Commercial Law revision

Sale of Goods only applies to movables, not including money

Where does this judgement come from?- Where trees became movables once they were chopped down. Court said if at a certain point the property becomes movable, it is that point in which it becomes a 'good'.

Glynwed Distribution Ltd v S Koronaka & Co clarified that a reasonable price for the goods is what would be [blank_start]fair and reasonable[blank_end] for the buyer to pay

Time limits are usually reserved for [blank_start]trade contracts.[blank_end]

Title is [blank_start]proof you are entitled to own[blank_end]

PST Energy v OW Banker

Where there is no ownership you cannot transfer ownership - [blank_start]Wilson Imports v Advance Sport[blank_end]

RV Ward v Bignall- [blank_start]'unconditional contract'[blank_end] means a scenario where there are no conditions whatsoever

Varley v Whipp concerned the issue of the sale of a reaping machine

'Deliverable state' is where the goods are in a state in which the buyer would be willing to accept them

Gowans v [blank_start]Bowe[blank_end]- dealing with the sale of [blank_start]potato's[blank_end]. Once the goods had been put into a [blank_start]deliverable state[blank_end], property had passed.

RULE ONE CASES- Property will pass when contract is made

Philip Head & Sons v Showfronts- concerned sale of [blank_start]carpets[blank_end]. The contract involved fitting and delivery. Court said it would only be in a [blank_start]deliverable state[blank_end] once [blank_start]fitted[blank_end] as very heavy and contingent on it for passing of possession

Wait & James v Midland Bank: seller wanted 500 tonnes of what which was transported with 100 tonnes- became bankrupt before separated out- court said no passing as goods had not been separated out therefore unascertained

S18 RULE 2- Where contract is [blank_start]conditional[blank_end], ownership will pass once the goods are in [blank_start]deliverable state[blank_end]

Lord Eldon v Hedley Bros- Property passed once goods had been weighed and the price had been ascertained. Which rule does this case apply to?

How many cases apply to S18 Rule 3?

Woodburn v Andrew Motherwell- where there is a condition on the buyer, rule 3 will apply

Nanka Bruce v [blank_start]Commonwealth[blank_end] Trust Ltd- Contract for the sale of [blank_start]coco[blank_end] where buyer would resell the goods and at that point there was the requirement for the price to be [blank_start]ascertained[blank_end] in order to asses the amount payable by the [blank_start]buyer[blank_end] to the seller. There court said for rule 3 to apply only the [blank_start]original seller[blank_end] must be worried about [blank_start]ascertaining[blank_end] the goods in the context of the [blank_start]original[blank_end] buyer.

Michelin Tyre Co Ltd v MacFarlane (Glasgow) Ltd states that the difference between the two types under s18 r4 will only matter where there is contractual stipulation saying the contract will not pass until a certain point.

Appropriation by exhaustion= when goods [blank_start]belonging to others[blank_end] are taken, what is [blank_start]left[blank_end] in the bulk will [blank_start]pass[blank_end] under the contract- s18 Rule 5 part [blank_start]3[blank_end]

S18 RULE 5 PART 2- The case of Healy v [blank_start]Howlett[blank_end] & Sons concerned the sale of [blank_start]20[blank_end] [blank_start]fish[blank_end] amongst a shipment of [blank_start]190[blank_end]. Before they could be [blank_start]earmarked[blank_end] the train was delayed and as a result they perished. Court deliberated and decided that just separating the goods was [blank_start]not enough[blank_end] to be ascertained sufficiently

S18 RULE 5 PART 1- [blank_start]Carlos[blank_end] Federspiel & Co SA v Charles Twigg Co- Concerned sale of [blank_start]bicycles[blank_end] where buyer was to pay in advance. Seller went bankrupt thus question of who the goods belonged to. The court stated that a seller who [blank_start]intends to pass[blank_end] property will have a [blank_start]final and decisive[blank_end] act in which there is nothing more to do.

