Rules about Delivery in Contracts Involving the Sales of Goods - Assignment Example

RULES ON DELIVERY FOR CONTRACTS FOR THE SALE OF GOODS Introduction The rules about delivery in contracts involving the sales of goods leaves room for many other things to take place between the instance the sales contract is actually agreed upon, and the instance the goods are really transferred to the purchaser possession. In particular, natural disasters, thefts, market forces or accidents may alter the environment set upon in the contract completely as prices may shift considerably, goods may be destroyed before and during transit, or theft of goods. Therefore, due to such possibilities, it is equally important to understand the rights and the liabilities including the duties of the concerned parties, between the instance the contract is signed and the instance the products are actually collected by the buyer. Before the creation of laws governing sales of goods contracts, the right of ownership or Law merchant was the major concept under sales law (Mann & Roberts, 2007, p. 398). Such laws comprised a system of regulations, customs, as well as usages self-imposed by the sellers themselves, in order to settle disputes while enforcing agreement duties between them. Such rules were introduced during fairs when merchants met to swap goods even as they settle their differences via the fair courts they operated themselves. Hence, from 17th century judges refined the codes behind mercantile laws into contemporary commercial law of sales (Mann & Roberts, 2007, p. 398). certain issues arose under rules governing delivery in sales of goods. Firstly, how do you determine what time the title actually changed from seller to buyer? As it presented a challenge in deciding which party the possession title had at the instance of a loss. Secondly, even though orthodox assessment under such rules would probably indicate that equity laws do not pertain, it would be hard to uphold such view in a contemporary and globalised world. Thus, the aim of this paper is to evaluate how delivery in contracts involving the sales of goods offers a contemporary uniform and fair regime practices for both domestic and international sale of goods. The paper also discusses the controversies surrounding such rules. Discussion Overview of Contract for Local Sales of Goods Rules In most jurisdictions, the sale of goods contracts are accords between the seller and a buyer meant to cover the trade and delivery of goods, or any other personal property (Atiyah, Adams, & MacQuee, 2005, ch 1). For instance in US, domestic sales-contracts fall under the Uniform Commercial Code, while in Australia the contract for delivery under sales of goods falls under the Australian Sales of Goods Act 1893. The rules are based on the Freedom of Contract, thus it is up to the concerned parties to agree on their bargain (Bridge, p. 45). Nevertheless, international sales contracts are governed by the United Nations Convention on Contracts for the International Sale of Goods 2009, or Vienna Sale Convention. This self execution treaty seeks to form even-hand contemporary and substantive regulations that will administer the rights, along with obligations of parties involved in any international sales contract. However, the Convention does not apply to every issue which can come about from a global sales contract. For instance, matters pertaining to validity of contracts and the effect of sales of goods contract on the property, and thus left to local laws to be applied by merit of private international rules edict. Given that common law is frequently applied in contracts for the sale of goods, any item to be referred to as good needs to be personal property, tangible or moveable. The contract arising from the sale of goods is defined as an agreement through which the seller agrees to transfer the goods to the purchaser for monetary consideration or price. However, there can be a sale contract involving one fraction owner and the other (Fountoulakis, Schwenzer, & Dimsey, 2007, p. 217). Furthermore, rules on sale contract can be absolute or restricted, and when the goods are transferred from the seller to the purchaser, the contract is considered a sale. However when the transfer occurs at a future date and subject to various conditions that are to be fulfilled afterwards, then the contract is referred to as an agreement to sell (Sivesand, 2005, p. 8). This agreement to sell only turns out to be a sale if time elapses, or else the circumstances are satisfied subject to which the possession of the products is to be shifted. For instance, the US UCC effect of the sales of goods contract requires that goods should be ascertained and when there occurs a contract for transaction of unascertained merchandises, then no property in the goods should be transferred to the purchaser except and until the products are ascertained. Under Australian Sales of Goods Act 1893, the England and Scotland Sales of Goods art.35, the property shifts based on the intent of concerned parties, and the property in goods is shifted to the purchaser at the instance the parties to the contract set for it to be transferred (Hondius, 2008, p. 337). When establishing the objective of the parties, consideration is placed on stipulations of contract, conduct of concerned parties, as well as the state of affairs of the deal. Unless a dissimilar intention comes about, the intent of the parties as to the instance in which the property in the product is to shift to the buyer is administered under the rules stipulated in the effect of the contract. When there occurs an unrestricted contract for the transaction of particular goods into a deliverable state, the property in the goods shifts to the purchaser when the contract is drafted. Nevertheless, it becomes immaterial whether the instance of payment and the instance of delivery, or even both are deferred at a later date. When the seller is bound to e carry out something on the goods with the intention of delivering them to a deliverable state, then the property will not shift until those actions are done on the goods and the purchaser has identified them (Pathak, 2007, p. 145).  