Commercial Law That Is Used by Companies Nowadays - Essay Example

First Transaction When WHA, offered to buy and Ken Motors accepted to sell the four new Ford Ka motors, the goods were sold by but the specific four Ford Kas were not ascertained. Section 16 of the Sale of Goods Act 1979 states that, subject to sect. 20A,1 title to unascertained goods cannot pass to the buyer unless and until they are ascertained.2 The principle applies to both quasi-specific and wholly unascertained goods. “Ascertained” means that the goods are identified and physically allocated to the contract of sale.3 As stated by Mustill J. in The Elafi:4 “What is needed for ascertainment is that the buyer should be able to say, Those are my goods This requirement is satisfied if he can say, All those are my goods. There is no need to be able to say that any particular goods came from any particular source.” Once the goods have been ascertained, thereby releasing the inhibition of sect. 16, the moment at which the parties intended title to pass may be inferred relying on the prima facie presumption created by rule 5(1) of sect. 18, i.e. that title passed when the unascertained goods sold by description and being in a “deliverable state”5 were unconditionally appropriated by one party with the assent of the other. Delivery of the goods by the seller to a carrier or other bailee for the purpose of transmission to the buyer is said by rule 5(2) of sect. 18 to constitute an act of unconditional appropriation.6 Where, for example, the seller still has the obligation under the contract to actually deliver the goods to the buyer, title may already have passed to the buyer upon some prior act of appropriation.7 Possession will only be transferred upon actual delivery.8 Unconditional appropriation is the irrevocable earmarking of the goods as the contract goods, after which act the seller gives up his right to change his mind and substitute other goods of the same kind.124 Unconditional appropriation was held, in Carlos Federspiel & Co., S.A. v. Charles Twigg & Co. Ltd.,9 to mean that the seller must have the intention to irrevocably attach the goods to the contract of sale, holding out that those goods and not others are the subject of the sale. When Ken Mortors selected six Ford Ka motors intending four to go to WAH, the goods going to WAH at that moment was sufficiently ascertained and earmarked because necessary documentation including the car’s identification would have to be prepared for delivery to WAH along with the specific cars. Therefore, title to the Ford Motors was passed to WAH at that instant before transportation. It should be remembered that the want of an unconditional appropriation is not an absolute bar to the passing of title the way that failure to ascertain is.10 In Re Stapylton Fletcher Ltd.,11 for example, once the wine had been sufficiently ascertained to meet the requirements of sect. 16 of the Act, property in it was deemed to have passed “by common intention” of the parties (rather than by rule 5 of sect. 18), despite the fact that the goods “... were not immediately appropriated to each individual customer”. Rule 5(1) makes it clear that the appropriation may be either by the seller or by the buyer (or their respective agents). In either case, the assent of the other party to the appropriation is necessary. Rule 5(1) of sect. 18 states that the assent to the appropriating act “may be express or implied, and may be given either before or after the appropriation is made.”12 It is clear that while WAH offered to buy goods of a specific description but did not ascertain the specific goods out of generic Ford Ka Motors, it impliedly assented to Ken Motors selecting four Ford Kas and appropriating it for the purposes of the contract. Ken Motors sufficiently ascertained the goods when it earmarked and loaded six Ford Kas on the transporter out of which four were intended for WAH. Title would immediately pass on such appropriation in the absence of an express stipulation in the contract. Section 20(1) of the Sale of Goods Act 1979 states: “Unless otherwise agreed, the goods remain at the sellers risk until the property in them is transferred to the buyer, but when the property in them is transferred to the buyer the goods are at the buyers risk whether the delivery has been made or not.” Thus, the moment the Ford Kas were loaded on the transporter risk was passed to WAH who would have to bear the loss caused by lightning. Second Transaction In the instant case, no formal hire-purchase agreement has been concluded between Global and Rachel and the hire-purchase proposal is merely an offer by Rachel which would become a binding contract once accepted in writing by Global. Ken’s Motors never sold the car to Rachel as they had only made arrangements for the car to be sold to Global who would thereafter transfer the title of the car to Rachel once a formal hire-purchase agreement is accepted. Therefore, the ownership of the car still vested with Ken Motors and merely the possession had been transferred to Rachel. Section 21 of the 1979 Act states that: 21. Sale by person not the owner   (1) Subject to this Act, where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell. Since, there was no valid, concluded hire-purchase agreement, section 27 of the Hire-Purchase Act 1964 is inapplicable.13 Therefore, no good title had been passed to Vera. Therefore, Ken Motor’s may sue Vera for price of the car, or conversion or for possession of the car. Global’s telephone call cannot be treated as a binding contract as hire-purchase agreements are legally required to be in writing. Even otherwise since Rachel has fraudulently used the identity of another person, even if there was a concluded hire-purchase agreement, such an agreement would be between Global and that third person and not Rachel, and therefore still Rachel would have been unable to pass on a valid title.14 As far as the Ford Escort is concerned, Ken Motors falls within the definition of trade purchaser in section 