Chapter 8 Interactive flashcards of key cases

Chapter 8 Interactive flashcards of key cases

The parties entered into two similar contracts for the supply of cotton seed to be shipped from Alexandria and delivered in London. Payment was made in exchange for shipping documents. On the arrival of the ship in London, and after payment for the goods by the buyer, only a portion of the seed was delivered. The ship then left with the remainder of the seed on board in order to discharge other cargo. The ship returned to London two weeks later and the balance of the seed was tendered to the buyer, but it refused to accept it. The buyer retained the portion which had been delivered and claimed repayment of the price paid for the rejected portion.

The court held that when the delivery had begun, the buyer was entitled to receive the whole quantity that they had ordered before the ship left the port. In the circumstances, the buyer was entitled to keep the part actually delivered and to reject the balance and to be repaid the price of the balance that had been prepaid. Unless the parties agree that delivery can be made by instalments, then the buyer is not bound to accept delivery by instalments.

In August 1947, O placed an order with CR to build a body onto the chassis of a car. It was understood that CR could obtain it within six or seven months at the latest. From the following March, O pressed for delivery. In June, O wrote to CR telling them that he would not accept delivery after 25 July. When O was informed by CR that the body of the car would not be ready by that date, he cancelled his order. CR completed the car in October, but O refused to accept delivery. CR sued for the price.

The Court of Appeal held that although the initial stipulation making time of the essence was waived by O’s requests for delivery after March 1948, this did not disentitle him from giving, at a later time, a reasonable notice, making time for delivery of the essence. O’s June letter constituted a reasonable notice and was, therefore, valid so as to make time of the essence of the contract. The result was that CR’s claim against O failed. If the buyer chooses not to repudiate the contract but instead allows an additional specified time for delivery and the goods are still not ready when this additional time has elapsed, they may then treat the contract as repudiated. In effect, by allowing the further specified time for delivery by the giving of reasonable notice, they have attached a condition to their waiver which revives their right to treat the contract as repudiated if the goods are still not ready.

A rogue, purportedly acting on behalf of a reputable company, placed three substantial orders with ICM for electrical goods. ICM acted on the orders and in turn placed orders with its suppliers for the goods. In accordance with the fraudster’s instructions, ICM requested that the suppliers deliver the goods to a named individual at a given business address. A security guard at the business address signed for the goods. The goods were later collected by the named individual.

The Court of Appeal held that as the goods had been delivered in accordance with the contract, the buyer was liable to pay for them. The terms of the contract showed that the goods were to be delivered to the named individual. As the goods had been collected by that named individual, it followed that the suppliers had delivered the goods in accordance with the terms of ICM’s contract. The fact that they had been signed for by the security guard did not matter. It was found that the security guard had authority to receive goods on behalf of persons carrying on business at the business address and there was no reason for the carrier to suspect that the named individual and the reputable company were not carrying on business at the business address.

The seller, who was a wine merchant, sued a licensed victualler for the cost of a case of champagne which it had sold to him on terms that it should be delivered at the buyer’s premises. The buyer argued that the champagne was never delivered to him. The seller engaged a carrier to deliver the champagne to the buyer’s premises. The delivery driver said that he delivered the goods to a man at a side entrance at the buyer’s premises and that someone on the premises signed the delivery note in the name of the buyer. The buyer argued that his premises were closed at the time this delivery was meant to have occurred, that he had never received the goods, and that the signature was not his, nor had he authorised anyone to sign for it.

The court held that a seller who is told to deliver goods at the buyer’s premises discharges their obligations if they deliver them there without negligence to a person apparently having authority to receive them. They cannot know what authority the actual recipient has. Their duty is to deliver the goods at the proper place and to take all proper care to see that no unauthorised person receives them. They are under no obligation to do more. If the buyer has been unfortunate enough to have had access to their premises obtained by some apparently respectable person who takes their goods and signs for them in their absence, the loss must fall on them and not on the innocent carrier or seller.

The buyer purchased a large number of motor horns of different descriptions and prices. The horns were delivered in several instalments. After accepting the first instalment, the buyer rejected the later instalments on the ground that they were not of (what was then referred to as) merchantable quality. At first instance, it was found that a large proportion of the horns were dented and badly polished owing to defective packing and careless workmanship but that they could easily and cheaply have been made merchantable. As a result, the court refused to hold that the consignment as a whole was unmerchantable but made an allowance to the buyer in respect of the defective goods.

The Court of Appeal held that acceptance of the first instalment of the goods did not preclude the buyer from rejecting the later instalment and that on the facts of this case the buyer was justified in rejecting the later instalments as they were not of merchantable quality. The earlier decision was reversed.

There was a severable contract for the sale of 100 tons of flock to be delivered by instalments. The first 15 instalments of the flock were satisfactory but the sixteenth was defective. This was followed by four more satisfactory instalments. The buyer sought to repudiate the entire contract. The Court of Appeal held that it could not do so.

The Court of Appeal said that where there is a sale of goods under a severable contract and only some of the instalments are defective, whether the buyer will be entitled to reject the entirety of the goods and regard the entire contract as repudiated will turn on the true meaning of s 31(2), with the main tests to be considered being, first, the quantitative ratio which the breach bears to the contract as a whole and, second, the degree of probability that such a breach will be repeated.

The seller sold seven electric engines to the buyer. It was a term of the contract that the engines should be delivered by rail. The seller sent the engines at the buyer’s risk. The seller loaded the engines onto the railway in box wagons but failed adequately to secure them, which resulted in them arriving in a damaged condition. The buyer refused to accept them from the railway. There was no difference in the freight costs as between ‘owners’ risk’ and ‘company’s risk’.

The Court of Appeal held that the seller had failed in its duty under s 32(2) of the (1893) SGA to make such contract with the carrier on behalf of the buyer as was reasonable, having regard to the nature of the goods and the other circumstances of the case, and that the buyer was accordingly entitled to refuse to treat the delivery to the railway company as delivery to itself and was therefore entitled to reject the goods.

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