Domestic Sale of Goods
The selling of goods in the United Kingdom (UK) and the binding contract between both (seller and buyer) are regulated by The Sales of Goods Act (1979) together with its later Amendments. A contract for the sale of goods provides that the transfer of goods for the seller to the buyer will only be complete through money or consideration transaction also known as the price. In some instances, the contracts for the sale of goods will have additional terms and conditions that are super-imposed to the general rules that are applicable to specific contracts. These contracts include sale of goods, installment, insurance, agency, and carriage of people as well as goods by sea, air, and land among others. This paper, therefore, endeavors to discuss the provided cases and ultimately offer reasonable advice to the companies involved. It examines specific contracts as well as their connection with the rules and practice and the relevant legislation.
The Sale of Goods Act1893, as well as the Sale of Goods Act of 1979, are both established and accepted as a codification of the common law. Both of set out rules to be followed, but in the majority of cases allows these rules to be altered by agreement between contracting parties (Stone, 2013, p. 23). Section 2(1) provides for the definition of the sale of goods contract. It defines a sale of goods contract as an agreement in that the seller transfers or commits to transfer the property or the title in the goods to the buyer upon payment of consideration known as the price. This definition is complemented by section 61(1) that provides that this definition extends to both agreement to sale and sell. However, the sale of goods contract should be distinguished from other transactions in which the property or title to the goods passes from one individual to the other. The reason is that these types of transactions are not sale of goods contract within the meaning of the act and proper reading of the Act. The most essential component of the sale of goods contract is that the transfer of the property only occurs in money consideration known as the price (MacKendrick, 2012, p. 48). The subject of this contract, on the other hand, is the goods that are comprehensively defined in section 61(1). This section defines goods to include industrial growing crops, emblements; things forming or attached to land that severed under or before the contract for the sale of goods, as well as all personal chattels apart from things in action or money. These goods are categorized differently and hence differently rules do apply to them, for example, future goods and existing goods.
There are sometimes that some formalities of the sale of goods contract may not be necessary. For instance, section 4 of the Act provides that subject to the sale of goods Act or any other Act, an agreement may be in writing either with a seal or without a seal or partly by word of mouth and partly in writing, or by word of mouth. A contract may also be implied from the manner in which the parties conduct themselves (Young , 2009, p. 11). Another element that will be relevant or essential to the cases to be studied is the passing of property together with the risk that is a distinguishing feature contract for sale of goods. The property refers to the ownership of the goods and the title may refer to the mean that allows the owner just possession of the goods or right to an individual's property. Possession is also understood as the physical control over the goods and it is not necessarily connected with the property in them. The risk in the goods however refers to the responsibility for damage, destruction, or loss of those goods as well as or the associated risks. These risks are borne anytime when it happens to either the buyer or the seller.
Angeon Plc supplies a range of chemicals to be used for the production and manufacture of commercial plastics. On October 28, 2013, they agree to undertake a number of contracts. First, they agreed to sell 10,000 liters of their proprietary liquid chemical Floximed to Barton Ltd at £10 per liter. The Floximed is described as being “in tank number 2 at our Woolston depot in Southampton.” There were15, 000 liters of Floximed in tank number 2 when the contract was made. The delivery of these goods were to be undertaken according to express standards of conditions of supply of Angeon's, and a copy was to be sent to all buyers. The conditions were among other things the payment of the full price of the supplied goods not later 30 days upon delivery of the said goods (Wishart, 2012, p. 22). The title of the supplied goods was also to remain with the seller until the full payment of the goods notwithstanding their delivery to the buyer. In addition, in the event that the supplied goods are mixed with any other different goods prior to their full payment, then the resulting mixture will eventually to an absolute property of Angeon until the full payment of the price. The seller was also not to be liable for any defects in their goods they supplied.
Barton Limited paid the half price of the contract on October 30, 2013, but before delivery of any of the Floximed, tank number 2 together with its entire contents at the Woolston depot got destroyed by fire. Following these events, Angeon refused to refund the monies that were already paid by Barton Limited. They further insisted that the balance or the full price of the goods must be paid because Barton Limited had already bought the goods prior to the destruction of the goods by fire (Beale , et al., 2007, p. 55).
In the event that there are no other terms or conditions to the contract, the general rule is that the risk passes with the property, as opposed to the possession of the goods. According to Angeon's standard conditions under paragraph (b), the title of the goods, in this case Floximed, was to remain with the seller until the full payment of the goods. Barton Limited only paid half on these prices, and, therefore, a proper and constructively interpretation of this term means that the property of the goods was still with Angeon. This is because the full price of the goods was not yet paid by Barton, and they had not obtained property in the goods according to the terms and conditions of the contract. Therefore, the goods were still the property of Angeon, and they bear the risk. Section 20(1) of Sale of Goods Act complements the terms of the contract and it provides that unless the parties agree otherwise, the goods remain at the risk of the seller, until he or she transfers the property to the buyer. However, in the event that the property in the goods is transferred to the buyer, he or she will have the risk of the goods, whether the goods have been delivered or not (Butler, 2009, p. 28). Therefore, Barton can rightfully claim a refund for the money they paid to Angeon for the goods up to the moment that the goods were destroyed by fire.
