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Introduction To Pass of Property and risk
In the aspects related to the unascertained goods within the Sales of Goods Act 1979 has also been focusing on the passing on the property risks and the risks are also a nuanced area of law that are designed to regulate the transactions involving goods. Furthermore, Section 2 (1), SGA 1979 has also stated that the contract of sale of goods under a contract must be done by the seller transferred and agrees to transfer the property under the goods for the buyers for money under consideration.
In this perspective, section 16 of this Act has also been reflecting that the common law related to property does not pass until goods are ascertained or specifically set aside for the contract. Section 18 Rule 5 of the Act has also been stating that property in unascertained goods has also been passed under unconditional appropriation. On the other hand, Sections 20A and 20B have been introduced to address issues particularly pertinent to buyers who have prepaid for goods in bulk that are to be ascertained or separated. Furthermore, it has also been focusing on the circumstances of seller insolvency. In terms of the passing of property, it is identified that under the case of Bayley J. in Gillett v Hill, 149 ER 871 at 873 a buyer must say he has property in goods forming part of a bulk storage if no one can point to the individuality of the goods.
In the case of Re Wait [1927] 1 Ch 606 the court has stated that the buyer cannot assert the aspects related to property rights on the specific perspectives that are not ascertained. It is also to be stated that by focusing on the perspectives related to proprietary claims, the unsecured creditor can also claim different perspectives. In the case of Re London Wine Co (Shippers) Ltd [1986], the London Wine Company has got insolvency and the question arose about the status of wine that customers had paid for but which had not been segregated from the general stock. The court has also decided that the property has also not passed that the buyers have the specific bottles of the wines through which it is identified that it has not segregated from the bulk. Furthermore, it is also to be stated that the general principle related to the property must be passed by the identification and appropriation of the goods to the contract.
Matthew has paid for 1000 cases of salmon before Anderson Fishery Limited's insolvency and the key question is whether the property and therefore the risk in those cases had passed to him before the fire. Alice and Henry has paid after the insolvency but before knowledge of it, the same principle applies. In case, the property had passed to them before the fire for that, they bear the risk of loss. The situation is complicated by Anderson Fishery Limited's insolvency. If the property had not passed, they might be treated as unsecured creditors in the insolvency proceedings.
Furthermore, it is also to be stated that the case of Elphick v. Barnes (1880) 5 CPD 321 under the contract law has also been highlighting essential perspectives related to consideration in contract formation. In this perspectives, it is also to be stated that Mr. Elphick has claimed an agreement with Mrs. Barnes is adequate and it is also to be stated that the court has observed that the this contract is not enforceable as there is no contract available.
Goods delivered on an approval basis
Consequences of Insolvency on the Sale
Understanding when property and risk pass in the sale of goods transactions is fundamental in contract law, with the Sale of Goods Act 1979 providing clear guidance in various sections. Section 20(1) of the Act establishes a general rule: the goods remain at the seller's risk until property in them is transferred to the buyer. This rule is pivotal for risk allocation, insurance considerations, and liability arrangements between the parties. It affects payment terms as payment can be linked to the passage of property. Additionally, the timing of property and risk transfer is essential for determining ownership in complex transactions where financing or collateral is involved. It plays a critical role in creditor rights and establishing claims to the goods in the unfortunate event of seller insolvency. Moreover, it defines the legal rights and remedies available to both parties in case of disputes or breaches of contract, allowing for the fair resolution of conflicts. Section 20(1) has stated that as a cornerstone in contract law, it has been emphasizing the importance of clarity and precision in defining when property and risk pass to ensure smooth and lawful commercial transactions.
Payment by Alice and Henry After Insolvency
In the case of Kirkham v Attenborough [1897] 1 QB 201, the court's decision has also stated that in transactions where goods are sent "on approval,". It has also been storing the goods without examination does not constitute an act adopting the transaction. This case has stated that the principle that an affirmative act is required to bind the buyer to the transaction such as actual acceptance or usage of the goods. It has further highlighted the importance of unequivocal acceptance in sales contracts. It has also been guiding future cases involving similar circumstances.
On the other hand, the case of “Atari v Electronics Boutique [1998] QB 539” has stated the significance of well-defined contractual terms in commercial transactions. The case has underscored the need for parties to abide by the terms and conditions outlined in their agreements. It has also served as a reminder that contractual obligations are binding and the interpretation of contract terms has also been playing a pivotal role in resolving disputes.
"Sale or Return Contracts Shedding a Little Light" (1998) 61 MLR 432 has contributed to the academic discourse on sale or return contracts.
Remedies
In the complex case involving Anderson Fishery Limited different remedies can be pursued to address the various legal issues. Matthew, Alice and Henry have purchased salmon from the company can seek compensation for the unfulfilled delivery or participate in insolvency proceedings to assert their claims as creditors. The insolvency of the company has also been opening the possibility of scrutinizing preferential payments made before insolvency. Furthermore, legal action can be taken against Andrew for the unauthorized sale of the Nissan Qashqai and efforts can be made to recover the vehicle or seek compensation from Arthur. Reviewing the contractual terms of the vintage trawler sale to David is essential to determine the timing of payment upon delivery. Each remedy depends on the specific circumstances and applicable laws, highlighting the complexity of addressing the legal consequences of insolvency and related transactions. Legal guidance is indispensable in navigating this intricate web of legal issues and pursuing appropriate remedies for all parties involved.
The case of E Hardy & Co (London) Ltd v Hillerns & Fowler [1923] 1 KB 658 aligns with Weiner v Gill in emphasizing the importance of payment as a factor in determining acceptance. In both cases, acceptance is linked to payment. However, the case of Ornstein v Alexandra Furnishing Co differs in that it focuses on the act of returning goods as a prerequisite for rejection. Failure to return the goods is considered acceptance.
In E Hardy & Co (London) Ltd v Hillerns & Fowler, the act of reselling part of the goods was deemed acceptance. It illustrates that actions taken by the buyer can constitute acceptance, even if they have not physically paid for the goods. Couchman v Hill [1947] 1 KB 554, particularly Scott L.J.'s statement, clarifies that elements in a description that are fundamental to the "identity" of the subject matter sold can be considered conditions of the contract. This principle has had a lasting impact on the interpretation of contracts and the distinction between conditions and warranties in contract law.
References
Aboukdir AA, ‘The Timing of the Passing of Risk under the English Sale of Goods Act 1979, the Interplay between the Principle of Party Autonomy and the Default Rule: Should the Risk Linked to the Passing of Property or to the Situation of the Goods?’ [2017] SSRN Electronic Journal
Aboukdir DA, ‘The Timing of the Passing of Risk under the English Sale of Goods Act 1979, the Interplay between the Principle of Party Autonomy and the Default Rule: Should the Risk Linked to the Passing of Property or to the Situation of the Goods?’ (papers.ssrn.com9 July 2017) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2999446> accessed 27 December 2023
Legislation.gov.uk, ‘Sale of Goods Act 1979’ (Legislation.gov.uk2011) <https://www.legislation.gov.uk/ukpga/1979/54/section/2>
Lexisnexis, ‘234 Unconditional Appropriation of Unascertained Goods: Sale of Goods Act 1979 Section 18 Rule 5 | Sale of Goods Vol 34 | LexisNexis’ (www.lexisnexis.co.uk2021) <https://www.lexisnexis.co.uk/legal/commentary/efp/sale-of-goods-vol-34/234-unconditional-appropriation-of-unascertained-goods-sale-of-goods-act-1979-section-18-rule-5> accessed 27 December 2023
