LAWS19031 Commercial Law and Information Literacy

The applicable law governing the said items in the case scenario discussed herein is property law (Blackstone, 1930). A fixture refers to any object or something that is attached to a property in such a way that the object becomes so attached has become part of the property. A fixture is ordinarily sold together with the property it is attached to. A chattel on the other hand refers to personal property capable of being moved and mostly includes household goods or furniture. A chattel is not attached to the property and therefore is distinct from it and can be removed from the property at the time of sale (Bridge, 2012).

In determining whether an object qualifies to be fixtures and/or chattels, two tests are applicable. The first test relates to the degree of annexation and the object of annexation (Tyree and Butterworths, 1997). However, the final determination is done upon careful examination of the circumstances. The determination on whether an object is a fixture or a chattel is very vital as it has a bearing on the rights of contracting parties (Law, 2008).

Therefore, it is generally determined that in circumstances where a chattel is substantially affixed to a property, courts generally infer it to be a fixture. Courts consider a variety of things before pronouncing itself on the question whether an object is a fixture or a chattel. Courts look at the intention of such annexation and the degree thereof (Peters, 1963).

In the case of Holland v Hodgson (1872) LR 7 CP 328, a person who owned a mill purchased looms to use in the mill. The looms were attached thereof to the stone floor using nails on a wooden beam and were capable of removal easily. The mill was then mortgaged for a loan which the owner defaulted in repaying occasioning the repossession of the mill by the finance company. The court was faced with the question as to the classification of the looms as either a fixture or a chattel. In the opinion of the court, the looms were fixtures as they had formed part and parcel of the mill.In this case therefore, it was further stated that for an object to qualify as a fixture, the intention of fixation has to be established as well. That object for better enjoyment of the property becomes a chattel while that put for convenience purposes would remain a chattel.

Application

The contract for sale between Ms Manpreet and Mr Sandeep for sale of a restaurant to the latter did not expressly state the items to be included or excluded in the sale of the restaurant. However, after the sale, items such as Combi Oven, cash register, tables and chairs were removed from the restaurant. Mr Sandeep claims therefore that those items were included in the sale value of the restaurant. The question is to determine who is entitled to the items.

In the case of Mancetter Developments Limited v Garmanson limited (1986) QB 1212, the court held that the development done to the leased property was fixtures and the lessee was not entitled to remove them at the end of the lease.

In determining whether the items removed from the restaurant were fixtures or chattels, the courts would normally determine the extent to which they are annexed and the intention for which they were annexed. Where items are so annexed to the property such that they become part of it, they become fixtures and are sold together with the property (Tay 1996). Additionally, if the annexed items function as to make the property fit for the purpose such that the property cannot be used for the intended purpose when the items are removed, they would be regarded as fixtures and the seller is not entitled to remove them from the property. They form part and parcel of the property.

The items removed from the restaurant were put in the business for such business to be carried out effectively. The restaurant could not function without the chairs tables and the items removed by the seller. Their main intention was to facilitate the business and therefore they became fixtures. The buyer is therefore entitled to the items and the seller cannot purport to remove them from them from the restaurant. At the time of sale and upon completion, the right of ownership is transferred to the buyer. The buyer therefore owns the whole restaurant including the items in it that function to facilitate the business.

There has been a breach of contract by the seller. The items belong to the buyer since they are necessary and the restaurant would not function when the items are removed. The seller is therefore in breach of contract and the buyer is entitled to claim for the difference in value when items are removed as well as a claim for damages for breach of contract and loss of business.

Problem 2

The scenario in this case relates to the law of sale of goods and specifically bailment. Bailment involves the voluntary transfer of property belonging to an individual to a different person so that the receiver stores them safely on behalf of the former. Such transfer creates a contract of bailment involving two parties; the original owner commonly known as the bailor and the recipient known as the Bailee (Clarke and Kholer, 2005). The Bailee does not acquire any interest on the subject of bailment. What is transferred is only possession. The ownership right is retained by the bailor. The property so transferred could just be for storage or for a specific purpose. Bailment would only arise where the Bailee has both the intention to possess and the actual possession of the subject property.

