Right Of Property And Right Of Possession

It is important to see whether the transfer of alloy has passed to Brassy LTD or remained with Alloy Ltd. Under Section 16, unascertained goods must first become ascertained however here they are ascertained goods. Section 17 looks at the importance of the parties’ intentions. Whether it is express or implied, the intentions seem clear. Section 18 looks at the presumption, if the parties’ intentions are not clear. Where the goods are specific or ascertained, property will pass when the parties ‘intend it to be transferred’ (s.17 (1).To determine their intention ‘regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case’ (s.17(2)). Property may still pass even though the time for payment or delivery has not arrived. If no such intention can be discerned, the Act provides rules in s.18 to resolve the issue of when the property is to pass. Section 18, Rule 1 "Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment or the time of delivery, or both, be postponed." Tarling v Baxter (1827) 108 E.R. 484. Also look at Ward (RV) Ltd v Bignall [1967] 1 QB 534 and Lacis v Cashmarts [1969] 2 QB 400).

"In a deliverable state" this is a restricted meaning. Defined in section 61 (5) as meaning when goods are "in such a state that the buyer would under the contract be bound to take delivery of them." Underwood Ltd v Burgh Castle Brick and Cement Syndicate [1922] 1 KB 343 “I do not mean deliverable in the sense that it is properly packed or anything of that kind. It must have everything done to it that the sellers had to do to it as an article.” Per Rowlatt J. For a more recent consideration Rohit Kulkarni v Manor Credit Ltd [2010] EWCA Civ 69 provides well. Another case is Philip Head v Showfronts [1970] 1 Lloyd’s Rep 140)

Unless otherwise agreed, the risk of accidental loss or damage passes to the buyer when property passes: s. 20 (1). The buyer will therefore have to pay the price if the goods are destroyed or damaged through no fault of the seller after property, and so risk, have passed.

If risk has remained with Alloy LTD and Brassy LTD demand 100k, then goods which have been stolen, have been held to have "perished" and this is true where only part is stolen (or by extension where only part is destroyed). Barrow Lane and Ballard v Philip Philips [1929] 1 KB 574.Where only part of the contract goods have perished, application of the statutory rules may not always produce a fair result, particularly where the market price of the goods has increased. Outside of the statutory rules more flexible results may be achieved. Sainsbury v Street [1973] 3 All ER 1127.

Now we must look at whether the title in the forklift and the risk passed to Carl. Section 16, however, goods are ascertained so this is not an issue. Section 17, again the parties intentions are clear from the facts. Thus leading us to Section 18, rule 2: goods not in deliverable state. Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until the thing is done and the buyer has notice that it has been done. This covers the situation where the goods are not in a deliverable state at the time of the contract and so property does not pass under rule 1, but they are later put into a deliverable state. Once the seller has undertaken the work necessary to render the goods deliverable, property will pass when the buyer has been given such notice as the contract specifies or, failing that, such notice as a reasonable person would require. The rule does not cover the situation where the contract requires the buyer to put the goods into a deliverable state and so in that situation property may pass, unless there is a contrary intention in the agreement. Section 18, Rule 2"Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until the thing is done and the buyer has notice that it has been done."

Unless otherwise agreed, the risk of accidental loss or damage passes to the buyer when property passes: s. 20 (1). The buyer will therefore have to pay the price if the goods are damaged or destroyed through no fault of the seller after property, and so risk, have passed. The buyer should therefore consider insuring the goods.

Moving onto the third issue, firstly who owns the crane? It was agreed that property in the crane would not pass to Roger until the service had been completed. Again look at Section 18, Rule 2 and. 20 (1). The buyer will therefore have to pay the price if the goods are damaged or destroyed through no fault of the seller after property, and so risk, have passed. The buyer should therefore consider insuring the goods. Therefore it is not Roger.

In this time Steve visited the premises and offered £8,500 for the crane, Quentin accepted a cheque and allowed him to take the crane, however the cheque bounced. From the facts the crane had not been serviced so no title had passed to Roger at this stage. Section 16: unascertained goods must first become ascertained however this is a specific good Again followed by Section 17: the importance of the parties’ intentions express or implied and then Section 18: presumptions if the parties’ intentions are not clear. If the title had passed to Steve, then the crane is owned by Brassy Ltd, however had it not been passed then Peter owns the crane.