For instance, when the seller is obligated to weigh the goods, and then measure them before conducting test for the intention of ascertaining price, then the property will not shift until such acts are performed and the buyer of the goods has noticed them. Furthermore, the US UCC considers that when the goods are delivered to the purchaser on authorization or on sale or return regulation, then the property shifts to the purchaser as either the buyer has signified approval to the seller, or performs any other action that approves the transaction. When the buyer does not indicate acceptance to the purchaser but keep hold of the products without providing notice of refusal, then when a time had been instituted for returning the products reaches, the property shifts to the buyer. However, a reasonable time is still a subject of fact in most of the local contracts regarding sales of goods delivery (Atiyah, Adams, & MacQuee, 2005, ch 2). On the other hand, most jurisdictions allows contract for unascertained products or future goods by description, that the property changes to the purchaser when the product description are absolutely appropriated into the contract by the vendor with the consent of the purchaser, or by the purchaser with the consent of the seller (Bridge, p. 46). Notably, the assent can be express or else implied and can be issued either prior to, or subsequent to formation of appropriation. When in pursuance of the sales of goods contract, the trader delivers the products to the purchaser, bailee, or even a delivery service whether identified by the purchaser or not, and that the contract does not set aside the right of discarding by the seller. This is because the seller is judged to have categorically appropriated the products to the contract. In terms of reservation of the right of disposal, the UCC, Australian Sales of Goods Act 1893, and the UK Sales of Goods art.35, provides for the contract to state that the seller can by the stipulations of the contract to reserve such a right until certain circumstances are fulfilled (Hondius, 2008, p. 338). Thus in such a scenario, in spite of the delivery of the products to the purchaser, bailee or delivery services, the products property does not shift to the purchaser until the circumstances set upon by the seller are satisfied. When the products are shipped, and the bill of lading indicates the products are deliverable to the instruction of the seller, then the seller is deemed to reserve such a right of disposal unless there is substantiation contrary to that. Furthermore, when the seller draws on the purchaser for the cost, and then conveys the bill of exchange together with the bill of lading to the purchaser in order to secure reception and imbursement of bill of exchange, then the purchaser is restricted to bring back the bill of lading when the purchaser does not respect or abide by the bill of exchange (Fountoulakis, Schwenzer, & Dimsey, 2007, p. 220). Thus, when the purchaser wrongfully keeps hold of the bill of lading, then the products property will not shift to the purchaser. Another provision relates to the sale by another person who is not the owner of the goods. The US UCC on sales of goods contract, and the Australian Sales of Goods Act 1893 contains a provision which requires that when the goods are sold by another individual who is not the owner of such goods, and does not trade them under the consent or authority of the owner, then the purchaser will attain no enhanced title to the goods than what the seller had (Fountoulakis, Schwenzer, & Dimsey, 2007, p. 220). The only exception is when the behaviour of the owner of the goods precludes them from rejecting the seller power to sell such goods. In most acts, there are no provisions that impact the authority of any contract of sale in any unique common law or even statutory powers of sale, or even a court order. The provision on Market overt requires that when the products are sold in the market overtly, and based on practice of market then the purchaser needs a superior title to the products, on condition that they are purchased under good confidence, and with no discernment of any flaw or desire of title on the side of the seller. If the seller possesses a voidable title to the goods, and the title is not an avoid title during the instance of sale, then the purchaser gets a good title. However, they should be purchased under good faith and there is a lack of notice of the seller of the goods defect of designation (Atiyah, Adams, & MacQuee, 2005, ch 3). When the goods are identified to be stolen and the criminal prosecuted towards conviction, then the property revests in the individual who was the owner, or any other personal representative of the owner in spite of any in-between dealings with them. This includes sale in market overtly or otherwise. In particular, the US Uniform Commercial Codes have the provision that when the products were acquired by fraud or any other illegal means that does not quantity theft, then the property will not revest to the individual who was the owner of the goods, or otherwise the owner personal representative, simply due to the conviction of offender (Pathak, 2007, p. 146). In UK, the Sales of Goods art.35 (4) define that a failure to inform the buyer of any non-conformity within a reasonable period after delivery will preclude antidote of termination. However, under other jurisdictions the buyer is not obligated to inform the seller regarding hidden defects. Controversies The most controversial issues arising from the rules on delivery regarding contract of sales of goods, is what are actually the duties between the buyer and seller, especially in determining