Commercial Law - against Brooke Ltd - Essay Example

? Commercial Law By Due Against Brooke Ltd Abraham is a wholesale supplier of wine, alcoholic spirits and related storage equipment. He contacted Brooke Ltd on Monday and offered to sell a large commercial wine cooling cabinet for ?800. Brooke Ltd accepted this offer. As the seller, Abraham, agreed to transfer the property in goods, the wine cooling cabinet, for a price, ?800, there was a contract of sale. The risk in the cabinet would have passed to Brooke Ltd when Abraham would have fitted some additional shelving inside the cabinet, packaged it for transit and dispatched it. Before it could have been done, the wine cooling cabinet was damaged by vandals. The damage that was made after the contract of sale was beyond the control of Abraham as he could have done nothing to stop it. Therefore, the goods that formed subject matter of the contract perished before the risk passed to the buyer without any fault of either the seller or the buyer. S. 7 of Sale of Goods Act (SOGA), 19791 states that, “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.” Also, by the application of S.18 (Rule 2)2, the cabinet was never put into a deliverable state and the property in it stayed with Abraham. Therefore, the agreement between Abraham and Brooke Ltd would be avoided and Abraham would have no liability to Brooke Ltd under this agreement. Against Charlie Abraham offered Charlie to sell three dozen bottles of 1967 Chateau Trent red wine. Charlie accepted this offer right away as the price offered by Abraham was very good. At that time, Abraham did not know that the vandals who broke into his warehouse had stolen one dozen bottles of 1967 Chateau Trent red wine. In Barrow Lane and Ballard v Phillip Phillips3, the seller had contracted to supply 700 bags of nuts to the buyer. At the time of delivery, only 109 bags were available for delivery as the rest had perished. It was held that the contract would be avoided because the contract was indivisible. Under S. 6 of SOGA4 and Barrow Lane and Ballard v Phillip Phillips, the agreement between Abraham and Charlie would be avoided because the goods had been perished before the contract was made. But it would not be a fair result because only a part of goods, one dozen bottles out of three dozen, were stolen and the rest is still in a deliverable state. These bottles can be delivered to Charlie. The application of Sainsbury v Street5 can give us a fair and a flexible result. In this case, the parties made a contract before the harvest in which the seller agreed to sell his entire crop to the buyer. The actual crop yielded much less than the estimated due to bad weather. The seller, therefore, sold majority of his crop to another buyer and sold the rest to the original buyer for a much higher price. It was held that the seller was liable to pay damages to the buyer because a lower tonnage was not produced due to any fault of the seller and none of the parties had anticipated this. By the application of Sainsbury v Street, Abraham would have to deliver the rest of the bottles at the same price to Charlie if Charlie agrees to pay the same price for two dozen bottles because none of the parties had anticipated a theft. Abraham is not absolved of his performance of the contract. Against Dinsa On Wednesday, Dinsa, the owner of a local florist’s shop, purchased a dozen bottles of French champagne from Abraham and paid in cash. She made payment when Abraham told her that he had plenty of French Champagne in stock. The property in bottles had not passed to Dinsa at the time of payment because the bottles had not been appropriated for her under S.18 (Rule 2) of SOGA. Abraham promised to deliver the bottles to her. On Thursday, he duly loaded a dozen bottles of French champagne on to a lorry owned by a local independent carrier which means that he appropriated the goods for delivery to Dinsa. The property in goods, champagne bottles, passed to Dinsa when Abraham loaded them on the lorry under S.18 (Rule 5 (2)) of SOGA6. Also, under S. 32 (1) of SOGA7, it would be deemed that Abraham has made the delivery to Dinsa. The lorry was involved in an accident and all the bottles were destroyed. In Wardar's (Import and Export) Co. Ltd v W. Norwood and Sons Ltd8, the goods that formed subject matter of the contract were perished in consignment. It was held that the risk in them had passed to the buyer when the goods were ascertained and they were deemed to have been ascertained when the seller put them in the hands of the carrier. The buyer had to bear the loss of perished goods. By the application of this case and S. 18 of SOGA, the loss of the champagne bottles would be borne by Dinsa because the bottles were duly appropriated and the property in them had passed to her when Abraham loaded them on the lorry to be delivered to her. Against Edwin Abraham had contracted to purchase a second hand delivery van from Edwin, a local builder and paid ?1000 in cash. Edwin had bought the van from Fiona, a commercial vehicles dealer, who had bought it from George. George had taken the van on hire purchase terms from Halfpenny Finance Ltd and had paid only one installment. Under S. 23 of SOGA9, George’s title to the van was voidable but he was able to pass a good title to Fiona assuming that his title had not been avoided at the time of sale. Assuming that Fiona had no notice of George’s voidable title, she had a right to pass a good title to Edwin and Edwin also had a right to pass a good title to a subsequent buyer. Under S. 