Atiyah: Sale of Goods

The Sale of Goods 11th ed Patrick S. Atiyah , John N. Adams , Hector MacQueen

ISBN13: 9780582894082
Published: April 2005
Publisher: Pearson Higher Education
£47.95

Buy

Note: Cases linked in the text on the right are either to BAILII reports (where available) or the Wikipedia reference.

Contract Text

Contents

1. Introduction

2. The Contract of Sale

3. Terms of the contract

4. Exclusion Clauses

5. Title and Passing of Property

6. Retention of Title

7. Nemo Dat

8. Performance of the Contract

9. Remedies of the Seller

10. Remedies of the Buyer

11. Articles on Sale of Goods and Contract issues

12. Drafting Sale Contracts and specimen sale contract

 

Sponsors



Student Subscription
Subscribe to the 2009 Weekly Law Reports & Receive All Parts for 2008 Free!

That's just £90 (£96 overseas) for two years' worth of parts (standard UK subscription cost for 2009: £450).
Contact: 0207 242 6471

Recent Case Law

Cases on Sale of Goods and Contract 2009 - 2000

 

Statutes

Sale of Goods Act 1979

Sale and Supply of Goods Act 1994

The Sale and Supply of Goods to Consumers Regulations 2002

Unfair Contract terms Act 1977

Factors Act 1889

Part III Hire Purchase Act 1964: ss.27 - 29.

Companion Volume

The Law of Contract


 
 
 
 

 




9. Remedies of the Seller

For a detailed review / revision of Remedies for Breach of Contract see:
Insite Contract: Remedies

9.1 The Unpaid Seller

S.38 SOGA 1979

"The Seller of goods is an unpaid seller within the meaning of this Act-

(a) when the whole of the price has not been paid or tendered

(b) when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise."

 

9.2 Rights of the Unpaid Seller

S.39 SOGA 1979

"(1) Subject to this and any other Act, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law -

(a) a lien on the goods or right to retain them for the price while he is in possession of them,

(b) in case of insolvency of the buyer, a right of stopping the goods in transit after he has parted with possession of them,

(c) a right of re-sale as limited by this Act.

(2) Where the property in the goods has not passed to the buyer, the unpaid seller has (in addition to his other remedies) a right of witholding delivery similar to and coextensive with his rights of lien and stoppage in transit where the property has passed to the buyer."

 

9.2.1 The Seller enjoys "Real" and "Personal" Remedies

Real Remedies

Rights against the goods - Lien (ss.41- 43);

Stoppage in Transit (ss.44 - 46);

Retention and Re-sale as limited by the Act (s.48)

Personal Remedies

Rights against the buyer

Action for Price (s.49);

Action in damages for non-acceptance (s.50)

9.3 Real remedies of the unpaid seller

9.3.1 Lien : s.41 - 43

The seller's lien arises (a) where the seller is unpaid (b) the goods sold are not subject to credit provision (c) if credit was given, the credit period has expired (d) the buyer is insolvent and (e) the seller is in possession of the goods or part thereof.

(a) The parties may override the statutory lien by express provision.

(b) The buyer's insolvency while giving a right of lien does not necessarily repudiate the contract.

(c) The exercise by the seller of the lien does not rescind the contract but may be a prelude to resale under s.48(3) (Infra).

(d) The lien exists to secure payment of the price in respect of the particular goods. Any claim for expenses incurred in detaining the goods must be the subject of a damages claim unless there is express provision made that the expenses element be treated as part of the price - in which case the lien would extend to the expenses element.

(e) The rights of stoppage in transit underpin the lien rights.

(f) The lien rights will terminate (a) when he delivers the goods to a carrier for transmission to the buyer without reserving a right of disposal over the goods (b) when the buyer of his agent lawfully obtains possession of them (c) by waiver of the lien or right of retention.

9.3.2 Right of re-sale s.48

"(1) Subject to the provisions of this section, a contract of sale is not rescinded by the mere exercise by an unpaid seller of his right of lien or retention or stoppage in transitu.

(2) Where an unpaid seller who has exercised his right of lien or retention or stoppage in transitu re-sells the goods, the buyer acquires a good title thereto as against the original buyer.

