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Lecture

Performance of the Contract - Delivery

6 Pages
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Department
Law
Course Code
JSB171
Professor
All

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PERFORMANCE OF THE CONTRACT - DELIVERY 1. ISSUES: Can [buyer] reject the [goods] OR rescind the contract because [xx% of the goods/on the basis goods are defective]. What is of issue on the facts is whether [buyer] can a) Terminate the contract as to the [remaining undelivered goods]. b) Reject [faulty goods] delivered to its premises c) Reject [faulty goods] delivered to [sub-buyer] by [seller] 2. WHAT OBLIGATIONS DO [BUYER’S] AND [SELLER’S] HAVE UNDER THE K? Duty of [seller] as seller to deliver the goods and of [buyer] as buyer to accept & pay for them, in accordance to terms of the contract: s29 SGA. Under s30 SGA, unless otherwise agreed, payment and delivery are concurrent conditions. 3. [HAVE or WHEN WERE] THE [GOODS] BEEN DELIVERED TO [BUYER]? Delivery is the voluntary transfer of possession from one person to another (includes constructive and symbolic): s3 SGA. The terms of the contract will determine whether [seller] is to send the [goods] or [buyer] is to collect them: s31 SGA. IF contract SILENT on delivery: Here, the contract is silent as to what is to occur, therefore the default position in s31(1A) will apply and (seller)’s place of business (or residence in default) will be the pickup point. If no time is stated for delivery, seller is bound to send them within a reasonable time: s31(2). IF goods are SPECIFIC and IN ANOTHER LOCATION: Here, with the knowledge of both (buyer) and (seller), (goods) are in (another location). Pursuant to s31(1B) this location will become the place of delivery. IF goods are with 3 PARTY: rd rd Here, [3 party] is holding the goods. Under s31(3) there will be no delivery in this situation unless [3 party] had notified [buyer]. In the present case _____. IF delivered to a person at BUYER’S PREMISES: Here, (seller) has delivered the goods to [buyer’s] premises and has handed over to [employee] who was [stolen the goods/misappropriated them]. Whether [seller] has discharged his obligation in this situation was considered in Galbraith & Grant v Block which held that as long as the goods were handed over to an apparently respectable person who appeared to have authority to receive them then there would be delivery. IF not respectable – obvious no authority: Here, (employee) clearly does not appear to have authority because ___(facts)___. IF time an issue: Here, time of the delivery may be relevant to show that (employee) had no authority to accept the goods. Under s31(2) the time for delivery, if not fixed in the K must be at a reasonable time. This is a question of fact: s 31(4A). In the present case the odd hour of delivery would suggest that [employee] did not have authority to accept delivery and therefore the goods will not have been delivered. IF nothing to show didn’t have authority: Here, nothing to show that (employee) didn’t have authority and therefore (seller) will have delivered the goods; analogously to Galbraith. IF delivered under FOB contract: Here, contract is a FOB contract. Under the FOB arrangement, delivery will be made when the goods pass the rail of the ship: Riviera. [unless other wise agreed] under s 34(3) the goods will be at [seller’s] risk until [buyer] has been given such notice as to insure them. IF buyer provided with details of location but seller didn’t notify of details of shipment (e.g. ship name): Here, arrangements have been made by [buyer] to have [seller] ship [goods] to [port]. [Seller] has done this but failed to notify [buyer] of the name/details of shipment. Whether or not [buyer] was given enough notice to pass risk in this situation can be determined with reference to the decision in Wimble v Rosenberg which is almost 1 analogous. There held that the buyer was already in possession of all the facts necessary to insure the goods as he knew the port shipped from and the destination port. Applying that reasoning here the same conclusion would be reached because [buyer] knows the shipping and destination ports and could ascertain from that information to ship name. IF delivered under a CIF contract: Here, the contract is a CIF contract. Under the CIF arrangement (seller) arranges the insurance and carriage costs. Once the goods are delivered to the ship the [seller] must provide to [buyer] the relevant documents, here [the bill of lading, insurance policy and invoice with details of the goods and price to be paid]. When [buyer] received these goods it was then delivery occurred: Kwei Tek Chao v B/T & Shippers. N.B. Buyer won’t loose right to reject just because he/she has taken delivery of documents and goods; MUST be acceptance: s29; Kwei Tek. Example: • Kwei Tek: the goods were delivered when they are physically delivered to the ship and that a buyer taking delivery at the destination port is not taking delivery under the K but out of his own warehouse. The crt noted that under the CIF the