Lecture notes
Commercial Law and Practice WS01 D1
- Module
- Commercial Law and Practice
- Institution
- City University (City)
Commercial Law and Practice WS01 D1
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LEGAL PRACTICE COURSECommercial Law and Practice
Workshop 1
Topic(s):
In the context of sale of goods:
incorporation of terms;
delivery and payment;
passing of property and risk;
failure to make payment; and
retention of title clauses.
Learning Outcomes:
By the end of this session you will be able to:
Advise a seller client of their rights under a commercial agreement for the sale of goods.
Analyse contractual terms of trading and identify the protections and remedies available
to a seller client.
Session Activities:
Analyse the circumstances surrounding a particular contract and related commercial
problem in relation to payment and retention of title.
Explain, in relation to a specific practical example, which contractual terms apply and
what remedies are available to your client.
Identify and apply the appropriate contractual terms in relation to the delivery of goods
and the related passing of property and risk.
Materials Attached:
Pre-session Task, consisting of email from supervisor attaching (i) attendance note, (ii)
terms and conditions of supply (2014 edition) and (iii) terms and conditions of supply
(2019 edition).
In-session Task, consisting of email from supervisor attaching flowchart.
Preparation for Session:
Read Chapters 4, 5 and 6 of the Commercial manual.
Read Sections 16, 17, 18, 19, 20, 32 and 49 of the Sale of Goods Act 1979 (as
amended), included in the Legislation Bundle.
Prepare a detailed written answer to the Pre-session Task.
Please bring the Commercial manual and the Legislation Bundle to the session.
You will need to use them.
Post-Session:
Consolidate your learning.
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, LEGAL PRACTICE COURSE
Commercial Law and Practice
Workshop 1: Pre-Session Task
To: trainee@wilsonandbuckley.co.uk
From supervisor@wilsonandbuckley.co.uk
Date: [date of workshop]
Subject: Posdram Ltd
This morning I met with the managing director of Posdram Ltd (“Posdram”) and attach a copy
of the attendance note of the meeting together with Posdram’s terms and conditions of
supply (2014 and 2019 editions). There have been no other editions. Posdram is a chemical
manufacturer and has been our client for some years now.
It has a problem with a customer, Rainboat Ltd (“Rainboat”), as you can see from the
attendance note.
Can you please prepare a detailed note of advice for me to send to the client, to cover
Posdram’s rights and remedies against the receivers of Rainboat. I suggest that you divide
your note into the following headings:
What were the terms of the contract for the supply of titanium dioxide?
To what extent were Posdram’s terms effective?
What are Posdram’s remedies?
On the basis of the above, what would you advise Posdram to do?
Methodology – when looking at the clients position
1. How and when was the contract formed?
2. What were the terms of that contract?
3. What are the client’s objectives?
4. What are the rights of the party not in breach?
5. Identify remedies of the party not in breach; and then
6. Advise as to course of action.
-Also consider right to sue for price under s.49 SGA
Summary of facts – Posdram Ltd
Long relationship with customer Rainbow
Some problems have recently arisen, in particular when the client tried to recover certain
items, the receivers have not been willing to help
Use the above 6 Qs approach to see what courses of action the client has
(1) How and when was the contract formed?
Oral agreement made on 5 December 2019
By telephone between Mr. Bell of Rainboat Limited and Andy Newson of Posdram Ltd
(2) What were the terms of that contract?
Express terms
o Standard terms?
o individually negotiated?
-So think about individually negotiated terms and possibility that a set of the clients standard
terms may be incorporated into the contract – which client would want this
-See which standard terms apply→ 2014 or 2019 ?
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, LEGAL PRACTICE COURSE
-In the telephone conversations, some express terms will have been negotiated→ Posdram
will supply 11,000 tons of titanium dioxide at £50 per ton payable within 30days→ individually
negotiated express terms
-In Dec 2019, there was no documentation was involved→ the 2014 would be deemed to be
incorporated, recognise there was a course of dealings between the parties (this was done
once every 2 months, which the first order in 2014, on the reverse side of the order form, it
has the 2014 terms of supply)→ so standard terms incorporated are of the 2014 edition
Implied terms
o SoGA (link to client’s objectives)
-Remember the default position is that SOGA implies certain terms
-E.g. s.12-s.14
-Remember here Posdram has supplied goods and has not been paid, so ideally want to be
paid,but if not possible then reclaim chemicals or proceeds of sale held in the account
-see under s.39 SGA – re-sale→ but Posdram has already parted with possession
See clients objectives:
to be paid what it is owed
or
minimise losses by getting goods back, possibly together with a claim for damages
Client’s remedies
2014 terms are effective in preserving rights offered by the SoGA and providing
additional protection→ so got SOGA rights and additional rights too
s.49 SoGA gives right to sue for price – if either property passed or contract makes
delivery a day certain→ property has not passed here, so cannot use this part of s.49
Clause 5.3 of 2014 terms→ it states price of goods must be paid within 30 days from
invoice→ this would amount to a day certain and give right to the second part of s.49,
which 5.3 also gives a claim of price even where property has not passed→ so it
possible to bring action for the price
Think about the facts – other options?
PFC v Energy Shipping case – casts some doubt where a ROT clause applies, the position
is not yet clear
-But remember Rainbow (clients customer) is in receivership, so would not be practical to
take action and sue for price→ so see if can get goods or proceeds of sale held in account
2014 terms RoT clause - paras 7.2 to 7.4
Starting point is there are ROT clause here, a selection of ROT clauses→ see which ones
may seek to rely on (don’t assume that the fact that there is a clause in the contract that it
would immediately be enforceable…
3,400 tons on premises?
Rely on 7.2 – will be effective as established in various cases that a simple ROT clause like
this is enforceable, and does not create a charge – as long as goods are still identifiable then
possible to recover the 3,400 tons
4,000 tons on premises which have been mixed?
Rely on 7.3 – but unlikely to be effective, it appears in standard terns often as the seller is
hopefully it will apply but in reality they do not most of the time -court will see chemical has
been incorporated into making paint and therefore has lost its identity and therefore the title
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