29 of the Hire-Purchase Act 1964. Section 29(2) states that: “(2) In this Part of this Act, "trade or finance purchaser" means a purchaser who, at the time of the disposition made to him, carries on a business which consists, wholly or partly,— (a) of purchasing motor vehicles for the purpose of offering or exposing them for sale…” Therefore, section 27 of the 1964 Act does not apply and Universal Finance Ltd. may sue Ken Motors for possession of the Ford Escort. Vera’s only remedy is to find Rachel and sue for the price she had paid for the car. Third Transaction Under section 14(2) of the Sale of Goods Act 1979, Husein is entitled to goods of a satisfactory quality when he purchases such goods from a buyer who sells such goods in the course of business. At the time the purchase of the second hand Ford Mondeo, the sale contract excluded the legal liability of Kens Motors Ltd for faults in vehicles sold. Under section 6(2)(a) of the Unfair Contract Terms Act 1977, as against a person dealing as consumer, liability for breach of the obligations arising from section 13, 14 or 15 of the 1979 Act (seller’s implied undertakings as to conformity of goods with description or sample, or as to their quality or fitness for a particular purpose); cannot be excluded or restricted by reference to any contract term. Dealing as a Consumer is defined under section 12 of the Unfair Contract Terms Act 1977.15 An individual deals as a consumer when he neither makes the contract in the course of a business nor holds himself out as doing so; and the other party does make the contract in the course of a business. The second hand good was not bought in a public auction, and therefore the burden of proving that the purchase was not made as a consumer lies on the seller either because the seller did not sell in the course of business or the buyer did buy or held out to buy in the course of business. The mere fact that Hussein runs his own taxi company, does not lead to a conclusion that he was dealing in the course of business and not as a consumer. The burden lies on Ken’s Motors Ltd. to show that Hussein purchased the car principally for commercial use as a taxi cab. Even if Hussein principally used the car for his personal use and incidentally used it in his business, he would still be regarded as a consumer. In R&B Customs Brokers v United Dominion Trust16 the court was concerned with the purchase of a car by a company which was in business as a freight forwarding agent. The car did not comply with the terms implied by the Sale of Goods Act 1979, section 14(2) and section 14(3). The vehicle was intended for use by the two directors of the company and it was the second or third such transaction by the company. Whether the sellers had excluded liability for breach of the terms implied by the 1979 Act depended on whether the purchasing company had dealt as consumer, within the definition in the Unfair Contract Terms Act, section 12, in making the purchase and that, in turn, depended upon whether it had bought in the course of a business. The Court of Appeal held that the purchase was not integral to a freight forwarding business nor one regularly carried out by the company and therefore it was not in course of business. Therefore, the third transaction is subject to scrutiny under section 14 of the 1979 Act, notwithstanding the fact that the sale contract had an exclusion of liability clause. Under section 14(2A) of the 1979 Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances. Furthermore, under section 14(2B), the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods— (a) fitness for all the purposes for which goods of the kind in question are commonly supplied, (b) appearance and finish, (c) freedom from minor defects, (d) safety, and (e) durability. There is nothing to show that the engine defect was present at the time the car was sold on 5th November 2005. It is only after 10th November 2005, that Hussein discovered the defect. Therefore, Hussein would be unable to prove that the car at the time it was sold, was non-conforming. The description of the goods as provided by the seller at the time of sale represented to Hussein that the car was a five year old second-hand car. Furthermore, the exclusion of liability in the contract for any defect in the car, though not conclusive to absolve Ken’s Motors Ltd. of liability, is certainly an indicator to a reasonable man, that there was no guarantee that there could not be any subsequent defects is a five year old second-hand car. Therefore, a reasonable person in Hussein’s position would have been aware that the car might be subject to defects and might require repair. It would be unreasonable for Hussein to expect too good a performance or durability from the car. Further, a relevant circumstance to be kept in mind in this regard is that the car was second-hand. In Thain v Anniesland Trade Centre17 the court held that a second hand Renault 19 which was 5- 6 years old and had done some 80 thousand miles, for GBP 2995, and which broke down some two weeks after sale when its gear box failed, was not unsatisfactory as durability was not a quality which a reasonable buyer would expect. In considering the cars fitness for its purpose the failure of an experienced witness to detect any of the symptoms prior to the cars purchase, and the car proving reasonably fit for its purpose during the initial period of use after its acquisition, provided a justifiable basis for the conclusion that the defect was not present when the car was sold. The Court further held that that the defect could have emerged at any time given the age and mileage of the car, and in buying the car the purchaser had immediately assumed the risk of repair, durability not being a quality that a reasonable person would have demanded from a second-hand car. Therefore, the seller is not liable for the engive defect after 5 days of the purchase of the car and any claim made by Hussein under the Sale of Good Act 1979 in a Court is likely to fail. Read More