#13884 - Transactions Delivery And Payment - Commercial Law

Transactions, Delivery and Payment

How do we define and classify property rights?

• We define and classify different things, in which persons can have property rights, the different kinds of property rights for instance, ownership or a lesser title like a tenancy

• We define the ways in which property rights can be acquired and transferred

• And finally to protect property rights against interference and infringement (we don’t deal with this)

• Ownership is the most extensive property right, the lesser right is some kind of special property right

• Bailee and Bailment: someone holds property but doesn’t have ownership of property.

• We often see that one party has possession, party A, of the goods, but party B, has the property right has the ownership.

• Note: we divide property into pure realty meaning land, and then pure personalty. For the purposes of this module we don’t deal with realty or real estate, we are dealing with personal property on the side of personalty

Title

Concept of title

• An element of ownership and interest in the property, and the interest denotes the quantum of rights, over the property which he holding the title enjoys against the other person though not necessarily all persons

• We call this relativity of title. Where do you stand against others who also have title?

• According to Goode we are talking about the strength of the interest in the goods, that you have in relation to others.

• No clear definition of ownership in English law, because we have different types of title

Good title

• The best title, or the absolute title (don’t write in exam) – at the top of the hierarchy

• Can be lawfully asserted against others, you have the right to tell someone to say “give that back it’s mine, you have mere possessory title”

Possessory title/Defective title

• Imperfect title, can only be asserted against those with a lesser right

Contract of bailment

• Special property right of the bailee

• The contract of bailment is where an owner of chattel A, delivers possession of that chattel to another B, and for a particular purpose on the basis that once that purpose is achieved B will re-deliver the identical chattel to A

• So you could say it is a short-term loan

• A special kind of contract – a temporary loan to use a particular good for a particular purpose

• Bailee must take reasonable care of the goods, so the bailee owes the bailor a duty of care

Sales of Goods Act 1979 (as amended)

• This act applies to contracts of sales of goods (s.1)

• How do we classify the distinction between contract of sale of goods, the supply of a pure services or the supply of goods and service?

• Why do we classify these?

  • Different types of legislation apply to different types of contract, so we want to know what group it falls under, and so different duties of care arises

History of contacts of Sale of goods

SGA 1893 S.4

• The act would only apply to contracts of sale, of goods: where the:

  • Value of ten pounds or upwards and;

  • Evidenced in writing

• This has been appealed through law reform.

SGA 1979 s.4

• A contract of sale may be made in writing (either with or without seal), or by word of mouth, or partly in writing and partly by word of mouth, or may be implied from the conduct of the parties

• So in other words the act applies to lots of contracts. No worried about form but about substance

• In Stevenson v Rogers, the LJ, said that although the jurisdictions of the continent have a commercial code, which they can dig out, we too have a kind of code. We will not restrict ourselves to SGA 1979, but also draw previous case law: still relevant and forms part of the code.

The test for distinction

Cammell Laird v Managanese Bronze (1934)

• A propeller (goods) manufactured by the seller, and interestingly enough the buyer gives the seller the design

• Dispute arises, on the satisfactory quality of the propeller, buyer not pleased seller says he did it to his specifications. Competing values on what is satisfactory.

• SGA only applies to contracts for the sale of goods. So if this is a contract for the supply of services, the act does not apply, and the buyer is left without a remedy

• House of Lords, Lord Macmillan, said that this contract is about the end product not about the services

• If the buyer thinks it is not satisfactory then under SGA. S14(2) then he can bring a claim, and can say the seller is in breach.

• Court going to ask is it Merchantable quality? Court will ask what will a reasonable buyer of a propeller, what would they have expected in terms of the level of quality?

Clay v Yates (1856)

• Contract to print a book; here the courts held that this was a contract for services. Printing of a book is supply services.

• We would have to argue which we would not be able to do in 1856 something around in the present day scenario that the provider of the service has done so negligently/carelessly

• In 1856, lacking legal base – lacking legislation to latch onto.

