LLB204 Property Notes PDF

Concept of Property The term ‘property’ does not refer to a thing; it is a description of a legal relationship with a thing. It refers to a degree of power that is recognised in law as Bundle of Rights power permissibly exercised over the time: Yanner v Ea...

Concept of Property The term ‘property’ does not refer to a thing; it is a description of a legal relationship with a thing. It refers to a degree of power that is recognised in law as Bundle of Rights power permissibly exercised over the time: Yanner v Eaton. Proprietary Rights– ○ Rights ‘in rem’ enforceable against the world at large Types of Property Personal Rights– ○ Rights ‘in personam’ enforceable only against the person from whom you derived the right (e.g. pursuant to a legally enforceable contract) All forms of property confer three primary rights which include: 1. The right to alienate the property; Rights of Property 2. The right to exclude others from the property; and 3. The right to use and enjoy the property. Yanner v Eaton Facts– Defendant accused of taking crocodiles without a licence in QLD; Defendant argued that his actions were protected by his native title rights, which allowed him to hunt crocodiles for traditional purposes; and The Queensland Fauna Conservation Act declared all fauna to be the “property” of the Crown, requiring a licence for hunting. Judgment– Principles HCA rules in favour of Yanner. Found the act did not extinguish his native title rights. Principle– The concept of ‘property’ is the legal relationship rather than a thing itself. In terms of this cae, the crown’s property in fauna did not preclude the exercise of native title rights Goods ACL s 2– Goods are tangible, movable and capable of possession, including: Definition Minerals, trees, crops, whether on, under or attached to land or not; Gas and electricity; and  Computer software. Fixtures Whatever is attached to the soil becomes part of it. General Definition In certain circumstances, chattels will pass with the land so that the owner of the land automatically acquires title of the object. Chattels Chattels real– ○ Leaseholds Chattels in possession– Types of Chattels ○ Tangible chattel goods (e.g. car) Chose in action– ○ Intangible property (e.g. a share in a company or a debt) ○ Cannot be physically possessed. Chattel Becomes a Fixture In the absence of a contract there are 2 rebuttal presumptions for determining the intention of the owner of the chattel or thing being affixed– If the item is fixed by more than its weight, it is presumed to be a fixture. Presumptions ○ Onus lies on the person asserting to the contrary. If the item is fixed merely by its own weight, it presumed not to be fixture ○ Onus of proof lies on the person asserting the contrary. A house is a fixture and therefore so are the stumps: Reid v Smith. A valuable tapestry attached by a life tenant so it could be removed is a chattel as it is not intended to be a permanent feature of the land: Leigh v Examples Taylor. A valuable tapestry installed to enhance the ambience of the room is a fixture as it was intended to be a permanent improvement to the land: Re Whaley. Annexation Annexation refers to the process of attaching personal property (chattels) to real property (fixtures). When personal property becomes annexed to real Definition property, it is considered a fixture. Degree of Annexation The extent to which the chattel is affixed to the fixture.  Object of Annexation Was it affixed for better use and enjoyment of the land or better use and enjoyment of the chattel? ‘If an item is affixed, the test of whether or not it is a fixture, is whether it has been fixed with the intention that it remain in position permanently or an indefinite period’: Coroneo. Consider: Nature of the chattel; Test Manner in which it is used; Period of time it is affixed to the land; Degree or mode of affixed; and ○ Can it be easily removed: Coroneo. Purpose for affixation. ○ Better use and enjoyment of the land or merely temporary: Coroneo. Coroneo Facts– Considered whether theatre seats were a fixture or a chattel. Judgment– Principles Held to be a chattel. Principle– If an item is affixed, the test is whether or not it is a fixture, is whether it has been fixed with the intention that it remain in position permanently or for an indefinite period. Ownership Ownership is the legal relationship between a person and an object. ‘Title’ refers to the owner’s ability to resist the competing claims of others to a thing. Definition ‘Interest’ refers to the bundle of rights the owner enjoys in relation to the object. Original Acquisition of Ownership General Principle Property in goods is transferred only when the owner intends it to be transferred and this intention must be couples with ‘consent’ and ‘delivery’. Elements of abandonment– 1. Physical abandonment; and Ownerless Things 2. Intention to abandon.  The contractual provisions may negate an intention to abandon: Moorhouse v Angus & Robertson (No1) Pty Ltd. Creation of New Property Creation of new property arises when new thing is brought into existence – e.g. copyright. Derivative Acquisition of Ownership General Principle Derivative acquisition of ownership arises when ownership transfers from the previous owner to another. Accession Commingling specification Sale Assignment Examples Gift Affixing to land Death Bankruptcy Accession Simple terms– The Accession Doctrine determines the ownership of property when one person’s property becomes a part of another person’s property, typically arising where materials or labour are added to existing property, creating something new or modified. Accession Doctrine Legal terms– Accession occurs when the attachment of a minor chattel to a dominant chattel where the identity of the principal chattel is not changed. The owner of the dominant chattel becomes the owner of the principal object which now includes the accessor. One chattel is added to or ‘accedes’ to another chattel in circumstances where the accessor cannot be removed from the principal without the destruction of, Attachment or serious injury to, the chattel as a whole. Generally, ownership of a chattel only passes to another if the owner intends. However, the effect of the doctrine of accession is that the ownership of Ownership accessory is transferred to the owner of the dominant chattel where the ‘necessity of the case requires it.  Property in a chattel can be deemed to have passed by operation of law where ‘necessity of the case’ requires it. This commonly arises where the accessory Necessity of the Case chattel cannot be identified or, if identified, it has been incorporated to such an extension that it cannot be detached from the principal object: Rendell v Associated Finance Pty Ltd. Rendell v Associated Finance Pty Ltd Facts– P hired engine from R and truck from AF under HP agreement. P installed the engine in the truck. Clause in the agreements stated that accessories attached to the truck become part of the truck Principles Issue– Who owned the engine. Judgment– R owned the engine, because it could be readily detached from the truck. Commingling Simple terms– The act of mixing or combining property that belongs to different owners in a way that makes it difficult to distinguish one owner’s property from another. Commingling Definition Legal terms– The mixing together of goods, which belong to two or more people in such a way as to produce an inextricable mixture which results in common ownership of the resultant mass or bulk. Agreement Where there has been an agreement, then as it agreed or as tenants-in-common in proportion to their contributions. 1) accidental mixing Is it possible to determine the contribution? ○ Yes – each party takes as tenants in common in proportion to their contribution: Coleman v Harvey 1NZLR 723. No Agreement ○ No – each party takes as tenants in common in equal shares: Buckley v Gross (1863) 3 B&S 566. 2) deliberate mixing  The resultant mixture is owned as tenants-in-common The innocent party received back their contribution with any doubt as to quantity being resolved in favour of the innocent party If the innocent party suffers loss by the mixing, it is entitled to claim damages from the mixing party. Specification One product is transformed into a different state by application of some physical, mechanical or chemical process. Ownership is dependant on whether the Definition transformation into a different product was lawfully done. Sale A ‘sale’ is a bilateral transaction between a seller and a buyer. A contract of sale transfers the ownership of or property in, the goods from the seller to the Definition buyer. Assignment Assignment refers to the immediate transfer of an existing proprietary right from the assignor to the assignee. The proprietary interest in a chose in action* can be transferred by way of assignment: Property Law Act 1974 (Qld) s 199. According to s 199 of the Property Law Act assignment must meet the following requirements: Assignment must be in writing under the hand of the assignor; Must be absolute and not purport* to be by way of charge; Definition Notice in writing must be given to debtor, trustee, or person from whom the assignor would have been entitled to claim the debt or thing in action; and Consideration is not necessary. *intangible property Gift A gift refers to a gratuitous* transfer of the ownership of property from the donor to donee with the full intention that the property should not be returned. Definition *Done without good reason or ‘uncalled for’. 