Issues

The issue in this case is whether there was a breach of bailment between the parties and whether Ms Xiao or her employees were negligent as to cause the loss of the passenger’s luggage.

Law

The bailment only relates to goods including movable property (Merrick, 1933).There are certain requirements for a contract of bailment to occur. First, there has to be an agreement between the bailor and the bailee. There is no requirement that the said agreement ought not to be expressly stated. Agreement can be implied especially by law for instance between a person who finds goods and the owner of such goods. The goods must be delivered to the bailee. The possession of such goods has to be transferred from the bailor to the bailee. Delivery of the goods can take different forms. It can either be constructive or actual delivery (Rigdeworth, 2008).

The purpose for which delivery of the goods is done must be certain in the circumstances. The goods should be ones that are capable of being returned at the end of the bailment contract. The subject matter of the contract for bailment should be one that is returned in the form in which it was transferred or it can be disposed by the Bailee on the instructions of the bailor.

The contract of bailment creates rights and duties to the parties involved in the contract. The bailor is under a duty to disclose all the faults associated with the goods which is likely to interfere with the use of the goods, to repay any expenses incurred by the Bailee in storing the goods, indemnify the Bailee for any loss or expense, to bear the risks associated with the normal wear and tear of the goods, to accept and receive the goods bailed at the end of the contract for bailment (Moyniham, 2005).

In the case of Gin v Wackenhut (1990) U.S. Dist. LEXIS 8718, the plaintiff instituted a negligence claim against the defendant to recover the value of jewellery they lost in the process of undergoing a security check at the airport. The court found that the checkpoint operator was negligent and breached the contract of bailment by causing the bag containing jewellery valued at $ 200000 to disappear. The security checkpoint officer was found liable for negligent bailment of the plaintiff’s bag of jewellery and had to pay damages in the circumstances.

In the case of Lilley v Doubleday (1881) 7 QBD 510, the defendant had entered into a contract to store some goods in his warehouse for the plaintiff. The plaintiff only stored part of the goods in the defendant’s warehouse and others at a different location. The goods stored in a different location were consumed in fire. The plaintiff could not succeed on a claim for damages for the goods destroyed by fire as there was no delivery of the goods to the defendant.

Application

Mrs Xiao operates a luxurious Alpine Bus Line that engages in the provision of elite services to select passengers. Mrs. Peppy happens to be one of those select passengers with expensive luggage which is eventually stolen. Mrs Xiao believes she or her employees were not negligent and the loss is attributed to breach of contract of bailment between her and Ms Xiao.

In resolving this case, the court would determine at first instance whether there was a contract of bailment in the circumstances. In ascertaining such, the court would establish whether all the elements necessary for a bailment contract existed and whether there was breach of bailment .the nature of business carried out by Ms Xiao generally makes her or her agents whichever the case maybe a Bailee for the select passengers using their services. There has to be an agreement expressly for the bailment to arise. The fact that they accept their customers to board the bus with luggage is an indication that they are willing to possess them and hand them over safely at the end of the journey.

The absence of any clause as to carrying luggage at owners risk also shows that they are Bailee for the period of travel.

A contract of bailment can be created even in situations where there is no express agreement between parties. For example, where a person leaves his or her clothes with a tailor for repair, a bailment contract would arise and the Bailee would be liable for any damage or loss that might happen to the goods in his or her possession. Likewise in this case, Ms Xiao would be held liable for the loss of Mrs Peppy’s luggage and the contents thereof and the Bailee is entitled to reimbursement for the value of the goods lost as well as damages for breach of contract of bailment. Ms Xiao or her employee managing the bus on the occasion was negligent. They are guilty for negligent bailment and are liable to pay damages for the lost luggage.