Dodd v Wilson (1946)

• Supply of drugs by a vet when he/or she inoculates cattle. And what happens if something goes wrong with the inoculation. The medicine is bad or is done in the wrong way.

• Here we have a skill involved, vets are specialists and so have a skill in providing this service. But there is also goods, the medicine.

• The courts said where there is work or skill involved or above in the making of the goods delivered, which is precisely what happened here, it is possible and also correct to view the contract substantially one of work and materials.

• We start to see a phrase called work and materials evolving after Dodd v Wilson

• We could say that the supply of medicine is incidental/secondary to the provision of the service.

• This was found to be a contract for the supply of service, b/c if it is not just goods then it cannot be the SGA.

• What this is substantially is both work and materials

Lee v Griffin (pre-1893) (Lecturer’s favourite case)

• Mr Lee has no teeth and goes to get a set of dentures made.

• It was held that when the dentures were not up to Mr. Lee’s standard

• That this was a contract for the sale of goods and he could argue that the goods, were not of satisfactory quality, forget about the process or skill to make dentures – it is about the end product

• Then the SGA applies and the buyer has a potential remedy

Lockett v Charles [1938]

• Supply of a meal in a restaurant considered to be the supply of goods it is the end-product with which is sought after.

• So SGA applies

Robinson v Graves (1935)

• Painting of a portrait. If treated as an end product easier to protect the consumer, if it’s a service different factors come into play.

• It seems to be a service

• You have to choose on up and until 1982

• This is the sales of goods so it is the end product. Courts said: what is the substance of the contracts? Perhaps the painting of it is incidental to the end product which could be a painting

N.B: these earlier cases are premised on the fact that since we do not have legislation that deals with both, we restrict ourselves. We have to choose, where it is both goods and services we have to choose.

Hyundai v Papadopoulos

• Can we have a situation where we have goods and services in the same contract, and can apply two different statutes?

• Answer is yes, this case will be looked at in the first tutorial

• Constructing it and delivering it.

• In this case the manufacture and delivery of a vessel was held to be the supply of goods

Contract of the sale of goods

• SGA s.1, sales are defined as contracts which the seller transfers or agrees to transfer property to the buyer for a money consideration called the price

  • Simply: transfer property in goods

• Property in goods, as referred to the sales of goods = title to the goods = ownership = extensive property rights (under pure personalty)

Sale versus agreement to sell

• Future goods, goods that are not yet manufactured (e.g. corn, grapes for wine, cars)

• Property refers to title in the goods, all the definitions are defined under s.61 SGA

Essential components of the contract of the sales of goods

1. The Contract

2. Subject matter of the goods – in our discussion of goods and services then we have a problem. State of the law now is that we look at the substantial element, where we have a contract of goods and services like in Dodd v Wilson today this would be classified in the box of the one thing that is substantial. A problem arises where they are both equally substantial seen in Hyundai v Papadopoulos. Emphasising the idea of the substantial element of the contract if it is goods then the sales of goods act applies, even if there is services involved

3. The parties must agree that the property in the goods will be transferred to the buyer – cannot be bailment – there has to be an intention to transfer property, not possession

4. Money consideration.

Problem areas: type of goods that are not treated by the sales of goods act: ships and aircraft. This is because the property in the goods transfers subjects to other statutes. You can buy ship & aircraft, but it is not yours, until it is registered. Done by merchant shipping act 1955, and civil aviation at 2013. Computer software is also another problem area.

Other types of transactions

• Exchange

  • Where goods are not being exchanged for a money consideration

  • Aldridge v Johnson: cows in exchange for crops.

  • A agrees to transfer the property in the goods to B, in exchange for property other than money or services

• Part Exchange

  • Pay money & maybe a car (example) and for that a new car. Part exchange part of the exchange is money and part is goods

Work and Materials

• Lee v Grffin

Construction

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