Sales - Remedies

Rejection and termination - overview

Termination relieves the buyer of the obligation to pay a price, can keep the goods - ends the contract / rejection - must return the goods

Conditions v warranties

Conditions = vial for contract to succeed, damages/repudiation if broken / warranties = minor, subsidiary assurances, damages if broken / breaches of condition can be treated as warrant breaches if buyer wants to keep goods - but never vice versa

Innominate terms

Innominate terms = rules that aren’t labelled as major minor - depends on how bad the damage is (Hong Kong Fir Shipping case)

Hansa Nord case (innominate terms) - facts

Hansa Nord / Germany company sold pellets for cattle feed - contract clause outlined how shipment to be in good condition / buyer wanted to reject - goods still usable, but not all were in good intention

Hansa Nord case (innominate terms) - Ruling

Hansa Nord / court ruled this wasn’t a breach - damages weren’t severe enough to override whole ben edit

Hansa Nord case (innominate terms) - Lord Denning

Hansa Nord / Lord Denning outlined how implied terms can be innominate terms (unusual for case law) - s15 reformed this unclarity as breaches must now be serious / but HN not completely overturned - s15 excludes slight breaches, HN governs gray area between slight + full breaches

Sale of Goods Act 1979 - overview of provisions

SGA 1979 / s11 - binary condition vs warranty outlined / s13 and 14 - conditions implied by law (no flexibility on correspondence, quality, or fitness) / s15A - limitation on termination if breach is slight / s35 - buyers’ acceptance loses right to terminate

Filobake v Rindo (applying s15A) - strict approach

Filobake v Rindo / F wanted to automate assembly line for pastries - R supplied part of the line with a warranty that it would handle specific recipes / F experienced issues - equipment unfit, rejected it / Court ruled in R’s favour - breach minor, machine could still work + F had delayed rejection too long

Hi-Flyers v Linde Gas (applying s15A)

Hi-Flyers v Linde Gas / some impurities in helium did breach s14(2) - but no effect on buyer’s ability to use it / breach too minor to reject

Curing rejection

Seller only has the right to cure rejection if 1) can still tender timely performance, 2) are willing to pay buyer’s expenses, or 3) breach isn’t bad enough to cause repudiation

Borrowman Philips v Free & Hollis (curing rejection)

Borrowman Philips v Free & Hollis / original shipment defective - seller’s sent a replacement, but buyers argued first failure made the whole contract dead - didn’t accept it / court ruled buyers couldn’t reject the 2nd tender (contract performance period not expired, sellers cured the rejection)

Acceptance - in legislation

SGA 1979 S35 / acceptance removes right to reject / 3 ways to find acceptance - intimation (communicates acceptance), inconsistent acts (act that expresses ownership), unreasonable retention / but buyer also has time to examine goods before accepting + asking for repairs doesn’t mean acceptance

Bernstein v Pamson Motors (harsh acceptance approach)

Bernstein v Pamson Motos / B bought car - broke down after 3 weeks, PM repaired car, B had and used it for 3 weeks, but B declined to accept it / Court ruled couldn’t rescind contract - but could claim damages (nominal ones for loss of use during repairs)

Clegg v Anderson (pro-buyer approach to acceptance)

Clegg used yacht for 8 months - asked for further information about a problem, rejected it 3 weeks after that / Court ruled in Clegg’s favour - yacht was not to SQ, counted right to reject from 3 weeks after period (after fault became known) / shows confusion over ‘reasonable’ time

Ritchie v Lloyd (repair + rejection)

Ritchie v Lloyd / buyers entitled to reject goods even after repairs - where seller had refused to provide info necessary to buyer / repair contracts do suspend buyers’ right to reject - but seller breached this by refusing to say what was wrong = right to reject restored

Hadley v Baxendale (damages)

Hadley v Baxendale / H got B to fix a mill - delivery delayed due to neglect, mill closed for several days / Court ruled in B’s favour - B unaware of reliance, H didn’t communicate special circumstances (loss of profits too remote + unforeseeable)

Remedy for breach of warranty (in law)

SGA 1979 s53 and 54 / s53 - no right to reject, but sue for damages/reduce price of goods (calculated through the fair market value formula) / s54 - can seek special damages for damages beyond the contract

Subsequent purchasers

Subsequent purchasers can sue the buyer for defective goods/damage reputation - question if buyer can sue original seller

Slater v Hoyle (subsequent purchasers) - case facts

Slater v Hoyle / Slater to sell cotton - half the pieces were defective, buyer accepted but refused further deliveries - sold cotton for profit / wanted to then claim damages, Slater argued they already profited from subsequent sales

Slater v Hoyle (subsequent purchasers) - Ruling

Court ruled in Hoyle’s favour / could recover damages based on difference in market value between goods contracted for + floods delivered (market value formula = value of goods as promised - value of goods as actually delivered, prima facie measure) / don’t take buyer’s separate sub-sale into account

Bence Graphics v Fasson (contrasting Slater) - case facts

Bence Graphics v Fasson / F supplied film to Bence - used to manufacture shipping containers / film degraded due to defects, but Bence still sold goods and profited (but suffered customer claims)

Bence Graphics v Fasson (contrasting Slater) - Ruling

Bence v Fasson / court ruled in F’s favour - market value formula displaced as both parties contemplated onward sales + customer liabilities when contracting / market value formula not absolute/automatic - consider buyer’s actual loss

Academic - Bridge - on market rule

Bridge: ‘the market rule is easier to administer than one that demands a close scrutiny of subsequent contracts’

Law Commission report 1987

Law Commission examined reform / sought to balance protection of buyers against disproportionate consequences of rejection for sellers = more flexible approach to minor breaches / led to s15A of SGA

Academic - Dyson and Kramer - overview

Dyson and Kramer challenge traditional view that damages assessed at breach - assessment should depend on actual loss + C’s ability to respond to the breach

Academic - Dyson and Kramer - Key takeaway

Use Dyson and Kramer to argue contractual damages should follow compensatory principle (Bence v Fasson) / tension between certainty and flexibility - market value more predictable, but contextual fairer

Article 49 of the Vienna Convention of the International Sale of Goods

Vienna Convention Art 49 - flexible, consequences-based test / focus on seriousness of breach + consideration of actual losses / English law more focused on certainty through classification (but s15A qualified this)

Normative considerations (for Slater versus Bence)

English commercial law = focus on efficiency + certainty, but courts meant to go beyond law to improve fairness / Slater default rule - but should be instances where the wider context is considered, law should focus on compensating real losses