempting to resell

         1. Which he wouldn’t have done, reducing damages.

      3. BUT If he has done that, the court may treat this as evidence of an acceptance by the seller of repudiation of the contract by the buyer

         1. Thus, even if the property had originally passed to B it will now revert in S and an action in price will no longer lie.

         2. So if his efforts to resell the goods have failed, he will have made his own position worse by attempting to dispose of them, as in the case of Ward v Bignall (1967)

BUYERS DUTIES

1. Duty to pay the price

   • Unless otherwise agreed, S is not bound to accept anything other than cash

   • A cheque is conditional payment only

     • If the cheque is not honoured seller can sue

       1. On the cheque itself

          1. In which case the buyer cannot set up defences based on breaches of contract

       2. On the contract of sale for the price of goods

          1. The buyer is deemed to be an unpaid seller if a cheque has been received and then dishonoured, s.38(1)b SGA 1979

SELLERS REAL REMEDIES

1. Fundamental Requirement – Unpaid Seller

   • Unpaid

     • Refers to the fact of being unpaid, so applies whether or not payment is due according tot eh contract

     • S.38(1) SGA 1979 includes failed conditional payment, partial payment etc

2. Lien, s.39(1)a SGA 1979

   • What is it?

     • A right to retain the goods until the whole of the price has been tendered

   • Requirements

     • Unpaid Seller

       1. If there are a number of separate contracts, S cannot claim a lien over goods which have been paid for

       2. But sale of goods by installments is still one contract, and the lien may therefore be exercised over any part of the goods, ex parte Chalmers (1873)

     • In Possession

       1. One sale has been completed and you retain possession you cannot have an USL Valpy v Gibson (1974)

     • Any of the following

       1. Goods have been sold without any stipulation as to credit

       2. Goods have been sold on credit but the term has expires

       3. Buyer has become insolvent

          1. Defined in s.61(4) SGA 1979 as ceasing to pay his debts in the ordinary course of business or he cannot pay his debts as they become due

   • Extent of the lien

     • Only over the payment of the price Somes v British (1860) not storage charges that arose after.

   • Losing the lien

     • When you cannot satisfy any of the requirements

     • Other occasions per s.43 SGA 1979

       1. Delivering the goods to a carrier for transmission to buyer

       2. When buyer lawfully obtains possession of the goods

       3. By waiver of the lien

3. Stoppage in Transit

   • Requirements

     • Buyer of goods is insolvent

     • S has parted with possession of the goods

     • The goods are in the course of transit

       1. If goods still with seller or agent lien

       2. If goods with the carrier stoppage in transit

       3. If goods are with buyer too late

   • Exercising the right

     • Telling the carrier (if the carrier still delivers the goods when there is a SIT then they are liable in conversion to S)

     • Taking actual possession of the goods

   • Termination

     • When the primary requirements are not met

4. Effect of the lien or SIT of a disposition by B1, s.47 SGA 1979

   • There is no effect UNLESS

     • S has assented

       1. Acknlwoedgment of the sale is not enough Mordaunt Brothers v British Oil and Cake Mills (1910) entry into S’s books of B1s delivery order to B2 was not enough

       2. More circumstantial evidence DF Mount v Jay & Jay (1970) S knew that B would pay the price from money he received when sold. S anxious to get rid of goods in a falling market, so had assented to B’s reselling

     • Where a document of title has been transferred to someone who takes it for good faith and valuable consideration

       1. It has to be the same document of title as in the S – B1 transaction DF Mount v Jay & Jay (1970)

       2. What does this mean in practice? A purposive construction, looking at the purpose of s.47(2) means that it must be linked in a sense to s.47(1) that you are assenting to the subsale, so by giving B1 a document he could transfer you must have in some way facilitated the sale to B2

   • Then if disposition to B2 is a

     • Sale – your lien is defeated

       1. However, S can intercept payment from B2 to B1 (a right of stoppage over the money) ex parte Goldring (1880)

       2. Doubted by Lord Selborne in Kemp v Falk (1882) because surely defeated means defeated for all time. How can you turn it into a right over the proceeds?