1. Delivery of possession 2. Intention of the donor to transfer the property right to the donee 3. Intention of donee to accept the transfer Elements 4. No valuable consideration* *Consideration refers to something of value that is exchanged between parties to form a legally binding contract. Delivery of Possession A delivery of possession must involve surrender of both possession and control, constituted by either an actual or constructive delivery. Intention The donor must intend and communicate said intention to give the donee the absolute right to the exclusive enjoyment of the chattel. Possession 1. Control; and Elements 2. Intention to possess. 1. Custody 2. Actual possession 3. Legal possession Six Forms of Possession 4. Lawful possession 5. Constructive Possession 6. Right to Possession Custody Definition Custody refers to the physical holding or control of a chattel which does not amount to possession: FCT v ANZ. FCT v ANZ Facts– Considered whether the bank had custody of documents in a safe deposit box. Contract with the customer states that the customer would have sole access to the box. Principles Bank had a spare key in case the customer lost theirs. Judgment– Bank had custody of the contents of the box Bank had to produce documents in its custody or control to FTC. Actual Possession Actual possession is evidenced by an outward act where an individual holds the property for their own benefit. Control of the property enables the possessor Definition to exclude the other. Legal Possession Legal possession is constituted by the state of being a possessor in the eyes of the law. This may coexist with the fact of physical control, making the Definition exercise rightful. However, the property need not have a lawful origin.  Lawful Possession Definition Lawful possession refers to the legal right to possession. It is not wrongful and is the possession of the true owner. Constructive Possession Constructive possession allows a person to have ‘possession’ of property without physically having it. This occurs when a person has the legal right to Definition possess the property but does not have physical control of it. The individual has the right to claim actual possession. Right to Possession The right to possession refers to the legal right to actual possession. Although more than one type of possession may exist at the same time, they are not Definition mutually exclusive. Transfer of Possession Delivery refers to the divestment and acquisition of possession by relation to choses in possession.* The delivery must be a voluntary and consensual transfer of possession from one person to another (e.g. a gift). An actual delivery is typically goods being physically handed over or taken whilst Delivery constructive delivery sees the goods being delivered without any change in their actual possession. *tangible object Abandonments means a divestment of possession by absolute relinquishment of private goods. Elements– Abandonment 1. Unilateral* physical abandonment; and 2. Intention to abandon. *occurring on or affecting one side only. In terms of finding, a person in possession of an object has rights even where the person is not the true owner. However, the finder does not acquire absolute property, but can keep it against all but the rightful owner: Armony v Delamirie. The rights acquired by the finder are merely possession and not ownership. ‘Finding’ typically arises out of disputes between a finder, the occupier of land, and the owner of the land. Finding Where goods are attached to the land, Elwes v Briggs Gas Co is referred to to determine if the owner of the land has a better claim to right. Where the goods are not attached to the land, Parker v British Airways Board established that the occupier has a better claim to rights but only if the occupier manifests an intention to exercise control over the building. Where no intention is established, the finger has a better claim.  Interference with Possession Wrongful taking – Trespass Wrongful taking is defined as a voluntary act which involves the direct and unauthorised interference with the possessor’s actual possession of a chattel: Definition Penfolds Wine v Elliott. Penfolds v Elliott Facts– Appellant made and sold wine in bottles Retained ownership of the bottles which were embossed with its name Respondent sold bulk wine to customers who provided bottles in which to carry it away Principles Appellant’s bottles were filled and sold by the respondent Appellant applied for an injunction to restrain an alleged trespass to goods Judgment– Dixon J at p 225 – the respondent came into possession of the bottles without trespass. For his brother delivered possession to him of the two bottles in question … his possession of the appellants’ bottles was, therefore, never trespassory. An individual has the title to sue for wrongful taking or trespass where they have actual possession or an immediate right to possession depending on the Title to Sue circumstances. Remedy Wrongful taking or trespass may be remedied through damages for the injury done to the chattel. Wrongful disposing – Conversion Conversion refers to the intentional wrongful dealing with another’s goods in a manner that is inconsistent with the immediate right of possession of the Definition owner: Penfolds Wine v Elliott. 1. Defendant’s conduct inconsistent with the rights of the owner; Elements 2. The conduct was intentional and not accidental; and 3. Conduct was so extensive an encroachment of the proprietary rights of the owner as to exclude themselves from use and possession of the goods. Title to Sue An individual has the title to see where they have the immediate right to possession. Remedy Conversion may be remedied through damages to the value of goods, usually calculated according to market value. Wrongful Detention – Detinue Detinue arises where the tortfeasor wrongfully detained goods and refuses to deliver said goods when demanded. Detnue may be committed without Definition knowing that the another person’s property has been interfered with. Title to Sue An individual has the title to sue if they have the immediate right to possession. Remedy Detinue may be remedied through an order for return of goods or damages to the value of the goods: Grant v YYH Holdings. Grant v YYH Holdings Facts– Action in detinue and conversion against the appellants for the return of 16 sheep Limitations act – 6 years from the cause of action accused by the plaintiff Rolfe DCJ – cause of action in relation to 16 sheep expired but not in relation to progeny and semen of those sheep First demand for return of the sheep – jan ‘04 Principles First demand for progeny and semen – nov ‘10 Action commenced Dec ‘10 Judgment– 16 original sheep were different ‘goods’ from the progeny and semen Claim made in relation to the sheep barred, but not claim in relation to progeny and semen. Bailment Bailment is the delivery of goods of the bailor into the possession of the bailee upon an express or implied promise that they will be delivered to the bailor or deal with the goods in a stipulated way: Hobbs v Petersham Transport. Bailment solely refers to choses in possession* and not choses in action or real property. The bailee must take possession of the goods voluntarily and Definition knowingly. Bailment must involve some degree of delivery (constructive or actual) and possession. Where there is no transfer, there is no bailment. *Tangle chattels Hobbs v Petersham Transport  Windeyer J– ‘A bailment comes into existence upon a delivery of goods of one person, the bailor, into the possession of another person, the bailee, upon the Principle promise, express or implied, that they will be re-delivered to the bailor or dealt with in a stipulated way’ Bailment by Finding Bailment may occur without the knowledge or consent of the bailor, such in cases of bailment by finding. Bailment most commonly occurs with knowledge and consent pursuant to contract, including– Lending a car Hiring a car Example Using a supermarket trolley Given possession of a car to a mechanic to be serviced Online purchases being shipped Bailment for a Term Definition Bailment for a term lasts for a definite period of time where the bailor’s right to possession is suspended for the duration. Bailment at Will Bailment at will lasts an indefinite period and may be terminated at any time by the bailor. Throughout a bailment at will, the bailor retains the right to Definition immediate possession against the bailor. Bailment and Other Relationships Bailment and Agency While the bailee does not represent the bailor, they exercise powers over the bailor’s property. The bailee does not have the right to create contracts on Role of Bailee behalf of the bailor or to make the bailor liable for the bailee’s acts. Role of the Agent The agent represents and has the power to affect the legal position of the bailor. The bailor may be liable for misconduct on behalf of the agent. Bailment and Licence Bailment refers to the transfer of