English Commercial Law
Outline & Section 1
Outline
PART I – SALE OF GOODS LAW
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Section 1 - Definition of the Contract of Sale
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Section 2 - What the Duties are Between the Parties Engaged in the
Contract of Sale
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Section 3 - The Requirements Necessary to Enforce the Contract of Sale
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Section 4 - The Competing Claims to the Ownership of Goods
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Section 5 - The Remedies Available to the Seller and the Buyer
PART II - CONSUMER LAW
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Section 6 - Consumer Protection
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Section 7 - Consumer Credit and Protection
PART III – E-COMMERCE LAW
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Section 8 - Online Commerce
PART IV – COMPETITION LAW
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Section 9 - Theoretical Foundations of Competition Law
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Section 10 - Practical Aspects of EC/UK Competition Law
Suggested Reading
Indicative Reading List
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Sale of Goods
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Consumer Law
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M Furmston and J Chuah, Commercial and Consumer Law (Pearson,Harlow 2010)
G Woodroffe, Consumer Law and Practice (8th edn Sweet & Maxwell, London 2010)
JK MacLeod, The Law Relating to Consumer Sales and Financing of Goods (2nd edn Routledge
Cavendish, London 2006)
E-Commerce Law
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JN Adams, Atiyah’s Sale of Goods (12th edn Pearson, Harlow 2010)
R Bradgate, Commercial Law (3rd edn Butterworths, Chippenham 2000)
E McKendrick (ed), Goode on Commercial Law (4th edn Penguin, London 2010)
LS Sealy and RJA Hooley, Commercial Law Text, Cases and Materials (4th edn OUP, Oxford 2009)
P Todd, E-commerce Law (Cavendish, London 2005)
D Bainbridge, Introduction to Information Technology Law (6th edn Longman, London 2007)
FF Wang, Law of Electronic Commercial Transactions (Routledge Cavendish, London 2010)
Competition Law
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R Whish, Competition Law (6th edn OUP, Oxford 2008)
M Furse, Competition Law of the EC and UK (6th edn OUP, Oxford 2008)
B Rodger and A MacCulloch, Competition Law and Policy in the EC and UK (4th edn Routledge
Cavendish, Abingdon 2008)
Ethos of English Commercial Law
• The Englishman has been a trader in his heart.
• Him having excelled in commerce meant that
he would excel in private law.
• The sophistication of his commercial laws has
caused his laws to be the setting paradigm for
the laws of other jurisdictions, jurisdictions
which did not have to be connected with the
old British Empire only.
The Sale of Goods Act as the Core of
English Commercial Law
• The old Sale of Goods Act 1893 is responsible for
much of the development of world trade, as we
know it
• This Act has been simplified but essentially preserved
in 1979 in the form of the Sale of Goods Act 1979 (as
amended in 1994)
• The USA, before the birth of the Uniform Commercial
Code in 1952, had a law which was not very different
to our Sale of Goods Act (SGA)
Economic Liberalism: When you read
the Sale of Goods Act, you read Adam
Smith
• Economic Liberalism lies at the heart of the
Sale of Goods Act 1979
• The theories of Adam Smith had only
prevailed by 1893 when the original Sale of
Goods Act came to life
• That spirit – to this day – prevails and defines
the application, the functions and the
operations of English Commercial Law
Section 1 (Definition of the Contract
of Sale) – Learning Outcome
• To understand the differences between a
contract of sale regulated by the Sale of Goods
Act 1979 and the non-sale of goods contract.
Characteristics of the Contract of Sale
• No formalities are required to create contracts for
the sale of goods and they may be written or oral.
• The governing statute will be the Sale of Goods Act
1979 (SoGA 1979), as amended.
• The defining characteristics of the contract of sale
are contained in s 2 of the SoGA 1979. The contract
of sale may be conditional, s 2(3), a future sale, s
2(5), or an agreement to sell, s 2(6).
Characteristics of the Contract of Sale
(continued)
• s 2(1), delineates the following requirements:
-Seller and buyer
-The transfer or agreement to transfer
property
-Money consideration
-Price
-Goods
A Seller and a Buyer
• Both the seller and the buyer must have capacity
and be committed to selling and buying.