     • Pledge – subject to B2’s right

       1. So S has to pay off the pledge to exercise his USL or SIT. And if the pledgee retains the goods and sells them, S is entitled to claim that the balance of the price is payable to him and not B Kemp v Falk (1882)

5. Resale, s.48 SGA 1979

   • A power to resell (the power to give good title, important to B2)

     • When S still has property in the good which he can pass to B2

     • S can use the seller in possession exception under s.24 SGA 1979, s.8 FA 1889

     • Seller has exercised his right of lien or SIT

   • A right to resell (the power to do without committing a breach of contract, important to S)

     • S’s obligation to deliver has not yet crystallized into an obligation to delivery any specific goods

       1. No liability because it cannot be said which goods he must delivery

     • B repudiates the contract and S accepts the repudiation

       1. B repudiating the contract

          1. E.g. B refusing to accept the goods. Insolvency does not automatically amount to repudiation

       2. S accepts the repudiation

          1. If S rejects the repudiation he has no right to resell unless he can bring himself under one of the other scenarios

     • If the goods are perishable or notice is given

       1. The seller gives notice that he intends to resell and the buyer still does not pay allowing you to make time of the essence

   • Effect of the resale

     • If there is an express right, there is rescission, per s.48(4) but no express provision for s.48(3)

     • Orthodox analysis: Rescission

       1. This is acceptance of repudiatory breach, rescinding the contract, and so the seller is entitled to profit on resale

       2. RV Ward v Bignall (1967) S sold 2 cars to B2 who repudiated the purchase, S gave notice per s.48(3) and tried selling both but could only sell one. S tried suing for the price of the unsold car and their loss on the resale on the first car. Resale of the first car had rescinded the original contract, so B1 was only liable for damages for non-acceptance

       3. In Johnson v Agnew (1980) the court made a distinction between rescission ab initio and termination for breach (which is what this is). And said that termination has no retrospective effect

       4. This was taken further in Hyundai Heavy Industries v Papadopoulos (1980) where B was liable to pay installments due before the contract

       5. Atiyah makes the point that Johnson (1980) was decided in the context of land and in the sale of goods there always is retrospective effect because it involves the restoration of the property in the goods from B to S or if the property has not yet passed the duty on seller to pass title to the buyer disappears

       6. Beatson (1981) argues that the duty to pay is conditional on subsequent performance by the other party

       7. Also the speeches in Hyundai contemplate that the decision may not apply to a pure contract for sale, as opposed to a contract of sale and manufacture, because if in a contract of sale, delivery is whole consideration for the price no delivery then there is a claim for TFC

     • Weird analysis: No Rescission

       1. Because this is not an acceptance of repudiatory breach Gallagher v Shilcock (1949) overrules in Ward v Bignall (1967)

       2. Therefore if property has passed to B1, the seller is acting as quasi-pledgee not owner and B1 remained liable for the price and could obtain profit if one made

6. ROT clauses and rescission under s.48

   • What happens?

     • You can rescidn the contract before reclaiming and reselling the goods

       1. If so, seller does not have to account for surple

     • But you can resell WITHOUT rescission

       1. Clough Mill v Martin (1984) Resale of goods can take place without rescission and the seller would have to account to B for any surplus made by him on the sale

       2. Atiyah this does not take into account s.48(4) but maybe there is an implied term which negatives s.48(4) because this is in the nature of a mortgage or charge

SELLERS PERSONAL REMEDIES

Action for the price, s.49 SGA 1979

1. Overview

   • Effect is to affirm the contract

   • More advantageous because it is a claim in debt is clear at the moment of contract, and you don’t have to mitigate it

     • You should theoretically get the same amount if you sue for non acceptance

2. Requirements

   • Property has passed to B

     • Property must pass even...