possession and control to the bailee and is subject to a voluntary acceptance of duty of care. In such circumstances, the Definition bailee may exclude all others from possession of the goods. Contrastingly, licence refers to circumstances in which the possession and control over goods remains with the owner meaning that no responsibility for guarding the chattel is accepted by the bailee (e.g. leaving a coat in a cloakroom). Bailment and Sale  Sale refers to the transfer of ownership rather than just merely transferring possession. Sales and bailment may coexist in relation to a particular chattel, including circumstances where: Definition a seller remains in possession after property has passed to the buyer; or a seller delivers goods to the buyer but stipulates that the property shall remain with the seller until payment – retention of title or ‘romalpa’ clause. Money No bailment of money occurs where ‘a’ lends money to ‘b’. The relationship of a banker and their customer is one of a debtor and creditor according to Definition South Australian Insurance Co v Randell. Sub-Bailment Subsidiary bailments occur when a person who is not the owner of goods but retains a present right to possession as bailee, transfers possession of those Definition goods to a third party (sub-bailee). Bailor may bring action against the sub-bailee and is not required to rely on any contract between the bailee and the sub-bailee. The sub-bailee is answerable both to the head bailor and to the bailee for any breach of the sub-bailee’s common law obligation: The Pioneer Container. Bringing Action The bailee remains liable to the bailor for any default of the sub-bailee. In an action by a bailor against a sub-bailee for loss of the goods, the sub-bailee can only rely on the terms of the contract with the bailee making a subsidiary bailment on those terms but not otherwise: The Pioneer Container. The Pioneer Container This case dealt with the carriage of goods by sea. It was found that the consent to subsidiary bailment ‘on any terms’ was sufficient consent to the Principles sub-bailee’s terms. Employees as Bailees An employee who, in the course of their employment, acquires control of the employer’s or another’s goods does not, by virtue of that control alone, Definition become a bailee. Here, the employee’s possession is generally deemed to be that of the employer and the employee owes a duty of care towards their employers’ property notwithstanding the absence of bailment. Where the employee is considered a bailee are liable for their employee’s negligence. Bailee’s Rights Against Third Party  Where a stranger commits a tort against bailed goods, the bailee can recover from the tortfeasor the full value of the goods, or the full cost of their repair or Definition diminution in value, as if they were bailee’s own property: The Winkfield. In an action against a third party for loss caused by the third party’s negligence, the bailee in possession can recover the value of the goods: The Winkfield. Possession constitutes title against the wrongdoer, however, they cannot defend themselves by showing that there is title in some third party. After Recovery recovering property in full from the third party, the bailee must make a property division with the bailor. Recovery by the bailee relieved the third party of liability to the bailor. Winkfield Facts– Mail was posted in South Africa and was en route to Southampton in England on a ship called ‘The Mexican’, which sank after a collision with ‘The Winkfield’ Owner of the TW admitted liability It was assumed for the purposes of the case that the plaintiff Postmaster-General was the bailee of the mail, constructive possession even though custody resided with the owners of the ship Plaintiff used recover a proportion of the loss from the Winkfield owners Principles Judgment– COA held that the owners of the negligent ship were liable in full for the value of the mail In an action against a third party for loss caused by third party negligence, the bailee in possession can recover the value of the goods Principle– Possession constitutes title against a wrongdoer; the wrongdoer cannot defend themself by showing that there is title in some third party (ie the bailor) Bailee has liability to account to the bailor Duties of the Bailor In the case of a bailment for a term, the bailor has the duty to not interfere with the bailee’s possession until the expiry of the term. The bailor may be liable Bailment for a Term in trespass, conversion or breach of contract. Bailment is Hiring In the case where the bailment is hiring for reward, the bailor must ensure goods are merchantable and fit for purpose. Duties of the Bailee Bailee for goods for the benefit of both parties – standard of care is liable for ordinary negligence. Traditional Approach Bailee for goods for the benefit of bailor alone – standard of care is liable for gross negligence. Bailee for goods for the benefit of bailee alone – standard of care is liable for even slight negligence.  The modern English approach to the duties of the bailee dictates that all categories of bailees will be liable for failure to exercise reasonable care where they Modern English Approach breach their duty of care: Tottenham Investments v Carburettor Services. Although the HCA is yet to consider the matter, the bailee’s general duty is to retain possession, delivery or return the bailed goods and to not misuse the goods in the way of conversion: Jackson v Cochrane. Jackson v Cochrane Facts– Owner delivered caravan to bailee motor dealer for sale on consignment (sale or return) Principles Bailee induced by fraudulent misrepresentation to deliver it to three strangers who said they have authority of the owner (misdelivery) Judgment– Bailee was liable for the loss of the caravan as a result of failing to take reasonable care of bailed goods. Tottenham Investments v Carburettor Services Facts– Bailor delivered motor vehicle to bailee for repair Bailee’s employees left key in ignition Principle Thieves broke in and drove the vehicle away Shortly after, the defendants installed security bars, an alarm system and signs outside warning of alarms Judgment– Defendant liable as they had failed to take reasonable care. Duty of Care According to the modern English approach, a bailee has the duty to take reasonable care in circumstances. The onus rests with the bailee to demonstrate that Definition they took reasonable care in the circumstances. Onus of Proof Normal Generally, the onus of proof in law of tort (negligence) lies with the plaintiff to prove a breach of duty of care that caused the plaintiff’s loss. In the event of loss or damage to the bailed goods the onus of proof lies with the bailee. This is because the bailee, being in possession, is in a better Reversal position to know what occurred and is more likely to have been at fault if they cannot adequately explain: Pitt Son & Badgery v Proulefco. Pitt Son & Badgery v Proulefco Principle Facts–  A wool broker retained in a wooden shed, wool it had sold to another The wool was destroyed by arson The shed was 40 years old, in dry condition and surrounded by an ineffective wooden fence with parts removed for firewood The shed was left unattended at night with no floodlighting or overnight watch The shed was non-residential The lessees of the shed conceded that they were bailees for reward but denied fault Judgment– The broker failed to take reasonable care. Goods Within Goods If a bailee has knowledge of the contents of the bailed goods (e.g. a bag containing money) and the value of said contents, they are considered the bailee of Definition both. Moukataff v BOAC Facts– 20,000 euros in banknotes sent in registered mail from London to Kuwait was stolen by a baggage handler. The defendant denies liability arguing a bailee of a mailbags, but not the contents Principle Judgment– Since BOAC knew the mailbags contained mail and in particular that the red labelled registered mail bags contained valuables, it was the bailee of both. Termination of Bailment Expiry of term Bailor’s demand in a bailment at will Wrongful act of bailee inconsistent with the bailment Reasons Wrongful act of bailee inconsistent with the bailment Bailor transfers ownership of goods to bailee Destruction of the goods. Agency  An agency relationship exists between two parties where one party (the agent) is authorised by the other party (principal) to do certain acts on behalf of the Definition principal which affects the principal’s rights and duties with respect to third persons: Consumer Commission v Flight Centre Group Key Requirements Consent An agency relationship manifests by consent of the parties, which may be implied even if explicitly disclaims. A principal may be liable for the careless conduct of an agent causing damage to property if the agent is not an employee. The principal will be liable when Liability the conduct occurs while the agent is carrying out a task for the benefit of the principal as their representative. Capacity Both the principal and agent must have legal capacity for the acts performed; minors have limited capacity to appoint agents. Agency and Third Parties Sue A principal may sue or be used by a third party directly if the agent acts on their behalf. Undisclosed