• If these basic requirements do not occur, the
contract is simply void.
• In Weiner v Harris (1910) the court held down the
basic principles as to how to determine whether the
parties are sellers and buyers. In this case a
manufacturer delivered jewellery to a dealer ‘on sale
for cash only or return’. The transfer of property was
to be effected only if the payment had been made.
Transfer or agreement to transfer
property
• Section 61 (1) SoGA 1979 reads as follows: ‘property
means the general property in the goods, not merely
a special property’
• Transfer of ‘ownership’ or ‘absolute legal right’ (see
Battersby and Preston (1972) 35 MLR 269; cf Ho
[1997] CLJ 571)
• (O)WNER ------------------ (B)AILEE (O remains the
owner despite the transfer of the goods and in fact B
is under a legal obligation to return the goods to O)
Transfer or agreement to transfer
property (continued)
• South Australia Insurance v Randell (1869) LR3PC101: farmers
deposited grain with B asking them to return the equivalent of
it at any time or to pay its cash value. Held that the intention
of the parties here was that grain deposited with B should
become B’s property, in the same way that money deposited
with a bank becomes the property of the bank.
• Mercer v Craven (1994) CLC328HL, however, the stored grain
was to remain with the depositors at all times. In addition the
grain of different farmers was mixed. HoL held that the mere
fact the goods belonging to more than one owner were mixed
does not destroy the owners’ property in those goods. As a
matter of intention, which is the main test here, the intention
here was one for a bailment.
Money consideration
• Money refers to the unit of account issued for the purpose
of legal tender within a legal jurisdiction.
• Problems arise where goods are sold for other than money or,
where money is used in conjunction with goods such as the
part exchange of a car.
• In Esso Petroleum v Customs & Excise Coms (1976) 1ALLER117
this arose. The question there was concerned with special
coins featuring images of the 1970 England World Club Squad
and entitling four gallons of Esso petrol. The majority of the
HoL held that if there was a contract entitling the motorist to
a coin, the consideration provided by the motorist was
entering into the main contract to buy petrol; any contract
relating to the free coin was not of sale.
Money consideration (continued)
• In Aldridge v Johnston (1857) 7E&B885 the buyer and the
seller set a price as well exchange of goods (barley for
bullocks). It was assumed that the transaction was one of
sale, the crucial factor having been that both goods that
were to be exchanged were valued in money terms.
• In Flynn v Mackin (1974) IR101 a dealer agreed to supply a
motorist with a new car in return for the motorist’s old car in
addition to giving the motorist £250 in cash. That was a
contract of barter and not of sale (but ‘if the transaction has
been that the new car was to be a particular price but that in
lieu of that price the vendor would take the existing car and
cash for the balance, the contract would have been a contact
for sale’).
A Price
• The price is a crucial term of the contract and failure to agree
on the price may be evidence that a contract has not been
concluded.
• Sec. 8 (1) allows the contract to fix the price, or left to be
fixed in a manner agreed, or determined by a course of
dealings between the parties.
• Where none of these apply, Sec. 8 (2) requires the buyer to
set a reasonable price.
• Sec (9) determines those situations where the price is to be
set by a third party.
• In May v Butcher (1934) 2KBHL there was an agreement for
the sale of goods with ‘prices to be agreed upon from time to
time’. Thus the court concluded that it did not have to set the
price for the contract under s. 8 of the Act.
A Price (continued)
• In Foley v Classique Coaches (1934) 2KB1CA there
was an agreement for the supply of petrol between B
and S ‘at prices to be agreed’ which was enforced. To
reach this conclusion the court took into
consideration the fact that this agreement was part
of a larger agreement and in any case there was an
‘arbitration clause’ in it, which meant that in case of
disagreement it was for arbitration to decide what
the proper price to be paid for petrol would be.
Goods
• Sec. 5, distinguishes goods in the following way:
- Existing goods, these are goods that are in the possession of the seller at
the time of the contract.
- Future goods, those goods that have to be manufactured or acquired by
the seller pursuant to the contract.
-Specific goods, those goods that are identifiable in a complete form at the
time of the contract.
-Unascertained goods, those goods that are not specific and are sold by a
generic description.