Problem 3

This case scenario relates to the law of sale of goods. The facts of the case in brief is to the effect that Helen Jane, a homeware and giftware business lady attended a gift fair at the exhibition centre and managed to get a bargain where she paid a deposit of 10% for a gift shop. However, the gifts shop was later broken into and all the gifts stolen. Later, the seller claimed the balance of the purchase price from Hellen.

Issues

The issue in this case is a determination whether Hellen was the owner of the goods by paying the deposit and if so, is the seller entitled to the full purchase price when the goods have been stolen before full purchase price is paid.

Law

Sale is defined as a contract where the seller of goods actually transfers or agrees to transfer the property in the goods to a buyer for money consideration (Fawcett and Carruthers, 2008). The consideration is referred to as the price of such sale. A sale can be absolute or conditional. Absolute sale occurs where the sale is or becomes final where the transaction has been completed fully. The ownership or the title of the goods therefore passes from the seller to the buyer. A conditional sale however does not give an immediate ownership to the buyer but the buyer may acquire immediate use of the goods. Title would only pass upon fulfilment of the condition thereof.

The time when transfer of the title to the goods is very important as it determines the rights of the parties. In the case of Mercer v Craven Grain Storage Company (1994), on an action for conversion brought by bailors against the Bailee where the Bailee acted outside their authority to sell grain for a value much lower than the one specified by the bailor. The court held that the Bailee did not acquire the title to the goods and therefore could not purport to sell them discretionary to third parties in total disregard of the express directions of the bailor.

The risk of loss or destruction to the goods remains with the seller until such a time when title passes to the buyer unless there is an agreement to the contrary between the parties. Goods can be bought but possession remains with the buyer especially where the seller through agreement has accepted to effect the delivery of goods, the buyer has the title to such goods. The seller only retains the possession of the goods. He or she should however deliver the goods in a condition that the buyer left them (Zimmermann and Whittacker, 2008).

A sale needs to be differentiated from agreement to sell. The former involves a complete contract while agreement to sell is something to be actualized in future.

In circumstances where a sale has been completed but the buyer does not take possession of the goods immediately, a contract of bailment is created. Such contract is inferred or can be through a formal agreement between the parties. The seller in this case becomes the Bailee who stores the goods safely until such time when the buyer takes possession. The title to the goods however remains with the buyer; the seller only retains the right of possession of the goods.

A sale can take different forms. It depends with the agreement of the parties provided that the said agreement is legal. For instance, sale can be through part payment either in hire purchase terms or through payment of a deposit. In the two scenarios stated above, the sale is legal and the buyer acquires the title to the possession of the goods pending the payment of the full purchase price. The buyer cannot however transfer a good title to the goods since the title remains with the seller until full payment is done (McKendrick, 2014).

Application

Helen is a business person dealing homeware and giftware. She attended a gift fair at the exhibition centre and managed to get a bargain where she paid a deposit of 10% for a gift shop. The buyer was prepared to part with possession at that time but by agreement between the parties, the goods were left to be stored in the seller’s stall overnight and to be collected the following day. However, the gifts shop was later broken into and all the gifts stolen. Later, the seller claimed the balance of the purchase price from Hellen.

The court therefore wold determine if the title to the goods passed to the buyer. It is evident that the possession however remained with the seller through an agreement as Hellen made arrangement to possess them. The court would also make a determination as to whether payment of deposit amounted to full performance of a contract as to entitle the buyer to acquire the title in the goods that formed the subject matter of a contract for sale.

The time when transfer of title occurs is very important in determining the rights of the parties in a contract for sale of goods. The transfer of title is covered under section 21 of the Sale of Goods Act 1979. Under section 25, it provides that where the seller retains the possession of the goods after sale of the same or of documents relating to the title of the said goods, he or she can still transfer the goods to another party and that third party would acquire good title to the goods. In this case therefore the title to the goods had passed to the buyer but the seller retained possession to the goods. The goods remained in his direct control as a Bailee in the circumstances and therefore he is liable to reimburse the buyer the deposit paid as well as damages for breach of bailment.