Principals Undisclosed principals may enforce contracts on their behalf but must have the agent acting with the scope of their authority. Where an agent exceeds their authority, they may be personally liable for breaches, particularly if third parties relied on their misrepresentations regarding Exceeding Authority authority. Breaches Misrepresentation If an agent misrepresents their authority, they may be held liable for any losses incurred by the third party relying on that representation. Capacity May appoint an agent to do any act which they themselves have capacity to do; Must have legal capacity to do the act which the agent performs on their behalf: Christie v Permewan Wright & Co Limited; Principal Must have legal capacity to contract; and If a minor, the capacity to appoint an agent to enter into a contract is limited to a contract they themselves can make validly. Need not have capacity in order to bind the principal; Agent Must have capability of understanding the nature of what they are doing and consent to it;  Even though a minor would not be liable to a third party on a particular contract in normal circumstances, if the minor were to enter into the same contract as an agent, it would be binding between the principal and third party. Sources of Authority Actual authority may be expressed (written or verbal) or implied on the basis of the principal’s actions: Express– Deed Contract (such as power of attorney Letter conferring authority Actual Authority Provision in a company’s constitution Board resolution Implied– Incidental authority; Usual authority; and Customary authority. Every agent has the implied authority to perform actions necessary to execute their authority. This implied authority arises from the principal’s consent Incidental Authority that the agent should have it. However, if the principal has given explicit instructions that contradict the authority, the agent cannot claim implied authority for those specific actions per Fray v Voules. An agent has implied authority to perform actions typical in their trade or profession to fulfil their responsibilities. However, an ordinary director of a company lacks the usual authority to bind the company, as established in Northside Developments Pty Ltd v Registrar-General. Usual Authority In contrast, a managing director has the authority to employ staff, borrow money, secure the company's property, and authorise other agents to enter into contracts on behalf of the company, as highlighted in Hely-Hutchinson v Brayhead Ltd. Internal course of dealing Conduct of the principal in relation to previous transactions enter into an agent: Hely-Hutchinson v Brayhead Ltd. Ostensible Authority  A legal relationship is formed between a principal and a contractor when the principal informs them that the agent has the authority to make a contract on Ostensible Authority the principal’s behalf. If the contractor relies on this information and acts on it, the principal becomes responsible for any obligations in that contract as per Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd. Representation by the principal, via words or conduct, to the third party that agent has the principal's authority to do this act. By words or conduct, expressly or implied. Most commonly by conduct– ○ From principal appointing agent to a particular position or entrusting agent with some responsibility ○ Course of dealing between third-parties and principal through agent ○ Principal’s silence which someone deals with third party apparently on behalf of principal Reliance on representation by third parties. Reliance on representation by third party Must establish the causal connection between the representation to the third party and the dealing between the third party and the agent. The principal is not liable where the third party has– ○ Not aware of the representation; ○ Did not believe it; or ○ Knew or had the power to know the agent lacked authority. Representation cannot be made by agent, only the principal or someone expressly authorised by principal: Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd. Principal may represent agent as its agent by– ○ Acquiescence: Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd. Silence as regards K’s lack of authority amounted to a representation by principal that the agent has authority. ○ Appointment to particular position: British Bank of the Middle East v Sun Life Assurance of Canada (UK) Ltd. Representation by principal that manager (agent) has the powers usually possessed by a manager ○ Principal describing agent in a particular way ○ Course of dealing between the third party and principal ○ Principal equipping A with a certain title, status and facilities: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451. ○ Business cars: Prospect Industries v Anscor Pty Ltd QSC 296. Alteration of third-party's position resulting from such reliance Third party have suffered a detriment in relying on the representation as to authority  Sufficient to establish alteration of position or action on the faith of representation ○ E.g. entering to contract engaging and instructing solicitor Result Consequences of a finding of ostensible authority are – Principal bound to third party ○ Third party can sue principal ○ Principal can sue agent for breach of duty Ratification Ratification arises when principal retrospectively grants authority to the agent, where the agent at the time has no authority or had limited authority which Ratification the agent exceeded. An agent's actions are considered valid as if they were performed by an authorised agent, putting everyone in the position they would have been in if the agent had proper authority at the time, as established in Firth v Staines. 1. The agent must act on the principal’s behalf for their actions to valid as in Howard Smith & Co Ltd v Varawa; 2. An undisclosed principal cannot ratify actions due to lack of authority; Requirements 3. The principal must exist and be legally capable at both the time of the act and the time of ratification; 4. Ratification must cover the entire contract; the principal cannot selectively accept parts; and 5. The principal must know all important facts unless they have stated they will ratify regardless of circumstances. A ratification can be done by the person in whose name the act was performed; The principal can also ratify through the agent; An agent only needs authority to ratify, not to have performed the original act per Re Portuguese Consolidated Mines Ltd; Who can ratify? An undisclosed principal cannot ratify actions as in Keighley Maxsted & Co v Durant; Under the doctrine of the undisclosed principal, the principal is not liable for breaches if the agent did not indicate they were acting for the principal; and A principal-agent relationship must be based on mutual knowledge and intention to affect the rights and responsibilities of all parties involved. Ratification involves clear actions or statements by the principal indicating they adopt the agent's actions done for their benefit or in their name. Ratification can be expressed or implied and doesn't need to be in writing; the principal does not have to notify the third party. Ratification Implied ratification requires a clear, positive act by the principal to show they accept the agent's actions. For implied ratification, the principal's words or conduct must be clear (Forman & Co Pty Ltd v Liddesdale). Examples of ratification include:  ○ The principal accepts monetary benefits from a contract. ○ The principal receiving payment for goods sold by the agent without prior authorization, provided they are aware of the relevant facts surrounding the sale Misleading or Deceptive Conduct Principal A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive under ACL s 18. ‘Person’ Under CCA s 4(1), the definition of ‘person’ including a body corporate for a– 1. Foreign corporation; 2. Trading or financial corporation; 3. Incorporated in a territory; or 4. Holding company of a body corporate of a kind referred to in a), b), c). Corporation Trading corporation– pursuant to s 51(xx) of the constitution Test– current activities of the corporation Test– purpose of incorporation; may be relevant if the corporation has not begun to trade Substantial means not merely peripheral; but not sole or main activities Financial Corporation– Definition in CCA s 4(1) included carrying on business for the purpose of banking, lending or borrowing money or insurance. ‘Trade and Commerce’ Personal transactions; ○ E.g. private sale of property Excludes Issue of planning certificates by local councils; Lecture about religious matters; Olympic selection; and  E.g. amateur sport Political promises. ‘Misleading or Deceptive Conduct’ ACL s 18 depicts that conduct tends to lead a reasonable member of the relevant order into error. Here, misleading conduct need not result from actual Principle deception; it is sufficient to merely have the potential to mislead as in Parkdale Custom Built Pty v Puxu Pty Ltd. To determine a ‘reasonable person’, one must assess whether the conduct was directed towards a specific individual or the public at large (Butcher v Lachlan Elder Realty Pty Ltd). ‘Reasonable Person’ Individual– subjective and objective factors are considered