(3) Where the goods are of a perishable nature, or where the unpaid seller gives notice to the buyer of his intention to re-sell, and the buyer does not within a reasonable time pay or tender the price, the unpaid seller may re-sell the goods and recover from the original buyer damages for any loss occasioned by his breach of contract.

(4) Where the seller expressly reserves the right of re-sale in case the buyer should make default, and on the buyer making default, re-sells the goods, the original contract of sale, is thereby rescinded, but without prejudice to any claim the seller may have for damages."

(a) If the seller had no right to re-sell (s.48(3)(4); buyer repudiation; unascertained good not appropriated to the contract) then the buyer will enjoy a claim against the seller in damages for non-delivery.

(b) A more subtle way of approaching the problem is for the buyer to waive the damages claim and treat the seller as if he were the buyer's agent to sell the goods and claim an account.

Benjamin ¶ 1204 p 722 3rd Edition .

(c) If the buyer repudiates his obligations under the contract (and this can include insolvency if the buyer shows he is unable or unwilling to pay) the seller can accept the repudiation, teat the contract as discharged, re-sell the goods (with title) and claim damages against the buyer for any loss occasioned thereby.

(d) If the buyer has both property and possession the seller's claim must be for the price or damages - personal remedies against the buyer. The real remedies, rights against the goods, appear to have been lost.

(e) It would appear that when title and possession are vested in a buyer who later repudiates the contract, the seller cannot recover the goods, property does not revest in the seller. Property revests where the buyer validly rejects the goods or the parties rescind on ground of misrepresentation. The way around the problem would be to make express provision on resale to cover the situation where property and possession vest in the buyer. (Problems could arise under the Bills of Sale Act 1878)

(f) If a seller re-sells the goods he may retain deposits as well as the price paid by the new buyer. (provided no damages claim was made against the buyer for loss on the re-sale) If, on the other hand, the seller chooses not to re-sell and claims damages the seller must take into account the deposit in the calculation of damages.


9.4 Personal Remedies of the Unpaid Selle

9.4.1 Action for the Price

S.49(1)(2) SOGA 1979

(1) Where under a contract of sale, the property in the goods has passed to the buyer, and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods.

(2) Where, under a contract of sale, the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay the price, the seller may maintain an action for the price, although the property in the goods has not passed, and the goods have not been appropriated to the contract."

(a) The right to sue for the price is independent of lien. In circumstances where the seller has been given judgment for the price he may still retain the goods by way of lien until he is actually paid. s.43(2)

(b) The action arises where the buyer has defaulted in paying for the goods.

(c) Under s.49(1) the seller may bring an action for the price only if the property has passed. (cf. s.49(2).) The contract must continue to remain in force. The seller must not have accepted a repudiation.

There is some support for the view that the seller may waive his right of retention of title, allow property to pass and bring an action for the price under s.49(1)

Napier v Dexters Ltd (1926) 26 Ll L. Rep at 63

(d) If the contract provides that payment is to be made on a day certain the seller may bring an action for the price on the expiration of the day certain. s.49(2).

Workman Clark v Lloyd Braziliano [1908] 1 KB 968

(e) The action for the price is an action on a liquidated sum. Advantage can therefore be taken of Ord. 14 RSC - Summary Judgment proceedings. (See also C.C.R. O.9)

(f) If it not possible to bring an action for the price under any of the heads indicated above the seller has to fallback on a remedy in damages for non-acceptance and non-payment under s.51.

Advantages of the 'price' action :

(a) Financial. The sum gained will invariably be higher than for damages.

(b) Where property has passed the seller is not under a duty to mitigate.

Additional remedies

The seller may be able to claim damages for special loss occasioned by the breach and be entitled to compensation for delay in acceptance of the goods under s.37.

s.37

"When the seller is ready and willing to deliver the goods, and he requests the buyer to take delivery, and the buyer does not within a reasonable time after such request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods : provided that nothing in this section shall affect the rights of the seller where the neglect or refusal of the buyer to take delivery amounts to a repudiation of the contract."

Failure of the buyer to pay on time

Failure to pay on time is not, of itself, a repudiatory breach. If the seller resells the goods he may lay himself open tan action by the buyer for non-delivery under s.51. The new buyer ought to be protected from the consequences of nemo dat under s.48(2) and s.24 sale of Goods Act.

s.48(3)

"Where the goods are of a perishable nature, or where the unpaid seller gives notice to the buyer of his intention to re-sell, and the buyer does not within a reasonable time pay or tender the price, the unpaid seller may re-sell the goods and recover from the original buyer damages for any loss occasioned by his breach of contract."

