Sales Contracts and Risk of Loss

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Questions and Answers

Who bears the loss if the goods are in the possession of the buyer but the seller becomes insolvent?

The Official Receiver

The buyer (correct)

Both the buyer and seller

The seller

What happens if the buyer pays the price but the seller becomes insolvent afterwards?

The buyer can claim a rateable dividend for the money paid. (correct)

The buyer can claim the goods immediately.

The seller must deliver the goods to the buyer.

The buyer has no rights over the goods.

In which case does the seller have to deliver the goods to the Official Receiver?

If the buyer does not pay the purchase price.

If the buyer claims the goods at any point.

Whenever the buyer becomes insolvent. (correct)

When the buyer pays the price and the seller becomes insolvent.

What defines a 'condition' in a contract of sale?

An essential stipulation that can lead to contract repudiation if breached. Signup and view all the answers

How is a 'warranty' defined in the context of a contract of sale?

A collateral stipulation that allows for damages but not repudiation. Signup and view all the answers

What is the consequence of breaching a condition in a sales contract?

The buyer may treat the contract as repudiated. Signup and view all the answers

What type of stipulation is considered to be of a 'fundamental nature' in a contract?

Conditions essential to the main purpose of the contract. Signup and view all the answers

If a buyer becomes insolvent without payment having been made, what is the seller allowed to do?

Refuse to deliver the goods to the Official Assignee. Signup and view all the answers

What characterizes a condition in a contract?

It is a stipulation essential to the main purpose of the contract. Signup and view all the answers

What is the primary remedy available for a breach of warranty?

The right to sue for damages only. Signup and view all the answers

Under what circumstances can a breach of condition be treated as a breach of warranty?

If the right to repudiate the contract is deemed to have been lost. Signup and view all the answers

What does Section 14(a) of SOGA 1957 require from the seller?

The seller must be the owner of the goods. Signup and view all the answers

How does a breach of condition affect the aggrieved party's options?

The aggrieved party can sue for damages and reject the contract. Signup and view all the answers

What distinguishes a warranty from a condition in a contract?

Warranties are subsidiary to the main purpose of the contract. Signup and view all the answers

What occurs if parties modify or exclude terms related to implied conditions?

Implied conditions have no bearing on the contract. Signup and view all the answers

Which of the following is an implication of a breach of warranty?

The buyer must keep the goods with no recourse. Signup and view all the answers

When does the property in specific goods pass to the buyer under Section 22 of SOGA 1957?

When the seller weighs or measures the goods and the buyer is informed. Signup and view all the answers

According to Section 24 of SOGA 1957, when does the property in goods pass for 'sale on return'?

When the buyer signifies acceptance or retains the goods beyond a fixed return time. Signup and view all the answers

What does the general rule regarding the passing of property state under SOGA 1957?

The seller bears the risk until the property passes to the buyer. Signup and view all the answers

What does the maxim 'NEMO DAT QUOD NON HABET' imply?

No one can give a better title than they have. Signup and view all the answers

Under Section 27(1) of SOGA 1957, what happens if a seller sells goods without the owner's authority?

The seller cannot transfer ownership to the buyer. Signup and view all the answers

What can parties do if there is a breach of condition regarding ownership as stated in Section 12(2) of SOGA 1957?

They can terminate the contract and seek damages. Signup and view all the answers

In the case of Lim Chui Lai v. Zeno Ltd, what issue arose regarding the materials delivered?

The contractor sold the materials without authority. Signup and view all the answers

When does property in unascertained or future goods pass to the buyer, as outlined in Section 23 of SOGA 1957?

At the time the contract is made. Signup and view all the answers

What is the right of lien for an unpaid seller?

The right to retain goods until payment is made. Signup and view all the answers

What can an unpaid seller do if the buyer becomes insolvent after the goods have been dispatched?

Stop the goods in transit. Signup and view all the answers

Under what condition can a seller sue for the price of goods?

The property in the goods has passed to the buyer. Signup and view all the answers

What does the right of resale allow an unpaid seller to do?

Sell the goods to a second buyer and transfer good title. Signup and view all the answers

What rights does an unpaid seller have concerning the custody of the goods?

They can charge a reasonable fee for care and custody. Signup and view all the answers

What is a significant aspect of section 56, SOGA 1957 regarding non-acceptance?

It permits the seller to claim damages for the buyer's refusal to accept goods. Signup and view all the answers

What happens if the buyer wrongfully neglects to pay for goods that have not been appropriated to the contract?