to determine how the conduct would have affected a person in the same position. Conduct at issue for the purposes of a claim based on ACL s 18– Conduct by representations; Conduct by silence; Types Puffery; Conduct passing on information supplied by another; Conduct endorsing information supplied by another; and Conduct by way of an expression of opinion. Conduct by Representations Representations about ACL s 4(1) states representation with respect to any future matter deemed to be misleading if the maker does not have reasonable grounds. S 4(2) requires future matters that a person shall be taken not to have reasonable grounds unless evidence is adduced to the contrary. Conduct by Silence In determining whether silence is misleading or deceptive conduct, the court considers whether a reasonable expectation exists for the disclosure of material facts, and whether silence can be misled by omission (Demagogue v Ramensky). Silence However, if the court finds an equal bargaining power between the parties with no reasonable expectation for further disclosure, the silent may not be deemed misleading (Miller & Associates Insurance Broking Pty Ltd v BMW Australia)  Silence in isolation refers to the failure to disclose information alone under s 18 of the ACL. For silence to be considered misleading or deceptive, it must Silence in Isolation be deliberate per s 2(2)(c). Inadvertent failure to disclose does not constitute deliberate. Silence alongside other acts does not call for any proof of subjective intention to mislead. The silence can be deemed misleading conduct in reliance on Silence with other act other misleading acts which give rise to liability (Noor al Houda v Bankstown Airport Ltd). Puffery Puffery refers to an exaggerated claim that a reasonable person would not rely upon. The Court generally does not consider puffery as misleading or Principal deceptive under the s 18 ACL. Where it is found that a ‘reasonable person’ would take such information seriously, it is deemed to be misleading or deceptive conduct. Conduct passing on information supplied by another If it’s clear that a corporation is not the source of information and disclaims any belief in its truth, merely passing the information along does not constitute Yorke v Lucas misleading or deceptive conduct. Expression of Opinion Expressions of opinion will not be misleading merely because they turn out to be incorrect; however, they may be misleading if they contain an implied Principal representation that the speaker holds that opinion, or an implied representation that there is a reasonable basis for it. Damages Under ACL s 236, a claimant may seek damages if they: 1. They have suffer actual loss; Elements 2. Conduct contravenes ACL s 18; and 3. Can demonstrate that the contravention cause their loss ○ Need not be the only cause but it must make material contribution to the loss (I&L Securities v HTW Valuers) Where the cause of action is satisfied, the claimant may recover the full amount of the loss on the balance of probabilities, regardless of other contributing Damages factors. Actual Loss  Passive Plaintiff experiences loss or damage without actively making a decision based on misleading conduct. Active Plaintiff makes a positive decision to enter into a transaction based on a material misrepresentation. Causation Reliance The plaintiff must prove that they would not have entered into the contract ‘but for ‘their reliance on the misleading representation Limitations on Damages Under CCA s 137B if: 1. A claimant makes a claim under ACL s 236; 2. The conduct contravenes ACL s 18; 3. Claimant suffered the loss or damage as a results of: Contributory Negligence ○ Partly of the claimant’s failure to take reasonable care; and ○ Partly of the conduct of the other person; and 4. The other person did not intend to cause the loss or damage and did not fraudulently cause the loss or damage; then The amount of the loss or damage that the claimant may recover under ACL s 236(1) is to be reduced to the extent to which the court thinks just or equitable. Limitations Under s 137C, a person is not entitled to recover the amount of loss or damage under s 236(1) if the loss or damage results from death or personal injury. Liability Direct CCA s 139B(2) states that conduct engaged in on behalf of body corporate by director, employee, or agent within the scope of their actual or apparent authority is taken to have engaged in by body corporate: Body Corporate CCA s 84(2) makes clear that activities by directors or agents of the company will attract direct liability and no question of vicarious liability arises per Wheeler Grace & Pierucci Pty Ltd v Wright. Employees found to have engaged in misleading conduct in the course of their employment, engage in that conduct in trade or commerce, if the activity of Employees the employer is in trade or commerce under Houghton v Arms. If such conduct is found to contravene s 18 ACL, the employee is personally liable. Natural Person Under CCA s 139C(2), any conduct engaged in on behalf of a person other than body corporate–  1. Both an employee or agent of principal within the scope of the actual or apparent authority of the employee or agent; or 2. By any person at direction of an employee or agent of the principal with consent of such employee; then They are directly liable for the conduct. Indirect If a person suffers loss or damage because of the conduct of another person and the conduct contravenes ACL s 18, the claimant may recover the amount of the loss or damage against that other person or against any person ‘involved’ in the contravention. Parties are considered to be involved under ACL s 2 if– Aided the contravention; Principle Induced the contravention; Directly or indirectly concerned or party to the contravention; or Conspired with others in relation to the contravention. Security Key features– Transfer of title or assignment of right to the mortgagee Subject to an equity of redemption – borrower can reclaim property upon repayment Mortgage Commonly Mortgaged Person Property– Contractual rights Share Key Features– No transfer of the chargor’s (borrower’s) interest in the secured property. Creation of a new interest in the secured property for the chargee (lender). Chargor retains ownership but is subject to the chargee’s rights. Chargee has preferential rights to payment from the secured property or its proceeds. Charges Usage Common in business lending transactions where security is needed. Can be fixed (specific assets) or floating (general assets that can change). Generally used for most assets of a company, except where a mortgage is preferred Pledge Key Features–  Arises from the transfer of possession of personal property to the lender as security for a debt. Lender can sell the pledged property to satisfy the debt. Possessory Security: Lender holds the item; not practical for borrowers who need to use it. Example– Pawn broker transactions. Key Features– Similar to a pledge but arises by operation of law or contract. Right to retain personal chattels until the debt is paid. Lien Example– A mechanic’s lien on a car until the repair bill is settled. Difference from Pledge– A lien does not grant the secured party the right to sell the goods to satisfy the debt. Personal Property Securities Act (‘PPS’) Applies to any transaction creating a security interest in personal property, regardless of form. Security interests can secure payment or performance of an obligation. Application The identity of the person holding the title does not affect the nature of the security interest. Liens and fixtures are excluded: PPS s 8. Territorial Nexus Per s 6, the PPS is applicable to all security interests in personal property located in Australia where the grantor is an Australian entity. Interested parties register their security interest via a financing statement. Such a statement requires: Collateral to be classified as consumer or commercial property under s 10; PPS Register May require description by serial number for specified regulations; Must belong to a single class as prescribed by the PPS sch 1 reg 2.3; and Must specific if the security interest is a purchase money security interest. Grantor – person whos grants security interest Key Terms Debtor – person who owes payment or performance secured by a security interest  Personal Property – any property other than land Security Agreement – any agreement that creates a security interest or evidence of such an agreement. Security Interest A security interest is an interest in personal property created by a transaction that secure payment or performance of an obligation under s 12. Principle Simple terms– A security interest is a legal claim or right that a lender or creditor has over a borrower’s personal property. This claim allows the creditor to take possession of the property if the borrower fails to repay the loan or meet obligations under s 12. Examples in s 12(2)– Fixed charge Floating charge Examples A chattel mortgage A consignment A lease A grantor gives a security interest in collateral (the property) to the secured party. Under s 19, giving security interest is called attachment of the security Attachment interest to the collateral. A security interest attaches to property when a person gives value for acquiring the security interest (or does something else to acquire it) and in return, the person gains rights in the collateral. Under s 20, a security interest is enforceable against a third party if: 1. The interest is attached to collateral; and Enforceability against 3rd 2. The secured party– Party ○ Possesses the collateral; ○ Has perfected the security interest by control; and ○ Has a written security agreement covering the collateral pursuant to s 20(2). Under s 21, interest may be perfected by: 1. Registration and subsequent publication in PPSR; Perfection ○ A single registration may prefect one or more security interests per s 21(4). 