Regarding the issue with the copper, Brassy Ltd will try and argue that Will had implied authority. Defined Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 Lord Denning MR

"It is implied when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their numbers to be managing director. They thereby impliedly authorise him to do all such things as fall within the usual scope of that office.”All the authority which an agent has may be entirely created by an implied agreement. Such an agreement can be inferred ‘from the conduct of the parties and the circumstances of the case’. - Hely-Hutchinson v Brayhead Ltd. The agent may be given implied actual authority to do all that is necessary in order to achieve the goals expressly agreed with the principal. Authorising an agent to enter into a contract to buy land carries implied actual authority to sign the documents required under statute because otherwise the agent would not be able to perform the task agreed -Rosenbaum v Belson [1900]. On the other hand, in Bryant, Powis, and Bryant Ltd v Law Banque du Peuple [1891–94] an agent, who had express actual authority by power of attorney to buy or sell goods, charter vessels and employ agents and servants, did not have implied actual authority to borrow money because this was not necessary to the tasks expressly authorised.

Implied actual authority may give an agent the power to do whatever is usual in the context of his trade, profession or position in order to execute his authority. - Hely-Hutchinson v Brayhead Ltd [1968] considering that Deidre has asked him to look out for such a purchase then it can be argued that he was in the position to execute his authority. An agent may have customary authority to act in accordance with the customs or practices of a trade or locality. Such customary authority must be reasonable and lawful. - Robinson v Mollett [1875]. This was defined in Hely-Hutchinson v Brayhead as the authority of an agent as it appears to others. If a principal by words or conduct indicates that a person has authority to act on his behalf, the third party contracts with the agent on that basis. In Rama Corp v Proved Tin Ltd Slade J stated that Apparent authority was really a form of estoppels. The principal represents to the third party by words or conduct that the agent has authority, and so the principal is later estopped from denying that authority. There are three requirements :- i). Representation (Summers v Soloman - It may be implied from conduct), ii) Reliance on the representation and iii) An alteration in the third parties position - resulting from the reliance. As far as alterations in the third party’s position are concerned, it is not entirely clear whether or not a third party does in actual fact have to have acted to his detriment or not. However if Deidre has given Will authority by her words or conduct, Deidre cannot deny that authority, however from the facts, it states that Will had been expressly forbidden to buy and copper on behalf of the business.

Lord Scott in Criterion Properties PLC v Stratford UK Properties LLC [2004] 1 WLR 1846 explained the position where the third party enters into a transaction which is contrary to the principal’s commercial interests.

“If a person dealing with an agent knows that the agent does not have actual authority to conclude the contract or transaction in question, the person cannot rely on apparent authority. Apparent authority can only be relied upon by someone who does not know that the agent has no actual authority. And if a person dealing with an agent knows or has reason to believe that the contract or transaction is contrary to the commercial interests of the agent’s principal, it is likely to be very difficult for the person to assert with any credibility that he believed that the agent did have actual authority. Lack of such a belief would be fatal to a claim that the agent had apparent authority.”- Herbert seemed a little surprised that Will was able to buy such a large quantity of scrap copper on behalf of the scrap yard but Will told Herbert that Deidre had asked him to look out for such a purchase.

In this situation the agent has no actual authority at the time of the relevant act but the principal for whom, (unknown to such principal), he was acting later adopts (“ratifies”) the particular act as if he had given prior authorisation.

2 days later “Frank considered the crushing machine a good buy and so he telephoned Herbert to say that he was approving the deal which Jimmy had made”

Express actual authority is the authority which the principal expressly gives to the agent: for example, where the agent is instructed to sell a particular property for the principal. In determining the express authority of an agent, the normal rules for construing contracts apply. SMC Electronics Ltd v Akhter Computers Ltd [2001] any ambiguity is likely to be resolved in favour of the agent as long as the agent acted reasonably Ireland and others v Livingston [1861–73] Requirements of this are: The agent must purport to act on behalf of an ascertainable principal Keighley, Maxsted & Co. Durant [1901]

“It is, I think, a well-established principle in English law that civil obligations are not to be created by, or founded upon, undisclosed intentions. That is a very old principle.”

The principal must be in existence at the time of the act and lastly the principal must be competent at the time of the act and of the purported ratification. Ratification may be either express or implied from the principal’s unequivocal conduct. The effects of ratification are that it has retroactive effect, i.e. it is equivalent to an antecedent authority/The principal may sue and be sued by the third party/The agent drops out of the picture, is discharged of all liability as regards the third party and cannot be held liable for exceeding his authority as regards the principal/ The principal may be liable to pay the agent reasonable remuneration or an indemnity for loss incurred by him. Since ratification puts the parties into the same position as if the act had been authorised from the outset, then logically it relates back to the moment of the original contract. Bolton Partners v Lambert [1889]

Cotton LJ “This rule allows the principal to choose whether or not to ratify, but such a choice is not available to the third party. On the other hand, the third party believed themselves to be bound by the contract and, if the principal fails to ratify, an action for breach of warranty of authority will lie against the agent.”

