S.6 and S.7 only apply to contracts of specific goods. However, future goods that are already
in existence are likely to be considered specific goods for the purpose of ss6 and 7.
- s.6 deals with events before the contract is made.
- s.7 deals with events after the contract has been made.
Good perishing before the contract is made s.6 SGA
Couturier v Hastie 1856: HoL held that in the case of a contract of sale of goods if,
unbeknown to the parties, the goods no longer exist, there will be no liability.
- The effect of this decision can now be seen in s.6 SGA
- S.6: Where there is a contract for the sale of specific goods, and the goods
without the knowledge of the seller have perished at the time when the contract
is made, the contract is void.
- S.6 applies only to goods that have perished. It will not apply to cases where the
goods never existed.
When will the goods be deemed to have perished?
It is not a defined term in the SGA but is given a broad interpretation by the courts. Courts
have held that goods will be deemed to have perished if they become significantly altered
so that, for commercial purposes.
- Asfar and Co V Blundell (1896): A ship carrying a shipment of dates sank during
voyage and was subsequently salvaged. Although the dates still retained the
appearance of dates and although they were of value for the purpose of distillation
into spirit, they where so impregnated with sewage as to be declared unfit for
consumption by the sanitary authority. CA Held that the dates had perished because,
for commercial purposes, they were so altered so that they were no longer the same
goods that were the subject of the contract.
Partial loss
- Barrow, Lane & Ballard Ltd v Philip Phillips & Co Ltd [1929]: Ballard bought a specific
lot of 700 bags of ground nuts from Phillips. Unknown to either party, before the
contract was made 109 bags had been stolen and after delivery hade been made of
150 bags, all the rest were also stolen. Phillips sued Ballard for the price of all 700
bags. It was held that s.6 applied since the parcel of 700 bags had perished when the
109 were stolen.
Events after the contract is made s.7 SGA
At common law, after a contract has been made, and through the fault of neither part
something happens to make its performance impossible, the contract is said to be frustrated
and the parties are released from future obligations.
- S.7 mirrors this common law position.
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