Problem 4

This case scenario revolves around a contract for sale of goods and specifically sale by description. Brief facts of the case is that the plaintiff, john does tennis training using his home tennis court. However, his students have increased in population and therefore he requires additional training courts to accommodate the increase in demand. He has been given a brochure by a supplier describing the court as smooth, soft and flawless. However, he discovers that the court has cracks and therefore is not suitable for tennis training classes.

Issues

The issue in this case is whether there is a breach of contract between the supplier and John and if so, is John entitled to any remedy under the Sale of Goods Act 1979?

Law

The transaction in this case is governed by the Sale of Goods Act 1979. A contract for sale refers to that contract where the seller of goods agrees to transfer the title on those goods to the buyer for money consideration which is the purchase price either absolutely or conditional. The parties to a contract for sale must have or possess the capacity required for contracts generally (Furmston and Fifoot, 2012).

The subject matter to which the goods relate could either be existing goods or future goods that are yet to be delivered to the seller. Where a contract purports to sell goods that are future and are not in the seller’s possession, such contract is an agreement for sale. It will only be a contract for sale when the goods are in the custody of the seller who has intimated to sell the same.

Under section13 of the Sale of Goods Act, there is provision that goods are capable of being sold by description. In such a case where goods are sold by description and the said goods are not availed for the buyer to physically examine them; there is an implied condition on the nature of such goods to the effect that the said goods would correspond to the previous description by the seller or his mercantile agent.

Additionally, where a seller sells the goods in the ordinary course of business, an implied condition on the mercantile nature of such goods exists but there is no such condition as to the defects that were brought to the attention of the buyer at the contract formation stage and where the buyer had the opportunity to examine the goods before the contract is made on defects that his ordinary examination would have revealed (Luther, 2004).

In the case of Re Moore and Company Limited V Landauer and Company (1921) All ER 466, the seller entered into a contract for sale of canned fruits in quantities containing a package of 30 tins in each pack. The seller delivered the correct quantity but some packs contained only 24 tins. However, evidence showed that the value of the goods were equal whether the pack had 30 or 24 tins. The court held that the contract was a sale by description and therefore the seller breached the contract by delivering goods that did not correspond to the description given to the buyer.

Similarly in the case of In  the case of Arcos Limited v EA Ronaasen and Son (1933) All ER 646, the case involved two written contracts where the appellant had agreed to sell to the respondents a specific quantity of redwood and another white wood staves with a thickness of half inch each. However, the starves that got delivered were in excess of the stated thickness. The court held that the seller had breached the contract especially the implied condition requiring the goods in a contract for sale that such goods would correspond to the stated description.

Application

The plaintiff, john does tennis training using his home tennis court. However, his students have increased in population and therefore he requires additional training courts to accommodate the increase in demand. He has been given a brochure by a supplier describing the court as smooth, soft and flawless. However, he discovers that the court has cracks and therefore is not suitable for tennis training classes. John is likely in the circumstances to lose most of his students because of lack of a training court.

In determining his rights, the court would first look at the contract so as to determine the rights of the parties. The contract is one involving sale of goods by description. In law, such sale is required to conform to certain condition that where goods are sold by description, the said goods ought to correspond to the description given at the time of entering into the contract. Where a material non correspondence occurs, the seller is in breach of contract and is liable to pay the price of the goods and damages for breach of the contract in addition

Conclusion

There is breach of contract between the supplier of tennis court and John in this case scenario. The supplier had presented a brochure to John, a brochure which described the tennis court vividly as smooth and flawless. However, John discovers that the court has cracks and thus rendering the court unsuitable for tennis training. The cracks are easily visible such that when the said sale had not been done by description, an examination would have revealed the cracks before such contract could have been entered into.

For such breach by the supplier, the remedy available to John is a claim for return of the purchase price and additionally a claim for payment of damages for breach of contract and the loss of business occasioned by such breach.

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