The seller can still sue for the price due. Signup and view all the answers

What is not a right of an unpaid seller in the context of sales contracts?

Right of rescission Signup and view all the answers

Under Section 30(2) of SOGA 1957, what is required for a buyer to pass a good title to a subsequent buyer?

The buyer must have obtained possession with the seller's consent. Signup and view all the answers

In Newton of Wembley Ltd. v. Williams, what key factor allowed A to pass a good title to B despite the dishonoured cheque?

B acted in good faith and was unaware of the cheque issue. Signup and view all the answers

What are the concurrent conditions of delivery and payment as per Section 31 of SOGA 1957?

Both parties must fulfill their duties simultaneously as stipulated in the contract. Signup and view all the answers

What is the outcome for a subsequent buyer if a car is sold by a dealer who lacks authority?

The buyer can only keep the car if they never knew the dealer lacked authority. Signup and view all the answers

According to the content, what is the main duty of the seller in a sales contract?

To deliver the goods according to the terms of the contract. Signup and view all the answers

What must buyers do in case they refuse to accept delivery wrongfully?

They must pay compensation to the seller. Signup and view all the answers

What legal concept is illustrated by the principle of continuous possession after sale?

Possession can transfer good title even without original ownership. Signup and view all the answers

Study Notes

Risk of Loss in Sales Contracts

The buyer bears the risk of loss even if the seller possesses the goods.
The seller bears the risk of loss if the buyer possesses the goods.

Insolvency and Possession

If the buyer pays the price and the seller becomes insolvent, the buyer can claim the goods from the seller's official receiver or assignee.
If the buyer becomes insolvent without paying the price, the seller must deliver the goods to the buyer's official receiver or assignee unless the seller has a lien over the goods.

Conditions and Warranties in a Contract of Sale

Conditions are stipulations essential to the main purpose of the contract. A breach of condition gives the buyer the right to repudiate the contract and claim damages.
Warranties are stipulations collateral to the main purpose of the contract. A breach of warranty only grants the buyer the right to claim damages.

Treating a Condition as a Warranty

A breach of condition can be treated as a breach of warranty under certain circumstances, effectively eliminating the buyer's right to repudiate the contract.
This can occur through waiver or compulsory treatment as specified under the SOGA 1957.

Implied Conditions in Contracts of Sale

The SOGA 1957 implies several terms in every contract for the sale of goods unless the parties explicitly exclude or modify them:
- Implied condition as to title: The seller must be the owner of the goods sold.
- Implied condition as to description: If the sale is by description, the goods must correspond with the description.

Transfer of Ownership: Nemo Dat Quod Non Habet (No one can give a better title than he has himself)

A seller who doesn't own the goods or sells without the owner's authority cannot transfer ownership to the buyer.
This is referred to as a breach of condition as to title or ownership, allowing the buyer to terminate the contract and claim damages.
This principle is subject to several exceptions, including:
- Sale by Mercantile Agent: If a person in possession of goods with the owner's consent sells them, they can transfer a good title to a subsequent buyer acting in good faith.
- Sale by Buyer in Possession After Sale: If a buyer obtains possession of goods with the seller's consent, they can transfer good title to a subsequent buyer acting in good faith even if they didn't obtain good title in the first transaction.

Performance of Contract: Duties of Buyer and Seller

Seller's Duties:
- Deliver the goods in accordance with the contract terms.
- Deliver and payment of price are concurrent conditions.
Buyer's Duties:
- Pay for the goods.
- Accept delivery.
- Pay compensation to the seller for wrongful refusal of delivery.

Remedies for Breach of Contract: Rights of the Unpaid Seller

The unpaid seller has several rights:
- Right of lien: The seller can retain possession of the goods until payment is made.
- Right of stoppage in transit: The seller can stop the goods in transit if the buyer becomes insolvent.
- Right of resale: The seller can resell the goods to a new buyer and give good title, regardless of the original buyer.

Rights of the Seller to Sue for Breach of Contract

The seller can sue for the price of the goods if:
- The buyer wrongfully neglects or refuses to pay for the goods when ownership has passed to the buyer.
- The contract stipulates a payment date irrespective of delivery, and the buyer fails to pay on that date.

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Description

This quiz covers essential concepts related to risk of loss in sales contracts, insolvency implications, and the differences between conditions and warranties in contracts. It is tailored for students studying contracts law and aims to enhance understanding of these crucial legal principles.