In Presentaciones Musicales SA v Secunda [1994] it shows that without authority solicitors issued a writ; this action was later ratified, but that ratification came outside the statutory time limits for issuing the writ. It was held that the ratification was effective. The majority in the Court of Appeal did not regard the solicitors’ action as a nullity and contrasted this with the situation in Brown. Roch LJ, however, thought that the cases showed ratification could not occur where a third party would be deprived of their property rights

Did ownership of goods pass to Brassy LTD as soon as the contract was made or when goods were delivered? If ownership remained with Packite are they liable? The passing of risk Under Section 20(1) “Unless otherwise agreed, the goods remain at the seller’s 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 buyer’s risk whether delivery is made or not.”Prima facie therefore risk passes with property, irrespective of delivery. The case of Sterns Ltd v Vickers Ltd [1923] 1 KB 78 provides an (exceptional) example of a situation where risk impliedly passed before property.

Specific goods perishing, where there is a contract for the sale of specific goods, but the goods perished before the contract without the knowledge of the seller, the contract is void (s.6). Section 6 may apply even if only part of the goods has perished Barrow, Lane & Ballard Ltd v Phillip Phillips & Co [1929] 1 KB 574 Sealy and Hooley. Under the contract one party (the seller or the buyer) may have agreed to take the risk that the goods do not exist at the time of the contract; in which case that party will be liable should the risk arise. Section 6 might seem to resemble the doctrine of common mistake in the general law of contract, but goods that have never existed cannot be said to have perished (as to whether s.6 reproduces the decision in Courturier v Hastie [1856] 5 HL Cas 673. The goods will have perished where they exist but have lost their commercial character: for example, cargo of dates perished when they went underwater for 2 days and were covered with sewage Asfarv Blundell [1896] 1 QB 123. The problem with this case is that it was not a decision under the Sale of Goods Act and there is a contrary – if rather dubious – authority, Horn v Minister of Food [1948] 2 All ER 1036).

Under s.7, where there is an agreement to sell specific goods and, without any fault on the part of either party, the goods perish subsequent to the agreement and before the risk has passed to the buyer, the agreement is avoided. Note that this section does not apply where there is a contract of sale. For Specific goods, statutory provisions sections 6 and 7. Section 6: where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract is made, the contract is void (for mistake or “initial impossibility”) and Section 7: 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 (for frustration or “subsequent impossibility”)

Note that there does not appear to be any scope for contrary intent. It would seem that the result is automatic. Consider other possible interpretations of such facts: has the seller warranted the delivery of the contract goods? Has the buyer entered a speculative contract? Is there a contingent contract? Should there be scope for such contrary intent? McRae v Commonwealth Disposals Commission (1950) 84 CLR 377.Applying the statutory rules relating to mistake or frustration may not always produce a satisfactory outcome. For an alternative approach used in respect of a contract for unascertained future goods see Sainsbury v Street below.

What is meant by “specific” goods in the context of sections 6 and 7? Can future goods be specific?

"Perish"? If the goods have been totally destroyed then they will be regarded as having perished. To what extent will damage, short of total destruction, suffice? Asfar v Blundell [1896] 1 QB 123 “so changed in its nature as to become an unmerchantable product which no buyer would buy and no honest seller would sell” (cf. Horn v Ministry of Food [1948] 2 All ER 1036) (See also: Turnbull v Rendell (1908) 27 NZLR 1067)

In this area of goods damaged in transit section 32 of the Act must also be looked at since this contains further relevant rules where a carrier is involved. “Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, for the purpose of transmission to the buyer is prima facie deemed to be a delivery of the goods to the buyer.” Note the meaning of “delivery”. In these circumstances the carrier is therefore deemed to be the buyer’s agent and the goods will ordinarily be at the buyer’s risk whilst in transit; remember section 18 rule 5(2). However, where the seller’s obligation is to deliver the goods to a specified place, the carrier will be the agent of the seller until the goods arrive at that place. Section 32(1) does not apply and the goods will ordinarily be at the seller’s risk whilst in transit. The crucial issue to determine is the precise delivery point under the contract. Unless otherwise agreed, where the seller does arrange carriage on behalf of the buyer under section 32(1) then the seller must make such contract with the carrier as may be reasonable having regard to the nature of the goods and the other circumstances of the case; section 32(2). Failure to do so will put the risk of damage in transit back upon the seller. Thomas Young v Hobson and Partners (1949) 65 TLR 365.If the goods are damaged after risk has passed to the buyer, then clearly the buyer will normally be required to pay for them. If the goods are damaged before risk has passed to the buyer, then the seller must normally bear the loss and the buyer will not have to pay the price. The seller may be able to repair the goods or to provide replacement goods, but if this is not possible then the seller will be liable for breach of contract unless the seller’s performance can be excused. This requires consideration of the rules relating to mistake and frustration.



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