Arbitration is an alternative to [blank_start]litigation[blank_end]

Benefits to arbitration

Earl of Kinfore- criminal cases may in some instances be taken to arbitration

Hackston: In terms of partnership issues, so long as legal personality is not the issue concerned, you can go into arbitration

[blank_start]McConnell[blank_end] and Reid: Both parties must agree that the best course of action is to go into arbitration

Where you have a very specific clause agreeing to arbitration in the contract, you have no choice but to go

Mylcrist Builders ltd v Buck: you cannot be awarded without the presence of both parties during arbitration

The decision to remove an arbitrator is made by [blank_start]arbitrators[blank_end]

Grey Construction case stipulates that there will always be an exception to the rule of confidentiality where there will be substantial injustice in a decision if upheld

Grey construction case indicates that there [blank_start]is[blank_end] an exception to the rule of confidentiality. It [blank_start]will[blank_end] operate to the extent that the court can ensure a [blank_start]fair[blank_end] outcome- where otherwise there would be a substantial [blank_start]injustice[blank_end]

The arbitrators may award anything they want in arbitration

In sequestration the trustee must report on their duties at the end of every [blank_start]relevant accounting period[blank_end]

Sequestration may go on for

Rankins Trustee clarifies that where a purchaser is made aware there is sequestration, they will be a good faith purchaser

Things that will vest in the trustee during sequestration

[blank_start]Braidwood[blank_end]- In the process of sequestration, the trustee [blank_start]is entitled[blank_end] to sue on behalf of the debtor for the purposes of damages to the estate

A cautionary obligation is a guarantee that an obligation will be fulfilled i.e. a promise that a promise will be kept

A cautionary obligation is considered both [blank_start]conditional[blank_end] and [blank_start]accessory[blank_end]

Cautionary obligation- Yeoman states

A [blank_start]letter of comfort[blank_end] in a cautionary obligation may be a written document falling short of a legal obligation

Cautionary Obligations: Fortune - A general offer to the world may be binding

CAUTIONARY OBLIGATION- CREDITOR MISREPRESENTATION: Where creditor has made a [blank_start]material[blank_end] misrepresentation the contract becomes [blank_start]void/ voidable[blank_end]. The case of [blank_start]Ranken[blank_end] makes clear that you cannot claim where you are aware of the facts as the third party. O'Donnell adds that you must ensure the facts given are both [blank_start]full and fair[blank_end].

Silence is an option even where the circumstances are unusual in the instance of misrepresentation by a creditor as clarified in Smith

Cautionary obligations: There lies a good faith duty particularly with [blank_start]spouses[blank_end]. In the case of Smith the wife claimed not to be liable due to [blank_start]misrepresentation[blank_end]. The court clarified that there is a [blank_start]special[blank_end] duty between a husband and wife particularly where they have the same [blank_start]financial advisor[blank_end]. [blank_start]Constructive[blank_end] notice is required to be given to the third party, where the nature of the obligation must be pointed out along with the advise to seek [blank_start]separate legal advice[blank_end]. Forsyth clarifies that where a third party is advised to seek separate legal advice but choses not to, there is [blank_start]no liability[blank_end] on the debtor. Similarly according to [blank_start]Broadway[blank_end], it is sufficient enough for the bank to rely on the [blank_start]word[blank_end] of the solicitor who is advising both parties. Finally Cooper makes known that there must be a link between the failure to give [blank_start]constructive notice[blank_end] and the reason in which they [blank_start]enter the contract[blank_end] for there to be liability.

Cautioners have the right to

A cautioners duty may be extinguished where, according to Aitken's Trs, the debtor is [blank_start]released[blank_end] from the principal debt but the creditor is unaware. This does not apply where the debtor is [blank_start]bankrupt[blank_end]. [blank_start]Crawford[blank_end] makes clear that agreeing not to sue is not the same as being released altogether.

Insurable interest is the purchase of risk