W3 - Sales III - Property & Risk

Passing of property - ownership + SGA

Ownership distinct from possession / SGA 1979 - s2 contract of sale (contract for sale = agreement to transfer property ownership)

Bunkers case - case facts

Bunker contracted to supply marine fuel bunkers - Bunker sourced fuel from a 3P / contract had RoT clause so 3P remained owner even though Bunker using the oil / Bunker went bankrupt, couldn’t pay 3P

Bunkers case - Court ruling

SC ruled in Bunkers’ favour / contract not standard sale of goods under SGA - Sui generis agreement (could consume goods immediately without ownership passing) / case established limit on sale of goods law - must follow s2 for statutory protections

Counterparty default

Counterparty default = when the other party fails to fulfil contractual obligations / can mitigate through assets as payment (accept asset instead of relying on money) / or assets as security (seller might have a legal right over an asset) / property rights = protection ordinary contract claims don’t have

Rem vs personam

Rights in rem = property rights, against world generally / rights in personam = personal rights, against specific people

Unsecured creditors

When a company becomes insolvent - assets distributed according to insolvency law / unsecured creditors share remaining assets - but doesn’t guarantee payment will be received

Passing of risk - SGA s16

S16 - goods must be ascertained (subject to s20 exceptions) / specific (identified before contract), ascertained (identified after contract) and unascertained goods / quasi-specific - part of a bulk (covered by s20)

Passing of risk - SGA s17

S17 - property passes when intended

Passing of risk - SGA s18

S18 - default rules for specific goods / gives rules for determining when ownership passes when intention unclear / rule 1 - goods ready for delivery, rule 2 - seller makes goods deliverable, rule 3 - seller must determine the price

Passing of risk - SGA s19

S19 - reservation of the right of disposal / seller can retain ownership even after goods have been delivered / bill of lading - prima facie evidence of right to disposal

Passing of risk - SGA s20

SGA 1979 s20 - risk generally follows property, unless agreed otherwise

Underwood v Burgh Castle 1922

Underwood v Burgh Castle / U sold engine to BC - engine embedded in concrete + had to be detached by seller / engine damaged during detaching - U wanted to claim from BC / court ruled in BC’s favour - engine not in a deliverable state (s18) - ownership hadn’t passed

Mucklow v Mangles 1909

Mucklow v Mangles / buyer paid in advance for a barge, seller put buyer’s name on it - became insolvent before delivery / court ruled ownership hadn’t passed - labelling not enough to amount to appropriation

Carlos Federspiel v Charles Twigg 1957

Carlos Federspiel v Charles Twigg / sellers manufactured bikes - packed in boxes + marked with buyer’s names / sellers became insolvent before shipment / court ruled preparing + labelling goods not enough if seller still has control over whether to dispatch them

SGA 1979 s18 rule 5 - in depth

Appropriation - merely labelling + preparing goods for delivery not necessarily enough (as shown by cases) / ascertainment by delivery - ownership presumed passed at delivery

Bulk goods - SGA s61

S61 outlines what a bulk is - collection of interchangeable goods, can purchase bulk but not ascertained goods

Re Wait 1927

Re Wait - seller owned 1,000 tons of wheat - buyer purchased 500 tons but seller became insolvent / court ruled buyer had no proprietary right over wheat - identifying bulk was insufficient, buyer’s particular goods hadn’t been ascertained

Re Wait - ruling in depth

Lord Atkin outlined how equity can’t intervene where statute strictly governs passing of property

Exceptions to SGA s18

S18 - ascertainment by exhaustion (property can pass when bulk reduced to amount owed to the buyer) / s20A - statutory co-ownership (buyer becomes tenant in common with other co-owners - share proportionate to price) / s20B - deemed consent (co-owners consent to dealings by other co-owners)

Bulk - academic debate (G vs B)

Goode - seller bears first loss, so seller’s share reduced before buyer’s / Bridge - loss should be shared proportionately between all interests

Re Stapylton Fletcher

Re Stapylton Fletcher / customers prepaid wine stored in bulk - seller kept records identifying buyers’ entitlements + didn’t claim ownership of stored wine / court ruled buyers were tenants in common (s20A can arise from parties’ intentions even if goods not separately identified)

Passing of risk overview

Risk determines who bears the financial loss if goods are lost, destroyed or damaged / general rule that risk passes with property even if no delivery

Healy v Howlett 1917

Healy v Howlett / buyer bought 20 boxes of mackerel from larger bulk - not separated before the fish was deteriorated / court ruled in buyer’s favour - seller bore loss as goods not yet ascertained

Healy v Howlett - in depth (Ridley)

Ridley J - ‘goods become the property of the co-signee are at his risk as soon as they are marked off by some distinct act as his, and not the seller’s’

Stern v Vickers 1923

Stern v Vickers / buyer bought white spirit from a bulk stored by a 3P - buyer held delivery warrant + paid storage charges / court ruled risk passed to buyer - risk can pass independently of property where parties’ agreement and conduct demonstrates common interest / contrasts Healy v Howlett - s20 default but not absolute

Frustration + destruction of goods

SGA s7 - if goods sell before purchase, can be discharged (general res extincta law of frustration applies)

Alliance Concrete Singapore v Sato Kogyo 2014

Case illustrated application of general frustration principles to commercial sales

Law Commission on bulks (pre s20 1995 reforms)

Buyers inadequately protected before / commercially unsatisfactory that a buyer who paid for a specified goods could risk losing goods / Law Commission proposal on bulks led to s20 / must balance certainty of title with commercial practicality

Academic - Burns - overview

Burns critically evaluated 1995 reforms / amendments do better align property law with commercial expectations + protects buyers / but reforms incomplete because co-ownership doesn’t eliminate all uncertainty or risk, especially when bulk depleted or damaged

Academic - Burns - final view

Burns argues the legislation improves commercial fairness, but doesn’t necessarily establish a fully coherent system for allocating ownership an risk in bulk transactions