2. Possession pursuant to s 24; or  ○ Need not be preceded by attachment. 3. Control for specific kinds of collateral pursuant to ss 25, 29. ○ E.g. bank accounts, company shares, electronic instruments, satellites and other space objects. Under s 164, a registration error invalidates a financing statement if: Registration Errors 1. Contains a seriously misleading defect; or 2. Has defects (e.g. errors in serial numbers or grantor details) making it undiscoverable. 1. Priority between unperfected security interest is based on the order of attachment (s 55(2)); 2. Perfected security interests take priority over unperfected ones (s 55(3)); and 3. Between the perfect security interests– Priority ○ Perfection by controls has higher priority (s 57(1)); ○ PMSI have priority over other perfected interests (s 62); and ○ For other perfected interests, priority is determined by the timing of perfects (ss 55(4)-(6), 56). Perfected Property PMSI Means any of the following under s 14– A security interest taken in collateral, to the extent that it secures all or part of its purchase price; a security interest taken in collateral by a person who gives value for the purpose of enabling the grantor to acquire rights in the collateral, to the Defintion extent that the value applied to acquire those rights; the interest of a lessor or bailor of foods under a PPS lease; or the interest of a consignor who delivers goods to a consignee under a commercial consignment. Perfected PMSIs received super priority over other security interests, meaning they take precedence in enforcement and satisfaction of debts under s 62. This means that properly registered PMSIs that meet the specific requirements allow the holder to recover debt first in the event of a default. Super Priority To qualify for super priority, a PSMI holder must: 1. Perfect the security interest by registration; 2. Disclose in financing statement that the security interest is a PMSI; and 3. Register within a specific time frame. PPS Lease  A PPS lease is defined as a lease or bailment of goods for a term exceeding two years or for an indefinite period under s 13(1). The interest of a lessor or Principle bailor of goods under a PPSA lease is deemed a security interest per s 12(3)(c). This means that such leases are treated similarly to other security interests under the PPSA. Commercial Consignment Under s 10, a commercial consignment is characterised by– 1. Retention of interest; ○ the person delivering the goods retains an interest in the goods delivered to the person receiving the goods Definition 2. Purpose of delivery; and ○ the consignor delivers the goods to the consignee specifically for sale, lease or other disposal 3. Ordinary course of business ○ Both the consignor and the consignee must deal in goods of kind as part of their ordinary course of business. However, commercial consignments do not include arrangements where goods are delivered to an auctioneer for sale or to a consignee who is generally Exclusion known to its creditors to be selling or leasing goods of others. Unperfected Security Interest A buyer or lessee who pays value for personal property generally takes the property free of an unperfected security interest (PPSA s 43). This protection Buyers or Lessee encourages transactions by ensuring that buyers are not burdened by unregistered claims. If goods are seized by an execution creditor (a creditor seeking to enforce a judgment), that creditor will have priority over an unperfected security interest Execution Creditors (PPSA s 74). This means that in the case of debt recovery through seizure, the execution creditor's claim will supersede unperfected interests. Vesting of Unperfected Unperfected security interests vest in the grantor (the debtor) upon the grantor’s insolvency (PPSA s 267). This means that if a debtor becomes insolvent, Security Interests any unperfected interests in their property are lost to the secured party, effectively reverting to the debtor. Taking Free "Taking free" means acquiring property without any existing claims, debts, or legal issues attached to it. It ensures that the new owner has clear and Simple Terms uncontested ownership, allowing them to use or sell the property without worries about previous liens or obligations.  When some “takes free” of a security interest, it means they are purchasing the property without the risk of the creditor repossessing it due to the borrower’s unpaid debts or obligations. Taking Personal Property Under s 43, a buyer or lessee of personal property who provides value can take the property free of any unperfected security interest. This applies unless the Free of Unperfected buyer was involved in the transaction that created or provided for the security interest. Security Interest Under PPS s 44, if property must be described by serial number, a buyer takes free of security if: Taking Free of Security 1. A search of register before the sale does not reveal of perfected security interest by that serial number; and Interest if Serial Number 2. The buyer was not part of the transaction creating the security interest. Incorrect or Missing This does not apply if the buyer takes goods as inventory. Under PPS s 45, a buyer or lessee, for new value, takes free of security interest if– Taking Motor Vehicles 1. A register search shows perfect security interest for the vehicle’s serial number prior to sale; and free of security interesting 2. The buyer has no actual or constructive knowledge of the security interest. This does not apply if the buyer takes goods as inventory. Taking personal property PPS s 46 applies when goods are sold in the ordinary course of the seller’s business. The buyer need not know the sale breached a security agreement. If the free of security interest in property is described by serial number, it cannot be held as inventory. ordinary course of business Taking personal domestic PPS s 47 applied if the market value of the personal property is $5,000 or less, allowing the buyer to take the property free of any security interest. or household property free of security interest Sale of Goods Transfer of Title by Non-Title The Nemo Dat Rule dictated that ‘you cannot transfer what you do not have’. SGA s 24(1) further stipulates that when a person who is not the owner sells Fundamental Rule goods with the owner’s consent or authority, the buyer does not gain any better rights than the seller had. Exception  Sale with authority or Under SGA s 24(1) says that if a sale is made with the authority or consent of the owner, section 24(1) does not apply. Here, the owner loses property rights consent of the owner and the third party buyer obtains title. Under SGA s 24(1) the buyer is not prohibited from acquiring a good title if the owner’s conduct misled the buyer into believing that the seller had authority to sell. By representation– If the owner represents that the seller is the owner or is the owner’s agent with authority to sell on these terms. Estoppel By conduct– If the owner’s act or omission enables the seller to represent that the seller is the owner. Exceptions– Merely entrusting another person with possession does not amount to representation that the seller owns the goods Delivery of documents of title does not convey a representation that holder of the documents of title has authority to dispose of the goods Carelessness in relation to goods is not conduct raising an estoppel Factors Act s 3(1), when a mercantile agent is in possession of the goods with the consent of the owner, any sale or other disposition of goods in ordinary course of business of a mercantile agent shall be as valid as if expressly authorised by the owner. This only applied where the buyer acted in good faith and without notice of lack of authority. Per s 2(1), a mercantile agent is anyone who, in the ordinary course of business, has the authority to buy or sell goods, consign goods for sale or raise money on the security of goods. Sale of Mercantile Agent Pacific Motors Auctions v Motor Credits defines ‘ordinary course of business’ to include without business hours, at proper business premises and/or on usual time. SGA s 3(2) dictates that the buyer acted in good faith if ‘it is in fact done honestly, whether it is done negligently or not’. Notice includes actual notice or wilfully closing one’s eyes. When the seller of goods has a voidable title to the goods but the seller’s title has not been avoided at the time of the sale, the buyer acquires a good title if Voidable Sales the buyer buys them in good faith and without notice of the seller’s defect in title. Seller in Possession After Where a person having sold goods, continues or is in possession of the goods, the delivery or transfer by the seller of the goods under any sale or other Sale disposition to a 3rd party in good faith and without notice of the previous sale is as valid as if seller was authorised by owner.  