18 (1) of SOGA, the property in the van had passed to Abraham when the contract was made because it was an unconditional contract for the sale of a specific van which was in a deliverable state. Abraham did not take delivery of the van at the time of the contract and agreed Edwin to allow possession for few days. Edwin was not entitled to pass a good title at that time as he had already transferred the title to Abraham but he sold the van Isabel for ?1000 in cash. The given facts give sufficient reason to presume under S. 24 of SOGA10 that Isabel purchased the van in good faith without any knowledge of Edwin’s defective title. Rowland v Divall11 cannot be applied here because there is not a total failure of consideration. Abraham is entitled to recover the ?1000 that he had paid for the van. Isabel can treat her contract as repudiated and sue Edwin for damages if any efforts are made by Halfpenny Finance Ltd to recover it from her. As for Abraham, he has a claim against Edwin only. Against Jane Abraham visited Jane’s wholesale wine warehouse two weeks ago knowing that Jane was out of the country and that she had put her manager, Keith, in charge of buying and selling. Keith offered Abraham two cases of 1963 vintage Bordeaux wine for ?1800. Jane had told Abraham that she would never sell that wine because she anticipated an appreciation in its value with time. Abraham mentioned this to Keith but he assured Abraham that Jane approved of this sale. Abraham agreed to buy the wine. Later, Jane told her that she was not bound to sell the wine to Abraham. This means that Keith did not have the authority to sell the bottles. This is a case of an agent’s apparent authority because Keith eliminated all the doubts in Abraham’s mind. Under S. 24 of SOGA, Keith has passed a good title to Abraham. Abraham has a right to claim the bottles. In Summers v Salomon12, a nephew acted as a buyer for a jeweler. He ordered some jewelry later when he had left the employment. It was held that the defendant had to pay. In the given case, Keith’s conduct was such that Abraham had sufficient reasons to believe that he was acting under authority. Therefore, Jane, contrary to her belief, is bound to sell the bottles to Abraham. Abraham told Keith that he wanted to sell his forklift truck. Keith did not have authority to buy machinery for Jane but he offered to buy the forklift truck from Abraham on her behalf. An agreement was reached and Abraham agreed to sell the truck for ?3000. Unknown to Abraham, his general manager sold the truck to William for ?4000 shortly after the agreement. William holds a good title to the truck because he bought it in good faith from Abraham’s general manager believing that he had the authority to sell the truck. Also, it can be reasonably believed that Abraham’s manager had the authority to sell the truck indeed. As between Abraham and Jane, an agreement was made but the title had not been transferred. S. 17(1) states that, “Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.”13 From the nature of the dealing between Abraham and Keith, it can be said that the property in the truck would have been transferred when it would have been delivered and its price would have been paid. Since, it never happened, William can enjoy a quiet possession of the truck. Abraham would not be bound to deliver the truck to Jane. Against Luke Abraham made a FOB Hull contract to purchase 1,000 bottles of English white wine from Luke last week. Abraham nominated the ship, the Newton and the contract of carriage was made by Luke in his own name. He took a clean bill of lading which means that the bottles were received in a perfectly good condition on the ship. He sent the bill of lading to Abraham. Abraham discovered that a large number of bottles were broken when he took delivery. From the outset of this case, Abraham may not be able to gain compensation from Luke because Luke took a clean bill of lading which means that the bottles were in a good condition and no damage was done when they were loaded. When Luke handed the wine to the carrier, the Newton, he had fulfilled his obligation to deliver the goods and under S.18 (Rule 2)14, the property in bottles had passed to Abraham. The risk of the damaged bottles would have to be borne by Abraham. In Mash & Murrell Ltd v J Emmanuel15, the seller sent potatoes on a ship. When the buyer received the potatoes, these were unfit for consumption. It was held that the buyer was responsible for the damage to potatoes as the risk had passed to him. Abraham and Luke have appointed an expert to discover whether the damage occurred before or after the goods were loaded on board the Newton. If the expert finds out that the bottles were damaged before they were loaded on board, Abraham would be successful in his claim against Luke. References 1. Barrow Lane and Ballard v Phillip Phillips [1928] All ER Rep 74. 2. Mash & Murrell Ltd v J Emmanuel [1961] 1 ALL ER 485. 3. Rowland v Divall [1923] 2 KB 500. 4. Sainsbury v Street [1970] 3 All E.R. 1126. 5. Sale of Goods Act, 1979. (UK) s 6. 6. Sale of Goods Act, 1979. (UK) s 7. 7. Sale of Goods Act, 1979. (UK) s 17 (1). 8. Sale of Goods Act, 1979. (UK) s 18 (Rule 2). 9. Sale of Goods Act, 1979. (UK) s 18 (1). 10. Sale of Goods Act, 1979. (UK) s 18 (Rule 5 (2)). 11. Sale of Goods Act, 1979. (UK) s 23. 12. Sale of Goods Act, 1979. (UK) s 24. 13. Sale of Goods Act, 1979. (UK) s 32 (1). 14. Summers v Salomon [1857] 7 E & B 879. 15. Wardar's (Import and Export) Co. Ltd v W. Norwood and Sons Ltd [1968] 2 All ER 602. Read More