sale of goods

ORDER of issues for a sale of goods problem?

(1) Who has legal ownership – property passed? ascertained (s 143), intention (s 144), s 146 rules | (2) Illegitimate sale – s 149 nemo dat; multiple sale → s 153; rogue agent → s 297 | (3) Remedies – s 135; conversion/detinue | (4) Loss – risk s 148 (+ bailment), perished ss 127–128.

s 120 and s 122 CCLA?

s 120: a contract of sale is created when the seller transfers or agrees to transfer property to the buyer for money consideration | s 122: the contract can be absolute or conditional.

s 123 – sale v agreement to sell?

s 123(1): property transferred immediately = SALE | s 123(2): transfer at a future date or subject to conditions = AGREEMENT TO SELL | s 123(3): becomes a sale when the transfer takes place / conditions are met.

s 143 – ascertained goods?

Property does not pass until goods are ascertained – specified/allocated to the buyer, not an undifferentiated bulk | A contract for future or unascertained goods is only an agreement to sell.

s 144(2) – how is intention ascertained?

Regard to (1) the terms of the contract (2) the conduct of the parties (3) the circumstances of the case | If the contract is silent and no intention appears → s 146 default rules apply (s 145).

CASE: Isaac v Unpaid Farmers (Weddel Receivership) – facts?

Weddel, a slaughterhouse, went into liquidation holding sheep carcasses and processed meat | Supplying farmers claimed ownership; the 'Kill Report' said sheep remained 'at all times' at farmers' risk, suggesting they kept ownership.

CASE: Isaac v Unpaid Farmers – held + principle?

Property HAD passed to Weddel | Kill Report inconsistent with how the transaction actually operated – Weddel slaughtered/processed as it saw fit, met and controlled marketing, storage, freight and insurance; payments unrelated to the end sale | Principle: true intention (conduct/circumstances) can override what the contract implies.

Key terms: deliverable state, specific goods, unconditional/conditional contract (s 119)?

Deliverable state – assembled and ready; buyer bound to take delivery | Specific goods – identified and agreed at the time of contract | Unconditional – no terms on when ownership passes | Conditional – property passes on payment/delivery/something else.

s 146 RULE 1?

Simple unconditional sale: property passes when the contract is made, IF unconditional and the goods are specified and in a deliverable state – irrelevant that payment or delivery is postponed.

s 146 RULE 2?

Specific goods NOT in a deliverable state – seller bound to do something to make them deliverable → passes only when (1) the thing is done AND (2) the buyer has notice.

s 146 RULE 3?

Price not ascertained – specific goods but seller must do something (weigh/measure) to fix the price → passes only when (1) price ascertained AND (2) buyer has notice.

s 146 RULE 4?

Goods delivered on approval / sale or return → passes when buyer (1) indicates acceptance or adopts the transaction, or (2) retains them without notice of rejection beyond the fixed time, or a reasonable time if none.

s 146 RULE 5?

Unascertained or future goods → passes when goods of the contract description in a deliverable state are unconditionally appropriated to the contract by either party with the other's assent | Deemed appropriated if seller delivers to buyer/carrier and doesn't reserve the right of disposal.

s 149 – what title does a buyer get?

Nemo dat – buyer only gets good title if the seller had it, unless the real owner gave the seller 'ostensible authority' to sell (s 149(2)) | Two codified exceptions (s 153, s 297), both for bona fide buyers without notice.

s 153 seller in possession – ELEMENTS?

(a) Sale of goods A → B (b) no delivery – A continues in / is in possession (c) A delivers the goods to third party C (d) C receives them in good faith without notice of the first sale → C gets good title.

CASE: Mitchell v Jones – facts + held?

B sold a horse to Mitchell, who leased it back to B; B then resold it to Jones (good faith, no notice) | s 153 did not protect Jones – B delivered the horse to M, ending the first transaction; the lease was a different transaction, so B did not 'continue in possession'.

s 297 mercantile agent – ELEMENTS?

(1) Mercantile agent (s 296(1)) (2) in possession of goods with the owner's consent (needn't be for sale) (3) sale to another (4) in the ordinary course of business as a mercantile agent (5) buyer acts in good faith (6) buyer has no notice of the MA's lack of authority.

s 296(1), s 296(2), s 299, s 300?

s 296(1): MA = agent who in the ordinary course of business has authority to sell, consign for sale, buy, or raise money on security of goods | s 296(2): possession = actual custody or held by another under their control | s 299: valid despite withdrawn/expired consent if buyer has no notice | s 300: owner's consent presumed absent contrary evidence.

CASE: Ron McDonald v Jim Boyd – facts + held?

A&J Motors had possession of a car and on-sold it though it didn't own it | Being in the business of selling cars it was a 'mercantile agent' → sale valid under s 297.

s 135 – buyer's remedy where no good title?

Implied condition that the buyer is entitled to good title → breach of contract claim against the seller | Parties can contract out (s 135(2)) | If buyer HAS title but another has the goods → breach of contract AND conversion/detinue.

s 148 – risk rules?

Risk passes with property unless otherwise agreed: (1) regardless of delivery (2) if delivery is delayed by buyer's or seller's fault, the party who caused the delay bears loss caused by it (3) does not affect the obligations of a bailee in possession.

s 127 v s 128?

s 127: contract for SPECIFIC goods void if goods had perished when the contract was made, without seller's knowledge – seller bears the loss, buyer released | s 128: AGREEMENT TO SELL specific goods void if they perish afterwards without fault of either party, before risk passes.

CASE: Oldfield Asphalts v Grovedale Coolstores – facts?

OA agreed to buy a freezing chamber; after signing it was damaged by fire caused by a third party; no party at fault; >$200,000 to fix | Property had not passed (conditional agreement to sell) so Grovedale bore risk – had it 'perished'?

CASE: Oldfield Asphalts – test + held?

Test: is the good no longer fit for the purpose the parties intended / so altered it's unsuitable for the intended business purpose / can it reasonably be repaired? | Held: perished – OA wanted it to store mulch, impossible in its state; repair cost 3x the purchase price → s 128 voided the agreement.

APPLY: A sells B a specific painting (ready, unconditional), B to pay next week; it is stolen from A's house tomorrow. Who bears loss?

Rule 1 – property passed when contract made → risk passed with property (s 148(1)) → B bears loss, but A in possession still owes bailee duties (s 148(3)).

APPLY: A sells a car to B, keeps it, then sells and delivers it to C who knows nothing. Who owns it?

s 153: sale A→B, A continues in possession, delivery to C, C good faith without notice → C gets good title | B's remedy is against A in contract.