Where a person, having agreed to buy goods, obtains possession of goods with consent of owner, the delivery or transfer by the buyer of the goods under Buyer in Possession After any sale or other disposition to a 3rd party in good faith and without notice of the rights of the owner as valid as if buyer was a mercantile agent in Sale possession of goods with consent of the owner. Performance of Contract According to SGA s 29, the seller has the duty to deliver the goods while the buyer has the duty to accept and pay for the goods. Here, payment and General Duties delivery are concurrent conditions unless otherwise agreed per s 30. Delivery Definition Under s 3(1), delivery is constituted by the voluntary transfer of possession. Section 31– 1. Delivery responsibility – Whether buyer must take possession of goods or the seller must send them depends on the specific contract, whether express or implied, between the parties; 2. Default place of delivery – If there are no specific contract provisions, the default place of delivery is the seller’s place of business. If the seller has no business, the location is their residence; 3. Specific goods in different locations – if the contract involves specific goods known to be in a different location at the time the contract is made, the location becomes the place of delivery; Rules 4. Timing of delivery – If the seller is obligated to send the goods, yet, no delivery time is specified, the seller must send them within a reasonable time; 5. Third party possession – if goods are held by a third party at the time of sale, delivery to the buyer does not occur until the 3rd party acknowledges holding the goods on the buyers behalf; 6. Demand or tender delivery – a demand or offer for delivery may be considered ineffective unless made at a reasonable hour; 7. Reasonable hour – ‘reasonable hour’ is defined based on the individual circumstances of each case; 8. Cost of deliverable state – Unless agreed otherwise, the seller is responsible for expenses related to putting the goods into a deliverable state; and 9. Document of title – the section does not affect the issuance or transfer of any document of title related to the goods. Section 32– 1. Delivery of short quantity – where a seller delivers fewer goods than agreed, the buyer can reject the delivery. However, if the buyer accepts the Wrong Quantity or Mixed delivered goods, the must pay for them at the agreed contract rate; Delivery 2. Delivery of excess quantity – if the seller delivers more goods than contracted, the buyer has two options: ○ Accept the goods that are party of the contract and reject the excess; or (2A) if the buyer accepts all the goods delivered, they must pay for them at the contract rate.  ○ Reject the entire delivery. 3. Mixed goods delivery – if the seller delivers goods that are contracted mixed with goods of a different description not included in the contract, the buyer can: ○ Accept only the goods that comply with the contract and reject the rest; or ○ Reject the entire delivery. 4. Trade usage and agreement – these provisions are subject to any relevant trade usage, special agreements or prior dealings between the parties. Section 33– 1. Unless otherwise agreed, the buyers of goods are not bound to accept delivery of them by instalments. 2. In contracts that state goods are to be delivered in instalments, each instalment is to be paid for separately. If the seller makes defective deliveries for one or more instalments, or if the buyer fails to take delivery or pay for one or more instalments, the implications depend on the specific terms of the contract and the surrounding circumstances. Instalment Deliveries Breach of contract– It must be determined whether the breach constitutes a repudiation of the entire contract or if it is a severable breach. ○ Repudiation: this would allow the non-breaching party to treat the entire contact as terminated. ○ Severable breach: this allows for a claim for compensation for the specific breach without terminating the whole contract. To apply this consider: ○ The ratio quantitatively the breach bears to the whole; and ○ The degree of probability or improbability that the breach will be repeated per maple flock co v universal furniture products. Acceptance According to s 37, the buyer is taken to have accepted goods when: 1. Buyers intimates to seller that the buyer has accepted them; Principle 2. The goods have been delivered to the buyer and the buyer does any act in relation to them which is inconsistent with the ownership of the seller; or 3. After the lapse of a reasonable time, the buyer retains the goods without intimidating the seller that the buyer has rejected them. Under s 36, if goods have been delivered to the buyer which the buyer has not previously examined, the buyer is not deemed to have accepted them unless Buyer’s Rights and until the buyer has had reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract. Under s 37 and Hammer & Barrow v Coca Cola, an act inconsistent with the right of the seller, in the event of rejection, to have the goods returned to the Seller’s Right seller at the place of examination of the goods as contemplated by the contract. Buyer’s v Seller’s rights Hardy v Hillerns & Fowler, says that s 37 is not to be read subject to s 36.  Hammer & Barrow v Coca Cola Seller carried on business in Christchurch D order 200,000 yo-yos Facts Before deliveries commences, d resold 85,000 to N (sub-buyer) in Auckland – 65,000 of which were defective Agents delivered them to sub-buyer’s premises in Auckland Examined there – ⅓ sent on to various retailers for resale and ⅔ retained at sub-buyer’s premises Remedies for the buyer 1. Reject the goods under s 38; or Breach of Implied terms 2. Damages under s 54. Unless otherwise agreed, when goods are delivered to the buyer and the buyer refuses to accept them, the buyer is not bound to return them to the seller. It Section 38 is sufficient for the buyer to merely tell the seller that the buyer refuses to accept them. Under s 38, the buyer has no obligation to return goods to the seller. However, under s 14(3), when: a sale contract is not severable and the buyer has accepted the goods or part of them; or if the contract is fer specific goods that have already become the buyer’s property; then Breach of Warranty any breach of a condition by the seller can only be treated as a breach of warranty. I.e the buyer cannot reject the goods or treat the contract as void, unless the contract specifically expressly or impliedly allows it. Losing the right to reject If an act constitutes acceptance of goods per s 37, the buyer has lost their right to reject the goods and the only remedy is damages for breach of warranty. goods Under s 21 r 1, if an unconditional contract for specific goods property passes on completion of the contract. The outcome may be seen to be unjust where Losing right to reject in the buyer has no opportunity to inspect the goods. Here, the courts have applied the ‘acceptance test’ even to specific goods as in Taylor v Combined the case of specific goods Buyers. Section 54– 1. When there is a breach of warranty by the seller, or if the buyer chooses to elect to treat a breach of a condition as a breach of warranty, the buyer cannot Section 54 reject the goods solely due to the breach. However, the buyer has two options: a. Set up against the seller the breach of warranty in diminution or extinction of the price; or b. Maintain an action against the seller for damages for the breach of warranty.  2. Such damages for breach of warranty are the estimated loss directly and naturally resulting in the ordinary course of events from the breach of warranty. Remedies for the seller Real remedies– 1. Right of retention under s 42; 2. Stopping goods in transit under s 45; 3. Resale under s 49; and Remedies 4. Withhold delivery under s 41(2). Personal remedies– 1. Sue for price under s 50; and 2. Damages for non-acceptance under s 51. Real Remedies ‘Unpaid seller’ is defined in s 40(1) to mean– 1. When the whole of the price has been paid or tendered; and 2. When a bill of exchange or other negotiable instrument has been received as a condition payment, and the condition on which it was received has been fulfilled by reason of the dishour of the instrument and otherwise. Definition ‘Person is deemed insolvent’ is defined in s 3(3) to mean– 1. Ceased to pay debts in the ordinary courses of business; or 2. Cannot pay debts as they become due. Section 42(1) stipulates that to exercise the right to retain possession of goods until they have been paid for, a seller must have actual possession. This right arises when the goods have either: Seller’s Right of Been sold with no credit period; Retention Where credit period has expired or When the buyer becomes insolvent. Under s 45, where property in goods has passed to buyer than unpaid seller who has parted with possession of the goods is entitled to stop the goods in Stoppage in Transit