• Sec. 61 defines the types of goods that fall within the above classifications.
• Recently problems have emerged regarding the classification of computer
software. See the case of St. Albans CC v International Computers Ltd.
(1996) 4ALLER481 where it was held that a software program per se is not
a good but if the program is supplied via some physical medium e.g. a
diskette or a compact disk then this can be taken to be a good.
The Most Important non-sale of
Goods Transactions
• Those contracts that do not satisfy the
requirement of sec 2(1) will not be classified
as sale of goods contracts. It is therefore
crucial to determine the nature of the
contract because in the event it is not a sale
of goods contract then the contract will be
regulated by a different statute that may not
be as advantageous as the Sale of Goods Act
1979.
The Most Important non-sale of
Goods Transactions (continued)
• The main statutes regulating non-sale of
goods contracts are the Supply of Goods and
Services Act 1982 along with the Supply of
Goods (Implied Terms) Act 1973.
The Most Important non-sale of Goods
Transactions – Hire Purchase (continued)
• The most important non-sale of goods transactions are the
following:
• Hire Purchase
• The object of a hire purchase is to supply goods on credit
terms coupled with a security for the supplier. The legal form
of a hire purchase agreement is of a hiring or bailment of the
goods by their owner (bailor) to the hirer (bailee) with the
hirer being granted an option to purchase the goods at the
end of the hire period.
• OWNER (BAILOR) ----------------------- HIRER (BAILEE) (with
option to purchase the goods at the end of the hire period)
The Most Important non-sale of Goods
Transactions – Hire Purchase (continued)
• See the case of Helby v Matthews where the
court was faced with the task of determining
whether a hire purchase agreement existed
or not. Here the HoL held that a hirer under a
hire purchase agreement is not a person who
has agreed to buy the goods; thus a wrongful
disposition by the hirer would not affect the
owner’s rights. In other words, the supplier
was offered here greater security than a
normal conditional sale would.
The Most Important non-sale of Goods
Transactions- Work and Materials
(continued)
• Work and Materials
• The object of the contract of sale is the transfer of
property from the seller to the buyer. The object of a
contract of work and materials is the performance of
a service for the customer.
• SERVICE PERSON --------------------- CUSTOMER (for
performance of service)
• The distinction between the two becomes blurred in
instances of those contracts where both goods and
services are transferred.
The Most Important non-sale of Goods
Transactions – Work and Materials
(continued)
• In Clay v Yates a contract for a printer to print
a book, the printer supplying the paper was
interpreted as one for work and materials,
applying the “substance of the contract test”.
This test was upheld in Robinson v Graves
(substance of the contract was the production
of something to be sold OR that skill and
labour have to be used for the production of
the article?).
The Most Important non-sale of
Goods Transactions – Work and
Materials (continued)
• In Hyundai Industries v Papadopoulos the HoL held
that a contract to build and supply a ship was a
contract of sale, even though this was not pure sale
and had the characteristics of a building contract.
• In Beta Computer Systems v Adobe it was held that a
contract for the supply of software is not a contract
for the sale of goods but a sui generis contract,
having some of the characteristics of a sale and some
of a licence.
The Most Important non-sale of Goods
Transactions – Exchange and Barter
(continued)
• Exchange and Barter
• Where the consideration for a contract is not money the
contract will be referred to as either an exchange or barter. In
the context of consumer contracts goods are often supplied in
conjunction with marketing promotions such as coupons or
vouchers.
• (S)UPPLIER ----------------- CUSTOMER (goods in consideration
of things other than money)
• The courts in these instances will look to the intention of the
parties, see the cases of Esso Petroleum v Customs and Excise
(see above), Chappell & Co. v Nestle Ltd.
The Most Important non-sale of Goods
Transactions – Hire and Bailment
(continued)
• Hire and Bailment
• A bailment and hire contract is characterised by a possessory
interest in the goods as opposed to a legal interest. In this
capacity no ownership in the goods is transferred.
• OWNER (BAILOR) ----------------------- HIRER (BAILEE) (only
possessory interest is created; thus no legal interest)
• e.g. contracts for the hire of goods
• contracts for custody for reward
• contracts of pledge, where the owner deposits them with a
bailee as security for a loan
Thank you.