According to the second contract, Angeon Plc agreed to sell 10 tons of their proprietary polymer resin beads Microflexto Condex Plastics Plc at £5,000 per ton. On November 4, 2013, the Microflex was delivered to Condex Plastics, and they immediately mixed 4 tons of the Microflex with several other ingredients to produce 5,000 garden plastic chairs. They consequently sold 3,000 of these chairs to Endurance products Limited at 40 pounds per chair. The cheque was given to Condex by Endurance for the contract price upon delivery. Condex paid this cheque to their trading account at Boyd's Bank. Unfortunately, Condex went into liquidation while full sale price of the Microflex was still outstanding. During this time, six tones of unused Microflex as well as 2000 chairs made from Microflex was still remaining at Condex's factory (MacKendrick, 2012, p. 29).
Condex sold 3,000 of the chairs they made from Microflex to Endurance Products Limited at 40 pounds per chair. In exchange, Endurance issued Condexa with a cheque equivalent to the contract price upon delivery and Condex paid it to their trading account at Boyd's Bank. As provided by the standard conditions (b) of Angeon, the property of the mixture and the unused quantity of six tones of Microflex remains the property of Angeon Plc and they had the right to dispose it. Therefore, the question of outstanding 2000 garden chairs resulting from the mixture of the four tones Microflex and other compounds used to manufacture the chairs must be critically discussed. The standard conditions of Angeon Plc do not contradict the general rule regarding the title of the goods. With regards to the already processed and mixed four tones, the general rule is that in the event that the goods supplied are mixed with other components and are no longer identifiable, the seller loses ownership of the supplied goods and the court will only imply a charge in his favor (MacKendrick, 2012, p. 39). This was stated in the case of Borden Limited v. Scottish Timber Product Limited (1979), and, therefore, Angeon can only rightfully claim the price of four tones of Microflex, but not ownership of the chairs.
Obviously, Condex Plastics Plc was not in an enviable financial situation as it did not pay any part of the delivered Microflex and stared a procedure of liquidation. The money could not go to Angeon Plc due to the procedure of liquidation. The only possibility for Angeon Plc in this case is to dispose of the remaining quantity of six tones of Microflex, that are in Condex Plastics Plc possession, but not their property. As for the rest of the already used amount Angeon Plc may claim a creditor’s petition following the procedures provided under sections 267 to 271 of the Insolvency Act of 1986. This is because the liquidation of the company in the United Kingdom is done according to the procedure provider in the Insolvency Act of 1986. With regards to the nature and content of its rules, the preamble of this Act provides that the Act to consolidate the enactments touching on company winding up and insolvency (Butler, 2009, p. 189).
With regards to the contract to sell a one-year old lorry to Don's Haulage Limited for 20,000 pounds, it is unfortunate that the circumstance of the transaction was conducted. The delivery lorry was ultimately delivered to Don's Haulage Limited on November 11, 2013 and the full price paid the same day. It did not take long before Don Haulage discovered that the engine of the lorry was excessively damaged and worn out for its repeated breakdowns and its age. What it is clear is that the negotiation of the transaction occurred only through description of the delivery lorry (Stone, 2013, p. 44). In this case, section 13(1) of the Sale of Goods Act provides that where a contract for sale of goods is by description, it is implied that the goods will correspond to the said description. Although, Algeon provides for disclaimer in their standard conditions that they will not be responsible for any defects in the supplied goods. This will not apply in the case of a delivery lorry because the lorry was not only defective but not fit for the intended purpose. As a result of this, Don Haulage Limited can successfully claim their money back or damages under implied conditions for merchantability under the Sale of Goods Act and Consumer Protection Act. This is complemented by the rule for strict product liability in the event that goods are defective and results to harm to users as provided under Consumer Safety (amendment) Act of 1986.
Bibliography
Beale , H., Bishop, W. & Furmstorm, P., 2007. Contract. Cambridge: Oxford University Press.
Butler, D., 2009. Contract Law. London: Butterworths.
MacKendrick, E., 2012. Contract Law: Text, Cases, and Materials. Cambridge: Oxford University Press.
Stone, R., 2013. The Modern Law of Contract. London: Routledge.
Wishart, M., 2012. Contract Law. Cambrigde: Oxford University Press.
Young , M., 2009. Understanding Contract Law. Cambrigde: Routledge.
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