transit and retain them until payment if: Buyer is insolvent; and  Goods are in transit. Under s 49, an unpaid seller can resell the goods where– Goods are perishable or seller has given notice to buyer of seller’s intention to resell and buyer does not within a reasonable time pay or tender the Resale price; or Where seller expressly reserves a right of resale in case of default by the buyer and the buyer makes default. Under s 41(2), in conjunction with other seller’s remedies, provided property in the goods has not passed to the buyer, the unpaid seller may withhold Withholding Delivery delivery of the goods. Personal Remedies The price ○ If the property in the goods has passed to the buyer and buyer wrongfully neglects or refuses to pay for the goods the seller may sue the buyer for the price under s 50. Damages for non-acceptance Remedies ○ If the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may claim damages against the buyer for non-acceptance under s 51(1). ○ Measure of damages – estimated loss directly and naturally resulting in the ordinary course of events, from the buyer’s breach of contract under s 51(2). ○ If an available market, damages will be the difference between the contract price and the market price per s 51(3). Consumer Guarantees for Goods Guarantees regarding title, undisturbed possession and the absence of undisclosed securities apply to all sales, regardless of whether they accord in ‘trade or commerce’. All other guarantees only apply when– Protected Goods Goods are supplied to a consumer; and Goods supplied in ‘trade or commerce’. Exceptions Due to the ‘trade or commerce’ requirement, these guarantees do not apply to private sales (s 54(1)(b)) and auctions pursuant to its ACL s 2 definition. ‘Consumer’  Under ACL s 3(1), a person is deemed a consumer if: a. The price of the goods did not exceed $100,000; and Consumer b. The goods were a kind ordinarily acquired for personal, domestic or household use or consumption; or c. The goods consisted of a vehicle or trailer for use principally in the transport of goods on public roads. Here, Bunnings v Laminex says that ‘ordinarily’ means ‘commonly’. Under ACL s 3(2), a person is taken not be a consumer if that person acquired goods or services for the purposes of– a. Resupply; or Not consumer b. Using them up or transforming them: ○ In the course of process of production or manufacture; or ○ In course of repairing or treating other goods or fixtures on land Bunnings v Laminex Bunnings acquired insulation products from Laminex for use in construction of its warehouses Advertised as ideally suitable for industrial or commercial buildings Facts Nothing other than price made them unsuitable for use in domestic settings HELD: ‘ordinarily’ means ‘commonly’ or ‘regularly’ not ‘principally’ or ‘exclusively’ Carpet Call v Chan Carpet put to a commercial use (night club in fortitude valley Facts Purchase price $69,000 when the prescribed amount at the time was $40,000 HELD: Carpet found to be ordinarily acquired for household or domestic use; consumer goods even though used in a commercial context ‘Goods’ Under s 2 of the ACL, the definition of ‘goods’ includes– Ships, aircraft and other vehicles; Animals, including fish; Minerals, trees and crops – whether on, under or attached to land or not; Definition Gas and electricity; Computer software; Second-hand goods; and Any component part of, or accessory to, goods.  Per s 8 ACL, goods are taken to be supplied to a consumer even if they are affixed to land or premises at time of supply. Here, although ‘residential dwelling’ are not considered goods, where sale includes chattels, the seller cannot avoid liability under ACL by arguing that the chattels are fixtures and thus part of the land. Examples of this include– Definition Air Conditioner; Dishwater; or Hot water system. Guarantees Guarantee of Acceptable Quality Under s 54(1) of the ACL, if a person supplies, in trade or commerce, goods to a consumer, there is a guarantee that the goods supplied are of an acceptable Principle quality. S 54(2) specified that foods are of acceptable quality if they are: Fit for all the purposes for which goods of that kind are commonly supplied; Acceptable in appearance and finish; ‘Acceptable Quality’ Free from defects; Safe; and Durable. In considering whether a good is of acceptable quality, one must apply the objective test to determine whether a reasonable consumer knowing all the defects in the goods at the time of supply would regard them as acceptable. Here, a reasonable consumer does not call for perfection. Application of s 54(3) a reasonable consumer would consider– Nature of the goods; Price of the goods; Objective Test Any statement made about the goods on any packaging or label on the goods; Any representation made about the goods by the supplier or manufacturer of the goods; and Any other relevant circumstances relating to the supply of the goods. Per Brandt v Flower Power and Stone Masonry, a reasonable consumer would also consider any representations made about the goods by the supplier. Guarantee of acceptable quality does not apply in relation to: Exceptions ACL s 54(4): defects specifically drawn to the consumer’s attention before the consumer agreed to the supply;  ACL s 54(6): goods damaged by abnormal use; and ACL s 54(7): consumer examines goods; and the examination actually conducted ought reasonably to have revealed that the goods were not of acceptable quality Guarantee of Fitness for Purpose Under the ACL s 55(1), If a person (the supplier) supplies, in trade or commerce, goods to a consumer; and Principle The supply does not occur by way of auction; There is a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit. Motor Vehicle: Examples ○ Fitness for purpose – specific purpose Purchaser informs supplier ‘must be capable of towing a one tonne motorboat’; or ‘must be suitable for off-road use’ Guarantee Manufacturer’s Express Warranty Guarantee that any express warranty provided by the manufacturer will be complied with is provided for in ACL s 59. ‘Express Warranty’ is defined in s 2 to include representation that relate to– Quality, state, condition, performance or characteristics of the goods; Principle Provision of services that are or may at any time be required for the goods; or Supply of parts that are or may at any time be required for the goods. This definition extends to all representations made by the manufacturer in promotional literature. Remedy Under s 271(5), a consumer may take action against the manufacturer to recover damages from manufacturers. Guarantee for Failure to Comply with Consumer Guarantees Against supplier– Principle ○ Not major: supplier decides on remedy  Repair; Replace; or Refund. ○ Major: consumer decides on remedy Reject and obtain refund; or Keep goods and obtain compensation. Against manufacturer– ○ Damages When a failure is considered to be not major, the consumer must first provide the supplier with an opportunity to repair the goods. ACL s 259(2)(a) Not Major provides that a consumer may remedy the failure within a ‘reasonable time’ If ‘reasonable’ is dependant in part on the nature of the goods, then, a ‘reasonable time’ a problem with essential goods such as hot water systems would be much short than discretionary goods such as a games console. Remedies Remedies Against Suppliers – Major Failure ACL s 260 defines ‘major failure’ as– Goods would have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; Definition Goods are significantly different from their description, sample, or demonstration model; Goods are substantially unfit for purpose for which goods of same kind are commonly supplied; or Goods are not of acceptable quality because they are unsafe. ACL s 259(3) provides that where the failure is major or cannot be remedied, the consumer may: Reject the goods; or Keep the goods but ask for compensation to make up for the difference in value caused by the failure. However, they must: Principle Notify the supplier that consumer rejects the goods and advise the supplier of grounds of rejection under s 263(1); and Return the goods under s 263(1).* *Unless the goods cannot be returned, removed or transported ‘without significant cost to the consumer’ in which case the supplier must collect the goods at their own expense and without a reasonable time.  Under ACL s 262(1), the right to reject goods conferred by s 259(3) is lost if– Rejection period for the goods has ended; Exception Goods have been lost, destroyed or disposed of by the consumer; Goods were damaged after being delivered to the consumer; or Goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them ACL Section 262(2)– Rejection period is period from the time of supply to the consumer within which it would be reasonable to expect the relevant failure to become apparent having regard to: Rejection Period ○ Types of goods ○ Use to which they are likely to be put ○ Length of time for which it is reasonable for them to be used ○ Amount of use to which it is reasonable for them to be put before such a failure becomes apparent Consequential Damages – Major and Non-Major Under ACL s 259(4), the consumer may receive damages for any loss or damage suffered because of the failure to comply with the guarantee, if it was