buyer would be bound to pay on receipt of the relevant shipping documents. IF delivered to CARRIER: Here, (goods) have been delivered to a carrier for the purpose of transmission to the buyer this is prima facie deemed to be deliver of the goods to the buyer: s34(1). Unless otherwise authorised by buyer, seller must make such contract with carrier on behalf of buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case: s34(2). If seller has omitted to do so, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself or herself, or may hold the seller responsible in damages: s34(2A). Here, ___. IF Delivers WRONG OR MIXED QUANTITY: Here, (buyer) has contracted with (seller) to provide (x no. of goods). Here however (seller) has delivered (y no. of goods). IF less than contracted: Here, (buyer) may reject (goods) but if he/she accepts them, he/she must pay for them at the contract rate: s32(1). IF more than contracted: Here, (buyer) may accept (x no. of goods – i.e. amount agreed to or other) and reject the rest, or the whole, although if he/she accepts must pay for them at the contract rate: s32(2A). IF delivers correct number but mixed with other product: Here, (seller) has also delivered (extra goods mixed in) which are mixed in with the bulk. (Buyer) may accept the (x no. of goods – i.e. amount agreed to or other mixed goods) and reject the rest, or the whole, however if he/she accepts must pay for them at the contract rate: s32(2A) & s32(3). 2 4. CAN THE BUYER REJECT THE GOODS TO BE DELIVERED IN THE FUTURE? Whether [buyer] can rescind the contract depends on the basis of [breach of implied condition] under SGA depends on the operation of s 14(3) SGA. Section 14(3) provides that a breach of an Implied Condition will become a breach of warranty where: 1. the contract is NOT severable 2. the buyer has accepted the goods (for unascertained goods); or 3. property has passed for specific goods Is the contract severable? Whether a contract is severable is a question of fact. A contract will be severable where it can be treated as a number of contracts in the one agreement. This requires an examination of the parties’ intention, price or payment and delivery method and the terms of the contract: Hammer and Barrow v Coca-cola. Does the K provide for delivery by separate instalments? If so, this points to it being severable. Other factors… IF separate invoices, payments: Here, the facts are analogous with Hammer v Coca-Cola. There it was held that separate invoices, instalment deliveries and approval by both parties evidenced a severable contract. Similarly in the present case there are [separate invoices and instalments with the knowledge of both parties] these facts like in Coca-cola would indicate a severable contract. IF one lump sum payment: There may be an issue with the payment method. Here, only one lump sum payment for all the goods. This may indicate an intention that the contract is not severable. If this is the case then, if [buyer] has accepted some goods, there will be no right to reject the [goods] as s 14(3) will operate to make the condition a warranty. This has been criticised as unfair by some commentators as it essentially gives the seller a licence to continue to breach the K because the buyer is limited to damages. This may mean the court is inclined to adopt a different construction on the basis that, even though the K appears entire, the parties, by their conduct, treated it as an instalment K… IF Instalment Contract [Here, the better view is that this contract is probably an instalment contract.] Section 33(2) SGA: where there is a contract of instalment whether a refusal to take an instalment is a repudiation of the whole contract or a severable breach is a question in each case depending on the terms and the circumstances. Although the words of s 33(2) require separate payments, when construing s 33(2) the court in Maple Flock said that lump sum Ks apply under this section. So the fact that there is only one payment here will not preclude s 33(2) operating. Objectively whether the acts or conduct of the party in breach evince an intention no longer to be bound by the contract: Hammer v Coca-Cola. Here, the two main principles in considering this section: Maple Flock (1) Ratio of defective goods to quantity of the contract as a whole (2) Degree of probability that the breach will be repeated. IF ratio of defective goods = above 40%: Here the facts are similar to Hammer v Coca-Cola, where the ratio of defective yoyos was approximately 80%. The court held there, that this was a significant amount which entitled, when considered with the high probability of future breaches; additionally because this was an early failure by seller to match the contract and because of the considerable cost and expenditure on advertising and the unavailability of replacing the yoyos; the court held that repudiation was sufficient to cover the whole contract. Here, the ratio is similarly high (xx%) further the probability of reoccurance is also high at (xx%). This is the (xth) instal
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