Commercial Law problem question – has property passed?

Problem 1

As Vitalia Ltd has gone into settlement it will be of import to find whether belongings in the polenta and acetum has successfully passed to Ciao. If it has, so Ciao will be the proprietor of the goods and entitled to take them, whereas if belongings in the goods has non passed so the goods will organize portion of Vitalia’s assets and in insolvency this will intend that Ciao is merely able to take in the insolvency as an unbarred creditor.

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Sing the polenta, Ciao agreed to purchase 10 pokes. Ten pokes were so set aside in Vitalia’s premises and labelled for Ciao. The transportation of belongings is governed by the Sale of Goods Act ( ‘SGA’ ) 1979. In this instance, the goods were unascertained goods as Ciao has non agreed to purchase a specific point but any 10 pokes of polenta. [ 1 ] Section 16 of the SGA 1979 provides that no belongings in unascertained goods base on ballss to the purchaser until they are ascertained. This is because there are no identified goods in which belongings can go through. Therefore, inRe Blyth Shipbuilding and Dry Dock Co[ 2 ] where a ship was in the class of building, it was held that belongings in the uncomplete vas had passed on payment but no belongings passed in stuffs which were in the ship pace and which might hold been used in the ship’s building.

Section 18 SGA 1979 provides for regulations which indicate when belongings is to go through in the absence of express purpose of the parties. Rule 5 is of relevancy to Ciao’s instance. It provides that where there is a contract for the sale of unascertained goods, and goods of that type are in a deliverable province and are unconditionally appropriated to the contract by the marketer with the acquiescence of the purchaser, so belongings in the goods passes to the purchaser. It further provides that the acquiescence may be express or implied and may be given before or after the appropriation is really made.

Therefore, the issue for Ciao is whether the goods have in fact been unconditionally appropriated to the contract by Vitalia with Ciao’s acquiescence. InRe London Wine Co ( Shippers )[ 3 ] the marketer issued buyers of vino with a papers corroborating that the buyer was the proprietor of the vino. However, the vino was kept within the general stock and there was nil to place the peculiar instances of vino to the single contracts. It was held that the goods had non been unconditionally appropriated. However, inRe Ellis Son & A ; Vidler[ 4 ] purchased vino was segregated from the general trading stock and it was held that the vino had been unconditionally appropriated to the contract. [ 5 ]

Using these instances, as the polenta was set aside and labelled for Ciao, it will be considered to hold been unconditionally appropriated to the contract. Furthermore, Ciao’s acquiescence to the appropriation may be implied from the fact that Ciao has seen the labelling and non made any ailment. As such, belongings in the polenta will hold successfully passed to Ciao.

Traveling to see the balsamic acetum, the goods in this instance are once more unascertained but they do organize portion of an identified majority ( the cargo shipped from Turin ) . Section 20A SGA 1979 sets out an exclusion to the general regulation in subdivision 16. It applies to a contract for the sale of a specified measure of unascertained goods where the goods form portion of an identified majority and the purchaser has paid the monetary value for some or all of the contracted goods.

The subdivision applies such that where the contract is for a specified measure of goods which form a portion of an identified majority, the purchaser acquires belongings in an undivided portion of the majority on payment. The purchaser becomes an proprietor in common of the majority and his portion is “such portion as the measure of the goods paid for and due to the purchaser out of the majority bears to the measure of goods in the bulk.” [ 6 ] Thus, where the majority remains big plenty for all buyers to be satisfied they each take their portion. If this were the instance here so Ciao would be able to take 50 liters.

However, as some of the balsamy acetum has been spilt in theodolite there is no longer sufficient acetum in the majority to fulfill both Ciao and Gourmet Ltd. Ciao has paid for the acetum in progress and this appears to hold occurred before the acetum was spilt. As such he has acquired belongings in the goods and subdivision 20 SGA 1979 will run such that hazard will hold passed with the belongings. As no belongings remains with the marketer ( as there is deficient measure staying ) the two buyers in this instance will hold suffered a loss proportionate to their undivided portions. [ 7 ] As both buyers had bought 50 liters they will portion the loss every bit. As such, Ciao will now be able to take 40 liters of balsamy acetum.

Problem 2

Jemima was instructed to purchase some crates of vino from Bellissima. However, she misinformed Ciao about the cost of the vino and besides purchased extra goods outside of what she had been asked to make. The issue here is hence one as to the possible bureau relationship between Ciao and Jemima.

An bureau relationship may be defined as “the relationship which exists between two individuals, one of whom expressly consents that the other should impliedly move on his behalf.” [ 8 ] In teaching Jemima Ciao was moving as chief and Jemima was moving as agent. As the agent, Jemima owed several responsibilities to Ciao. Importantly, on the facts presented, Jemima was under a responsibility to account to Ciao. Jemima was under a responsibility to maintain Ciao’s money offprint from her ain, unless the understanding with Ciao provided that she could blend financess. Furthermore, Jemima was under a responsibility to keep accurate histories of her minutess and to bring forth those histories to Ciao on petition. [ 9 ] In this instance an history provided by Jemima would hold indicated that she was in breach of her fiducial responsibility to Ciao to move in good religion and non do a net income out of the relationship or act for his ain benefit without consent. [ 10 ] As Jemima has told Ciao that the vino cost ?3 more per bottle than it really did, she has presumptively kept the balance of the money. This is a breach of her responsibilities towards Ciao and she will be apt to refund this money. [ 11 ]

Fabio has now discovered the bureau relationship and is declining to let go of the crates of vino to Ciao. The inquiry here is whether Fabio is bound by the understanding despite the unrevealed bureau relationship. Fabio may seek to reason that as they did non cognize that they were in fact undertaking with Ciao they should non be bound to the understanding. However, in English jurisprudence an unrevealed principal can implement contracts made by his agent. [ 12 ] Yet, where the individuality of the principal is of import in the dealing the 3rd party may be able to avoid the understanding. For illustration, inSaid V Butt[ 13 ] an agent was asked by the principal to purchase a ticket for a theatre public presentation because the chief knew that he would non be able to buy one in his ain name due to his hapless relationship with the theater director. The tribunal held that there was no contract between the principal and the 3rd party as there had been an operative error.