whether a sale was by the description provided (Pathak, 2007, p. 145). For instance, in the Australian case of Varley v Whipp (1900) 1 QB 513, the defendant sold a second had reaping machine that had not been seen by the buyer. Hence, when the equipment was delivered it did not match the description offered. The conclusion arrived was that goods should only be traded by description, whereby the description clearly identifies the commercial nature of the item to be sold. Thus, the earliest date at which the property can be deemed to pass is when the goods were accepted by the buyer. This case reveal that the description of the products is actually what the concerned parties should stipulate, and every matter that is express should be in the contract. Another issue that normally arises in such cases is whether the contract risk principle allows risk to shifts with delivery. Under the UK Sale of Goods Act art.32 (2), a buyer can decline to handle the delivery to the carrier or can hold the seller responsible for any damages or theft of the goods. Thus, any contracts for sale of goods can be declared by a court void when the conditions become impossible. Nevertheless, not all jurisdictions allows the doctrine of frustration cannot be just invoked simply because one party is going to experience loses. This became apparent in the US case of Maple Farms, Inc. v. City School District of Elmira Supreme Court of New York, 76 Misc.2d 1080, 352 N.Y.S.2d 784 (1974). In this case, Maple Farms had a contract to supply milk to a New York school district at a fixed price. However, market factors pushed the prices too high, and in the end it became unreasonable for Maple to supply the milk due to the huge loss it would incur. Maple then sought a declaratory judgment stating impractical performance. However, the court threw out the claim, stating that the seller/Maple took a risk when defining the fixed-price contract. In particular, the general rule defines that with the exception of the most severe of state of affairs, a party seeking discharge from its obligation due to unexpected monetary burdens arising from a change in market conditions is still required to accomplish the contract. This shows that even though risk shifts with property and unless otherwise decided, the products will remain at the seller peril up until the property of the goods is transferred to the purchaser (Fountoulakis, Schwenzer, & Dimsey, 2007, ch 2). However, the courts are not so consistent in such matters, and in the case of Mishara Constr. Co. v. Transit-Mixed Concrete Corp.310 N.E.2d 363 (Mass. 1974)). The Appellate Court ruled that it was instead commercially impractical for Transit to deliver the concrete due to the labor actions at Mishara, and that if Transit had defied the striking workers, then this would be detrimental to its business. In his case Mishara entered into a contract with Transit to supply concrete, whereby deliveries were to be made in amounts needed by Mishara. However, a labor strike ensued and Transits did not deliver the concrete to the site. Then Mishara acquired a new firm to deliver concrete but at an elevated price, before suing Transit corp. for nonperformance. The court allowed Transist to severe the contract, and this ruling show how there is narrow interpretation of the provision of structure of the contract, including the rights and requirement of the seller and buyer. Hence, the provisions limit the scope of application of the rules. In particular, the burdens of proof are not covered entirely, however, if the property of the goods is transferred to the purchaser, then risk shifts to the purchaser peril whether delivery was done or not. In some jurisdictions, like Australia, when delivery is delayed due to the buyer or seller mistakes, then the despite calls for the risk of the goods to be at the party in fault and only for the loss that results from that fault. Conclusion This paper has evaluated how delivery in contracts involving the sales of goods offers a contemporary uniform and fair regime for both domestic and international sale of goods. The paper has also discussed the controversies surrounding such rules, using examples from US, UK and Australia. The most controversial issues arising from the rules, is what are actually the duties between the buyer and seller, especially in determining whether a sale was by the description provided. Secondly, whether the contract risk principle allows risk to shifts with delivery. Thus, the report concludes that since both purchaser and seller can shift roles during the sequence of the contract, then the contracts should define specifically their obligations. This is because the capability of the seller to accomplish the obligations can be completely dependent on punctual presentation by the purchaser. Secondly, an unexpressed condition can be implied when and only when the parties must have wished-for that condition to form an element of the contract. Therefore, the seller should be under a duty to deliver the goods in agreement with the implied terms as to the state of the products, however, implied terms should not just be simply the most imperative source of remedy for the purchaser, but market conditions should also be factored in. List of References Atiyah, P. S., Adams, J. N., & MacQuee, H. (2005). The Sale of Goods (11 ed.). Pearson Higher. Bridge, M. G. The Sale of Goods (2 ed.). Oxford University Press. Fountoulakis, C., Schwenzer, I., & Dimsey, M. (2007). International Sales Law. Routledge. Hondius, E. H. (2008). Principles of European Law on Sales (PEL S). Sellier European law publ. Mann, R. A., & Roberts, B. S. (2007). Business Law and the Regulation of Business. Cengage Learning. Pathak, A. (2007). Legal Aspects Of Business 3E. McGraw-Hill Education. Sivesand, H. (2005). The Buyer's Remedies for Non-conforming Goods:Should There Be Free Choice Or Are Restrictions Necessary? European law publ. Read More