Laws3111 Lecture8 2011

Week 8 – Intentional Transfers - Sale

  • Primary legislation – Sale of Goods Act Qld (1896)
  • s 4(1) defines contract of sale – sale or agreement to sell
  • s 3 – goods include choses in possession, NOT action/money
  • Note: Does NOT apply to gifts, barter, etc. but MAY apply to a contract for work AND materials, if its primarily for the materials.
  • If the materials are ancillary, NOT a sale of goods (Robinson v Graves)
  • If the contract is for the delivery of a chattel, it may well be a sale of goods – even if it also involves payment for the construction of that chattel (Deta Nominees v Viscount Plastic)
  • High Court seem to suggest that delivery of a chattel NOT annexed to the land would probably be a sale of goods (Wilson & Dawson’s obiter in Hewett v Court)
  • Obligations set out in s 29 – seller delivers, buyer accepts and pays.
  • Implied conditions as to quality/title (ss 15-18)

Transfer of Property – when does it occur?

  • Default rule – property and risk pass at the same time (s 23). If property is retained (Romalpa) then risk may well be retained as well.
  • Only specific (s 3) or ascertained goods that have been identified can transfer
  • Ascertainment – identified AFTER the sale is made (In Re Wait)
  • Unascertained – generic bulk goods not specifically identified at time of sale (eg. 10 tonnes of grain)
  • “For present purposes, two species of unascertained goods may be distinguished. First, there are "generic goods." These are sold on terms which preserve the seller's freedom to decide for himself how and from what source he will obtain goods answering the contractual description. Secondly, there are "goods sold ex-bulk." By this expression their Lordships denote goods which are by express stipulation to be supplied from a fixed and a pre-determined source, from within which the seller may make his own choice (unless the contract requires it to be made in some other way) but outside which he may not go. For example, "I sell you 60 of the 100 sheep now on my farm." (In Re Goldcorp)
  • Specific performance is unavailable unless goods are specific or ascertainable. (In Re Wait)
  • Intention is irrelevant if it is impossible to achieve due to unascertainability (Re Goldcorp Exchange).
  • Long term storage and/or well labelled segregation will probably be sufficient to establish goods have been ascertained (In Re Stayplton)

In Re Stayplton

  • ESV raised invoices, recorded entries in ‘bible’, moved wine to reserved storage area, and stored it by type/vintage.
  • Card placed on each stack identifying customers, with cards/bible updated upon delivery/collection
  • Also offered storage services for wine purchased elsewhere at a higher rate
  • Held that the sale and long term storage of wine, combined with the separation/segregation of the wine was sufficient to render it ascertainable – at the very least, the customers became tenants in common of the stack based on their contribution.
  • Contrast with In Re London Wine Co. where the lack of separation and segregation meant that wine paid for by customers was not ascertained unless through exhaustion or specific labelling.

Passing of Property/Risk

  • Goods must be ascertained for property to pass (s 19)
  • Property passes when contract intends it to pass (s 20), but if silent, default rules apply (s 21)
    • Rule 1: If specific and deliverable at time of contract, then instantly
    • Rule 2: If specific and non-deliverable at time of contract, then only after they have been made deliverable and buyer has been notified
    • Rule 3: If specific and deliverable but needs to weigh/test to determine price, then only after price determined and buyer notified
    • Rule 4: If delivered to buyer ‘on approval’, property passes when buyer approves or a reasonable amount of time has passed
    • Rule 5: UNASCERTAINED goods only pass when appropriated and in a deliverable state, by one party with assent of the other.
  • If transfer occurs at sale/once deliverable, then buyer bears risk during delivery (Symes v Laurie)
  • However SoG Act does NOT affect duties under bailment (s 23(3))

Symes v Laurie

  • Purchase of a house, relocation from one property to another
  • Held that a house is goods, not property, once physically separated from the property in one piece
  • As the intention of the parties was not clear, s 21 applies
  • Rules 1 or 2 applied (different judges) – once the house was rendered deliverable, property had passed
  • Normal rule – risk follows property (s 23(1)) unless one party delayed/was at fault (s 23(2)). No evidence of fault here.
  • The contract was consistent with this conclusion – so the buyer had property/risk.

Carlos Federspiel v Charles Twigg

  • Purchase of bicycles – buyer had paid, but seller was wound up prior to shipment.
  • Held goods only pass when ascertainment is finalized – irreversible attachment. This requires the agreement of both parties, and actual/constructive possession of the goods.
  • As such, the earliest they could pass was at time of shipment

Case Study: Problematic Artworks

  • Forgeries and fakes, unknown or contested authors
  • 1. Common mistake by both parties
    • Can render contract void or voidable in equity (if fundamental)
    • Bell v Lever Bros – reluctance to include term such as ‘is a painting by one of the old masters’ UNLESS state of new facts serves to completely destroy the original subject matter.
    • Case law suggests a reasonable joint mistake does not void the contract unless a specific term allows for that (Leaf v International Galleries)
    • Policy consideration – not to re-open legislation years later
  • 2. Negligent Misrepresentation
    • Actionable misrepresentation that is false CAN void the contract
    • Innocent representation can be defeated by a lengthy lapse of time or by a lack of unconscionability (equitable remedy – short time span + requires unconscionability)
    • Honest opinion is probably NOT actionable representation (Bissett) as it is reasonable to double-check an opinion
  • 3. Misrepresentation under statute (AC&C)
    • Misleading & deceptive conduct (s 18)
    • Misrepresentations (s 29 (a)(g)(k))
    • Conduct likely to mislead the public (s 33)
    • Also prosecutes Aboriginal Art products not done by Aboriginals

Saints Gallery v Plummer – Abnormal failure of TPA/AC&C

  • Plummer bought $13,000 painting from gallery, discovered it was forgery
  • Failed to succeed in that case, as HE was the valuer – placed no reliance on the museum’s representations, and museum only acted as an intermediary

Breach of Sale Contract (Express Terms)

  • s 54 and 14 – breach of a warranty (or condition treated as a warranty) grants a right to claim damages
  • Only a breach of a condition PRIOR TO ACCEPTANCE is sufficient for repudiation (Leaf Galleries)

Implied Terms by Sale of Goods Act

  • Sale by description – must correspond to description (s 16) – but does the description actually include the artist, or is it a painting name with an opinion of who the artist is?
  • Fitness for disclosed purpose (17) – limited, particularly if buyer inspects prior

Harlingdon & Leinster v Hull

  • Seller told buyer he was relying on their expertise (knew nothing of Munter)
  • Held it was NOT a sale by description, as lack of correspondence to the description was irrelevant – it was not an essential term relied on by the buyer, they relied on their own inspection and knowledge
  • Held the painting WAS of merchantable quality – fulfilled the requirements of aesthetic pleasure and (admittedly reduced) resale. That loss of value was irrelevant to fitness for purpose/merchantable quality.
  • “It could still have been hung on a wall somewhere and been enjoyed for what it was, albeit not for what it might have been” – Nourse LJ

Remedies

  • 50-55 of Sale of Goods Act – however generally only damages (54) once goods actually delivered.
  • 50 – Seller has an action for the price if not paid after delivery
  • 51 – Seller has an action for damages if the buyer refuses to accept delivery
  • 52 – Buyer has an action for damages if the seller refuses to deliver
  • 53 – Buyer can request specific performance IF the court sees fit
  • 54 – Breach of warranty gives rise to damages