The above instance has been criticised [ 14 ] and has non been followed in a commercial scene. Therefore, inDyster v Randall & A ; Sons[ 15 ] where the contract was for the sale of land which would non hold been sold straight to the principal the contract was held to be valid as between the principal and 3rd party.

In Ciao’s instance, as the dealing was a commercial one and the individuality of the principal is likely to be considered unimportant. As such, normal bureau regulations will use and Fabio will be bound by the understanding.

The 2nd issue which arises in relation to Jemima’s bureau relationship with Ciao is the grade to which Ciao is bound by the footings of the understanding entered into with Stylee by Jemima. The facts suggest that Jemima was moving exterior of her existent authorization when she agreed to purchase the 15 tabular arraies. Therefore, it must be determined whether Jemima was in fact moving as Ciao’s agent at this clip.

The philosophy of evident authorization Acts of the Apostless to make an bureau relationship even where there is no express understanding to that consequence when certain fortunes exist. These fortunes are that there must hold been a representation by the principal to the 3rd party that the agent has authorization, the 3rd party must trust on the representation, and the 3rd party must non hold been cognizant that the agent was moving without existent authorization. [ 16 ] The consequence of evident authorization in Jemima’s instance would be to enlarge her existent authorization from authorization to buy vino to authorization to buy the tabular arraies.

The representation as to authority must be made by the principal and non by himself. [ 17 ] In this instance Jemima has presented her concern card. In some fortunes this could be sufficient for evident authorization, for illustration if the company had made her a senior director of the concern. [ 18 ] However, as Jemima is a junior employee her concern card is improbable to incorporate a representation from Ciao that she has authorization to come in into the dealing. As such, Jemima did non hold any authorization, whether existent or evident, to come in into the understanding. The consequence of this analysis is that Ciao is non obliged to pay Stylee for the tabular arraies.

Problem 3

Ciao as a concern is in breach of its responsibility to present the contract goods to Deelite Ltd. This is a breach of contract for which Ciao will be apt. [ 19 ] These liabilities will include amendss for breach of contract. The general step of amendss is the difference between the contract monetary value and the market monetary value for the goods. In some fortunes there may besides be amendss awarded for loss of net incomes on resale. [ 20 ] This will depend on the exact nature of the contract and whether the claim can be brought withinHadley Vs Baxendale[ 21 ] rules.

However, as Ciao is a partnership, the specific issue here is to what extent the persons involved will be apt. As for Patrizio, although he appears to be entitled to a portion of Ciao’s net incomes this is non sufficient to convey him in line with the spouses of the concern. Patrizio remains an person and will non be personally apt. This is because subdivision 2 of the Partnership Act 1980 provides that, although the reception by a individual of a portion of the net incomes of a concern is leading facie grounds that he is a spouse in that concern, the reception of a portion of the net incomes in the signifier of wage of a retainer or agent does non itself make that retainer or agent a spouse in the concern. As Partizio is having a portion as payment for his work as a director he will non be a spouse.

However, for the spouses of the concern remain jointly and independently apt for all partnership duties. [ 22 ] As Nigella has decided to retire she will no longer be apt for the partnership debts. [ 23 ] Yet, although Bruno has begun to cut down his engagement in the running of Ciao, he will stay apt for the partnership duties under subdivision 9 of the Partnership Act 1980. This will be the instance unless the company has formed a limited partnership and registered this formation. Under this agreement Bruno would be apt merely to the extent of his investing. [ 24 ] However, there is no grounds that this is the instance. Furthermore, as the partnership does non look to be a Limited Liability Partnership, each of the staying spouses will be apt personally for the debts of the concern, instead than hold their liability limited by the sum of their investing.


A Adams,Law for Business Students( 6ThursdayEdition Harlow: Pearson 2010 )

JN Adams and H MacQueen,Atiyah’s Sale of Goods( 12ThursdayEdition Harlow: Pearson 2010 )

R Bradgate,Commercial Law( 3rdEdition Oxford: Oxford University Press 2000 )

T Burns, “ Better Late than Never: The Reform of the Law on the Sale of Goods organizing portion of a Bulk ” ( 1996 ) 59 MLR 260

P Dobson and R Stokes,Commercial Law( 7ThursdayEdition London: Sweet & A ; Maxwell 2008 )

E McKendrick,Goode on Commercial Law( 4ThursdayEdition London: Penguin 2010 )

N Ryder, M Griffiths and L Singh,Commercial Law: Principles and Policy( Cambridge: Cambridge University Press 2012 )

LS Sealy and RJA Hooley,Commercial Law: Text, Cases, and Materials( 4ThursdayEdition Oxford: Oxford University Press 2009 )



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