I f the property in the goods has not passed the seller will be able to pass title to the new buyer.

If the contract provided that the time of payment was a condition of the contract or 'of the essence' the seller may treat the buyer's refusal to pay as a repudiatory breach, treat the contract as at an end, sell to a new buyer (passing full title, since the buyer's title, if he had title, will revest in the seller) and claim damages for any loss occasioned by the buyer's breach.

 

Seller's tactical position

The remedies of the seller are dictated in practical terms by three factors;

(a) whether the property has passed or not

(b) whether time of payment is expressed as a condition or not

(c) whether the market is rising or falling

There is little doubt that the seller may, by express provision, assert a right to sue for the price in accordance with the terms he has thus set out in the contract. S.49 is not an exhaustive list of the circumstances when the seller may sue for the price.

9.4.2 The Action for Damages for Non-Acceptance of the Goods

S.50 (1)(2)(3) SOGA 1979

"(1) Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages for non-acceptance.

(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer's breach of contract.

(3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted or (if no time was fixed for acceptance) at the time of the refusal to accept."

(a) General principles: The general principles applicable to damages claims can be summarised as follows:

1. Breaches of contract are actionable per se

2. The object of damages is to compensate

3. There is a requirement to mitigate loss

4. Damages can be recovered only for loss sustained

5. The loss must be caused by the breach.

(b) Mitigation: The distinction between breach and anticipatory breach is fundamental.

British & Bennington Ltd v NW Cachar Tea Co [1923] AC 48

Braithwaite v Foreign Hardwood Co Ltd [1905] 2 KB 543

" If the buyer wrongfully repudiates the contract, the seller can accept the buyer's repudiation and then maintain an action even though he is unable to show that he had the capacity to perform the contract when the buyer repudiated it. On the other hand, this principle must be reconciled with another equally established rule, namely that a party is not precluded from relying upon one ground of repudiation merely because at the time he gave another and unjustifiable reason for repudiating."

Atiyah: 7th Edition.

See also Gebruder Metelman v NBR (1984)

(c) Calculation of damages : is laid down in s.50(3)(2)

s.50(3) Meaning of 'available market'.

A place where goods can be sold

Dunkirk Colliery v Lever (1878) 9 Ch D 20

Thompson v Robinson Gunmakers Ltd [1955] Ch 177

Charter v Sullivan [1957] 1 All ER 809 Jenkins LJ considered that since there was a distinction between contract price and market price there was only an available market where the market price was regulated by supply and demand. This would exclude markets where the goods were sold by reference to a fixed price in which case the available market rule is inappropriate and the question becomes one simply of the amount of lost profit made on the lost sale. Where there is no available market the measure will generally be the difference between the sale price and the value of the goods to the seller at the time of breach.

Harlow & Jones v Panex International [1967] 2 Lloyds Rep 509

The measure under s.50(3) is only a prima facie measure.

The seller plays the market, takes the risk and sells at a higher price than the market price.

The duty to mitigate precludes the situation where the seller delays re-selling after breach and attempts to claim damages based on the market price fall subsequently.

The converse is more interesting. What is the position if the seller does not sell, holds onto the goods and sells at a higher than market price at a later stage. In the circumstance it is submitted that the seller will still be able to claim the difference between the contract price and the market price at the date of breach - and retain any gain he made as a result of taking the risk of market fluctuation.

Campbell Mostyn Ltd v Barnett Trading Co [1954] 1 Lloyds Rep 65 .

(d) No available market: the seller must claim under s.50(2). The seller's loss is the difference between the contract price and the value of the goods to the seller at the date of breach.

The principles of remoteness of damage are well known and are not rehearsed in note form here.

The Heron II [1969] AC 350

(e) Special Loss: If the seller sustains consequential loss this may recovered under the two limbs in Hadley v Baxendale. This is provided for in s.54.

 

For a detailed review of Remedies for Breach of Contract see:
Insite Contract: Remedies

 

Wildy & Sons website

Wildy's new books RSS feed

  

 

 

 

 

web counter